Document of The World Bank Public Disclosure Authorized

Report No: 29174

IMPLEMENTATION COMPLETION REPORT (IDA-26050)

ON A Public Disclosure Authorized CREDIT

IN THE AMOUNT OF SDR 79.9 MILLION (US$100 MILLION EQUIVALENT)

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR THE

XIAOLANGDI RESETTLEMENT PROJECT Public Disclosure Authorized

June 29, 2004 Public Disclosure Authorized

Rural Development and Natural Resources Sector Unit East Asia and Pacific Regional Office CURRENCY EQUIVALENTS (Exchange Rate Effective June 17, 2004) Currency Unit = Yuan (Y) Y 1.00 = US$ 0.121 US$ 1.00 = Y 8.2866

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

CAS - Country Assistance Strategy CRO - County Resettlement Office EIA - Environmental Impact Assessment EMO - Envrionment Management Office EMP - Envrionmental Management Plan EPB - Environment Protection Bureau ERR - Economic Rate of Return ESE - Environmental Supervising Engineer HPRO - Henan Provincial Resettlement Office ICR - Implementation Completion Report IDA - International Development Association MOF - Ministry of Finance MTR - Mid-term Review MWR - Ministry of Water Resources NRCR - National Research Centre For Resettlement POE - Panel of Experts RPDI - Reconnaissance Planning And Design Institute SAR - Staff Appraisal Report VEO - Village Environmental Officer SAR - Staff Appraisal Report SPRO - Shanxi Provincial Resettlement Office YRCC - Yellow River Conservancy Commission YRCH - Yellow River Central Hospital YRCCRO - Yellow River Conservancy Commission Resettlement Office YRWHDC - Yellow River Water Hydropower Development Corporation YRWHDCRO - YRWHDC Resettlement Office

Vice President: Jemal-ud-din Kassum Country Director: Yukon Huang Sector Director: Mark D. Wilson Task Team Leader: Chaohua Zhang

CHINA XIAOLANGDI RESETTLEMENT 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 4 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 16 7. Bank and Borrower Performance 17 8. Lessons Learned 18 9. Partner Comments 20 10. Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 31 Annex 4. Bank Inputs 38 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 40 Annex 6. Ratings of Bank and Borrower Performance 41 Annex 7. List of Supporting Documents 42 Annex 8. Project Scope and Progress 43 Annex 9. Loan Covenant Compliance 45 Annex 10. Living Standard Assessment of the Resettlers 47 Annex 11. Consultation, Participation and Grievance Redress Mechanism 53 Annex 12. Gender and Vulnerable Households in Resettlement And Rehabilitation 56 Annex 13. Project Organization and Management 59 Annex 14. Project Monitoring and Supervision 61 Annex 15. Environment Management 64 Annex 16. Cultural Property Preservation and Protection 70 Annex 17. Post Resettlement Assistance 74

Project ID: P003644 Project Name: CN - XIAOLANGDI RESETTLEMENT Team Leader: Chaohua Zhang TL Unit: EASES ICR Type: Core ICR Report Date: June 29, 2004

1. Project Data Name: CN - XIAOLANGDI RESETTLEMENT L/C/TF Number: IDA-26050 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: General industry and trade sector (43%); General transportation sector (19%); General information and communications sector (19%); General agriculture, fishing and forestry sector (11%); Central government administration (8%) Theme: Rural services and infrastructure (P); Other social protection and risk management (P); Other social development (S); Other environment and natural resources management (S)

KEY DATES Original Revised/Actual PCD: 06/23/1993 Effective: 09/22/1994 09/22/1994 Appraisal: 11/20/1993 MTR: 06/30/1996 03/28/1997 Approval: 04/14/1994 Closing: 12/31/2001 12/31/2003

Borrower/Implementing Agency: The People's Republic of China/The Ministry of Water Resources Other Partners:

STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Director: Yukon Huang Nicholas Hope Sector Manager: Mark D. Wilson Joseph Goldberg Team Leader at ICR: Chaohua Zhang Daniel Gunaratnam ICR Primary Author: Chaohua Zhang

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: HL Institutional Development Impact: H 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: 3.1.1 The objectives were to assist the Borrower: (a) to resettle and improve the livelihoods of approximately 154,000 people in the reservoir area who need to be resettled as a result of the construction and inundation up to the 265 meter level of the Xiaolangdi Multipurpose Dam; and (b) to minimize the effects of social adjustment of the resettlers and of their host communities following resettlement.

3.1.2 In practice, the project did not limit its livelihood development activities to only the resettled people, but included the host population. The objectives were realistic and important, both for the country as a whole and for the rural sector. The project had moderate to significant risks at appraisal, but most of these risks were ameliorated by effective and flexible management arrangements that allowed changes to the project directions. The major change in project direction was in the livelihood component where, instead of a larger share of incomes being generated from county industry the income was generated from a combination of land based schemes, village based commercial farming and village industries and some off-farm employment. It was a moderately complex project, but not one that placed undue demands on the implementing agency, which made changes to ensure risks were reduced. The project now is completed and throughout was very responsive to the circumstances of the Borrower and its development priorities.

3.2 Revised Objective:

3.2.1 The objectives of the project remained unchanged during the implementation phase, although the target populations of resettlers increased from 154,000 to 172,487. Although ten years have passed since its appraisal, the objectives of the project remain consistent with the current Country Assistance Strategy (CAS) for China and with current international understanding, policy and standards in reservoir resettlement that have seen significantly raised expectations and requirements.

3.3 Original Components:

3.3.1 The components of the project were: Component A Residential and Infrastructure Reconstruction for Villages and Towns Component B Transfer of Resettlers Component C Planning, Design and Institutional Support Component D Livelihood Development

3.3.2 In addition, the project included the following five important activities; they are described in different levels of detail in the SAR but are not stated as project components. Only Activity 4 had separate financing identified, and the other activities appear to be "embedded" in the main components: Activity 1 Social Adjustment Activity 2 Consultation, Participation and Grievance Redress Activity 3 Gender and Vulnerable Groups Activity 4 Environment Management Activity 5 Cultural Relics Protection

3.3.3 The project was prepared and designed on the basis of a detailed analysis and an understanding of experiences and lessons learned in the past 40 years in this sector in China. The components were closely related to the achievement of the objectives, and were well within the capacity of the implementing agency. One of the key lessons learned was the need for a "development" approach for reservoir resettlement. The

- 2 - development approach consisted of, apart from pure compensation payments for replacement of housing, village and all infrastructure including industries, there was additional large economic project infrastructure provided for the resettlers like the Wenmengtan Land reclamation and associated irrigation and drainage (80,000 mu) and Houhe Dam and irrigation (75.000 mu). The value of the new infrastructure was about $100 million to help develop and restore livelihoods of resettlers and boost incomes of host families. Most of the industries were essentially compensated, so that resettlers could start with modern and environmentally friendly facilities, producing new and more marketable products. This was established as a fundamental principle in the Chinese policy framework for reservoir resettlement developed in the late 1980s and was built into the project design through several decades of planning and efforts by local design institutes and enhanced by international expertise and experience brought in with the preparation of the project. This was reflected in the project design through: (a) a clear objective that resettlers should not only restore, but also improve their living standard; (b) basic principles to be followed in planning, design and implementation in line with this objective; (c) an elaborate institutional establishment; (d) a participatory and consultative approach for planning and implementation; and (e) a commitment to carry out post-resettlement support activities for the sustainable development of the resettlers. 3.3.4 With the benefit of hindsight, it is now clear that the project design could have been strengthened to reflect more accurately the detailed design process, to appreciate better the complexities of reservoir resettlement, and subsequently to gauge better the risks and challenges involved. 3.3.5 First, the project followed a phased approach for detailed planning and technical designs for resettlement. This approach was inherently understood, but not presented adequately in the SAR. This caused misunderstandings in terms of the dynamics and details of the project implementation designs.

3.3.6 Second, the Bank realized the risks during preparation concerning the feasibility and sustainability of the industrial resettlement component, but accepted it as a method of improving living standards, because of the strength of the rural industrial sector (which was growing at 15 percent per year during the period 1980-1993). The Bank’s initial position proved to be correct and this component was replaced with the land-and-agriculture based program because macro-economic changes worldwide had caused the industrial sector to be become unstable and, therefore, unsuitable and risky as a basis for resettlement. The appraisal mission did accurately forecast the parametric risks, but it was impossible to forecast the systemic risks of worldwide macro-economic behavior for rural industries in the rural sector in China. It was also assessed during the appraisal that these systemic risks would to be settled during implementation by being flexible with the approach to resettlement.

3.3.7 Third, the core and strength of the Chinese approach for reservoir resettlement is its reliance on land and agriculture, and the Bank's policy preference and emphasis on a “land for land” approach. The appraised project followed an approach of land for land and in addition provided for large off-farm income from county level industries, which proved to be unsuccessful. Though the project design anticipated the general trend of moving into the non-farm sector, it was not anticipate the drastic macro-economic change in the county industries and the impact this would have. As a result, the government, in consultation with the Bank changed the approach from a focus on county based industries to one focused on village industries, commercial farming (sideline activities: cash crops, commercial livestock, fishery, agro-processing, village industries), off-farm employment and land based agriculture. This approach was successful.

3.3.8 The positive government policy framework, strong government commitment and success of a few early reservoir resettlement programs led to some optimism about the timing of reaching objectives and in hind sight, an underestimation of the complexities of reservoir resettlement, particularly on the social and political side. While the overall project objectives have been achieved within the project time-frame, and

- 3 - full livelihood restoration achieved for 70% of the resettlers, the remaining 30% the resettlers has reach about 80% of their targeted incomes. Some of the lag can be accounted for due to the slowness of changes in shifting from county to village based industries, sideline activities and also villagers desire to take a large portion of the livelihood restoration compensation and invested it on high quality schools, clinics, village center and on infrastructure rather than on larger irrigation or commercial agriculture or viable village industry. However, some more analysis could have helped to understand better the evolving social and political reforms in rural China and the challenges to be encountered in the reconstruction of livelihoods for the affected rural villages and resettlers. However, no amount of analysis could have predicted the villagers desire to invest more on higher quality service infrastructure, rather than productive economic facilities.

3.4 Revised Components:

3.4.1 The project components remained unchanged throughout the implementation of the project. However, there were four changes in the project's circumstances that affected the scope of all components. First, the proposed new industrial investment to create non-farm jobs for resettlers was cancelled because of the changed macro-economic situation and the high risks it carried in resettlement. The planned industrial resettlement program was replaced with a land-and-agriculture based alternative program. Second, as a result of the above change and the necessity for more resettlement sites, the host population increased from an estimated 300,000 to 545,000. Third, because of the up-dated project impact inventory survey in 1995 and the need that emerged in detailed technical design to move together those administrative villages located on the inundation line, the affected population under the project was increased from 154,000 to 172,487. Fourth, the Reservoir Phase III Resettlement Program planned for implementation during 2010-2011 was advanced to start in 2002.

3.5 Quality at Entry:

3.5.1 The Quality at Entry of the project is considered to have been satisfactory. The project was one of the first large-scale resettlement projects in which the Bank had been involved throughout the whole design stage. The project was consistent with the government's priorities and reflected the government's commitment to meet international standards concerning resettlement, to take a long-term approach in remaining engaged after the physical resettlement activities were completed, and to restore and improve the living standards of affected people. The Bank's Operational Directive 4.30 on Involuntary Resettlement was used as the basis for the establishment of a set of seventeen specific resettlement criteria to be observed in the design and implementation of the project. The quality of the project design is considered to have been good. Most of the assumptions about external factors and project risks were reasonable; however, in a rapidly changing economic environment, those aspects of livelihood improvement that were based on county industrial job-creation were largely abandoned and income was generated from land based activities, commercial agriculture, village and household industries. The project was able to adapt to this changed set of circumstances.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective:

4.1.1 The achievement of the objectives under the project was generally satisfactory. The project has essentially completed the resettlement program. All resettlers, with the exception of a small number, have moved into new houses in their new villages, with complete infrastructure and public facilities. The living conditions and the environment have substantially improved. Replacement land has been allocated to the resettlers and various livelihood activities are under implementation. Independent assessment indicates that the majority of the resettlers have improved or restored their living standard.

- 4 - 4.1.2 Resettlement of 172,487 people. The project has completed its resettlement program with the exception of 1,500 people, less than 1 percent of the total, who have chosen to resettle themselves on their own. A total of 227 villages and 12 towns have been established, and 170,987 people in 51,969 households have moved into new houses. This exceeds the appraisal target 154,000 people. The new settlements are complete with infrastructure and public facilities, with improved access to markets, services, information and various non-farm job opportunities. The majority of the resettler villages moved as whole communities, so that social networks and kinship were maintained. The host population has also benefited from the improved infrastructure. There are 1,500 people who have not moved with their fellow villagers to the agreed and developed resettlement sites. They have changed their minds for various reasons, including changed preference, village internal conflicts and desire to stay close to the reservoir. While the project offices have been working with them to finalize the optimum alternatives many of these resettlers have chosen to take their compensation and moved out on their own to other sites. The government will continue to manage and track this group to ensure that they are properly resettled to the location of their choosing. The government is being requested to report annually for the next three years, ending in 2007 on the status of this management program.

4.1.3 Restoration and improvement of livelihoods. The project resettler population consists of four groups (rural farmers, urban residents, employees of enterprises and institutions, and the host population). The project objective was to reestablish the livelihoods of the affected population through designed investment measures, so that they will not only restore their pre-relocation living standard, but also share in the project benefits. Monitoring data indicate that the project has generally achieved its objective.

4.1.4 The project area includes twelve towns with a population of 9,519 people. They are mostly employees in township government and institutions or business people. The project impact on these people was limited only to their residences. All towns were relocated within their own jurisdiction, with improved infrastructure and public facilities. The urban households have completed and moved into new houses, generally larger in space and better in quality than their previous homes. Their living standards have improved.

4.1.5 The project affected 789 enterprises, most of them village or private workshops, which hired workers on a daily basis. These small operations have been compensated. There were a few medium-sized state owned enterprises with a total employment of 3,846. They have either restarted their operations or switched to new operations at new sites. All 3,846 long-term or regular employees have been reemployed in the same enterprises. Additionally, there are 2,332 resettler labors employed in the new enterprises as long-term workers.

4.1.6 The host population, which provided land for the resettlement program is of 545,024 people in 397 villages spread out over 13 counties in Henan and Shanxi Provinces. They were indirectly affected by losing part of their farm land for the project resettlement programs. Monitoring and supervision confirm that land compensation funds have been delivered to all host villages, village lands have all been redistributed to the affected households and the completed livelihood programs have enabled them to improve their livelihoods through on-farm investment, cropping pattern adjustment and non-farm ventures. The host population also benefited from the infrastructure and public facilities put in place under the project. In general, the living standard of the host population has improved.

4.1.7 The majority of the project-affected resettler population are farmers, accounting for 91 percent of the total. Their restoration of livelihood was considered in four parts: (i) housing conditions, (ii) infrastructure, (iii) access to public services, and (iv) income. The resettlers now enjoy significantly

- 5 - improved livelihoods in terms of housing conditions, infrastructure and access to public services. The resettlers are quite happy with housing conditions, which in most cases are spectacular for the rural areas and far superior to the cave dwellings in the pre-resettlement villages. Though the average housing area is very slightly smaller, the housing has improved in terms of structures, lighting, ventilation, water supply and sanitary conditions.

4.1.8 Monitoring and surveys also indicate a high level of satisfaction with infrastructure and access to public services. All 227 new villages are complete and functional with basic infrastructure such as water supply, power supply, drainage systems and village road, schools, medical services, township centers, telephone and broadcasting lines. Most of these basic facilities are constructed to a much higher standard than the pre-resettlement conditions. For example, a reticulated safe water supply is provided for each household; the electrical power network supplies each household; each household has a two-tank dry latrine or a flush toilet and excreta is composted and disposed of safely; and drainage out of the village is connected to a main drain or river system. Environmental conditions have improved significantly and the incidence of disease has been reduced to 5 percent compared to the pre-resettlement conditions. Significant investments have been made in school buildings and teaching facilities, and child care has improved. Vulnerable groups, especially the old and single women or widows, have been provided with old-age homes and other living facilities. The new resettlement sites have also provided them with better and convenient access to markets and non-farm employment opportunities. In conclusion, the project is highly successful in restoring and improving housing, infrastructure and public services for the resettlers.

4.1.9 The project implemented its land-and-agriculture based strategy for livelihood development, supplemented by non-farm employment. Land compensation has been delivered to all resettlers. Replacement land has been purchased and provided to all resettler villages as planned. Some 169 villages, about 75 percent of the total, have reached the designed standard per resettler for replacement land. In the villages where the area of replacement land has not reached the design standard, the villages have started alternative livelihood programs with their remaining land compensation funds. Monitoring and supervision reports indicate that the resettler villages have started extensive farm and off-farm livelihood programs and that around 70 percent of the affected population have improved or restored their income level; the remaining 30 percent have reached up to 80 percent of their previous income levels; full income restoration will take a few more years to achieve.

4.1.10 Several factors contributed to their slow recovery of incomes for this 30 percent of the population. First, the unfavorable macro-economic development in the rural sector in China since the mid-1990s caused farming income growth to slow down and even to fall. The designed land-based package was not able to produce the expected income. Instead, farmers have turned to side-line activities and non-farm sectors for employment opportunities. The project tried to adapt to this macro-economic change, but the gradual shift prolonged the income restoration period. Second, the project areas suffered successive droughts in the last decade and this has had a severe impact on farming and the restoration of the incomes of resettlers. Third, project-induced factors caused the base-line income as measured, to be unusually high and this made restoration even more difficult.

4.1.11 The government is committed to achieving the full restoration of livelihoods for this 30 percent of rural resettlers. The project has designed a post-resettlement support fund to address the outstanding issues. This fund has been established and funds were derived from hydropower revenues and a program developed. However, its operation was affected by insufficient funding because hydropower revenues were low because of a drought in the Yellow River. The Ministry of Water Resources (MWR) and the National Development and Reform Commission (NDRC) have resolved the funding issue, providing an amount of between 600-1,000 million yuan. The arrangement is being processed according to government

- 6 - administrative procedures and the government has been requested to notify the Bank when the funds have been transferred to the Fund account. The government has also agreed to maintain the project institutional arrangement to operate this fund. With this fund in full operation, full restoration of incomes is expected to be achieved in a few years.

4.2 Outputs by components:

4.2.1 Component A: Residential and infrastructure reconstruction for villages and towns (Cost: US$292.9 million estimate at appraisal; US$483.2 million actual) This component was planned to include: (a) the construction of new villages and replacement housing for rural resettlers; (b) the residential reconstruction for new towns; (c) the relocation of special institutions; and (d) the reconstruction of affected infrastructure. The outcome of this component is rated as highly satisfactory.

4.2.2 Residential reconstruction for villages. The project established 227 administrative villages with a total population of 155,139. All resettlers (except the remaining 1500) have moved into new houses. Monitoring data indicate that the housing conditions and physical living environment of the resettlers have substantially improved as a result of the project. All new villages are complete with basic infrastructure and public facilities, such as power, water supply, drainage and road, schools, clinics, telephone and broadcasting lines. They have improved access to public services, such as health and education, and better access to markets, services, information and non-farm job opportunities.

4.2.3 Residential reconstruction for towns. The project required the relocation of twelve towns with a total population of 17,212, of which 7,693 have agricultural status and 9,519 were urban residents. All of the affected towns were relocated to new sites nearby with the same administrative jurisdictions and functions. These new towns were complete with basic infrastructure and public facilities. All the old towns' populations moved to the new towns.

4.2.4 Relocation of special institutions. The project successfully completed its relocation programs for the affected special institutions. These included nursery and seed farms, management offices and stations, and a jail. They were provided with replacement sites and reestablished with compensation funds payment at reconstruction costs before actual inundation.

4.2.5 Infrastructure reconstruction. All replacement infrastructure sujected ot inundation was redesigned and reconstructed including roads, transmission lines, communication lines, broadcasting facilities and water supply works. All new residential areas are serviced with roads, electricity lines, telephones lines, broadcasting receiving facilities, water supply and drainage facilities.

