China - Country water resources assistance strategy

48499 China Country Water Resources Assistance Strategy 2002 The World Bank East Asia and Pacific Region  Abbreviations and Acronyms AAA - Analytical and Advisory Assistance CWRAS - Country Water Resources Assistance Strategies DFID - Department for International Development EPB - Environmental Protection Bureau ET - Evapotranspiration GEF - Global Environment Facility IRBM - Integrated River Basin Management IWRM - Integrated Water Resources Management M&I - Municipal and Industrial MOA - Ministry of Agriculture MOC - Ministry of Construction MOF - Ministry of Finance MWR - Ministry of Water Resources O&M - Operation and Maintenance RBM - River Basin Management SDPC - State Development Planning Commission SEPA - State Environmental Protection Administration SIDD - Self-Managing Irrigation and Drainage District SOCAD - State Office for Comprehensive Agricultural Development TA - Technical Assistance TBWRC - Tarim Basin Water Resources Commission TVIE - Township and Village Industrial Enterprises WCP - Water Conservation Project WRMP - Water Resources Management Policy WRSS - Water Resources Sector Strategy WSC - Water Supply Corporation WSO - Water Supply Organization WUA - Water Users Association WWTP - Waste Water Treatment Plant  I. Introduction 1. China faces a water resources crisis of multiple dimensions throughout the country, but the problems are particularly acute in dry northern China--that is, north of the Yangtze River Basin--and even more so in the catchments of the Huang (Yellow), Huai and Hai Rivers. The importance of water resources management is well recognized and considered to be a priority issue at the highest levels of the Chinese Government. As noted in Premier Zhu Rongji's Report on the Tenth Five Year Plan:1 "Lack of water resources is a serious limitation on the economic and social development of our country. We need to put water conservation high on our work agenda, establish a rational system for management of water resources and a rational pricing mechanism, comprehensively adopt water conservation technologies and measures, develop water-efficient industries, and raise the entire society's awareness of water conservation. Prevention and control of water pollution should be strengthened. We should improve sewage treatment and utilization. We need to expedite the planning and building of projects to divert water from the south to the north." 2. China has very serious water problems despite substantial economic development achievements, strong technical expertise, and political stability. But in terms of its potential and the critical pressing needs for water resources management, China could do much better in managing its water resources. The World Bank's assistance to China in water resources development and management in the past has tended to be reactive and downstream in the project cycle. However, this approach has significantly limited the potential benefits of Bank assistance to China which a more upstream approach, based on a strategic partnership, could provide. 3. In general, the Chinese government has requested assistance from the Bank for projects that the Chinese government has felt would benefit from Bank involvement and after the projects have been basically defined in terms of content. The Bank has then worked with its Chinese counterparts to make adjustments to the already defined projects in order to improve them and incorporate international experience. This has basically been the approach to Bank assistance in China because both China and the Bank have strongly emphasized the importance of the client (China) being in the driver's seat and the Bank providing assistance where and how the client wants. But the result has been failure to gain the maximum value from Bank assistance. In effect, China has treated the Bank as a commercial source of financing rather than a strategic partner in development. 4. The fundamentalissues for China are not only technical but concern the institutions and management instruments; their solution depends more on political understanding and strong will from the political leaders at all levels, rather than just funding. In order to accommodate a shift towards improved water resources management and to make better use of Bank assistance, it is important for the Bank to become more involved in upstream dialog and Analytical and Advisory Assistance (AAA) to help in defining the legal and institutional framework, policy, strategy and particularly in planning and implementing the overall water resources management and investment program for China. Selection of projects and activities for Bank involvement including the possibility of concentrating Bank assistance in critical areas, should also be a mutual exercise of the Chinese government and the Bank. China is now a much more sophisticated and internationally savvy client than it was during earlier years of Bank involvement. There is essentially no risk that China would allow the Bank's assistance to drive the reform agenda, but China could benefit substantially from the Bank's assistance and advice when considering these upstream aspects. As an honest broker with worldwide experience and access to expertise, the Bank can be a very effective partner for open dialogue and debate at all levels, which are needed for effective strategic reform of management in the water resources sector. 