Completion Report

Project Number: 33437-01 Loan Number: 1919 December 2011

People’s Republic of China: Songhua River Flood Management Sector Project

CURRENCY EQUIVALENTS

Currency Unit – yuan (CNY)

At Appraisal At Project Completion

15 August 2002 23 November 2010 CNY1.00 = $0.12 $0.15 $1.00 = CNY8.28 CNY6.63

ABBREVIATIONS

ADB – Asian Development Bank CPCO – central project coordination office EA – executing agency EMP – environmental management plan FSR – feasibility study report IEE – initial environmental examination IMAR – Inner Mongolia Autonomous Region MWR – Ministry of Water Resources NDRC – National Development and Reform Commission O&M – operation and maintenance PDR – preliminary design report PMO – project management office PRC – People’s Republic of China PSC – project steering committee SWRC – Songliao Water Resources Commission

WEIGHTS AND MEASURES ha – hectare km2 – square kilometer m3 – cubic meter mu – a Chinese unit of measurement (15 mu = 1 ha) t – metric ton

NOTES

In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2 Director General K. Gerhaeusser, East Asia Department (EARD) Country Director P. Heytens, PRC Resident Mission (PRCM), EARD

Team leader X. Shen, Senior Project Officer (Natural Resources and Agriculture), PRCM, EARD Team members M. Gan, Associate Project Analyst, PRCM, EARD X. Jiang, Operations Assistant, PRCM, EARD W. Zhu, Senior Safeguards Officer (Resettlement), PRCM, EARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page BASIC DATA i MAP v I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 4 D. Disbursements 4 E. Project Schedule 5 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Consultant Recruitment and Procurement 6 I. Performance of Consultants, Contractors, and Suppliers 7 J. Performance of the Borrower and the Executing Agency 7 K. Performance of the Asian Development Bank 7 III. EVALUATION OF PERFORMANCE 7 A. Relevance 7 B. Effectiveness in Achieving Outcome 8 C. Efficiency in Achieving Outcome and Outputs 8 D. Preliminary Assessment of Sustainability 9 E. Impact 9 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 11 A. Overall Assessment 11 B. Lessons Learned 12 C. Recommendations 13 APPENDIXES 1. Project Framework 15 2. Component 1: Flood Management System 22 3. Component 2: Flood Control Works 24 4. Project Cost and Financing Plan 28 5. Projected and Actual Contract Awards and Disbursements 30 6. Project Implementation Schedule 31 7. Organization Chart and Flow of Funds 33 8. Status of Compliance with Loan Covenants 34 9. Economic Reevaluation 40 10. Social Impact and Poverty Reduction Assessment 47 11. Evaluation of Land Acquisition and Resettlement Activities 53 12. Environmental Impact Analysis 60

BASIC DATA

A. Loan Identification

1. Country People's Republic of China 2. Loan Number 1919 3. Project Title Songhua River Flood Management Sector Project 4. Borrower People's Republic of China 5. Executing Agency 1. Ministry of Water Resources 2. Heilongjiang Provincial Government 3. Jilin Provincial Government 4. Inner Mongolia Autonomous Regional Government 6. Amount of Loan $150.0 million 7. Project Completion Report Number PCR: PRC 1303

B. Loan Data 1. Appraisal (Phase 1) – Date Started 21 October 2001 – Date Completed 5 November 2001

2. Appraisal (Phase 2) – Date Started 23 November 2001 – Date Completed 3 December 2001

3. Loan Negotiations – Date Started 6 August 2002 – Date Completed 8 August 2002

4. Date of Board Approval 20 September 2002

5. Date of Loan Agreement 14 February 2003

6. Date of Loan Effectiveness – In Loan Agreement 15 May 2003 – Actual 29 May 2003 – Number of Extensions 1

7. Closing Date – In Loan Agreement 31 December 2007 – Actual 31 December 2009 – Number of Extensions 1

8. Terms of Loan – Interest Rate London interbank offered rate (LIBOR) based – Maturity (number of years) 25 – Grace Period (number of years) 5

9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval

29 May 2003 23 November 2010 90 months Effective Date Original Closing Date Time Interval

29 May 2003 31 December 2007 55 months

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b. Amount ($ million) Net Original Last Revised Amount Amount Amount Undisbursed Category Allocation Allocation Canceled Available Disbursed Balance 01A Civil Works (non- 46.3 60.0 0.9 59.1 59.1 0.0 poor subprojects) 01B Civil Works (poverty 52.6 50.1 0.4 49.7 49.7 0.0 subprojects) 02A Equipment 12.3 16.0 0.5 15.5 15.5 0.0 02B Vehicles 2.5 4.5 0.2 4.3 4.3 0.0 03A Overseas Training 1.4 0.3 0.0 0.3 0.3 0.0 03B Domestic Training 0.3 0.0 0.0 0.0 0.0 0.0 04 International 1.9 4.4 0.0 4.4 4.4 0.0 Consultants 05 Monitoring and 0.4 0.5 0.0 0.5 0.5 0.0 Evaluation 06 Incremental PCO 0.5 0.5 0.0 0.5 0.5 0.0 Operating Costs 07 Front-end Fee 1.5 1.5 0.0 1.5 1.5 0.0 08 Interest and 14.6 12.2 0.0 12.2 12.2 0.0 Commitment Charge 09 Unallocated 15.7 0.0 0.0 0.0 0.0 0.0 Total 150.0 150.0 2.0a 148.0 148.0 0.0 PCO=Project Coordination Office. a $1,956,244.08 was cancelled at loan closing.

10. Local Costs (Financed) - Amount ($) $13,324,239 - Percent of Local Costs 4.4% - Percent of Total Cost 3.1%

C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost 134.0 134.7 Local Currency Cost 223.7 299.1 Total 357.7 433.8

2. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs ADB Financed 135.5 135.8 Borrower Financed 207.7 285.8 Sub-total 343.2 421.6

IDC and Commitment Charges ADB Financed 14.5 12.2 Borrower Financed 0.0 0.0 Sub-total 14.5 12.2 Total 357.7 433.8 ADB = Asian Development Bank, IDC = interest during construction.

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3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual A. Component 1. Flood Management 29.9 29.8 2. Flood Control Works 307.1 388.3 3. Project Management 4.6 2.0 B. Front-end Fee 1.5 1.5 Total Base Cost 343.1 421.6 C. Interest and Commitment Charges 14.6 12.2 Total Project Cost 357.7 433.8 Source: Songliao Water Resources Commission. 4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants (Package 1) July 2004 July 2004 Date of Contract with Consultants (Package 2) July 2004 July 2004 Completion of Engineering Designs (34 subprojects) March 2004-December 2008 Civil Works Contract Date of Award April 2003 September 2004 Completion of Work November 2006 December 2009 Equipment and Materials First Procurement April 2003 April 2004 Last Procurement November 2006 December 2009 Completion of Equipment and Materials November 2006 December 2009 Start of Operations Heilongjiang Subprojects November 2006 July 2007-December 2009 Inner Mongolia Subprojects November 2006 December 2008-December 2009 Jilin Subprojects November 2006 August 2006-December 2009

5. Project Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress From 20 September 2002 to 31 December 2009 Satisfactory Satisfactory

D. Data on Asian Development Bank Missions No. of No. of Specialization a Person Name of Mission Date Persons -Days of Members Fact-finding Mission 14–21 September 2001 3 21 a (2), c Appraisal Mission (Phase 1) 21 October – 5 November 2001 4 60 a, c, d, j Appraisal Mission (Phase 2) 23 November–3 December 2001 2 20 a, c Inception Mission 8–19 September 2003 5 24 a, e, k, l, o Loan Review Mission 19–27 August 2004 3 14 a (2), e Loan Review Mission 4–15 April 2005 5 55 a, e, f, h, k (Handover Mission) Mid-term Review 14–25 November 2005 6 53 b, e, f, g, h, j Special Loan Review 10–14 July 2006 3 12 e, f ,h Mission Loan Review Mission 4–15 September 2006 4 40 e, f, k, h Loan Review Mission 3–8 August 2007 3 15 e, f, h Loan Review Mission 19–26 September 2007 3 21 e, f, h

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No. of No. of Specialization a Person- Name of Mission Date Persons Days of Members Special Loan Review Mission 23 June–6 July 2008 4 40 e, f, h, i Special Loan Review Mission 16–20 February 2009 3 12 f (2), m Loan Review Mission 22–29 September 2009 2 14 e, f Loan Review Mission 23–27 November 2009 1 8 f Loan Review Mission 7–11 December 2009 2 8 f, h Special Loan Review Mission 25–26 November 2010 3 6 e, f, h Project Completion Review 11–20 April 2011 4 23 e, f, h, n a a = (senior) project specialist, b = economist (staff consultant), c = programs officer, d = counsel, e = (assistant/associate) project analyst, f = (senior) project officer, g = finance officer, h = (senior) resettlement officer, i = environment officer, j = environment specialist, k = procurement specialist, l = (senior) financial control specialist, m = administrative assistant, n = environmental specialist (staff consultant), o= disbursement specialist.

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Map

I. PROJECT DESCRIPTION

1. Floods and droughts have produced some of the worst natural disasters in the People’s Republic of China (PRC). The poorest members of society are most at risk from such calamities. The Songhua River basin, which is the third largest river basin in the PRC and one of its most important industrial and grain production bases, has encountered frequent flooding.1 The worst flood on record hit the basin in 1998, covering 25% of the basin area. It damaged agriculture, property, and infrastructure, with a total economic loss of CNY 52 billion. The number of people living below the government poverty line in the Songhua River basin increased from 3.5 million in 1998 to 5.2 million in 1999.

2. After the approval of three emergency loans to rehabilitate infrastructure damaged by the 1998 flood,2 the Songhua River Flood Management Sector Project was designed to reduce future flood damage in the Songhua River basin through integrated river basin management and improved flood protection.3 The project comprised three components: (i) a flood management system, (ii) flood control works, and (iii) capacity building and project management. ADB provided a loan of $150 million from its ordinary capital resources for the project.

3. The project assisted the shift from structural measures for flood control to a more balanced approach using both structural and nonstructural measures for flood mitigation and flood plain management in the basin. In addition to strengthening the flood control works to meet national design standards in some sections of the basin, the project (i) improved the infrastructure of the basin and provincial flood control command centers; (ii) helped establish and extend the monitoring network for water regimes and flood control works; (iii) built up the institutional capacity of Songliao Water Resources Commission (SWRC) to facilitate the adoption and implementation of an integrated and basin-wide approach to flood management; and (iv) developed the Songhua River Basin Flood Management System, which provides flood information management, flood forecasting and warning, and decision support. Details of the actual achievements at impact, outcome, and output levels are in the project framework (Appendix 1).

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

4. The project design was consistent with the PRC’s development objectives and relevant to ADB’s country strategy and water sector policy. After the devastating 1998 floods in the Yangtze River, Songhua River, and Nen River, the PRC government significantly increased its investment in infrastructure for flood protection. The Ministry of Water Resources (MWR) organized river basin commissions to prepare a national flood management plan. The government recognized that the major water resource problems in the PRC were interrelated

1 The Songhua River Basin, located in north-eastern China, has an area of 561,200 km2 and a population of 53.53 million. The basin comprises 158,600 km2 in Inner Mongolia Autonomous Region, 270,400km2 in Heilongjiang Province, 131,700km2 in Jilin Province, and 500 km2 in Liaoning Province. The Songhua River is one of the seven largest rivers in the PRC. The northern source, the Nen River, and the southern source, the Second Songhua River, meet at Sanchahe to form the Songhua River. From this confluence, the Songhua River flows eastward to join the Heilong River at Tongjiang City in Heilongjiang Province. Major flooding took place in the Songhua River Basin in 1953, 1955, 1956, 1957, 1969, 1988, 1995, 1998, and 2010. 2 Loans 1685/1686/1687-PRC: Northeast Flood Damage Rehabilitation Projects were approved by ADB in April 1999. 3 ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for Songhua River Flood Management Sector Project. Manila.

2 and their resolution required a shift from a sector focus approach to a more integrated and comprehensive approach. The MWR and the Office of State Flood Control and Drought Relief Headquarters required that flood protection should move from flood control to flood management. The government also listed flood safety as the top objective of the Tenth Five- Year Plan and 2010 Vision for the Water Sector.4 The target was that, by 2010, flood protection standards in major flood-prone areas would reach the levels set in the integrated river basin plans. This could be achieved through (i) improvement of flood protection and disaster alleviation systems, which include dike structures in major rivers; (ii) construction of regulating structures in river trunks and branches; (iii) flood storage and detention areas; and (iv) non- structural measures.

5. A project preparatory technical assistance was approved by ADB in December 1999 to support the government in the preparation of Songhua River Flood, Wetland, and Biodiversity Management Project.5 For practical reasons related to institutional complexity, two projects were eventually developed. The watershed management, wetland restoration, and biodiversity conservation components became a separate project. 6 The flood control works and flood command system remained within the scope of this project. The quality of the project preparatory technical assistance was satisfactory.

6. At appraisal, the project addressed ADB’s strategic and environmental objectives in the water sector, and it was in line with ADB’s water policy to promote an integrated water resources management approach.7 At project completion, the project remains relevant to ADB’s country partnership strategy, and it contributes to improved flood and water management, and water quality in rural areas, which is a targeted outcome for the agriculture and natural resources sector.8

7. The overall project design was sound except for the implementation arrangements, and the formulation process was adequate (paras. 19–21). Strong ownership for the project was generated during project formulation through stakeholder consultation. The sector loan modality was appropriate at appraisal considering that: (i) the document, Some Suggestions on Improvement of Flood Control Construction of the Nen River and Songhua River in the Short Term, which was approved by the MWR and endorsed by the State Council in 2000, served as a sector plan; (ii) many relatively small-scale subprojects were dispersed throughout the basin and were to be developed in different timelines; (iii) the provincial executing agencies (EAs) had the necessary capability to implement the project, the SWRC was strengthened through staff transfer from the MWR to the SWRC, and project management capacity especially for the environmental and social safeguards was enhanced through the consulting services provided; and (iv) the sector policy was appropriate and has been improving.

B. Project Outputs

8. Component 1 Flood Management System. All subcomponents were successfully completed. The Songhua River Basin Flood Management System was developed for flood

4 From 1998 to 2002, the government invested CNY165.2 billion in water conservancy infrastructure, equivalent to 70% of its total water conservancy investment since 1949. 5 TA 3376-PRC: Songhua River Flood, Wetland, and Biodiversity Management Project. 6 Loan 2157-PRC/Grant 4571-PRC: Sanjiang Plain Wetland Protection Project was approved by ADB in March 2005. 7 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for Songhua River Flood Management Sector Project. Manila. 8 ADB. 2008. Country Partnership Strategy: People’s Republic of China (2008–2010). Manila.

3 information management, flood forecasting and warning, and decision support; and is operated by the hydrology bureau and flood control and drought relief office of the SWRC. The system enables real-time flood management and decision making to be based on computerized spatial data in contrast to the rudimentary flood warning system and a decision-making process based on outdated technology and inaccurate predictions prior to the project. The system provides an additional 24 hours for the SWRC to prepare dispatching plans for the Baishan and Fengman reservoirs, and allows the Heilongjiang Provincial Government to receive flood warnings for Harbin from 7 to 10 days in advance. The project also partly supported upgrading of the basin and provincial flood control command centers, and establishment or upgrading of the work station and hydrological station networks. Together with the infrastructure financed by the government’s phase I project for a national command system for flood control and drought relief, a modernized river basin-wide monitoring network was established and strengthened for monitoring of water regimes and flood control works with better coverage and real-time data. Details of this component are in Appendix 2.

9. Component 2 Flood Control Works. The project financed 34 subprojects to construct and/or improve the flood control works in Jilin Province, Heilongjiang Province, and Inner Mongolia Autonomous Region (IMAR). At appraisal, 26 subprojects were planned, but during implementation, 4 reservoir rehabilitation subprojects were withdrawn from the project owing to their urgency and were completed using domestic funds. Twelve additional subprojects were included to enhance utilization of the loan savings from subproject cancelation and the lower contract value of some civil works. In total, 647.7 km of dike were reinforced, rehabilitated, or upgraded, and 90.6 km of new dikes were constructed. This consisted of 387.8 km implemented by Heilongjiang Province, 132.1 km by Jilin Province, 173.4 km by IMAR, and 45.0 km by the SWRC. The subproject scope covered: (i) strengthening or upgrading of existing dikes; (ii) constructing new dikes; (iii) constructing or installing culverts, barrages, pumping stations, and other related structures; (iv) constructing flow control structures and associated works for flood detention basins; and (v) rehabilitating a reservoir and related structures for water storage as well as for wetland rehabilitation. Details of this component are in Appendix 3. The map presents the distribution of the 34 subprojects in the Songhua River basin. The loan closing date was extended for 2 years, partly for the processing and construction of the additional subprojects (para. 15).

10. Component 3 Capacity Building and Project Management. Project management teams were established at various levels from the central project coordination office (CPCO) and the provincial project management office (PMO) down to the project implementation unit for each subproject. A project performance management system was established with consultant support. Environmental and social task forces were formed in the CPCO together with the safeguard consultants to assist the provincial PMOs in strengthening their environmental and social functions in project management. Through regular reporting, workshops, and a project website, the exchange of information between the CPCO and the PMOs was improved. Capacity building was carried out through training, workshops, study tours, and on-the-job training to develop project management competence, improve the operation and maintenance skills of the Songhua River Basin Flood Management System staff, and enhance the understanding of integrated river basin management approach. In total, 3,955 person-days of domestic training and 3,561 person-days of international training were provided for relevant project staff at various levels.

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C. Project Costs

11. The overall project cost was $433.8 million, which was $76.1 million or 21% higher than the $357.7 million estimated at appraisal. The increase was mainly due to (i) yuan appreciation, and (ii) the financing of additional flood control works subprojects (para. 9). ADB financing was $148.0 million, and the balance of $285.8 million was financed by the central government, provincial governments, and local governments. Appendix 4 compares the detailed project costs by component and the summary financing plan at project appraisal and completion.

