China - Yangtze Flood Emergency Rehabilitation Project

Report No. PID7251 Project Name China-Yangtze Flood Emergency (+) Rehabilitation Project Region East Asia and Pacific Sector Other Agriculture Project ID CNPE63123 Implementing Agencies Provinces of Hubei, Hunan and Jiangxi Final PID Date December 31, 1998 Appraisal Date November 11, 1998 Tentative Board Date February 9, 1999 1. Background. Floods are very devastating in China and their occurrences are as old as the country's history. Prolonged, widespread and intensive rain storms are the main causes of floods. Flash floods usually occur in the hilly areas after severe rainstorms and, combined with land slides, displace and kill many people. More than half of China's flood casualties are in the hilly areas where flash floods and land slides have buried villages. In addition, the coastal areas (Jiangsu, Zhejiang, Fujian and Guangdong Provinces) are subject to damages caused by typhoon-related flooding and tidal surges. 3. Beside weather, other factors contributing to floods are: (i) extensive deforestation and cultivation in the upper catchment areas of major river systems have caused serious soil erosion, silting and aggradation of river channels downstream, leading to more frequent floods, higher flood levels and volumes; (ii) Increased water diversion for consumptive uses (i.e. Yellow River) has caused deteriorating morphology of river beds, reducing sharply the sediment transport and carrying capacity of river channels which increases the probability of a given flood to overtop the river banks; and (iii) large areas of lakes and low-lying areas have been reclaimed for habitation and cultivation, reducing the flood detention capacity that would help to reduce the flood levels of the main rivers. 4. Despite centuries of flood control and protection works to keep river floods within their banks, devastation still occurs almost yearly in China in one or more of its eight major river basins. Major flood events have occurred in 1931, 1954, 1991, 1993, 1996 and 1998, with increasing frequency and severity during the 1990s. The 1931 flood killed some 400,000 people and affected more than 50 million people in the Yangtze and Huai River basins. However, the loss of life has been significantly reduced from the pre-1950 periods due to improvements made to the main river protection systems and the flood warning and evacuation plans that allow timely evacuation of people to safety, and more effective control of epidemic diseases that used to kill thousands after floods. Despite major investments in the past the flood protection standard on the major rivers is still low, i.e.10-20 years recurrence level of protection in the Yangtze River (without flood detention), 50-60 years in the Yellow River, 40 years in the Huai River, about 20 years in the Liao, Songhua and Zhujiang rivers. Therefore, increasing economic development along major rivers and in river basins would face risks of more frequent floods and greater economic losses if no major flood control and protection works are undertaken.  5. The Floods of 1998. Persistent torrential rains in the summer of 1998 caused enormous flooding in the Yangtze River Basin and Northeast China. The floods have affected one-fifth of China's population in 29 provinces, over 3,600 people have died, and about 5 millions hectares of crops were destroyed. There has been severe damage to infrastructure and social service facilities, disrupting economic production and activities. Economic losses are estimated at over US$ 36 billion. The losses and hardships of the people would have been much worse without a massive flood fighting operation mounted by the central government, the provinces, all levels of local government, and the armed services. 6. Yangtze River Flood. The Yangtze is China's largest river, 6,300 km long with a basin covering 1.8 million square km. It holds half a billion people or 45 percent of China's total population, produces about 42 percent of its GDP, and consumes just over 43 percent of the country's total investment in fixed assets. A combination of events caused the vast areas of inundation in the Yangtze basin. In the Yangtze's middle reach, wide spread unprecedented rainstorms occurred during June and July and caused flash floods in the provinces of Hubei, Hunan and Jiangxi. Rivers and lakes were rapidly filled. The resultant torrential floods in the hilly regions, coupled with mud slides, caused devastating damages to villages along the rivers and killed many. Flooding in the lake and poldered areas was further aggravated by the high river stages in the Yangtze River (in all eight flood peak waves occurred) when upstream flood water arrived during August and early September. Consequently, vast areas behind the Yangtze River dikes were inundated for almost three months due to back flow of Yangtze water. Some poldered areas were deliberately breached for flood release and detention to reduce critical flood levels threatening the key city of Wuhan. The 1998 flood water levels recorded in the Yangtze exceeded the 1954 levels, the highest of modern times. 