4.2.6 Component B: Transfer of resettlers (Cost: US$7.3 million estimate at appraisal; US$9.5 million actual) With assistance and guidance from the Yellow River Reconnaissance Planning and Design Institute and the resettlement offices, the resettlers decided on the layouts of villages and the design and location within the resettlement areas. Residential plots were allocated in a transparent fashion in the villages. While village committees were responsible for village infrastructure construction, the resettler households were responsible for their own house construction. All transfer arrangements were made by county resettlement offices and information regarding transfer was provided to the resettlers before relocation. Physical relocation was organized by county resettlement offices with transport. Various allowances were provided for transport, including medical costs and compensation for missed working hours. The host governments, as well as farmers made various welcome arrangements for the resettlers. The transfer process was smooth and the output of the component is rated as satisfactory.

- 7 - Table 1: Movement of Rural Resettlers

Phase 1992- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2010- Total 1994 2011 Dam-site SAR 9944 9944 Actual 11652 11652 180m SAR 7230 7230 7230 21690 Actual 11549 22776 8100 42425 265m SAR 26122 26122 26122 26122 26124 130612 Actual 16347 45771 30658 18262 0 0 1676 112714 275m SAR 17924 17924 Actual 7650 7850 1700 17200 Total SAR 9944 7230 7230 7230 26122 26122 26122 26122 26124 17924 180170 Actual 11652 11549 22776 8100 16347 45771 30658 18262 7650 7939 3376 184080

4.2.7 Component C: Planning, design and institutional support (Cost: US$11.7 million estimate at appraisal; US$44.1 million actual) This component was designed to establish the project organizations and to provide training and institutional support. This component has played a critical role in the planning, design and implementation of the project. The output of the component is rated as having been highly satisfactory.

4.2.8 Project staffing and training. All planned resettlement offices were established at provincial, municipality, county and township level. These offices were provided with all necessary working facilities, equipment and vehicles. Training was provided to all resettlement officers in various forms including on-site training, overseas training, local and international study tours, training class and diploma study in universities. The training covered resettlement planning, financial management, procurement, livelihood development, and agricultural extension. Project staffing was as follows:

Table 2: Resettlement Staff

SAR ICR (Actual) Staff Henan Shanxi Total Henan Shanxi Others Total Province Province Province Province * In 1992 101 25 126 101 25 69 195 Initial phase 1993-94 339 65 404 339 65 138 542 Middle phase, 1995-2000 939 99 1038 1042 256 207 1505 Last phase, 2001 32 79 111 554 136 104 794 *MWRRO, YRCCRO, Design Institute, Monitoring and Evaluation Organization, etc.

4.2.9 Project management system. The Yellow River Water and Hydro Development Corporation Resettlement Office (YRWHDCRO) established a management system for the project's implementation. This system extends down to the provincial, municipal and county resettlement offices. It covers financial management, annual planning management, progress monitoring, reservoir clearance, procurement, disbursement, completion inspection and auditing. The YRWHDCRO also developed a set of management regulations and procedures covering annual planning and design, planning and design review procedures, progress reporting, disbursement, procurement, reservoir clearance, completion inspection, grievance redress, independent monitoring, resettlement supervision, environment and public health monitoring. Project staff at the YRWHDCRO, provincial, prefecture and county levels have all been assigned to follow through the implementation of these rules and regulations.

4.2.10 Planning and design. The Reconnaissance Planning and Design Institute (RPDI) is the design institute for the whole of the Xiaolangdi Multipurpose Project. The RPDI carried out the detailed designs jointly with the provincial, prefecture and county resettlement offices, including inventory updating,

- 8 - compensation rate evaluation, assessment of carrying capacity of different resettlement sites, feasibility of different resettlement alternatives, as well as the cost estimates. The RPDI has been in charge of the technical review and approval of all resettlement designs and their revisions. Its role continued through the implementation process. The effective functioning of the RPDI has ensured the quality and efficiency of the detailed planning and design process, and helped significantly with consensus building and coordination in the implementation process.

4.2.11 Independent monitoring. Independent monitoring of the resettlement implementation process is an important part of the project management system. As defined in the Credit Agreement, the North China Water Conservancy and Hydropower Institute was appointed in 1994 as the Independent Monitor to carry out socio- economic monitoring of the resettlement program. The independent monitoring was carried out in line with the "Social Economic Monitoring Guideline for Xiaolangdi Resettlement Project" and the "Implementation Plan of the Social Economic Monitoring of Xiaolangdi Resettlement Project" developed and agreed with the YRWHDCRO and the International Development Association (IDA). It covered various aspects of the resettlement program for both the resettlers and the host population, and provided both timely feed-back for resettlement management and a sound basis for final evaluation of the resettlement implementation.

4.2.12 Resettlement Supervision. Replicating the practice of a supervising engineer in civil works construction, the YRWHDCRO appointed the Resettlement Bureau of Yellow River Conservancy Commission as the Resettlement Supervisor for the project. The supervisor started working in June 1996 with the establishment of a supervising team and six supervising stations in the field. The supervision covered all aspects of the resettlement implementation including resettlement physical progress, fund allocation and use, construction quality and specifications, contract management and coordination. The supervision was carried out from the field stations through regular site visits, interviews and meetings as well as the review of progress reports.

4.2.13 International Environment and Resettlement Panel of Experts. The YRWHDCRO established this panel in 1994 to assist in the implementation of the resettlement and environmental aspects of the project. The panel consists of domestic and international experts and the panel's composition changed during different phases of the project when the perceived needs and advice had also changed. The panel has convened twelve times and produced twelve reports. In general, the panel played a useful role in the project management and provided good advice in its implementation and management.

4.2.14 Component D: Livelihood Development (Cost: US$257.1 million estimate at appraisal; US$295.7 million actual). This was the core component of the project. It was to re-establish the resettlers in their livelihoods (i.e., 50 percent in farming, 29 percent in industrial jobs, 11 percent state farm enterprise workers and 10 percent government employees). However, the expected shift in rural China to non-farming activities actually happened faster and consequently design changes in this component were made at the time of the Mid-Term Review (MTR). This component has been completed as designed. The output of this component is considered generally satisfactory.

4.2.15 Re-establishment of Livelihoods in Agriculture. This component comprised irrigation and dryland development and the re-establishment of side-line activities to achieve a 5-10 percent increase in per capita income for both the resettlers and host farming communities. The land replacement and development programs have been completed with the land compensation fund, including land developed in the Wenmengtan and Houhe Irrigation area. The project has purchased 197,468 mu (1 ha = 15 mu) of farm land for the resettlers with part of the compensation funds for their lost land. This includes 112,995 mu of irrigated land. On average, the project has achieved the target of average land holding per relocatee

- 9 - at 1.2 mu.

4.2.16 It should be noted that resettler household land-holding varies between relocating villages. Data also reveals that only 169 villages have reached the designed target of per capita farm land holding, about 75 percent of the total. Monitoring reports indicate that those villages which have not purchased sufficient land have invested the land compensation funds in on-farm irrigation facilities or alternative non-farm income-generation activities. These activities are extensive, including side-line activities, cash crops, small livestock, fishery, agro-processing, aquatic poultry and small industrial ventures. These activities helped farmers generate more share of the resettler income than expected.

Table 3: Farmland Allocation For Resettlers

Province/County Actual Land Per Capita (mu) Total Land allocation (mu) Total Of which irrigated land Total Of which irrigated land Reservoir Total 1.39 0.80 197468 112995 Henan Province 1.37 0.93 158995 108059 Jiyuan City 1.01 0.87 29281 25111 Menjing County 1.29 0.17 12056 1635 Xinan County 1.31 0.18 19437 2653 Yima City 339 339 Wenxian County 1.43 1.43 17715 17685 Menzhou City 1.47 1.45 45873 45301 Zhongmou County 1.36 1.29 2653 2513 Yuanyang County 1.1 1.07 4506 4395 Kaifeng County 2.63 2.63 7884 7884 Mianchi County 1.95 17911 Shanxian County 1.22 0.49 1340 543 Shanxi Province 1.48 0.19 38473 4936 Yuanqu County 1.44 0.20 34964 4936 Pinglu County 2.08 0 2724 0 Xiaxian County 1.8 0 785 0

4.2.17 Wenmengtan Scheme. This scheme was designed to create farm land for 42,000 resettlers through the construction of dykes and a land reclamation and improvement program. To reclaim the area on the flood plain of the Yellow River, 118 spur dikes and 52.98 km of flood control embankment were completed. The warping and reclamation yielded about 200,000 mu of land of which 62,000 mu was farm land. The reclaimed land is protected from floods through the embankments. The reclaimed area had a system of tube-wells for irrigation and drainage. The developed land was allocated to the resettlers. This scheme was successfully completed and its outputs are rated as satisfactory.

4.2.18 Houhe Reservoir Scheme. The scheme included completion of the Houhe Dam and irrigation system to irrigate an area of 75,000 mu of land. The dam is a 75 m high concrete gravity-type dam with a central spillway and a lateral outflow tunnel which connects to the main canal of the irrigation scheme. The irrigation scheme consists of a 58 km main canal, twelve branch canals (191 km) and irrigation of 75,000 mu of farmland, of which 12,300 mu is allocated to the resettlers, 50,000 mu is allocated to the impacted host villages and 12,700 mu is for host people out of the project area. The entire component took eight years to complete, longer than planned, but the final completed works are excellent. As a result of an inter-agency coordination and financing dispute, the completion of the irrigation system was significantly delayed and this has affected the farmers' livelihood development activities.

- 10 - 4.2.19 Although this component is completed as designed, income restoration will take longer than expected for the 30 percent of rural resettlers. The project implemented its land-and-agriculture based strategy for income generation, supplemented by non-farm employment. This included payment of a compensation fund and the provision of replacement land. The other factor that affected income growth was the desire for villagers to invest a significant portion of their livelihood compensation to high quality sound infrastructure like schools, clinics, and public facilities. Monitoring and supervision reports indicate that the resettler villages have started extensive farm and off-farm livelihood development programs. Monitoring data also reveal that around 75 percent of the affected population have improved or restored their income level and the rest have reached up to 80 percent of their previous income level. Because of the government commitment through the post-resettlement support fund, it is expected that these people will recover their previous levels of income in the next few years.

4.2.20 Industrial and Side-line Development. It was planned to move about 21,070 farmers into the non-farm sector and 20,528 of them were expected to be provided with new jobs through the establishment of 84 county and township enterprises. During implementation the government reassessed the feasibility and risks of this resettlement component and decided to scale down the county industrial resettlement program. Adjustment was made during the MTR to replace the industrial component with a land-and-agriculture based program and sideline and village industry development. Some of the planned investments were implemented and some villages also made village non-farm investment with the land compensation fund. These enterprises are estimated to have provided 2,332 jobs for the resettlers.

4.2.21 Re-establishment of Factories, Mines and Other Enterprises. This included the moving and reconstruction of existing manufacturing and mining operations. The inundation affected 789 enterprises including thirteen county enterprises, 105 township enterprises, 446 village enterprises and 225 private enterprises, of which 547 were engaged in mining and the rest were in brick-making, agro-processing and small manufacturing. All village and private enterprises were small work-shops with only temporary employees. The project completed compensation payments for all. Most of the small village and private operations have taken up their re-establishment on their own with the cash compensation. The project offices successfully implemented the relocation and reconstruction of the few big manufacturing and mining enterprises which have either restarted their operations or have switched to new operations. All 3,846 long-term or regular employees have been re-employed in the same enterprises. Additionally, there are 2,332 resettler laborers employed in the new enterprises as long-term contract workers.

4.2.22 Activity 1: Social Adjustment. This activity was to integrate all social adjustment issues into the planning and design of the different phases of the resettlement program. These relate to farming support services, training and assistance in non-farm employment, consideration of host concerns, transfer arrangements, interaction with the host villages, essential services in the resettlement areas, and consultation with and assistance to women. These considerations and programs were not only incorporated into the plan and design of different phases of the resettlement but were also implemented with care during the actual resettlement and rehabilitation process. Tremendous efforts have been devoted to ensuring that the resettled groups and the host population are smoothly and well integrated socially, economically and culturally. This output of this activity is rated as satisfactory.

4.2.23 Activity 2: Consultation, Participation and Grievance Redress. The project followed a highly consultative and participatory process in its planning, design and implementation. The project implemented its information disclosure strategy. All media channels were mobilized to disseminate project information for consultation and participation purpose. Information disseminated related to the project, resettlement policies, compensation rates and measures, household inventory, resettlement alternatives and site designs,

- 11 - and the grievance channel. While the government and the design institutes played the leading role, the resettler communities were the actual driving force in the project. Resettlers participated in the inventory and census, planning and design as well as the implementation of their respective resettlement sites and livelihood development programs. The planned grievance redress mechanism was established with assigned staff and an operational regulation. The project followed the grievance procedures. The project management also maintained a continuous presence in the field to facilitate early identification and fast resolution of grievances. In general, this system functioned effectively to facilitate smooth implementation. The project practices in this regard are exemplary in reservoir resettlement.

4.2.24 Activity 3: Gender and Vulnerable Groups. Women, children and vulnerable groups account for the majority of the resettlers. Women participated in the entire process of project planning and implementation. Women also play an important and active role in income-generation activities. It is estimated that about 34,600 women participated in various activities of skill training. The project had 466 women staff at various levels of the project offices and they participated actively in the project management. There were 29,239 children (ages 7-16) relocated, about 17 percent of the total. All resettlement villages have improved access to education and health facilities, with much improved study environments and medical treatment. School attendance has reached 100 percent with a few exceptions. Vulnerable groups refer to the old, disabled, households with people suffering from chronic diseases, households without labor, the widowed and the extreme poor. The project identified 1,568 such households, containing about 3 percent of the total resettler population. The project made special budget provisions to help with their resettlement. All of them have received their resettlement entitlements and have all moved into new houses with assistance under the project. Particular care was taken of the old and widowed people. Sixty-two nursing homes have been established in the resettlement areas for the old and widowed people. .

4.2.25 Activity 4: Environmental Management (Cost: US$3.5 million estimate at appraisal, US$8.4 million actual) This activity was designed to address the environmental impacts associated with the resettlement program through the implementation of the agreed Environment Management Plan (EMP). The government established an environment management system which has been effective in the EMP implementation. Under the EMP, the project completed: (a) the provision and operation of the environmental and public health facilities in all new resettlement villages; (b) the management of the environmental impacts of established enterprises; (c) the management of the environmental impacts of resettlement activities in the host areas; (d) the monitoring of the EMP implementation, water quality in resettlement villages and public health of both resettlers and host population; and (e) the management of reservoir clearance. In 2001, a Bank environmental thematic supervision mission rated the project as being very satisfactory.

4.2.26 Activity 5: Cultural Relics Protection. This activity was to complete the phased planning of cultural relics protection measures and to implement the approved action plans. The government mobilized national experts and established a multi-level institutional structure to implement this activity. The project completed: (a) the planning and design of protection measures for different phases of resettlement; (b) field surveys that identified 180 sites of cultural significance; (c) drill-exploration of 3.26 million m² of the area and excavation of 327,000 m²; and (d) protective and preservation measures for identified cultural relics. They included complete relocation, partial relocation, modeling and treatment of the unearthed cultural relics as well as documentation and follow-up study of the underground findings. The total cost of this component was 35.26 million yuan. This output of this activity is rated as having been satisfactory.

- 12 - 4.3 Net Present Value/Economic rate of return:

4.3.1 This free-standing resettlement project included an economic development component to ensure restoration and improvement of resettler livelihoods. Of the total investments of US$840 million, 35 percent (US$295 million) were for infrastructure development, land acquisition for productive purposes and commercialization projects. Of this livelihood development, a significant portion of the investments (47 percent, US$140.9 million) was for infrastructure and 50 percent (US$146.4 million) was for land acquisition and for special side-line activities (see Annex 3, Table 2). Infrastructure investments have already boosted incomes and enhanced side-line activities such as animal husbandry and, in some cases, aquaculture development. Most of these investments were for land development, irrigation and soil improvement. The economic rates of return (ERR) from these investments are between 12.7 and 18.8 percent. These returns are quite robust and indicate that the projects are economically sustainable and will generate farm incomes which will restore their livelihoods.

4.4 Financial rate of return:

4.4.1 The financial rates of return for irrigation are not applicable in this project. Financial assessments has been reviewed for livelihood reestablishment and these are presented in Annex 3.

4.5 Institutional development impact:

4.5.1 The project had significant institutional impacts in the water sector regarding reservoir resettlement in China. These impacts can be summarized as follows:

(a) The institutional structure involved 1,505 staff at ministry, provincial, municipal, county and township levels during the peak time. They received training on various subjects related to project management and resettlement implementation. Many of the staff have made local or international study trips. Frequent visits and interactions with international experts have also given them greater exposure to international best practice and standards.

(b) As part of the management system, the government developed various rules, regulations and guidelines to manage the project. They were related to financial management and accounting, resettlement planning and design, information disclosure and grievance redress, environment management, livelihood development, cultural relics protection, reservoir clearance, resettlement completion inspection, acceptance and hand-over to local government. These contributed to local capacity build-up.

(c) This project has piloted several initiatives in reservoir resettlement planning and implementation. They include mechanisms of independent resettlement monitoring and resettlement supervision, engagement of the environmental supervising engineer and village environmental officers as well as independent design institutes during resettlement implementation. These proved to have played important roles in the successful project implementation and are of much value in reservoir resettlement planning and implementation.

- 13 - 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency:

5.1.1 In the mid-1990s, the macro-economic situation worsened for rural county industries and this triggered a re-evaluation of the feasibility of the planned industrial resettlement component. Considering the high market risks, the proposed new industrial investments were cancelled and the industrial resettlement component was replaced with a land-and-agriculture based program and sideline development (commercial agriculture, hot houses and livestock development, etc.)

5.1.2 In the past decade, farmers experienced challenges as the share of agricultural output fell, causing reduced growth or even a fall of farm income and the rural resettlers, like most farmers in China turned their attention to side-lines and non-farm opportunities which became an important source of household income.

5.1.3 The past decade also saw successive natural disasters in the project areas, including drought and flood, which reduced farm incomes and further slowed down income recovery for some project resettlers.

5.2 Factors generally subject to government control:

5.2.1 Strong government commitment. This was vital to the completion of the project and to the sustainable development of the resettler and host communities. This was demonstrated through: (a) providing the required financial resources for the project completion, particularly when the cost increased substantially; (b) mobilizing all other relevant government agencies in the project areas to join in the project implementation efforts; and (c) instituting an extensive monitoring and supervision effort.

5.2.2 Long review process of the revised budget. The government up-dated the project inventory of impacts during 1995-1996. This up-date showed a significant increase in project impacts that contributed to a big increase in project costs. The up-dated inventory and the revised project cost went through several reviews within the government, which took a long time and the project funds were disbursed on an advance basis to ensure smooth project implementation. Though the project was not delayed by funding shortages, the slow approval process caused confusion in budget allocation, delayed disclosure of the revised budget and created difficulties for inspection at completion.

5.2.3 Inter-agency coordination. Inter-agency coordination was generally good with a few exceptions where lack of coordination and agreement significantly delayed completion of two dated covenants. Disagreement over funding, among other factors, delayed the completion of the Houhe Irrigation System by five years. The project followed the government's policy and established a post-relocation support fund. Though the fund had been established as legally covenanted, its effective operation ran into technical difficulties that could have been resolved earlier according to the policy.

- 14 - 5.2.4 Village self-administration and village politics. The project implementation period coincided with the government's push for village self-administration. This democratic process promoted transparency and the participation of the farmers in village decision-making, but in some villages this also led to unilateral decisions by village committees not to adhere to construction design standards in village development and to a relaxation of government supervision responsibility. This resulted in over-construction of village infrastructure in some villages and non-productive investment from the land compensation fund that depleted village resources for sustainable livelihood development. The last decade also saw a re-emergence of traditional family lineage influences that played an increasingly significant role in village decision-making. Family rivalry in village politics increased difficulties and complexities in building consensus in the resettlement planning process and contributed to some of the outstanding issues.

5.3 Factors generally subject to implementing agency control:

5.3.1 Strong commitment and action within the implementing agencies enabled the mobilization of human resources and the development and implementation of a comprehensive management system.

5.4 Costs and financing:

5.4.1 The project costs experienced significant increases during implementation. The total cost was estimated at US$571 million at appraisal. With the inventory up-date during 1995-1996, the project cost was revised and up-dated to US$840 million during the MTR. The cost increase was mainly the result of: (a) the increase in the number of resettlers; (b) this in turn generated an increase in the quanties of physical investment needed (eg more housing, streets, drainage ; electricity); and (c) the increase of market prices and compensation rates. The project census and inventory was done by the inundation line at the feasibility study stage. However, detailed design revealed the need to resettle some additional administrative villages on the inundation line. This is the main reason the number of resettlers in the project increased. Rapid economic development, even after the order to stop construction within the reservoir area, significantly increased the quantities of infrastructure andcompensation, particularly structures and for village enterprises. At the strong request of local governments, the central government agreed to up-date the project design on the basis of the up-dated impact inventory, the latest market prices and the increased compensation rates. Project financing arrangements remained the same as appraised. IDA financing remained at 79.9 million SDR, while the Central Government of China provided the rest of the project financing.

Table 4: Component Cost Summary (US$ million)

Component Appraisal Actual Cost Percentage of Estimate Appraisal Resettlement Planning and Design 11.7 44.1 376.1 Residential and Infrastructure Construction 292.9 483.2 165.0 Transfer of Relocatees 7.3 9.5 130.1 Livelihood Development 257.1 295.7 115.0 Environmental Management 3.5 8.4 240.0 Total Baseline & Contingency Costs 571.2 840.9 147.2 Total Project Costs 571.2 840.9 147.2

- 15 - 6. Sustainability 6.1 Rationale for sustainability rating:

6.1.1 The project is highly likely to be sustainable considering the achievements under each of the components and activities, and sustainability is further enhanced by the commitment from the government for post-relocation support to the resettlers. This is also confirmed by early phases of the resettlement program. A number of factors contributes to the sustainability of the project's achievements:

(a) The resettlement planning and design followed a development approach. This is reflected in: (a) the objective of not only just restoring income, but improving the overall living standard of the affected population; (b) detailed development measures; and (c) adequate financing of the resettlement program.

(b) The Xiaolangdi Multi-purpose Project enjoyed high public endorsement. The resettlement program has received public support from all sectors, including the host governments and population.

(c) Xiaolangdi resettlement followed a consultative and participatory planning, design and implementation process. This process ensured that the resettlement program was built on the full understanding of the social, cultural and economic characteristics of the affected population, who participated actively in this program.

(d) The project has delivered all the elements for future sustainable development, including replacement houses, basic infrastructure, public facilities and farm land.

(e) The new resettler villages are fully functional in terms of the elected village governments and schools, village clinics, village offices are all operating. Power and water supply and sanitation and environmental facilities (such as rubbish collection and disposal and drainage out of the villages) are operational. The incidence of infectious diseases in the new resettler villages is only 5 percent that experienced in the pre-resettlement sites, because of improved environmental conditions.

(f) All vulnerable groups of people (including the old, widowed, single women, and children) have been catered for through special targeted government and community efforts under the project.

(g) The resettlement villages are well integrated into the host population both socially and economically. The host county and township governments actually implemented the resettlement program. Livelihood development for the resettlers was carried out under the general guidance of local social and economic development plans and was well incorporated into the local economies.

(h) Resettlement locations are generally more favorable for future development. This was one of the planning principles. The majority of the resettlement villages are at convenient locations, closer to towns. The new locations provide better access to market information and more opportunities for non-farm employment.

(i) Although almost all of the objectives have been achieved, the government is committed to the full achievement of the project objectives, especially on income restoration for the small portion, who have not achieved their income target. This commitment is reflected in the extensive support provided to the resettlers and the agreed post-relocation livelihood support program.

- 16 - 6.2 Transition arrangement to regular operations:

6.2.1 The resettlement program was implemented by phases. Each phase of the program was reviewed at its completion. The last one was carried out according to a guideline issued for this project by the Ministry of Water Resources at the end of 2003. There will be one final state inspection by the NDRC in mid-2004. The project has essentially been handed over to the local governments, although formal hand-over will take place after the final state inspection. The host governments implemented the entire resettlement program. They had ownership of the resettlement program from the beginning, and extended social and economic services to the resettlers. Transfer arrangements have virtually been seamless.

7. Bank and Borrower Performance Bank 7.1 Lending:

7.1.1 The Bank's performance from project preparation to implementation was satisfactory. During the preparation stage, the Bank assisted with local and international expertise in reviewing the project designs, resettlement action plans, environmental impact assessment and management plans, and in establishing the implementation and monitoring system. This assistance proved important in confirming the project design and resettlement strategy.

7.2 Supervision:

7.2.1 The Bank regularly supervised the project and attached high priority to its implementation. The Bank carried out twenty-four supervision missions (averaging two per year) to review project implementation. Bank supervision proved to be of critical value in adjusting and modifying the resettlement strategy during project implementation, identifying key issues to be addressed and working with relevant offices and ministries to find solutions to resolve these issues, particularly in bringing about quicker resolution of inter-agency disputes and policy decisions. Overall, Bank supervision brought significant added value to the project implementing agencies to ensure materialization of the project target. Regular and frequent Bank supervision affected project achievement positively.

7.3 Overall Bank performance:

7.3.1 The Bank's overall performance is considered to have been satisfactory. It was able to assist the MWR and the YRWHDCRO in project preparation and to advise and guide the implementing agencies to overcome critical bottlenecks. These efforts have contributed significantly to the generally successful completion of the project.

Borrower 7.4 Preparation:

7.4.1 The government's performance during preparation was satisfactory. The MWR and the YRWHDC worked jointly with the provincial and local governments and developed a coordinated resettlement strategy and action plan. Initial surveys started as early as 1986 and were up-dated in 1992. However, given considerable macro-economic developments in the period 1992-1994, the YRWHDC undertook a resurvey in 1994-1995 and confirmed a big increase in impacts and project costs. The project design was up-dated accordingly in the MTR. All parties, from the MWR to villages, participated in the detailed designs and implementation plans. The government maintained a flexible approach for the phased

- 17 - plans and designs to accommodate new requests and necessary changes.

7.5 Government implementation performance:

7.5.1 The overall performance of the government in implementation was good. All project offices were established as designed and were staffed adequately. A management system was developed and implemented for supervision and monitoring purposes. Xiaolangdi Resettlement Project went through a complicated, robust and highly participatory implementation process. It had actual implementation, phased planning and design for different phases of the resettlement program all going on simultaneously. The YRWHDCRO and provincial resettlement offices successfully managed this process and completed the resettlement program.

7.6 Implementing Agency:

7.6.1 The YRWHDC under the MWR provided sufficient funding to ensure smooth implementation. The YRWHDC appointed the RPDI as the designer at central government level to review and approve all major changes and revisions to the resettlement design. This proved an important quality and cost control measure in this participatory process. The YRWHDC appointed the YRCCRO as the supervision engineer to supervise the construction undertaken by the counties. This proved particularly important in ensuring the quality of works and land development for each resettlement site. In addition, the YRWHDC appointed the North China Water Conservancy and Hydropower Institute as the Independent Monitor and the RPDI Environmental Department to supervise the environmental aspects, especially the public health of each resettlement site during the implementation process. These additional supervision mechanisms proved critical in the project management system.

7.7 Overall Borrower performance:

7.7.1 Overall, the Borrower's performance was satisfactory. The government's commitment to the success of the project was exceptionally good. The Borrower was dynamic enough to make major changes to the project scope after the resurvey of the project area and provided the required financing. The MWR had coordination meetings at each critical stage of the project and ensured that all issues were resolved. The project essentially suffered no delays.

8. Lessons Learned

8.1 This project is the first free-standing resettlement project the Bank has ever financed. This project has accumulated many successful experiences, and the most important lessons learned are the following:

(a) Resettlement with development is instrumental to the success and sustainability of a resettlement program. With this approach, the project aimed not only to relocate people, but also to ensure an improved and sustainable livelihood for the affected population This is reflected in the project objective, design principles, and whole implementation process, as well as the government's commitment to post-relocation support to the resettlers.

(b) Strong government commitment is critical to the successful implementation of the project. The government established and staffed an extensive institutional structure, provided timely and sufficient funding for the resettlement program and continued a policy on post-relocation support activities. These ensured the smooth implementation and sustainable development for the resettler and host populations.

- 18 - (c) Adequate institutional capacity and effective management systems are conditions for success. There was much knowledge and rich experience before the project in reservoir resettlement planning with the MWR, Henan and Shanxi provinces, the YRCCRO and the RPDI. These proved an asset for the project. Under the project, the government established a multilevel organization for the resettlement implementation, with a total 1,505 staff, and extensive training was provided to support them.

(d) Independent supervision and monitoring mechanism proved to be important in reservoir resettlement management. The project included an independent monitor, a resettlement supervisor, a public health monitor, an environment supervising engineer and an international panel of experts. These strengthened the implementation capacity and improved the efficiency and effectiveness of the project management system.

(e) It is necessary and important to maintain the technical service of the project design institute. The RPDI continued its involvement in resettlement implementation as technical advisor and reviewer of resettlement plans and designs. It provided important services in revising and optimizing the project design. This proved to be critically necessary, particularly with the participatory planning and implementation approach.

(f) Reservoir resettlement has to follow a consultative and participatory process for its design and implementation. This process was adopted in the project and enabled the full participation of the resettler communities so that their concerns, requests and needs were integrated into the resettlement design.

(g) Timely funding is key in successful implementation. The project never experienced funding shortages and this ensured its timely and smooth implementation. However, most of the funds were disbursed on an advanced basis due to the late approval of the revised budget. This created confusion and difficulties in implementation.

(h) The implementation of the project proved that smooth and successful implementation require close and good coordination between various local governments and government agencies. This coordination was mostly good in the project, with a few exceptions where resettlement was substantially delayed.

(i) Active and early participation of the host population is important and necessary. In the project, the host governments not only participated in the resettlement planning and design process, but also implemented the program itself. This helped create a smooth transition of the resettler programs into the normal operations and promote the social and economic integration of the resettlers into the host population.

(j) Livelihood development should always be the core of a resettlement program. Given the scale of resettlement, much focus was devoted to the physical construction and relocation component of the resettlement program. This led to a late start of the livelihood development programs and the slow livelihood recovery. It is important that livelihood development be given equal attention at the start of the project implementation.

- 19 - 9. Partner Comments (a) Borrower/implementing agency:

Project Background

Xiaolangdi Resettlement Program was phased into four stages for implementation, i.e., Dam-site, Reservoir Phase I, II and III. The World Bank financed Xiaolangdi Resettlement Project covered only Reservoir Phase I and II. According to the inventory update in 1994, the Xiaolangdi Resettlement Project affected 29 townships in 8 counties/cities of Jiyuan, Mengjin and Xinan in Luoyang Municipality, Mianchi of Sanmengxia Municipality, Yuanqu, Xiaxian and Pinglu of Yuancheng Municipality. Twelve towns, 43 institutions above township government level, 182 administrative villages, 789 manufacturing and mining enterprises were required to be relocated. The project inundated 7.25 million square meters of housing, 381,870 mu of land (including 181,709 mu of irrigated land), 12 mini hydro-stations, 658 km of canals, 688 km of roads, 548 km of communication lines and 109 cultural relics sites. The total re-settler population was 172,487.

The resettlement program affected a host population of 545,000 in 397 villages in 59 townships in Yima, Mengzhou, Wenxian, Yuanyang, Zhongmou and Kaifeng counties. The project also completed the Wenmengtan river training and land development program, the Houhe Dam and the irrigation area development program for the project resettlement.

The preliminary design of the resettlement program was completed during 1986-1991. During 1997-1998, the Ministry of Water Resources and the State Planning Commission reviewed and approved the technical design and budget of the resettlement program. The total project cost was 8.03 billion Chinese yuan, including US$110 million of IDA credit.

Xiaolangdi Resettlement Project followed a management model based on “leadership of MWR, management by the project owner, provinces contracted for implementation and county as the basic unit for implementation”. The Ministry of Water Resources was responsible for the overall coordination of the Xiaolangdi Resettlement Project. The YRWHDC established a resettlement bureau to be responsible for the project management. Henan, Shanxi Provinces, all project counties and cities also established resettlement offices to be responsible for their part of the resettlement work under their respective governments. The Yellow River Reconnaissance, Planning and Design Company (the former RPDI), the Yellow River Engineering Consulting and Supervision Company (the former YRCCRO), and the Henan China Water Consulting Firm were contracted as the designer, supervisor and independent monitor of the Xiaolangdi Resettlement Project. As requested by the World Bank, an international environment and resettlement panel of experts was established to provide consultancy to the project.

Project Implementation

According to the dam construction and the designed reservoir operation mode, dam-site resettlement was completed during 1991-1994. Reservoir Phase I resettlement started in 1994 and was completed in June 1997. Reservoir Phase II resettlement started in 1998 and was completed by June 2001. Reservoir Phase III resettlement started in 2002 and was completed end of 2003.

According to the preliminary completion review, the project has moved 198,000 people, established 247 resettlement sites, built 6.25 million square meters of housing for the re-settlers, allocated 204,000 mu of

- 20 - farm land; relocated 11 towns, completed the development of designed infrastructure (such as roads, power supply, communication lines, broadcasting lines etc.), completed relocation of enterprises, reservoir clearance, treatment of cultural relics and filing management according to their plans and relevant regulations.

The project has put much emphasis on the livelihood development of the re-settlers. The project has played an active role in guiding and supporting re-settlers in the land development, adjusting production patterns, promoting planting industry, animal husbandry and side-line development. The project also promoted third and tertiary industries, such service industries and organized labor export. These assistance have helped re-settlers broaden their income generating opportunities.

Residential and infrastructure development has been completed in the relocated villages and towns. Construction standards are substantially higher than before and have met the needs of the re-settlers. The project has completed compensation payment for the enterprises and institutions. Part of the enterprises were relocated, part combined and part cancelled. All the non-farm employees have been properly resettled.

Project Implementation Evaluation.

We have reviewed carefully the Implementation Completion Report prepared by the World Bank. We concur with its content and basic conclusions. At the same time, in January 2004, the MWR and the two provincial governments conducted the preliminary national evaluation and acceptance for the implementation completion of the project. The evaluation concludes that the Xiaolangdi Resettlement Project completed all planned tasks and the overall quality is good. The project environmental protection work also passed the evaluation of the State Environmental Protection Agency. Main conclusions of the evaluation are as follows:

· Following a management model based on “leadership of MWR, management of project owner, contracts with provinces for implementation and county as the basis for implementation”, Xiaolangdi Resettlement Project adopted a development approach for resettlement with the basic principle of “putting people first” and implemented a scientific implementation system. The project paid much attention to the up-front planning and design work, reinforced the management function of the YRWHDCRO, strengthened the contracting and responsibility system of local governments, established independent monitoring and supervision mechanisms and placed much emphasis on planning and financial management. In this way, the resettlement program followed the same management approach for engineering works. Through strengthening the preparatory work, the resettlement progress met the need for the dam construction and its effective functioning. Resettlement work achieved good results. Towns and infrastructure were rehabilitated and improved. There was good control over the project investment. Re-settlers are generally happy, and good and harmonious social orders have materialized in the resettlement areas. All participating parties tried to pilot new practice in the resettlement work and have accumulated rich experiences in resettlement, particularly in applying international management practices. These are of good value to resettlement work in other engineering projects in China.

· The re-settlers' living conditions have achieved obvious improvement. Rural re-settlers have completed relocation. All resettlement sites have been established, with residential housing and infrastructure completed. Farm land has been generally delivered to the re-settlers according to the quantity and quality designed. Productive measures are already in place and livelihood development has achieved

- 21 - good preliminary result with positive prospect for future development. All household compensation funds have been paid and nearly all compensation funds for village assets have also been delivered to the villages in an open and transparent fashion. There is also a clear policy for post-resettlement support. The re-settlers have been properly resettled and most of them are satisfied with the resettlement status. Good and harmonious social orders have been achieved.

· The relocation of towns, above-township institutions, reconstruction of special schemes in the reservoir and host areas and the treatment of manufacturing and mining enterprises were carried out according to their plans and designs formulated on the basis of government procedures for capital construction.. They have restored or exceeded their previous functions. All have been reviewed for completion and handed over to their responsible agencies.

· Both provincial resettlement offices have organized their respective municipal and county resettlement offices and carried out reservoir clearances according to relevant technical guidelines for reservoir clearance. They have completed reservoir clearances for EL 180 m, EL 180-215 m, EL 215-234 m, EL 235-265 m, EL 265-275 m. All these clearances passed through their completion reviews and ensured the normal operation of the reservoir.

· There was a sound financial management system for resettlement funds. Financial disbursements were basically conducted according to the stipulated procedures and they were subject to an internal and external monitoring. Fund allocations were normally timely and managed according to the established rules.

· Wenmengtan Scheme started in October 1993 and all major civil works were completed at the end of 2000. During 1995-2000, the warping and land improvement programs were completed by districts. Each district was reviewed at completion for compliance with the design standards and handed over to local governments according relevant regulations. This satisfied the need for resettlement. The entire program passed the MWR completion review in December 2003. The Houhe Dam and Irrigation Scheme started construction in October 1996 and was completed in June 2003. The YRWHDC and the Water Conservancy Department of Shanxi Province organized the completion review and then handed over the scheme to Houhe Reservoir Management Bureau of Yuncheng Municipality. Re-settlers have benefited from this scheme.

· Cultural relics treatment was completed according the plan approved by the state. The authorized agency issued the permit for impounding.

· There was a sound system for file management, with appropriate filing measures and management procedures. Project files were representative of the resettlement work at different phases. File folders were well organized, managed and properly maintained.

· The project attached great importance to environmental protection work. There was a comprehensive environmental management system. The project, for the first time in China, introduced the environment supervision mechanism and village environment officers. The project also provided training to environmental officers at various levels. The project also promoted the use of two-pit toilets in resettlement villages. The project paid much attention to public health and environment monitoring. These measures have effectively prevented the outbreak of epidemic diseases.

- 22 - Evaluation of World Bank Performance

After the appraisal of the Xiaolangdi Multi-purpose Project, the World Bank appraised the Xiaolangdi Resettlement Project in 1993 and signed the Credit Agreement for Xiaolangdi Resettlement Project in June 1994. Since then, the World Bank supervised the project implementation twice a year.

· Project identification. The World Bank adhered strictly to its policy requirements in project identification and listened to the government for its specific technical opinions. The Bank provided necessary support in the project preparation and studied together with their government counterparts to establish the project objective, determine the project scope, credit amount, project cost, disbursement ratio and various implementation measures. World Bank experts have made many field visits to the project areas and assisted in the project preparation.

· Project preparation and appraisal. In order to prepare the project smoothly, the World Bank sent many missions to support the government in the project feasibility study and provided assistance and training to the government technical staff. These helped the government's timely completion of the project preparation and feasibility study. The World Bank appraised the project in 1993. They studied the project planning content, technical assistance, organization, management model, government commitment, cost estimate, benefit analysis, etc, and completed the project staff appraisal report. The World Bank collaborated closely with the government counter-parts during the project preparation and ensured the smooth completion of the pre-appraisal and appraisal of the project.

· Project supervision. Since the start of project implementation in 1994 and until 2004, the World Bank sent 17 missions and supervised the project's implementation closely. The World Bank discussed the identified issues with the Chinese counter-parts and provide sound recommendations to address them. The World Bank staff have been particularly keen on issues directly related to re-settlers’ rights and entitlements. The Bank missions conducted their investigation and supervision through field visits to project cities, counties and villages. Their hard-working and thorough attitude has left deep impressions on their Chinese counterparts. They have contributed to the resolution of some major issues such as the land quality issue in Wenmengtan and the land leveling issue in Houhe Irrigation Areas. The World Bank also assisted the government to hold various training workshops on resettlement and environment management. These have helped with the improvement of our management and technical staff. Direct support from the World Bank is one of the bases for the smooth implementation of the Xiaolangdi Resettlement Project.

