China - Gansu and Inner Mongolia Poverty Reduction Project : environmental assessment

E=269 CHINA: Western Poverty Reduction Project Environmental Information Package This package of documents comprises an Environmental Summary and Evaluation of the above project prepared by World Bank staff plus English language translations of three Environmental Impact Assessments (EIAs) commissioned, in accordance with relevant EIA requirements of the Government of the People's Republic of China, by the Provincial/Regional Governments participating in the project. The Environmental Summary and Evaluation provides a concise summary and evaluation of the main environmental implications of the proposed investments and is based on the contents of the EIAs and the results of additional environmental and technical evaluations undertaken as part of project feasibility assessment.  l Contents Environmental Summary and Evaluation Environment Impact Assessments World Bank Loan for Poverty Reduction in West China: Environmental Impact Assessment (EIA) for the Agricultural Development and Poverty Reduction Project in Xiangride-Balong, Qinghai Western China Poverty Reduction Project Financed by the World Bank: Report On * Assessment Of Environmental Impacts In Gansu Project Area Environmental Impact Assessment (EIA) for The World Bank Loan "Poverty Reduction" I Project in Inner Mongolia 3 Maps China Western Poverty Reduction Project - Qinghai Province - IBRD No. 29993 China Western Poverty Reduction Project - Gansu Province - IBRD No. 29994 3 China Western Poverty Reduction Project - Inner Mongolia Province - IBRD No. 29995 1 I I I l I I  l I CHINA: Western Poverty Reduction Project 3 Environmental Summary and Evaluation A. Overview Introduction. The objective of the proposed Western Poverty Reduction Project (WPRP) * - is to alleviate chronic poverty for the absolute poor living in remote and inaccessible villages of * Gansu Province, Qinghai Province and Inner Mongolia Autonomous Region within the People's Republic of China. The proposed project is the third in a series of World Bank-assisted poverty reduction projects in China that support the government's Eight-Seven Poverty Reduction Plan I (the 8-7 Plan). In all three of the Participating Provinces (PPs), project supported interventions would enable poor households to raise their incomes through increasing grain and livestock production sufficient to meet their basic food needs and in many cases also generating a marketable surplus to improve their living standards. This report summarizes the main relevant findings and recommendations of three province specific environmental impact assessments (EIAs) prepared for the proposed project as well as results of additional environmental and technical evaluations undertaken as part of project feasibility assessment, and outlines the World Bank's evaluations of the main, substantive environmental issues. The objective of the proposed Western Poverty Reduction Project (WPRP) is to alleviate IJ chronic poverty for the absolute poor living in remote and inaccessible villages of Gansu Province, Qinghai Province and Inner Mongolia Autonomous Region within the People's Republic of China. The proposed project is the third in a series of World Bank-assisted poverty I reduction projects in China that support the government's Eight-Seven Poverty Reduction Plan (the 8-7 Plan). In all three of the Participating Provinces (PPs), project supported interventions would enable poor households to raise their incomes through increasing grain and livestock i production sufficient to meet their basic food needs and in many cases also generating a marketable surplus to improve their living standards. Strateeic Context. The proposed project supports several of the World Bank's key Country Assistance Strategy objectives including: targeted poverty alleviation investments, support for primary education with a particular focus on girls and minority nationalities, support for environmentally sustainable agricultural and livestock development and enhancing access to basic services for poor people. Access to health, education and other rural services would also be improved for the poor households. Although the proposed project will be implemented in three PPs, this report focuses mainly on proposed developments in Qinghai Province, which will *- involve new land reclamation and development in areas not presently utilized for crop production and, as such, offer the greatest potential for environmental impact. Developments in the other two PPs are substantially confined to modifications and improvements to existing land uses and mainly represent intensification rather than major changes in land use. B. Environmental Review Process Applicable Environmental Procedures. Consistent with the "Environmental Protection Law" of the People's Republic of China and Operational Directive (OD) 4.01, "Environmental Assessment" of the World Bank, each of the three components has been the subject of an Environmental Impact Assessment (EIA). These documents have been prepared to meet Chinese requirements for an EIA and World Bank provisions for activities placed in