7. Commendable efforts were organized by the provincial government to contain the Yangtze River flood from breaching the main dikes. Millions of people affected by the flood were evacuated to safety on high grounds and on top of the dikes. The flood has made millions homeless, destroyed or damaged many infrastructure and social services facilities. There is an urgent need for aftermath flood recovery works to restore and rehabilitate the damaged and destroyed public infrastructure and social services so as to restore rapidly the economic production systems. 8. Project Objectives. The objective of the proposed project is to rebuild social and economic infrastructure damaged by the devastating floods in Hubei, Hunan and Jiangxi provinces, thereby restoring rapidly economic production and social services. In the project design, priorities have been given to restoration and reconstruction of water supply and health facilities to prevent spread of diseases after flood, and roads to restore key access to the flooded areas so as to re-generate economic activities. 9. Project Description. The project is located in 54 counties of Hubei (27), Hunan (15) and Jiangxi (12) provinces that were most severely damaged by floods during June to September 1998. The main components are: Roads: Restoration and reconstruction of 84 county and rural roads covering a total length of 945 km ($49.5 million). Water Supply: Restoration and reconstruction of 55 damaged county and township -2 -  water supply systems, serving a total population of about 2.5 million people ($30.3 million). Schools: Restoration and reconstruction of 199 county and township secondary and primary schools serving a total student population of about 222,000 ($18.7 million). Hospitals and Clinics: Restoration and reconstruction of 146 county and township hospitals, health centers and clinics, serving a total population of about 4.0 million people ($16.0). Irrigation: Restoring 18 irrigation areas covering a total of 44,200 ha ($7.5 million) and benefiting about 446,00 0 farmers. Studies and Technical Assistance: Provision for each province to upgrade existing or developing flood forecasting. simulation and dispatch systems, taking into account the recent flood experience ($1.3 million). 10. Project Costs and Financing. The project cost is estimated at RMB 1,100 million (US$ 132.5 million equivalent). The Bank Group will provide a Loan of $40 million and a Credit of SDR28.9 million (US$40 million equivalent) which will meet 60 percent of the total cost. The remaining $52.5 million will be provided by the Government. 11. Project Management Structure Project Leading Groups (PLGs) would be established at the province, prefecture, city, and county levels to organize and direct implementation of project works. The members of these PLGs would include directors or vice directors of Finance, Planning, Construction Commission, City/Urban Construction, Transportation, Health, and Education Bureaus. The main functions of the PLGs are to coordinate the different government agencies involved, to approve major policies related to the flood reconstruction activities, and to make sure that the counterpart funds for the project are available in adequate amounts and in a timely manner. Under each PLG, Project Management Office (PMO) would be set up to coordinate project preparation, supervise project implementation, review and verify claims for reimbursement, and consolidate such claims and submit them to the Provincial Finance Bureau for payment from the Special Account. The Provincial PMO will prepare progress reports in a format agreed with the Bank and arrange for accounts and audits. 12. Rationale for Bank Involvement. Bank involvement in the proposed project will accelerate the restoration of economic and social activities through the rebuilding of water supply works, roads, schools, and health centers. The project is consistent with the Bank Group's Country Assistance Strategy for China (No. 16321-CHA) presented to the Board on March 18, 1997 and the CAS Progress Report (No. R98-107) on May 28, 1998, focusing on poverty alleviation and the reconstruction of essential infrastructure. The next CAS, currently under preparation, will address the Bank's short- and long-term strategy in the water sector in view of the increasing flood frequency and economic losses suffered in the county. The current Water Sector Study is also addressing this flood issue. 13. Responding to a request for assistance from the Ministry of Finance (MOF), a Bank reconnaissance mission visited the affected areas in Hubei, Hunan and Jiangxi Provinces from September 16 to 22, 1998. This was followed -3 -  by an appraisal mission from November 11 to 24, 1998. 14. Lessons Learned from Previous Bank Group Assistance. China has previously received assistance from the Bank Group after major natural disasters. Recovery and salvage operations after a major forest fire in northeastern China were successfully supported under the Da Xing An Ling Forest Fire Rehabilitation Program (FY88, $56.9 million), and earthquake reconstruction was supported under (a) China Earthquake Reconstruction Project (FY90, $30 million equivalent); and (b) the Inner Mongolia and Yunnan Earthquake Reconstruction Program (FY97, $65 million equivalent); and (c) Hebei Earthquake Rehabilitation project (FY98, $28.4 million equivalent). The proposed project is essentially modeled on the North China Earthquake Project and the Inner Mongolia and Yunnan Earthquake Reconstruction. In the North China Earthquake Project the relevant lessons highlighted in the Bank Group's Operations Evaluation Department (OED) Performance Audit Report dated June 27, 1996, included: (a) the importance of strong local leadership and local project management offices; (b) attention to the Borrower's views; (c) minimization of bottlenecks in the project's cash flow to accelerate urgent reconstruction activities; and (d) the benefits of using "fast track" project processing in the Bank Group. These lessons have been applied to a large extent in the preparation of this proposed loan and credit. 