Overall Evaluation of World Bank Performance

Since the involvement of the World Bank in the Xiaolangdi Resettlement Project, there were some advanced concepts and approaches introduced and reflected in the implementation of the project. There were big improvements in the quality of resettlement implementation and management. These are reflected in the following: l Thorough and in-depth preparation work, participation of re-settlers, the concept of environmental carrying-capacity and selection of alternative options laid a solid basis for the preparation work of the project. l Assistance in establishing a complete and comprehensive management system strengthened the management function of the project owner, supervision mechanism of the independent monitor and

- 23 - resettlement supervisor, and ensured the smooth implementation of the project. l Tracking the resolution of major issues in implementation ensured the re-settlers’ interests are protected. l Paying much attention to environment protection work provided a solid basis for sustainable development in the resettlement areas. l Emphasizing the social adjustment of the re-settlers ensured the protection of re-settlers’ interests and materialization of the concept of “putting people first:". l More emphasis on the training for re-settlers helped with the faster adaptation to the local productive and living environment and shortened the transitional period.

In general, the World Bank's participation in the Xiaolangdi Resettlement Project sped up the materialization of the project objective, trained a large group of resettlement officers and promoted the integration of Chinese resettlement work with international practice. The World Bank participation is an important factor in the success of the Xiaolangdi Resettlement Project.

(b) Cofinanciers:

There were no co-financier involved in the project.

(c) Other partners (NGOs/private sector):

There were no other partners involved in the project.

10. Additional Information

- 24 - Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome/Impact Indicators

1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Planning and design completion: 1. Below 180 m were completed 1. All designs have been (1) Below 180 m by July 1, by July 1, 1996. completed for all phases of the 1996; project. 2. Designs were to be completed (2) 180-265 m by December 1, by December 1998. 1997; and 3. Designs were to be completed (3) Above 265 m by December by December 2000. 1, 1998. Resettlement housing Resettlement housing A total of 36609 units of completion for: completion: housing were completed by Dec 2000. All houses were completed (1) First 6,600 people by June Phase I completion of 11,695 in advance of the required dates. 1, 1994; units by June 1997 ; total A total of 46,310 resettlers resettlers moved 46,310 (2) 21,000 people by December moved in 1996 and 1997. In 1, 1996; Phase II completion of 25914 phase II a total of 126,897 units of housing by Dec 2000; resettlers were moved by the end (3) 31,600 people by December total resettlers moved in phase II of Dec 2000. Most people were 1, 1997; is 126,897 moved in advance of dates (4) 32,100 people by September required and a total all housing 1, 1998; was completed. (5) 33,600 people by September 1, 1999; (6) 34,200 people by September 1, 2000. Land Allocation for Farming for:

1. Phase I be completed by Phase I farm land transferred to Phase I farmland was all June 1997; farmers by June 1997 should be transferred in Dec 1997 37,000 mu 2. Phase II land allocation be Phase II farmland transferred to Phase II farmland was all fully completed by Dec farmers should be 143,000 mu. transferred to farmers by Dec 2000. By Dec 2002 2002 (1) Completion of Wenmengtan River Training be completed by River Training work was should have the following June 1999 completed in June 2000 completion schedule: River training by December 1997;

- 25 - (2) Warping by December All warping be completed by All warping work was completed 1998; soil improvement and December 1999 in December 2000 agricultural development by Soil improvement work by All soil improvement work was December 1999. December 2000. completed in early 2001. There is no more outstanding work for to be done and all construction activities have been completed. (3) Houhe Dam Construction Houhe dam be completed in Dec Houhe Dam and Reservoir was start by March 1996 and 2002. completed in August 2003. No completion by end 1997. outstanding work needs to be Irrigation Construction should Irrigation construction start done. be completed by June 2003 for by March 1996 and 15,000 mu for resettlers Irrigation works were completed completion by January by May 2003 for some 15,000 2001. mu for resettlers. All works have been completed. (4) Land development and For Henan and Shanxi land Henan completed by June 2003 a industrial development in development was to be total of 113,300 mu of each resettlement schedule completed for Phase I and II by upgraded irrigation systems, will follow the same as the June 2002. A total of 113,000 land leveling for 45,000 mu and housing schedules. mu in Henan and 11,000 mu in 15,000 mu of soil improvements Shanxi needs to be improved by which essentially upgraded 71% land leveling, irrigation canal of the land to first class construction, soil improvement irrigation for the resettlers. etc. Shanxi completed land leveling and irrigation improvement for some 11,000 mu and another 4,500 mu of existing irrigation area. Overall the land development program has been completed (5) Real income increases. No Specific Changes were made Real incomes increases for Resettlers should be to these requirements in the resettlers will be 2.5-9.9%p.a. 2.8-6.0% p.a. after mid-term reviews averaging 5.2% p.a. for the resettlement. Host period of growth. Host communities should have a communities will have income real income increase of increases of 7.3-15.9% p.a. 0.7-2.4% p.a averaging about 13.4% for the period of growth. After period of growth they will have income growth similar to the local communities.

- 26 - Annex 2. Project Costs and Financing

The total project cost was estimated at US$571 million at appraisal. The YRCC Resettlement Office during the appraisal presented costs and compensation figures based on a 1986 survey with some up-dating in 1992 for Phase I of the project. However, the project area saw fast economic development since the survey, especially during 1990-1994. These economic developments necessitated a re-survey in the entire project area during 1995-1996 which saw a significant increase in the quantities of inundation impacts. The RPDI conducted this re-survey, re-estimated the project cost and proposed the revised project budget. The State Planning Commission reviewed and approved the revised budget and financing plan. During the MTR, the total project cost was reviewed and revised to be US$840 million on the basis of the re-survey. This represents an increase of US$269 million, about 47 percent. The main contributing factors included: (a) the increase in the number of resettlers in the project; (b) the increase of physical impacts (houses, structures and village enterprises); (c) market price increases; and (d) the increase of compensation rates for all compensatory items. All cost increases were financed by the government. The details of cost changes and expenditure are as follows:

Project Costs by Components (in US$ million equivalent)

Component Appraisal Actual Cost Percentage Estimate of Appraisal Resettlement Planning and Design 11.7 44.1 376.0 Residential and Infrastructure Construction 292.9 483.2 165.0 Transfer of Relocatees 7.3 9.5 130.1 Livelihood Development 257.1 295.7 115.0 (a) Wenmengtan 47.1 67.7 143.7 (b) Houhe Dam and Irrigation 15.4 24.7 160.4 (c) Agricultural & Production development 9.2 198.2 108.1 (d) Industrial Development * 174.2 0 included above (e) Monitoring and social development 10.4 5.1 49.0 Environmental Management 3.5 8.4 240.0 Total Baseline & Contingency Costs 571.2 840.9 147.2

Total Project Costs 571.2 840.9 147.2

Total Financing Required 571.2 840.9 147.2

* The industrial component was cancelled. The development cost coming mainly from land compensation went into the land-and-agriculture-based resettlement programs. As a result, the cost in (d) was included in (c).

- 27 - Project Costs by Procurement Arrangements (Appraisal Estimate) (in US$ million equivalent)

1 Procurement Method 2 Expenditure Category ICB NCB Other N.B.F. Total Cost 1. Works 13.8 152.6 80.6 65.6 312.6 (13.1) (48.8) (38.7) (0.0) (87.5) 2. Goods 3.00 0.0 1.2 179.2 183.4 (3.0) (0.0) (1.2) (0.0) (4.2) 3. Services 0.0 0.0 3.2 0.0 3.2 (0.0) (0.0) (1.2) (0.0) (1.2) 4. Training 0.0 0.0 1.5 0.0 1.5 (0.0) (0.0) (1.0) (0.0) (1.0) 5. Environmental 0.0 0.00 5.8 0.0 5.8 Management/Cultural relics (0.0) (0.0) (1.2) (0.0) (1.2) 6. Monitoring 0.0 0.0 1.6 0.0 1.6 (0.0) (0.0) (1.1) (0.0) (1.1) 7. Administration 0.00 0.00 1.3 61.9 63.2 (0.00) (0.00) (1.0) (0.0) (1.0) Total 16.8 156.6 95.2 306.7 575.30 (16.1) (48.8) (45.1) (0.00) (110.00)

- 28 - Project Costs by Procurement Arrangements (Actual) (in US$ million equivalent)

1 Procurement Method 2 Expenditure Category ICB NCB Other N.B.F. Total Cost 1. Works 0.00 0.00 178.5 595.8 774.30 (0.00) (0.00) (107.1) (0.00) (107.1) 2. Goods 0.31 0.00 0.43 0.00 0.74 (0.31) (0.00) (0.32) (0.00) (0.63) 3. Services 0.00 0.00 2.89 0.0 3.89 (0.00) (0.00) (2.89) (0.0) (3.89) 4. Training 0.00 0.00 1.03 0.00 1.03 (0.00) (0.00) (1.03) (0.00) (1.03) 5. Environmental 2.82 2.98 5.8 management (0.56) (0.00) (0.56) 6. Monitoring 0.00 0.00 1.00 4.10 5.10 (0.00) (0.00) (1.00) (0.00) (1.00) 7. Administration 0.00 0.00 0.00 50.04 50.04 /Engineering (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.31 0.00 186.67 653.9 840.9 (0.31) (0.00) (112.9) (0.00) (113.21) 1/ Figures in parenthesis are the amounts financed by the IDA Credit. All costs include contingencies. The dollar amounts also reflect the appreciation of SDR. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

- 29 - Project Financing by Components (in US$ million equivalent)

Component Appraisal Estimate Actual Cost Percentage of Appraisal Bank Govt CoF Bank Govt CoF Bank Govt CoF % % 1. Planning and 7.7 4.0 - 2.89 41.23 - 38 1031 - design 2. Resettlement 75.9 214.3 - 94.42 388.78 - 124 181 - Construction 3. Transfer - 7.3 - 0 9.5 - 0 0 - 4. Livelihood development - Wenmengtan 14.0 33.1 - 13.3 54.4 - 95 164 - - Houhe 5.9 9.2 - 0 24.7 - 0 268 - Agric/Production 4.1 182.7 - 0 198.2 - 0 108 - & Industries Monitoring & 0.8 7.8 - 2.03 3.07 - 254 39 - Social adjustment 5. Environmental 1.7 2.7 - 0.56 7.84 - 33 290 - Management

Total 110.0 361.1 - 113.2 727.72 - 103 202 -

- 30 - Annex 3. Economic Costs and Benefits Economic Costs and Benefits and Resettler Income assessment

Economic Costs and Benefits

A major portion of the project investments, US$295.7 million, were for livelihood development activities, about 35 percent of the total investments. Of this, US$140.9 million was for infrastructure and US$146.4 million was for land acquisition and for special side-line activities. Infrastructure investments helped boost crop incomes and enhanced side-line activities, such as animal husbandry and aquaculture development.

Table 1: Livelihood Reestablishment

Million $ % Wenmengtan Land Development 67.7 23% Houhe dam + Irrigation 24.7 8% Other irrigation (in county) 48.5 16% Land acquisition/ special commercialization projects 146.4 50% Environment Management 8.4 3% Total 295.7 100%

This economic analysis focuses on evaluating the infrastructure component. The land and special side-line/commercialization village projects were analyzed by county and townships before investments were provided.

Economic Evaluation of the Infrastructure Component. Economic evaluation of the infrastructure component essentially consisted of irrigation projects with side-line associated with irrigation. Evaluation of the economic benefits consisted of the following:

(a) economic benefits were determined by using border prices of key outputs and inputs after netting out production costs and taxes and other transfer payments; (b) benefits from side-lines were from animal husbandry which increased as a result of crop production. The use of crop residues for feed generated additional benefits and these were quite significant. There were generally about 3-4 animal models for the side-line activity;

Economic costs were determined after removing all transfer payments such as taxes and duties from the financial costs for the construction of productive facilities. All prices used for construction are market prices and there were no subsidies or distortions in the prices. The costs of resettlement construction were excluded since the benefits of housing and social infrastructure (such as schools, clinics, etc.) have social benefits and these benefits generally balance the costs. Table 2 shows the total investments, net present value and the EIRR for all the infrastructure investments.

- 31 - Table 2: EIRR, Investment Costs and NPV

SAR ICR Item EIRR EIRR Investment NPV Y(000,000) Y(000,000) Houhe Irrigation Area 19.9% 17.1% 204.5 51.5 Wenmengtan 16.1% 14.7% 542.8 163.2 Downstream Counties Kaifeng NA 18.5% 52.3 16.4 Zhongmou NA 17.0% 32.4 6.7 Yuanyang NA 14.9% 60.5 14.6 Other Counties Jiyuan NA 18.8% 113.2 327.9 Mengjin 10.8% 16.2% 79.1 33.3 Mianchi NA 15.4% 109.1 53.1 Xin'an NA 13.9% 28.6 36.0 Yuanqu NA 12.7% 16.3 2.7

Comparison of ICR and SAR Evaluation. Table 2 shows a comparison of the SAR EIRR and the ICR evaluation values. Only three schemes were evaluated in the SAR: Wenmengtan, Houhe dam and irrigation, and Mengjin move back case. During the appraisal the detailed schemes for the counties were not fully designed and, therefore, it was not possible to evaluate them. The comments are given below for the differences in the values of EIRR evaluated at appraisal and ICR.

Part A: Houhe Irrigation Component. The Houhe irrigation component has an EIRR of 17.1 percent compared to the 20 percent estimated at appraisal. The following reasons contribute to this drop: l The moving of resettlers took place in 1999, and the reservoir was completed in 2001, a delay of four years. Therefore, the benefits occurred in a delayed manner. l Land leveling was not completed and the irrigation ditches were not built on time. l In recent years, the reservoir storage could not reach its desired level because of the drought. Consequently, the service area could not be fully irrigated as designed.

Part B: Wenmengtan Irrigation Component. The Wenmengtan irrigation component has an EIRR of 14.7 percent compared to the 16.01 percent estimated at appraisal. This was caused by: l Investment for this component increased considerably because of land leveling and soil improvement. l In the Wenmengtan area, farm production accounts for 61 percent of the total income, and in recent years the prices of farm products have decreased. The impact on this area was quite significant.

Part C: Down-stream Counties. The down-stream counties include Kaifeng, Yuanyang and Zhongmu. Their EIRRs are 18.5, 14.9 and 17 percent, respectively. The situation looks quite good because the soil is of good quality with perfect irrigation system and convenient transportation.

Part D: Other Counties. Other counties are Yuanqu, Xinan, Mianchi, Mengjin and Jiyuan. Their EIRRs range from 12.7 to 18.8 percent: The reasons are: the irrigated land makes up a relatively large proportion of the total; the side-line income has increased quite rapidly in recent years; and transportation is convenient for the sale of products.

- 32 - Resettler Income Impact of Sampled Data Based on Consumption Type Analysis

A considerable amount of monitoring and surveys were done during the 10 years of this project. Much of this monitoring data points to about 70% of the incomes have been restored of the pre-resettlement incomes. However much of this data although valid needs to be checked with a consumption type analysis to verify the income data and to compare with the SAR 1994 estimates of income analysis which were essentially a consumption type analysis.

Baseline Income estimates and Changes since SAR

The SAR uses a baseline estimate of income based on the 1993 State Statistical Bureau surveys for the various project areas (essentially for the counties). These were verified with the counties in 1994 and supported by county chiefs. The ICR sample typifies about 41,000 people out of the 204,000 that were resettled. When baselines are compared figure I shows that some of the baseline incomes have increased in some of the villages because most people were resettled almost 5 -6 years later and the incomes have risen in real terms. The incomes of the remote areas have not changed substantially (villages 1-4). The places where the baseline have not changed substantially are in the Yuanqu County area. Most of the substantial jump in income has come from off-farm income and sideline/commercial farming activities despite the decline in crop incomes (grains especially).

Figure 1

SAR Baseline 1998 Compared with Actual in 1998

12000 10000 8000 6000 4000 2000

Family Incomes in Y/HH 0 1 3 5 7 9 11 13 15 17 19 21 23 Number of Villages

SAR Baseline updated Actual Baseline

Figure 2 shows that off-farm and commercial agriculture has increased enormously from 10% in the 1993 income surveys to 22-65% and a substantial portion of this income is also coming from off farm. Hence rural incomes of so call farmers is heavily biased to non farm and commercial agriculture. That is why despite declining agriculture prices which today is almost 50% of international prices farmers incomes have not declined but have actually increased. The rate of real increase of the baseline incomes varies from 5-10% per year because of the off farm and commercial agriculture in incomes. It must however be stated that the resettlers are now settled in places where access to markets to cities are further enhanced and therefore the impact of off farm income is much more significant.

- 33 - Figure 2

Off-farm Income in 1998 Baseline

100.0%

80.0% Farm Income 60.0% 40.0% Off Farm including 20.0% sidelines 0.0% Xin'an Xin'an Kaifen Mianchi Yuanyang zhongmou

Income Restoration for resettlers

The income changes with resettlement were computed based on sampled data taken from many villages by the monitoring consultants. Essentially the income was computed from farm and sideline activities and off farm sources input and output data. The farmgate prices for inputs and outputs were derived from the independent monitor and from local statistical bureaus. The detailed income analysis results are indicated in table in table 4. To make a comparison of baseline it was necessary to update the SAR data by using the CPI index to the times when resettlers were moved and the results of this analysis is shown in Table 3. In Table 3 the actual preresttlement income is also recorded. The baseline as estimated using the SAR data updated using the CPI indices in almost all cases are lower than the actual presettlement incomes. This indicates the rural sector incomes had real growth because of farmers switching to off-farm and commercial farming which increased incomes faster than the inflation rates. It must however be indicated this effect is very much more pronounced in the new resettlement villages where off-farm and commercial farming activities because the new villages are much closer to urban areas where resettlers are closer to the large markets and to sources of employment (see Annex 10).

The post resettlement actual incomes in 2001, 2003, 2004 as computed from consumption surveys indicate that incomes in 2001 show about 50% of the farmers have recovered or exceeded their incomes and very quickly this rises to 66-70% in 2003 and 80% in 2004. By 2008 it is expected all farmers would have fully recovered or exceeded their incomes. This data compares very closely to the monitoring data from the independent monitor who has indicated that 70% of the resettlers have recovered their incomes in 2003 .

Host Income Impact

Host impact is clearly very positive. In most of the cases the host impact varies from 10% to over 100% (see table 4 ). The host benefits significantly because the funds derived from the sale of land provided the host villages to initiate village enterprises and land quality improvements through irrigation. The income that host farmers derived from the enterprises and irrigation enhancements provided significant improvement in incomes. Table 4 also shows the host impact which in all cases shows significant improvements to host villages.

