2. Ethnic Minority Policy

Public Disclosure Authorized

ETHNIC MINORITY DEVELOPMENT PLAN

FOR

THE WORLD BANK FUNDED Public Disclosure Authorized

GANSU INTEGRATED RURAL ECONOMIC DEVELOPMENT

DEMONSTRATION TOWN PROJECT

Public Disclosure Authorized

GANSU PROVINCIAL DEVELOPMENT AND REFORM COMMISSION Public Disclosure Authorized

LANZHOU , G ANSU

NOV . 2011

CONTENTS

1. INTRODUCTION ......

1.1 B ACKGROUND AND OBJECTIVES OF PREPARATION ...... 1 1.2 K EY POINTS OF THIS EMDP ...... 2 1.3 P REPARATION METHOD AND PROCESS ...... 3

2. ETHNIC MINORITY POLICY......

2.1 A PPLICABLE LAWS AND REGULATIONS ...... 5 2.1.1 State level ...... 5 2.1.2 Gansu Province ...... 5 2.1.3 Zhangye Municipality ...... 6 2.1.4 Baiyin City ...... 6 2.2 POLICY FRAMEWORK FOR ETHNIC MINORITIES ...... 6

3. BACKGROUND OF THE PROJECT ......

3.1 G ENERAL INTRODUCTION ...... 11 3.2 H ONGSHUI TOWN ...... 13 3.3 H ONGWANSI TOWN ...... 14

4. INTRODUCTION TO ETHNIC MINORITIES IN THE PROJECT AREAS ...... 16

4.1 G ENERAL INTRODUCTION ...... 16 4.2 Y UGU PEOPLE ...... 19 4.2.1 Geographic distribution ...... 19 4.2.2 Modes of production and demographic classification ...... 21 4.2.3 Resource endowment and livelihoods ...... 22 4.2.4 Language ...... 24 4.2.5 Religion ...... 24 4.2.6 Social division by gender ...... 25 4.3 T IBETANS ...... 25 4.3.1 Distribution of affected population ...... 25 4.3.2 Modes of production and demographic classification ...... 26 4.3.3 Resource endowment and livelihoods ...... 26 4.3.4 Language ...... 27 4.3.5 Religion ...... 27 4.3.6 Social division by gender ...... 27 4.4 H UI PEOPLE ...... 27 4.4.1 Geographic distribution ...... 27 4.4.2 Modes of production ...... 28 4.4.3 Resource endowment and livelihoods ...... 29 4.4.4 Language ...... 30 4.4.5 Religion ...... 31

4.4.6 Social division by gender ...... 31 4.5 I DENTIFICATION ETHNIC MINORITIES ...... 31

5. SUMMARY OF SOCIAL ASSESSMENT ...... 34

5.1 E VALUATION OF IMPACTS AND MUTUAL ADAPTABILITY ...... 34 5.1.1 Hui people ...... 34 5.1.2 Yugu people/Tibetans ...... 36 5.2 O RGANIZATIONAL AND INSTITUTIONAL EVALUATION ...... 39 5.2.1 Organizational structure ...... 39 5.2.2 Implementation capacity ...... 41 5.2.3 Operation and management systems ...... 41 5.3 SOCIAL GENDER AND DEVELOPMENT ...... 41 5.3.1 Hui people ...... 42 5.3.2 Yugu people/Tibetans ...... 43 5.4 RISK ASSESSMENT ...... 44 5.4.1 Hui people ...... 44 5.4.2 Yugu people/Tibetans ...... 46 5.5 MAIN SUGGESTIONS OF SOCIAL ASSESSMENT ...... 50

6. COMMUNITY PARTICIPATION......

6.1 P RESENT SITUATION OF COMMUNITY PARTICIPATION ...... 51 6.2 E THNIC MINORITY IN SOCIAL ASSESSMENT ...... 51 6.3 P RE -ASSESSMENT PROJECT AWARENESS SURVEY ...... 55 6.4 P OST -ASSESSMENT PROJECT RECOGNITION SURVEY ...... 56 6.5 C ONTRIBUTION OF COMMUNITY PARTICIPATION TO PROJECT DESIGN ...... 58 6.5.1 Hongshui Town ...... 58 6.5.2 Hongwansi Town ...... 59 6.6 PARTICIPATION FRAMEWORK FOR ETHNIC MINORITIES ...... 60

7. ACTION PLAN......

7.1 A CTION PLAN FOR HUI PEOPLE ...... 65 7.2 A CTION PLAN FOR YUGU PEOPLE /T IBETANS ...... 68 7.3 B UDGET AND FUNDING SOURCES ...... 74 7.4 N OTE TO FUNDING ...... 74 7.5 A NNUAL INVESTMENT PLAN ...... 74 7.6 I NSTITUTIONAL ARRANGEMENTS FOR MONITORING AND EVALUATION ...... 76 7.7 M&E INDICATORS ...... 76 7.8 APPEAL HANDLING ...... 78

APPENDIXES ......

APPENDIX 1: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF HUI PEOPLE IN HIGH -QUALITY ALFALFA CULTIVATION ...... 79 APPENDIX 2: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF HUI PEOPLE IN DEMONSTRATION SILO CONSTRUCTION ...... 80 APPENDIX 3: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF HUI PEOPLE IN HIGH -QUALITY

MUTTON SHEEP FEEDING ...... 81 APPENDIX 4: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF HUI PEOPLE IN TRAINING SYSTEM BUILDING OF PRODUCTION BASE ...... 82 APPENDIX 5: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN REFRIGERATED WAREHOUSE CONSTRUCTION AND OPERATION ...... 83 APPENDIX 6: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN FARM PRODUCT BAZAAR CONSTRUCTION ...... 84 APPENDIX 7: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN INFRASTRUCTURE CONSTRUCTION FOR QILIAN JADE PROCESSING ZONE CONSTRUCTION ...... 85 APPENDIX 8: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN THE CONSTRUCTION OF THE ETHNIC CHARACTERISTIC PRODUCT PROCESSING AND STARTUP TRAINING CENTER ...... 86 APPENDIX 9: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN PROFESSIONAL TRAINING ...... 87 APPENDIX 10: I TEMS AND REQUIREMENTS FOR PARTICIPATION OF YUGU PEOPLE /T IBETANS IN THE TRAINING OF FARMERS AND HERDSMEN ...... 88 APPENDIX 11: R EQUIREMENTS FOR VILLAGE PROJECT IMPLEMENTATION COMMITTEES OF HUI VILLAGES ...... 89 APPENDIX 12: R EQUIREMENTS FOR COMMUNITY PROJECT IMPLEMENTATION COMMITTEES OF YUGU /T IBETAN COMMUNITIES ...... 90 APPENDIX 13: R EQUIREMENTS FOR THE MINORITY CHARACTERISTIC PRODUCT PROCESSING ASSOCIATION OF SUNAN COUNTY ...... 91 APPENDIX 14: R EQUIREMENTS FOR THE QILIAN JADE ASSOCIATION OF SUNAN COUNTY ...... 92 APPENDIX 15: R EQUIREMENTS FOR THE ASSOCIATION OF INDIVIDUAL BUSINESSES OF SUNAN COUNTY ...... 93 APPENDIX 16: D EMOGRAPHIC DATA OF DIRECTLY AFFECTED YUGU PEOPLE /T IBETANS IN THE URBAN AREA OF HONGWANSI TOWN ...... 94

III

LIST OF TABLE AND CHART

TABLE 1: T ECHNICAL ROUTE FOR EMDP PREPARATION ...... 4 TABLE 2: P OLICY FRAMEWORK FOR ETHNIC MINORITIES ...... 7 TABLE 3:L IST OF DEMONSTRATION TOWNS ...... 11 TABLE 4:L IST OF KEY COMPONENTS OF THE DEMONSTRATION TOWNS ...... 12 TABLE 5:P ROJECT STAGES AND OVERALL SCHEDULE ...... 12 TABLE 6:O VERVIEW OF DIRECT IMPACTS OF THE HONGSHUI TOWN SUBPROJECT ...... 13 TABLE 7：：：OVERVIEW OF DIRECT IMPACTS OF THE HONGWANSI TOWN SUBPROJECT ...... 15 TABLE 8:E THNIC DEMOGRAPHIC DATA OF THE PRC AND GANSU PROVINCE ...... 16 TABLE 9:P OPULATION STRUCTURE OF SOME DEMONSTRATION TOWNS IN 2009 ...... 17 TABLE 10:P OPULATION COMPOSITION OF ETHNIC MINORITY POPULATION OF TWO DEMONSTRATION TOWNS ...... 17 TABLE 11:P OPULATION COMPOSITION OF ETHNIC MINORITY POPULATION OF COMMUNITIES OF HONGWANSI TOWN ...18 TABLE 12 ：：：POPULATION COMPOSITION OF ETHNIC MINORITY POPULATION OF COMMUNITIES IN HONGSHUI TOWN ...19 TABLE 13 ：：：DISTRIBUTION OF POPULATION OF SUNAN COUNTY BY ETHNIC GROUP IN 2009 ...... 20 TABLE 14 ：：：KEY INDICATORS OF POPULATION DATA AND DISTRIBUTION OF AFFECTED YUGU PEOPLE ...... 20 TABLE 15 ：：：PRE -ESTIMATE DATA ON RESOURCE ENDOWMENT AND INCOME OF YUGU HERDSMEN IN HONGWANSI TOWN IN 2009 ...... 22 TABLE 16 ：：：KEY LIVELIHOOD INDICATORS OF SURVEYED YUGU HERDSMEN ...... 23 TABLE 17 ：：：PER CAPITA ANNUAL INCOME IN URBAN AREA AND PASTORAL AREA OF HONGWANSI TOWN IN 2010 ...... 24 TABLE 18 ：：：DIVISION OF PRODUCTION AND LIVING LABOR BY GENDER FOR YUGU HOUSEHOLDS SPECIALIZING IN STOCKBREEDING ...... 25 TABLE 19 ：：：KEY INDICATORS OF POPULATION DATA AND DISTRIBUTION OF AFFECTED TIBETANS ...... 26 TABLE 20:D ISTRIBUTION OF KEY RURAL VULNERABLE GROUPS IN HONGSHUI TOWN ...... 28 TABLE 21:C ULTIVATED AREA OF COMMUNITIES IN HONGSHUI TOWN IN 2009 ...... 30 TABLE 22:S UMMARY OF IDENTIFICATION OF ETHNIC MINORITIES ...... 32 TABLE 23:S OCIAL DIVISION BY GENDER IN HUI COMMUNITIES DIRECTLY AFFECTED BY THE PROJECT ...... 42 TABLE 24:S OCIAL DIVISION BY GENDER OF YUGU PEOPLE /T IBETANS ...... 43 TABLE 25:C OMPOSITION OF POOR POPULATION IN TWO HUI COMMUNITIES ...... 44 TABLE 26 ：：：ENDOWMENT OF LAND RESOURCES IN HUI COMMUNITIES ...... 45 TABLE 27 ：：：RESULTS OF PROJECT AWARENESS SURVEY OF DIFFERENT ETHNIC MINORITIES BEFORE THE ASSESSMENT .....51 TABLE 28 ：：：SUMMARY OF SEMI -STRUCTURED INTERVIEWS INVOLVING ETHNIC MINORITIES ...... 52 TABLE 29 ：：：SUMMARY OF KEY INFORMANT INTERVIEWS INVOLVING ETHNIC MINORITIES ...... 53 TABLE 30 ：：：SUMMARY OF FGD S INVOLVING ETHNIC MINORITIES ...... 53 TABLE 31 ：：：SUMMARY OF QUESTIONNAIRE SURVEY INVOLVING ETHNIC MINORITIES ...... 54 TABLE 32: S UMMARY OF FIELDWORK INVOLVING ETHNIC MINORITIES ...... 54 TABLE 33 ：：：PROJECT AWARENESS SURVEY OF KEY STAKEHOLDERS ...... 55 TABLE 34:P ROJECT AWARENESS SURVEY OF FARMERS , HERDSMEN AND RESIDENTS IN SAMPLE COMMUNITIES ...... 55 TABLE 35: P ROJECT AWARENESS SURVEY OF FARMERS AND RESIDENTS IN SAMPLE COMMUNITIES OF HONGWANSI TOWN (BY COMPONENT ) ...... 56 TABLE 36:P ROJECT RECOGNITION SURVEY ...... 56 TABLE 37: R ECOGNITION SURVEY OF ETHNIC MINORITIES FOR INTEGRATED BAZAAR RECONSTRUCTION IN SAMPLE COMMUNITIES OF HONGWANSI TOWN ...... 57 TABLE 38: R ECOGNITION SURVEY OF ETHNIC MINORITIES FOR QILIAN JADE PROCESSING ZONE CONSTRUCTION IN SAMPLE

COMMUNITIES OF HONGWANSI TOWN ...... 57 TABLE 39: R ECOGNITION SURVEY OF ETHNIC MINORITIES FOR THE ETHNIC CHARACTERISTIC PRODUCT PROCESSING AND STARTUP TRAINING CENTER IN SAMPLE COMMUNITIES OF HONGWANSI TOWN ...... 57 TABLE 40:P ARTICIPATION FRAMEWORK FOR HUI PEOPLE IN THE PROJECT ...... 61 TABLE 41: P ARTICIPATION FRAMEWORK FOR YUGU PEOPLE /T IBETANS IN THE PROJECT ...... 62 TABLE 42:A CTION PLAN FOR HUI PEOPLE ...... 65 TABLE 43: A CTION PLAN FOR YUGU PEOPLE /T IBETANS ...... 68 TABLE 44:A NNUAL INVESTMENT PLAN OF EMDP BUDGET ...... 75 TABLE 45: I NSTITUTIONAL ARRANGEMENTS FOR EMDP M&E ...... 76 TABLE 46: T YPES AND EXPLANATION OF M&E INDICATORS INVOLVING ETHNIC MINORITIES ...... 77

CHART 1: L OGIC DIAGRAM OF PROJECT ACTIVITIES IN HUI COMMUNITIES ...... 29 CHART 2: O RGANIZATIONAL CHART OF THE PROJECT ...... 40

ABBREVIATIONS

CPC - Communist Party of China EMDP - Ethnic Minority Development Plan FGD - Focus group discussion M&E - Monitoring and evaluation O&M - Operation and maintenance PMO - Project Management Office PRC - People’s Republic of China

UNITS

Currency unit = Yuan (RMB)

1.00 yuan = $0.15

1 hectare = 15 mu

1. Introduction

1.1 Background and objectives of preparation

Through extensive preparation and identification, 12 demonstration towns have been finally selected for the World Bank-funded Gansu Integrated Rural Economic Development Demonstration Town Project (hereinafter referred to as the “Project”). Project activities are focused on road, bazaar and infrastructure construction, and aim to promote the integrated socioeconomic development of the demonstration towns.

Through a quick identification and scan of the socioeconomic profile of the 12 demonstration towns, the World Bank Identification Mission has found that the subprojects of Hongshui Town, Jingtai County, Baiyin City and Hongwansi Town, Sunan County, Zhangye Municipality involve such ethnic minorities as Hui people, Yugu people and Tibetans directly, and have triggered the pertinent provisions of the World Bank’s Operational Policy OP4.10 on Indigenous Peoples. In order to ensure that ethnic minorities benefit from the Project, and possible socioeconomic risks are reduced or avoided, it is necessary to assess the Project’s impacts on ethnic minorities systematically, and prepare an Ethnic Minority Development Plan (EMDP) for the Project to meet the following objectives:

1) To ensure that the ethnic minorities directly affected by the Project, including Hui people, Yugu people and Tibetans, benefit from the Project;

2) To avoid or reduce possible negative impacts or potential risks of the Project to ethnic minorities;

3) To ensure that project activities involving ethnic minorities are implemented on the basis of full disclosure to, in-depth participation of and extensive consultation with ethnic minorities;

4) To ensure that project activities and action plans involving ethnic minorities are suited to ethnic minorities’ socioeconomic situation, cultural traditions and religious believes;

5) To ensure that ethnic minorities are free to express their reasonable claims, and opinions and suggestions for the Project in a well informed manner; and

6) To ensure that ethnic minorities are able to maintain their lawful rights and interests through a lawful and effective appeal mechanism, and obtain necessary legal advice from the project owner.

1.2 Key points of this EMDP

Based on the World Bank’s Operational Policy OP4.10 on Indigenous Peoples, and the main objectives of this EMDP, this EMDP should include the following key points:

1) Legal framework: a summary of laws, regulations and policies on ethnic minority development in the project areas, which aims to ensure that the actions proposed in this EMDP are in line with the socioeconomic situation and legal framework of the project areas

2) Basic information:

a) Basic information of the Project, including its scope, areas and ethnic minorities involved;

b) Population and distribution of ethnic minorities involved in the Project, their socioeconomic situation, main production and marketing activities, and main customs and religious believes, etc.