environmental screening category "B," which includes an Environmental Management Plan. The EIAs were prepared by the Environmental Protection Research Institute of Gansu Province, the  l I Environmental Sciences Institute of Inner Mongolia Autonomous Region, and the Qinghai Institute of Environmental Science. All three institutes hold the "Environmental Impact Assessment Certification of Class A," issued by the State Environmental Protection Agency and the scope of the EIAs was substantially in compliance with that required for the World Bank's environmental Category A, including public consultation. However, the bulk of the environmental analysis associated with the proposed project was of an essentially technical nature and designed to ensure that all relevant environmental considerations were taken into account in project design. The EIA documents identify the key environmental risks, and mitigation and environmental monitoring measures with their associated costs, and specify implementation responsibilities. English language translations of these reports have been placed in the Public Information Center at the World Bank. Environmental Screening Category. The proposed project was reviewed and placed in World Bank environmental screening category "B" in accordance with the provisions of Operational Directive 4.01 and taking account of past practice with classification of a large number of similar integrated agricultural development projects financed by the World Bank in I China over the last 10 years. Review of the scope and proposed activities of the project by Chinese and World Bank environmental staff indicated that the potential impacts were not unusual or unprecedented in terms of other large scale rural developments being undertaken in I China, whether financed solely by the Government or co-financed by the World Bank and other donors. These activities generally have limited risk of adverse effects that could be addressed through design, mitigation and/or monitoring measures. The land reclamation and improvement _ activities supported under the project are of a kind that have been widely and successfully applied in other arid and semi-arid development projects in both the Project Provinces/Regions and other Provinces/Regions in central and western China. Previous interventions of this type by the World Bank have included the Gansu-Hexi Corridor Project and the Tarim Basin I and II Projects. In addition, the proposed activities would be implemented in a large number of dispersed sites with most of the anticipated negative environmental impacts being of local nature. The mitigation measures and methods to be utilized are well known and established in China. It should be noted I that during project preparation the overall scale of the proposed project, particularly the scale of developments in Qinghai Province, was substantially reduced with an incremental decrease in potential environmental impacts. Preparation and Review Process. Project preparation has included the participation of a highly experienced international environmental consultant as an integral member of the U interdisciplinary project team used by the World Bank. This specialist participated in the preparation, pre-appraisal and appraisal of the project. The work of this individual was complemented by World Bank environmental staff who reviewed the environmental documentation prepared for the project. The environmental design of the project represents the combined work of these different experts. The EIA documents were submitted to Chinese authorities and the World Bank prior to appraisal and have been reviewed and approved by the 3 State Environmental Protection Agency of China. They have been made available in the PPs to government agencies and project affected persons upon request. The EIA work was carried out in close coordination with the Social Assessments and the preparation of the Voluntary Resettlement Implementation Plan (VSIP) and the involuntary Resettlement Action Plan (RAP) for the Qinghai sub-project. Consultation Process. Public consultation activities were also undertaken as part * preparation of all three ELAs. In Qinghai, these consultations were undertaken in both the 'move out' and 'move in' areas in conjunction with the social surveys carried out as background to the resettlement program, while in Gansu and Inner Mongolia, specific surveys were carried out to I gauge project awareness and opinions on various aspects including environmental issues. The * 2  l | surveys were quite large; 1,800 questionnaires were distributed in Qinghai 'move out' areas and 120 in the 'move in' area, 5,000 questionnaires were distributed in Gansu supplemented by face to face interviews, and 4,650 questionnaires were distributed in Inner Mongolia. In Qinghai, I environmental issues were only mentioned by respondents in the 'move in' area and the main issue of note was universal concern (i.e. expressed by 100% of respondents) that the new settlers would cut vegetation and destroy the ecological environment. In Gansu, there was a high level of awareness of the project and about 80% of respondents considered that the project would