- 34 - Table 3: Comparison of Family Income SAR and ICR Evaluation for Baseline

SAR ICR (Actual) SAR

Post- Pre-reselltement family income Pre-reselltement reselltement

Year Income Year Income Year Income Income Resellters Yuan\a Yuan Yuan\a Houhe (average average 1993 2555 1998 4106 1998 4979 6490 income) Houhe- Houhe Low income 1993 2562 1998 4117 1998 4125 5491 Houhe Medium income 1993 2668 1998 4287 1998 5223 5366 Houhe High income 1993 3950 1998 6348 1998 5687 10421 Jiyuan Within Jiyuan 1993 2974 1998 4779 1998 7171 5869 180-215 1993 2974 1998 4779 1998 7171 n/a 215-235 1993 2974 1999 5018 1999 6041 n/a 235-265 1993 2974 2000 5269 2000 6664 n/a Within Township 1993 3110 1995 4466 1995 8014 7932 To Wenmentan 1993 3420 n/a Mengjin Within Country1 1993 2591 1998 4164 5904 Mengjin 180-215m 1993 1998 4164 1998 5639 n/a Mengjin 235-265m 1993 2000 4289 2000 4026 n/a Within Township 1993 2538 4079 5641 Xinan Within Country 1993 2590 1998 4162 1998 6805 7023 Xinan 180-215 1993 1998 4162 1998 6805 n/a Xinan 235-265 1993 2000 4287 2000 8752 n/a To Wenmentan To Wenmentan 1993 2200 1998 3535 1998 9902 7055 To Wenmengtan 180-215 1993 1998 n/a To Wenmengtan 215-235 1993 1999 3641 1999 7431 n/a To Wenmentan 235-265 1993 2000 3751 2000 5627 n/a To Kaifei etc. 1993 1973 3171 5584 To Zhongmu 1993 2310 1998 3712 1998 5909 6221 To Yuanyang 1993 2142 1998 3442 1998 6142 5016 Mianchi Within Country 1993 1819 1998 2923 1998 5215 4901 180-215 1993 1998 1998 7745 n/a 235-265 1993 2000 2000 5936 n/a To Kaifen 1993 1973 1998 3171 1998 7121 5584 Shanxian Within Coutry 1993 1559 1998 2505 1998 5627 3751 Yuanqu Within Coutry 1993 2952 1998 4744 1998 5431 6659 Xiaxian/pinglu Within Country 1993 2376 1998 3818 1998 4371 6659

- 35 - Host Impact Houhe(average income) 1993 2534 1998 4072 1998 1980 7233 Jiyuan Within Country 1993 3361 1998 5401 1998 2233 6616 Within Township 1993 4527 1998 7275 1998 NA 7932 In Wenmentan 1993 3550 1998 5705 1998 7132 6171 Menjin Within Country1 1993 2534 1998 4072 1998 3069 4856 Within Country2 1993 2978 1998 4786 1998 NA 5118 Within Township 1993 2591 1998 4164 1998 NA 5634 Xinan Within Country 1993 2660 1998 4275 1998 2501 4644 In Wenmentan 1993 3550 1998 5705 1998 5781 6171 To Kaifei etc. 1993 4497 1998 7227 1998 NA 8853 In Zhongmu 1993 3665 1998 5890 1998 4500 7805 To Yuanyang 1993 5280 1998 8485 1998 4855 8583 Mianchi Within Country 1993 2433 1998 3910 1998 1984 4255 To Kaifei 1993 4497 1998 7227 1998 963 8853 Shanxian Within Coutry 1993 2518 1998 4046 1998 NA 4114 Yuanqu Within Coutry 1993 3071 1998 4935 1998 NA 5634 Xiaxian/pinglu Within Country 1993 3265 1998 5247 1998 NA 6221 \a Inflated Using the Provincial CPI Indices

- 36 - Table 4: Comparison of SAR and ICR Post Resettlement Income

ICR (Actual) SAR ICR Post- Pre-reselltement resellte Post-reselltement Family income in Yuan ment Year Income Income Year Income Year Income Year Income Year Income Resellters Yuan Yuan\a Actual Actual Actual Forecast Houhe(averageaverage income) 1998 4979 6490 2001 4789 2003 5,394 2004 5793 2008 7256 Houhe- Houhe Low income 1998 4125 5491 2001 3228 2003 3,860 2004 4190 2008 5049 Houhe Medium income 1998 5223 5366 2001 5332 2003 5,753 2004 6119 2008 7274 Houhe High income 1998 5687 10421 2001 6421 2003 7,044 2004 7576 2008 9618 Jiyuan Within Jiyuan 1998 7171 5869 180-215 1998 7171 2001 6846 2003 7,667 2004 8192 2008 10359 215-235 1999 6041 2002 6209 2003 5,957 2004 6358 2009 8717 235-265 2000 6664 2003 6511 2003 6,511 2004 6687 2010 9677 Within Township 1995 8014 7932 1998 12689 2003 14,846 2004 15681 2005 16551 To Wenmentan Mengjin Within Country1 5904 Mengjin 180-215m 1998 5639 2001 5819 2003 6,630 2004 7023 2008 8371 Mengjin 235-265m 2000 4026 2003 4015 2003 4,015 2004 4234 2010 6012 Within Township 5641 Xinan Within Country 1998 6805 7023 Xinan 180-215 1998 6805 2001 7132 2003 8,085 2004 8120 2008 10252 Xinan 235-265 2000 8752 2003 9234 2003 9,234 2004 9432 2010 10437 To WenmentanTo Wenmentan 1998 9902 7055 To Wenmengtan 180-215 1998 9902 2001 9198 2003 9,557 2004 10122 2008 12151 To Wenmengtan 215-235 1999 7431 2002 7503 2003 7,717 2004 8022 2009 10369 To Wenmentan 235-265 2000 5627 2003 5557 2003 5,557 2004 5954 2010 8322 To Kaifei etc. 5584 To Zhongmu 1998 5909 6221 2001 5046 2003 6,801 2004 6878 2008 8446 To Yuanyang 1998 6142 5016 2001 7757 2003 9,174 2004 9229 2008 11540 Mianchi Within Country 1998 5215 4901 2001 11375 2003 8,369 2004 8362 180-215 1998 7745 2001 6582 2003 8,877 2004 9365 2008 10987 235-265 2000 5936 2003 9024 2003 9,560 2004 9804 2010 11088 To Kaifen 1998 7121 5584 2001 7088 2003 11,214 2004 11798 2008 13767 Shanxian Within Coutry 1998 5627 3751 Yuanqu Within Coutry 1998 5431 6659 2001 5069 2003 5,811 2004 6128 2008 7758 Xiaxian/pingluWithin Country 1998 4371 6659 2001 2003 2004 2008 Total Host Impact Houhe(average income) 1998 1980 7233 2001 2839 2003 2,598 2004 2604 2008 3283 Jiyuan Within Country 1998 2233 6616 2001 5859 2003 7,282 2004 7849 2008 9927 Within Township 1998 NA 7932 2001 NA 2008 NA In Wenmentan 1998 7132 6171 2001 10176 2003 11,930 2004 12125 2008 14881 Menjin Within Country1 1998 3069 4856 2001 3596 2003 4,064 2004 4279 2008 5131 Within Country2 1998 NA 5118 2001 NA 2008 NA Within Township 1998 NA 5634 2001 NA 2008 NA Xinan Within Country 1998 2501 4644 2001 2810 2003 3,978 2004 4250 2008 4202 In Wenmentan 1998 5781 6171 2001 9482 2003 11,366 2004 11561 2008 14317 To Kaifei etc. 1998 NA 8853 2001 NA 2008 NA In Zhongmu 1998 4500 7805 2001 5657 2003 6,445 2004 6609 2008 7362 To Yuanyang 1998 4855 8583 2001 9220 2003 18,183 2004 18965 2008 22589 Mianchi Within Country 1998 1984 4255 2001 3526 2003 4,794 2004 5433 2008 5557 To Kaifei 1998 963 8853 2001 1479 2003 3,075 2004 3075 2008 2575 Shanxian Within Coutry 1998 NA 4114 2001 NA 2008 NA Yuanqu Within Coutry 1998 NA 5634 2001 NA 2008 NA Xiaxian/pingluWithin Country 1998 NA 6221 2001 NA 2008 NA \a Inflated Using the Provincial CPI Indices Total

- 37 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 06/24/1993 Task Manager, Anthropologist; Assistant Anthropologist; Institutional Specialist; Resettlement Specialist

Appraisal/Negotiation 10/1993 8 Task Manager; Engineers (2); Resettlement Specialists (2); Anthropologist 04/1994 6 Task Manager; Lawyer; Resettlement Specialist; Anthropologist; Irrigation Engineer; Economist Supervision

10/25/1994 3 Task Team Leader; S HS Financial/Training Specialist; Irrigation Engineer 05/30/1995 3 Task Team Leader; HS HS Irrigation Engineer ; Anthropologist 11/15/1995 3 Task Team Leader; Irrigation HS HS Engineer; Economist 05/1996 2 Task Team Leader; Irrigation HS HS Engineer 11/1996 3 Task Team Leader; Resettlement HS HS Specialist; Irrigation Engineer 12/1997 3 Task Team Leader; Resettlement S S Specialist; Financial Specialist 06/1998 4 Task Team Leader; Resettlement S S Specialist; Irrigation Engineer; Anthropologist 11/1998 4 Task Team Leader; Resettlement S S Specialist; Social Development Specialist; Environment Specialist; Irrigation Engineer 01/1999 9 Task Team Leader; Resettlement S S Specialists (2); Procurement Specialist; Financial Specialist; Auditor; Irrigation Engineer; Social Development Specialist; Economist 09/1999 8 Task Team Leader; Resettlement S S Specialists (3); Compensation Specialist; Financial Specialist;

- 38 - Irrigation Engineer; Auditor 05/2000 5 Mission Leader; Resettlement S S Specialist; Engineer/Cost; Financial Specialist; Social Development Specialist 12/2000 8 Task Team Leader; Resettlement S S Specialists (3; Social Development Specialist; Environment Specialist; Irrigation Specialist; Financial Management Specialist 10/2001 9 Task Team Leader; Resettlement S S Specialist; Engineer; Social Development Specialist (2); Financial Management Specialist; Environment Specialist; Agronomist; Cultural Property Specialist 05/2002 9 Task Team Leader; Engineer; S S Resettlement Specialist; Environment Specialist; Social Development Specialists (2); Cultural Property Specialist; Economist; Rural Development Specialist 11/2002 6 Task Team Leader; Engineer; S S Environment Specialist; Social Development Specialist; Economists (2) 10/2003 5 Task Team Leader; Social S S Development Specialists (2); Resettlement Specialist; Economist ICR 9 Task Team Leader; Social Development Specialists (2); Resettlement Specialists (2); Economists (2); Environment Specialist; Irrigation Engineer

(b) Staff:

Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 146.0 Appraisal/Negotiation - Supervision 669.0 ICR - Total 845.0

- 39 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA

Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA

- 40 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU

6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU

- 41 - Annex 7. List of Supporting Documents

Staff Appraisal Report: Xiaolangdi Resettlement Project Independent Monitoring Reports Project Environment Review Living Standard Assessment

- 42 - Additional Annex 8. Project Scope and Progress

The entire Xiaolangdi Resettlement Program consists of four phases, i.e. damsite, Reservoir Phase I, II and III. The damsite resettlement was completed before the project appraisal. Reservoir Phase III was planned for implementation during 2010-11 while Reservoir Phase I and II were financed under the project.

Project scope. The project financed Reservoir Phase I and II. According to the updated inventory in 1994, the project would affect 29 townships in 8 counties of Henan and Shanxi Provinces. The project would require the relocation of 12 towns, 182 villages, 789 mines and factories, 12 mini hydro stations, 658 km of canals, 688 km of roads and 548 kms of communication lines. The total affected housing area is 7.25 million m2 and 381,870 mu of land including 181,790 mu of cultivated land. There would be 109 sites of historical relics to be affected. The total affected population was 172,487 people compared with 153,182 as appraised.

Resettlement site and infrastructure development The project helped build 227 resettlement villages and 155,139 people in 47,012 rural households have moved into new houses, with a total housing area of 7,248,100 m2. The project has relocated 12 towns, with a total urban population of 9,519. The new villages and towns are complete with water supply, drainage, power systems, schools, hospitals and roads. The project also compensated and relocated 789 factories and mines, with a total 3846/5683 workers reemployed. The project has also completed reconstruction and rehabilitation of affected infrastructure, including reconstruction of 1,997 kms of roads, 2,154 kms of power lines, 1,886 kms of communication lines, 1,073 km village drains, 58 mini-hydro stations and 80 bridges with 2424 meters in length.

Key Project Impacts & Progress

Item Unit SAR Actual Henan Shanxi Total Henan Shanxi Total 1 Affected Towns No. 8 4 12 8 4 12 2 Affected Villages No. 173 53 229 217 66 283 3 Affected Population No. 133616 39255 172871 130440 42047 172487 4 Village housing area M² 4818800 1873000 6691800 5657900 1590200 7248100 5 Cultivated land Mu 157600 47890 205490 146187 39993 186180 6 Enterprises No. 665 159 824 591 198 789 7 Infrastructure Roads Km 1022 2411 254 2665 Power lines Km 2419 1862 292 2154 Communication lines Km 777 1624 262 1886 Schools No 176 53 229 243 74 317 Clinics No 194 58 252 511 156 667 Bridges No 80 80 Drainage ditches Km 856 181 1037

- 43 - Movement of people The project has completed its resettlement program as planned. In total, the project has moved 172,487 people in 52,269 households. Damsite resettlement involved 11,728 resettlers and was completed before the project appraisal in 1993. Reservoir Phase III resettlement would involve 17,200 people to be moved. They were planned to be moved during 2010 and 2011. This part of the resettlement was advanced to start in 2002 and is expected to be completed by June 2004, following the same standard.

Livelihood development While enterprise workers and government employees are re-employed in the relocated or restructured enterprises and government agencies, the rural farming population were reemployed in job opportunities created under the project livelihood development programs in agriculture and new industries. The rural livelihood development program is largely land and agriculture based, supplemented by non-farm and industrial schemes. Land provision is the fundamental measure of the resettlement program. The project has allocated 11,000 ha of farmland for the resettlers, including 7,000 ha of irrigated land. This is achieved through expansion of the irrigation areas in Houhe Irrigation Area (5,000 ha), river training, warping and land improvement program in Wenmengtan (13,300 ha protected and 4,100 ha created) and purchase of land from host population. All of the rural resettler villages have been provided with replacement land. Sideline industries have turned out to be an important aspect in the livelihood development programs. These schemes were developed at township, village and household level. They have become an important factor in promoting livelihood development.

- 44 - Additional Annex 9. Loan Covenant Compliance

Section Class Current Status Description of Covenant Sect 4.01(a)(b)(c) 01 Complied with Records and accounts to be maintained for the Project. Sec 4.02(a) 07 Complied with Implement RS plan acceptable to IDA. Sec 4.02(b) 07 Complied with RS implementation remains synchronized with dam construction and if there is a lag in the RS implementation by 4 months the coffer dam will not be closed. Sec 4.02(c) 07 Complied with Ensure water level of reservoir is not permitted to rise above 265m until resettlement plans are provided to and approved by IDA. Sec. 4.03(a) 07 Complied With Operate such a fund with procedures acceptable to IDA. Sch. 4 Part A 1 05 Complied with Use YRCC-RPDI to approve final designs. Sch.4 Part A2.(a) 09 Complied with Employ an independent monitoring institution. Sch. 4 Part A2.(b) 09 Complied with Furnish reports promptly. Sch. 4 Part A.3 07 Complied with Publicize the grievance system. Sch. 4 Part B1 (a) 06 Complied with Comply with Environmental Standards and Guidelines acceptable to IDA. Sch. 4 Part B1.(b) 06 Complied with Implement the Environmental Management Plan in a manner acceptable to IDA. Sch. 4 Part B2.(a) 06 Complied with Furnish to IDA detail plans to be implemented in the next year. Sch. 4 Part B2.(b) 06 Complied with Establish Environmental Management Office with competent staff in numbers satisfactory and responsibilities and functions acceptable to IDA. Sch. 4 Part B3.(a)(b)(c) 06 Complied with (a) Employ an international environment and resettlement panel; (b) furnish reports and (c) implement all recommendations. Sch. 4 Part C1.(a) 10 Complied with Houhe dam and irrigation will be sufficiently completed to permit resettlement in 1997. Sch. Part 4 C2.(a)(b) 10 Complied with (a) Houhe dam and structures will be periodically inspected by an

- 45 - independent group of experts and (b) plans for proposed inspection will be submitted one year before the completion of the dam. Sch. Part C2.(c) 10 Complied with Employ a panel of dam experts for reviewing the designs and grounds for changes and the panel findings should be promptly reported. Sch.4 Part C(a) (b)(c) 10 Complied with (a) Obtain all government approvals for industrial projects; (b) employ industrial consultants and; (c) implement follow-up actions. Sch.4 Part D1.(a)(b)(c) 05 Complied with (a) Maintain the resettlement office (RO) of MWR; (b) provinces and counties to maintain Ros and; (c) coordinating groups at all levels be maintained. Sch. 4 Part D2 04 Complied with Furnish to IDA the proposed implementation program and financing plan for coming year. Sch. 4 Part D3 05 Complied with All TA and training will be carried out according to a program acceptable to IDA. Sch. 4 Part D4 05 Complied with Carry out with IDA a joint mid-term review. Sch. 4 Part 5 11 Complied with Maintain a revolving fund with a balance of three months estimated non-credit expenditures for the project. Sch. 5 1 to 17 07 Complied with Resettlement criteria should be followed as agreed with the Bank.

- 46 - Additional Annex 10. Living Standard Assessment of the Resettlers

The project resettler population consists of four groups, i.e. rural farmers, urban residents, employees of enterprises and institutions, and the host population. The project objective was to reestablish the livelihoods of the affected population through designed investment measures so that they will not only restore their pre-relocation living standard, but also share in the project benefits. This is a summary of various assessment efforts on the materialization of the project objective through analysis of employment, income, physical living environment, infrastructure, housing conditions and social environment .

Rural resettlers

General assessment. The majority of the project resettler population are farmers, accounting for 91% of the total. Monitoring and supervision data indicate that the housing conditions and physical living environment of the resettlers have substantially improved as a result of the project. All resettlers have moved into new houses, generally smaller in area, but much better in quality. All new villages are complete with basic infrastructure and public facilities, with improved access to public services such as health, education, communications and better access to market, non-farm employment and information.

Monitoring data indicates that about 70% of the resettlers have either reached or surpassed their pre-resettlement income target and around 20% have reached about 80% of their pre-resettlement income. The project has completed the payment of land compensation funds and the replacement land reallocation program. Those villages who have not reached the designed land allocation standard have started alternative income-generation activities with their land compensation funds. Full income restoration for all resettlers would take longer than expected. There are many factors leading to the slow recovery of income, including the changed macro economic environment in farming sector in China, the slow shift from farming to non-farm employment and the inflated income baseline before relocation.

Payment and use of land compensation funds. Land compensation fund has been paid to all resettler villages. Normally village councils decided on the use of the land compensation fund. The compensation funds have been used generally to purchase replacement lands from the host villages and to invest in alternative productive schemes. There are some villages who spent the money in public welfare and facilities. Payment of land compensation provided the financial resources for resettler to purchase replacement land and develop alternative productive activities, such as sideline activities.

Land allocation and farming income. The major impact of the project is farmland loss and the project has adopted a land and agriculture based strategy to address this impact. Provision of replacement land was the fundamental measure for livelihood rehabilitation. The project was designed to provide 1.2 mu of land per capita on average (one mu of irrigated land or 1.75 mu per capita for dry land) taking into consideration the pre-relocation per capita land holding and the productivity of the lost land.

Of 227 villages, 169 have reached the designed target of per capita farmland holding. This represents 75% of the total. The Project Supervisor also reports that 58 resettler villages have not reached the designed standard of land holding, about 25%. This is largely due to i) land resources constraint in the host areas and ii) their previous small land holding. In these villages, alternative livelihood programs have started with the land compensation funds, including sideline activities, cash crops, agro processing, small livestock, non-farm jobs, small business and factories. These activities helped farmers generate more income than cultivation.

- 47 - Changed macro-economic environment and coping strategy. China witnessed stagnation and often reduction in farming income share in the past decade, particularly during 1996-2002 when farming output share of total family income was falling and farmers started replying less on farming as the main source of income. Instead farmers have turned to sidelines and non-farm sectors for employment opportunities. Natural disasters are another contributing factor to further reduce farm income share in the project areas. Statistics show that the annually natural disaster affected area in Henan is 34.77 million mu, ranging between 26%-67% of the total planting area in the province during 1990-2002. The project rural resettlers were no exception to this macro change and to the effects of natural disasters. In coping with this macro change, they adjusted their livelihood rehabilitation strategy, which was land and agriculture based, to place more emphasis and efforts in the sidelines and non-farm activities.

Non-farm employment. While cultivation still provides the most employment opportunities for the resettlers, Xiaolangdi resettlers started to gear their efforts also into non-farm activities and commercial agriculture to cash crops, livestocks, aquaculture, and village indurstries. The project resettlement program also improved the resettlers’ prospect for more sidelines and non-farm employment opportunities by moving the resettler population closer to towns where employment information and opportunities are more accessible. At the same time, the land compensation funds provided cash for this shift. The host governments and project offices carried out extensive extension and training programs to help the resettlers adapt to the new environment. These included skill trainings in sidelines, paddy growing and management, land terracing, dryland farming, fruit tree plantation and management, herbal medicine growing and management, animal raising (cattle, pigs, sheep, rabbit etc.), aquaculture, green houses and marketing etc. Shanxi and Henan Governments reported that they had organized 1,165 training session for 84,550 person times. Shanxi and Henan also organized labor export to the more developed areas and over 11,000 rural laborer participated.

