China - Yangtze Basin Water Resources Project

Document of The World Bank Report No: 25903 IMPLEMENTATION COMPLETION REPORT (CPL-38740; SCL-3874A; SCPD-3874S; TF-22764; IDA-27100; TF-28762) ON A LOAN IN THE AMOUNT OF US$100 MILLION AND A CREDIT IN THE AMOUNT OF SDR74.8 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A YANGTZE BASIN WATER RESOURCES PROJECT June 30, 2003 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 2003) Currency Unit = Yuan Y1.0 = US$ 0.12 US$ 1.00 = Y 8.3 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CPMO Comprehensive Project Management Office DSRP Dam Safety Review Panel DSS Decision Support System ERR Economic Rate of Return FFWS Flood Forecasting and Warning System FRR Financial Rate of Return ICB International Competitive Bidding IDA International Development Association LHPC Lishui Hydro Power Corporation MTR Mid-Term Review MWR Ministry of Water Resources NCB National Competitive Bidding NPK Nitrogen - Phosphate - Potassium (fertilizer) O&M Operation and Maintenance PIM Participatory Irrigation Management PMO Project Management Office RCC Roller Compacted Concrete SAR Staff Appraisal Report SIDD Self-Financing Irrigation and Drainage District WRB Water Resources Bureau WSC Water Supply Corporation WTO World Trade Organization WUA Water User Association Vice President: Jemal-ud-din Kassum Country Manager/Director: Yukon Huang Sector Manager/Director: Mark D. Wilson Task Team Leader/Task Manager: Richard Reidinger  CHINA YANGTZE BASIN WATER RESOURCES PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome 19 6. Sustainability 22 7. Bank and Borrower Performance 24 8. Lessons Learned 28 9. Partner Comments 32 10. Additional Information 34 Annex 1. Key Performance Indicators/Log Frame Matrix 36 Annex 2. Project Costs and Financing 40 Annex 3. Economic Costs and Benefits 43 Annex 4. Bank Inputs 45 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 47 Annex 6. Ratings of Bank and Borrower Performance 48 Annex 7. List of Supporting Documents 49 Maps IBRD 26382 and 26383  Project ID: P003596 Project Name: Yangtze Basin Water Resources Project Team Leader: Richard B. Reidinger TL Unit: EASRD ICR Type: Core ICR Report Date: June 27, 2003 1. Project Data Name: Yangtze Basin Water Resources Project L/C/TF Number: CPL-38740; SCL-3874A; SCPD-3874S; TF-22764; IDA-27100; TF-28762 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Flood protection (37%); Irrigation and drainage (27%); Renewable energy (25%); Animal production (6%); General agriculture, fishing and forestry sector (5%) Theme: Natural disaster management (P); Water resource management (P); Rural services and infrastructure (S) KEY DATES Original Revised/Actual PCD: 07/13/1992 Effective: 10/16/1995 11/16/1995 Appraisal: 08/11/1994 MTR: 12/31/1997 12/10/1997 Approval: 04/25/1995 Closing: 12/31/2001 12/31/2002 Borrower/Implementing Agency: People's Republic of China/Hubei and Hunan Provinces Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Russel Cheetham Country Director: Yukon Huang Nicholas C. Hope - Department Director Sector Manager: Mark D. Wilson Joseph Goldberg - Division Chief Team Leader at ICR: Richard Reidinger Richard Reidinger ICR Primary Author: Richard Chisholm; Liu Xueming (FAO/CP); R. Reidinger (WB) 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:L Institutional Development Impact:SU Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The main objectives of the project were to raise agricultural production and incomes; reduce the risk and impact of floods; introduce a more sustainable and cost-effective system for Operation and Maintenance (O&M) of irrigation and drainage schemes; and promote institutional reform and strengthening and improve planning and environmental monitoring in the water sector. Key institutional development objectives were to introduce comprehensive river basin management, and Self-financing Irrigation and Drainage Districts (SIDDs) based on farmer participation. The latter was to promote cost recovery, decentralization of services delivery, and participation by users in irrigation projects as key elements of Government and Bank water resources policy. This was the first Bank Group-supported comprehensive water resources operation in China. The objectives aimed to increase agricultural productivity in order to narrow the rural/urban income gap and were in line with the National Government's long term strategies and policies for the agriculture sector as formulated in the early 1990s which sought to increase production to meet the requirements created by population and income growth and to increase income in rural areas. In the water resources sector, the National Government sought to promote water saving and efficient water use; comprehensive water resource and river basin management; financial self sufficiency and cost recovery; reduced water pollution; and implementation of priority ("key") water development projects. The Bank's agricultural sector strategy objectives as defined in the 1993 Country Assistance Strategy (CAS) were to promote sustainable agricultural development, assist impoverished and environmentally vulnerable areas and groups, and increase and diversify agricultural production. Thus the project objectives were clear and well formulated, in-line with the overall strategies of the Borrower and the Bank Group. 