D. Disbursements

12. Of the $150.0 million loan proceeds approved by ADB, $148.0 million was disbursed from May 2003 to November 2010, and $2.0 million was canceled at loan closing. The SWRC adopted the direct payment procedure and the imprest fund procedure; Jilin Province adopted the imprest fund procedure and the reimbursement procedure; and Heilongjiang Province and IMAR used only the imprest fund procedure for disbursement throughout the project. Four imprest accounts were set up, one for each of the 4 EAs. Overall, loan disbursement lagged behind the project’s physical implementation. Although loan disbursement progressed smoothly for the SWRC, there were delays, albeit to a different extent, in the two provinces and IMAR. The delays were mainly due to the excessive time taken for processing withdrawal applications at the various levels of the PMOs and financial bureaus due to unfamiliarity with disbursement procedures and requirements at the outset of the project. Toward project completion the ceiling on the imprest accounts created bottlenecks.

13. The backlog of disbursements was repeatedly discussed in ADB review missions. The EAs and ADB made joint efforts for mitigation actions. To improve disbursement capacity, the EAs organized training workshops and on-the-job training, and ADB and CPCO provided resource persons for disbursement training. To shorten the disbursement cycle through imprest accounts, the EAs organized coordination meetings, and ADB facilitated the EAs’ internal discussions to streamline the imprest fund procedure within the provinces. For example, the number of steps taken by IMAR for payment was reduced from 11 to 4, which greatly increased the annual turnover ratio of their imprest account. To clear the backlog and remove the bottlenecks, ADB also advised the provincial EAs to adopt a direct payment procedure that is appropriate for disbursement under large contracts. The direct payment procedure was not used because the provincial finance bureaus were concerned about the safety of funds and the time consuming procedures required by the State Administration of Foreign Exchange. Nevertheless, the turnover ratio of imprest accounts increased significantly from 2009 as a result of these efforts.

14. The EAs also encountered difficulty with disbursements for force account works, since ADB in the past had only allowed the reimbursement procedure for disbursement of force account works. The project team coordinated with the Controller’s Department of ADB, and the Project Administration Instructions of ADB (PAI)9 were revised in May 2010 to allow the use of the imprest fund procedure for force account works disbursement.10

9 ADB. Project Administration Instructions. Manila 10 In the PRC, the State Administration of Foreign Exchange allows each EA to open only one foreign currency account for a single project financed by an international finance institution. Jilin Province was able to open another reimbursement account due to the retroactive financing arrangement for Xianghai subproject.

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E. Project Schedule

15. The project was physically completed in December 2009, after a two-year loan extension approved by ADB in June 2007. The loan extension was needed mainly due to: (i) an outbreak of severe acute respiratory syndrome (SARS) from April to August 2003;11 (ii) the addition of 12 subprojects, which were proposed and processed after the midterm review to utilize the loan savings; (iii) the longer time needed for the required domestic approvals of subprojects in comparison with the shorter time taken for ADB’s approval; and (iv) seasonal restrictions for the annual construction period for flood control works subprojects—winter and the flood season are not suitable for dike construction in northeastern China. Delays in commencement of construction and extended construction periods were also experienced. The project implementation schedule is in Appendix 6.

16. For half of the subprojects, construction was delayed for one to two years compared with the implementation schedule. ADB took almost three years to process this sector project and applied a flexible approach for subproject processing during project implementation (prior approval combined with post facto approval). In contrast, the PRC government had stringent approval procedures for all subprojects. For example, the National Development and Reform Commission (NDRC) and SWRC approved feasibility study (FSR) and preliminary design report (PDR),12 while the Ministry of Environmental Protection or provincial environmental protection bureaus approved the environmental impact assessments. Further, the Ministry of Land Resources or provincial land resource bureaus approved the pre-examination of resettlement impacts and the commencement of resettlement where land acquisition and/or house demolition was involved.

17. Against this background, the FSR for the project and the FSRs for 27 subprojects were approved in June 2002 by the NDRC prior to project approval by ADB on 20 September 2002. The loan agreement was signed on 14 February 2003 and the loan became effective on 29 May 2003. The NDRC and MWR approved the PDRs for 12 subprojects in June 2004 as the first batch, while the Ministry of Land Resources approved the commencement of land acquisition for the first 9 subprojects in March 2005. For the 11 additional provincial subprojects identified after the 2005 midterm review, the NDRC approved the FSRs in July 2008, although the provinces’ submissions were made in 2007; the PDRs were approved by each province from September to December 2008. The project could have benefited more from the sector loan modality if corresponding domestic procedures for subproject approval had been established.

18. Some subprojects suffered from extended construction periods. This was mainly due to: (i) delays in securing counterpart funds from the local governments, (ii) disbursement of ADB loan proceeds lagging behind subproject progress (paras. 12–13), and (iii) lengthy consultations and negotiations for resettlement.

F. Implementation Arrangements

19. Implementation arrangements remained largely as designed at appraisal. The MWR (through the SWRC), Heilongjiang Provincial Government, Jilin Provincial Government, and IMAR Government were the four EAs for the project. A CPCO was set up in the SWRC for overall implementation of the flood management system and project coordination with the line

11 Inter city travel and meeting events were strictly restricted during this period. 12 The PDR approval for the 11 additional subprojects was delegated to the provincial development and reform commissions and the water resources bureaus to speed up the government approval process.

6 ministries, ADB, and provincial PMOs. Provincial and regional project management offices were located in the provincial water resource bureaus in Jilin Province and IMAR, and in the provincial development and reform commission in Heilongjiang Province. Implementation units were set up for each subproject in the city and county water resource bureaus. The organization chart and flow of funds are in Appendix 7.

20. A project steering committee (PSC) was established with representatives from the NDRC, Ministry of Finance, and MWR to monitor implementation progress, coordinate activities involving the line ministries, and resolve conflicts or problems. Leading groups were set up at provincial, city, and county levels to provide guidance and resolve issues when required. The PSC was designed to meet at least once a year, and as often as needed. Two PSC meetings were actually convened during the entire project implementation period. Once after loan effectiveness and the again after the midterm review. Both PSC meetings provided guidance for the project to improve project management and address implementation issues. Given the importance of such an inter-agency coordination mechanism at the national level and the difficulty of convening a meeting with the attendance of all senior officials, it is recommended for future projects of a similar nature that a working group be established under the PSC (para. 58).

21. The effectiveness of designating multiple executing agencies is debatable. It would have reduced complexity and improved efficiency if the MWR had been designated as the sole EA and the project had been implemented through the SWRC and provincial water resource departments. Because the wetland restoration and biodiversity conservation components were excluded from the project, implementation would have been more effective if the MWR had implemented the project through its management system. It was in fact a great challenge for the SWRC to coordinate with three provincial EAs; these arrangements also complicated ADB’s project management, as ADB also had to communicate and coordinate with four EAs during project implementation.

G. Conditions and Covenants

22. Compliance with most covenants was achieved. No covenants were modified, suspended, or waived during implementation. For covenant number 2 in Appendix 8, the PSC was not able to meet at least once each year (para. 19). For covenant number 23, the Zhaodong government in Heilongjiang Province could not provide sufficient counterpart funds during project implementation for the Zhaodong dike subproject, although it has committed to complete the remaining works in 2012 with its own funds. About one-tenth of the construction works were still to be completed, including the landside anti-seepage measure and the dike crest road for some parts of the dike. Appendix 8 provides the status of compliance with loan covenants.

H. Consultant Recruitment and Procurement

23. International consulting services for the project were divided into two packages for (i) the flood management system, and (ii) flood control works and project management. The consultants were recruited using the quality-and–cost-based selection method in accordance with ADB’s Guidelines on the Use of Consultants (April 2002, as amended from time to time). In accordance with the loan agreement, the national consultants required for other project activities funded by counterpart funds were engaged following domestic procedures acceptable to ADB.

24. For the procurement of goods and works financed from the loan proceeds, 6 contracts were procured through international competitive bidding, 195 contracts through national

7 competitive bidding, and others through international shopping, direct contracting, and force account modes. All contract packages were procured in accordance with ADB's Guidelines for Procurement (February 1999, as amended from time to time).

I. Performance of Consultants, Contractors, and Suppliers

25. The consultants, contractors, and suppliers generally performed satisfactorily. There were a few disputes in some civil works contracts, but these were resolved amicably. The international consultant for the flood management system performed highly satisfactorily. The evaluation panel of MWR concluded that the Songhua River Basin Flood Management System reached advanced international standards, and the system had was an example of international best practice for rainfall run-off forecasting in data deficient areas.

J. Performance of the Borrower and the Executing Agency

26. The performance of the borrower and the four EAs was satisfactory. Given the complexity of the project, the limited experience in ADB procedures among the provincial PMOs and CPCO prior to this project, and the number of inexperienced implementing agencies involved, the achievements under the project were remarkable. The project trained many CPCO and provincial PMO staff, who then became trainers for ADB’s project management training programs. The SWRC was efficient in implementing subcomponents and the right bank of the Nen River dike subproject as an implementing agency. It was capable in project management, and providing technical support as a central coordination body, though it experienced limitations in coordinating with the provincial governments. Among the provincial EAs, Heilongjiang Province was efficient in processing subprojects, but its technical skills were weak because the provincial PMO was set up in the development and reform commission rather than the water resource bureau. Jilin Province performed well at inter-agency coordination and the provincial PMO actively supported the implementing agencies to resolve problems. IMAR was more experienced and diligent in procurement and contract management, but was less efficient in disbursement. The project was particularly successful in improving the SWRC’s institutional capacity for flood management.

K. Performance of the Asian Development Bank

27. ADB’s performance was satisfactory. The project was delegated to the People’s Republic of China Resident Mission for administration on 18 April 2005. All the EAs expressed high appreciation for ADB’s effective assistance in project preparation and implementation. ADB worked closely with the CPCO and provincial PMOs to facilitate project implementation, provide timely advice and approval, and assist the EAs in resolving problems during implementation. In addition, ADB provided sufficient general and specific training programs to build the capacity of the executing and implementing agencies.

III. EVALUATION OF PERFORMANCE

A. Relevance

28. The project was and remains highly relevant to the PRC government’s development strategy and ADB’s past and present sector and country partnership strategies (paras. 4–7).The project contributed to social and economic growth, sustainable development, and improved living standards in the Songhua River basin through reduction in the risks and losses associated with flood disasters. The project benefited the poor and vulnerable people living in flood-prone

8 areas. The project addressed the weaknesses in government responses to flood emergencies by improving technical measures for emergency coordination and decision-making. More importantly, the project advanced water sector reform from flood control to flood management.

B. Effectiveness in Achieving Outcome

29. The project was effective in achieving its outcomes. It reduced flood damage in the Songhua River basin through integrated river basin management and improved flood protection. The 34 flood control works subprojects under the project improved flood protection standards through newly constructed dikes, and dike strengthening and upgrading. The rural areas are protected against a 20–35 year flood event, and the large and medium sized cities are protected against a 50–200 year flood event. The project financed flood control command centers, monitoring subcenters for water regimes and flood control works, work stations, and hydrological stations. Together with the government-funded infrastructure, the project created a modernized basin-wide monitoring and coordination network, and enabled the central government and SWRC to receive real-time data within 30 minutes. The Songhua River Basin Flood Management System developed by the project has effectively provided major flood forecasting and timely warning with extended forecast periods and improved accuracy. The system supports coordinated cross-boundary emergency response and decision-making by the Songhua River Flood and Drought Relief Headquarters. The project contributed significantly to flood protection and mitigation in the exceptional flood of 2010 (para. 45).

C. Efficiency in Achieving Outcome and Outputs

30. The project is rated efficient based on the economic reevaluation and evaluation of the efficiency of the implementation process.

31. Efficiency of Investment. The investment was efficient. The economic internal rate of return (EIRR) of the entire flood control works component was reestimated at 17.9%, and its economic net present value was estimated at CNY833.5 million, demonstrating that the project is economically viable. The EIRRs of 34 subprojects at completion ranged from 12.9% to 33.1%, indicating that all subprojects are economically viable. Compared with the EIRRs at appraisal, the EIRRs were higher or similar for 23 subprojects, and lower for the remaining 11 subprojects. The improved EIRRs for most subprojects mainly stemmed from three factors: (i) actual investment costs were lower than those estimated at appraisal, which resulted from competitive bidding for procurement of civil works and equipment, and optimized design; (ii) the construction of some subprojects was completed quicker than expected; and (iii) the economic benefits of some subprojects increased significantly because of greater investment and accelerated development in the protected area. The lower EIRRs were mainly associated with (i) longer than envisaged construction periods, and (ii) higher resettlement costs for a few subprojects.

32. Efficiency of Process. Implementation was highly efficient for 12 additional subprojects, and less efficient for 9 subprojects identified at appraisal. The project disbursement and subproject approvals were considered inefficient (paras 12–13, and 16). In terms of achieving outputs, the project exceeded the target for dike improvement and construction by 42%, although the loan was extended by two years, about 40% of the original loan period. Overall, the implementation process is considered efficient.

9

D. Preliminary Assessment of Sustainability

33. The project is rated likely sustainable. The operation and maintenance (O&M) budget is likely to be sufficient. For component 1, the Songhua River Basin Flood Management System and the Songhua River Basin Flood Control Command Center passed technical evaluation or acceptance tests, and are in operation with sufficient O&M funds. For component 2, except for the right bank of Nen River dike subproject, which was handed over to the local O&M unit, all flood control subprojects are being inspected by the provincial authority as required for the final acceptance inspection and handover to the local O&M units. According to the provincial EAs, sufficient funding and personnel will be allocated for O&M of the subprojects or subcomponents. Heilongjiang Province committed to allocate CNY48.75 million annually, Jilin Province CNY27.05 million, and IMAR CNY2.29 million in line with the estimated requirements. ADB requested that the EAs monitor closely those subprojects that experienced difficulty in receiving sufficient domestic funds from county governments for subproject construction. It is further noted that the Jilin provincial government made prompt arrangements to rectify the 2010 flood damage to the Jilin Wendehe dike and Jilin dike subprojects.13

34. SWRC staff capacity is adequate for system application and routine maintenance of the Songhua River Basin Flood Management System. The SWRC team supported the system’s development, and prepared emergency response proposals, flood regulation plans, and river channel clearance schemes using the system. Given the satisfactory performance of the system, ADB recommended mobilizing additional funds for the system update within three years to sustain its important role in flood forecasting and decision support.

35. In addition, the SWRC consolidated its role as a flood management coordinator and river basin planner after its institutional capacity was strengthened in terms of technical standards and project management experience. The integrated river basin management concept has been mainstreamed in the new Songhua River Basin Comprehensive Plan and the new Songhua River Basin Flood Management Master Plan.

E. Impact

1. Social Impacts and Poverty Reduction

36. The project contributed significantly to socioeconomic growth, sustainable development, and living standards improvement in project-protected areas. The risk of losses caused by floods has been greatly reduced. This includes those due to death, injury, and health hazards; community displacement; damage to property, productive assets, and infrastructure; disruptions to production and education; and costs for emergency evacuation. The project generated incomes for floodplain communities, including the poor, from labor-intensive construction of flood control works. About 20,000 job opportunities for local labor were created during construction. The reduced flood risk and improved public infrastructure have also stimulated agricultural development, attracted industrial investment, and promoted related tertiary industries. Consequently, local residents are benefiting from an improved environment and quality of life.

13 Exceptional flood flows were reported in Second Songhua River and its tributaries. Twelve upstream tributaries of the Second Songhua River encountered their highest recorded flood flows, and some of them were affected, The Wende River catchment was the most affected, with its highest peak flood flow since 1909. The Jilin Wendehe dike subproject was severely damaged, and the Jilin dike subproject suffered minor damage. The rehabilitation works were completed earlier this year.

10

37. The project has contributed to poverty reduction and equitable growth. Poor and vulnerable people suffered most from floods before the project because they tend to reside closer to the riverbanks and are also slower to recover from losses. Frequent flooding drained their capacity for accumulating financial resources and restricted investment and on-farm development. The project has reduced the risk from flood damage, and is providing opportunities for local governments to invest in social services and infrastructure, particularly drinking water, medical clinics, and road infrastructure. Women and ethnic minorities also benefited from this equitable and sustainable improvement.

38. The project helped to promote social development and poverty reduction, and brought visible changes to the project-protected areas. From 2003 to 2010, the (i) per capita GDP of the Songhua River basin increased by 129% from CNY13,976 to CNY32,008, (ii) per capita fiscal revenues grew by 211% from CNY686 to CNY2,136, and (iii) per capita rural net income increased by 94% from CNY2,730 to CNY5,305. The total number of rural poor in the project areas decreased by 26% from 1.8 million people in 2003 to 1.2 million people in 2010, while the number of urban poor declined by 15% from 1.5 million people in 2003 to 1.3 million people in 2010. The project directly protected 7.4 million hectares of land, and benefited 18.3 million people, of which 10.3 million are rural and 2.7 million are poor. A detailed evaluation of social and poverty reduction impacts is presented in Appendix 10.

2. Land Acquisition and Resettlement

39. The project comprised 34 structure subprojects, 22 of which required land acquisition and resettlement. Three resettlement plans for core subprojects were prepared during the project preparatory technical assistance, and another 19 resettlement plans were prepared and approved prior to commencement of civil works for each subproject. Land acquisition and resettlement implementation actually began in 2004, and was largely completed by the end of 2008. A total of 876.7 ha land were permanently acquired, which was 27.3% lower than estimated in the resettlement plans. A total of 110,849.3 m2 of buildings were demolished, which was 4.1% less than estimated in the resettlement plans. The project relocated 576 households comprising 1,703 people, which was 28.7% less than the number of affected people estimated in the resettlement plans. The variation in resettlement impacts was mainly because (i) the amount of land acquisition in the resettlement plans was estimated based on the total land area within each subproject’s scope, but subsequent detailed investigations identified some state- owned land; (ii) the width of the dike protection area in some subprojects decreased from 50 meters to 20 meters following the detailed designs; and (iii) the project construction design was optimized to minimize land acquisition and resettlement impacts during implementation.

40. Land acquisition and resettlement were implemented in accordance with the resettlement plans and the relevant state laws and provincial regulations. 14 In general, the actual compensation rates were higher than those in the resettlement plans. For permanent land acquisition, the actual compensation rates were based on a multiple of 16 times the average annual output value (AAOV) in accordance with the relevant state laws.15 The actual house compensation rates were the same as or higher than those in the resettlement plans.