These have enabled the resettlers to carry out their livelihood rehabilitation under a changed environment. According to a village survey by the Resettlement Supervisor in July 2003, the entire project area had started extensive farm sideline and non-farm activities. They included vegetable growing ( 2,533 greenhouses), forest and fruit trees plantation (19,263 mu), herbs and flower gardens (3,439 mu), livestock rearing (100,933 pigs, 11,653 cattles, 490,000 chickens, 18,110 rabbits, and 2,101 households engaged in specialized animal rearing), and 4,002 small business (agro processing, transport, service shops and manufacturing factories). Supervisor data presented that there are altogether 21,665 number of resettlers, from the rural population taking up long-term and daily non-farm jobs. These have led to changes in their employment pattern and income structure. Statistics show that farming income has been consistently falling since 1997 and its contribution to household income has dropped from 62% in 1995 to 48% in 2001.

Income restoration analysis. Income restoration level varies at each phase of resettlement and for different modes of resettlement. Monitoring data indicates that resettler income increases each year. By the end of 2003, about 110 of the 150 villages surveyed by the Independent Monitor have restored or surpassed their pre-relocation income; 29 villages have reached 80% of the pre-relocation income level and the rest less than 80% income level.

Monitoring data further shows that resettler villages in Reservoir Phase I have an average per capita income of 1,046-2,464 yuan in 2003, higher than 345-1,567 yuan before relocation. On average, all resettler villages have restored their income in Reservoir Phase I. Resettlers in Reservoir Phase II have an average per capita income of 574-3,849 yuan in 2003 as compared to 780-2,507 yuan before relocation. The average per capita income in most of the 61 villages moved during 1998-2000 have surpassed their baseline income. However, in the 16 resettler villages moved in 2001-2002, only 50% have surpassed the baseline income, 35% reached 80% of their pre-relocation income and 15% lower than 80% of the

- 48 - pre-relocation income. Many reasons contributed to the slow recovery, including the macro change in the farming sector, slow startup of non-farm activities, time required for some cash crops and the inflated baseline.

Monitoring data indicate that the shift of farmer from farm into non-farm sectors actually happened faster than expected in the SAR and there is a direct and close correlation between income restoration and the growth of non-farm income. Extensive non-farm activities have been started in the project areas and non-farm income has increased significantly in the household. There are three reasons. First, farmers found farm output share of the family income was reduced and the constraint in land resources for farm expansion was not available. Secondly, convenient village locations, improved communication conditions and better access to information have improved their prospect for non-farm employment. Thirdly, local governments have also provided skill training and organized labor export for the resettlers into the non-farm sector. As a result of these, non-farm income has risen substantially.

The above assessment stays valid if economic growth without the project is taken into consideration. As analyzed, the past decade saw a consistent falling of farming output share in China and there was an acceleration of shift from farming to non-farm activities. Consequently, the share of household farming income has been gradually declining. Most of the resettler villages were located in remote mountainous areas, away from towns, with limited access to market information and financial resources to start non-farm activities. In the without-project scenario, their farming patterns and employment structure were less likely to change or shift to non-farm industries as rapidly as many farmers did to cope with the macro change. It was expected that their income would still be largely land based and would have gone on a stagnant if not declining trend under the macro economic situation in rural China. (see annex 3 for Shanxi villages.) The project has opened up many non-farm opportunities and enabled the resettlers to adopt a relatively faster shift to a multi-industry economy. This has helped the resettlers better cope with and overcome the macro economic bottlenecks and averted the expected stagnant or declining income trends. The project has achieved significantly its objective following this analysis.

A comparative expenditure analysis by the National Research Centre for Resettlement indicates that the average per capita living expenditure in 2002 is 1073 yuan compared with 626 yuan before relocation. The analysis also reveals that those with an average annual per capita living expenditure of less than 499 yuan represents 17% in 2002 while it was 46% before relocation; those with an annual living expenditure of 1000-1999 went up from 15% before relocation to 33% in 2002. This indicates that 80% of those surveyed spend more than before. Monitoring data on resettler consumption expenditure also indicates that resettlers’ living standard has improved. Their diet has changed from mainly staple food to a combination of meat, egg and vegetables which accounts for 50-60% of their food expenditure. They spend more on clothing, water, power, telephone, communications and daily necessities. Their household assets have increased to include TV, refrigerators and washing machines.

Income restoration could have shown a better result if not for two factors that distorted the baseline income information. Both are project-induced activities that temporarily pushed up the baseline income data in the years of the baseline survey. After 1993 when the decision on the project was made, local governments dropped restrictions on mining activities and encouraged excavation of coal resource in the reservoir area. This sudden spur produced many temporary non-farm jobs that pushed up their non-farm income. The second factor is that the dam construction and early phases of resettlement produced a surge of job opportunities at the damsite and with the infrastructure and house construction in the new villages. Many resettlers in Phase II participated in these activities and boosted up their baseline income.

Housing Conditions. Housing conditions for all resettlers have seen significant improvement after the

- 49 - project. The Supervisor indicated that the resettlers have built houses for 46,940 rural families, with a total area of 5.993 million m2, averaging 37.84 m2 per capita under the project. The average housing area is slightly smaller, but housing has improved in terms of all other indicators. Most of the old houses were earth/timber structured houses or caves, with relatively poor geological and lighting conditions. Their new houses are mostly brick-timber/concrete houses and some multi-story, with much improved lighting, ventilation, water supply and sanitary conditions. They have closer access to school, hospital, market and the township centers. All resettlers feel satisfied with their new houses.

The survey in the 10 typical resettlement villages reveals significant changes in housing structures after resettlement. Brick-timber structures decreased from 36.2% before relocation to 7.3% after relocation while earth-timber structures decreased from 15.4% to 0.8%. Caves dropped from 33.3% to 0.2% after resettlement while simple houses dropped from 0.4% to 0%. Brick and concrete houses increased from 14.4% to 91.7% after resettlement while two story houses also increased from 12.2% to 34.9%.

Infrastructure and public facilities. The project has established 227 villages. All new villages are complete with the designed infrastructure and public facilities. Monitoring and supervision data indicates that most of the old village had dirt streets or roads. They relied mainly on wells or rivers for water supply, and basic infrastructure and public facilities were quite inadequate. After resettlement, these have improved significantly,

· Water supply. All resettlement villages have operating water supply systems. The project has completed 217 deep well, 220 water towers, 139.8 kms of water supply lines to villages. · Drainage. All resettlement villages are complete with drainage systems, including 871 km of village drains and 93.7 km drains outside the villages · Power supply. The project has completed 180.8 km of 380 v lines, 895.6 km of 220v lines. All resettler households are connected with the power system. · Roads. All resettlement villages are connected to road system. The project completed 191 km county-county roads, 113 km county-town roads, 649 km of township-village roads, 722.9 km of main and branch village streets. · Medical service. Medical service coverage has improved to cover all resettlement villages. Each resettlement village has now two clinics, averaging one for 48 households. The distance to the township hospitals averages 3 km. · Schools. All schools were completed before relocation to ensure the continuity of education. The project has built 158 new primary schools and 9 middle schools. All schools have been assigned qualified teachers. · Communications. The project has set up 1098.56 km of telephone lines and 371.33 km of broadcasting lines. All resettlement village are connected to these lines. · Hygiene. All villages have set up trash cans or pits. 64% of the resettler households have also installed two-pit toilets, an environment measure that has proved to be effective.

Social adjustment. One of the principles of the project design was to move the affected villages together as much as possible so as to maintain the community and kin bondage. Separation of villages are only considered at the request of the resettlers. The project villages are generally large, averaging close to 800 people per village. This has mostly materialized.

- 50 - Tremendous efforts have been devoted to ensuring that the resettled groups and the host population are smoothly and well integrated socially, economically and culturally. The host governments have played an active role to assist the resettled population and include them in their coverage of service provision, such as extension service, market information disclosure, employment guidance etc. All resettler villages have elected their own village administration to manage village affairs. One indicator of the harmonious integration into the host areas is the many intermarriages between the host and resettler villages.

Urban population moved

The project affected and relocated 12 towns. This is one more than the appraised figure (Xieyu Town in Yuanqu County of Shanxi Province). The total urban population is 9,519 people averaging 800 persons per town. The SAR states a total of 17,212 people as the affected population. This includes 9,519 urban residents and 7,693 farmers living in villages around the town, but registered within the same town. The 7,693 rural residents are all farmers and they were resettled to new locations around the new towns as part of rural resettlement program. The 9,519 urban residents were mostly employees in township government, institutions and business people. The project impact on these people was limited only to their residences. All 12 towns were relocated and re-constructed within their own jurisdiction. The entire town population moved together into the new towns, including government agencies, institutions, enterprises and business. Therefore the project had no impacts on their employment. The largest relocation town is Gucheng Town in Yuanqu County of Shanxi Province with a relocating population of 2,788. The smallest relocating town is Xieyu Town in Yuanqu County with 234 people. With the built-up of new towns, they now enjoy much improved infrastructure and public facilities (sufficient water and power supply, road and street with cement pavement, effective drainage systems, better medical services and schools). Their housing conditions also improved in terms of living space and quality.

Employees in affected enterprises

The number of actually affected enterprises was 789 instead of 252 as stated in the SAR and most of them are small coal mines. This big increase is due to the fact that local governments encouraged local people and promoted intensive coal mining in the reservoir area at the start of the project. The 789 enterprises comprise 13 county enterprises, 105 township enterprises, 446 village and 225 private workshops. Operation-wise, 547 of the 789 enterprises were coal mines and the rest are mainly engaged in brick making, coal washing, grain processing and cement production. Those private and village workshops were small operations who hired on a daily basis. The workers were mainly local farmers who worked there during their off-farming seasons. As the resettlers moved into the resettlement areas closer to towns, these lost job opportunities were replaced with more employment opportunities in urban and semi-urban areas, with new job opportunities generated with the investment of compensation funds.

Only the few medium state enterprises had regular or long-term contract employees. The total number is 3,846, a slight increase compared with 3,083 in the SAR. The project has completed compensation payment for all enterprises. The manufacturing or relatively larger mining enterprises have either restarted their operations or switched to new operations at new sites. All 3,846 long-term or regular employees have been reemployed in the same enterprises. Additionally, there are 2,332 resettler labors employed in the new enterprises as long-term workers.

- 51 - Host population

The host population who provided land for the resettlement program is 545,024 in 397 villages spread out in 13 counties in Henan and Shanxi Province. These people are indirectly affected by losing part of their farmland for the project resettlement program. The designed approach for livelihood rehabilitation was to redistribute the remaining village land among all village households and use the land compensation fund for village-planned productive schemes.

The host village survey by the independent monitor shows that the average land loss among the host villages is relatively small at 0.3 mu per capita. Considering the general increase of non-farm income in rural households, the land loss impact on income is even smaller. The independent monitor and the Resettlement Supervisor also confirm that i) land redistribution has been completed in all host villages, ii) the land compensation funds have been invested in on-farm works and village welfare facilities, such as schools and clinics. The productive use of land compensation funds have enabled the farmers to improve their land productivity, adjust their cropping patterns and start non-farm ventures. Survey data indicate that their income has generally increased, largely due to expansion of cash crops, livestock rearing and aquaculture. At the same time, the host population also benefit from the infrastructure and public facilities put in place under the project. In general, the living standard of the host population has improved as well.

Damsite resettlers

The damsite resettlement was completed before the project appraisal. However, as part of the overall resettlement program, the independent monitor also covered it. Damsite resettlers achieved a relatively fast restoration and increase in income. Monitoring data indicates that their income restoration rate reached 100% in 1999 and many well exceeded their previous income level.

The livelihood restoration program was completed as designed. Land compensation was delivered to the affected villages and nearly all resettler villages have received their allocated land. The villages have invested the land compensation into all kinds of productive ventures, including on-farm works and non-farm ventures. The non-farm resettlement program was also completed. At the same time, the dam construction created many job opportunities. The resettler households have started all kinds of service ventures, such as restaurants, shops, taxi, house renting etc. Many resettler have taken up jobs at the construction sites, such as security guards, loading and unloading staff etc. Non-farm income was a major contributing factor to the fast income increase. The percentage of sidelines and other non-farm income increased from 57% in 1992 to 88% in 1994 and 93% in 1999. Similarly, all 11 resettlement villages are complete with improved village infrastructure. Housing conditions have improved in terms of housing area and construction quality. Education and medical facilities have also seen significant improvement. School enrollment has reached 100%.

However, with the dam construction completed, many of the construction-related employment opportunities have disappeared. The resettlers have experienced a drop in their income. As their coping strategy, they have started to give more attention to agricultural activities, farming and sidelines as well as looking for alternative non-farm employment opportunities. Henan Government is also exploring possibilities of getting additional land for some villages short of land.

- 52 - Additional Annex 11. Consultation, Participation and Grievance Redress Mechanism

Consultation and participation. Xiaolangdi Resettlement Project followed a participatory approach for planning and implementation. This was effectively implemented during the project planning and implementation process.

Information dissemination was key step in this process. The project offices mobilized various media channels to disseminate project information for consultation and participation purpose. These include news paper, radio broadcast, information booklet, household inventory card and compensation card ( one for each household), TV programs, resettlement policy papers, resettlement newspaper, village information bulletin boards etc. Information disseminated relate to resettlement policies, compensation rates and measures, household inventory, resettlement alternatives and site designs, grievance channels. Village meetings, group discussions and household visits are also used to encourage consultations with resettlers on inventory verification, resettlement alternatives, housing construction and resettlement implementation. While the design institutes and the government played a central role in planning and design, the resettlers had the final say in finalizing the resettlement program. This is reflected in the entire planning and implementation process.

All local governments, villager representatives and affected institutions participated in the project inventory and census work. Village representatives confirmed and signed off on the inventory results of collective assets. All affected households and representatives of affected institutions have also confirmed the inventory by signing on the inventory results. The 1995 up-dated survey was also responding to local requests in view of the continuous development in the project areas.

Local governments, with the assistance of design institutes, proposed the initial resettlement plan. This plan was disclosed among affected and host villages for consultation. Resettler representatives were organized to tour the resettlement sites and met with host villages. Agreements were reached and signed off between the resettlement and host villages, and the resettlement and host governments before the project proceeded into the next stage of designs. Some villages proposed their own resettlement sites. These proposals were assessed by design institutes for technical feasibility and finalized after repeated consultations. All resettlement sites were finalized for implementation only after they were endorsed by the resettlers.

Resettlers are the key players in the resettlement implementation program and they drove the implementation process with assistance and supervision by the government. This is reflected in the following:

· Land purchase and resettlement agreements signed between resettlement and host townships, between resettlement and host villages after meetings and consultations. · Land compensation payment and transfer completed, coordinated and supervised by host governments. · Resettler finalization of their own household resettlement program. If different from planned alternatives, household preference was discussed with village council and assessed by design institutes and governments for feasibility, and finalized within all concerned. · Village layout and design finalized and endorsed by the villages.

- 53 - · Household residential plots allocation, normally following a procedure discussed and agreed during the village meeting. Typically it was collectively measured, demarcated, numbered and allocated by drawing lots. · House construction, generally organized by the households themselves following a village general plan. · Household financial compensation cards issued and publicized in the villages. · Household farmland allocated following procedures discussed and decided in the village meetings. · Use of village collective funds generally publicized in village bulletin boards and supervised by the villagers.

Grievance redress. Xiaolangdi Resettlement Project has established a grievance redress mechanism. All levels of resettlement offices have established grievance redress sections, with assigned staff to receive, register, resolve and follow up on the grievances. YRWHDCRO issued a “Working Procedures And Rules on Resettler Grievance Redress” which covers the scope, institutional setup, staffing and working procedure to address grievances.

The project followed the grievance redress procedure. Grievance redress started at the village level where village leaders would pass on the grievances to township and county resettlement offices if they cannot resolve it. Where grievances cannot be resolved within the policy framework of the project, resettlers have the alternative of filing cases at court. The project has a huge institutional setup to implement and supervise the resettlement program. This involves resettlement offices at various levels, the resettlement supervisor and independent monitors. The entire setup has maintained a continuous presence in the field to facilitate early identification and fast resolution of grievances.

Grievances redress continued throughout the project planning and implementation period. The project has registered 1122 grievances, most of which were registered orally by the resettlers. The grievances filed vary at different stages of the project and they can be grouped into issues on resettlement site (inside, outside movement), missed items or mistakes in inventory, compensation rates and abuse of power by village leaders.

· Selection of resettlement site was a complicated and time-consuming process. Finalization of the site selection went through repeated consultations, following frequent requests by resettler households during the project implementation to change the resettlement sites. Normally requests in this regard were discussed, assessed for feasibility and determined in consultation with the resettler households. In situations requiring adjustment to the overall project resettlement planning, such requests with recommendations based on investigations and consultations were submitted to the Ministry of Water Resources for final decisions. · Inventory record was the second most reported grievance. The biggest move on this is the 1994-1995 updated survey that led to increase in all categories of impacts and total project cost. Individual household grievances of this kind were normally first verified by villages and township governments, and then reported in summarized forms to the provinces for decisions. Major mistakes or missing items were verified by the Project Resettlement Supervisor, the RPDI and the Resettlement Offices and then recognized for compensation.

- 54 - · Compensation rates were generally publicized and known. Complaints about compensation rates were normally investigated by the project resettlement offices, and if true, would be required to be corrected. · Housing quality. In the early phases of the project, several villages organized construction of the new houses for the resettlers. These collectively built houses experienced quality problems. These were eventually addressed in a consultative process. · Land quality. Distance and quality of allocated land was another frequently reported complaint. Most of these were reported at village level, rather than household level. The issue was often the long distance to the allocated land, accessibility to irrigation and land quality. These issues were addressed on a village by village basis by county and provincial resettlement offices, through either engineering or alternative measures. · Abuse of power by village leaders and local officials. Village level democracy developed rapidly in the course of project implementation. Where village leaders abused their power, villagers voted them out of village administration. Some were put under criminal investigation when they broke the law. It is the same with local government officials.

- 55 - Additional Annex 12. Gender And Vulnerable Households in Resettlement And Rehabilitation

Vulnerable households

Vulnerable households refer to the old, disabled, household with people suffering chronic diseases, without labor, widowed and extreme poor. The Independent Monitor has covered these groups, totaling 5,175 people in 1,568 households, which is about 3 % of the total resettler population. The project office is keenly aware of the presence of the vulnerable groups and the need to give them special care during the resettlement design and implementation process. Under the care of the village council and various levels of project agencies, the vulnerable groups received special attention and assistance during implementation. All of them have received their resettlement entitlements, including land, house plots and various compensations and subsidies. Villages organized the construction of their new houses and all of them have moved into new houses. Specific assistance delivered to the vulnerable households include the following:

Budget provisions. The project has planned two support subsidies for the vulnerable groups. One is a 30.52 million yuan housing subsidy to support those households without or with very poor housing in new house construction. The other subsidy is a 14.36 million yuan education and health subsidy. These two subsidies were estimated and included in the project resettlement budget.

During the project implementation, some extreme poor households who used to live in caves experienced difficulties in building new houses. YRWHDCRO, HPRO and SPRO set up a special fund using physical contingency to address this issue. In Henan, a special fund was created at 1,000 yuan per resettler at 7% of the total resettler population, totaling 9.37 million yuan. This has benefited 9,370 people in 2,747 households. In Shanxi Province, the practice was to top up the house compensation for those whose house compensation fund was less than 2,500 yuan per person to 2,500 yuan per person. A total of 2.75 million yuan was spent in this regard, benefiting 2764 people in 698 households. These funds were allocated to the poor villages as part of the annual budget. The vulnerable households were identified by the villages themselves and confirmed by the local resettlement offices. The amounts for these households were publicized in the villages and paid to the households for house construction. These measures, totaling 12.12 million yuan benefited 12,134 people in 3,445 households and helped with the housing reconstruction process.