3.2 Revised Objective: 1 The original project objectives remained unchanged throughout the project implementation period. Emphasis on the institutional development objectives, and particularly on the development of Self-financing Irrigation and Drainage Districts (SIDDs), however, became increasingly important as their large benefits began to appear from the earliest stages of project implementation. Activities under the livestock and grassland development sub-component in Hubei were altered at the Mid-Term Review (MTR) to focus on breed improvement and stop further grassland development, due to low demand for grassland by farmers. 3.3 Original Components: Part A - HUBEI Component The Hubei component included rehabilitation of four large irrigation and drainage projects, improvement of the large Sihu (Four Lakes) drainage area, and four non-water subcomponents for aquaculture, forestry, grassland/livestock and soil improvement. The water resources sub-components included substantial institutional development to reform irrigation operation and management through SIDD development, and a detailed "SIDD Development Plan" was required (from each Province) by the loan covenants early in the project. Each subcomponent had its own Project Management Office (PMO), although there was a Comprehensive PMO under the Planning Commission and a Financial PMO under the Finance Bureau at the Provincial level. Detailed sub-components were as follows: 1 In June 2003, about SDR 0.2 million of the Credit was allocated to a new SARS and Infectious Diseases Response Program (see Section 10). This program is still under implementation and not part of this ICR. - 2 -  (1) Irrigation Repair and Rehabilitation Subprojects. The irrigation component of the project in Hubei province included essential repair and rehabilitation works to upgrade four existing large-scale irrigation schemes - Zhanghe, Dongfeng, Yindan and Wenxia - with a total benefiting area of 271,200 hectares, as follows: (a) Zhanghe Irrigation District (US$19.9 million): Rehabilitation of the General Main canal; the No.3 Main canal and its service area, including canal lining for 20 km, raising of embankments, construction of retaining walls (where landslides occur frequently), and repair and replacement of structures; rehabilitation of 155 km of branch and sub-branch canals; improvement and construction of laterals, sub-laterals and on-farm works including irrigation and drainage ditches and land leveling; and rehabilitation of three medium-size reservoirs. (b) Dongfeng Irrigation District (US$20.3 million): Construction of a cutoff wall at Shangjiahe diversion dam to reduce high flow seepage losses in the right bank limestone foundation; lining of 87 km of general main and branch canals to increase capacity and efficiency of the main conveyance system; improvement of laterals and sub-laterals for about 2,600 hectares, including widening of irrigation and drainage ditches and land leveling for low-yield land; repair or replacement of various structures including four aqueducts and 42 tunnels and a number of other structures; and repair of four medium-size reservoirs to improve flow discharge capacities and remove structural defects. (c) Yindan Irrigation District (US$24.8 million): Rehabilitation of the General Main canal (55 km) including lining (9 km) and a number of structures, and construction of retaining walls; rehabilitation of main canals No. 1, 2, 4 and 5 including lining (4 km) and repair of various structures; improving of laterals, sub-laterals and on-farm works; and rehabilitation of a medium-size reservoir by raising dam height and improving the spillway. (d) Wenxia Irrigation District (US$16.3 million): Rehabilitation and improvement of 128 km of main canals, including rebuilding collapsed sections and repair of 23 tunnels; rehabilitation of similar works on 10 branch canals and associated structures; improvement of the capacity of eight pumping stations for irrigation and drainage; and pilot scale improvement of laterals and sub-laterals serving 2,200 ha. To improve operation of the four existing irrigation schemes, the project provided for installation of remote monitoring systems for the General Main