3) Summary of social assessment:

a) Possible positive and negative impacts of the Project on ethnic minorities;

b) Potential risks to ethnic minority development that may arise from the Project;

c) Key findings and conclusion in the community consultation of ethnic minorities

4) Local participation strategies: developing an action plan so that ethnic minorities can carry out in-depth participation on a well informed basis in such plan.

5) Actions: developing possible actions that ensure that ethnic minorities benefit from the Project, avoid or minimize potential risks, and are in line with their socioeconomic situation, traditional customs and religious believes

6) Institutional capacity building: ensuring that this EMDP is supported by a feasible organization and its capacity building plan

7) Budget and financing plan: evaluating the financial budget required for EMDP implementation, and clearly defining the sources of such funds in the project design

8) Monitoring and evaluation (M&E): preparing M&E indicators and plan to evaluate the effectiveness of the Action Plan

1.3 Preparation method and process

According to the World Bank’s Operational Policy OP4.10 on Indigenous Peoples, the basis of preparation of this EMDP is a systematic social assessment of the Project.

For this purpose, the assessment team conducted the first round of fieldwork in Hongshui and Hongwansi Towns where ethnic minorities are involved in the Project during March 10-30, 2011. The team conducted extensive field investigation and community consultation of the ethnic minorities and related stakeholders in the project areas using such participatory methods as participatory survey, participatory observation, focus group discussion (FGD), individual interview, key informant interview and questionnaire survey.

In addition, during fieldwork data compilation and EMDP preparation, the assessment team, the town PMOs and the relevant minority communities conducted extensive further consultation to ensure the mutual adaptability between this report and the socioeconomic background of the project areas.

The process, methods and workload of fieldwork will be described in more detail in Chapter 5 “Community Participation” of this report.

Accepting the assignment of assessment February 2011

Defining objectives of February 25, 2011 assessment

Identifying Adjustment assessment tasks February 28, 2011

Designing the March 1-10, 2011 assessment plan

Fieldwork March 10-30, 2011 Supplementary surveySupplementary

Analyzing survey data April 1-30, 2011

May 25, 2011, including the first drafts of Preparing the first the Social Assessment Report, EMDP, draft Community Participation Handbook and

Appeal Handling Mechanism

Reviewing and modifying the first May 25-30, 2011 draft

Finalizing the assessment report June 20, 2011

Table 1: Technical route for EMDP preparation

2. Ethnic Minority Policy

2.1 Applicable laws and regulations

Ethnic equality is a core principle of ethnic policies of the People’s Republic of China (PRC), and is defined clearly in the form of law through the Constitution of the PRC and the Law of the PRC on Regional Ethnic Autonomy, etc. As a region inhabited intensively by ethnic minorities in China, Gansu has established a systematic policy framework and enforcement system with focus on regional ethnic autonomy from the state level to localities.

The laws, regulations and policies on ethnic minorities in the project areas generally cover the state, provincial and local levels.

2.1.1 State level

- the Constitution of the PRC

- Law of the PRC on Regional Ethnic Autonomy

- Regulations on Religious Affairs

- Regulations on Ethnic Work in Urban Areas

- Regulations on Administrative Work in Ethnic Townships

- Development Plan for Supporting Small-population Ethnic Groups

- Some Opinions of the State Council on Further Prospering and Developing Cultural Programs of Ethnic Minorities

- Decision on Further Strengthening Work for Ethnic Minorities, and Accelerating the Socioeconomic Development of Ethnic Minorities and Minority Areas

- Opinions on Further Supporting the Socioeconomic Development of Minority Areas of Gansu Province

2.1.2 Gansu Province

- Opinions of the Gansu Provincial Government on the Implementation of Some Opinions of the State Council on Further Prospering and Developing Cultural Programs of Ethnic Minorities

- Opinions of the General Office of the Gansu Provincial Government on Some Issues Concerning the Strict Implementation of Ethnic Policies of the CPC and the State of the State Council

2.1.3 Zhangye Municipality

- Opinions on Further Accelerating the Socioeconomic Development of Minority Counties and Townships

- Training Program of Zhangye Municipality for Ethnic Minority Talent

- Autonomy Regulations of Sunan Yugu Autonomous County of Gansu Province (2010 Amendment)

- Special Construction Plan of Sunan County for the Development of Small- population Ethnic Groups

2.1.4 Baiyin City

- Eleventh Five-year Plan for Ethnic Minority Development of Baiyin City - Tenth Five-year and 2010 Plan for the Economic and Social Development of Ethnic Minorities of Baiyin City - Opinions of Baiyin City on Further Strengthening Ethnic Work, and Accelerating the Economic and Social Development of Ethnic Minorities and Minority Areas

2.2 Policy framework for ethnic minorities

The Ethnic Minority Development Plan (EMDP) of the Project has been prepared based on the laws and regulations of the PRC for ethnic minorities, the applicable policies of Gansu Province, Zhangye Municipality, Baiyin City and Sunan Yugu Autonomous County, and the World Bank’s policy Indigenous Peoples (OP4.10), including the applicable laws and regulations, and special plans of the PRC, the applicable policies of Gansu Province, the applicable policies and special plans of Zhangye Municipality and Baiyin City, and the Bank policy, as shown in Figure 2. The policies and regulations of the PRC for ethnic minorities are essentially consistent with the Bank policy. First, they attach importance to the equality and development of ethnic minorities, and pay special attention to them in economic, social, cultural and other programs in order to protect the rights and interests of ethnic minorities, and improve their social and economic status, and spiritual and educational levels. Second, all development measures provide preferential support based on local ethnic cultures and agricultural characteristics, with focus on the infrastructure construction, development-oriented poverty reduction, cultural industry development, unique culture protection, and talent training. Third, their mechanisms and procedures attach importance to public participation, consultation and action plans, and require that audience should be given to ethnic minorities’ opinions, attitudes and expectations at the preparation, implementation and monitoring stages of the Project actively. The implementation of the Project, and the preparation and implementation of EMDP will promote the realization of the objectives and requirements of the above policies.

Table 2: Policy Framework for Ethnic Minorities Level Type Name Key points Except that ethnic autonomous regions have the powers equivalent to local governments, power organs of autonomous localities shall also have the following powers: autonomous legislative power; and autonomous power to manage local political, economic, financial, educational and cultural affairs, establish local public security forces, and use and develop minority languages, etc. Laws and regulations regulations and Laws Citizens of the PRC have the freedom of religious belief, and state Constitution of the PRC and ethnic autonomous organs shall protect the freedom of religious Regional Ethnic Autonomy Law belief of citizens of all ethnic groups. of the PRC Ethnic administrative regulations shall be formulated to promote the Regulations on Religious Affairs development economic, cultural and other programs of minority Regulations on Urban Ethnic townships, protect the lawful rights and interests of ethnic minorities, Work and enhance ethnic unity. Regulations on Administrative Except persons deprived of political rights, any citizen attaining the Work of Minority Townships full age of 18 hours, regardless of ethnic group, race, gender, occupation, family background, religious belief, educational level, property status and length of residence, shall have the right to elect and to be elected. The state shall assist all ethnic minorities in accelerating economic development and cultural building from all aspects, including finance, State level State materials and techniques. Among the 55 ethnic minorities, the 22 ones with a population of less than 100,000 shall be supported, including Yugu people. The period of the plan shall be from 2006 to 2010. Development objectives: to improve the infrastructure of administrative villages inhabited by ethnic groups with small populations significantly, solve prominent productive and living problems of civilians effectively, provide essentially sufficient food and clothing to the existing poor population, and make them reach locally medium or above levels in terms of economic and social development through about 5 years of effort Plan to Support the Plans Plans Key tasks: strengthening infrastructure construction, improving Development of Ethnic Groups productive and living conditions, focusing on the construction of with Small Populations (2006- human and animal drinking water projects, traffic projects, power 2010) supply projects, housing projects and basic farmland (pasture) construction projects, and conducting ecological resettlement for farmers and herdsmen short of subsistence conditions; adjusting economic structure and developing characteristic industries to promote income increase; developing science and technology, educational, health and cultural programs to promote social progress; and strengthening training to improve population quality Policy measures: strengthening support for infrastructure construction, fiscal funds, credit funds, social programs, talent training and counterpart support

The State Ethnic Affairs Commission will continue to promote the “More Prosperous Frontiers and Better-off People Action”, and keep increasing investment in Gansu Province from the Special Fund for Supporting the Development of Ethnic Groups with Small Populations, and the Special Fund of the “ More Prosperous Frontiers and Better-off People Action”; The departments concerned shall be coordinated to focus the State level (cont’d) (cont’d) level State construction of ethnic trading outlets and technical improvement projects of appointed manufacturers of special commodities needed Policies Policies Opinions on Further Supporting by ethnic minorities on Gansu Province appropriately; the Economic and Social Increase investment in ethnic minority development funds, Development of Minority Areas endeavor to realize growth in every year of the Twelfth Five-year in Gansu Province Plan period at a rate not less than the national average, and direct the preparation of the development plan for ethnic minority programs during the Twelfth Five-year Plan period; Further strengthen the rescue and protection of cultural heritage of ethnic minorities, actively condition and exploit characteristic cultures of the ethnic minorities in Gansu Province, especially the three Gansu-specific ethnic minorities (Dongxiang, Yugu and Bao’an), and actively drive the normalization and IT building of spoken and written languages of ethnic minorities. Development objectives: Cultural infrastructure in minority areas will be relatively complete, and a public cultural service system that covers ethnic minorities and minority areas will be largely established by 2020. Opinions of the Gansu Policy measures: Accelerate public cultural infrastructure Provincial Government on the construction of ethnic minorities and minority areas; strengthen Implementation of Some support for the building of minority art performance troupes and Opinions of the State Council on museums; carry out public minority cultural activities actively; Further Revitalizing and Province level level Province strengthen the excavation and protection of minority cultural Developing Cultural Programs Policies Policies heritage, actively condition and exploit characteristic cultures of the of Ethnic Minorities ethnic minorities in our province, especially the three Gansu-specific ethnic minorities (Dongxiang, Yugu and Bao’an); respect, inherit and carry forward excellent traditional cultures of ethnic minorities; and actively promote the development of the minority cultural industry. Notice of the General Office of Fully realize the extreme importance of ethnic policies; strictly the Gansu Provincial implement ethnic policies of the CPC and the state, strengthen Government on Carrying leadership, define responsibilities, and ensure that all ethnic policies through Opinions of the General are implemented practically. Office of the State Council on Issues Concerning the Strict Enforcement of Ethnic Policies of the CPC and the State

The municipal government shall strengthen financial support for minority areas. From 2003, special minority development funds of Opinions of the Zhangye 350,000 yuan ethnic minorities, transfer payment subsidies of over

Policies Policies Municipal Government on 500,000 yuan, and counterpart funds for minority township Further Accelerating the development of 400,000 yuan shall be granted annually, and social Economic and Social programs of minority areas shall be supported actively. Development of Minority Implement preferential policies for ethnic trading enterprises and Counties and Townships appointed manufacturers of ethnic goods carefully, coordinate taxation authorities and banks to refund or exempt taxes for Sunan Zhangye Municipality Municipality Zhangye County Ethnic Trading Co. and other enterprises. Regulations Regulations Detailed provisions shall be made in respect of rationale, Regulations on the Exercise of autonomous organs, people’s courts and people’s procuratorates, Autonomy of Sunan Yugu official team building, economic construction, financial management, Autonomous County of Gansu educational, science, cultural and health programs, and ethnic and Province religious affairs in order to regulate autonomous activities. Establish a pool of backup minority officials, hold one or two rural official training courses for minority townships, and three or four Training Program of Zhangye practical skills training courses for farmers and herdsmen annually in Special Plans Plans Special Municipality for Minority Talent order to improve the science and technology level, and ability to increase income of officials and civilians. Focus on t he construction of administrative villages inhibited by Yugu Special Construction Plan of people, and townships and small market towns where Yugu people Sunan County for the are relatively centralized in terms of rural economic development, Development of Ethnic Groups energy, traffic, social programs and other projects. 216 projects have with Small Populations been planned in total, with an estimated total investment of 91.66 million yuan, including a state investment of 68.7 million yuan. This policy further specifies that ethnic work is aimed mainly at Hui Eleventh Five-year Plan for people. Ethnic Minority Development of Economic development: Accelerate infrastructure construction, Baiyin City especially village highways in minority areas; support ecological Tenth Five-year and 2010 Plan agriculture properly, and actively promote the l icorice cultivation base

Baiyin City City Baiyin for the Economic and Social projects in the five minority resettlement villages in the irrigation area Policies Policies Development of Ethnic of Jingtai County; strengthen financial support for minority areas; Minorities of Baiyin City adjust the economic structure of minority areas actively, and support Opinions of Baiyin City on the development of characteristic agriculture, stockbreeding and Further Strengthening Ethnic green agriculture greatly; and solve the poverty problem of ethnic Work, and Accelerating the minorities with great efforts. Economic and Social Social programs and ethnic unity: Accelerate the development of Development of Ethnic educational, science and technology, health and cultural programs, Minorities and Minority Areas train and select minority officials greatly, strengthen the building of the ethnic legal system, and do well in religious work.

The objective of the Bank’s policy on Indigenous Peoples is that development projects fully respect the dignity, human rights, and cultures of Indigenous Peoples, ensure that they benefit, and avoid

Operational policies policies Operational or mitigate potentially negative impacts on them. Ensure the effective consultation and informed participation of World Bank Bank World ethnic minorities during the whole process, and establish a whole set of actions to ensure that ethnic minorities benefit from the project, OP4.10 Indigenous Peoples namely the EMDP of the project. The EMDP should describe the socioeconomic profile of the ethnic minorities affected by the project, identify the major impacts of the project on them, including positive and negative ones, consider modifying the project design to minimize negative impacts, and/or take measures to avoid or reduce negative impacts to enhance the project’s benefits for ethnic minorities.

3. Background of the Project

3.1 General introduction

Through the overall investigation and review of the characteristics of proposed project activities in the demonstration towns under the Project, and their socioeconomic profile by the National Development and Reform Commission, the Ministry of Finance, the World Bank Identification Mission, and the Gansu Provincial Development and Reform Commission, the relevant municipal development and reform commissions, and county development and reform bureaus have identified 12 demonstration towns for the Project through careful comparison and screening under the leadership of the Gansu Provincial Development and Reform Commission. These towns are:

Table 3:List of demonstration towns No. Demonstration town No. Demonstration town

Dongwan Town, Jingyuan Shenzi Town, Lingtai County, 1 7 County, Baiyin City Pingliang City

Hongshui Town, Jingtai County, Dongzhi Town, Xifeng District, 2 8 Baiyin City Qingyang City

Ganquan Town, Maiji District, Dangzhai Town, Ganzhou District, 3 9 Tianshui City Zhangye City

Zaojiao Town, Qinzhou District, Hongwansi Town, Sunan County, 4 10 Tianshui City Zhangye City

Meichuan Town, Minxian County, 5 11 Huahai Town, Yumen City Dingxi City

Wenfeng Town, Longxi County, 6 12 Qili Town, Dunhuang City Dingxi City

According to the objectives of the Project, Gansu Province’s medium- and long- term development plan, and the criteria and basic principles for the selection of project towns, the World Bank Identification Mission and the provincial PMO have screened and adjusted the proposed components based on the socioeconomic profile, natural resource endowment, geographic characteristics of the demonstration towns, and the necessity and feasibility of the proposed components. It has been determined that the components of the demonstration towns are focused on the construction of roads and supporting facilities, farmland irrigation, the construction of bazaars and supporting facilities, the construction of production bases and supporting facilities for dominant industries, the extension of fine varieties/breeds and techniques, the building of relevant specialized cooperatives, and related training and technical assistance.