14 The Land Administration Law (1998), the Decision of the State Council on In-depth Reform Concerning Strict Land Management (State Council (2004) No. 28), Land Acquisition Compensation and Resettlement Regulation for Medium to Large Scale Hydro-power Projects (Decree No.74, the PRC State Council, 1991, updated in 2006 No.471), and relevant regulations of Heilongjiang Province, Jilin Province, and Inner Mongolia Autonomous Region. 15 State Council (2004) decree No. 28, and the updated Land Acquisition Compensation and Resettlement Regulation for Medium to Large Scale Hydropower Projects in 2006.

11

41. The project induced partial income loss of affected households whose farmland was close to the riverbanks, although the land productivity was poor because of floods. In order to assist affected households in restoring their incomes and improving their livelihoods, plans for livelihood rehabilitation and physical relocation were included in the resettlement plans to ensure living standards fully restored. With the implementation of income restoration measures, the incomes of affected households have been restored and even increased compared with those prior to resettlement. Based on a survey of households conducted by the external monitor, the average per capita annual income of 256 households that had lost land increased by 56% from CNY5,450 before resettlement to CNY8,849 after resettlement; for 113 relocated households surveyed, their average per capita living space for urban affected households is 30.97 m2, which is higher than the average space of 26.4 m2 before resettlement; and rural affected households surveyed saw similar increases in their living space. Furthermore, their new houses were built of brick and concrete compared to their previous houses made of earth and grass or wood and brick. Appendix 11 presents a detailed evaluation of land acquisition and resettlement implementation.

3. Environment

42. The project was category B at the time of appraisal and required an initial environmental examination (IEE) report for each subproject. All IEE reports, including environmental management plans (EMPs), were prepared and approved by ADB. The project had no major significant environmental impacts as it was located in built-up areas with no undisturbed natural environments. The main environmental issues identified in the IEE reports included soil and water loss; noise pollution; land losses for affected people; impacts on groundwater, nature conservation areas, river water quality, riverine ecology, water intake, and human health; impacts from vehicles during construction and soil and brick disposal; and a reduction of flood recession agriculture.

43. Mitigation measures specified in the EMPs were included in the civil works contracts. Environmental supervision agencies were engaged for each subproject to monitor environmental protection undertaken by contractors. The external monitors were recruited for each subproject to monitor the surface water and air quality, and noise levels at project sites for comparison with the monitoring results from the control sites; and ensure that the EMPs were effectively carried out and there were no unanticipated negative environmental impacts. According to the 121 external monitoring reports and 102 environmental supervision reports prepared from 2005 to 2010, the mitigation measures were implemented well during construction; the adverse effects of project construction on the surrounding environment were minimized; and the project fully met the requirements of local residents and environmental protection agencies, and complied with the approved EMPs. The ecology of the areas in the embankment-reinforcement subprojects improved considerably with the planting of trees along the embankments.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

44. The project is rated successful. It was (i) highly relevant to the government’s and ADB’s development strategies, (ii) effective in achieving its outcomes, (iii) efficient in achieving outcomes and outputs, and (iv) likely to be sustainable. Overall, the project was implemented as

12 envisaged. Although the loan was extended for two years, eight more flood control works subprojects were completed in comparison with the candidate subprojects identified at appraisal.

45. In 2010, exceptional flood flows were reported in the Second Songhua River and its tributaries. The structural and non-structural components of the project withstood the test of the 2010 flood and contributed greatly to flood protection and mitigation. The physical structure subprojects improved the flood protection capacity of the weakest links in the flood control works system to an equivalent of a flood of about 50–200 year average recurrence interval. Other than the Jilin Wendehe dike subproject, no overtopping or breaching occurred in the other subprojects during this flood. The dikes successfully protected the local population, and protected private and public infrastructure from flood damage.16 The non-structural measures also played an important role in mitigating the 2010 flood. The real time data for water regimes collected through the monitoring network were transmitted to the central government and SWRC within 30 minutes. The Songhua River Basin Flood Management System was effective in forecasting floods with improved accuracy and an extended forecast period. The system has helped the SWRC to make sound decisions in regulating water releases from Baishan and Fengman reservoirs. Although the 2010 flood with a recurrence interval of over 100 years affected the upstream catchment of the Second Songhua River, it turned what would have been a catastrophic event into an ordinary flood by regulating these two reservoirs, which successfully reduced downstream pressures.

46. The project significantly contributed to (i) poverty reduction and equitable growth, (ii) sustainable economic development, and (iii) public safety and quality of life improvement in the Songhua River basin through improved river basin management and reduced flood risk and damage in floodplain areas.

B. Lessons Learned

1. Flood Management Related

47. The project provides useful lessons on the process of changing institutional and policy making mindsets, in this specific instance in relation to flood management. Prior to the project, flooding was often perceived solely as an agent of damage and disruption to human settlement and socioeconomic activities, and even a cause of human casualties in the PRC. People, however, now realize that floods (in particular more frequent and smaller freshwater floods), sustain ecosystems and the services that ecosystems provide. The benefits of floods also include recharging ground water, maintaining river courses, making soil more fertile, purifying water, and sustaining natural habitats. The old belief that floods should be fought and controlled by construction of dams, dikes, and bypass channels was misleading. Furthermore, continuously strengthening and extending structural flood defenses is unsustainable economically, environmentally, and in terms of social equity.

48. The flood management approach accepts that certain parts of the landscape will occasionally be flooded and seeks to reduce the ultimate cost to society. This includes taking measures to prevent floods from becoming disasters, anticipating worst-case scenarios, and identifying opportunities for conveying the resultant flood wave through the river system in a safe and largely predictable manner. The approach incorporates structural measures, but only

16 For the Jilin Wendehe dike subproject, the extraordinary flood overtopped the entire 3.83 km dike and exceeded the dike crest of 3.98 meters. Although the dike was seriously damaged by the flood, its existence also helped to protect the Fengman economic development zone of Jilin City and reduce losses from the flood.

13 as part of a larger strategy that includes: (i) flood proofing important structures and implementing land use controls; (ii) establishing flood forecasting, risk assessment, and warning systems; (iii) preparing emergency responses and flood recovery measures; and (iv) creating financial incentives such as flood insurance and eco-compensation. Risk assessment is essential for flood management, and the project significantly improved the SWRC’s capacity for flood forecasting and risk assessment through the development of the Songhua River Basin Flood Management System.

49. The concept of integrated water resource management and the river basin management approach were recognized and put into practice by the PRC as adaptive processes. The government took steps to achieve such change. The Songhua River Basin Flood Management Master Plan was prepared first, and then the Songhua River Basin Comprehensive Plan was formulated. In regard to policy implementation, the flood forecasting, risk assessment, and warning systems were completed first, and the actions on flood retention area and flood insurance development are still ongoing.

50. The project advanced these reforms and helped to develop a new way of thinking about floods and their broader ecological significance in the Songhua River basin. The government agencies involved in the Songhua River basin have shifted their approach from only structural measures for flood control to a balanced approach using both structural and non- structural measures. However, there remains room for improvement in the development of different types of non-structural measures. In the next phase, basin flood management needs to evolve into integrated flood management, which not only aims to reduce the human and socioeconomic losses from flooding but also to increase the social, economic, and ecological benefits from floods and the use of floodplains.

2. Project Management Related

51. The lessons learned in project design and implementation include: (i) complicated implementation arrangements for future projects should be avoided to reduce challenges and increase efficiency in project implementation; (ii) domestic approval procedures and timelines for subprojects should be carefully reviewed and adequately factored into project schedules so that the schedules can be adhered to; and (iii) in addition to the training on consultant recruitment, ADB should also provide EAs with adequate training in consulting service contract management to ensure cost effective and quality consulting services.

C. Recommendations

1. Project Related

52. Future Monitoring. To ensure the sustainability of project outcomes, the EAs must monitor the O&M of the facilities and structures. Special attention should be paid to those subprojects that experienced difficulty in receiving sufficient funds from county governments for subproject construction, especially after the handover from the implementation unit to the O& M unit.

53. Further Action or Follow-Up. The Heilongjiang PMO will ensure that the Zhaodong dike subproject reaches the designed flood protection standard by the end of 2012, and will inform ADB accordingly (para. 21).

14

54. Additional Assistance. Given the satisfactory performance of the Songhua River Basin Flood Management System, it is recommended that additional funds be mobilized for the system update within three years to sustain its important role in flood forecasting and decision support. Although the evaluation panel considered that the system reached advanced international standards in regard to best practices, the recent development of monitoring networks and flood protection structures should be incorporated into the system to improve its performance and keep it up to date (para. 33).17

55. Timing of the Project Performance Evaluation Report. It is recommended that the project performance evaluation report be prepared by ADB in 2013 or at a later date, after the remaining works of the Zhaodong dike subproject have been completed, and the final acceptance inspection of most subprojects has been conducted.

2. General

56. Disbursement. It is recommended that ADB and the EAs take a more proactive approach to address disbursement delays. This issue is common for projects in the agriculture and natural resources sector because (i) EAs have multiple administrative levels for project and financial management, (ii) timelines are often unnecessarily extended for the processing of withdrawal applications, and (iii) lower level staff are unfamiliar with ADB disbursement procedures. ADB and the EA should discuss and agree on mitigation measures to avoid disbursement delays when they prepare the project administration manual during project preparation.

57. Consulting Services. ADB should include training for supervision of consulting services in the EA capacity building program, especially for EAs in the agriculture and natural resources sector. EAs in this sector normally have limited experience in handling international consulting services prior to implementing their first ADB-financed project. ADB and the EAs normally make considerable efforts in the consultant selection process to increase economy and efficiency. Similar, perhaps even greater, efforts should be extended to supervising consultants’ contracts to ensure quality and cost-effective consulting services.

58. Project Steering Committee. It is often required that a PSC be established for a project of a similar nature and meet at least annually to provide overall guidance and coordination among the line ministries. Given the importance of such an inter-agency coordination mechanism at the national level and the difficulty of convening a meeting with the attendance of all senior officials, it is recommended for future projects of a similar nature that a working group be established under the PSC. This working group should comprise officials directly involved in project supervision to ensure close communication and timely coordination among the central and provincial agencies concerned, and the working group should report to the PSC on a regular basis for guidance.

17 At the time of system development, only limited monitoring stations and data were available. By 2010, SWRC was able to receive real-time data from 202 hydrological stations, 658 rainfall stations, and 169 reservoir stations.

Appendix 1 15

PROJECT FRAMEWORK

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Goal

Promote sustainable, Reduced risk and Reduced risk and State, Governments pro-poor economic losses from losses from provincial, and implement the growth through flooding for 62 flooding for 54 regional project in improved river basin million people. million people. government accordance with management and Strategic assets Strategic assets statistics; principles of reduction of flood risk such as oil fields, such as oil fields, sample surveys integrated water in the flood industrial areas, industrial areas, from PME resources management area and agricultural and agricultural planning and industries are industries are management protected protected

Ten major cities Ten major cities PME and There is high-level (11 million (25 million provincial and acceptance of an population) population) regional appropriate flood protected against protected against statistics management plan flood; increased flood; increased public safety and public safety and disaster disaster preparedness preparedness

160,000 km² (30 160,000 km² (30 Maps of the Official land percent of basin percent of basin basin; zoning ensures and 100 percent of and 100 percent of provincial and that new house floodplain) floodplain) regional construction is modeled for flood modeled for flood statistics prevented in forecasting and forecasting and locations not

sustainable sustainable protected from Appe development development flooding

ndix2 Improved cost Water Resource PME surveys to Cost recovery recovery and Construction Fund assess program reflects maintenance of and Flood Control capacity to pay local capacity to

assets Infrastructure Fund pay. 15 were established

in three project provinces. Governments levied a fee for the construction and maintenance of water resources infrastructure, including flood control infrastructure

16 Appendix 1

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Purpose

Reduce flood damage Coordinated flood Songhua River Songhua River HP, JP, IMAR in Songhua River emergency Flood Control Basin Flood governments basin through response achieved Headquarters Control Center implement the integrated river basin through flood established; and subcenters project, guided by management and forecasting and Songhua River are working SWRC. State improved flood decision support Basin Flood effectively. Council endorses protection system by SWRC Management SWRC’s role SWRC’s lead role Master Plan as flood in flood approved in 2008; coordinator and management Songhua Flood planner Management accepted by System functioned provinces and in 2007 region

Structures improve Structures PCR, MWR flood protection strengthened or statistics, from 20 to 35 yr constructed under provincial and (rural dikes) and 34 subprojects by regional from 50 to 200 yr 2009; rural dikes statistics (city dikes), by protect against a 2007; 5 reservoirs 20-35 year flood, Provincial and upgraded and city dikes regional protect against a government 50-200 year flood records

Effective No illegal MWR reports There is sustained enforcement construction or and statistics political and prevents new approval for new financial support construction in construction by for basin-wide areas at risk from 2010 management flooding by 2007

FWS accurately FWS accurately MWR review of Project is predicts major predicts major SWRC implemented as flooding by end flooding from 2008 effectiveness designed 2005

FWS issues timely FWS issues timely Independent warnings as warnings monitoring of planned operational readiness by Emergency Emergency MWR drills/tests achieve drills/tests achieve Independent "satisfactory" "satisfactory" monitoring of disaster disaster agreed-upon preparedness level preparedness level indicators by 2006 by 2007

Appendix 1 17

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Resettlement for Resettlement for Compensation approximately 4,924 affected paid in accordance 4,900 affected persons in 22 sites with ADB and persons in 16 sites by 2009 PRC resettlement by 2004 policies; relevant agencies cooperate Outputs

1. Flood forecasting, Mathematical Mathematical Project Provinces and warning and decision hydraulic model hydraulic model progress region implement support system decision support decision support reports and project under completed system built by system built by PCR SWRC guidance 2006 2006, in full commission in 2007

Strategies, Songhua River Project Local officials emergency plans, Basin Flood progress effectively enforce watershed Management reports and land zoning planning and Master Plan PCR zoning, river basin approved in 2008; flood control Songhua River master plan Basin updated and Comprehensive completed by early Plan formulated for 2007 final approval by State Council

2. Flood control works Dikes: 20 sites 32 dikes and 1 Project Governments

completed upgraded/ newly double-beat sluice progress provide adequate Appe built to design upgraded or newly reports, PCR funds for operation standard by Dec built to design and maintenance ndix2 2006 standard by Dec of assets 2009

Reservoirs: 5 sites Reservoirs: 1 site Project Upgraded survey 17 of wetlands/water of wetland /water progress equipment will be

storage upgraded storage upgraded reports, PCR properly used and by Dec 2006 by Dec 2006; the well maintained by other 4 sites SWRC completed with domestic funds by 2005

3. Institutional Training of Training of Progress MWR and capacity building and personnel personnel: 7,516 reports, PCR provincial staff are project management person-days transferred to SWRC CPCO and 3 CPCO and 3 Progress 1997 Flood PMOs established PMOs established reports, PCR Control Law will be between 2000 and implemented 2003 effectively by MWR

18 Appendix 1

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Task Force for Task Force for Progress SWRC’s lead role environment and environment and reports, PCR in flood social / social / management is resettlement resettlement confirmed by State established in Council CPCO, 3 PMOs, and all project implementation units Activities

1. Flood management system

1.1 GIS for integrated Start: April 2003 Started: Oct 2004 Operational SWRC and water management Complete: Completed: GIS for provincial September 2005; November 2007; forecasting and authorities give SWRC is SWRC was FWS; project policy-level responsible for the responsible for the reports attention to flood management flood management consistency in system system design standards

1.2 Math hydraulic Start: Mid-2003 Started: Oct 2004 Model Accuracy of model model/decision Complete: April Completed: operational and depends on support system 2006 November 2007 calibrated with topographic satellite surveys. Model imagery of needs to be 1998 floods, constructed in project reports stages and must be compatible with national standards

1.3 Verification with Start: April 2003 Started: Oct 2004 Project reports existing topographic Complete: Completed: June and review survey September 2005 2006 mission reports

1.4 Flood forecasting, Start: September Started: March Operational Disaster warning, decision 2003. Complete: 2005 system, project preparedness for support system April 2006 Completed: reports traditionally flood- November 2007 affected areas is much improved. 1.5 Based on model, Start: April 2004 Started: May 2006 Maps showing Official land prepare flood Complete: April Completed: standard floods zoning ensures management 2007 November 2007 (1:20, 35, 50, that new strategies and 100 years), construction is emergency plans project reports precluded from unprotected areas 1.6 Based on model, Start: April 2005 Started: May 2006 Project reports Cooperation with flood control plan Complete: April Completed: major reservoirs is update 2007 November 2007 forthcoming

1.7 Based on model, Start: April 2005 Started: April 2005 Project reports Environmental and optimize reservoir Complete: April Completed: June Social Division set flood control 2007 2008 up in SWRC. Task

Appendix 1 19

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Force to 1.8 Socioeconomic Start: April 2003 Started: January EIA/IEE/EMP/ coordinate and environmental Complete: April 2004, social and responsible monitoring 2007 Completed: Dec resettlement agencies Responsible: 2009 action plans; SWRC and 3 Responsible: project reports PMOs SWRC and 3 PMOs

1.9 Construct SWRC Start: April 2003 Started: June 2003 Works Compatible center Complete: April Completed: Sep completion infrastructure is 2005 2005 reports; project installed in SWRC, Responsible: Responsible: reports JP, HP, IMAR SWRC SWRC

1.10 Computer Start: Sep 2003 Started: Dec 2006 network Complete: April Completed: May communication 2004 2009 facilities for Center in Responsible: JP Responsible: JP JP

1.11 Construct centers Start: April 2003 Started: August Works in HP and IMAR Complete: April 2007 completion 2005 Completed: reports and Responsible: HP, December 2009 commissioning IMAR Responsible: HP reports IMAR

1.12 Improve / expand Start: April 2003 Started: Dec 2006 Real-time HDAS Complete: April Completed: Dec hydrological data

2006 2009 are stored in the Appe JP (3 subcenters, 2 Responsible: JP, Responsible: JP, hydrological main stream stations, HP, and IMAR with HP, and IMAR with subcenters and ndix2 8 at branch stream, 4 local entities at city local entities at city the provincial water level stations) and county level and county level center in JP

HP (7 subcenters, 5 19 main stream stations, 14 stations at branch stream, 5 water level stations)

IMAR (2 subcenters, 9 stations at branch stream)

1.13 Upgrade and Start: April 2003 Started: Dec 2006 Works Real-time expand works Complete: April Completed: Dec completion operation data operational data 2006 2009 reports and (real-time state of acquisition system in Responsible: JP, Responsible: JP, commissioning the reservoirs or JP (4 subcenters, 26 HP, and IMAR with HP, and IMAR with reports dikes or dams as county stations, 8 local entities at city local entities at city damages of a reservoir stations) and county level and county level reservoir, etc.) are stored in the works

20 Appendix 1

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks In HP (5 subcenters, operational data 24 county stations, 15 subcenters and reservoir stations) the provincial centers in JP, HP, In IMAR (2 and IMAR subcenters)

2. Flood control works

2.1 Strengthen, raise Start: April 2003 Started: Mar 2005 Dikes at 20 Flood procedures existing dikes and Complete: Nov Completed: subproject sites need to be construct new dikes - 2006 December 2009 to withstand the designed for less 470 km long Responsible: Responsible: design flood important areas so provincial and provincial and flow; completed as not to regional regional structures and aggravate governments governments maintenance downstream systems; flooding project reports

2.2 Rehabilitation and Start: April 2003 Started: May 2001 Completed upgrading of 5 Complete: Nov. Completed: Oct. structures; reservoirs to improve 2006 2009 project wetland management Responsible: Responsible: JP completion and raise total water provincial and with local report; post storage to 8.5 million regional government evaluation m3 governments reports

2.3 Two Resettlement 2001 and 2003. 2001 to 2009. Review of RP Studies need to be Plans (RPs) & 13 IEEs Responsible: Responsible: and IEE completed and completed at provincial & provincial & reports. approved by appraisal. 14 RPs and regional regional Monitoring of Ministry of 12 IEEs to be done governments governments measures Environmental coordinated by coordinated by during Protection and SWRC/ESD SWRC/ESD construction ADB before construction starts

3. Capacity building & project management

3.1 Determine needs Start: April 2003 Started: July 2003 Approved Staff will be made and develop training Complete: Sep Completed: Report on available for program 2003 November 2004 needs. Training training by SWRC, Responsible: Responsible: programs, list 3 PMOs, and SWRC SWRC of people and related agencies schedules 3.2 Conduct formal Start: July 2003 Started: Minutes and workshops, Complete: April September 2003 materials of conferences, and on- 2007 Completed: Dec workshops, the-job training 2009 evaluation reports

3.3 Establish CPCO in Start: April 2003 Started: August Management Personnel are SWRC, and 3 PMOs Complete: June 2000 offices appointed by 2003 Completed: July functional; list SWRC and 3

Appendix 1 21

Performance Indicators/Targets Monitoring Assumptions Design Summary Appraisal Actual Mechanisms and Risks Responsible: 2003 of people and provinces with SWRC and Responsible: positions; office space, provinces/region SWRC and working equipment, and provinces/region programs transport facilities Inputs: Resources:

1. Consultants International 80 International 85 ADB Counterpart person-months; person-months; contractual funding in the national 608 national 433 documents amounts person-months person-months programmed will be available on 2. Civil Works $198.6 million $223.1 million PRC/ADB time contractual/ 3. Equipment, $21.3 million $25.2 million procurement Software, Supplies documents

4. Training $2.8 million 342 person- Project Personnel will be months at a cost of progress available from $1.3 million reports provinces to participate in training programs CPCO = Central Project Coordination Office; EIA = environmental impact assessment; EMP = environmental management plan; FWS = flood warning system; GIS = geographic information system; HDAS = hydrological data acquisition system; HP = Heilongjiang Province; IEE = initial environmental examination; IMAR = Inner Mongolia Autonomous Region; JP = Jilin Province; MWR = Ministry of Water Resources; PCR = Project Completion Report; PME = project monitoring and evaluation; PMO = project management office; PRC = People’s Republic of China; SWRC = Songliao Water Resources Commission. Sources: Asian Development Bank and Songliao Water Resources Commission. Appe ndix2

21

22 COMPONENT 1: FLOOD MANAGEMENT SYSTEM

Appendix2 Implementing Operation and Maintenance Subcomponent Scope Agency/Unit Agency A. GIS system for Songhua River Basin Flood Information Management Songliao Water Songliao Water Resources Flood Control Subsystem for spatial data management, inquiry, analysis and Resources Commission

visualization, including basin, weather, rainfall, flood, and Commission engineering information. B. Mathematical Module Library, in which the numerical models for runoff Hydraulic model prediction from rainfall, and one-dimensional and two- dimensional hydrodynamic models for water level and discharge situation prediction were set up for various parts of the river basin. C. Flood Forecasting Major functions include water level and flow rate forecast for System control points in truck stream and main branches; inflow forecast for three major reservoirs (Baishan, Fengman, and Nierji); flood scenario analysis; discharge volume calculation for flood detention areas; and forecast accuracy calibration. D. Research over The decision support system is composed of flood forecast, standard floods dispatching, scenario simulation, 2D simulation, loss cities/Decision Support estimation, and flood control services modules. System The 2D simulation module is able to stimulate the flooding process in Jiamusi, Qiqihar, Harbin, and Jilin City, and Yueliangpao and Pangtoupao detention areas with historical/extreme floods. E. SWRC Central Premises Distribution System, computer network system, Command consultation and commanding conference system, flood control communication system, and SWRC building. F. Three Provincial Heilongjiang Province: flood control command vehicles Heilongjiang non- Heilongjiang Hydrological Centers procured (cars and boats). structural measures Bureau, and Heilongjiang project construction Flood Control Office Inner Mongolia Autonomous Region: and management Consultation and commanding conference system, computer division of the IMAR Hydrological Information network system, and communication tower. Songhua River Center; and IMAR Flood Flood Management Control Office Jilin Province: Sector Project Circuitry upgrade and server room facilities. Jilin Flood Control Office and G. Work stations Heilongjiang Province: IMAR non- Jilin Hydrological and Water Equipped 5 sub-centers, 25 county stations, 15 reservoir Resources Bureau

Implementing Operation and Maintenance Subcomponent Scope Agency/Unit Agency stations with computer network system and/or data collection structural measures facilities. Emergency communication system for Yihe reservoir. project construction and management Inner Mongolia Autonomous Region: division of Songhua Construction of 2 new sub-centers. River Flood Management Jilin Province: Sector Project Construction of 4 sub-centers, 26 county stations, and 8 reservoirs stations. Jilin non-structural H. Hydrologic Heilongjiang Province: measures project Information Collection Office renovation and network appliances for 7 sub-centers; construction and System offices and monitoring facilities for 19 hydrological stations, 5 management gauging stations, and Harbin hydrological pier. division of Songhua Automated water regime monitoring and reporting system, and River Flood dispatching software for the Xiquanyan reservoir. Management Sector Project Inner Mongolia Autonomous Region: Equipment, database software, and flood forecast software for IMAR Water Regime Center; construction of 2 water regime sub-centers, and renovation of 9 national flood reporting stations.

Jilin Province: Construction of 3 water regime sub-centers and upgrade of 11 hydrological stations and 4 gauging stations. DSS=decision support system, IMAR=Inner Mongolia Autonomous Region, GIS=geographic information system, SWRC=Songliao Water Resources Commission. Sources: Asian Development Bank, Heilongjiang PMO, IMAR PMO Jilin PMO, and Songliao Water Resources Commission.

Appendix2

23

24

COMPONENT 2: FLOOD CONTROL WORKS Operation and Maintenance Subproject Name Key Features Grade Implementation Unit Agency Appendix3 1. Heilongjiang Province (16 subprojects) 1.1 Harbin Qunli Dike New dike: 10.2km Grade II Water Project Construction Watercourse and Dike (core subproject) Improvement: 3.3 km (50 years) and Management Division, Management Division, Harbin Water Authority Harbin Water Authority

1.2 Jiamusi Dike Improvement: 14.5 km Grade I City Flood Control Works Watercourse Management (100 years) Construction and Division, Jiamusi Water Development Division, Authority Jiamusi Water Authority 1.3 Yilan Dike New dike: 2.85 km Grade II Construction and Watercourse Management Improvement: 15.61 km (50 years) Management Division of Division, Yilan Water Authority Yilan Dike Subporject, Yilan Water Authority 1.4 Dalianhe Dike New dike: 1.755 km Grade II Construction and Dalianhe Coal Mine Dike Improvement: 4.132 km (50 years) Management Division of Management Station, Yilan Dalianhe Dike, Yilan Water County Authority 1.5 Zhaodong Dike Improvement: 68.03 km Grade II Construction and Watercourse Management (50 years) Management Division of Division, Zhaodong Water Zhaodong Dike Subproject, Authority Zhaodong Water Authority 1.6 Tangyuan Dike New dike: 0.895 km Grade II Construction and Watercourse Management Improvement: 12.625 km (50 years) Management Division of Division, Tangyuan Water Tangyuan Dike Subproject, Authority Tangyuan Water Authority 1.7 Tongjiang Dike Improvement: 25.902 km Grade II Construction and Watercourse Management (50 years) Management Division of Division, Tongjiang Water Tongjiang Dike Authority Subproject, Tongjiang Water Authority 1.8 Fujin Dike Improvement: 33.35 km Grade II Construction and Watercourse Management (50 years) Management Division of Fujin Division, Fujin Water Authority Dike Subproject, Fujin Water Authority 1.9 Mulan Dike New dike: 2.1 km Grade II Construction and Watercourse and Dike Improvement: 19.29 km (50 years) Management Division of Management Division, Mulan

Operation and Maintenance Subproject Name Key Features Grade Implementation Unit Agency Mulan Dike Subproject, Water Authority Mulan Water Authority 1.10 Bayan Dike New dike: 1 km Grade II Construction and Watercourse Management Improvement: 23.7 km (50 years) Management Division of Division, Bayan Water Authority Bayan Dike Subproject, Bayan Water Authority 1.11 Tonghe Dike New dike: 7.675 km Grade IV Construction and Watercourse Management Improvement: 42.36 km (20 years) Management Division of Division, Tonghe Water Tonghe Dike Subproject, Authority Tonghe Water Authority 1.12 Harbin Daowai Dike New dike: 1.68 km Grade II Water Project Construction Watercourse and Dike (additional) (50 years) and Management Division, Management Division, Harbin Water Authority Harbin Water Authority 1.13 Qiqihar Dike Improvement: 51.35 km Grade II City Flood Control Works Watercourse Management (additional) (50 years) Construction Division, Qiqihar Division, Qiqihar Water Water Authority Authority 1.14 Mudanjiang Dike New dike: 7.45 Grade I Construction and Watercourse and Dike (additional) Improvement: 10.79 km (100 years) Management Division of Management Division, Mudanjiang Dike Subproject, Mudanjiang Water Authority Mudanjiang Water Authority 1.15 Zhaoyuan Dike Improvement: 6.314 km Grade II Construction and Watercourse Management (additional) (50 years) Management Division of Division, Zhaoyuan Water Zhaoyuan Dike Subproject, Authority Zhaoyuan Water Authority 1.16 Fangzheng Dike Improvement: 20.937 km Grade IV Flood Control Works Watercourse Management (additional) (20 years) Construction and Division, Fangzheng Water Management Division, Authority Fangzheng Water Authority 2. Jilin Province (10 subprojects) 2.1 Xianghai Reservoir Raising and reinforcing of main Grade II Construction and Xianghai Reservoir

(core subproject) and saddle dams; 1 new saddle (100 years) Management Division of Administration Bureau Appendix3 dam; and 8.07 km of slope Xianghai Reservoir Risk protection improvement Removal and Strengthening Project, Tongyu County 2.2 Jilin Dike New dike: 24.29 km Grade I Construction and Jilin City Watercourse Station, (100 years) Management Office of Jilin Jilin Water Resource Bureau Dike Subproject, Jilin Water Resource Bureau 25

26 Operation and Maintenance

Subproject Name Key Features Grade Implementation Unit Agency 2.3 Songyuan Dike Improvement: 2.779 km Grade I Project Leading Group Office Songyuan City Flood Control Appendix3 (100 years) of Songyuan Dike Subproject Project Management Committee 2.4 Changchun Dike Dike improvement and bank Grade I Project Leading Group Office Changchun City Yitong River revetment: 24.01 km (200 years) of Changchun Dike Management Committee Subproject

2.5 Zhenlai Dike Improvement: 23.844 km Grade II Project Leading Group Office Zhenlai County Watercourse (50 years) of Zhenlai Dike Subproject Station, Zhenlai Water Resource Bureau 2.6 Da'an Dike Improvement: 23.24 km Grade II Project Leading Group Office Da’an City Watercourse Station, (50 years) of Da’an Dike Subproject Da’an Water Resource Bureau 2.7 Hanshu No.3 Dike Improvement: 7.495 km Grade II Construction and Baicheng City Yueliaopao (50 years) Management Office of Reservoir Administration Hanshu No.3 Dike Bureau Subproject, Baicheng Water Resource Bureau 2.8 Hanshu Double-beat 8-hole sluice Grade II Construction and Baicheng City Yueliaopao Sluice (50 years) Management Office of Reservoir Administration Hanshu Double-beat Sluice Bureau Subproject, Baicheng Water Resource Bureau 2.9 Second Songhua River Bank revetment: 14.55 km Grade II Jilin Province River Affairs Jilin Province River Affairs Dike (additional) (50 years) Bureau Bureau 2.10 Jilin Wendehe Dike New dike: 3.83 km Grade II Construction and Jilin City Watercourse Station (additional) (50 years) Management Office of Jilin Wendehe Dike Subproject, Jilin Water Resource Bureau 3. Inner Mongolia Autonomous Region (7 subprojects) 3.1 Du'erbenxin Dike Improvement: 13.67 km Grade III Implementation Unit of Watercourse Management (core subproject) (35 years) Du'erbenxin Dike Subproject Station, Zhalaite Banner Water Authority

3.2 Ulanhot Dike Improvement: 21.173 km Grade I Implementation Unit of Ulanhot City Dike (100 years) Ulanhot Dike Subproject Administration Station, Ulanhot Water Authority 3.3 Ni’erji, Borong, and New dike:1.7 km Grade IV Implementation Unit of Ni’erji, Ni’erji Township Dike Hangu’er Dike Improvement: 82.66 km (20 years) Borong, and Hangu’er Dike Management Station, Dike Subproject Management Station of Hangu’er River Office

Operation and Maintenance Subproject Name Key Features Grade Implementation Unit Agency 3.4 Wulanhada Dike New dike: 1.9 km Improvement: Grade IV Implementation Unit of Wulanhada Dike Management (additional) 20.3 km (20 years) Wulanhada Dike Subproject Station, Ulanhot Water Authority

3.5 Tuquan Dike Improvement: 3.8 km Grade II Implementation Unit of Tuquan Watercourse and Dike (additional) (50 years) Tuquan Dike Subproject Management Station, Tuquan Water Authority

3.6 Horqin Right Front New dike: 2.168 km Grade II Implementation Unit of Horqin Horqin Right Front Banner Banner Dike (additional) Improvement: 4.919 km (50 years) Right Front Banner Dike Watercourse Management Subproject Station, Horqin Right Front Banner Water Authority 3.7 Deliqi’er Dike New dike: 21.068 km Grade V Implementation Unit of Deliqi’er Dike Management (additional) (10 years) Deliqi’er Dike Subproject Station, Deliqi’er Water Authority 4. Songliao Water Resources Commission (1 subproject) 4.1 Right Bank of Nen River Improvement: 45.02 km Grade IV Construction and Zhalaite Banner Water Dike (additional) (20 years) Management Bureau of Nen Authority, Bao’anzhao Dike River Right Bank Provincial Water and Power Management Boundary Dike Project Division, Zhatailong Water Management Union Sources: Heilongjiang PMO, Inner Mongolia PMO, Jilin PMO, and Songliao Water Resources Commission.

Appendix3

27

28

PROJECT COST AND FINANCING PLAN

TABLE A4.1: DETAILED PROJECT COST BY PROJECT COMPONENT Appendix4 ($ million)

Appraisal Mid-Term Review Actual

Component Foreign Local Total Foreign Local Total Foreign Local Total A. Flood Management 1. SWRC 4.3 9.2 13.5 3.7 10.2 13.9 5.0 12.5 17.5 2. Heilongjiang Province 3.4 3.1 6.5 3.8 1.5 5.3 5.7 1.5 7.2 3. Jilin 2.5 1.4 3.9 2.7 1.1 3.8 1.0 0.5 1.5 4. Inner Mongolia 1.2 2.6 3.8 2.5 1.3 3.8 2.8 0.8 3.6 Subtotal 11.3 16.3 27.6 12.7 14.1 26.8 14.5 15.3 29.8 B. Flood Control Works 1. SWRC 0 0 0 0 0 0 5.7 6.3 12.0 2. Heilongjiang Province 44.1 90.0 134.1 34.9 78.0 112.9 48.5 182.2 230.7 3. Jilin 31.4 54.2 85.6 28.9 57.0 85.9 38.2 73.4 111.6 4. Inner Mongolia 15.5 33.6 49.2 9.0 17.0 26.0 12.8 21.2 34.0 Subtotal 91.0 177.8 268.9 72.8 152.0 224.8 105.2 283.1 388.3 C. Project Management 1. SWRC 0.9 0.9 1.8 1.1 1.1 2.2 1.3 0.6 1.9 2. Heilongjiang Province 0.4 0.5 0.9 0.2 0.3 0.5 … … … 3. Jilin 0.3 0.4 0.7 0.1 0.2 0.3 … … … 4. Inner Mongolia 0.3 0.5 0.8 0.2 0.3 0.5 … 0.1 0.1 Subtotal 1.9 2.3 4.2 1.6 1.9 3.5 1.3 0.7 2.0 D. Front-end Fee 1.5 0 1.5 1.5 0 1.5 1.5 0 1.5 Total Project Based Cost 105.7 196.5 302.2 88.6 168.0 256.6 122.5 299.1 421.6

E. Contingencies 1. Physical Contingencies 7.9 16.4 24.3 3.5 6.6 10.1 0 0 0 2. Price Contingencies 5.8 10.8 16.6 4.8 9.2 14.0 0 0 0

F. Interest During Construction 14.6 0 14.6 19.6 0 19.6 12.2 0 12.2 and Commitment Charges

Total Project Cost 134.0 223.7 357.7 116.5 183.8 300.3 134.7 299.1 433.8 Note: Numbers may not sum precisely because of rounding. Sources: Asian Development Bank and Songliao Water Resources Commission.