have beneficial or neutral environmental effects. In Inner Mongolia, there was a high level of awareness of the proposed project and the great majority (93%) of respondents felt that the environmental effects of the project would be neutral or beneficial. Approach to the Analysis. The environmental analyses and related project documents have been reviewed from two main points of view: i) to determine whether there were any I particular environmental aspects within the proposed project areas which would justify modifications or adaptations to the proposed development plans to enhance environmental sustainability; and ii) to define the environmental management and monitoring procedures which I should be implemented as part of the implementation plan. The main environmental risks associated with the project relate to the fact that the poverty alleviation benefits arise from land use intensification in arid and semi-arid agro-ecological zones that are intrinsically sensitive from I an environmental point of view. It should be noted that no pesticides are planned to be procured with the proceeds from this loan/credit. Although the project is primarily a poverty alleviation project, it also provides some opportunities to produce environmental benefits through reduced land use pressures particularly in Qinghai and Gansu and promotion of more environmentally sustainable agricultural practices in Gansu. Potential Environmental Risks. More particularly, the main environmental risks I include: i) possible acceleration of desertification; ii) possible agro-chemical pollution due to excessive application of fertilizers and pesticides; iii) solid waste generation from small rural enterprises and plastic film used in cropping; and iv) possible impact on wild vegetation and * animals due to direct displacement or indirect effects of proposed land development activities. A review of these potential impacts and proposed design, mitigation and monitoring measures are described below. It should be noted that Chinese government agencies and research institutions I have established a substantial track record of environmentally sustainable development of similar areas in other Provinces/Regions under very similar biophysical and geographical circumstances. The World Bank is investing in similar, although much larger scale, land development programs I in very similar environments in Gansu Province (Gansu-Hexi Corridor Project) and in Xinjiang Uighur Autonomous Region (Tarim Basin I and II Projects) and project preparation and implementation experience in these projects has provided a substantial basis upon which to 3 ~ evaluate the feasibility of the proposed developments. C. Proiect Setting. Development Alternatives and Proposed Interventions * Project Setting. The target population in the three PPs live in fragile agricultural and pastoral lands. In Qinghai, crop yields are low due to poor soil quality, low rainfall, recurrent drought and undeveloped farming techniques. Increasing cultivation and grazing pressures in I mountainous areas are having devastating ecological impacts and there appear to be limited and possibly even no environmentally sustainable development options available in those areas. In Gansu and Inner Mongolia crop yields are low largely due to a comparatively harsh agro- I ecological environment which is characterized by poor soils, steep topography, recurrent drought, short growing period, and significant grassland degradation combined with the lack of access of the targeted .poor population to productivity enhancing technologies and capital for planting higher value crops or forages. As in Qinghai, this situation is already resulting in severe I 3  l I environmental degradation and, without intervention, this trend will continue and worsen. However, and in contrast to Qinghai, there appear to be some options in both Gansu and Inner Mongolia for introducing productivity enhancing and environmentally sustainable crop and livestock development packages essentially in situ. There are proven technologies widely and successfully adopted in the proposed project areas and their further application is basically limited by shortages of investment funds of the type that the project will provide. The project will not solve all the problems in the three PPs, but it will make a substantial contribution to alleviating them. Development Alternatives. All of the participating PPs and Counties suffer from severe poverty which is leading to serious environmental problems. In this context, the "no development" option is not feasible within the government's poverty alleviation or environmental objectives. Within that context, development options in the participating PPs are severely I constrained by environmental and technical factors. In Qinghai, the resource base of the move out Counties has been severely depleted due to intense population pressure and the associated unsustainable cultivation and over grazing that has been necessary for local people to survive. I Neither the Government nor the World Bank has been able to identify agricultural technologies that can provide a solution given current population pressures and the only feasible alternative is to provide opportunities for at least some of the population to voluntarily move to other areas which offer the promise of a more sustainable future. The benefits of this strategy can be extended further by rehabilitating the worst of the vacated land and treating (e.g. through terracing) the remainder for redistribution amnongst those families remaining so that they too will have a better chance of improving their situation and the condition of the local environment (as will happen through an existing government program). The situation in the two other PPs is not quite as severe insofar as there are known strategies for improving the sustainability of rural development "in situ". In these cases, development options are constrained by the need to reduce risk. Preference under the project has been given to supporting known technologies which have already been shown to be effective and acceptable to * fanners. The menu of possibilities is very limited. To the extent that other development options are being pursued through the project (e.g. sustainable rangeland management in Inner Mongolia), this is being done through demonstration/pilot programs which will provide a better opportunity to evaluate the effectiveness of these approaches and their acceptability. Given the general development framework which arose from consideration of the above constraints, further work was done on consideration of detailed design options. From an environmental point of view, probably the most significant of this work related to water management and overall development options for the Xiangride-Balong irrigation development in I ~ Qinghai. A wide range of conjunctive water use options are available and mathematical modeling was used to evaluate five of these and select an approach which provided an adequate balance between engineering, environmental and other factors. Monitoring will be undertaken during project implementation to determine the need, if any, for revision of the proposed development strategy. Proposed Intervention Strategy. An important aim of the proposed strategy is to progressively broaden the focus of the farming systems from exclusively food self-sufficiency, as it is at present, to one which continues to stress food security but also offers increased opportunities for generating cash incomes. As productivity and incomes increase, opportunities I should be provided to progressively retire from cultivation steeper land and other areas subject to severe wind erosion which are not suitable for sustainable crop production. It is intended that these lands would be sown to forage legumes and grasses, or protective trees. The consequent improvement in soil water conservation and progressive reduction of soil erosion (wind, sheet, I 4  l | gully) would, over time, also contribute towards raising sustainable crop and forage production. A priority objective of the development packages is to improve the nutrition and productivity of livestock which are essential, long-standing traditional elements of local farming systems in all I three areas and cannot be ignored in any integrated development approach. Livestock development would encourage the cut-and-carry feeding of penned ruminant (cattle, sheep, goats) and improved non-ruminant (pigs, poultry, rabbits) integrated crop/livestock production systems, thereby progressively reducing or eliminating large and small ruminant grazing on natural pastures, which is one of the major sources of the land degradation problems being experienced throughout the PPs. D. Proposed Project Supported Activities Agro-ecological and social conditions in each of the three PPs are quite different and, hence, the details of the proposed investments intended to achieve the above strategic objectives differ substantially between Provinces although the physical interventions fall within five general classes as follows: i) Land and Household Development (all PP). The investment activities include intensification of crop production through the use of proven improved and environmentally-friendly technologies to raise crop yields, introduction and/or expansion of cash crop production (vegetables, tree crops, fruits), conversion of livestock management from free-range to confined-feeding production systems for sheep, goats, cattle, pigs, rabbits and poultry, improvement in the quality of farm level technical services through skills upgrading of county, township and village technicians, and support for adaptive research into and on-farm demonstration of improved and environmentally sound farming systems; ii) Irrieation and Land Improvement (all PP). In Qinghai, construction of a new regulating reservoir and renovation of an existing reservoir plus construction of i irrigation and drainage systems to service approximately 19,000 hectares of land. In Gansu and Inner Mongolia, construction of dispersed, small scale irrigation works covering a total of 34,050 hectares plus terracing of 26,500 hectares of sloping land and installation of soil and water conservation works; iii) Rural Infrastructure (all PP). Construction of 216 kilometers of Class III and IV