Table 4:List of key components of the demonstration towns Hongwansi Town Hongwansi Meichuan Town Meichuan Dongwan Town Town Dongwan Town Hongshui Dangzhai Town Town Dangzhai Ganquan Town Town Ganquan Wenfeng Town Town Wenfeng Dongzhi Town Town Dongzhi Zaojiao Town Town Zaojiao Huahai Town Huahai Town Shenzi Town Town Shenzi Qili Town Qili

Component

Construction of roads and supporting facilities √ √ √ √ √ √ √ √ Farmland irrigation √ √ √ Construction of bazaars and supporting facilities √ √ √ √ √ √ √ √ Training and technical assistance √ √ √ √ √ √ √ √ √ √ Construction of industrial bases and supporting facilities √ √ √ √ √ Demonstration and extension of fine varieties/breeds and √ techniques Building of specialized cooperatives √ √

According to the project design, the preparation work of the Project will be completed by June 2012, and the construction period will be 54 months, from June 2012 to December 2016. In view of the application approval procedures for World Bank-funded projects, the completion of the preliminary identification work of the Project by the World Bank Identification Mission in December 2010 means that the preparation work will begin in January 2011 and end in May 2012. For this reason, this Handbook defines the period from January 2011 to May 2012 as the preparation stage of the Project, the period from June 2012 to December 2016 as the construction period, and the period thereafter as the O&M period.

Table 5:Project stages and overall schedule Project stage Duration

Preparation stage Before June 2012

Implementation stage June 2012-December 2016 (54 months)

O&M stage After December 2016

It should be noted that since different components will be implemented in succession and for different periods of time, the implementation period, and O&M period of each component will be based on the corresponding subproject design.

3.2 Hongshui Town

The key components in Hongshui Town are focused on building the town into a regional production and distributing center of farm and animal products, including:

1) Road construction

a) Changlin Road: construction of an urban Class 3 primary trunk road of 1.934km, 26m wide, 4 lanes in two ways, with 12 grade crossings, one small bridge, rain and sewer pipelines, streetlamps, landscaping and traffic works

b) Tai’an Road: construction of an urban Class 3 primary trunk road of 1,828.467m, 20m wide, 2 lanes in two ways, with 12 grade crossings, one small bridge, rain and sewer pipelines, streetlamps, landscaping and traffic works

2) Drainage works: laying of sewer pipelines of 5,145m along roads (2,710m for Changlin Road and 2,435m for Tai’an Road), and rain pipelines of 1,640m (860m for Changlin Road and 780m for Tai’an Road)

3) Forage base construction and fine mutton sheep breed extension: construction of a 6,000 mu high-quality alfalfa forage base and 200 50 m 3 silos, supporting the economic development of 300 households in poor ethnic minority (184 households) and Han (116 households) villages, introduction of 900 mutton ewes (3 per household on average) and 140 mutton rams, and providing supporting living facilities for 140 households

4) Skills training: including 130 men-times of training in the province, 319 men- times of training in the province and 2,359 men-times of training in the township, 2,808 men-times in total

Table 6:Overview of direct impacts of the Hongshui Town subproject Are ethnic Component Communities involved groups directly affected?

Road construction Urban area of Hongshui Town No (Tai’an Village)

Drainage works Urban area of Hongshui Town No (Tai’an Village)

Forage base construction and fine All communities of Hongshui Town Yes mutton sheep breed extension

Skills training All communities of Hongshui Town Yes

3.3 Hongwansi Town

Hongwansi Town is a demonstration town pillared on stockbreeding and animal product processing. The town is located in the Qilian Mountain area, which is the main producing area of Qilian jade and has a high proportion of ethnic minorities. It is one of the main habitats of Yugu people in China, and has tens of ethnic minorities. Therefore, the components in Hongwansi Town are focused on stockbreeding, Qilian jade development, and the development and conservation of traditional ethnic handicrafts, including:

1) Infrastructure construction for Qilian jade processing zone construction

a) Road construction: construction of urban roads with a total length of 1.849km, where Kangle Road 0.675km, Yuhong West Road 0.432km and Yuhong East Road 0.742km

b) Water supply, drainage and heating works: laying of water supply pipelines of 0.667km, sewer pipelines of 2.21km and heat supply pipelines of 0.785km

c) Electric and lighting works: construction of two cable shafts, one 50KVA box transformer, one distributing box, laying of cables of 2,800m and wires of 2,800m, and setup of 92 streetlamps

d) Ethnic characteristic product processing and startup training center: construction of an ethnic characteristic product processing and startup training center, two-storied main structure, 60m long, 17m wide and 9.75m high per floor, with a floor area of 1,020 m 2 and a building area of 2,048 m 2

e) Landscaping works: landscaping of 1,000 m 2

2) Farm product bazaar development

a) Bazaar development: construction of an animal product trading hall, two-storied main structure, 40m long, 30m wide and 8.1m high, with a building area of 1,980 m 2, two 500-ton refrigerated warehouse, 49.5m long, 18.6m wide and 4.8-6m high, with a building area of 920.7 m 2 each (the equipment room is 19.5m long, 18.6m wide and 6m high, with a building area of 362.7 m 2; the warehouse is 30m long, 18.6m wide and 4.8m high, with a building area of 558 m 2), totaling 1,841.4 m 2; surface hardening of 1,637 m 2, landscaping of 1,000 m 2; purchase of 5 refrigerated trucks and 2 forklifts

b) Environmental works: construction of a garbage collection station, 19.4 long, 7.4m wide and 3.6m high, with a building area of 143.6 m 2; a public toilet, 9.76m long, 7.4m wide and 3.6m high, with a building area of 72.22 m 2

3) Scientific and technological training: training 18 men-times of project management staff, 15 men-times of technicians, and 300 men-times of farmers and herdsmen

Table 7：：：Overview of direct impacts of the Hongwansi Town subproject Are ethnic Component Communities involved groups directly affected?

Infrastructure construction for Qilian Longchang, Hongwan and Yuhong Yes jade processing zone Communities

Bazaar development Longchang, Hongwan and Yuhong Yes Communities

Scientific and technological training All communities of the town Yes

4. Introduction to Ethnic Minorities in the Project Areas

4.1 General introduction

55 of the 56 ethnic groups of China can be found in Gansu Province, especially Hui, Tibetan, Dongxiang, Tu, Manchu, Yugu, Bao’an, Mongolian, Salar and Kazak, of which Yugu, Bao’an and Dongxiang are ethnic groups unique to Gansu. Of the 14 prefecture-level cities and prefectures in Gansu, Linxia and Gannan and ethnic minority autonomous prefectures. There are also 7 ethnic minority autonomous counties in Gansu, of which Sunan Yugu Autonomous County is affected by the Project.

Table 8:Ethnic demographic data of the PRC and Gansu Province Whole country (data Gansu Province (data Gansu Province (data from the sixth from the fifth from 1% sampling

population census in population census in population survey in 2010) 2000) 2005)

Han people (0,000) 122593.26 2292.51 2351.75

Proportion to total 91.51 91.25 90.74 population (%)

Ethnic minorities 11379.22 219.92 239.97 (0,000)

Proportion to total 8.49 8.75 9.12 population (%)

6 of 12 demonstration towns affected by the Project have ethnic minority population and ethnic minority population in only 2 (Hongwansi Town, Sunan County and Hongshui Town, Jingtai County) of them are directly affected by the Project.

Table 9:Population structure of some demonstration towns in 2009 Proportion of Does the Project Total Han Ethnic ethnic affect ethnic Demonstration town population people minorities minorities to minorities total population directly?

Dongwan Town, Jingyuan 45000 45000 0 0.00% No County, Baiyin City

Hongshui Town, Jingtai 25541 24486 1055 4.13% Yes County, Baiyin City

Hongwansi Town, Sunan 13958 9005 4953 35.49% Yes County, Zhangye City

Dangzhai Town, Ganzhou 31000 30998 2 0.01% No District, Zhangye City

Meichuan Town, Minxian 44303 42486 1817 4.10% No County, Dingxi City

Qili Town, Dunhuang City 12174 11712 462 3.79% No

Dongzhi Town, Xifeng 68413 68413 0 0.00% No District, Qingyang City

Huahai Town, Yumen 12434 12434 0 0.00% No City

Zaojiao Town, Qinzhou 37528 37142 386 1.03% No District, Tianshui City

Table 10:Population composition of ethnic minority population of two demonstration towns Town Category of persons Number (person) Proportion

Total population 13958 100.0%

Han people 9005 64.51%

Yugu people 2731 19.57%

Hongwansi Town Tibetans 1758 12.59%

Hui people 268 1.92%

Mongol 85 0.61%

Other peoples 111 0.80%

Overall population 25541 100.0%

Hongshui Town Han people 24486 95.9%

Hui people 1055 4.1%

Seen from the distribution of ethnic minorities in two demonstration towns directly affected by the Project, Hui people in Hongshui Town mainly inhabit in two pure Hui communities. The ethnic minorities directly affected by the Project are completely consistent with total ethnic minorities in the project area. Hongwansi Town involves multiple ethnic minorities in the centralized distribution on the whole. The population of ethnic minority directly affected by the Project accounts for 87.3% of total population of ethnic minority of the whole town.

Table 11:Population composition of ethnic minority population of communities of Hongwansi Town Impact type of the Project Project the of type Impact Overall population population Overall Other peoples peoples Other Yugu people people Yugu Han people people Han Hui people Hui people Tibetans Tibetans Mongol Mongol

Communit Communit

Total of Hongwansi Town 13958 9005 2731 1758 268 85 111 Communities Communities in township intownship Hongwan Community 2396 1671 452 223 33 15 2 Direct impact Yuxing Community 3728 1712 1156 756 21 11 72 Direct impact

Longchang Community 2916 1332 896 552 70 29 37 Direct impact

Subtotal 9040 4715 2504 1531 124 55 111 Proportion in the total population 0.65 0.52 0.92 0.87 0.46 0.65 1.00 Yingpan Village 633 595 15 12 11 Indirect impact Administrative villages in villages Administrative Tianqiaowan Village 641 607 6 5 23 Indirect impact Longfeng Village 431 365 17 3 46 Indirect impact pastoral area area pastoral Qingtaizi Village 276 196 47 24 9 Indirect impact Duntaizi Village 573 532 3 38 Indirect impact Baizhuangzi Village 402 356 14 21 11 Indirect impact Lamawan Village 495 438 37 20 Indirect impact Xiliugou Village 482 431 30 21 Indirect impact Huashuwan Village 687 587 55 39 6 Indirect impact Daciyao base 298 183 6 79 30 Indirect impact Subtotal 4918 4290 227 227 144 30 0 Proportion in the total population 0.35 0.48 0.08 0.13 0.54 0.35 0.00

Table 12 ：：：Population composition of ethnic minority population of communities in Hongshui Town Proportion of Han Proportion of Hui Community Total population people people Tai’an 1693 100% 0 Xiejialiang 1497 100% 0 Zengjiajing 1456 100% 0 Xiaoshan 848 100% 0 Jiebei 1305 100% 0 Chenghua 734 100% 0 Songjiazhuang 1255 100% 0 Yangcheng 1929 100% 0 Qinghe 1699 100% 0 Hongshaxian 2313 100% 0 Changlin 907 100% 0 Jing’an 669 0 100% Yongle 386 0 100% Gongjian 1484 100% 0 Dazuizi 1127 100% 0 Total 25541 95.9% 4.1%

4.2 Yugu people

4.2.1 Geographic distribution

Yugu is an ethnic minority unique to Gansu, and about 90% of Yugu people live in Kangle Xiang, Dahe Xiang, Minghua Xiang, Huangcheng District, Mati District and You’ai Xiang, Sunan Yugu Autonomous County, and a few live in Huangnibao Yugu Xiang, Suzhou District, Jiuquan Municipality.

Yugu is one of the extremely small-population ethnic minorities of China. According to data from the fifth national population census in 2000, the national population of Yugu people was 13,719 in 2000. According to data from he sixth national population census, the national population of Yugu people was 14,668 as estimated from the average growth rate of ethnic minority population of 6.92% 1 between 2000 and 2010.

In 2009, Sunan County has a total population of 36,623 with 9,830 of Yugu people, accounting for 26.84%.Sunan County is the main place for Yugu people and

1 National Bureau of Statistics of the PRC, Bulletin of Key Data of the Sixth National Population Census in 2010 (No.1), April 28, 2010, http://www.stats.gov.cn/tjfx/jdfx/t20110428_402722253.htm

total population of Yugu people in Sunan accounts for about 67% of total national Yugu people.

Table 13 ：：：Distribution of population of Sunan County by ethnic group in 2009 Proportion to the county’s Ethnic group Population total population Total poplation 36623 100.00% Han people 15965 43.59% Yugu people 9830 26.84% Tibetans 9474 25.87% Hui people 580 1.58% Mongolians 335 0.91% Tu people 408 1.11% Other ethnic minorities 31 0.08%

Sunan County town is located at Hongwansi Town. In 2009, total Yugu people of the whole town are 2,731, accounting for 19.57% of total population of the town and 27.8% of total Yugu people of the whole county.

As main scope (except for training of farmers and herdsmen) of construction of Hongwansi Town is within three communities, Yugu people directly affected mainly are distributed at the township.In 2009, Total population of the township was 9,040 with Yugu people of 2,504, accounting for 27.70% of total population of the township and 91.69% of total Yugu people of the whole town.

Table 14 ：：：Key indicators of population data and distribution of affected Yugu people Key indicator Data Total national population of Yugu people in 2010 (pre-estimate) 14668 Population Yugu people of Sunan County in 2009 9830 Proportion in the national population of Yugu people (pre- estimate) 67% Proportion in the whole-county population 26.84% Yugu people population of Hongwansi Town in 2009 2731 Proportion in the whole town population 18.7% Population of Yugu people of the township directly affected by the Project 2504 Proportion in the whole town population of Yugu people 91.69% Population of Yugu herdsmen indirectly affected by the Project 227 Proportion in the whole town population of Yugu people 8.3% Population of Yugu people of Sunan County indirectly affected by the 7326 Project Proportion in total population of the whole county 74.53%

4.2.2 Modes of production and demographic classification

According to the characteristics of Yugu people affected by the scope of construction, they can be divided into the following three subgroups: Yugu people in pastoral area affected indirectly by the Project, urban Yugu residents affected directly by the Project and Yugu herdsmen affected directly by the Project.

4.2.2.1 Yugu herdsmen in pastoral area

Mainly distributed at administrative villages in pastoral areas with the total population of 227, accounting for 8.3% of total Yugu people population of Hongwansi Town. Stockbreeding is the main source of livelihood, which focuses on breeding of Alpine Merino, in addition to breeding of yaks, horses and red deer in nomadic code.

4.2.2.2 Yugu herdsmen in town

2,731 Yugu people in town are directly affected by the Project, of which 30% are Yugu herdsmen that settled in town. They have pasture resources, live mainly on stockbreeding and are of rural status in household registration. Large numbers of herdsmen have settled in town from the nomadic status in the pastoral area for the following reasons:

Impact of the herdsman settlement program

With the implementation of public programs for pasture resources protection, stockbreeding development and livelihood improvement for herdsmen, such as grassland fencing, grazing ban, rotation grazing and herdsman settlement, the improvement of traffic infrastructure in the project areas and the increase of herdsmen’s income, most Yugu herdsmen have settled, and their mode of production has turned from the traditional full nomadism mode to today’s “nomadism + settlement” mode.

The geographic coverage of Hongwansi Town is very extensive, so that herdsmen are highly scattered. An administrative village in the pastoral area is actually a geographic concept for the purpose of public administration and is actually very extensive, other than a functional zone that is densely populated and offers intensive service and facilities. Therefore, herdsman settlements are mostly within the urban area of Hongwansi Town so that settled herdsmen can enjoy basic public services, including medical care, education, amusement, communication and traffic.

Investment in urban housing properties

With the development of stockbreeding, the economic position of herdsmen has improved greatly. In particular, Yugu herdsmen, having more natural resources, have enjoyed greater economic improvement, providing an economic basis for their investment in urban housing properties.

The dullness of prolonged grazing in the pastoral area is an important reason for their settlement in town.

The pastoral area is sparsely populated, and their children’s education is a big problem, which is the most important reason for their settlement in town.

Sound infrastructure and public services in town provide an important means of security for supporting the elderly.

4.2.2.3 Yugu residents in town

Accounting for about 70% of Yugu people of the township, mainly refer to residents of Yugu people working at government, enterprises or public institutions or engaged in individual business as main livelihood sources. Their common characteristics are owning urban citizen registration but without grassland resources. Their main income sources are wages, individual business operations, etc.

4.2.3 Resource endowment and livelihoods

At present, Hongwansi Town has 6.4 million mu of grassland and 14,000 mu of arable land. Due to difference of traditional production modes, Yugu people have no experience and tradition in agricultural planting and all rely on grazing. In 2009, Hongwansi Town had a total population if 13,958 with per capita grassland area of 444 mu.

Among existing population of Sunan County, Yugu people are the earliest aborigines. When the collective grassland contracting reform was conducted in the 1980s, their per capita grassland area was usually more than 2 times of that of herdsmen of Han or other people migrated later, not less than 1,000 mu per capita 2. The maximum raised sheep of Yugu herdsmen can be 50 heads per capita based on the stock capacity (20 mu grasslands/sheep) of plateau grassland on Qilian Mountains.

In 2009, there were 289,599 heads of mutton sheep in Hongwansi Town, accounting for 90% of theoretical stock-carrying capacity. On this basis, the actual per capita amount of mutton sheep of Yugu people is 45 heads. At the year-end amount of 185,354 heads of mutton sheep in Hongwansi Town at the end of 2009 and an off-take rate of 36%, an average Yugu herdsman offers about 16 heads of mutton sheep annually. Based on the prevailing market price of mutton sheep in the project areas, the profit of each head is about 500 yuan, so the annual per capita net income of Yugu herdsmen is not less than 8,000 yuan3.

Table 15 ：：：Pre-estimate data on resource endowment and income of Yugu herdsmen in Hongwansi Town in 2009 Key indicator Pre-estimated data Per capita pasture area 1,000 mu

2 The field survey data show that, the highest and lowest grassland of grazing households of Yugu people per capita is 3,500 mu and 1,500 mu respectively. 3 Such data are pre-estimated average value based on macro data and only include income from mutton sheep feeding and exclude income from breeding of other livestock and do not represent annual income of Yugu residents per capita at the town.

Per capita annual amount of mutton sheep 45 heads Per capita annual off-take of mutton sheep 16 heads raised Per capita annual net income 8,000 yuan

For example, among the 79 Yugu respondents in the urban area, 31 are herdsmen, meeting the minimum statistical requirement. The key livelihood indicators of herdsmen are as follows:

Table 16 ：：：Key livelihood indicators of surveyed Yugu herdsmen Key livelihood indicator Unit Survey value Average household population - 3.6 Per capita pasture area mu 1134 Average distance between summer range km 14 and settlement Average distance between winter range and km 18 settlement Maximum distance between range and km 57 settlement Average amount of kettle per household Head 49 Average amount of sheep per household Head 165 Average gross household income yuan 41429 Per capita gross income yuan 10357 Most of stockbreeding Nomadism in summer + stable - feeding in winter Main mode of livestock marketing Door-to-door purchase by - animal traders Main mode of wool marketing Door-to-door purchase by wool - traders

In 2010, per capita annual income was 11,025 yuan at Hongwansi Township and per capita annual income was maintained 6,500-8,000 yuan in pastoral areas. Therefore, in respect of economic income, Yugu people are at the middle stream and upstream on the whole in the project area and they have strong ability to resist economic risks that may be caused by the Project.

Table 17 ：：：Per capita annual income in urban area and pastoral area of Hongwansi Town in 2010 Community Per capita annual income (yuan) Urban area of Hongwansi Town 11025 Yingpan Village 7362 Tianqiaowan Village 7485 Longfeng Village 6919 Qingtaizi Village 6764 Pastoral Duntaizi Village 7160 area Baizhuangzi Village 7097 Lamawan Village 7473 Xiliugou Village 7245 Huashuwan Village 7196 Daciyao base 6702

4.2.4 Language

Traditional language of Yugu people consists of western Yugu language and eastern Yugu language. The former is mainly spoken by the masses of Yugu people in the west of Sunan County, and most masses of Yugu people at Hongwansi Town speak western Yugu language; the latter is mainly spoken by the masses of Yugu people in the east of Sunan County. Eastern and western Yugu languages only have oral expression and have no characters. In addition, as eastern and western Yugu languages do not belong to the same one language family, they cannot communicate to each other smoothly. The project area is located at Qilian Mountains. From time immemorial, it is the place inhabited by multiple peoples and transition zone between agricultural and pastoral areas. Thus, historically Yugu people speak Chinese and Tibetan language or other languages at the same time.

At present, Yugu people in the project area mainly use Mandarin and Chinese characters. Thus, during the project implementation, failure to fully understand language and participate in the Proejct due to language barrier will not occur.

4.2.5 Religion

Yugu people believe in Tibetan Buddhism. Temples are the speical place for religious activities. For traditional nomadism production and living, they cannot live a fixed life like people in agricultural areas. Thus, they cannot go to religious places such as temple to carry out religious activities every day. As a result, in general households of Yugu people worship simple niche for Buddha so as to salute the image of Buddha.

For the masses of Yugu people directly affected by the Project, household religious facilities are not identical due to different housing structures. Most the masses of Yugu people living at one-story houses retain simple niche for Buddha so as to salute the image of Buddha in daily time. But those living in houses of more than one story have no simple niche for Buddha due to lack of corresponding place because of housing design.

However, the masses of ethnic minorities have transferred to fixed settlement from traditional nomadism on the whole. Thus, it is very convenient for them to carry out religious activities at temples and relevant religious facilities and places in the urban areas. Religious belief and activities of the masses of Yugu people directly affected by the Project will not be affected.

4.2.6 Social division by gender

Monogamy is implemented for Yugu people. Men and women undertake production and living labors together. Men undertake more heavy work while women undertake more housework, skilled and production work. Animal product sales are mainly undertaken by men, while taking care of children and elders are mainly undertaken by women; as for the management and decision making of community public affairs, men's participations are usually more than that of women. From the point of work devision by agender, the project activities will not cause direct production and livelihood effect on most masses of Yugu people. Thus, there exist no risks in this regard. Table 18 ：：：Division of production and living labor by gender for Yugu households specializing in stockbreeding Key production or living Division of labor (estimated from amount of labor undertaken) activity Male Female Grazing 70% 30% Animal epidemic prevention 70% 30% Stable feeding 50% 50% Shearing 50% 50% Weeding 70% 30% Wool marketing 70% 30% Mutton marketing 80% 20% Housework 20% 80% Caring for the old and 30% 70% children

Since project activities do not have any direct production or living impact on most of the affected Yugu people, there is no risk in this respect.

4.3 Tibetans

4.3.1 Distribution of affected population

Tibetan is one of the ethnic groups with large population among national ethnic minorities. It is the third largest ethnic group in Hongwansi Town distributed at all townships and towns of the whole county. In 2009, Tibetan population was 9,474 in Sunan County and accounts for 25.87% of total population of the whole county; Tibetan population is 1,758 in Hongwansi Town and accounts for 12.59% of total population of the whole town, second only to Han and Yugu people.

Tibetans in Hongwansi Town directly affected by the Project and those in communities of three townships total 1,531 and account for 87% of all Tibetans in Hongwansi Town. Tibetans in pastoral areas of the whole town indirectly affected by the Project are 227 and account for 13% of all Tibetans in Hongwansi Town. It can be seen that, Tibetan population distribution characteristics affected by the Project in the project area are the same as those of Yugu people. Both are in highly centralized distribution at the township.

Table 19 ：：：Key indicators of population data and distribution of affected Tibetans Key indicator Data Tibetan population of Sunan County in 2009 9474persons Proportion in total population of the whole county 25.87% Tibetan population of Hongwansi Town in 2009 1758persons Proportion in the total population of the whole town 12.59% Tibetan population of Hongwansi Town directly affected by the Project 1531persons Proportion in the whole town population of Tibetans 87% Tibetan population of Hongwansi Town indirectly affected by the Project 227 Proportion in the whole town population of Tibetans 13%

4.3.2 Modes of production and demographic classification

Taking the production modes as core characteristics, affected Tibetan groups in the project area also can be divided into three subgroups: Tibetan masses in pastoral area indirectly affected by the Project, non-herdsman Tibetan in town directly affected by the Project and Tibetan herdsmen in town directly affected by the Project.

Tibetans in pastoral area : mainly distributed at administrative villages in pastoral areas, total population is only 227 and accounts for 13% of total Tibetan population in Hongwansi Town. Stockbreeding is the main source of livelihood, which focuses on breeding of Alpine Merino, in addition to breeding of yaks, horses and red deer in nomadic code.

Tibetan herdsmen in town : account for about 30% of total tibetans in town, most Tibetan herdsmen live in town mainly because of the herdsmen settlement project. In addition, some Tibetan herdsmen purchase housings at the township so as to facilitate children education and the aged caring. Although such Tibetan herdsmen live at the township, they still take stockbreeding as main production and livelihood sources and possess grasslands in pastoral areas.

Tibetan resident in town : account for about 70% of Tibetans of the township, mainly refer to Tibetan residents working at government, enterprises or public institutions or engaged in individual business as main livelihood sources, their common characteristics are having urban citizen registration without grassland resources.

4.3.3 Resource endowment and livelihoods

Historically, Yugu people and Tibetans always coexist, go in for stockbreeding and are aborigines.Thus, so far, Tibetan and Yugu people in the project area are

basically the same in terms of production mode, natural resource endowment and income.

4.3.4 Language

Tibetans use their own characters and language in the project area. As Tibetans live together with Han people, Yugu people and other ethnic minorities, Tibetans also use Chinese and Chinese characters in the project areas. Thus, during the project implementation, failure to fully understand language and participate in the Project due to language barrier will not occur.

4.3.5 Religion

Tibetan masses in the project area believe in Tibetan Buddhism. Temples are the main place for religious activities. In addition, among Tibetan masses directly affected by the Project, those living at one-story houses retain simple niche for Buddha generally, while those living in houses of more than one story have few simple niches for Buddha because of too small housing and structural design. Thus, most religious activities are carried out at religious places such as temples.

Religious belief and activities of the Tibetan masses directly affected by the Project will not be affected.

4.3.6 Social division by gender

Monogamy is implemented for Tibetan masses in the project areas. Men and women undertake production and living labors together. Men undertake more heavy work while women undertake more housework, skilled and production work. Animal product sales are mainly undertaken by men, while taking care of children and elders are mainly undertaken by women; as for the management and decision making of community public affairs, men's participations are usually more than that of women.

4.4 Hui people

4.4.1 Geographic distribution

Hongshui Town project involves 2 Hui communities which are only two Hui people communities in this town. Two villages are in the north of Hongshui Town and on the edge of Tengger Desert. Total population of two villages is 1,055 and accounts for 4.1% of total population of Hongshui Town and 5.5% of total rural population (19,313) of Hongshui Town. By 2010, Jing’an Village had a total population of 669 of 151 households. 34 households with 133 persons enjoyed rural minimum living security (MLS). 1 household with 2 persons enjoyed the five

guarantees. 97 households with 419 persons were poor. Yongle Village had a population of 386 of 86 households. 23 households with 111 persons enjoyed rural minimum living security. 2 households with 2 persons enjoyed the five guarantees. 81 households with 350 persons were poor.

Table 20:Distribution of key rural vulnerable groups in Hongshui Town Rural population Five-guarantee Rural poor Rural population under MLS population population Village Proportion Proportion Prop ortion Proportion Qty. to whole Qty. to whole Qty. to whole Qty. to whole town, % town, % town, % town, % Hui Yongle 386 2.00 111 4.13 2 2.99 350 4.25 villages Jing’an 669 3.46 133 4.95 2 2.99 419 5.09 Xiejialiang 1502 7.78 83 3.09 4 5.97 296 3.60 Tai’an 1693 8.77 205 7.63 7 10.45 450 5.47 Zengjiajing 1462 7.57 123 4.58 6 8.96 426 5.17 Xiaoshan 848 4.39 63 2.34 4 5.97 282 3.43 Jiebei 1305 6.76 393 14.62 7 10.45 1046 12.70 Chenghua 734 3.80 61 2.27 3 4.48 196 2.38 Han Songjiazhuang 1255 6.50 70 2.60 3 4.48 282 3.43 villages Yangcheng 1929 9.99 225 8.37 4 5.97 751 9.12 Qinghe 1699 8.80 248 9.23 2 2.99 804 9.77 Dazuizi 1127 5.84 321 11.94 4 5.97 810 9.84 Changlin 907 4.70 116 4.32 7 10.45 288 3.50 Gongjian 1484 7.68 190 7.07 0.00 731 8.88 Hongshaxian 2313 11.98 346 12.87 12 17.91 1102 13.39 Total 19313 100 2688 100 67 100 8233 100

4.4.2 Modes of production

Villagers of Jing’an Village and Yongle Village were migrated from mountain regions of Liujiaxia reservoir at the beginning of the 1990s. In the past, they mainly rely on breeding as livelihood source. However, they cannot sustain their life due to vegetation deterioration. When just migrated to Hongshui Town, households of two Hui villages had no experience and technology in agricultural planting. It is more difficult to plant crops in sandy soil on the verge of desert.

Through more than 20 years of gradual exploration and adaptation, presently Hui people of two villages basically form the production and living mode of settlement of “agricultural planting+ breeding + part-time work”.

Mainly grain & cash crops and high-quality forage (such as corn, benne and alfalfa) are planted in improved sandy soil; for breeding, main mutton sheep is raised in pens and required forage comes from cornstalk and a few of self-planted alfalfa. Their nutrient is used as high-quality farmyard manure so as to further imporve the soil, thus increasing grain yield; for part-time work, they go to work at the mine in the southern mountain region of Hongshui Town in slack season. At present, such three main sources account for 1/3 of main income of households respectively.

Construct silo to Alfalfa planting, to improve the improve usage rate of feed nutrient structure, and cornstalk increases mutton sheep production efficiency. Silo construction, to improve the utilization efficiency of crop

Distribution of corn kernels and Providing self-use meat and family purchase wheat Take cornstalk as the feed for income flour breeding

Training and Corn planting Mutton sheep science and technology feeding support

Jingdian (Phase 2) Possessing Pumping irrigation Project, Take sheep stools and other farm manure traditional breeding guaranteeing the irrigation as the high quality fertilizer to improve experiences and needed by agriculture sandy land so as to increase the output of technical guarantees corn and other crops

Road construction, to improve the bazaar trading environment, and lower trading costs

Chart 1: Logic diagram of project activities in Hui communities

4.4.3 Resource endowment and livelihoods

As southern areas of Hongshui Town with good soil fertility and quality have been occupied by other communities of previous displaced persons when displaced persons of two Hui villages moved to Hongshui Town, they only can select to settle at transition zones relatively nearer to the desert edge. Under such historical background, compared with other communities of Hongshui Town, land resources of two Hui villages are characterized by fewer per capita available arable land and higher production cost of the land.

In addition, households of two Hui communities have no experience in agricultural planting and production before displacing to Hongshui Town. Notwithstanding nearly 20 years of learning and adaptation, their overall planting technology level is relatively low, and overall education level and knowledge & skills

are lower than those of surrounding Han people. Compared with surrounding Han communities, socioeconomic development is backward.

In 2009, per capita arable land in Hongshui Town was 4.7 mu, while per capita arable land is 1.8 mu for Yongle Village and 2.3 mu for Jing’an Village, far lower than that of other Han communities.

In addition, since the arable land in Yongle and Jing’an Villages has been converted from sandy land and is of poor water retention, investment in pesticides and films is very high. Due to poor land fertility, under the same conditions, corn yield/mu is about 1/5 lower than that of other communities. Based on the profit of 800 of 1 mu of corn after deducting cost, income/mu for Hui villages is about 150 yuan lower than that of other Han villages.

The survey shows that, actual per capita net income of farmers in two Hui communities in 2010 was about 3,000-3,500, while thanks to comprehensive advantages of land resources and land fertility, actual per capita net income of other Han communities above 5,000 yuan, even 7,000-8,000 yuan.

Table 21:Cultivated area of communities in Hongshui Town in 2009 Actual cultivated Actual per capita Community Reported area (mu) area (mu) arable area (mu) Hui Yongle 700 534 1.8 communities Jing’an 1532 1168 2.3 Tai’an 10290 3998 6.1 Xiejialiang 5090 4255 3.4 Zengjiajing 4980 3797 3.4 Xiaoshan 3220 2455 3.8 Jiebei 4071 3104 3.1 Chenghua 2162 1963 2.9 Han communities Songjiazhuang 4240 3233 3.4 Yangcheng 7756 5913 4.0 Qinghe 5210 3972 3.1 Hongshaxian 18840 15860 8.1 Changlin 6383 5674 7.0 Gongjian 6060 4620 4.1 Dazuizi 4030 3072 3.6 Public farms 5887 5887 - Total 90451 73905 4.7

4.4.4 Language

Hui people of Yongle Village and Jing’an Village use Chinese and Chinese characters and have no special language, dialect and character.

4.4.5 Religion

Main religious belief is Islam. 1-2 mosques are set up in each village center and managed by imam. Imam led villagers to worship according to Islam doctrines.

Imam, as the religious leader of communities, generally neither take charge of management and decision-making of secular business nor intervene operation of two village committees. However, comments and suggestions are generally solicited from imam for important public issue management and decision-making of communities.

4.4.6 Social division by gender

Monogamy is implemented for villagers in Yongle Village and Jing’an Village. In respect of household production division, men undertake most heavy physical work while women undertake light physical work as well as breeding. Generally, men do not do housework.

Women basically have no right to participate in management and decision- making of public issues of communities.

See the section on social gender analysis in the next chapter.

4.5 Identification ethnic minorities

According to the four criteria for the identification of ethnic minorities in the World Bank’s Operational Policy OP4.10 on Indigenous Peoples, the following table makes a detailed analysis of Hui people, Yugu people and Tibetans. The analysis shows that the Hui people, Yugu people and Tibetans affected directly by the Project comply with the Policy, which neans that an EMDP should be developed for their participation in and benefiting from the Project.

Table 22:Summary of identification of ethnic minorities Ethnic Compliant Definition in 0P4.10 Features group or not?

(a) self-identification (a) Hui and other communities recognize that farmers in Hui communities are a group with its own cultural Yes as members of a characteristics, customs and religious believes in the project areas. distinct indigenous cultural group and (b) Their existing arable land and other natural resources are not left over by their ancestors, but were acquired Basically recognition of this by the existing farmers upon migration to their present communities 20 years ago. yes identity by others; (b) collective attachment Hui (c) Economic, social and political organizations in Hui communities differ slightly from those of other ethnic Basically to geographically groups in the project areas. However, Hui communities have their unique religious organizations; each yes distinct habitats or community has a mosque and a religious leader, and religious activities are carried out according to the Islamic ancestral territories in doctrines; religious are usually separated from social, economic and political activities, and religious leaders the project area and imams do not involve in public affairs management. to the natural resources in these (d) Their language has no difference from the mainstream languages and official language in the project areas; No habitats and they use spoken and written Chinese, and can understand Mandarin Chinese. territories; (c) customary cultural, (a) The Yugu people and other ethnic groups recognize that Yugu people are a group with its own cultural Yes economic, social or characteristics and religious believes in the project areas. political institutions that are separate from (b) The Yugu people are an indigenous people in the project areas, and their existing pastures and other natural Yes those of the dominant resources have been left over from history. society and culture; and (d) an indigenous (c) Economic, social and political organizations in Yugu communities and pastoral areas differ slightly from those Basically language, often Yugu of other ethnic groups in the project areas. The Yugu people believe in Tibetan Buddhism, have religious yes different from the leaders, temples and other religious facilities and organizations, and observe the traditional doctrines and code official language of of conduct of Tibetan Buddhism; religious leaders and organizations do not involve in public affairs the country or region. management.

(d) The Yugu people have their own unique spoken language but have no written language. Elderly ones can Basically use the Yugu language freely, but the young generation cannot use it proficiently. All Yugu people regardless of yes age can use spoken and written Chinese skillfully, and can understand Mandarin Chinese.

(a) The Tibetans and other ethnic groups recognize that Tibetans are a group with its own cultural characteristics Yes and religious believes in the project areas.

(b) The Tibetans are an indigenous people in the project areas, and their existing pastures and other natural Yes resources have been left over from history.

Tibetan (c) Economic, social and political organizations in Tibetan communities and pastoral areas differ slightly from Basically those of other ethnic groups in the project areas. The Tibetans believe in Tibetan Buddhism, have religious yes leaders, temples and other religious facilities and organizations, and observe the traditional doctrines and code of conduct of Tibetan Buddhism; religious leaders and organizations do not involve in public affairs management.

(d) The Tibetans have their own spoken and written language, and can use spoken and written Chinese skillfully. Yes

5. Summary of Social Assessment

Acording to TOR of social assessment of the project, from Feb. 2011, evalution team started prior preparation, and then from March 10 to 30, 2011, the evaluation team made first phace field work for 20 days in project areas. In this process, social and economic outcome, impact and risk of the project, especially for local minority ethnic people, had been considered. Meanwhile, on the base of first phace feildwork, evaluation team made another complementarity investment on Yugu and Tibetans people of the project area in May 2011.

In the process of evaluation, most important stakeholders, such as each level PMO, relevant governmental department, community, common farmers and nomadic people, households whose land been occupied, businessman, enterprises, community organizations, rural economic agency and so on, had participated in the field survey and community consultation process on the basis of prior and fully informed.

Main methods and tools like field observation, half-construction interview, key informant interview, questionnaire survey and focus group discussion had been used in field work. Of which, field work that relevant with minority ethnic people in Hongshui and Hongwansi Township are: 22 times of field observation, 128 times of half-construction interview, 84 times of key informant interview, 18 times of focus group discussion, and 261 valid samples of questionnaires.

5.1 Evaluation of impacts and mutual adaptability

The social eveluation results show that, the project scope and project design in the two demonstration towns that involve ethnic minorities in general have rather high mutual adaptability with the directly related ethnic minorities, including economic adaptability, social adaptability, cultural adaptability, and coverage and inclusiveness of project benefit/damage compensation. Generally speaking, it's expected that the Project will provide good infrastructure environment and basis for industry growth for the development of ethnic minorities.

5.1.1 Hui people

The impact of the Project on Hui communities is mainly realized with direct project intervention method. The project scope that will have a direct impact on Hui communities, including mutton sheep feeding, silo construction, alfalfa cultivation and herdsmen training, is conducted closely revolving around the Hui communities' production and living style that center on livestock breeding and agricultural cultivation. Therefore, it complies with the actual demand of farming households and current state of economic and social development in Hui communities, and has high community identification. Meanwhile, all affected Hui people in Hongshui Town are concentrated in Yongle Village and Jing’an Village. Therefore the project benefit coverage will be 100%.

The development of the Project needs farming households’ supporting implementation in terms of mutton sheep feeding, soli construction and alfalfa cultivation. The social assessement results indicate that the estimated payment is within farming households' ability to pay of the Hui community, and the survey on willingness to pay indicates that the farming households of Hui community has a high willingness to pay, and they wish the Project to be carried out as soon as possible to increase economic income and improve livelihood. Therefore, there is no economic risks in the whole project.

As the traditional livestock breeding species of Hui communities, breeding experience, skills and perfect breeding facilites for sheep are rather mature. In addition to soli construction, alfalfa cultivation and skills training the Project is about to put into action for the purpose of improving cultivation environment and increase cultivation efficiency, will make the project scope more adaptable to the present production style and current state of economic and social development of Hui Communities.

The project scope, with funding livestock breeding as the core, doesn’t involve project construction, and project implementation will produce no temporary environmental impact. Meanwhile, the implementation of the Project will help to improve the tough external environment the Hui communities faces presently. The focuses are as follows:

1) The two Hui villages are located at the terminal of the Jingdian Pumping Irrigation Project (Phase 2), next to Tengger Desert. Under the same conditions of water and fertilizer conditions, the soil fertility and yield are 25%-50% lower than that of the other areas of Hongshui Town. But since sheep manure has a good effect on improving desertification land, and after 2 or 3 years, it will remarkably improve the land structure and improve soil fertilization.

2) As a simple, practical and low-cost forage improving facility, the silo can not only increase the taste and the nutrient value of the forage, but also double the use efficiency of maize straw by ammonifying forage.

3) Alfalfa cultivation could effectively improve the present breeding mode which don’t pay attention to forage nutrition balance and improve the margin benefits of livestock breeding.

4) Generally, farming households of Hui people receive low level of education, and have few practical skills. In addition, since there are a lot of differences between Hui people and Han people in terms of food habits and religious beliefs, leaving home to seek jobs elsewhere is rather difficult for them. Therefore, they only work in several small local mines. But due to the poor safety protection measures of the small local mines, nearly 10 young and adult farmers have been injured or disabled to different degrees in the two communities. The household income brought by the implementation of the Project can substitute the income from doing work for others to some degree and reduce the time working in the local mines.

The scope of project conducted in the Hui communities does not involve religious beliefs and social custom taboos of Hui communities. Therefore, it has high cultural adaptability.

Besides the direct impact on the Hui communities of the above project scope, the bazaar road and supporting facilities construction of the Hongshui Town will also impose indirect impact on Hui communities, mainly reflected in improving bazaar trade environment, providing better bazaar trade environment and transport and logistics environment for agricultural materials and agricultural and stockbreeding products sales of Hui people. Therefore, in the foreseeable future, high trading cost arising from trading through agricultural and stockbreeding product broker (sheep broker, grain broker) will be gradually reduced, and the overall economic benefits will be improved.

5.1.2 Yugu people/Tibetans

The Hongwansi Town subproject will mainly be conducted in the township, but the Hongwansi Town is located in the pasturing areas of Qilianshan Mountain with a small population occupying vast land. Under the background of national nomad settlement project and development of livestock breeding industry and nomad livelihood improvement in recent years, a large number of traditional nomads gradually settled down in the township, which make the population of the directly affected Yugu people and Tibetans within the township area taking 87% of the total population of Yugu people and Tibetans in Hongwansi Town. Therefore, from the percentage of directly affected ethnic minorities populations, it could been seen that the Project has rather high benefit coverage.

Meanwhile, due to the complexity and diversity of the Hongwansi Town subproject, including farm product bazaar, construction of Qilian Jade Processing Zone ancillary facilities, construction of the Ethnic Characteristic Product Processing and Startup Training Center, as well as training and capability building, the Project will have different direct impacts and indirect impacts on the Yugu people and Tibetans of different type in the township.

5.1.2.1 Farm product bazaar construction

The construction of farm product bazaar system complies with the present overall development demand of Hongwansi Town. Meanwhile, it’s forecast that the construction will have a positive impact on improving the operation conditions and market size of existing traders including Yugu people and Tibetan and so on ethnic minority traders in the bazaar, turning open-air operation into indoor operation, avoiding the impact of extremely cold weather in winter on the health of traders, attracting more customers to buy things in the bazaar, and increasing trader’s benefits. It has high mutual adaptability with the operation status and practical demand of existing traders in the bazaar.

At present, since the operation cost is very low in the open-air bazaar, stall fees of traders are all exempted. But since it’s foreseen that the operation cost of the newly-built comprehensive bazaar will be increased, some stall fees will be collected from the stall traders according to the size and location of the stalls. The assessment shows that existing traders in the bazaar generally have a high willingness to pay and deem that it’s acceptable to collect some stall fees after the operation environment is improved.

Seen from the present operation returns, due to the open-air operation, in the 4 or 5 months in the summer, there are a lot of tourists and a lot of nomads nearby coming into town for shopping every year. But during the rest time, because of the

rare population in Hongwansi Township and large number of commercial stalls, the annual operation return of traders in the present bazaar is generally rather low, ranging from 15,000 to 20,000 yuan for every open-air stall. Therefore, the payment ability of traders after they enter in the new bazaar will not be high.

According to the existing design and planning of the present project, on one hand, after the new bazaar is established, some of the stalls will remain half-open operation mode, exempting or reducing part of stall fees of traders. On the other hand, after the new bazaar is established, due to the improvement of bazaar environment, it’s forecast that number of consumers coming into the bazaar and shopping will will also increase, and it will have positive meaning in increasing the returns of traders and payment capability.

Generally speaking, farm product bazaar constrution project has high economic adaptability with Yugu people and Tibetans affected by the Project. But special measures or actions shall be formulated to guarantee that the disadvantaged or vulnerable groups of Yugu people and Tibetans can afford the increased operation cost.

The construction of farm product bazaar is closely related to the present overall town development plan and practical development demand of Hongwansi town, and meanwhile, it is also closely related to the livestock breeding industry which is a leading industry in Hongwansi Town and have high mutual adaptability with the overall industry structure and economic development mode and the production style of affected Yugu people and Tibetans of the project area. In the mean time, there is no conflict with the religious beliefs and cultural custom of Yugu people, Tibetans and such ethnic minorities.

5.1.2.2 Refrigerated warehouse construction

In addition, as an important part of farm product bazaar construction, the construction of two meal product refrigerated warehouses will produce positive impact on the ethnic minorities of the project area. According to present refrigerated warehouse design storage capability and the current stage and capability of stockbreeding and processing, the establishment of refrigerated warehouse will increase the beef and mutton processing capability of Hongwansi Township by 500 tons, and increase the breeding scale of red deer from the present 4000 heads to 7000 heads. 80% of the Yugu people and Tibetans within the township directly affected by the Project are settled nomads. Therefore, they will directly benefit from the expansion of market processing capability brought about by the two refrigerated warehouses.

5.1.2.3 Supporting infrastructure construction in Qilan Jade Processing Zone

The impact of the Project on the Yugu people and Tibetans and such ethnic minorities are mainly reflected in the following aspects: (1) The construction of Qilian Jade Processing Zone involves land acquisition, property demolition and resettlement, in which the Yugu people and Tibetans and such ethnic minorities are directly involved; (2) As the characteristic industry and future leading industry of the project area, Qilian jade processing will provide employment chances and operation chances for the Yugu people and Tibetans and so on ethnic minorities who are out of work, wish to change the employment type after settling down in the township or who are interested in jade processing industry.

For the displaced and resettled Yugu people and Tibetans and so on ethnic minorities, the project design has formulated property demolition and resettlement compensation scheme that complies with relevant laws, regulations and policies as well as economic and social realities within the project area. And after extensive community mobilization and negotiation, it has received wide supports from the displaced and resettled farming households, including Yugu people and Tibetans and so on ethnic minorities. Meanwhile, aiming at the disadvantaged groups of Yugu people and Tibetans and so on ethnic minorities, additional compensation plan is specially formulated in the compensation and settlement scheme. Therefore, the implementation of the Project has good economic adaptability with the displaced ethnic minorities.

As a unique mineral resources of Sunan County, Qilian jade resource is one of the most unique natural resoureces within the project area. Within the relevant planning and policies frameworks concerning the reasonable development and protection of Qilian jade resource of Feinan County, the construction of Qilian jade processing zone will certainly provide good environment for regulation and operation of this industry. Since this industry is still in initial stage at present, the main jade resource comes from picking of open ore on the earth’s surface which are mostly individual action. At present there is no large-scale exploitation of proven underground ore vain. The nomadic mode of production of ethnic minorities such as Yugu people and Tibetans provides high objective conditions for the picking Qilian jade resources and earning some extra income. At present, there are 253 people engaging in businesses concerning Qilian jade processing, 185 of which are Yugu people and Tibetans, excluding the nomads who pick up Qilian jade after pasturing. Therefore, the implementation of the Project will have high economic adaptability with the ethnic minorities that are directly affected.

In addition, though the implementation of the Project mainly belongs to commercial development, it has positive significance in improving the economic development of Hongwansi Township area and increasing employment opportunities. The surplus labor released from stockbreeding of nomad who settle in the township including the ethnic minorities such as Yugu people and Tibetans can benefit from the increasing employment opportunities. And the project design has taken providing privileged access to newly increased employment opportunities for surplus labor of ethnic minorites such as Yugu people and Tibetans as one of the important project implementation principles. Therefore, the implementation of the Project generally has a high social adaptability. Meanwhile, the Project does not involve conflict with the religious facilities, customs and manners of ethnic minorities, and there are no cultural conflict problems. 5.1.2.4 Construction of the Ethnic Characteristic Product Innovation and Training Center At present, there are 112 people conducting businesses concerning ethnic characteristic product processing within the project area as per initial statistic, in which 98 are ethnic minorities such as Yugu people and Tibetans. But due to lack of normative industry standard and orders. as an important emerging industry and important component of tourist industry within the project area, ethic characteristic product process still faces diverse difficulties in actual industry development, talents cultivation and skills inheritance.

The construction of ethnic characteristic product innovation and training center will have positive significance in promoting economic and social development of this region, increasing the inheritance, protection and development of the traditional culture and intangible cultural heritage of ethnic minorities such as Yugu people. The

directly affected ethnic minority groups such as Yugu people and Tibetans will benefit from the implementation of the Project and later playing of economic and social benefits, increased employment opportunities, access into this industry and learning of ethnic characteristic product processing skills. Therefore, it generally has high economic and social adaptability.

Since the implementation of the Project directly relies on ethnic characteristic culture, at present the ethnic characteristic products in trading are mainly traditional costumes, jewelries, embroideries, household articles, tourist souvenirs of Yugu people together with some of articles for religious activities of Tibetan buddhism. These products will not inflict conflicts with religious belief and cultural customs. Therefore, the implementation of the Project has high adaptability in the cultural level.

5.2 Organizational and institutional evaluation

5.2.1 Organizational structure

With the provincial development and reform commission being the highest coordinating agency of the Project at the provincial level, a project organizational system with the county development and reform bureau being the coordinating agency has been established in Hongshui Town, a project organizational system with the county development and reform bureau being the coordinating agency and the county construction bureau being the managing agency has been established in Hongwansi Town. Town PMOs have been set up at the town level for project implementation. The organizational structure is as follows:

Provincial development Provincial Consulting and reform PMO expert team commission Provincial finance finance Provincial department

Other Municipal government Municipal departments development and reform PMO commissions

District/ county District/ county finance bureaus finance county District/ development County and reform PMO Other bureaus government departments

Township Town government PMO s

Admi n. villages / communities

Farmers/herd Specialized Specialized Enterprises technicians Res Traders Brokers smen idents

Chart 2: Organizational chart of the Project

This organizational system is significant for successful project implementation: (1) As project coordinating agencies, the development and reform commissions/bureaus can fully play their coordinating function among government functional departments, and mobilize these departments to participate in and support the Project, and provide human, financial, material, intellectual and political resources for project implementation; and (2) The project implementing agencies established in the town governments can organize residents, farmers and herdsmen to fully participate in and benefit from the Project.

However, it should be noted that in the current organizational system, organizational setup at the target group and community levels is still unsound, so that the Project’s influence on and interference with ethnic minorities have to be embodied directly at the community and individual levels in most cases. Therefore, in order to ensure the adequate participation of and free consultation with ethnic minorities, thereby realizing the objectives and benefits of the Project, organizational

and capacity building should be strengthened, and more community and specialized organizations should be established.

5.2.2 Implementation capacity

Since one of the main duties of a development and reform commission is to organize and approve investment and development projects of all types, and a town government, as the very grass-root level of the government, participates in almost all investment and development projects within its jurisdiction, or even implements such projects directly, the organizational system with focus on development and reform commissions and town governments has strong implementation capacity generally, and can ensure successful project implementation.

However, in the meantime, since no World Bank-funded project has been implemented in Hongshui Town and Hongwansi Town, and no such project has been handled by the relevant county development and reform bureaus, the relevant town governments and county development and reform bureaus are not familiar with the policy requirements and implementation procedures of World Bank-funded projects. This will be one of the potential risks to project implementation. Therefore, it is very necessary to conduct capacity building for the project implementing agencies.

5.2.3 Operation and management systems

The present project design addresses the management systems for the project implementation process only, and the institutional design for the subsequent operation and maintenance (O&M) of the Project has to be improved. From the perspective of the affected ethnic minorities, the OM&E systems of the Project should cover the following:

- Participation activities and space of ethnic minorities during project implementation;

- Mode of participation of and institutional design for ethnic minorities during project implementation;

- Special policies and actions that ensure that ethnic minorities benefit from the Project and their losses are compensated for reasonably;

- Information disclosure system;

- Appeal handling procedures and mechanism for ethnic minorities

5.3 Social gender and development

Since the Project will not only conduct direct intervention in community and farming household level, but also indirectly impose influence on the production and living style of ethnic minorities through the establishment and improvement of public

infrastructures, bazaar trading and distribution system, it will have great significance to investigate the current state of social gender development of ethnic minorities from the angle of social gender and improve the project scope and implement design with special aims.

5.3.1 Hui people

The directly affected farming households of Hui communities all believe in Islamism. According to the islamic traditions, status of the female as a whole is rather low. Though they shoulder much of the production and living labor, their participation in public affairs and decision making of the communities is rather few. But the Hui communities of Yongfeng Village and Jing’an Village directly involved in the Project are the only two Hui communities of Hongshui Town, taking a small proportion of the total population. Meanwhile, with the increasing of economic and social development and external exchanges, the status of the female has been greatly improved compared with the traditional Islamic society, for example, the enrollment ratio for girls of school age in compulsory education stage has reaches 100% in both communities.

Table 23:Social division by gender in Hui communities directly affected by the Project Proportion of gender Proportion of gender division of labor of Han division of labor of Han Production, living and project activities people people Male Female Male Female 1 Sheep raising (in pens) 30% 70% 50% 50% 1.1 Feed 20% 80% 40% 60% 1.2 Daily management 20% 80% 30% 70% 1.3 Sheep shearing 50% 50% 50% 50% 1.4 Sales of mutton and wool 80% 20% 80% 20% 1.5 Purchase of breeding sheep 80% 20% 80% 20% 2 Agricultural cultivation 50% 50% 50% 50% s1.1 Soil preparation 70% 30% 70% 30% 1.2 Applying fertilizer 50% 50% 50% 50% 1.3 Seed sowing 30% 70% 30% 70% 1.4 Irrigation 70% 30% 70% 30% 1.4 Harvest 50% 50% 50% 50% 1.5 Selling 80% 20% 80% 20% 1.6 Purchase of agricultural means of 80% 20% 80% 20% production 3 Work for others 100% 0 60% 40%

4 Housework 20% 80% 30% 70% 5 Management and decision-making 80% 20% 60% 40% of family mattters. 6 Management and decision-making 100% 0 60% 40% of public affairs

The production and living labor division closely related to the activities of the Project as a whole shows a feature that men play the key role in the society while women are confined to the family chores, i.e. men are responsible for heavy labor

activities while women focus on light physical labor and men have the last say in in the public affair management and family affairs.

The labor division of social gender in Han and Hui communities with respect to production and life style as well as management of public affairs shows that though women in general belong to the vulnerable groups, their practical role and function in the socioeconomic development and production and life are critical, therefore, women’s role and function in the design of project implementation and execution shall be given plenty of consideration in order to guarantee the realization of project objectives and effects. For example, community consultation and skills training activities for farmers in Hui communities should incorporate women’s opinions, and involve women sufficiently.

5.3.2 Yugu people/Tibetans

The similarities in production mode, customs and religious beliefs of Yugu people and Tibetans directly affected by the Project makes the labor division of social gender of Yugu people and Tibetans quite similar. Men dominate the stockbreeding while women dominate the houseworks; men dominate the sales of animal products and procurement of production materials while women dominate the procurement of living materials. With the transforming of production and living mode from nomadic way to “nomad plus settlement”, the labor division of the male and female in production and living does not have great changes.

In addition, in Qilian jade processing and ethnic characteristic product processing of the Project, the labor division of social gender depends on specific conditions. For example, men dominate the jade product processing and in ethnic characteristic product processing, women dominate the processing of the traditional folk costumes, jewelries and embroideries while men dominate the processing of cow head, sheep head and other ethnic characteristic products. In bazaar operation, the survey of the ethnic minority traders among the bazaar traders shows that the female operators outnumber male operators.

Therefore, the social division by gender of different groups of Yugu people and Tibetans is roughly as follows: Table 24:Social division by gender of Yugu people/Tibetans Production, living and project Proportion of gender division of labor Ethnic group activities Male Female Yugu/Tibetan Jade processing 90% 10% residents in Ethnic characteristic product 50% 50% urban area processing 30% 70% Market individual operation 70% 30% Processing and distribution of 20% 80% agricultural and stockbreeding products Housework Yugu/Tibetan Stockbreeding 80% 20% herdsmen in Animal product distribution 90% 10% urban area Housework 10% 90% Caring for the old and children 20% 80% Yugu/Tibetan Stockbreeding 70% 30% residents in Animal product distribution 80% 20% pastoral area Housework 20% 80%

5.4 Risk assessment

5.4.1 Hui people

The impact of the Project on the Hui communities and farming households in general are positive, but some risky factors that might hinder the smooth project implementation and balanced benefiting of Hui farming households can not be ignored, mainly reflected in the following aspects:

1) Some poor households fail to raise funds for investment at a time.

According to the fund raising standard of households affected by the Project, each household shall raise 1,200 yuan to purchase ewe. Some households also have to raise 600 yuan to purchase ram. In addition, households to construct silos shall raise another 2,000 yuan. Thus, the least and most raising of households for the investment at a time is 1,200 yuan and 3,800 yuan respectively. Presently, 224 farmers receive rural MLS and 4 enjoy the five guarantees in the two Hui communities. Although in the survey, some farmers receiving MLS said they could raise 1,200 yuan at a time, but the possibility that some farmers cannot afford this amount is not precluded.

Table 25:Composition of poor population in two Hui communities Indicator Yongle Village Jing’an Village Total population 386 669 MLS population 111 133 Proportion to total population (%) 28.76% 19.88% Five-guarantee population 2 2 Proportion to total population (%) 0.52% 0.30%

2) Since quotas for breeding ram feeding and silo construction are limited, it is difficult to allocate these quotas rationally to satisfy most farmers.

As silos can improve the utilization rate of corn straw by at least one time on the whole, it means that, theoretically breeding capacity can be 2 times of current breeding capacity without increasing corn straw production. According to the standard that one mu of cornsalk can breed about one basic ewe, the maximum breeding capacity of two Hui communities can be 10-15 per household presently. The actual survey shows that, actual breeding capacities of rural households of Yongle Village and Jing’an Village have reached 10 and 11. It means that, rural households will soon face the lack if corn straw if in the current breeding mode. Thus, it is essential to construct silos in the medium to long term. The survey of two communities shows that, more than 90% of surveyed Hui rural households want to construct silos.

Table 26 ：：：Endowment of land resources in Hui communities Actual cultivated area Actual per capita Community Reported area (mu) (mu) arable area (mu) Hui Yongle 700 534 1.8 communities Jing’an 1532 1168 2.3

According to the project design and current project investment rating, 15 and 30 silos will be constructed in Yongle Village and Jing’an Village respectively. However, these two villages have actual rural households of 67 and 117 respectively. Their actual demands for silos are far higher than the silos that are subsidized by the Project.

Thus, how to determine silo construction indicator allocation programs acceptable to all rural households and promote their smooth construction and implementation become one of challenges and risks facing the Project

3) Some households are not motivated to plant alfalfa and facing challenge is how to effectively popularize it.

In the project area, annual precipitation is 200mm but annual evaporation is 3,000mm and most soil is improved sandy soil with extremely bad water conservation conditions. However, alfalfa planting needs sufficient irrigation and fertilization. All irrigated arable land in the project area relies on water supplied through the Jingdian Project (Phase 2) pumping irrigation works. Total water supply rating is calculated based on registered and filed land area. Thus, large-scale alfalfa planting must occupy arable land which will reduce grain crop planting area such as corn; if existing arable land is not occupied, sandy soil shall be reclaimed for planting and centralized water supply must be expanded. Based on existing conditions of the project area, both choices face predicament.

At present, households plant a small quantity of alfalfa for their own purpose, which can basically meet current stockbreeding development demands. Thus, if alfalfa replaces corn, its direct economic benefits will be 2 times of those of corn based on current market price of alfalfa. However, if the market sales of large-scale alfalfa hay cannot be ensured and self-demand or local digestion is saturated, households are not economically motivated to plant alfalfa in a large scale. At present, cornstalk is main forage for household breeding. With self-demands meet, economic benefits from planting alfalfa are 2 times of that of planting corn. In the medium to long term, with development of stockbreeding, if all cornstalk produced locally is used as forage, total economic benefits of planting corn will be 1.5-2 times of planting alfalfa.

Thus, direct economic benefits of planting alfalfa will be 2 times of those of planting corn, provided that the value of using cornstalk as forage is not considered and market sales of excess alfalfa is ensured. As a result, households are greatly motivated to plant alfalfa with low economic risks.

In the medium to long term, wide popularization of silo technology can meet demands for forage of flocks and herds 2-3 times of current breeding. Economic risks of planting alfalfa are also low provided that the market sales of excess alfalfa are ensured.

4) The farming households of Hui community in general are of strong organizing and collective awareness, but due to lack of experience in launching similar projects, there might be some technical risks in project management and implementation in community level.

At present, the public affair management and decision making in Hui communities are mainly resolved through villager autonomy and matter-by-matter discussion organized by “two committees” of the village.Meanwhile, religious leader imam also have significant influence on public affair management and decision making in the communities. At the same time, due to the Hui people’s respect for religious doctrines and the status of vulnerable groups in Hongshui Town, the communities in general is of high unity internally, and the farming households are of strong organizing and collective awareness. In the meantime, the result of community mobilization and negotiation shows that farming households of Hui communities have high recognition and willingness to participate in the implementation of the Project.

But due to the differences between the launching of the Project and the relatively simple public affair management or decision making and the involving of complicated project organization and management, the managers are required to have certain management knowledge and skills to realize the community-leading project implementation and promotion. But due to the lack of experience of existing community organizations and principals in launching similar projects, during the implementation of the Project, it's necessary to organize skill training and capability building of farming households and communities in terms of project operation, management and maintenance.

5) Women are of low status in the Hui community in general, but the smooth implementation of the Project activities relies on the actual participation of women in production and living.

In the two communities, whether in communities or in families, the status of women are not high. It’s generally difficult for them to express their thinking and will. So it is difficult for them to fully express their views and ideas on public affairs management and decision-making of the community. But in the meantime, they paly important roles and shoulder a large amount of actural production work both in agricultural and stockbreeding and in family life. Since the main scope the Project proposes to launch is closely related to the agricultural and stockbreeding, how to make women speak of their ideas and suggestions fully during the Project implementation so as to make the proejct scope and design more conforming to women’s labor habits and labor mode will have significant meaning in smooth development of the Project and realization of project objective and expected benefits.

But due to the constraints on women of Hui communities in participating in public affair management and decision making by traditional culture, religious doctrine, individual habits or abilities and so on, how to ensure and increase women’s participation in the Project will make the implementation of the Project face signifiant challenges in the Hui communities.

5.4.2 Yugu people/Tibetans

Since the project scope of Hongwansi Town mainly concentrates in the township and focuses on the construction of public service facilities, the impact on ethnic

minorities and existing risks are different from that of Hui people, mainly reflected in the following aspects.

1) Temporary land acquisition and environment impact during the project construction.

The project construction locations are in the dense population and enterprises and institutions areas of Hongwansi Township. The construction of the Project might give rise to the environmental impacts such as temporary land acquisition, noise pollution, dust pollution traffic jams and so on. Among which, the one having the largest impact will be comprehensive bazaar construction component. It is located in the center of Hongwansi Township, with government institutions, communities, schools, enterprises and trades distributed around 1 mile. And the one that will bear the biggest impact will be the 20 or so traders or stores next to the construction boundary line, who main specialize in general merchandises and foods. Ethnic minority traders such as the Yugu people and Tibetans take up about 50% of these traders or stores.

According to the design of the Project, though construction measure such as the fence set-up and partitions will be adopted during the project construction period to reduce the influence on surrounding traders, residents and relevant organizations, but air pollution and traffic jams caused by noise pollution, dust pollution, chemical product evaporation of different degrees will be unavoidable during the construction period.

Therefore, during the project implementation, the construction units shall be ordered to take relevant measures to reduce above pollutions on one hand, and on the other hand, the managing agencies of project implementation will unfold extensive public participation and negotiation, and publish relevant project information timely and reduce the influence on the public and increase the public's understanding and support of the Project.

2) The integrated bazaar construction may cause temporary livelihood pressure to its existing traders and old tenants of existing bazaar.

In the farmers’ market system construction component, the temporary displacing and resettlement of traders within the existing integrated bazaar are involved. The survey shows that, resident trader total 27 in the existing integrated bazaar with Han, Hui, Tu, Yugu and Tibetan of 20, 3, 2, 1 and 1 respectively They specialize in beef, mutton, cloth, clothes, hat, fruit, vegetable, snack and small articles of daily use.

During the bazaar construction, existing traders have to move to the abandoned existing bazaar opposite to the bazaar for temporary operation according to the project design and planning. During this period, all costs and expenditures of traders will be compensated by PMO. Although such program is recognized by all traders, some traders may face certain livelihood pressure during this period and after new bazaar is completed.

First, the existing bazaar, as the temporary displacing resettlement site, has been abandoned for many years. Its buildings can resume their function through simple maintenance. However, the bazaar is enclosed by residential buildings and stores facing the street and has only one overpass of about 4 m wide for going into inside and outside. In addition traders with diversified operation and overlapped functions appear around. The bazaar is unsuitable for business operation in terms of location. As a result, open-operation traders with low benefits (especially traders of

ethnic minority with very low benefits) will face more bleak operation, lower benefits and more livelihood pressure.

Therefore, PMO shall undertake temporary loss to temporarily resettled traders (especially traders of ethnic minority) and ensure such traders can enter the bazaar preferentially after the bazaar is completed. Preference in operation and management costs shall be given during a certain period.

Second, as the temporary resettlement site, existing bazaar is as warehouse for renting. The project implementation force existing tenants to move from the bazaar and additional costs will be increased. The existing bazaar is public and managed by the Integrated Bazaar Administration Committee. Thus, within 3 months before market traders temporarily displace and resettle to the existing bazaar, the PMO shall notify tenants of existing bazaar to prepare to throw a lease. If their contracts do not expire during this period, PMO shall compensate their loss incurred according to the contracts.

3) Some households 4 affected by land acquisition and property demolition suffer risks of lower livelihood level and need special caring and compensation.

In the Project, only Qilian jade processing zone involves land acquisition and property demolition. That within WB red boundary line will not involve property demolition. 230 households involves land acquisition and property demolition for the whole project, including 87 households of Yugu people, 22 Tibetan households and 9 households of other ethnic minorities. Detailed arrangement is made for land acquisition and property demolition as well as resettlement in the project design. It will ensure that reasonable compensation will be given to rural herdsmen/residents on the whole.

Among agricultural households and herdsmen/residents (including ethnic minorities), some households receiving minimum living security, poor groups and disabled groups still face risks of lower livelihood level after land acquisition and property demolition. For the above speical groups, first, preferential compensation and resettlement shall be provided; second, new jobs brought about by the project implementation will be given to them preferentially; third, they shall be incorporated into support scope such as urban minimum living security and relieft.

4) After the ethnic characteristic product center is completed, the ethnic characteristic product processing will be increased quickly, but some traditional process may gradually dies out due to introduction of industrial production process and technology.

At present, most ethnic characteristic product processing is in small workshop production mode. Although the problem of low production efficency exists, most production processes and technologies used are traditional. After the ethnic characteristic product center is completed, with gradual production expansion, in the medium to long term, industrial large-scale production is possible. This will bring about production efficiency improvement. But traditional manual techniques of small workshop production may die out.

4 The Project’s direct subsidy scope only involves supportive facilities such as roads in Qilian jade processing bazaar. No land acquisition and property demolition are involved within the boundary line. The whole Qilian jace processing bazaar involves land acquisition and property demolotion of 230 households including ethnic minorities such as Yugu people and Tibetan.

5) After Qilian Jade Processing Zone and ethnic characteristic product center are completed, workshop traders currently engaged in Qilian jade or ethnic characteristic product processing cannot bear operation cost at the bazaar and will face risks of being eliminated gradually.

At present, in the project area, 253 and 112 persons are engaged in Qilian jade and ethnic characteristic product processing respectively with 185 of Yugu people and 98 of Tibetan. The survey shows that, most of them take their own housings as business place in a small scale. Only a small quantity of persons in a large scale rent stores in flourishing areas of the township.

After new bazaar is completed, scale effect brought about by entering new bazaar will be expected to promote overall development of two industries. However, higher residence cost will force some traders not to reside at the new bazaar. To a certain extent, this make them marginalized and eliminated.

For this, the plan recommends local government to asist persons (with weak overall strength but want to operate at the bazaar) to apply for discount government loans or other preferential loans; meanwhile, their ability construction such as professional skills and market operation training will be incorporated into the project training plan.

6) After refrigerated warehouses are completed, it maybe very difficult for ordinary farming/grazing households and traders to use them.

Two refrigerated warehouses in the farmers’ market construction component are located at Tiancheng Grassland Co., specializing in beef and mutton processing and Qilianshan Biology Co. specializing in red deer products. At present, these two companies are at the fast expansion stage. Thus, the construction of refrigerated warehouses is significant for them. In addition, the market guarantee can be provided for herdsmen to increase breeding capacity by expanding local animal product processing capacity and stockbreeding development space.

From the point of ownership relationship, refrigerated warehouses are of state- owned assets. During the project design, PMO will sign the interest allocation agreement with enterprises where the warehouses are located so as to determine their ownership and interest allocation principle. In addition, these two enterprises are responsible for operation and management of refrigerated warehouses. Such mode may cause these two enterprises become the only one user of the warehouses. It is very difficult for other market main bodies (including herdsmen of ethnic minority and beef and mutton sellers) to enjoy refrigeration services provided at the market price.

For this, in order to ensure fair benefits, PMO, enterprises where the warehouses are located and other market main bodies (including herdsmen and traders of ethnic minorities such as Yugu people and Tibetan) shall coordinate to make reasonable operation, management and use systems of the warehouses, provided that they participate together.

5.5 Main suggestions of social assessment

To sum up the social assessment of impact on ethnic minorities of the Project, from the point view of ensuring the ethnic minority’s benefits and participation in the implementation of the Project, lowering the risks encountered by ethnic minorities, and promoting the smooth project implementation and realization of project objectives and benefits, this social assessment report gives the following suggestions:

1) Formulate operational action framework to guarantee the ethnic minority’s direct benefiting and fair benefiting from the Project and their full participation in and effective monitoring on the Project.

2) State clearly and intensify the coordination and management mechanism of the Project, improve the system construction of the project management mechanism and enhance the coordination and management capability of implementing and executing the Project and integrate them to the project training plan uniformly.

3) Coordinate and integrate the existing resources and policies of various government functional departments, such as minimum living standard guarantee, government relief, soft loan, petty loan, sunshine project, including providing relevant supporting support for the affected the poor, minimum assurance groups, the disabled, the group who want to obtain professional skills and women, including ethnic minorities.

4) Stress reasonable compensation to the directly affected group such as displaced households/resident households/traders of ethnic minorities, and provide additional livelihood compensation and livelihood recovery funding to the vulnerable groups such as poor households and minimal living security households.

6. Community Participation

During the social assessment, extensive, prior, free and informed community participation and consultation was conducted on the possible participation of ethnic minorities in the Project, and how to establish a participation mechanism beneficial to ethnic minorities.

6.1 Present situation of community participation

Before the social assessment, no large-scale disclosure and consultation for Hui communities had been conducted for the Hongshui Town subproject, and the subproject was still at the macroscopic demonstration stage; in the Hongshui Town subproject, which involved property demolition, community participation and consultation for displaced households (including minority displaced households) was conducted early, but large-scale community participation and consultation for other ethnic minorities was not conducted substantially.

This is reflected in the project awareness survey of ethnic minorities. In this survey, no minority farmer surveyed in Hongshui Town was aware of the scope of the Project. In the survey of Yugu people and Tibetans in Hongwansi Town, 100% of the minority displaced households surveyed were aware of the scope of the Project, but minority traders in farm product bazaars, minority Qilian jade processors, minority processors of ethnic characteristic products and other minority respondents engaging in other industries were unaware of the scope of the Project.

Table 27 ：：：Results of project awareness survey of different ethnic minorities before the assessment Ethnic group Ethnic minority Awareness of the Project Hui 2 households in a Hui community 0% Minority displaced households 100% Minority traders of the farm product bazaar 0% Minority Qilian jade processors 0% Yugu/Tibetan Minority processors of ethnic characteristic 0% products Minority herdsmen 33.4%

6.2 Ethnic minority in social assessment

In the social assessment process, the methods that involved ethnic minorities directly generally fall into two categories, namely interview methods and survey methods.

1) Semi-structured interview

Semi-structured interviews involving ethnic minorities include both individual and group interviews, and were conducted in the following forms mainly: (1) semi- structured interview with ethnic minorities only; (2) semi-structured interview involving ethnic minorities; and (3) semi-structured interview not involving ethnic minorities but involving interactions between the Project and ethnic minorities.

Table 28 ：：：Summary of semi-structured interviews involving ethnic minorities Main subjects and number of semi- Minority Demonstration Total structured interviews (minority persons persons town (times) involved / total number) involved - PMO staff (12/12) - Ordinary urban traders (0/15) - Farmers (9/15) Hongshui Town - Staff of Qinghe Breeding Co. (0/1) 55 22 - Staff of Kanghui Breeding Co. (0/1) - Staff of Dafu Dairy (1/2) - Ordinary breeders in breeding base (0/9) - PMO staff (15/15) - Ordinary traders in integrated bazaar (2/16) - Farmers and herdsmen (8/17) Hongwansi - Jade processors (3/5) 73 40 Town - Processors of ethnic characteristic products (5/5) - Displaced households (7/15) Total 128 62

2) Key informant interview

Ethnic minorities are involved in key informant interviews in two main forms: (1) interviewees are minority representatives; (2) though interviewees are not minority representatives, they are very familiar with the background of ethnic minorities or interactions between the Project and ethnic minorities in the project areas.

Table 29 ：：：Summary of key informant interviews involving ethnic minorities Main subjects and number of key informant Minority Demonstration Total interviews (minority persons involved / persons town (times) total number) involved - Key PMO members (4/4) - Heads of main competent government departments (7/7) - Typical urban traders (0/10) - Major breeders (1/4) Hongshui Town 40 21 - Head of Dafu Dairy (1/1) - Head of Qinghe Breeding Co. (0/1) - Head of Kanghui Breeding Co. (0/1) - Farmers (4/6) - Key leaders of relevant communities (4/6) - Key PMO members (4/4) - Heads of main competent government departments (12/12) - Typical open-air traders of integrated bazaar (2/5) - Jade processors (2/3) - Processors of ethnic characteristic Hongwansi products (3/3) 44 34 Town - Displaced farmers/residents (3/5) - Farmers and herdsmen (2/2) - Head of Qilianshan Biology Co. (0/2) - Head of horse and deer breeding base of Qilianshan Biology Co. (0/1) - Head of Tiancheng Grassland Co. (0/1) - Leaders of relevant communities (6/6) Total 84 55

3) FGD

Ethnic minorities participate in FGD in manners similar to those in semi- structured interviews, including: (1) FGD with ethnic minorities only; (2) FGD involving ethnic minorities; and (3) FGD not involving ethnic minorities but involving interactions between the Project and ethnic minorities. Table 30 ：：：Summary of FGDs involving ethnic minorities Minority Demonstrat Main subjects and number of FGDs (minority Total (times) persons ion town persons involved / total number) involved - County/town PMOs (1/1) - Heads of functional departments of county Hongshui government (1/1) 9 8 Town - 3 sample communities (4/6) - Traders in town bazaars (0/1) - County/town PMOs (1/1) - Heads of functional departments of county Hongwansi government (1/1) 9 9 Town - 3 sample communities (6/6) - Traders in integrated bazaar (1/1) Total 18 17

4) Household questionnaire survey

During the social assessment, no special questionnaire for ethnic minorities was designed; instead, ethnic minorities were included as respondents in the questionnaire survey. Since residents in Hui communities are concentrated and engage in farming mainly, they were subject to group sampling; since Yugu people and Tibetans, especially herdsmen, were highly floating, they were also subject to non-probability sampling, such as accidental sampling.

Table 31 ：：：Summary of questionnaire survey involving ethnic minorities E Women’s copies copies Women’s Actually issued issued Actually thnic minoritiesthnic Valid copies Valid Remarks Remarks copies copies copies Sample community ’

Yongle Village 30 28 0 28 Hui people Hongshui Town Jing’an Village 30 26 0 26 Hui people Jiebei Village 25 22 8 0 Longchang 70 65 30 48 31 Yugu people, 17 Tibetans Community Hongwan 55 49 22 36 23 Yugu people, 13 Tibetans Hongwansi Community Town Yuxing Community 55 50 20 39 25 Yugu people, 14 Tibetans 4 Yugu people, 1 Tibetan, 2 Daciyao Village 25 21 0 7 Mongolians Total 290 261 80 184

Table 32: Summary of fieldwork involving ethnic minorities Method of Demonstration town and Number of times involving ethnic fieldwork number of times minorities directly and proportion (%) Hongshui 9 8 88.89% FGD Hongwansi 9 9 100.00% Key informant Hongshui 40 21 52.50% interview Hongwansi 44 34 77.27% Semi-structured Hongshui 55 22 40.00% interview Hongwansi 73 40 54.79% Household Hongshui 76 54 71.1% questionnaire Hongwansi 185 130 70.3% survey Note: See the Appendixes hereto for the detailed process of the fieldwork.

6.3 Pre-assessment project awareness survey

Before the social assessment, a project awareness survey was conducted among the key stakeholders of the Project and ethnic minorities affected directly the Project. Farmers, herdsmen and residents were subject mainly to questionnaire survey, and traders, specialized technicians and brokers were subject to interview mainly. The results are as follows:

Table 33 ：：：Project awareness survey of key stakeholders Hongshui Town Hongwansi Town # of respondents #respondents of # of respondents #respondents of Awareness rate rate Awareness Awareness rate rate Awareness Unaware Unaware Unaware Unaware Aware Aware Aware Aware Respondent

PMO staff 12 12 0 100.0% 15 15 0 100.0% Government departments 7 7 0 100.0% 12 12 0 100.0% Members of village committees, CPC 6 0 6 0.0% 6 6 0 100.0% branches and community committees Minority farmers, herdsmen and residents 54 0 54 0.0% 130 93 37 71.4% Bazaar traders / specialized technicians 15 0 15 0.0% 26 26 0 100.0% Enterprises 6 0 6 0.0% 3 3 0 100.0% Note: In the table, except that the awareness data of “minority farmers, herdsmen and residents” is for ethnic minorities only, the other data is for all respondents.

In addition, minority farmers, herdsmen and residents in different communities vary in project awareness, as shown below:

Table 34:Project awareness survey of farmers, herdsmen and residents in sample communities Demonstration town Sample community Aware Unaware Jing’an Village 0 100% Hongshui Town Yongle Village 0 100% Jiebei Village 0 100% Longchang Community 75.4% 24.6% Hongwan Community 73.5% 26.5% Hongwansi Town Yuxing Community 72.0% 28.0% Daciyao Village 61.9% 38.1%

It can be seen that minority residents in Hongwansi Town were highly aware of the scope of the Project before the social assessment, while whose in Hongshui Town were almost unaware of the scope of the Project. However, farmers, herdsmen and residents in different communities of Hongwansi Town vary greatly in awareness.

Table 35: Project awareness survey of farmers and residents in sample communities of Hongwansi Town (by component) Awareness Ethnic Characteristic Community Farm product bazaar Qilian jade processing Product Processing and reconstruction zone construction Startup Training Center Hongwan 31.6% 68.4% 63.2% Longchang 87.9% 100.0% 81.8% Yuxing 76.9% 79.5% 59.0%

It can be seen that before the social assessment, different project towns varied greatly in the progress of information disclosure and public consultation. The differences in awareness also indicate that no systemic community mobilization and consultation was conducted at the preparation stage in the demonstration towns.

6.4 Post-assessment project recognition survey

The fieldwork was also a key aspect of community participation and consultation at the preparation stage. For this purpose, a project recognition survey was conducted after all stakeholders got a better understanding of the Project. This survey was focused on the target groups of the Project and the groups directly affected by the Project. Farmers and herdsmen were subject mainly to questionnaire survey, and traders, specialized technicians and brokers were subject to interview mainly.

Table 36:Project recognition survey Hongshui Town Hongwansi Town Respondent # of Recognition # of Recognition Affirmative Affirmative respondents rate respondents rate

PMO members 12 12 100.0% 15 15 100.0%

Heads of government 7 7 100.0% 12 12 100.0% departments

Members of village committees, CPC branches and 6 6 100.0% 6 6 100.0% community committees

Minority farmers, herdsmen and 54 54 100.0% 130 117 89.74% residents

Bazaar traders / specialized - - - 10 9 90.00% technicians

Note: (1) In this table, the data for minority farmers, herdsmen and residents is based on the questionnaire survey, and reflects ethnic minorities’ recognition of the Project only; (2) The data for bazaar traders / specialized technicians does not include ethnic minorities for Hongshui Town, while includes minority traders, processors of ethnic characteristic products and Qilian jade processors involved in the fieldwork (including semi-structured interviews and key informant interviews) for Hongwansi Town.

Although all stakeholders highly recognize the Project in general, farmers, herdsmen and residents in different communities vary in recognition to some extent, especially in components involving personal behavioral and livelihood decisions.

Table 37: Recognition survey of ethnic minorities for integrated bazaar reconstruction in sample communities of Hongwansi Town Hongwan Longchang Yuxing

Community Community Community Are you interested in this Good to me 94.7% 100.0% 87.2% component? Not clear 5.3% 0.0% 12.8% Approving 100.0% 100.0% 92.3% Your attitude to this Opposed 0.0% 0.0% 2.6% component Not clear 0.0% 0.0% 5.1% Are you willing to Yes 15.8% 30.3% 28.2% operate at the new No 57.9% 12.1% 25.6% bazaar? Not clear 26.3% 57.6% 46.2%

Table 38: Recognition survey of ethnic minorities for Qilian jade processing zone construction in sample communities of Hongwansi Town Hongwan Longchang Yuxing

Community Community Community Are you interested in this Good to me 78.9% 97.0% 79.5% component? Not clear 21.1% 3.0% 20.5% Approving 84.2% 100.0% 87.2% Your attitude to this Opposed 0.0% 0.0% 2.6% component Not clear 15.8% 0.0% 10.3% Are you willing to Yes 0.0% 27.3% 33.3% operate in the No 78.9% 27.3% 23.1% processing zone? Not clear 21.1% 45.5% 43.6%

Table 39: Recognition survey of ethnic minorities for the Ethnic Characteristic Product Processing and Startup Training Center in sample communities of Hongwansi Town Hongwan Longchang Yuxing

Community Community Community Are you interested in this Good to me 94.7% 100.0% 97.4% component?

component? Not clear 5.3% 0.0% 2.6% Your attitude to this Approving 100.0% 100.0% 97.4% component Not clear 0.0% 0.0% 2.6% Are you willing to Yes 57.9% 97.0% 56.4% operate in the new No 21.1% 0.0% 15.4% center? Not clear 21.1% 3.0% 28.2%

The survey results show that though the Project is highly recognized at the community level, some farmers, herdsmen and residents still do not understand the Project in sufficient detail.