Table A4.2: Summary Financing Plan ($ million)

Source Appraisal Estimate Midterm Review Actual Foreign Local Total % Foreign Local Total % Foreign Local Total %

ADB 134.0 16.0 150.0 41.9 116.6 8.4 125.0 41.6 134.7 13.3 148.0 34.1

Local Sources 0 207.7 207.7 58.1 0 175.4 175.4 58.4 0 285.8 285.8 65.9 National Government 0 10.5 10.5 0 94.0 94.0 0 133.4 133.4 Provincial Governments 0 8.7 8.7 0 6.3 6.3 0 32.8 32.8 Local Governments 0 188.5 188.5 0 75.1 75.1 0 119.6 119.6

Total 134.0 223.7 357.7 100.0 116.6 183.8 300.4 100.0 135.1 298.7 433.8 100.0 Sources: Asian Development Bank and Songliao Water Resources Commission.

Appendix

4

29

30 Appendix 5

PROJECTED AND ACTUAL CONTRACT AWARDS AND DISBURSEMENTS

Table A5: Cumulative Contract Awards and Disbursements ($ million) Contract Awards Disbursements Year Projecteda Actual Projecteda Actual 2003 2.0 0.0 2.5 1.6 2004 19.2 16.7 11.6 18.2 2005 33.0 45.9 32.2 24.6 2006 48.0 60.4 30.6 30.7 2007 77.0 80.7 40.7 57.7 2008 116.9 97.3 87.7 86.3 2009 132.4 131.4 126.3 135.4 2010 131.4 134.4 147.4 148.0 Total 131.4 134.4 147.4 148.0 a Annual projected plus cumulative actual contract awards or disbursements from previous years. Source: Asian Development Bank.

Figure A5.1: Projected and Actual Contract Awards

160 140

) 120 100

million 80 ($ ($ 60 40

Amount 20 0 2003 2004 2005 2006 2007 2008 2009 2010

Projected Actual

Figure A5.2: Projected and Actual Disbursements

160 140 120 100 80 ($ million) ($ 60 40

Amount 20 0 2003 2004 2005 2006 2007 2008 2009 2010

Projected Actual

PROJECT IMPLEMENTATION SCHEDULE

Activity 2003 2004 2005 2006 2007 2008 2009 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 Flood Management System

Flood Control Works

Heilongjiang Province Harbin Qunli Dike (Core Subproject)

Jiamusi Dike

Yilan Dike

Dalianhe Dike

Zhaodong Dike

Tangyuan Dike

Tongjiang Dike

Fujin Dike

Tonghe Dike

Mulan Dike

Bayan Dike

Mudanjiang Dike

Qiqihar Dike Appendix Harbin Daow ai Dike

Zhaoyuan Dike 6

Fangzheng Dike

31

Activity 2003 2004 2005 2006 2007 2008 2009 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4

Jilin Province 32

Xianghai Reservoir (Core Subproject)

Changchun Dike Appendix6

Jilin Dike

Songyuan Dike

Zhenlai Dike

Da'an Dike

Hanshu No. 3 Dike

Hanshu Double-beat Sluice

Second Songhua River Dike

Jilin Wendehe Dike

Inner Mongolia Du'erbenxin Dike (Core Subproject)

Ni'erji, Borong, and Hangu'er Dike

Ulanhot Dike

Wulanhada Dike

Horqin Right Front Banner Dike

Tuquan Dike

Deliqi'er Dike

Songliao Water Resources Commission Right Bank of Nen River Dike

Sources: Songliao Water Resources Commission, Heilongjiang PMO, Jilin PMO, and Inner Mongolia PMO. Original Actual Flood Period

Appendix 7 33

ORGANIZATION CHART AND FLOW OF FUNDS

. t National Ministry of Asian Development and Water Ministry of Development Gov’

Reform Finance Bank l Resources a Commission tr Cen

Project Songliao Water Steering Resources Committee Commission (SWRC)

Central Project Coordination Office (CPCO)

Provincial/ Regional Government

. t ’ Gov

Project Leading Group (PLG) Regional

Provincial Provincial Water Provincial Development Resources Finance Bureau Provincial/ & Reform Bureau Commission Provincial Project Management Office (PPMO) 1

Local Leading Group (LLG)

Local Finance Local Water Bureau Local 2

. Resources t Development ’ & Reform Bureau Local Project Commission Management Appendix Office (PMO) 1 11111111http://i Local Gov tem.taobao.co m/item.htm?id= Project 8512798258htt Implementing Unit p://item.taobao. com/item.htm?i 6 d=8512798258

1. In the case of Heilongjiang Province, the PPMO and PMO were set up in the development and reform commission. 33

2. Local government includes municipal, city, and county governments.

Coordination

Flow of funds

Statement of Account and Plan

Executing Agency

Implementing Agency and Unit

Source: Asian Development Bank

34 Appendix 8

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Reference to Status of Covenant Loan/Project Compliance Agreement 1. MWR shall, through SWRC, be the Project Executing LA, Schedule 6, Complied with. Agency for Part A of the Project, and HPG, IMARG and para. 1 JPG shall be the Project Executing Agencies for Project activities carried out in their respective provinces/region under Parts B and C of the Project. MWR shall provide technical guidance through SWRC for flood preparedness during Project implementation, monitor Project benefits, and report to ADB. SDPC and MWR shall review and approve all subproject feasibility studies. 2. The PSC, which has been established with LA, Schedule 6, Partly complied with. representatives from SDPC, MOF and MWR, shall para. 2 The PSC was coordinate the Project at the national level. The PSC established on 29 June shall monitor progress, coordinate activities involving 2003, but held two state ministries and agencies, and resolve any conflicts meetings only. The first or potential problems or cause of delay. The PSC shall meeting was on 9 Sept meet at least once a year, and as often as necessary. 2003. The second meeting was on 21 Sept 2006. 3. With respect to Part A of the Project, MWR shall LA, Schedule 6, Complied with. delegate authority to SWRC to act as the Project para. 3 Implementing Agency. The Borrower shall ensure that the Central PCO is established prior to the Effective date, and that the Central PCO is adequately staffed with qualified full-time staff and resources. The Central PCO shall be responsible for coordination of progress reports from the provincial PMOs to the central Government and ADB. The SWRC shall be responsible for overall implementation of the flood management system. 4. Each of the Project Executing Agencies shall ensure LA, Schedule 6, Complied with. that its Provincial Leading Group (PLG), which has been para. 4 established, is headed by a Vice-Governor of the province or region and is comprised of senior representatives of the Planning Commission, Finance Bureau, Water Recourses Bureau, SWRC, and other relevant agencies. The PLG shall be assisted by the PMO in each province/region headed by a senior staff member, who has been appointed by the province/region. The PMO head shall also be a member of the PLG. The Borrower shall ensure that the PMOs are adequately staffed by qualified, full-time staff from the bureaus represented on the PLG and that they are responsible for coordination of the work programs in their respective areas. The PMOs shall be responsible for planning and implementing the Project as delegated by their respective PLGs. The PMOs shall be responsible for the Subproject; the infrastructure of the flood management system in their province/autonomous region (i.e., center, sub-center and stations); Subproject

Appendix 8 35

Reference to Status of Covenant Loan/Project Compliance Agreement feasibility studies; tender document of technical support to Subprojects; and preparation of quarterly progress reports to the Central PCO. The Borrower shall ensure that the Central PCO and the PMOs regularly communicate and meet quarterly to coordinate their work. 5. The Borrower shall ensure that Local Leading Groups LA, Schedule 6, Complied with. are established and headed by the Vice Mayor (or para. 5 equivalent) with representatives from the local Planning Commission and the Finance, Water Resources, and Urban Construction Bureaus. The LLGs Shall supervise implementation of Subprojects prepared by the local government (league, municipality, city, and county). The Borrower shall also ensure that the local governments undertake resettlement activities including public consultation, monitoring and evaluation, and grievance resolution, relocation management, and administration of livelihood restitution. 6. The provincial/regional implementing agencies (IAs) LA, Schedule 6, Complied with. shall be comprised of the relevant local government para. 6 agencies, including the Planning, Finance and Water Resources Bureaus and other relevant agencies. For each Subproject, a Project Implementing Unit shall be established in the Water Resources Bureau or Construction Bureau of the prefecture/municipality and city/county where the Subproject is to be implemented. 7. Subprojects shall be comprised of (i) flood control LA, Schedule 6, Complied with. dikes; (ii) gates for diversion of river water to wetlands; para. 7 (iii) rehabilitation of unsafe reservoirs; (iv) wetland improvement; (v) flood storage and retention basins; (vi) related structures including bridges, and flow control

devices; and (vii) pumps, motors, and other Appendix electromechanical equipment associated with flood protection infrastructure. 8. In order to be financed with proceeds of the Loan, LA, Schedule 6, Complied with.

Subprojects shall satisfy the criteria set in the RRP and paras. 8-11 5 the Loan Agreement.

9. HPG, IMARG and JPG shall be responsible for LA, Schedule 6, Complied with. 35 acquiring land and resettling people for the Project in para. 12 External Monitoring accordance with the relevant laws and regulations, Agency submitted 79 including Land Administration Law of 1988, municipal monitoring reports on 22 urban demolition regulations and ADB’s Policy on subprojects. Involuntary Resettlement, including the RPF and RPG. All persons affected by the acquisition of land required for the subprojects shall be compensated in a timely manner and resettled in accordance with the resettlement plan. Each of the Project Executing Agencies shall engage an independent, qualified agency acceptable to ADB to monitor resettlement entitlements, prepare semi-annual

36 Appendix 8

Reference to Status of Covenant Loan/Project Compliance Agreement reports during project implementation and evaluate and report on the achievement of resettlement objectives at project completion and one year thereafter. The Project Executing Agencies shall ensure that copies of the resettlement plan, in Chinese language, are placed in the township offices for perusal by affected people. The temporary resettlement offices and township governments shall be responsible for receiving the comments of the affected people and addressing their concerns. There shall be intensive consultation with all people affected during asset inventory and valuation at the household level. The Project Executing Agencies shall ensure that written agreements are signed with each affected collective, household, and enterprise before constructions begins. 10. The Borrower shall ensure that for staff in the SWRC, LA, Schedule 6, Complied with. HPG, IMARG and JPG and selected local government para. 13 More than thirty officials, training is provided in the implementation of international and resettlement, environmental aspects and economic domestic training evaluation of the candidate subprojects. A training plan workshops and study shall be prepared and submitted which is acceptable to tours were organized. ADB. National institutions with specific expertise in these areas shall be selected and engaged in accordance with selection criteria and procedures acceptable to ADB, to provide targeted training inputs, in consultation with the international consultants. 11. All facilities and structures built and rehabilitated, LA, Schedule 6, Complied with. including non-structural activities under the Project shall para. 14 be operated and maintained by the IAs during the implementation and after completion of the works through annual budgetary allocation. The Borrower shall ensure that the local governments concerned will be responsible for O&M from their own resources. 12. The Borrower shall ensure that SFCH arranges LA, Schedule 6, Complied with. workshops at least three times during implementation para. 15 17 training workshops (once in the first year, once immediately prior to the mid- and seminars were term review and once in the final year of implementation). organized. 13. Within one year of the Effective Date, SWRC and the LA, Schedule 6, Complied with. Project Executing Agencies shall prepare and commence para. 16 Intergovernmental implementation of a time bound action plan acceptable to coordination/cooperation ADB to carry out an integrated system of flood on structural and non- management, including strengthening of structural measures for intergovernmental coordination and cooperation on flood protection and structural and non-structural measures for flood management were protection and management. Such action plan shall. strengthened. River Among other things, assign responsibility for areas of Basin Flood overlapping or conflicting jurisdiction, identify any Management Plan and impediments to coordination between SWRC and the River Basin Integrated local governments and propose measures to alleviate Management Plan were these impediments. formulated.

Appendix 8 37

Reference to Status of Covenant Loan/Project Compliance Agreement 14. The Borrower shall ensure that SWRC develops and LA, Schedule 6, Complied with. implements good governance principles with respect to para. 17 Songhua River Basin flood management policy planning and implementation, Flood Management including representation of the EAs on the SWRC in Mater Plan approved in connection with such planning and day-to-day 2008. implementation, updating of the river basin flood management plan, public participation in the planning and implementation decision-making process, and development of public awareness programs. 15. The Borrower shall ensure that lessons learned in LA, Schedule 6, Complied with. flood management, including policy, institutional and para. 18 operational innovations under the Project and other projects are taken into account during project implementation and in the Government’s reform of river basin management and river basin commissions. 16. MWR shall ensure that flood related data and data LA, Schedule 6, Complied with. from hydrological stations at state level collected under paras. 19 and 20 Data are available from their jurisdiction are made fully available to the public and SWRC and MWR other potential users. Data and information that is of use websites. for the benefit of the people shall be freely shared under the Project. The borrower shall encourage all Ministries and institutions active in the water sector other than MWR, to follow the initiative of MWR to make all hydrological data and information, collected under their jurisdiction, fully available to the public and other potential users. 17. Following enactment by the Borrower of the revised LA, Schedule 6, Complied with. Water Law, HPG, IMAR and JPG shall issue amended or para. 21 new provincial/regional regulations, so that such regulations are in accordance with the revised Water Law.

18. The Borrower shall ensure that HPG, IMAR and JPG LA, Schedule 6, Complied with. Appendix develop and improve mechanisms to improve cost para. 22 recovery and raise O&M funds through means including the charging of fees and the allocation of budgetary resources. The IMARG shall issue instructions to 5 establish the Flood Control Infrastructure Fund, and

establish and provide financing for this Fund. 37

19. The Borrower shall ensure that MWR assigns LA, Schedule 6, Complied with. qualified and experienced staff to SWRC, as necessary, para. 23 to ensure that SWRC can carry out its responsibilities under the Project. 20. The Project Executing Agencies shall each establish LA, Schedule 6, Complied with. a project monitoring and evaluation system acceptable to para. 24 ADB in their PMOs. Indicators shall include: (i) economic development and poverty indicators in the project area; (ii) hydrological indicators such as frequency of flooding; (iii) physical progress of the Project; (iv) social impact indicators, including progress on relocation and impact

38 Appendix 8

Reference to Status of Covenant Loan/Project Compliance Agreement rehabilitation; and (v) cost recovery. The provincial/regional PMOs shall prepare and maintain records of such information for at least five years after the completion of civil works. SWRC shall monitor and assess activities, and include the results in quarterly progress reports to ADB. 21. Project monitoring and evaluation (PME) shall be LA, Schedule 6, Complied with. undertaken to assess changes in socio-economic para. 25 Conducted three rounds conditions in the Subproject area based on the of PRA for 4 sample participatory rural appraisal (PRA) approach. The key subprojects in 2 PRA quantitative indicators shall include agricultural and provinces and Inner commercial production patterns, incomes and Mongolia Autonomous expenditure levels, poverty reduction effects through Region. income and social capabilities, access to public and private technical, social services and utilities, and village organization. 22. Project implementation shall be reviewed annually by LA, Schedule 6, Complied with. the Borrower and ADB. At the end of the second year, para. 26 the Borrower and ADB shall carry out a comprehensive midterm review of the project objectives and scope, including physical progress, policy agenda and institutional performance, and shall assess whether the Project will achieve its intended objectives and benefits, and shall take appropriate measures including modification of design and reallocation of resources as necessary. 23. HPG, IMARG, JPG and SWRC shall make available, PA, Section 2.02 Partly complied with. promptly as needed, the funds, facilities, services, The Zhaodong equipment, land and other resources which are required, government could not in addition to the proceeds of the Loan, for the carrying provide sufficient out of the project. counterpart funds during project implementation, although it later committed to completing the remaining works by 2012. 24. Each of HPG, IMARG, JPG and SWRC shall (i) PA, Section 2.09 Complied late. maintain separate account for the Project and for its (a) HPG submitted the 2009 overall operations; (ii) have such accounts and related - June 2010 audit report financial statements (balance sheet, statement of income on 11 October 2010. and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than nine(9) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditor’s opinion on the use

Appendix 8 39

Reference to Status of Covenant Loan/Project Compliance Agreement of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for its imprest account/statement of expenditures), all in the English language. Each EA shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. ADB = Asian Development Bank; HPG = Heilongjiang Provincial Government; IA = implementing agency; IMARG = Inner Mongolia Autonomous Regional Government; JPG = Jilin Provincial Government; MOF = Ministry of Finance; MWR = Ministry of Water Resources; O&M = operation and maintenance; PCO = Project Coordination Office; PLG = Provincial Leading Group; PME = project monitoring and evaluation; PMO = project management office; PRA = participatory rural appraisal; PSC = Project Steering Committee SDPC = State Development Planning Commission; SFCH = Songhua River Flood Control Headquarter; SOE = statement of expenditures; SWRC = Songliao Water Resources Commission. Sources: Asian Development Bank and Songliao Water Resources Commission. Appendix 5

39

40 Appendix 9

ECONOMIC REEVALUATION A. Introduction

1. The Songhua River Flood Management Sector Project was designed to reduce flood damage in the Songhua River basin through integrated river basin management and improved flood protection. The project comprises three components: (i) a flood management system, (ii) flood control works, and (iii) capacity building and project management. For the flood control works component, 34 subprojects were undertaken to construct and/or improve the flood control works in Jilin Province, Heilongjiang Province, and Inner Mongolia Autonomous Region.

2. An economic reevaluation was conducted for the flood control works component during the project completion review.1 As at appraisal, the economic costs and benefits from the flood management system and capacity building and project management for the Songliao Water Resource Commission and the provincial and regional project management offices (PMOs) were not analyzed, since the economic value of those components cannot be reliably estimated.

B. Methodology and Assumptions

3. The reevaluation of the flood control works component compared the with- and without- project scenarios by utilizing the same methodologies and major assumptions as at appraisal, and is in accordance with ADB’s Guidelines for the Economic Analysis of Projects. 2 This reevaluation assesses the economic viability of each subproject and the whole flood control works component after project implementation. Each subproject contributed to overall flood control in the Songhua River basin and provided protection to locally inundated areas. However, since the overall benefits to the entire floodplain from improved protection cannot be allocated among the different subprojects, they were excluded from the current analysis, as was the case at appraisal. The benefits included in each subproject analysis were limited to direct and quantifiable benefits from local flood protection and, in the case of the Xianghai reservoir subproject, the direct benefits from flood protection and incremental economic activity attributable to improved reservoir storage.