rural roads (i.e. minor access roads) to improve access to 289 remote administrative villages; construction of drinking water supply facilities to serve 370,000 people in 760 administrative villages; and extension of electric power lines to 410 administrative villages; iv) Rural Enterprise Development (all PP). Provision of credit to underwrite establishment of small scale, non-state owned, household-based rural enterprises for construction of food and fiber processing facilities based on appraisal criteria; and v) Voluntary Settlement (Oinghai only). Voluntary settlement in a new agricultural development area for an estimated 57,800 absolute poor currently living in degraded mountainous areas of eastern Qinghai and 4,000 local herders and farmers living around the settlement area. l 5  l E. Common Indirect Environmental Impacts There are several indirect potential environmental impacts that are common to the various I project activities in all three PPs. These include: i) Use of Plastic Mulch. Increased use of plastic mulch is becoming a problem throughout China, notwithstanding its demonstrated agricultural benefits. In one of the PPs (Gansu) it is proposed to establish a small plastic recycling plant of a type being promoted throughout the country. Whether this proves to be financially viable (something which will need to be firmly established before financing is approved) remains to be seen. Neither Qinghai nor Inner Mongolia are likely to be able to generate the quantities of plastic that would render such a plant viable and hence, no such developments have been proposed in these areas. On the other hand, informal, inter-Provincial plastic recycling has started to develop in China and this may offer an alternative. In the longer term, the problem is only likely to be dealt with on a national basis through the promulgation and enforcement of national I design standards for plastic film which include, inter alia, the requirement for film to be degradable following exposure to UV light. Such film is already available in China although it costs more than conventional film and its use is not mandatory. I In the interim, this form of pollution has to be viewed as an unavoidable aesthetic impact of the proposed project; ii) Small Scale Aero-Enterprise. Some small scale agro-enterprises could generate liquid wastes containing organic material that are subject to regulation under national water pollution control laws. This is most substantially an issue with proposed developments in Gansu Province rather than in Qinghai and Inner Mongolia. In the cases that have tentatively been identified, the control technologies are well known, simple to design, construct and operate, and subject to regulatory procedures administered by Provincial and County Environmental Protection Bureaux (EPBs). Administrative steps will be included in sub-loan processing procedures in all three PPs to ensure that loans will not be issued without environmental clearances being received from relevant EPBs; and iii) Increased Use of Aericultural Input. Increased on-farm productivity will be achieved, at least in part by increased use of inputs, including fertilizers and I pesticides. Regarding fertilizer usage, there are parts of China, particularly in lake catchments in the highly developed coastal zones of the country, where nutrient enrichment (eutrophication) problems are being experienced and research indicates I that, while most of the problem is due to emissions of nitrates in human and industrial wastes, some (typically on the order of 20-25 percent of total nitrogen emissions) is due to non-point emissions from farms. Such problems are not being experienced in central and western China for the good reason that farmers in these regions tend, for financial reasons, to significantly under-utilize fertilizer. This is likely to continue to be the case in the project areas. In addition, the farming practices being promoted under the project are intended, among other things, to reduce soil loss, conserve water and increase organic matter retention. All other things being equal, all of these strategies contribute to reduction in nutrient losses from fields. Regarding the use of pesticides, World Bank funds will not be used for I procurement of such chemicals although it is likely that farmers engaging in cash crop and orchard production will procure them using their own funds. The project will rely on continuation of existing pest management programs by Provincial and County Plant Protection Departments. These include farmer education, a highly 6  l organized pest forecasting system that is designed to discourage calendar spraying, restrictions on the types of chemicals which can be sold and mandatory requirements for the display of occupational health and safety warnings and recommended application levels and procedures on containers. 