Assistance in housing and old age care. For vulnerable households who need assistance in construction of new houses, the villages normally played the leading role. They mobilized laborers, materials and even credit within the villages to help them build houses. Some villages also built village houses for the vulnerable households, such as the widowed and provided free meals. The new villages represent an improvement for the older people in terms of housing conditions, access to transport and health services. However, the changed environment also exerted psychological pressure on them. The project resettlement agencies and villages took particular care for the need of the old and widowed people. Some township governments and villages built nursing homes for the old and widowed people where the care cost is paid for by the township and villages. In the resettlement areas, there are 62 nursing homes. These nursing homes receive government subsidies and have medical staff and caregivers.

- 56 - Project Impacts on Women And Children

Women take up 48% of the total resettlers and 57% of them are in labor force (18-45 years old). They have played an important role in the resettlement process and the socioeconomic development in the resettlement areas. Women participated in the entire process of project planning and implementation. This includes the inventory, census, the finalization of resettlement sites, selection of housing type, land allocation, use of village compensation fund, livelihood activities, construction of village infrastructure and schools. Women also played an important role in income generation activities, particularly in aquaculture and planting industry. The project also paid important attention to the skill training and the active participation of women in livelihood development activities, such as green houses vegetable growing, forestry, fruit trees and courtyard orchard etc. There are 466 women staff, about 31% of the total staff at various levels of the project offices. There are also 553 staff in women’s union at various levels in the project areas. They participated in the village decision-making process in resettlement. Briefly, project impacts can be summarized as follows: l The project significantly improved the housing conditions of the resettlers. Women resettlers all feel that this is one of the key aspects of the improved living environment. l The project has significantly improved the physical living environment for the resettlers. All the resettlement sites are complete with streets, power, water supply and drainage systems. They no longer need to go and carry water over a long distance. This saved them time and energy. l The convenient location of the resettlement sites have also improved their access to information, market and job opportunities. l The project has also improved the conditions for livelihood activities and lessened the burden on female members of the resettler households. The resettlers who have moved into the plain areas now have higher level of mechanization that has reduced their work load in the field. l Women resettlers used to experience tremendous physiological and mental pressure before resettlement when their husbands worked as daily wagers in small coal mines where accidents were frequent. Coal miners often developed work-related diseases, such as arthritis and lung problems. With new livelihood alternatives, the incidence of these diseases is much reduced and they no longer have to worry about that. l Women resettlers received equal opportunities for education, training and extension service. The project has provided training to resettlers 84,550 person-times, including 34,665 for women. Women resettlers enjoyed an equal opportunities in land allocation, livelihood development and non-farm employment measures. They also participated actively in village politics in the resettlement process. l There were 29,239 children (aged 7-16) relocated, about 17% of the total. Their education was given the highest attention. According to the Independent Monitor, all resettlement sites with over 100 households have their own elementary schools and all sites with over 500 households have their own middle schools. All resettlement villages have met the state requirements in terms of teacher-student ratio and school area. The sample survey in 10 representative resettlement villages indicates that the teacher-student ratio is 5.9 teachers for every 100 students, while that of the host villages is 4.6. Their classroom area is 6.3 m2 per student compared with 5.8 m2 in the host villages. School attendance has reached 100% except in nine villages where seriously disabled children couldn’t go to school. l The best buildings in the resettlement areas are the school buildings. The study environment has improved. Children are much closer to their homes, have more time to play and study, and participate in after-school activities. Better school environment has also attracted better school faculty.

- 57 - l All resettlement villages have clinics and the resettlers enjoy improved medical treatment. Prior to resettlement, they did not have clinics in the villages and had to travel a long distance to township hospitals or clinics for treatment. Now, most villages have clinics that provide medical services. They are much closer to township or county hospitals. Monitoring data indicates that on average the resettler villages have 2.1 clinics in each village as compared with 2.4 in the host villages, 2.7 doctors compared with 2.4 in host villages and 3.2 kilometer to central hospitals as compared to 2.9 for the host villages. Women resettlers are able to receive regular check-up during pregnancy. Safety of both mothers and infants are much better ensured. At-home delivery has dropped significantly among the resettlers. In the project areas, hospital delivery has reached 90% for rural mothers and over 98% for mothers in their advanced maternal age. At the same time, children are now able to receive regular immunization services.

- 58 - Additional Annex 13. Project Organization and Management

Project Organization

The project organization was established as designed in the SAR. The Ministry of Water Resources was the overall responsible agency, represented by YRWHDCRO who managed the implementation of the project. HPRO and SPRO, with the prefecture, county and township resettlement offices, were the project implementing agencies. In addition, RPDI played a leading role throughout the implementation process as the project designer. North China Water Resources And Hydropower Institute was appointed as the Independent Monitor and was monitoring the project implementation since the project start. The MWR also engaged the Resettlement Bureau of YRCC as the Resettlement Supervisor. As designed, the International Environment And Resettlement Panel functioned according to its Terms of Reference as concurred by the World Bank.

Changes to organization. There are some changes in the organizational setup. First, the Leading Group as described in the SAR was modified into an annual coordination meeting between the provinces and the central ministries. Second, YRWHDCRO replaced the YRCC Resettlement Bureau as the project management agency. A Resettlement Supervisor was appointed during the course of project implementation to strengthen project management.

Organizational Function

Resettlement Leading Group. This was a high level coordination body, consisting mainly of the Vice Minister of MWR, and the vice governors of Henan and Shanxi Provinces. Their main function was to deliberate key policies and major issues in project implementation. The Leading Group had three meetings at critical times of the project implementation and helped address key issues.

MWR Resettlement Bureau. This bureau was supervising and guiding the project implementation on behalf of the ministry. It had five divisions with a total 23 staff. Its main responsibility was to supervise the project implementation, advise and recommend to the ministry on key project issues. The bureau carried out regular supervision of the projects and helped address bottlenecks during project implementation.

YRWHDCRO. This agency managed the resettlement implementation on behalf of the YRWHDC. It had four divisions with 42 staff. Its main responsibilities were to i) manage and coordinate project implementation, ii) liaison with the World Bank, iii) liaison with MWR and local implementing agencies, iv) contract and coordinate the external consulting services (RPDI, Independent Monitor, Resettlement Supervisor, International Panel etc), v) review and approve provincial implementation plans, vi) receive, disburse and supervise the use of resettlement funds, and vii) supervise project progress and coordinate resolution of key resettlement issues. This was one of the key and critical agencies. YRWHDCRO has effectively carried out its responsibilities, enabled the project to progress as planned and achieved the project targets in progress and quality.

Implementing agencies. Both Henan and Shanxi Provincial Governments established a project implementing system in their provinces. This involved two provincial resettlement offices, seven municipal resettlement offices, and thirteen county resettlement leading groups as well as resettlement offices. The main responsibilities of the implementing agencies involves i) the development and review of the resettlement plans, ii) development and review of the annual resettlement implementation plans, iii)

- 59 - disbursement and supervision of resettlement funds, iv) actual implementation of the resettlement and livelihood rehabilitation program, v) regular supervision and reporting of implementation progress and quality, vi) provision of assistance to the Independent Monitor, Resettlement Supervisor and the International Panel in their routine operations, and vi) overall project implementation. This involved over close to 1000 full time resettlement staff and the assistance of all other government agencies at the county and township level. This institutional setup represents the commitment of Henan and Shanxi Provinces to the successful completion of the project as well as the full restoration and sustainable development of the livelihoods of the resettlers.

RPDI. RPDI was the planning and designing institute of the Xiaolangdi Resettlement Program. It played a leading role in the resettlement planning and the detailed design of the resettlement program. Its main responsibility involved i) conducting inventory, ii) developing the resettlement plan, iii) participation in and guiding the preparation of the project implementation plan, iv) revision of the resettlement design and v) technical assistance and service in implementation. RPDI’s work has laid a solid and important basis for the finalization of the resettlement program and its implementation.

Independent Monitor, Resettlement Supervisor and International Panel. In order to ensure the successful implementation of the project, the project design included additional monitoring mechanisms, i.e. the Independent Monitoring, International Environment And Resettlement Panel. During the course of project implementation, MWR decided to introduce additional monitoring mechanism, i.e. Resettlement Supervisor. These mechanisms have much strengthened the management of the project. See Annex 14 for details.

Staff Training

Training has been an important step to build up the institutional capacity. Regular training were planned and carried out for resettlement staff at every level. Training activities included overseas and domestic study tours, various technical training sessions, trainings by experts, training in universities, staff exchange between projects, regular on-job training and on-site training as well. These training sessions cover resettlement policies, resettlement planning guidelines and methodologies, project management, resettlement accounting, environment protection, resettlement monitoring, supervision etc.

- 60 - Additional Annex 14. Project Monitoring And Supervision

As part of the project management system, the Ministry of Water Resources established an independent monitoring and supervision system. This system consisted of three parts, i.e. the independent monitoring of the resettlement progress, the independent supervision of the resettlement program and the independent monitoring of the environment and public health aspects of the project.

Independent Monitoring. As agreed in the Credit Agreement with the Bank, North China Water Conservancy and Hydropower Institute was appointed 1994 as the Independent Monitor to carry out social economic monitoring of the resettlement program. This monitoring was conducted twice a year since 1994.

Monitoring scope. The independent monitoring covered mainly social economic development status of the resettlers and the host population as well as the social adjustment of the resettler communities. Specifically it monitored, l Resettlement funds allocation, disbursement and use at various levels of government agencies l Compensation fund payment to resettler households and host villages l Livelihood activities l Resettler relocation l Living standard restoration assessment for both resettler and host population l Infrastructure development for both the resettler and host population l Public service systems (schools, hospitals etc) for both the resettler and host population l Social adjustment of the resettler communities (institutional setup, preferential policy implementation, social and economic integration of the resettler and host population l Vulnerable groups in resettlement l Women in resettlement

Monitoring organization and methodology. The monitoring team, which developed into the Resettlement Monitoring Institute, had 20 staff in the fields of economics, sociology, engineering, agriculture and irrigation. The institute also contracted local staff in the county and village to collect and verify monitoring data. Monitoring was conducted twice a year, with a final monitoring in January 2004. Independent monitoring was conducted on a sample basis (village and households) for each phase of the resettlement program. In order to be as representative as possible, the sampling has factored in geographical distribution, different phases of the resettlement program, different levels of economic development, different social economic settings, attention to the vulnerable groups. It covered 1538 households from 133 resettler villages and 206 households from 22 host village.

Monitoring information was collected through establishing a running database on income and expenditure for each sample household, interview of the sample households, focus group meetings, questionnaire investigation and special surveys. l Household database. Each sample household recorded its daily income and expenditure and compiled on a monthly and quarterly basis. Staff from the local monitoring stations visited them monthly to check and collect the information, and inputted the data into the computerized system as the main basis for income evaluation. l Household interview. In the semi-annual monitoring, the expert teams randomly checked on sample households on their income and expenditure against the running database. These interviews also

- 61 - covered other aspects of the resettlement program. l Focus group meetings with resettlers, women, different income groups, local government officials and project staff l Questionnaire survey on sample households at the resettlement sites. l Special investigations, such as on host population and affected industries. l Briefings from the project offices

The collected information was processed and analyzed for monitoring evaluation twice a year. The analysis was conducted comparing against the baseline information as contained in the general plan, baseline living standard survey and the Bank Staff Appraisal Report. At each monitoring would review the project physical progress, the implementation process, the overall impacts of living standard restoration as well as following up on issues identified in the previous monitoring exercises, using both qualitative and quantitative methods. Apart from the regular tracked household monitoring, the Independent Monitor provided two baseline living standard surveys, 21 regular monitoring reports, three special monitoring reports as well as one final monitoring report on the overall project at the beginning of 2004.

The project monitoring is a decade-long process of exploring, learning and improvement through practice. Independent monitoring of resettlement program was a new concept at the start of the project in 1993. The government, the Bank and the Independent Monitor experienced a long and gradual process of development and improvement process in terms of monitoring concept, scope, procedures and methodologies. This is well reflected in each monitoring report. This is pioneering work at this scale and has served the project well.

Resettlement Supervision. YRWHDCRO replicated the practice of supervising engineer for civil works management and appointed ‘the Resettlement Bureau of the Yellow River Commission’ as the project/Resettlement Supervisor.

Supervision organization. The supervisor started working in June 1996 and has conducted supervision for Phase I-III of its reservoir resettlement. The supervisor has adopted a Chief Supervisor Responsibility System. The Resettlement Bureau established a supervising team under the leadership of the Chief Supervisor with 43 supervising staff. Six supervising stations were set up in the project counties, each with 5-6 staff. The chief supervisor was responsible for the execution of the supervision contract and coordination with local governments and the project offices.

Supervision scope. According to the supervision contract, the supervision covered the following, l Resettlement physical progress, including resettlement site development, infrastructure development at the site, residential house construction, farmland allocation, on-farm development, town relocation and reconstruction, resettlement and reconstruction of large schemes, restoration of infrastructure and public facilities around the reservoir, relocation of institutions and enterprises, resettler relocation and reservoir clearance. l Resettlement funds, covering fund disbursement at different levels of government and fund use according to annual plans, payment of resettlement compensation. l Construction quality and specifications, covering infrastructure, resettler houses and public buildings. l Information management, covering implementation information collection and exchanges.

- 62 - l Contract management, covering the implementation of contracts between different levels of governments; and l Coordination, covering continuous information disclosure, relationships between resettlers and construction units and contractors with the project office.

Supervision methodology. The methodology includes the following, l Information collection through site inspection, interviews and group meetings; l Reporting system. Supervision teams conducted monthly overall supervision, submitted supervision reports to Chief Supervisor who provided monthly overall project supervision briefs and quarterly supervision reports to local governments and the project offices. The supervisor produced one final supervision report for the entire project.; l Sharing supervision information with all relevant project agencies, including MWR, project office, province, city and county governments; l Information disclosure in oral and written format to local governments and local people about project policy and planning details, problems and agreed measures to address them; l Supervision notice. In case of identification of major problems or deviations from design, contracts or plans, supervising staff would issue supervision notice to alert relevant agencies, recommending and requesting corrective measures; and l Regular supervision and coordination meetings with contractors, project office, villages and local governments to discuss identified or potential problems and recommendations to address them.

Evaluation of Resettlement Supervision. The past six years of practice indicate that resettlement supervision has proved to be an effective and necessary tool in i) checking on the progress, quality and financial flow of the project, ii) quantifying and confirming resettlement progress through independent and first-hand data, iii) facilitating information flow and iv) improving coordination among contractors, project offices, communities and local governments.

International Panel of Experts. Xiaolangdi Resettlement Project established this panel in July 1994 to assist in the implementation of the resettlement and environmental aspects of the project. The panel consisted of domestic and international experts of various expertise. Its composition changed during different phases of the project when the perceived needs and advice had also changed. The panel convened 11 times and produced 11 reports. In general, the panel played a useful role in the project management and provided good advice in its implementation and management.

- 63 - Additional Annex 15. Environment Management

Xiaolangdi Resettlement Project has effectively executed “the Project Environmental Management Plan (EMP)” as described in the SAR and agreed in the Credit Agreement. The implementation of the EMP is considered Satisfactory and has realized its major environmental objectives. In July 2003, the State Environmental Protection Agency, on the basis of a nation-wide assessment, awarded the Xiaolangdi Multipurpose Project (including the Xiaolangdi Resettlement Project) the third place among the 100 most environment-friendly investment projects in China. The project is considered to have many pioneering practices which would be of much value for future investment projects in China.

Major Environmental Impacts & Environment Management Plan The project Environmental Impact Assessment (EIA) was developed in 1992 and it detailed project environmental impacts. The major environmental issues are related to impacts of i) inundation and relocation, ii) cultural relics, iii) resettlement activities in host areas, iv) public health among both resettlers and host population; v) relocation and development of industries and vi) reservoir clearing.

As an important part of the EIA, a comprehensive EMP was developed detailing environmental management tasks for both Xiaolangdi Multi-purpose Project and the Resettlement Project. The EMP covered ten aspects of environmental management activities involved in implementation of XRP, including: i) establishment and operation of environmental management system; ii) environmental management in resettlement villages; iii) environmental management in resettlement enterprises; iv) environmental management in host areas; v) reservoir clearing; vi) cultural relics; vii) environment monitoring; viii) environment training; ix) use of international panel of experts and x) provision of environmental management fund.

Implementation of EMP Establishment of Environmental Management System. Since 1994, Xiaolangdi Resettlement Project established an environment management system to implement the EMP. This is the first such system in China that introduces the environment management office (EMO), environment supervising engineer (ESE), village environment officer (VEO), and panel of experts (POE) into implementation of a major resettlement Project, which are described below. l YRWHDCRO established an EMO in 1994. This EMO was responsible for the management and monitoring of the implementation of the EMP. Several technical consultants from resettlement design institute and environmental monitoring institutes were contracted to provide technical assistance to the EMO. l The EMO employed a team from RPDI as the project ESE with responsibilities to supervise, monitor and provide on-site assistance to local ROs and villages during the implementation of the EMP. The team consisted generally of six environmental professionals. l A VEO was selected and appointed in each resettlement village. This VEO was usually a member of village committee. Special training was provided to all VEOs. The VEOs were responsible, under guidance of the ESE, for the implementation of the EMP in the villages including implementation of environmental facilities and public health programs. l An international panel of experts on environment and resettlement (POE) was established by the YRWHDCRO. The purpose of the sub-panel was to review every six months the performance of all parties involved in environmental management and to report to both the YRWHDCRO and the World

- 64 - Bank on its findings and recommendations for needed improvements. l In addition, the system also involved provincial and county resettlement offices, Henan and Shanxi Provincial Archeological Institutes, other environmental monitoring institutes and local environment protection bureaus.

The following figure illustrates the parties involved in the system and their relationships.

World Bank YRWHDCRO Local EPBs

Management/contract Coordinate/report

EMO/RS POE

Henan/Shanxi ROs

City/County ROs Henan/Shanxi AIs WRPB YRC RPDI H

Reservoir Area and Resettlement Area / Resettlement Villages and VEOs

Note: YRWHCRO–responsible for implementation of XRP; EMO-fully responsible for overall environmental management for XRP ; WRPB – Yellow River Water Resources Protection Bureau, responsible for drinking water quality monitoring in resettlement villages; YRCH–Yellow River Central Hospital, public health; RPDI–Environmental Supervision Engineer (Environmental Inspectors); Provincial and local ROs–responsible for implementation of XRP in their administration area; Henan/Shanxi AIs– Henan/Shanxi provincial Archeological Institutes; VEOs–Village Environmental Officers; POE–Panel of Experts, meet semi- annually to review environmental performance of all parties involved;

In order to ensure smooth and effective operation of the system, a reporting mechanism was established. The EMO produced semi-annual reports to local government, to the POE, and to World Bank supervision missions.

This management system with EMO as the core element, was effective and ensured the implementation of the EMP and the realization of the major objectives stated in the EMP. Xiaolangdi experience on environmental management has shown that such a system is necessary for a large scale resettlement project such as XRP in China or in other developing countries.

- 65 - Environmental management in resettlement villages. The key component of the EMP was the provision and operation of environmental and public health facilities in the new resettlement villages for resettlers. These facilities, including housing, water supply, drainage, road, solid waste treatment, excreta management, health care, and school sanitation significantly improved resettler’s sanitary conditions and helped with the protection of resettlers’ health in new resettlement areas. The following facilities have been made available to resettlement villages: l Water supply to 100% of the households with piped water to 80% households and yard, and individual wells to the rest 20% households; l Sanitary or improved toilets to 100% households: two-pit toilets: 64%; water flush toilets:10%; single-pit toilets: 26%; l In village drainage in 100% villages; l Designated solid waste disposal sites for 57% villages; l Paved in-village roads in 100% villages with 74% hardened (concrete or asphalt); l Paved access roads to 100% villages with 81% hardened (concrete or asphalt); l 1-5 clinics in each village; l Power supply available to 100% villages; l Telephone service to 100% villages; l TV programs to 100% villages; l Significant tree planting in over 50% villages.