4. The economic costs and benefits of each subproject were reassessed to evaluate the economic returns on the investments made using the following assumptions: (i) the economic life of each subproject is 40 years including the construction period, as was the case at appraisal; (ii) the costs and benefits are expressed in constant 2010 prices, and valued using the domestic price numeraire method; (iii) all taxes and duties are excluded in deriving economic values; (iv) the financial costs of foreign currency components are adjusted to their respective economic values using the updated shadow exchange rate factor of 1.01; 3 (v) unskilled labor is valued at a shadow wage rate of 0.90, or 90% of the wage rate on the project, which is the same rate as at appraisal, and is intended to reflect the low productivity of and lower wages for unskilled labor as compared to skilled labor in the PRC; (vi) all other local currency costs (including equipment, operation and maintenance [O&M], and other costs), unless otherwise indicated, are assumed to equal their economic costs, after taxes and duties are deducted; and (vii) the economic opportunity cost of capital used is 12% per annum.

1 The local governments, which own the dikes, do not receive revenues from their flood protection services and do not operate as financially independent entities. 2 ADB.1997. Guidelines for the Economic Analysis of Projects. Manila 3 A shadow exchange rate factor of 1.01 is equivalent to a standard conversion factor of 0.99, which is widely accepted as the appropriate value for the PRC, and has been extensively used in similar projects.

Appendix 9 41

5. For the reevaluation of Jilin Wendehe dike subproject, a second stream of capital costs was incurred for dike rehabilitation as a result of the damage caused by the 2010 flood. An economic cost of CNY15.5 million was estimated based on the design report for dike rehabilitation. Considering that subproject construction was started and completed in 2009, the dike was overtopped in 2010, and the rehabilitation will be completed by the end of 2011, it is assumed that the flood protection benefit will start from 2012 and last until 2048, and it was calculated using the same methodology as at appraisal. In fact, although the dike was overtopped by the 2010 flood, its existence still helped the Fengman economic development zone of Jilin City to reduce losses from the flood. The economic benefit generated in 2010, however, was not reflected due to lack of reliable data.

C. Economic Costs

6. The economic costs of subprojects consist of capital and O&M costs. As at appraisal, the major financial capital costs include: (i) land acquisition and voluntary and involuntary resettlement; (ii) civil works; (iii) equipment and vehicles; (iv) training and study tours; and (v) others including overheads, surveys and design, supervision, environment mitigation measures, and subproject management. All these capital costs were derived from the actual costs and converted to economic capital costs by deducting taxes and duties, and then applying the relevant conversion factors. The financial O&M cost for all subprojects was estimated at 3.27% of the respective capital cost and was assumed to equal the economic cost after deduction of taxes and duties.4 The construction periods of the various subprojects ranged from 1 to 8 years.

7. The results of the analysis show that (i) the actual amount of capital investment was less than expected at appraisal for most subprojects; (ii) about half of the 22 originally planned subprojects, including the 3 core subprojects, had extended construction periods, and so the capital expenditures were spread over longer periods than the planned two years; and (iii) most of the 12 additional subprojects included after the midterm review were completed more quickly than expected, with the capital investments being compressed into one year.

D. Economic Benefits

8. The benefits included in each subproject analysis were limited to direct and quantifiable benefits from local flood protection and, in the case of the Xianghai reservoir subproject, direct Appendix benefits from flood protection and incremental economic activity attributable to improved reservoir storage.

9. Flood Protection Benefits. The methodology to quantify the economic benefits of flood 5 protection at appraisal is based on the expected output with and without the project. Without the

project, industrial assets, public infrastructure, household assets, and agricultural and industrial 41

production would be exposed to flooding at certain frequencies with corresponding damages; emergency evacuation costs would be incurred, and investment and economic growth in flood- prone areas would be stunted. With the project, the losses from floods are assumed to be zero when the flood’s severity is within the probability of the protection standards of the dikes.

10. To quantify the economic benefits of flood protection at project completion, the same methodology was followed using updated economic data on the protected areas. The financial valuation of damages was based on the value of crops and industrial output, public

4 This is the average rate calculated from the updated O&M cost estimates and capital costs of the 34 subprojects. The data were provided by the provincial PMOs and subproject implementing agencies.

42 Appendix 9

infrastructure, industrial and household assets, and per capita emergency evacuation costs. Potential losses of farm implements and household items and the cost of the necessary cleanup and silt removal after a flood were not calculated. Financial values were converted to economic values using conversion factors for the civil works, materials, equipment, and labor shares of each type of damage. The estimates of inundation data and asset loss rates made at appraisal were updated as necessary by the design institutes and the implementing agencies. The inundation data were not changed, except for the Jilin Wendehe dike subproject, where the estimates were updated taking the actual impact of the 2010 flood into consideration. These data were combined with the data on current economic activity in the protected areas to estimate total economic losses for varying levels of flood severity in the with- and without-project scenarios. Average annual damages were then computed by estimating the area under the damage-frequency curve (flood frequency plotted against associated damages).

11. The economic benefits were reevaluated for all 34 subprojects, including the three core subprojects. Table A9.1 presents the reevaluated total economic losses for the with- and without-project scenarios, as well as the annualized incremental damage avoided, for the three core subprojects compared with their appraisal estimates.

Table A9.1: Comparison of Annualized Flood Control Benefits due to Core Subprojects (CNY’000) At Completion At Appraisal Damages Annualized Annualized Flood Without Incremental Incremental Frequency Project With Project Damage Avoided Damage Avoided Harbin Qunli Dike Subproject 10.00% 333,253 0 33,325 22,924 5.00% 793,864 0 34,546 22,594 2.00% 1,310,535 0 18,084 11,878 Total 85,955 57,396

Xianghai Reservoir Subproject 2.00% 156,912 0 3,138 3,138 0.10% 1,116,923 0 10,080 2,312 Total 13,218 5,450

Du’erbenxin Dike Subproject 10.00% 87,232 0 8,723 3,982 5.00% 104,431 0 1,290 590 2.00% 128,619 0 951 435 Total 10,964 5,007 Sources: Economic Reevaluation Report at Project Completion, and Report and Recommendation of the President.

12. For the Harbin Qunli dike subproject, the reevaluated total incremental annualized economic benefit (IAEB) is greater than expected at appraisal, mainly as a result of increases in industrial assets and outputs, and household assets protected by the subproject at completion. For the Xianghai reservoir subproject, the reevaluated total IAEB is also greater than expected at appraisal, mainly because of greater development of protected areas. For the Du'erbenxin dike subproject, the reevaluated total IAEB is greater than expected at appraisal because of the significant contribution of the household sector at project completion.

13. Incremental Economic Benefits Attributable to Improved Reservoir Storage. The economic benefits of the Xianghai reservoir subproject go beyond flood protection, and the increased and more reliable supply of water from the rehabilitated reservoir reduces the

Appendix 9 43 frequency of drought in the area and improves the environment for wildlife. However, following the appraisal calculation, the reevaluation scope of non-flood related benefits was limited to (i) reed production, (ii) tourism, (iii) fisheries in the reservoir, and (iv) irrigated agriculture downstream. No attempt was thus made to quantify the direct environmental benefits. These additional economic benefits were reevaluated based on the information provided by the implementing agency for the with–project scenario against the data from appraisal for the without-project scenario.

14. Total reed production in the area varies from year to year, but no substantial increase was observed. Similarly, no significant impact was found on irrigated agriculture downstream. Therefore, zero incremental benefits from reed production and agriculture were counted in the reevaluation. For the fisheries, a fish catch of 100t per year with a value of CNY19/kg is assumed for 2011 onwards, which reflects a lower fish catch but higher market price at subproject completion. Tourism grew rapidly and beyond expectations at appraisal. According to a local government report, about 220,000 tourists visited Xianghai in 2008, predominantly domestic tourists. For an estimate of the economic benefit from tourism, it was assumed that (i) Xianhai receives 200,000 tourists every year; and (ii) they each spend an average of CNY135 from 2008 onwards, with all of them paying the entrance fee and half of them spending a night locally. However, the rapid increase in tourism revenue in Xianghai cannot be attributed solely to improved reservoir storage, given the large investment made by the government for tourism site development in recent years. Table A9.2 compares the annual incremental benefits at completion against those at appraisal.

Table A9.2 Other Benefits Attributable to Improved Reservoir Storage (CNY’000) At Completion At Appraisal Incremental Incremental Benefits Without Project With Project Benefits Benefits Reed Production 2,392 2,392 0 2,392 Tourism 16,000 27,000 11,000 4,000 Fisheries 1,375 1,900 525 825 Irrigated Agriculture 4,784 4,784 0 1,097 Total 24,551 36,076 11,525 8,314

Sources: Economic Reevaluation Report at Project Completion, and Report and Recommendation of the President. Appendix

E. Reevaluated Economic Rates of Return

5

15. Economic internal rates of returns (EIRRs) were computed to examine the economic viability of the subprojects and the flood control works component as a whole. Table A9.3 shows the economic costs and benefits of the flood control works component from 2002 to 2048. The 43 benefits are shown as flood protection benefits and other benefits attributable to improved reservoir storage, while the costs are shown as capital and O&M costs. The EIRR of the entire component is 17.9%, and its economic net present value is CNY833.5 million, showing that the investment in flood control works under the project is economically viable.

16. Table A9.4 shows the EIRRs for all the subprojects at completion compared with appraisal, and also the results of sensitivity analysis. The EIRRs of the 34 subprojects at completion ranged from 12.9% to 33.1%, indicating that all the subprojects are economically viable. Compared with the EIRRs at appraisal, these EIRRs were either better or about the same for 23 subprojects, and worse for the other 11 subprojects. The improved EIRRs for most subprojects mainly stemmed from three factors: (i) actual investment costs were lower than

44 Appendix 9 estimated at appraisal, which resulted from competitive bidding for procurement of civil works and equipment, and optimized design; (ii) the construction of some subprojects was completed quicker than expected; and (iii) the economic benefits of some subprojects increased significantly because of greater investment and accelerated development in the protected area compared to the appraisal prediction. The lower EIRRs were mainly associated with (i) much longer than envisaged construction periods, and (ii) increased resettlement costs for a few subprojects.

17. These reevaluated EIRRs provide conservative estimates of the economic value of the project, given the relatively limited scope of benefits accounted for in the economic reevaluation. This reevaluation excluded (i) the avoidance of substantial social and longer-term costs that are not easy to quantify, including avoidance of injuries, hospitalization, loss of life, and mobilization of flood-fighting crews; (ii) losses due to disruption of communications, transportation, education, and family life as well as loss of livestock and farm machinery; (iii) the incremental value of land and real estate; and (iv) in the case of Xianghai dike subproject, substantial direct environmental benefits.

F. Sensitivity Analysis

18. The sensitivity analysis further tested the robustness of the economic viability of the flood control works component and all the subprojects, using three different scenarios: (i) a 10% benefit decline, (ii) a 10% O&M cost increase, and (iii) a combination of both. Table A9.4 shows that the flood control works component would remain economically viable in any scenario. The 10% benefit reduction would have a substantial impact on every subproject, while a 10% O&M cost increase would have a minimal impact. With the 10% O&M cost increase, no subproject would register an EIRR lower than 12%. On the other hand, the 10% benefit reduction would make the EIRR slightly lower than 12% for the Jilin dike subproject and the Harbin Qunli dike subproject. Only these two subprojects would register EIRRs slightly below 12% in the scenario of both a 10% benefit reduction and a 10% O&M cost increase. Considering the conservative estimation of the economic benefits (para. 17), the economic viability of all the subprojects, as well as the entire flood control works component, has proven to be robust at project completion.

Appendix 9 45

Table A9.3 EIRR of Flood Control Works Component (CNY million) Costs Benefits Capital O&M Total Flood Other Total Year Costs Costs Costs Benefit Benefitsa Benefits Net Benefits 2002 13.0 0.0 13.0 0.0 0.0 0.0 (13.0) 2003 13.4 0.0 13.4 0.0 0.0 0.0 (13.4) 2004 3.0 0.0 3.0 0.0 0.0 0.0 (3.0) 2005 403.8 0.0 403.8 0.0 0.0 0.0 (403.8) 2006 671.2 0.0 671.2 0.0 0.0 0.0 (671.2) 2007 416.1 0.0 416.1 107.7 2.5 110.2 (305.8) 2008 251.2 11.9 263.1 149.1 15.2 164.2 (98.8) 2009 638.8 16.7 655.5 212.7 14.5 227.2 (428.3) 2010 5.9 55.0 60.8 484.7 14.5 499.2 438.4 2011 15.5 60.0 75.5 499.7 13.9 513.6 438.1 2012 0.0 60.9 60.9 522.1 13.4 535.5 474.6 2013 0.0 60.9 60.9 538.3 12.8 551.1 490.2 2014 0.0 60.9 60.9 554.9 12.3 567.3 506.4 2015 0.0 60.9 60.9 572.2 11.7 583.9 523.0 2016 0.0 60.9 60.9 589.9 11.5 601.4 540.5 2017 0.0 60.9 60.9 607.8 11.5 619.4 558.5 2018 0.0 60.9 60.9 625.2 11.5 636.7 575.8 2019 0.0 60.9 60.9 642.5 11.5 654.0 593.2 2020 0.0 60.9 60.9 659.0 11.5 670.6 609.7 2021 0.0 60.9 60.9 672.7 11.5 684.2 623.3 2022 0.0 60.9 60.9 686.6 11.5 698.1 637.2 2023 0.0 60.9 60.9 700.8 11.5 712.3 651.4 2024 0.0 60.9 60.9 715.2 11.5 726.8 665.9 2025 0.0 60.9 60.9 730.0 11.5 741.5 680.7 2026 0.0 60.9 60.9 745.1 11.5 756.6 695.7 2027 0.0 60.9 60.9 760.5 11.5 772.0 711.1 2028 0.0 60.9 60.9 776.1 11.5 787.6 726.8 2029 0.0 60.9 60.9 792.1 11.5 803.6 742.8 2030 0.0 60.9 60.9 808.4 11.5 820.0 759.1 2031 0.0 60.9 60.9 825.1 11.5 836.6 775.7 2032 0.0 60.9 60.9 842.1 11.5 853.7 792.8 2033 0.0 60.9 60.9 859.5 11.5 871.0 810.1

2034 0.0 60.9 60.9 877.2 11.5 888.8 827.9 Appendix 2035 0.0 60.9 60.9 895.3 11.5 906.9 846.0 2036 0.0 60.9 60.9 913.8 11.5 925.4 864.5 2037 0.0 60.9 60.9 932.7 11.5 944.2 883.3 2038 0.0 60.9 60.9 952.0 11.5 963.5 902.6 5

2039 0.0 60.9 60.9 971.6 11.5 983.2 922.3 2040 0.0 60.9 60.9 991.7 11.5 1003.3 942.4

2041 0.0 60.9 60.9 1012.2 11.5 1023.8 962.9 45

2042 0.0 58.7 58.7 1005.7 0.0 1005.7 947.0 2043 0.0 58.7 58.7 1026.5 0.0 1026.5 967.8 2044 0.0 54.7 54.7 862.0 0.0 862.0 807.3 2045 0.0 27.0 27.0 432.2 0.0 432.2 405.3 2046 0.0 27.0 27.0 441.3 0.0 441.3 414.3 2047 0.0 18.8 18.8 233.6 0.0 233.6 214.8 2048 0.0 11.2 11.2 194.5 0.0 194.5 183.4 EIRR 17.9% ENPV 833.5 a At appraisal, it was assumed that the tourism benefit would increase slowly until 2015 even without the project. Sources: Economic Reevaluation Report at Project Completion, and Report and Recommendation of the President.

46 Appendix 9

Table A9.4 EIRR by Subproject at Appraisal and Completion

Base EIRR (%) Sensitivity Analysis (%)

At Appraisal At Project O&M Cost Benefit O&M Cost +10% No. Subproject /Design Completion +10% -10% & Benefit -10% Overall Project 17.9 17.9 16.4 16.2 Heilongjiang Province 1 Jiamusi Dike 19.1 18.6 18.4 16.9 16.7 2 Yilan Dike 17.1 21.6 21.3 19.5 19.3 3 Zhaodong Dike 19.7 14.2 14.1 13.0 12.9 4 Tangyuan Dike 19.3 20.9 20.7 18.9 18.8 5 Tongjiang Dike 23.3 27.1 26.9 24.6 24.5 6 Fujin Dike 28.5 25.8 25.6 23.2 23.1 7 Bayan Dike 13.8 26.4 26.1 23.4 23.1 8 Harbin Qunli Dike 26.7 12.9 12.9 11.9 11.9 9 Dalianhe Dike 18.2 33.1 32.9 30.0 29.8 10 Tonghe Dike 15.2 19.3 19.0 17.2 16.9 11 Mulan Dike 18.0 24.4 24.2 22.2 22.0 12 Harbin Daowai Dike 22.4 25.1 24.9 22.6 22.3 13 Qiqihar Dike 20.1 27.9 27.6 25.1 24.8 14 Mudanjiang Dike 18.6 20.3 20.0 18.2 17.9 15 Zhaoyuan Dike 24.6 27.6 27.4 25.1 24.9 16 Fangzheng Dike 17.5 23.4 23.1 21.0 20.7 Inner Mongolia Autonomous Region 17 Du'erbenxin Dike 13.4 19.9 19.8 18.6 18.5 18 Ulanhot Dike 21.6 25.4 25.2 22.8 22.6 19 Ni’erji, Borong, and Hangu’er 13.4 Dike 15.8 15.5 14.1 13.8 20 Wulanhada Dike 21.6 15.6 15.3 13.7 13.5 21 Tuquan Dike 22.7 26.0 25.7 23.4 23.1 Horqin Right Front Banner 22 Dike 19.5 28.0 27.7 25.2 24.9 23 Deliqi’er Dike 17.2 29.8 29.5 26.8 26.6 Jilin Province 24 Xianghai Reservoir 13.6 20.4 20.3 19.0 18.9 25 Changchun Dike 19.8 16.9 16.7 15.4 15.1 26 Jilin Dike 14.9 13.0 12.8 11.7 11.5 27 Songyuan Dike 16.0 14.0 13.8 12.5 12.3 28 Zhenlai Dike 15.9 15.6 15.4 14.0 13.8 29 Da'an Dike 22.8 22.6 22.3 20.1 19.8 30 Hanshu No. 3 Dike 28.2 16.5 16.2 14.7 14.4 31 Hanshu Double-beat Sluice 12.8 25.8 25.5 23.4 23.1 32 Second Songhua River Dike 17.5 22.4 22.2 20.2 19.9 33 Jilin Wendehe Dike 17.0 13.4 13.3 12.3 12.1 Songliao Water Resources Commission 34 Right Bank of Nen River Dike 25.6 23.2 23.0 20.8 20.5 Sources: Economic Reevaluation Report at Project Completion, Report and Recommendation of the President, and Feasibility Study Reports.