3 F. (inehai Proposed Activities in Oin2hai Activities in Qinghai, unlike the developments in the other two PPs, is based totally on the development of irrigated agricultural production to accommodate voluntary resettlers. The project area has an arid to semi-arid climate and crop production is not possible in the absence of irrigation (either natural or artificial). Activities will involve development of an irrigation system to service an area of about 19,000 hectares which will be located in six separate development areas spread over a total area of approximately 250,000 hectares. Thus, the development area comprises about 8 percent of the "project area" (the geographical area whose boundaries circumscribe all the individual development areas). Water Resources Development. Irrigation infrastructure would be developed through two separate systems servicing five separate irrigation districts located in close proximity to each other: i) Xian2ride-Balone Irrieation Sub-District. The first system would be completely new and will comprise a diversion weir on the Xiangride River, a 28 kilometer conveyance canal leading to a 23 million cubic meter regulating dam'. A 59 kilometer long canal would connect Keri Dam to the Balong Irrigation Sub- district (14,700 hectares) and part of the Qingshuihe Irrigation Sub-district (1,660 hectares). The canals will all traverse and be located within extremely sparsely vegetated desert land (vegetation cover generally less than 5 percent) and will be concrete lined to reduce seepage losses; and ii) Hatu Irrization Sub-District. The second system will involve rehabilitation and increasing the delivery capacity of an existing irrigation system through improvements to an existing intake structure, raising the wall height of an existing regulating reservoir (Hatu Dam) by one meter, and treating the base of I the dam to reduce leakage. This system would service a total of about 2,800 hectares in three irrigation sub-districts (Hatu - 760 hectares, Yikegaoli - 740 hectares and Xiaoxiatan - 1,130 hectares). Activities will also include financing of installation of appropriate drainage systems and on-farm irrigation works in all the serviced areas. Crop Production. Crop production investments in Qinghai would include the initial land development (clearing, leveling and cultivation) for crops (starting with green manure planting), forage and tree planting on 19,200 hectares to which water will be supplied through the irrigation component. Project funds will be provided to cover investments for the first crops to be sown by the settlers (seed, fertilizer, plastic mulch, pesticides, etc.), development of seed production and multiplication areas (679 hectares in total), development of two technical service centers, and ' The dam is, in fact, an off-river reservoir of a type often referred to as "turkey's nest dam." That is a reservoir which is surrounded on three or four sides by constructed walls. Keri Dam will have a front wail height/crest length of I 40meters/390 meters and side wall heights/crest lengths of 21 meters/135 meters and 26 meters/480 meters. The reservoir will inundate approximately 127 hectares of unused desert land and have an average depth of about 15 meters. 7  l installation of applied research and demonstration plots for farmer training. The main crops to be grown include grain (wheat and barley), potatoes, rape, beans and vegetables (onions, garlic, cabbages). Forage crops (vetch, alfalfa, clover and oats) would be grown as an integral part of crop rotation as is the widespread practice in arid and semi-arid development projects in China2. About 15 percent of the land development area will be used for establishment of forested windbreaks, shelterbelts, fuel wood forests and production forests as is conventional practice in such developments. Livestock Development. Forage production will be derived from the areas to be newly irrigated, with winter forage consisting of ensilaged greenfeed and byproducts, ammoniated straws and stalks which are widely used in China and supplemented, in some cases, by purchased or home-produced concentrates such as oilseed cake, wheat bran and barley. Livestock production will be based entirely on the stall-fed, cut-and-carry feeding system with no utilization of grassland areas. Production systems will include pig breeding and fattening, sheep and cashmere goat breeding and fattening and/or household chicken and egg production. The majority of households are expected to raise only a small number of animals, largely for household consumption but with one or two surplus animals sold for cash income, although a minority may choose to specialize in one type of animal production system. Small forage areas would be planted on each farm while specialized forage production farms (about 2,880 hectares in total) would be designated within the settlement area. Each household would be allocated land (about 0.256 hectares) including the forage production farns. Forage would include hardy varieties such as milk vetch, alfalfa and wild rye grass. A condition of household-based livestock financing would be a proven self-sufficiency in forage or grain. Livestock numbers would be based on feed balance calculations. Grazing on the natural grasslands surrounding the settlement area would be prohibited. Local Grassland Monitoring Stations supervised by Project Management Offices (PMOs), would spot check the accuracy of feed balances and