15. Environmental and Social Aspects. The project is essentially designed to rebuild facilities and restore services damaged by the flood and will provide safer water supplies and repair hospitals and clinics that will treat flood-related illnesses. Therefore, the project will have beneficial effects and no adverse impacts on environment. The government has issued policy directives on banning of logging, restoration of forest in upper catchment areas, intensification of soil and water conservation measure, restoration of flood detention capacity in major lakes, and massive resettlement of people in low-lying areas to higher grounds less vulnerable to flood. These policy directives would have significant long-term improvements of the environment. The project is therefore rated as a "B." Little or no involuntary resettlement and land acquisition is expected for construction of project works, except for a few flood-damaged water supply plants to be relocated could necessitate land acquisition and compensation to some households. As the exact quantities could only be determined after the required technical feasibility studies have been completed. The project provinces have prepared policy framework to resolve any involuntary resettlement, land acquisition and compensation encountered during project implementation. The policy framework has been reviewed by the Bank. 16. Project Benefits. As an emergency recovery loan to restore existing basic infrastructure and social services damaged and destroyed by floods, financial and economic analyses have been considered. Instead, the benefits and social impacts have been assessed. Some 84 county roads with a total length of 945 km would be restored to provide vital access for economic activities. A total of 55 county and township damaged water supply plants would be restored or reconstructed to provide clean and safe water to about 2.5 million people. The proposed 199 secondary and primary schools to be restored would accommodate 222,000 students who are now temporarily dispersed to neighboring schools or placed in make-shift schools. Importantly, the 143 hospitals, health centers and clinics to be restored would serve a total of about 4.0 million/year and their early completion would help to control spread of gastro-intestinal diseases in the flooded areas. Some 44,200 ha of - 4 -  irrigation land in 18 areas would have their irrigation facilities restored for early production by some 446,000 farmers. Since the damages are so wide spread and severe that it is not possible for the limited Bank Loan/Credit to cover all the flooded areas in each province. However, for the selected project counties and townships, the sub-projects to be implemented would restore significant social services and facilities, thereby helping to re- generate economic production and activities. 17. Project Sustainability. The project would be sustainable as it essentially restores and reconstructs existing infrastructure and facilities destroyed or damaged by floods. Upon completion, the various sub-projects would be taken over for operation and ,maintenance by the existing local governments by the present operation and maintenance units. Infrastructure and facilities would be fully used as the flood affected communities are in dire need of such facilities and services. 18. Risks. Project implementation may be delayed because of a lack of local counterpart funds and delays in the procurement. In order to accelerate project implementation it has been agreed to finance a large proportion of the investment costs from the Bank Loan/Credit. The Bank has also agreed to simplify procurement and disbursement procedures. A project launch workshop will be conducted to train project staff in project implementation and management, especially on procurement, disbursement and financial management. Risks of similar floods in the near future exist and difficult to predict. However, in the restoration and reconstruction of infrastructure and services elements of flood-resilience to similar future floods have been considered in the planning and design as far as practicable. Contact points: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Hubei Province: Mr. Ma Shan Zheng, Division Chief Project Management Office Hubei Provincial Foreign Capital Financed Project Office 17 Dong Yi Road Shuiguobu Wuchang Wuhan 430071, Hubei Province, China Fax No. 86-27-8731-8562 Hunan Province: Mr. Hu Wei Ling, Director Hunan Bureau of Finance 1 Chengnan West Road Changshs 410007, Hunan Province, China Fax No. 86-731-516-5184 Jiangxi Province: Mr. Fang Ming Ming, Division Chief Foreign Economic Cooperation Division Jiangxi Bureau of Finance 47 Ruzi Road -5 -  Nanchang, Jiangxi Province, China Fax No. 86-791-622-6735 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending January 15, 1999. - 6 -  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -7-