Appendix 10 47

SOCIAL IMPACT AND POVERTY REDUCTION ASSESSMENT

A. Project Beneficiaries

1. The project seeks to improve people’s living standards and to promote sustainable economic growth through improved river basin management and reduced flood risks and damage in the Songhua River basin. The construction of the project not only contributed significantly to reducing poverty and promoting equitable growth on a sustainable basis, but it has stimulated rural economic growth and benefits for about 18.3 million people, of which 10.3 million (or 56.3%) are rural people and 2.68 million (or 14.6 %) are poor. The project comprised a total of 34 subprojects that directly protect 7.38 million hectares of land including 2.92 million hectares of farmland in Heilongjiang Province, Jilin Province, and Inner Mongolia Autonomous Region (IMAR). In addition, 8 important cities (Harbin, Jiamusi, Qiqihar, Mudanjiang, Jilin City, Changchun, Songyuan and Ulanhot), 25 counties, 172 towns or subdistrict offices, and 1,730 villages or residential committees directly benefit from the project. Table A10.1 provides information on the project beneficiaries for each subproject.

Table A10.1: Project Beneficiaries

No. of No. of Protected Protected Protected Protected Towns/ Villages/ Area Farmland Protected Subdistrict Residential Protected Subproject (ha) (ha) City/County Offices Committees Population A. Heilongjiang Bayan Dike 4,433 3,227 Bayan 5 16 20,000 Dalianhe Dike 18 … Yilan 1 … 6,312 Fangzheng Dike 4,170 2,860 Fangzheng 1 13 22,500 Fujin Dike 392,000 160,000 Fujin 8 228 134,000 Harbin Daowai Dike 28 … Harbin 5 42 927,000 Jiamusi Dike 4,780 … Jiamusi 4 15 520,000 Mudanjiang Dike 3,010 … Mudanjiang 1 6 337,400 Mulan Dike 4,007 3,247 Mulan 3 14 61,700 Qiqihar Dike 133,100 24,000 Qiqihar 4 … 1,180,000 Harbin Qunli Dike 24 … Harbin 2 3 45,400 Tangyuan Dike 16,800 13 Tangyuan 1 8 68,500 Tonghe Dike 16,347 9,853 Tonghe 1 28 58,500 Tongjiang Dike 527,500 206,700 Tongjiang, Fujin 16 331 300,000 Yilan Dike 1,866 867 Yilan 1 3 101,000 Zhaodong Dike 49,347 27,260 Zhaodong 5 147 113,000 Zhaoyuan Dike 134,000 73,980 Zhuangyuan 10 219 244,500 Subtotal(A) 1,291,431 512,006 68 1,073 4,139,812 B. Jilin Changchun Dike 1,497 1,497 Changchun 3 … 168,800 Da’an Dike 87,000 38,000 Da’an 4 28 296,000 Hanshu Sluice 5,000,000 1,790,000 Zhenlai, Da’an … 18 9,980,000 Songyuan Dike 2,500 2,000 Songyuan … 10 300,000 Wendehe Dike 360 150 Jilin 3 5 18,800

48 Appendix 10

No. of No. of Protected Protected Protected Protected Towns/ Villages/ Area Farmland Protected Subdistrict Residential Protected Subproject (ha) (ha) City/County Offices Committees Population Zhenlai Dike 126,000 69,333 Zhenlai 17 … 160,000 Xianghai Reservoir 42,000 29,000 Tongyu 10 142 108,000 Jilin Dike 3,600 980 Jilin municipal … 11 155,000 Da’an, Zhenlai, Hansu No.3 Dike 279,300 139,333 … 32 680,000 Qianguo Jilin, Jiutai, Shulan, Dehui, Second Songhua 118,500 106,620 Yushu, Nongan, 17 359 1,384,700 River Dike Fuyu, Songyuan, Qianguo Subtotal(B) 5,660,757 2,176,913 54 605 13,251,300

C. Inner Mongolia Horqin Right Front 2,400 1,530 Keerqin Town 1 19 200,000 Banner Dike Tuquan Dike 5,000 2,000 Tuquan … … 10,700 Wulanhada Dike 6,500 5,367 Ulanhot 1 8 22,590 Ulanhot Dike 3,100 300 Ulanhot 8 … 214,600 Deliqi’er Dike 14,113 12,847 Arong Qi 1 4 7,410 Du’erbenxin Dike 6,900 5,333 Zhalaite Q 1 4 4,136 Ni’erji, Borong, and 37,160 8,487 Mo Qi 3 24 31,700 Hangu’er Dike Nenyou Dike 356,000 192,080 Zhalaite Qi 35 … 388,000 Subtotal(C) 431,173 227,944 50 59 879,136 Total 7,383,361 2,916,863 172 1,730 18,270,248 … = no data available. Source: The Executing Agency’s Project Completion Report.

B. Sustainable Socioeconomic Growth in the Project Area

2. The project has contributed to social and economic growth, sustainable development, and improvement of people’s living standards in the project protected areas by reducing flood risks. With the construction of 34 subprojects starting from 2002, the project greatly promoted local agricultural development, enhanced secondary and tertiary industry, and contributed to regional economic growth in the Songhua River basin.1 The statistical data in Table A10.2 show that socioeconomic conditions in the project area have improved rapidly in recent years. From 2003 to 2010, the per capita GDP of the Songhua River basin increased by 129% from CNY13,976 to CNY32,008; per capita fiscal revenues increased by 211% from CNY686 to CNY2,136; and per capita rural net income increased by 118% from CNY2,730 to CNY5,952.

3. The project has contributed to local industrial development by providing the local governments with the means to attract economic investment. Data show that the per capita capital asset investment of the Songhua River Basin reached CNY25,043 in 2010, with a growth rate of 541% compared to CNY3,905 in 2003. The project also facilitated the construction and development of industrial parks and environment-friendly living areas for communities. For example, the Yitong Economic and Technological Development Zone benefited greatly from the

1 The Xianghai reservoir subproject started in 2002 under a retroactive financing arrangement.

Appendix 10 49

Changchun dike subproject, making extraordinary achievements in recent years. Of the 84 companies that have invested in the zone, 29 belong to Fortune 500 companies. In addition, the local government has improved infrastructure and community facilities in the project protected areas, thereby directly improving local residents’ quality of life. In IMAR, use of the industrial park in Zhalaite Banner steadily improved, attracting 17 enterprises with a fixed asset investment of CNY2.1 billion in 2008. The output value of the industrial park accounted for 11.7% of the total GDP of Zhalaite Banner in 2008.

Table A10.2: Socioeconomic Growth in the Project Area (Unit: CNY/person)

Per Capita Per Capita Per Per Capita Per Capita Per Capita Capital Rural capita Industrial Agricultural Fiscal Assets Net Items GDP Output Output Revenue Investment Income Heilongjiang 2003 12,794 2,867 2,035 971 3,232 2,603 2010 29,002 8,104 4,769 2,567 17,718 6,122 Growth 127% 183% 134% 164% 448% 135%

Jilin 2003 16,196 4,546 2,543 403 4,774 2,979 2010 37,206 13,808 4,921 1,258 37,825 5,862 Growth 130% 204% 94% 212% 692% 97%

Inner 2003 5,090 982 1,768 188 2,979 1,670 Mongolia 2010 14,860 3,893 6,682 432 6,617 4,428 Growth 192% 296% 278% 130% 122% 165%

Songhua 2003 13,976 3,532 2,249 686 3,905 2,730 River Basin 2010 32,008 10,431 4,916 2,136 25,043 5,952 Growth 129% 195% 119% 211% 541% 118% Sources: 2004 and 2011 statistical yearbooks of Heilongjiang, Jilin, and Inner Mongolia.

4. The project also plays a significant role in protecting new investments in agriculture, by reducing crop losses, as well as promoting local agricultural processing and modernization. This resulted in a large increase in agricultural output and rural incomes in the project areas. The per capita agricultural output in the Songhua River basin more than doubled from CNY2,249 in 2003 to CNY4,916 in 2010. In addition, it also stimulated the process of agricultural modernization and provided opportunities for local communities to develop high-production and high-tech agricultural industries. For example, as a result of the Mo Qi subproject, 37 model villages have developed their own agricultural industries brand, aiming at ―one village, one brand.‖

C. Flood Risk Mitigation and Damage Reduction

5. In general, prior to project construction, major flood disasters hit the Songhua River around once every 10 years. The worst flood over the past 200 years hit the region in 1998, threatening Harbin City, severely affecting other urban and rural areas, and inflicting loss of life and property damage equivalent to $7.3 billion, which significantly raised the poverty level in the flood area. During the past decade, rapid urbanization has significantly expanded potential economic damage from flood risk. The project established the capacity to manage flood occurrence in the basin through an upgraded flood protection system that protects the cities, major assets, and industries,

50 Appendix 10 and supports the sustainable livelihood of people residing in the floodplain areas. There are 18 million people benefiting directly from the project.1

D. Poverty Reduction in the Project Area

6. The project contributes to poverty reduction, since the poor and vulnerable suffer most from floods. About 3.3 million poor people, including 1.8 million rural poor, lived in 11 poverty counties in the project area in 2003. Poverty incidence in the project area in 2010 has been reduced significantly owing to economic development and greater progress in poverty reduction. The total number of the rural people in poverty in the project area decreased by 32% from 1.8 million people in 2003 to 1.2 million people in 2010, while the urban poor decreased by 15% from 1.5 million people in 2003 to 1.3 million people in 2010. Table A10.3 presents details of poverty incidence in the project area. These people remain vulnerable but their flood risks have been significantly reduced.

Table A10.3: Poverty Incidence in the Project Area Poverty Poverty Rural Poor Urban Poor Items Year Counties Villages Population Population Heilongjiang 2003 4 597 725,215 694,017 2010a 4 597 379,964 665,922 Decrease (%) 0 0 (48%) (4%) Jilin 2003 3 1,221 894,620 757,618 2010a 3 1,221 701,126 583,192 Decrease (%) 0 0 (22%) (23%) Inner Mongolia 2003 4 386 183,863 34,112 2010a 4 341 142,031 32,186 Decrease (%) 0 (12%) (23%) (6%) Total 2003 11 2,011 1,803,698 1,503,664 2010 11 1,866 1,223,121 1,281,300 Decrease (%) 0 (7%) (32%) (15%) Notes: Rural Poverty line : < CNY 882 in 2003, < CNY 1274 in 2010 Urban Poverty line: Heilongjiang: CNY 119 per month in 2003, CNY 240 per month in 2010. Jilin: CNY 103 per month in 2003, CNY 227 per month in 2010. Inner Mongolia: CNY 113 per month in 2003, CNY 300 per month in 2010. a The data are estimated by the poverty incidence, while Heilongjiang and Jilin is about 6.5%, Inner Mongolia is about 10% in 2010. Source: Provincial Poverty Alleviation and Development Office.

7. The project has helped to prevent frequent flooding. Because they are protected against floods, households in rural areas can build up their savings; invest more in improved farm practices; and finance income-generating activities to continually improve their living conditions. In the urban areas, since flood risks have been significantly reduced, local governments have invested funds to further develop the areas along the river banks, where the majority of urban poor people used to reside and had been exposed to flood risks. The living conditions of local people have improved substantially since the project. For example, the people who reside along the Yitong River have benefited from the increase in the price of real estate and housing lease revenues.

8. In order to monitor the social and poverty reduction benefits of the project, three social assessment reports on four selected subprojects have been prepared since 2006, using

1 The number of 62 million as a goal indicator at appraisal in the project framework referred to the total population in the whole Songhua River Basin rather than the directly protected population under the project.

Appendix 10 51 participatory rapid appraisal (PRA) approaches. It was concluded that rural poverty is caused by location, a limited resource base and poor quality of land, lack of skills and income-earning opportunities from nonagricultural livelihoods, and the poor health of adults. The project has reduced flood risks, thus contributing to safety and better investment opportunities for local communities. According to the final report of the PRA, rural poverty population was reduced by 19% to 27% in these areas. See Table A10.4.

Table A10.4: Poverty Incidence in Four Sample Subproject Areas (Unit: Persons)

Year Zhenlai Tangyuan Tongjiang Mo Qi a b 2001 108,000 78,838 56,160 108,000 2008 79,000 64,050 41,100 81,800 Reduction 27% 19% 27% 24% Note: Rural Poverty Line:< CNY 872 in 2001, < CNY 1,067 in 2008. a Refers to 2000. b Refers to 2005. Source: Final Summary Report of Participatory Rural Appraisal.

9. The provincial governments have implemented specific poverty reduction programs in the subproject areas. These included (i) poverty reduction programs for the whole village, (ii) technical training programs for poor laborers, (iii) projects supported by local enterprises, (iv) micro-credit programs for poor families, and (v) technical support for agricultural production. According to the PRA, CNY503 million of poverty reduction funds were disbursed to the four project counties from 2001 to 2008. These poverty reduction programs have significantly improved the income of the poor households in the subproject areas. See Table A10.5.

Table A10.5: Poverty Reduction Funds to Sample Villages in Subproject Areas (Unit: CNY Million)

Year Zhenlai Tangyuan Tongjiang Mo Qi 2001 33.18 3.50 22.21 2.26 2002 20.58 15.39 15.33 4.70 2003 26.30 17.08 18.11 8.35 2004 30.49 18.88 17.31 5.10 2005 30.25 18.28 17.70 9.66 2006 25.71 15.51 16.74 5.58 2007 17.06 21.84 9.49 5.80 2008 22.13 15.16 8.80 7.52 Total 205.70 122.67 125.69 48.97

Source: Final Summary Report of Participatory Rural Appraisal. .

E. Labor and Employment

10. During project implementation, local income was generated from labor-intensive construction of dikes and reservoirs for flood-affected communities and poor people in the project

52 Appendix 10 area. A total of 21,695 job opportunities were created from project construction and maintenance, of which 35.8% were for poor laborers and 8.9% for women (Table A10.6). Table A10.6 also provides details of the number of job opportunities created and average annual per capita incomes in each province.

Table A10.6: Job Opportunities Created by the Project

Average Annual Per Poor Women’s No. of Jobs Created Province Capita Income Employment Employment (CNY) Construction Maintenance Total Num. % Num. % Heilongjiang (16) 8,921 521 9,442 18,263 3,589 38.0% 900 9.5% Jilin (10) 7,540 303 7,843 15,401 3,215 41.0% 440 5.6% IMAR (8) 4,253 157 4,410 18,827 955 21.7% 590 13.4% Total 20,714 981 21,695 … 7,759 35.9% 1,930 8.9% … = no data available. Source: The Executing Agency’s Project Completion Report.

F. Gender Dimensions

11. Women shared equally in the benefits during project implementation. A total of 1,930 women were employed, accounting for 8.9% of the total local workers. Women’s traditional household tasks of fetching drinking water, fuel, and food, taking care of children and elders, and feeding livestock, become more difficult during and after flooding. With the project, flood risks significantly reduced, women benefit greatly from a steady income and highly improved hygiene and environmental conditions.

G. Ethnic Minority Development

12. The minority peoples in the project area included Daur, Hezhe, Hui, Korean, Man, Mongolian, Oroqen, and Xibo. The minority peoples enjoyed equal benefits from the project. For example, in the Deliqi’er subproject, CNY103 million of direct economic losses were successfully avoided after subproject construction. In addition, CNY10.55 million of investment by the local government in 2009 and 2010 significantly improved agricultural extension, rural biogas construction, and the living environment, and promoted ethnic minority culture through the construction of cultural centers. There are no outstanding issues.

H. Conclusions

13. Project construction contributes to social development and poverty reduction in the project area: (i) a total of 18.2 million people are protected by the project, of which 10.3 million are rural people and 2.68 million are the poor in the project area; (ii) GDP of the project area and rural income have significantly increased; (iii) poverty incidence in the project area has decreased; (iv) the project directly created 21,695 job opportunities for local people, including the poor and women; and (v) the project also benefited minority communities and gender development.

Appendix 11 53

EVALUATION OF LAND ACQUISITION AND RESETTLEMENT ACTIVITIES

A. Scope of Land Acquisition and Resettlement

1. The Songhua River Flood Management Sector Project aims to reduce flood damage in the Songhua River basin through integrated river basin management and improved flood protection. The project comprises 34 structure subprojects, 22 of which induced land acquisition and resettlement. Three resettlement plans for the core subprojects were prepared during the project preparatory technical assistance, and another 19 plans (one for each subproject) were prepared and approved prior to the commencement of civil works of each subproject. Land acquisition and resettlement implementation actually began in 2004, and was largely completed by the end of 2008.

2. According to the resettlement plans, the total permanent land acquisition was estimated to be 1,206 hectares (ha) (18,090 mu).1 The impact of permanent land loss was estimated to be equivalent to the loss of livelihood for 4,126 persons. Building demolition was estimated at 115,557.9 square meters (m2) and required 740 households or 2,388 people to be relocated. The resettlement completion report prepared by the Changchun Songliao Reservoir Resettlement Development Consultation Center (CSRDCC) showed that a total of 876.7 ha of land were permanently acquired, which was 27.3% less than estimated in the resettlement plans. There were 3,221 people actually affected by land acquisition.2 A total of 110,849.3 m2 of buildings were actually demolished, which was 4.1% less than estimated in the resettlement plans, and 576 households with 1,703 affected people were relocated. Table A11.1 presents the actual project impacts as compared to those estimated in the resettlement plans.