1Premier Zhu Rongji's Report on the Outline of the Tenth-Five Year Plan for the National Economic and Social Economic Development (2001-2005), delivered at the Fourth Session of the Ninth National People's Congress on March 5, 2001. 1  5. This upstream assistance can include Bank support for interchanges with other developing and developed countries dealing with similar water related problems, seminars and workshops, more access of senior Bank water staff to Chinese leaders, improved cooperation and coordination with other multilateral and bi-lateral international organizations, more formal and informal AAA provided by the Bank, etc. But the fundamental requirement for such a partnership to work is that China must decide to use the Bank in a new, more comprehensive way for its strategic development purposes. 6. The Bank's assistance strategy for China in meeting its water resources challenges needs to revolve around three major dimensions: q Keeping in mind that water resources management improvements are a long-term endeavor, the Bank should provide assistance to China in translating the rhetoric of water conservation and sustainability into practical-realistic programs and policies. The Bank should provide AAA when requested and assist the Government in developing policy and strategic approaches to addressing water resources management needs. q For Bank financed infrastructure projects, the Bank should help assist the Government in formulating management components which will be an integral part of the projects, and focus on (i) generating the support of political leaders, and (ii) following a "bottom-up and top-down" approach that includes the active participation of water users. The Bank should also work with Government to develop non-infrastructure water resources management projects, such as the proposed GEF Hai Basin Integrated Water and Environment Management Project. q The Bank should give priority to financing water conservation, watershed management, irrigation and drainage system rehabilitation, water pollution control including wastewater treatment, flood and drought management, bulk water supply for Municipal and Industrial (M&I) uses, rural water supply, hydropower including mini-hydro. The projects should be designed within a basin-wide or regional water resources perspective, with emphasis on poverty reduction and, where appropriate, on eco-system restoration of rivers, wetlands, lakes, and coastal waters. 7. This Strategy Paper identifies China's principal water resource challenges, what China is already doing, and how the Bank can assist in the future. The large size of the Bank's water portfolio and the urgency of the problems, demand a strategic framework for the Bank's support to China. In 2002, the Bank and the Chinese Government are cooperating on the evaluation of the last, and preparation of the new, Country Assistance Strategy. In October 2002, China promulgated a new Water Law, has recently prepared a new five-year plan, and is updating the master plans for the major river basins. The Bank hopes it can assist China in improving its water resources management, and accelerate implementation of reforms through a shared Country Water Resources Assistance Strategy (CWRAS). 8. The Bank's Water Resources Sector Strategy (WRSS) is currently being finalized and will support the 1993 Water Resources Management Policy (WRMP). The holistic approach recommended is generally described as Integrated Water Resources Management (IWRM) and sometimes as Integrated River Basin Management (IRBM). While unified management is an ideal, the integrated approach starts from the present institutions and stakeholders. One of the conclusions of the WRSS is that Country Water Resources Assistance Strategies should be produced for key countries in each of the Bank's six regions. During the Bank's fiscal year 2002, ending June 2002, each region is preparing one CWRAS in consultation with a selected client country. In the case of the Bank's East Asia and the Pacific Region, China has been chosen for the first CWRAS, which is elaborated in this Strategy Paper. A workshop was held in Beijing on June 5, 2002 co-sponsored by the Bank and the Ministry of Water Resources during which this Strategy Paper was discussed. This final version of the Strategy Paper incorporates the comments from the workshop and is an integral part of the process of CAS preparation. 9. The Bank provides AAA on policy-related issues and two recent documents have been used in preparation of this Strategy Paper: 2  q "Agenda for Water Sector Strategy for North China" is a comprehensive analytical report addressing water scarcity, floods, water for agriculture, water pollution, groundwater, and water management institutions in the Huang-Huai-Hai River Basins (3H basins). It represents the state of the art as far as analytic and technical engineering approaches to water resources management, encompassing water quality as well. It also enables the implications of alternative assumptions about key economic and financial parameters. The basins cover the North China Plain which is the breadbasket of China. The report outlines an action plan and provides an indicative assessment of investment needs. q "China: Air, Land, and Water-Environmental Priorities for a New Millennium" also deals extensively with water resources management and water pollution issues. 10. Referred to as the Bank's Analytical Reports in this Strategy Paper, these two reports conclude that: