China - Second Guangdong Pearl River Delta Urban Environment Project : China - Second Guangdong Pearl River Delta Urban Environment Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB770 Project Name GUANGDONG PEARL RIVER DELTA URBAN ENVIRONMENT 2 Region EAST ASIA AND PACIFIC Sector Water, Sanitation and Flood Protection Sector (100%) Project ID P087273 Borrower(s) PEOPLE'S REPUBLIC OF CHINA Implementing Agency Shenzhen Municipal Government Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [ ] S 2 [ ] S 3 [ ] S F [X] TBD (to be determined) Date PID Prepared March 15, 2004 Estimated Date of Appraisal Authorization January 18, 2005 Estimated Date of Board Approval June 16, 2005 1. Key development issues and rationale for Bank involvement Shenzhen Municipality was set-up as the first Special Economic Zone (SEZ) in 1980 and has grown over the last 20 years from a fishing village into a regional urban center, driven by Foreign Direct Investment (FDI) and Private Sector Participation (PSP). Over the last decade, Shenzhen has experienced a GDP growth of 15% per annum, well above the national average, but at a heavy environmental cost, leading to increased environmental pressures for the sustainable management of water and wastewater in the well developed SEZ, but also in the two lagging Districts. The Shenzhen Municipal Government (SMG) seeks to halt the environmental deterioration and enhance the low quality of the environment and to address the resultant threat to the sustainability of the local economic development (LED) to improve its competitiveness and urban livability. Environmental sustainability is considered a prerequisite for continued economic growth. SMG development vision is supporting the Central Government strategy set in the 11 th five year plan of balanced (equitable) and sustainable growth. The focus is on an economically and environmentally sustainable urbanization process, including expansion of economic activities and generation of jobs for the poor, since much of the growth is powered by large inflows of migrant workers from the poorest segment of the population in China. The Pearl River Delta (PRD) is one of the most complex urban systems in Asia. Shenzhen is located on the south-eastern reaches of the PRD in the Guangdong province. It neighbors Hong Kong in the South and Dongguan Municipality in the North-East. Shenzhen is bordered by three bays: Shenzhen Bay (Deep Bay) in the West, the main estuary for the PRD, heavily polluted and Dapeng Bay in the East, protected by a coastal mountain range and Daya Bay further East. It covers an area of about 2,000 km 2 and is drained by 5 main rivers. Shenzhen with a population of about 8 million, including 1.6 million registered residents, 4.0 million permanent migrants and a floating population of about 2 million migrants. Guangdong Provincial Government (GPG) announced a plan to clean-up the PRD through an eight-year US$5 billion investment program. Page 2 The proposed operation not only supports GPG