Table A11.1: Land Acquisition and Resettlement Impacts

Permanent land acquisition (ha) House demolition RP Actual Demolished area (m2) Affected persons Subproject Total Farmland Total Farmland RP Actual RP Actual A. Heilongjiang Harbin Qunli Dike 125.97 117.36 112.30 57.51 53,290.90 62,259.76 513 513 Kiamusze Dike 14.00 7.29 13.67 3.03 13,137.00 5,871.16 428 428 Bayan Dike 7.99 7.99 5.02 2.93 Zhaodong Dike 180.85 151.45 151.45 151.45 2,412.00 3,424.00 119 119 Fujin Dike 158.73 123.12 102.40 11.70 Tangyuan Dike 10.74 8.25 5.99 3.36 Yilan Dike 45.77 32.13 26.66 26.26 771.20 72.00 Tongjiang Dike 103.95 74.78 21.28 21.28 Tonghe Dike 83.43 65.81 76.28 58.66 485.66 0 9 9 Dalianhe Dike 17.71 5.72 17.71 5.72

1 The mu is a traditional land area measurement. 15 mu = 1 hectare. 2 The number of persons affected by land acquisition was estimated using assumption of 100% land loss to be consistent with those estimates in resettlement plans. This also highlights difficulties to get an accurate number of persons affected by land acquisition under collective tenure system in the PRC. However, the actual land acquisition impacts on individual affected households were not serious since (i) the project acquired lands are located in frequent flooding areas and (ii) affected farmers still have fertile farmlands, which benefit from the project upon completion.

54 Appendix 11

Permanent land acquisition (ha) House demolition RP Actual Demolished area (m2) Affected persons Subproject Total Farmland Total Farmland RP Actual RP Actual Mulan Dike 35.99 27.70 5.06 5.06 Zhaoyuan Dike 23.11 5.28 23.11 3.98 Fangzheng Dike 8.75 6.03 6.36 3.41 356.00 356.00 26 26 Harbin Daowai Dike 2,749.00 2,749.00 Subtotal(A) 816.99 632.91 567.29 354.35 73201.76 74731.92 1095 825 B. Jilin Changchun City Dike 35.00 … 35.00 … 22,101.50 19,234.30 880 621 Jilin City Dike 58.47 39.76 3.76 1.19 18,074.20 15,972.00 251 240 Jilin Wendehe Dike 8.49 1.88 8.49 1.88 Subtotal(B) 101.96 41.64 47.25 3.07 40,175.70 35,206.30 1131 861 C. Inner Mongolia Nibohan Dike 97.36 26.16 78.84 1.64 123 0 Wulanhaote Dike 16.14 16.92 0.51 Arong Qi Dike 40.58 22.02 36.72 24.13 Wulanhada Dike 5.77 4.84 5.32 4.40 Nenyou Dike 127.18 21.80 124.40 20.85 2,180.44 911.08 39 17 Subtotal (C) 287.03 74.82 262.2 51.53 2180.44 911.08 162 17 Total 1,205.98 749.37 876.74 408.95 115,557.90 110,849.30 2,388 1,703 … = no data available. RP = resettlement plan. Source: The Executing Agency’s Resettlement Completion Report.

3. The variation in project impacts on land acquisition and resettlement was mainly because: (i) the amount of land acquisition in the original resettlement plans was estimated on the basis of the total land area within each subproject’s scope, but the subsequent detailed investigations identified some of the land was state owned; (ii) the width of the dike protection area in some subprojects decreased from 50 meters to 20 meters followed detailed design; and (iii) the project construction design was optimized to avoid or minimize land acquisition and resettlement impacts during implementation.

B. Resettlement Policy and Compensation Rates

4. Land acquisition and resettlement was implemented on the basis of the resettlement plans, the Land Administration Law (1998), the Decision of the State Council on In-depth Reform Concerning Strict Land Management (State Council [2004] No. 28), Land Acquisition Compensation and Resettlement Regulation for Medium to Large Scale Hydro-power Projects (Decree No.74, the PRC State Council, 1991, updated in 2006 No.471), and relevant laws and regulations of Heilongjiang province, Jilin province, and Inner Mongolia Autonomous Region.

5. In general, actual compensation rates were higher than those in the resettlement plans. For permanent land acquisition, the actual compensation rates followed State Council (2004) decree No.28, and Land Acquisition Compensation and Resettlement Regulation for Medium to Large Scale Hydro-power Projects and were based on a multiple of 16 times the average annual output value. The actual house compensation rates were also higher than those in the resettlement

Appendix 11 55 plans. Table A11.2 compares the actual compensation rates in each subproject area with the compensation rates outlined in each resettlement plan.

Table A11.2: Land Acquisition and House Demolition Compensation Rates

Land Compensation Standard (CNY/ ha) House Compensation Dry land Paddy (CNY/ m2) Item RP Actual RP Actual RP Actual A. Heilongjiang Harbin Qunli Dike 605,600 605,600 1,100-1,200 1,350-1,450 Kiamusze Dike 66,000 446,400 705 833 Bayan Dike 77,040 123,200 108,570 172,800 Fujin Dike 62,900 118,400 Tangyuan Dike 62,900 118,400 97,750 184,000 Yilan Dike 60,000 118,400 188,800 262-385 277 Tongjiang Dike 56,520 97,600 86,960 150,400 Tonghe Dike 120,000 112,000 160,000 160,000 Mulan Dike 96,560 113,600 136,000 160,000 Zhaoyuan Dike 121,600 225,000-886,300 225,000-886,300 Zhaodong Dike 280-400 280-400 Fangzheng Dike 118,400 220,000 188,800 220,000 280 280 Harbin Daowai Dike 950-1,000 950-1,000 B. Jilin Changchun City Dike 1,800 2,030 Jilin City Dike 94,395 561,600 154,200 561,600 546-748 663-1,205 Wendehe Dike 26,700 1,200,000 C. Inner Mongolia Nibohan Dike 93,585 93,585 Wulanhaote Dike 102,000 120,000 Arongqi Dike 66,800 66,800 192,000 192,000 Wulanhada Dike 297,600 Nenyou Dike 95,188 112,318 317-532 317-532 RP = resettlement plan. Source: The Executing Agency’s Resettlement Completion Report.

C. Resettlement Measures, Income Restoration, and House Relocation

6. As a result of the project, affected households whose farmland was close to the riverbanks suffered a partial loss of income, even though land productivity had been poor because of frequent flooding. In order to assist affected households in restoring their incomes and improving their livelihoods, plans for livelihood rehabilitation and physical relocation were included in each resettlement plan to ensure living standards fully restored. Since the resettlement impacts of each subproject were small, the affected villages and affected persons were directly compensated in cash. In addition, different schemes for income restoration were carried out on the basis of the economic characteristics of affected villages. The measures for income restoration mainly included: (i) farmland readjustment within the group or village; (ii) improvement of the irrigation system and village infrastructure, including public facilities; (iii) provision of employment opportunities during project construction and operation; (iv) development of plastic canopies to produce crops with

56 Appendix 11 higher economic value; (v) promotion and development of new enterprises and self-employed secondary and tertiary businesses (i.e. transportation, shops, and catering services); and (vi) provision of free technical training for affected persons to enhance their job skills.

7. With the implementation of restoration measures, the incomes of affected households has been restored and even increased following resettlement. A survey of sample households was conducted by the external monitor. For the 256 affected households losing land, the survey showed that average per capita annual incomes had increased by 56% to CNY8,849 after resettlement. As for individual households, the income of 96% of the sampled households was higher than before resettlement. However, the income of 11 households was lower because of the natural disaster in 2009. Table A11.3 provides the details.

Table A11.3: Resettlement Income Restoration (by 2009) (Unit: CNY, %)

Per capita net Per capita net Increase / Number of Restoration Num. of income (before income (after Decrease Households Rate Subproject Samples resettlement) resettlement ) (%) Restored (%) Nibohan Dike 15 8,176 13,495 65 15 100 Wulanhaote Dike 7 5,585 9,743 74 7 100 Arong Qi Dike 12 8,114 5,767 (29) 7 58 Wulanhada Dike 4 14,931 28,711 92 4 100 Nenyou Dike 5 10,687 14,771 38 5 100 Jilin City Dike 9 1,231 3,407 177 9 100 Jilin Wendehe Dike 10 8,473 8,701 3 10 100 Kiamusze Dike 5 2,005 6,158 207 5 100 Bayan Dike 4 3,940 4,431 12 4 100 Zhaocdong Dike 22 4,253 6,188 45 22 100 Fujin Dike 39 3,925 9,489 142 39 100 Tangyuan Dike 1 23,000 24,500 7 1 100 Yilan Dike 25 2,737 5,238 91 25 100 Tongjiang Dike 49 5,230 10,405 99 47 96 Tonghe Dike 20 6,711 5,269 (21) 16 80 Mulan Dike 12 7,000 9,118 30 12 100 Zhaoyuan Dike 4 4,586 5,222 14 4 100 Fangzheng Dike 13 5,409 5,481 1 13 100 Total 256 245 96 Source: The Executing Agency’s Resettlement Completion Report.

8. From 4 to 9 July 2011, the external monitor conducted a complementary survey on income restoration for those 11 households and concluded that their income losses because of land acquisition had been restored by 2010. In Arong Banner, the average per capita income of five households increased from CNY4,935 in 2008 to CNY11,951 in 2010; the average income of two households in Tongjiang increased from CNY5,636 in 2005 to CNY15,196 in 2010; and that of four households in Tonghe increased from CNY3,145 in 2007 to CNY8,117 in 2010.

9. A total of 576 households in eight subprojects were relocated owing to project construction. For rural affected households, in addition to cash compensation, the affected households also received plots of residential land free of charge within a village or concentrated resettlement site.

Appendix 11 57

Local governments and village committees mobilized resources to prepare resettlement sites, and constructed infrastructure facilities such as water supply, power supply, roads, telecommunication, and a television system. The affected households either (i) built new houses using their compensation money and available construction materials in the resettlement sites within their original villages, or (ii) were given the opportunity to purchase a new apartment at a preferential price in a concentrated resettlement compound constructed by the local government. Affected urban households were entitled to (i) replacement housing or (ii) cash compensation, which was generally adequate to buy a house within the same area; in some cases, the local government offered housing at preferential prices to ensure all APs had affordable housing options.

10. According to the survey of 113 sample households conducted by the external monitor, the average per capita living space for urban affected persons was 30.97 m2 after resettlement, which is higher than the average space of 26.4 m2 before resettlement. There was a similar finding among rural affected households. Furthermore, the construction of new houses for rural affected households was improved to brick and concrete from houses made of earth and grass or wood and brick. The new housing locations are also safe from regular flooding.

D. Land Acquisition and Resettlement Cost

11. The total actual cost of land acquisition and resettlement was CNY651.97 million (22.8% of the project cost), which was 35.4% higher than the CNY481.48 million estimated in the resettlement plans. The reasons for significant variation in land acquisition and resettlement costs are: (i) for some subprojects, the decreased costs were mainly due to reduced project impacts, particularly in the amount of permanent land acquisition; and (ii) for other subprojects, the increased costs were mainly due to higher compensation rates than in the resettlement plans. Table A11.4 provides land acquisition and resettlement costs for each subproject.

Table A11.4: Land Acquisition and Resettlement Cost (Unit: CNY Million) Subprojects RP Actual Increase/ Decrease (%) A. Heilongjiang Harbin Qunli Dike 203.04 433.08 113.3 Kiamusze Dike 39.53 28.55 (27.8) Bayan Dike 9.99 2.36 (76.4) Zhaodong Dike 28.96 14.23 (50.9) Fujin Dike 15.94 10.71 (32.9) Tangyuan Dike 1.35 0.85 (36.8) Yilan Dike 7.92 9.56 20.7 Tongjiang Dike 6.84 3.35 (51.0) Tonghe Dike 18.04 12.90 (28.5) Dalianhe Dike 0.69 0.80 16.0 Mulan Dike 3.60 1.18 (67.3) Zhaoyuan Dike 2.07 3.51 69.3 Fangzheng Dike 1.40 2.65 89.1 Harbin Daowai Dike 5.72 3.48 (39.2) Subtotal 345.09 527.19 52.8% B. Jilin Changchun City Dike 53.54 49.41 (7.7) Jilin City Dike 42.79 40.68 (4.9) Wendehe Dike 11.88 16.32 37.4 Subtotal 108.21 106.42 (1.7)

58 Appendix 11

Subprojects RP Actual Increase/ Decrease (%) C. Inner Mongolia Nibohan Dike 6.10 1.21 (80.2) Wulanhaote Dike 7.18 4.49 (37.4) Arong Qi Dike 3.25 1.17 (63.9) Wulanhada Dike 3.18 3.34 4.9 Nenyou Dike 8.48 8.15 (3.9) Subtotal 28.19 18.36 (34.9) Total 481.48 651.97 35.4 RP = resettlement plan. Source: The Executing Agency’s Resettlement Completion Report.

E. Institutional Arrangement

12. A Social, Environment and Resettlement Office or designated resettlement staff within the CPCO and the three provincial PMOs took overall responsibility for coordinating the planning, implementation, and reporting of land acquisition and resettlement. The county implementing agencies were responsible for resettlement implementation. Each implementing agency set up a resettlement office to take primary responsibility for resettlement consultation, implementation, financing, and timely delivery of entitlements. In addition, the resettlement specialist engaged under the project (6 person-months of international services) provided substantial guidance and reviewed the resettlement plans during project implementation.

F. Monitoring and Evaluation

13. CSRDCC was engaged as the external agency by each subproject’s implementing agency to conduct independent monitoring and resettlement for the project from 2004 to 2010. The CSRDCC prepared and submitted 79 monitoring reports on 22 subprojects to ADB. A resettlement completion report was also prepared and submitted to ADB by September 2010. In addition, CSRDCC conducted a complementary survey on income restoration in May 2011.

G. Participation, Information Disclosure, and Grievance Redress

14. During resettlement preparation and implementation, the local government and the resettlement implementing agencies conducted a participatory approach to disclose resettlement policies, negotiate with the affected people, and mobilize their participation in major resettlement activities. Furthermore, the affected villages and affected people were informed about the key elements of land acquisition and resettlement through the project impact and compensation cards that were distributed to them.

15. Complaint channels were established and disclosed to the affected people during project preparation and implementation for those subprojects that involved land acquisition and resettlement. For example, in 2009 and 2010, some affected persons in the Harbin Qunli Dike subproject complained that they were not appropriately resettled, and requested to be offered opportunities to purchase new apartments at a preferential price in resettlement compounds. Given that land acquisition and resettlement was implemented in 2006, the Heilongjiang PMO established a special resettlement post-support leading group in early 2010 to investigate and coordinate with the Harbin Municipal Government to address the concerns raised.

Appendix 11 59

16. According to the Heilongjiang PMO’s investigation, the affected households in the Qunli Dike subproject had been compensated based on the resettlement plan, and had been offered opportunities to purchase new apartments during resettlement implementation, and most of them had moved into the resettlement compound. However, some affected households waived or cashed in such an opportunity according to their own situation, since they had the option to purchase a new apartment in other commercial residential compounds or stay with their grown children. Since the real estate price had increased significantly in the intervening years in the project area due to rapid urbanization, some affected people had misgivings about their previous decision and requested another opportunity to purchase an apartment in the resettlement compound. The Heilongjiang PMO has been coordinating with the Harbin Municipal Government on this matter. Some households were subsequently offered another opportunity to purchase an apartment in the resettlement compound and reached agreement to do so, while some other cases are still under negotiation. ADB requested the Heilongjiang PMO to continue to follow up with the Harbin Municipal Government on this issue and report to ADB on a regular basis.

H. Lessons Learned and Recommendations

17. As the project area is rapidly urbanizing, a fully functioning resettlement post-support mechanism would have been helpful in addition to the mechanism established during the project preparation and implementation stages to assist affected people in achieving long-term sustainable livelihoods after project completion. Such a post-support mechanism has been a feature of the water resources sector in the PRC for some time, particularly for projects involving large reservoirs. It is suggested that such a resettlement post-support mechanism also be established for other sector projects.

60 Appendix 12

ENVIRONMENTAL IMPACT ANALYSIS

A. Project Description

1. The project is category B. The summary Initial Environment Examination (SIEE) for the project covering core subprojects identified before approval was circulated to ADB’s Board of Directors on 17 August 2001. Initial environment examination (IEE) reports for each subproject processed after Board approval, including the environmental management plans (EMPs), were prepared by implementing agencies and approved by ADB. The main environmental issues identified in the IEE reports included soil and water loss; noise pollution; land losses for affected people; impacts on groundwater, nature conservation areas, river water quality, riverine ecology, water intake, and human health; impacts from vehicles during construction and soil and brick disposal; and impacts of the recession of river flows on farmlands. The mitigation requirements as specified in the EMPs were incorporated into civil works contracts.

B. Institutional Setup and Environment Management

2. The Central Project Coordination Office (CPCO), three provincial project management offices (PMO) and all subprojects contractors established Environment and Social Units (ESUs) and engaged qualified staff to monitor environmental protection measures and ensure that all applicable national, provincial, and local environmental laws, regulations, guidelines and standards are followed during construction. The CPCO selected the Songliao River Basin Water Environmental Monitoring Center (SRBWEMC) to monitor environmental conditions during project implementation. The SRBWEMC monitored surface and groundwater, wastewater, and atmospheric dust, informing the PMO, contractors, and local residents of ambient conditions in a timely way to minimize the project’s adverse impacts on the environment. Based on the monitoring results, SRBWEMC submitted 121 environmental monitoring reports over the period from 2005 to 2009 for ADB’s review. The Songliao River Environment and Water Resource Consultation Service Center was engaged to prepare the final environment management evaluation report, which was submitted to ADB in February 2011.

C. Environmental Impacts and Mitigation Measures Implemented

3. Through the cooperation of the CPCO, the environmental protection agencies at all levels, the contractors, the independent environmental supervision agency, and the SRBWEMC, all identified environmental protection measures were undertaken, mitigating the impacts on the environment. The project fully met the requirements of local residents, the environmental protection agencies, and the project EMPs. The ecology of the areas in the embankment-strengthening subprojects improved considerably with the planting of trees.

D. Environmental Benefits

4. The project significantly improved the area’s environment. Positive environmental impacts, both direct and indirect, included (i) an increased level of flood protection; (ii) improved public safety, particularly due to embankment strengthening, which will increase security and stability of the settlements, their social cohesion, and protection of livelihoods; (iii) increased vegetation cover, which will strengthen river banks and reduce erosion; and (iv) temporary jobs, supplementary incomes, and increased economic activity during construction. In addition, damage due to land loss because of floods will be reduced substantially in the future, resulting in higher agricultural production and incomes for farmers, and an improved quality of life in urban areas.

Appendix 12 61

E. Conclusion

5. During construction and operation, all the contractors fulfilled their obligations to protect the environment and to implement mitigation measures in their construction schemes. The adverse effects of the project construction on the surrounding environment were thus minimized. The necessary environmental management approaches have been integrated into operations. The project has significantly improved the environment and public health and safety in the Songhua River basin.