compliance with confined feeding. Low-cost, adobe and plastic cover livestock sheds, ammoniation pits, capital stock purchase, forage establishment costs would be financed, and for specialized households, one third of the cost of initial feed purchases. A number of households would specialize in forage processing with small low-cost straw and chaff cutters. Rural Roads Development. Construction of 116 kilometers of all-weather, Class IV gravel roads on a 4x4 kilometer grid would be financed, which would follow branch canals in all irrigation areas plus 426 kilometers of farm roads. These roads will be no risk of increasing access to areas outside the project. Rural Enterprises. This component will underwrite development of extremely small scale agro-processing enterprises including; a feed concentrate mill, a flour mill, a fodder chopping mill, a vegetable oil extraction mill and noodle manufacturing plant. Rehabilitation of 'Move-Out' Areas. As part of existing land rehabilitation programs in the "move out" areas, approximately 85 percent of vacated land will be planted to trees and grasses and retired from cultivation. The remaining 15 percent is of lesser slope and will be terraced and shared amongst families remaining in the area to increase per capita farm size and improve the possibilities for developing more environmentally sustainable farming systems. 2Farmers in the and regions frequently plant a crop such as clover as a green manure crop simultaneously with a grain crop or, if the season is long enough, as a second crop for forage production or as green manure. 8  l Existing Environmental Conditions The key environmental concern in Qinghai is the potential impact of the land use change to be promoted in the Xiangriade-Balong areas (hereafter referred to as the Qinghai-project area) of Dulan County where the resettlers are to be established. As noted above the environmental effects in the 'move-out' counties will be neutral to beneficial due to reduced pressure from agriculture and grazing on marginal lands combined with actions to rehabilitate these areas. Location and Landforms. The Qinghai-project area is located in the southeastern corner of the Qaidam Basin, which extends diagonally southeast to northwest through the northern half of Qinghai Province. The mountains bordering the Basin to the northeast, southeast and southwest reach heights of up to 5,000 meters above sea level (a.s.l.) while the lowest elevations in the center of the basin are in the order of 2,500 meters a.s.l. The general slope of the Basin is from southeast to northwest. The main landforms comprise the denudational mountains and hills which form the boundaries of the basin (and are also the only location of reliable precipitation), denudational and depositional gobi on the piedmont plains at the base of the mountains (the lower parts of these are the only areas where agriculture other than itinerant livestock grazing is possible) followed, in the lower reaches of the Basin, by sand dunes and salty marshes. Numerous salt lakes including some of the largest in China dot the lower parts of the Basin. The gobi piedmont areas are subject to on- going depositional action and reworking as a result of flooding from the rivers that emerge from the mountains. Closer to the foot of the mountains, they are covered with gravel and vegetation is virtually non-existent. As distance from the mountains increases the slopes flatten, the surface materials become finer and the groundwater table is shallower (3-25 meters). These areas offer agricultural development potential provided that supplementary water can be provided. Immediately to the north of the Qinghai-project area is located an extensive saline swampy area or "soak", covering about 35 square kilometers which follows the course of the Qaidam River and exists due to the intersection of the underlying water table and the ground surface. The water is saline due to the evaporative concentration of salts dissolved in the groundwater. The ground surface in this area is braided, due to periodic flood flows in and overflows from the river and vegetation cover is variable from quite dense in the gullies to non- existent on the ridges. This type of swampy ecosystem continues intermittently along the course of the Qaidam River system for some 180 kilometers to the northwest until the river terminates in the Huaerxun Lake system, one of the largest systems of salt lakes in China. Climate. The Qaidam Basin is totally cut off from maritime air masses and is thus the driest part of Qinghai and amongst the driest areas in all of China. Average annual rainfall in the northwestern parts of the Basin is in the order of 20-50 millimeters but this increases progressively towards the project area reaching 50-100 millimeters immediately west of Balong and 100-200 millimeters east of Balong. Rainfall in all areas is erratic and unreliable. Precipitation in the surrounding mountains can be as high as 700 millimeters, much of which falls as snow. Runoff and infiltration of this precipitation is essentially the sole source of water for all life within the Basin. Average temperatures are cool (around 4