Canals and main canals of the four sub-projects; water measuring devices on canals, reservoirs and off-takes; improvement of radio and communication systems; local and foreign training study tours; and equipment including computers and vehicles. (2) Flood Control Improvement at Sihu Lakes Subproject. Sihu subproject (US$43 million) comprised: (a) Upgrading of flood protection: Improvement of the Chang Lake dike including raising and strengthening of a 28 km section, slope protection, and construction of a 13 km long wave break wall; improvement of eight sluices and concrete-surfacing of the dike-top road; improvement of the Hong Lake dike, including raising and widening of 84 km of the dike, slope protection and improvement of four sluice gates; and increase of the discharge flood handling capacity of the Tianguan River including dredging of 20 km and raising of embankments; and (b) Improving drainage: Installation of pumps with a total capacity of 16 m3/s and replacement of old pumps by 10 new energy-saving pumps of 9 m3/s each; and construction of local drainage networks, including subsurface drainage and land leveling to improve about 28,000 hectares of low-yield land. In coordination with the Bank project, a series of coordinated studies were financed for Sihu, first with Canadian and then with Japanese grant funds, to upgrade the operational system of the Sihu Lake system by developing computerized hydraulic mathematical models for the Sihu area and a Decision Support System (DSS) to help guide future lake and drainage operations and improve planning. The models and DSS were to provide a basis for a modern, computerized real-time operating system for the Sihu Lake area. Although work under the grants was not part of the project as prepared, it was completely integrated with the project by the Hubei project authorities during implementation. - 3 -  (3) Non-water Sub-projects. The project financed four non-water subprojects, with details as follows: (a) Aquaculture (US$15.55 million): Lake improvement over 12,593 ha, new fish ponds (216 ha), and improved fish ponds (365 ha); new (117 ha) and improved (205 ha) nursery ponds for fish; five new fish hatcheries; one turtle pond (1 ha) and one turtle hatchery (4.2 ha); establishment of a technical training and extension center; and formation of a Scientific Fish Farmers Association. (b) Forestry (US$10.21 million): Economic Forest (principally chestnut, citrus, stone fruit, pear and medicinal plants over 5,718 ha) managed by an estimated 20,828 beneficiary households; Timber Forestry (5,000 ha) including poplar and slash pine principally for pulp and poles but also experimenting with techniques for production of millable timber to meet future needs; Protection Forestry (6,000 ha) including water and pond fir (Metesequoia and Taxodium spp) in lowlands and slash pine and poplar in upland sites; and two training centers to be built (800 m2) or renovated (2,000 m2). (c) Grasslands Development and Breed Improvement for Cattle (US$13.07 million): Development of 11,415 ha of upland and 8,110 ha of lowland grazed pasture; improvement of the Provincial level breeding and artificial insemination center; and stud stock importation. (d) Soil Improvement (US$11.09 million): Development of local fertilizer blending capacity not available in the Province through construction of six blending plants of 30,000 t/annum capacity, each with sales and storage facilities; and construction of 19 fertilizer supply stations to sell mixed NPK fertilizers. Fertilizer sales were supposed to generate financing for fertilizer research and extension services (supporting a network agricultural service system for soil fertility) which would help optimize fertilizer inputs in agricultural areas. The service system included of improvements to four research institutes, and 9,900 m2 expansion of the Jingzhou training center and the Hubei Provincial Fertilizer Monitoring Center. (4) Institutional Development. Institutional development was mainly for irrigation management reform and focused on establishment of Self-financing Irrigation and Drainage Districts (SIDDs) comprising Water Supply Corporations (WSCs) at the reservoir/main canal level and Water User Associations (WUAs) to take over O&M of the lower levels of the systems. It also sought to strengthen the Hubei Water Resources Department through various studies and training programs. The WSCs and WUAs were to be formed on a pilot basis in parts of the irrigation systems under improvement in anticipation that the concept would spread once benefits to farmers became evident. In addition to SIDDs, various research studies and capacity building activities were to be conducted under the project, and the Hubei Fish Farmers Association would be formed. Part B