An innovative practice in implementation of environmental protection measures (EPMs) in resettlement villages is the use of village environmental officers (VEOs). Each resettlement village appointed one VEO, usually a member of village committee, to be responsible for ensuring implementation of the EPMs in the village including construction of environmental facilities and implementation of public health programs. Xiaolangdi experience has indicated that use of VEOs in XRP is quite successful and the VEOs have played a unique role in the implementation of EPMs in resettlement villages.

Environmental management in resettlement enterprises. Due to the cancellation of the industrial resettlement component, only a few enterprises were established for resettlement. Only 34 of the affected enterprises were relocated or shifted to new production activities, of which most are small scale township or village enterprises (TVEs). They were closely monitored by local environmental protection agencies for compliance with Chinese environmental requirements during relocation or development. Periodic monitoring and investigation by ESE showed that generally, those enterprises observed Chinese environmental requirements including EIA requirements.

Environmental management in host area. Environmental impacts of the project on host area were mainly related to the natural environment and the quality of life of host population. As the resettlers moved into the host areas, one of the concerns was about possible pressure on wildlife, forests and soil erosion due to the intense land development of resettlers. Measures were taken into consideration in the detailed project designs to prevent these possible impacts. Most resettlers were relocated in the already developed agricultural areas. Tremendous emphasis was placed against tree cutting and on tree plantation in resettlement areas. In addition, many villages also participated in the government’s “Land Retirement Program”, which reverted slope farmland to forestry land. The impacts of resettlement project on natural environment was quite limited.

A public health monitoring program was carried out since 1996 in both resettlement and host areas including reservoir surrounding areas. The monitoring program includes disease incidence investigation, physical examination for villagers in five resettlement villages and four host villages. The monitoring

- 66 - results showed that project implementation did not cause adverse impacts on public health in host areas.

Environmental monitoring. The project environment monitoring mainly includes monitoring of implementation of EMP, water quality in resettlement villages and public health of both resettlers and host population. The Environment Supervising Engineer (ESE) carried out the environmental monitoring of the implementation of the EMP in resettlement villages and in resettlement enterprises. The involvement of the ESE proved to be quite effective. The regular monitoring facilitated timely information flow on environmental issues and helped the EMO make management decisions and their timely execution.

The YRPB was assigned by the EMO to be responsible for monitoring of drinking water quality in resettlement townships and villages. The monitoring covered all resettlement villages. Monitoring findings helped with the selection of the resettlement sites and ensured safe water supply to resettlers.

The Yellow River Central Hospital (YRCH) was responsible for monitoring sanitation and anti-epidemic program in resettlement villages. YRCH carried out physical examinations for resettlers and host villagers since 1998. YRCH concluded from these examination that there was no outbreak of state-classified infectious disease (Category 1-2) and there was no discernable difference on disease cases and morbidities between resettlement villages and host villages and between villages relocated locally and villages relocated in other county.

The YRCH also carried out investigations on infectious diseases in Xiaolangdi Area in 1996, 1998, and 2001 respectively. From the investigation results, following conclusions may be made:

· No obvious increase on the morbidities of those infectious diseases occurred, compared with the morbidities in 1985 before commencement of Xiaolangdi Project, which means no significant impacts of Xiaolangdi Project on infectious diseases situations in Xiaolangdi Area. · The morbidities of the three major infectious diseases in Xiaolangdi Area identified in EIA/1992, malaria, hemorrhagic fever, and encephalitis, decrease yearly and have decreased to a quite low level, from 2.56/100,000 in 1986 to 0.22/100,000 in 2000, from 8.68/100,000 in 1986 to 0.16/100,000 in 2000, from 3.65/100,000 in 1986 to 2.44/100,000 in 2000, respectively, which indicates that the implementation of the EPMs on public health in Xiaolangdi area has been quite effective.

Reservoir Clearing. In line with the regulation issued by MWR on reservoir clearing, the reservoir clearing was carried out in three phases. County resettlement offices took the lead in organizing and implementing the clearing activities following requirements set up by MWR. Pertinent sanitary, anti-epidemic and environmental protection agencies took part in the clearing activities. Each clearing was firstly inspected and accepted by an inspection team formed by representatives from YRWHDCRO, HPRO, SPRO, provincial environment protection bureau, project design institute and other related agencies. Final acceptance and approval was given by a group of officials and experts organized by MWR. Reservoir clearings were been carried out in 1997, 1999, 2000, 2001 and 2003 respectively and all the clearings have been accepted with satisfaction.

Environmental training. The International Panel of Experts provided basic training to EMO staff and environmental monitoring teams. The EMO and provincial resettlement offices organized five training courses for VEOs during 1998-2002. The training courses for VEOs proved to be quite effective. Though the training by the POE was quite valuable, one big gap in Xiaolangdi environmental management was the lack of systematic training for YRWHDCRO and EMO staff, environmental officials of provincial and county ROs and for staff of environmental monitoring institutes. The gap caused unnecessary difficulties

- 67 - in the process of implementation of the EMP, particularly at the beginning phase.

Use of International Panel of Environmental Experts (POE). As agreed in the Project Credit Agreement, an international panel of experts on environment and resettlement (POE) was established by the YRWHDCRO in 1994. The POE consisted of two foreign and seven domestic experts three of whom formed the environmental sub-panel. A total of 12 POE meetings were held and 12 POE reports were prepared in the period of 1994-2000. Xiaolangdi experience showed that use of the POE has proven to be necessary and successful. The POE played an essential role in guiding and promoting the establishment and effective operation of the environmental management system and the successful implementation of the EMP.

Environmental management fund. In the project EMP, a total of 125.6 million yuan was estimated for the implementation of the overall EMP for both the dam construction and the resettlement. A total of 72.42 million yuan was budgeted and approved for implementation of the EMP for the Resettlement Project in 1998, in which: l 14.46 million yuan for reservoir clearing; l 35.26 million yuan for protection of cultural relics; and l 22.52 million yuan for other tasks of the EMP/RS.

The other tasks of EMP/XRP included establishment and operation of EMO, environmental monitoring, environmental supervision, environmental training, operation of international panel of experts, and special fund for environmental subsidies (VEOs and extension of two-pit toilets) etc. By the end of 2003, all above budgets had been made available.

- 68 - Table 1: Summary Evaluation of Implementation of Environmental Management Plan in XRP

Item Task Description Implementer Implementation Evaluation Status 1. Set up Organize and monitor implementation Yellow River Implemented Environmental of environmental protection activities Water and Highly Management Hydropower Satisfactory Leading Group and Development EMO Corporation (YRWHDC) 2. Seismic Tasks of EMO/Dam/YRWHDC Not Applicable Monitoring 3. Planning and a. complete EIA of resettlement area Local Implemented Satisfactory Monitoring b. organize and implement resettlement Implemented Satisfactory Implementation environmental aspects of resettlement offices, Implemented Satisfactory of Resettlement planning environmental Implemented Satisfactory c. write up quarterly report on protection Implemented Satisfactory resettlement progress bureaus (EPBs), d. do annual socioeconomic experts employed environmental evaluation in the host by EMO/RS area e. conduct environmental management of development projects 4. Protection of a. organize and monitor Provincial Implemented Satisfactory Cultural Relics implementation of cultural relics Cultural Relics protection activities Bureaus b. prepare quarterly reports 5. Sanitation and a. give annual physical examinations to Reservoir Implemented Satisfactory Anti- epidemic 1-10% of people in host areas or other Anti-epidemic Program affected areas Station and Implemented Highly b. monitor epidemic situations, rats, station at Implemented Satisfactory mosquitoes, diet, hygiene province, Implemented Highly c. control rats and mosquitoes to prefecture, and Satisfactory prevent malaria, encephalitis and municipal levels hemorrhagic fever Satisfactory d. distribute vaccines to susceptible communities 6. Monitoring of a. b. c. – Tasks of YRCC Water Water Quality EMO/Dam/YRWHDC Resources Bureau Implemented Satisfactory d. analyze water quality 7. Construction Tasks of EMO/Dam/YRWHDC Not Applicable Area 8. Reservoir a. Clear the reservoir area Resettlement Implemented Highly Clearing Office Satisfactory 9. Special Studies Tasks of EMO/Dam/YRWHDC Not Applicable 10. Environmental a. set up an environmental library EMO/RS Implemented Satisfactory Library, b. employ expert consultants as Implemented Highly Consultants and required Partially Satisfactory Technical c. technically train staff of EMO/RS Implemented Unsatisfactory Exchanges and EIA Team

Note: 1. The table is prepared in accordance with the summary table of EIA/Xiaolangdi Project 1992; MWR = Ministry of Water Resources; 2. EMO/RS= EMO under Xiaolangdi Resettlement Office which is responsible for environmental management of Xiaolangdi Resettlement Project; 3. EMO/Dam/YRWHD= EMO under YRWHDC which is responsible for environmental management of Xiaolangdi Dam construction and operation.

- 69 - Additional Annex 16. Cultural Property Preservation And Protection

The project is located in the cradle of the Yellow River civilization and the creation of the Xiaolangdi Reservoir has great impacts on the many cultural and historic sites both under and above ground. Following Chinese policies, identification, restoration and protection of cultural relics were integrated into the project design and human resources nation-wide were mobilized to carry out the cultural relics work that largely includes exploration, excavation, restoration and protection. Restoration and protection plans were implemented with satisfaction and key findings have been studied and published.

Chinese policies. The Chinese government has enacted a series of laws, regulations, technical guideline and standards regarding cultural relics protection in capital investment projects. They cover the definition, classification, appraisal and treatment procedures of cultural relics, methodologies and responsibilities for cultural relics protection in design and approval of civil works, investigation, exploration and excavation of cultural relics in construction, funding as well as repairing, preservation and research of found cultural relics. Main principles followed are: l For large civil work investment, the project proponent should work with the provincial cultural relics administration bureaus to investigate and explore the possible relics sites. l If any relics is found, the project proponent and the cultural relics administration bureau should reach an agreement on the required measures which will be reviewed by the Chinese Social Science Academy and approved by the State Cultural Relics Administration Bureau. No civil work is allowed to start before completion of excavation. l If relics is found during construction, the civil works should be stopped immediately. The local cultural relics administration bureau should be informed. If the relics is precious, the local relics administration bureau should report to the provincial cultural relics bureau for required treatment. l The qualification of the excavation institute and team leaders should be reviewed and certified by the State Relics Administration Bureau. l Funding for cultural relics exploration and excavation under investment projects should be provided by the project proponents.

Management system for cultural relics. China has in operation a multi-level management organization for the exploration, restoration and protection of cultural relics. This project expanded the system which involves several lines of institutions: l Central administration. This involves the State Planning And Development Commission, State Cultural Relics Administration Bureau. They reviewed and approved the project plan and design for cultural relics exploration and protection. l Local administration. This involves provincial and county cultural relics administration bureaus. They guided, organized and supervised the actual implementation of the approved plans in their own jurisdiction. They also participated in the exploration, preservation and protection work.

- 70 - l Technical teams. There are two tiers of experts working on the project. The first tier are the national and provincial research institutes. They include the Chinese History Museum, Zhengzhou University, Zhongshan University, Wuhan University, Henan Relics Research Institute, Shanxi Cultural Relics Research Institute, Henan Ancient Architecture Research Institute, Chinese Geologic University, and People’s Liberation Arm Measurement College. The second tier are the municipal and county research institutes and archaeological teams.

YRWHDCRO signed a contract with Henan Cultural Relics Administration Bureau for the detailed design and implementation of the cultural relics protection work. The bureau established a leading group consisting members from all relevant organizations. They also established several archaeological teams. For each identified site, the bureau established specific excavation teams under an appointed team leader. Sites of significance were treated as separate projects and the bureau established separate teams for each. The participation of national experts of the many different disciplines have optimized the excavation design, provided critical advice during excavation, restoration and maximized research values of the cultural properties.

Planning for cultural relics protection. Henan Cultural Relics Protection Bureau worked with RPDI who was the chief designer of the project, and developed the project operational procedure in line with national laws, policies, regulations and working procedure. Cultural relics preservation and protection was well incorporated into the different phases of the resettlement planning and design.

Every excavation site got approval and certificate from the State Relics Administration Bureau. Besides conducting review on

Given the cultural significance of the project area and the project impact, survey, planning and design work on cultural relics exploration and protection started in 1982 when the State Relics Administration Bureau instructed Henan and Shanxi Provincial Cultural Relics Bureaus to start exploration and inventory work in the reservoir area. Both national and local expert teams were mobilized for this large-scale inventory work. Over 100 national and local specialists participated in this work. The investigations began with the layout of the civil work to define the scope and schedule of the investigation. The expert teams researched related historical documents, local records, archaeological history and conducted interviews with local people, particularly with old people as well as field survey. A detailed record was kept with mapping on the location, scope, status, age and culture of the relics, ancient tombs, ground ancient architecture and ancient inscriptions. While archaeological work continued during this period, three large scale investigations were conducted. The findings were presented in special reports, with all site locations mapped, classified for significance in line with local policy and a budget were produced. This continued into the late 1980’s and the inventory was incorporated into the project preliminary technical design for inundation treatment and resettlement plan in 1991.

The inventory identified 180 sites of cultural significance. This includes 129 underground sites, covering 3,270,000 m2 from the Neolithic Age to Song Dynasty, and 40 ground sites covering an area of 2,070,000 m2 from Mesolithic Age to Song Dynasty. The local panel of experts reviewed the inventory data, field reports and recommended drilling exploration to cover 3,265,800 m2 of the area and site excavation in 327,000 m2 of the area. Different treatment approach was adopted to the ground relics according to classification of national standards. This includes complete relocation, partial relocation, modeling and treatment of the unearthed cultural relics as well as documentation and follow-up study of the underground findings. These were all included in the detailed design. The Ministry of Water Resources and State Planning Commission reviewed and approved the project preliminary technical design in 1993, including

- 71 - the strategy and action plans for cultural relics exploration, excavation and protection. This preliminary design was later updated with detailed design for each phase of the resettlement program.

Implementation of protection measures. Main activities planned include excavation of underground sites, treatment, documentation and follow-up study of unearthed relics, treatment of ground cultural relics including relocation, modeling, etc.

Large scale excavation started in September 1994 when the dam construction started. While expert institutes from Henan and Shanxi provinces took the lead in the field work, experts from all over the country were mobilized, including Chinese History Museum, Northwestern University, Zhongshan University, Chinese Science University, Beijing Normal University, Geological Institute of Chinese Science Academy, Ancient Invertebrate and Human Being Research Institute, Biology Research Institute, and Archaeological Institute of Chinese Social Science Academy. This is the also the first project where multi-disciplinary approach was adopted for exploration of cultural relics in investment projects. The experts participating in the exploration are of field archaeology, science archaeology, environment archaeology, animal archaeology, plant archaeology, history, geology and paleoanthropology, ancient biology, ancient architecture etc.

In the reservoir area, the main ground relics include grottoes, steles, ancient plank roads, temples, houses, bridges and city gates from the many dynasties in the past 2000 years. The main protection method was to investigate and describe the relics by word, graph, picture and video. Valuable relics were relocated and reconstructed. All planned protective and preservation activities were completed.

YRWHDCRO and Henan Cultural Relics Research Institute published “Archaeology Reports on Cultural Relics in The Area of Xiaolangdi Reservoir”, systematically documenting the findings and research of the unearthed cultural relics. Various research and studies were produced and published in professional journals.

Major Activities and Accomplishments in Xiaolangdi Reservoir Cultural Property Protection

Activities Henan Shanxi Unearth l 35 Yangshao cultural relic sites l Yangshao Culture and Miaodigou underground relics (Mesolithic Age): Bancun, Phase II:Xiaozhao relic site, Changquan, Huailin, Juanzi, Ningjiapo relic site, pottery kilns in Xiwo, Zhuoziping, Baigou, Sanjiagou, Nanbao, Xiabo, Xiama, Taijian, Huangpo, Maluo, Dongguan, Liuzhuang, Wufujian, Mahe, Yangjia, Yanghu, Xihetou, Xizhai, Shaping, Longyan, Zhaigen, Yandong, Zhouli, Diantou, Beibaotou, Hexi, Ningjiapo Qinghe, Qiaogou, etc. l Longshan Culture:Dongzhai l 12 Longshan cultural relic sites l East Dong and Han Dynasty:Shangbo l Shang Dynasty:Jiaodui relic site relic site, Dongtan, Xunguduo, Guli l Late Tang Dynasty:Yong Tomb l Erligang City site of Shang Dynasty l Han, Tang and Song l Late Banpo cultural relic dynasties:Xicun site:Southern Fortress Commercial l Han Dynasty:Yangdong storage City, Western Fortress relic site, relics Xigou relic site and Xiaodui relic site l Hangu Fortress of Han Dynasty l Tang and Song dynasties:Longyan in Xin'an relic site

- 72 - l Porcelain kilns in Xin'an l East Zhou's tombs:Xiguan, l 13 tombs of Tang and Han Xinzhuang, Shangbo City dynasties l Tombs:Zhaili l 1 city site of Dongzhou Period l Calligraphies on Yellow River l Ancient tombs in Liangzhuan, navigation of Han, Tang, Song and Cangtou, etc. Ming dynasties l Ximiaopu relic site of Xiaozhao Village of Gucheng Township Remove and Remove and protect the entire Xiwo l Investigate, map and remove the restore the ground Grottoes in Xin'an and the Tang temple of Ming and Qing dynasties: relics Emperor Temple in Jiyuan remove and restore the Guan Emperor Temple Survey the ground Map, remove and reconstruct l Map, remove and reconstruct 18 ancient residences Xianghu residences, Lu Family's mansions of Ming and Qing dynasties and buildings mansion and Huayan with 129 rooms at the five sites of Xi Temple in Mianchi Jinbang, Li Xuezhong, Liu Wenqing, Wen Yugen and Zhang Yinlin Survey, map and Collection of Lu's stone inscriptions l Map and partially remove 80 remove the ground epigraphies of Ming and Qing stone inscriptions dynasties and wood roads Survey, map and Investigate about 2,000 meters of l Survey, map and photograph 5,000 remove the ground ancient wood roads in the Yellow meters of Han and Tang dynasties' ancient relic sites Rive's Balihutong and Tang wood roads, and model made for part Dynasty's Yulin City, and study the of them. Yellow River's navigation

Budget and financing. The total budget for cultural relics preservation and protection was estimated at 35.26 million yuan. This budget was reviewed and approved by the State Planning Commission.

- 73 - Additional Annex 17. Post-resettlement Assistance

The Chinese government has adopted a development strategy for implementing reservoir resettlement. Post-resettlement support in livelihood development is one of the key aspects of this strategy in sustainable livelihood development. This support mechanism in reflected in the following aspects,

Livelihood Support Program. Following local policy and the Credit Agreement with IDA, the government has established a post-resettlement support fund to finance post-resettlement livelihood programs. The government stipulates that a fund will be created at 250-400 yuan per resettler per year out of the power sales from the project to support post-resettlement activities. The support period is generally expected to be 10 years after relocation. In Xiaolangdi Project, the State Council has ruled that the support fund will be 300 yuan per resettler per for 10 years. The total support fund is expected to be 600 million yuan for the next 10 years. Both Henan and Shanxi Provinces have developed livelihood development programs in line with this fund. By the end of 2002, the Xiaolangdi Multi-purpose project has contributed 29.91 million yuan to the post-resettlement support fund, including 23.58 million for Henan Province and 6.33 million for Shanxi Province. These funds are mainly used to support livelihood development activities and vulnerable groups.

Social and Extension Support System. The government social support and extension systems in the host areas started to serve the resettler villages once they completed their relocation. The government support systems include social welfare, health, education, science and agriculture extension services. These services have become available to the resettlers as soon as they moved into the host areas and have played an important role in their livelihood reestablishment and development.

Organization. While local governments provide the general social and extension support services as their routine functions, the project resettlement offices at provincial and county level will be maintained to manage and supervise the implementation of the post-resettlement livelihood programs. The Resettlement Bureau of MWR will continue its guiding and supervising function for the post-resettlement livelihood development activities while Henan and Shanxi Provincial Resettlement Offices will continue to assign staff to manage and supervise the post-resettlement livelihood activities. The project county resettlement offices will be maintained in most counties, particularly those with large number of resettlers, to implement and manage the post-resettlement resettlement activities, though the staffing may be scaled down due to the reduced workload.

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