6.5 Contribution of community participation to project design

6.5.1 Hongshui Town

Through community participation, the following key modifications have been made to the design of the Hongshui Town subproject:

6.5.1.1 Replacing beef cattle breeding with high-quality mutton sheep feeding

It was originally planned to fund two Hui communities to feed beef cattle, but farmers in Hui communities are not wiling to feed beef cattle and prefer raising sheep for the following reasons:

a) Sheep feeding is most cost effective and has a shorter payback period; mutton is more expensive, and the comparative income of sheep feeding is 1.5-2 times that of cattle feeding.

b) Cattle were rarely fed in the history of Hui communities; there are no knowledge, experience and facilities for cattle feeding. However, they have a long history of sheep feeding, and have rich experience in feeding and marketing, and readily available sheepfolds.

c) In the culture of Hui communities, sheep are a better symbol of wealth than cattle.

d) Sheep dung is better to sandy land improvement than cattle dung.

6.5.1.2 Expanding the scope of stockbreeding funding to include poor farmers in Han communities

In the former project design, stockbreeding funding was limited only to Hui communities. An important reason is that beef cattle are more costly, and there is no surplus money in the project investment to fund farmers in Han communities. The replacement of cattle with sheep means a lower amount of funding for each household so that some poor farmers in Han communities can be funded with the project investment remaining unchanged.

In the modified project design, the number of households benefiting from mutton sheep feeding will be increased to 300 from 184 (in two Hui communities only) in the former design to include those in Han communities, thereby expanding the coverage of project benefits.

6.5.1.3 Reducing the scale of cultivation alfalfa

It was originally planned to cultivate 10,000 mu of high-quality alfalfa, but the community participation and consultation results show that this has certain risks, including:

a) There is a high demand for alfalfa cultivation, but it can be cultivated on irrigated land only, thereby reducing the cultivated area of field crops, such as corn.

b) There is still a gap of about 6,000 mu in terms of the cultivated area of alfalfa.

c) The output/input ratio of alfalfa is 1.5 times that of corn; however, if corn stalks are counted in as a source of forage, the overall profit of corn cultivation is 1.5 times that of alfalfa.

The formerly planned alfalfa cultivated area of 10,000 mu has been changed to 6,000 mu in the modified project design, reducing the possible socioeconomic risks.

6.5.2 Hongwansi Town

Through community participation, the following key modifications have been made to the design of the Hongwansi Town subproject:

6.5.2.1 Canceling the forage cultivation base

It was formerly planned to construct a forage cultivation base in Daciyao, but the community participation and consultation results show that this has high risks, including:

a) The Daciyao base is over 40km away from the project area, and is located at the junction between the Qilian Mountain pastoral area and the Hexi Corridor; it is costly to transport forage from the base to the pastoral area.

b) Due to the base’s vicinity to an agricultural area, the forage produced by the base is in competition with corn stalks in the agricultural area but does not have any competitive advantage, so there is a potential market risk.

c) If residents are migrated from the project area to the forage cultivation base for large-scale stable feeding, not only there is difficulty in migration in the short term, but also heavy investment is needed for infrastructure construction, generating great financial and environmental risks.

The risky forage cultivation base construction component has been removed from the modified project design.

6.5.2.2 Adding the Ethnic Characteristic Product Processing and Startup Training Center

The project area is in the only Yugu autonomous county and the largest Yugu habitat of China, where Tibetans account for a high proportion to total population. In addition, the project area is located on a key point of the Qilian Mountain tourist route, receiving over 500,000 men-times of visitors annually. Minority culture, stockbreeding and tourism have made ethnic characteristic product processing an important tourist product in the project areas today.

On the basis of extensive community participation and consultation, it is recommended that ethnic characteristic product processing and industry development be important items of project funding, and embodied in the modified project design.

6.6 Participation framework for ethnic minorities

According to the interactions between the Project and the affected ethnic minorities, and the community participation and consultation of ethnic minorities in the Project, the following participation framework for ethnic minorities has been developed.

It should be noted that the participation framework for ethnic minorities is part of the overall community participation framework of the Project, which is described in more detail in the Social Assessment Report and the attached Community Participation Handbook. Only the core items and indicators of community participation related to ethnic minorities are covered here.

In addition, the modes and activities of community participation of ethnic minorities in the Project, and the monitoring indicators thereof are described in detail in the Appendixes hereto.

Table 40:Participation framework for Hui people in the Project Component involving Community participation activities to be Indicator/criterion of examination Method of examination Hui people directly conducted

1. High-quality alfalfa - Mobilization of minority communities - Farmer representatives involved in community - Community engagement cultivation mobilization / consultation not less than 20% of all survey - Consultation of allocation program of households in the community, and women 2. Silo demonstration funding quotas representatives reach or exceed 20% of all - Community awareness construction participants; survey - Consultation of community implementation 3. Funding for ethnic programs - Community mobilization / consultation includes - Community satisfaction minorities and representatives of vulnerable groups; survey poor households in - Project implementation and construction mutton sheep - A written program on supporting standard, feeding - M&E and reporting application procedures and quota allocation criteria for farmers, and silo construction procedures and program are developed and disclosed, and community awareness is over 50%.

4. Minority farmer - Solicitation and consultation of training - Women representatives involved in community - Records of community training needs mobilization / consultation are not less than 20% of mobilization / consultation all farmer representatives involved. - Consultation and determination of training - List of trainees and basic program - Trained farmers are not less than 40% all farmers personal information in minority communities. - Consultation of allocation program of - Training records / report training quotas - Women attending farmer training are not less than 40% of all trainees, and this proportion is not less - Satisfaction survey of - Implementation of training than 35% for Hui communities. trainees

- Monitoring and reporting of training process and effectiveness

Table 41: Participation framework for Yugu people/Tibetans in the Project Component Community participation activities to be Method of involving ethnic Indicator/criterion of examination conducted examination minorities directly

1. Construction of - Community mobilization involving ethnic minorities - Minority representatives involved in consultation are not - Minutes of two 500-ton less than 50% of all participants; consultation refrigerated - Consultation on refrigerated warehouse O&M, use meetings / warehouses and benefit distribution - A written program for refrigerated warehouse O&M, use interviews and benefit distribution is developed and disclosed, and the - Monitoring and reporting of the effectiveness of awareness among ethnic minorities is not less than 30%. - Engagement refrigerated warehouse O&M survey

2. Farm product - Community mobilization involving minority traders - Among those involved in consultation, minority - Awareness bazaar construction representatives are not less than 20%, and the proportion of survey - Consultation on the loss compensation and minority traders in the existing bazaar is not less than 50%; resettlement program - Satisfaction - A written program for loss compensation and survey - Consultation on the O&M and use program of the resettlement is developed and disclosed, and the awareness completed integrated bazaar among ethnic minorities is not less than 30%.

- Monitoring and reporting of loss compensation, temporary resettlement and bazaar operation

3. Infrastructure - Community mobilization involving ethnic minorities - Among those involved in consultation, minority construction of the representatives are not less than 20%, and minority Qilian jade - Consultation on the loss compensation and displaced households are not less than 40%; processing zone resettlement program - Representatives of processors of ethnic characteristic 4. Ethnic - Consultation on the O&M and use program of the products and Qilian jade involved in participation are not Characteristic Qilian jade processing zone less than 20%. Product Processing and Startup Training - Monitoring and reporting of loss compensation, - A written program for loss compensation and Center property demolition program, O&M and use resettlement is developed and disclosed, and the awareness among ethnic minorities is not less than 30%.

5. Training of - Solicitation of training needs and willingness - Minority representatives involved in community - List of trainees specialized consultation not less than 50% of all participants; and basic technicians, farmers - Survey/determination of composition and number personal and herdsmen of trainees - Minority processors of ethnic characteristic products and information Qilian jade attending professional training are not less than - Consultation of allocation program of training 50% of all trainees; - Training records quotas / report - Minority herdsmen attending training are not less than - Consultation and determination of training program 20% of all minority herdsmen; - Satisfaction survey of - Monitoring and reporting of training process and - Among ethnic minorities attending training, women are trainees effectiveness not less than 30%.

7. Action Plan

Based the above actions and requirements aimed to ensure that Hui people, Yugu people, Tibetans and other ethnic minorities fully participate in and benefit from the Project, the following budget has been prepared on the basis of adequate community consultation and discussion, and in consideration of the socioeconomic situation of the project areas and the general budget of the Project:

7.1 Action plan for Hui people

Table 42:Action plan for Hui people Time of Unit Estimated scale and Budgetary Funding Budget Project action Implementers implement- investment Key M&E indicators note item source (yuan) ation (yuan)

1. Establishment of One in Yongle and See Appendix 11: Town PMO, village project Jing’an Villages each Establishment Villager Requirements for village village Preparation implementation and operating autonomy - - project implementation autonomy stage committees costs funds committees of Hui committee villages

2. Training of Hui 736 men-times (at least Not less than 80% of farmers one from each of the farmers in Hui villages Town PMO, 184 households in the attend training, and village project Implement- Project two Hui villages, Training costs 100 73600 trainees’ overall implementation stage budget including 62 women, 4 satisfaction with training ation committee men-times per is not less than 80%. household)

3. Fine mutton ewe Town PMO, Implement- 3 mutton ewes per Project Farmers’ satisfaction with 1200 224400 feeding village project ation stage household (184 budget mutton ewe feeding implement- households in the two satisfaction is not less ation committee villages), project subsidy than 80%. 400 yuan/head, self- Purchase raised money 400 costs of yuan/head. The self- mutton ewes Self-raised 1200 217200 raised money of the 3 five-guarantee households is offered by the Project.

Time of Unit Estimated scale and Budgetary Funding Budget Project action Implementers implement- investment Key M&E indicators note item source (yuan) ation (yuan)

4. Fine mutton ram 28 mutton rams in Project Farmers’ awareness of 650 53950 feeding Yongle Village and 55 in budget the mutton ram allocation Jing’an Village, 83 in Purchase program is not less than total, project subsidy costs of 90%, and satisfaction not 650 yuan/head, self- mutton rams less than 80%. Self-raised 650 53950 raised money 650 yuan/head

5. Silo construction 15 silos in Yongle Project Farmers’ awareness of 1000 45000 Village and 30 in Jing’an budget the silo allocation Silo Village, 45 in total; program not less than construction project subsidy 1,000 90%, and satisfaction not costs yuan/silo, self-raised Self-raised 2000 90000 less than 80%. money 2,000 yuan/silo

6. Alfalfa cultivation 150 mu in Yongle Farmers’ awareness of Village and 300 mu in the alfalfa cultivation Jing’an Village; World Purchase Project quota allocation program 50 22500 Bank subsidy 50 costs of seeds budget is not less than 90%, and yuan/mu in kind satisfaction not less than 80%.

7. Exemption of self- 3 households; funds Five-guarantee raised funds for five- included in Item 3 of the households are exempt Town PMO, guarantee households budget from self-raised funds; village project Implement- Exempted for Project in Hui villages - - five-guarantee implementation stage farmers budget households’ satisfaction ation committee with the Project is not less than 80%.

Time of Unit Estimated scale and Budgetary Funding Budget Project action Implementers implement- investment Key M&E indicators note item source (yuan) ation (yuan)

8. Training of 90 men-times (covering Complete training members of the preparation, program and records are county/town PMOs, County PMO, implementation and available; the absence Whole village project consultation O&M stages, 5 times for Project rate of trainees is not process of Training costs 300 27000 implementation and training PMOs and 4 times for budget more than 15%; trainees’ the Project committees and other experts village project overall satisfaction with project implementing implementation training is not less than agencies committees) 80%.

9. Development of Two Hui communities In community program for consultation, the community proportion of farmer participation and representatives is not consultation, and Town PMO, less than 40%, that of Community project implementation village project Implement- Project women representatives is consultation - 20000 at the implementation implementation stage budget not less than 20%. costs stage ation committee Community awareness of the allocation plan is not less than 90%, and satisfaction not less than 80%.

10. Project M&E Third party Third party EMDP M&E Implement- Participatory Project consultation (during and after project - 200000 ation stage M&E costs budget experts implementation each)

Total 1027600

7.2 Action plan for Yugu people/Tibetans

Table 43: Action plan for Yugu people/Tibetans Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan)

1. Establishment of Longchang, Yuxing Representatives of community project and Hongwan ordinary residents are implementation Communities not less than 50% in the committees committee, Yugu and Tibetan representatives not less than 40%, and Establishment 3 urban Preparation Community women representatives and operating 30000 90000 communities stage autonomy funds not less than 25%. The costs committee is elected by the community congress. See the Community Participation Handbook for other indicators.

2. Establishment of The association’s The association has a ethnic characteristic main costs are relatively complete product processing registration fees, One-time organizational system, County/town Preparation association establishment establishment Project budget - 15000 and independent office PMOs stage costs and costs and management purchase costs of facilities, and is able to office supplies provide technical and marketing services .

Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan) marketing services. 3. Capacity building Each association Members’ overall of Qilian Jade has 5 members, 10 satisfaction with the Association members in total. Project association is not less The required costs implementation Project budget - - than 70%. 4. Capacity building are included in and capacity of Individual Business Item 8 (capacity building costs Association building) of the budget.

5. Conservation of A professional Project budget - 220000 Processors’ overall traditional processing production team satisfaction with the techniques of ethnic and photographers video works is not less characteristic products will be invited to than 80%, public shoot traditional awareness of such Implement- processing works is not less than Production costs Fiscal budget of ation stage techniques, and 40%, and such works the tourist - 100000 produce DVDs for are broadcast on local bureau sale. mainstream media at least once, and are available at local public cultural agencies.

6. Town-wide training Town PMO, 1000 men-times (2 200 men-times Not less than 60% of of minority herdsmen agricultural main laborers of under rural minority herdsmen are each household technological trained, and trainees’ broadcasting Implement- will be trained one Training costs poverty relief 100 20000 overall satisfaction with and television ation stage school, and time, and trainees program of training is not less than other are mainly Yugu poverty relief 80%. government and Tibetan office training herdsmen in the

Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan) training herdsmen in the 200 men-times agencies town) under women skills training 100 20000 program of women’s association

200 men-times under technological training program 100 20000 of science /technology bureau

400 men-times under project 100 40000 budget

7. Training of minority Town PMO, 283 minority 150 men-times The absence rate of specialized processors of (core trainees is not more than agricultural Implement- technicians Qilian jade and Training costs practitioners) 300 45000 15%; trainees’ overall broadcasting ation stage and television ethnic under project satisfaction with training school, and characteristic budget is not less than 80%. other products will be

Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan) other products will be 50 men-times government trained 283 for 300 under training men-times. technological agencies training program 200 10000 of science /technology bureau

100 men-times under free vocational training program 200 20000 of human resources and social security bureau

8. Capacity building 90 men-times The absence rate of of county/town PMOs, (covering the trainees is not more than county functional preparation, 15%; trainees’ overall departments, implementation satisfaction with training County PMO, Whole community project and O&M stages) is not less than 80%. consultation and process of Training costs Project budget 300 27000 implementation training experts the Project committees, market management agencies, trade associations, etc.

Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan)

9. Resettlement and - Displaced households’ compensation fees for satisfaction with the property demolition compensation and Preparation Resettlement resettlement for property Town PMO Resettlement - - stage Action Plan demolition is not less than 90%. See the Resettlement Action Plan for other indicators.

10. Compensation fees Affected stakeholders’ for temporary satisfaction with the environmental impacts environmental Environmental arising from project Implement- resettlement program is Management - - construction ation stage not less than 80%; See Plan the Environmental Management Plan for other indicators.

11. Development of Longchang, Yuxing Residents involved in program for and Hongwan consultation are not less community Communities than 15% of all participation and residents, and minority consultation, and Consultation Community representatives not less Preparation project implementation and assessment consultation Project budget - 30000 than 60%; community stage at the implementation experts costs awareness of project stage implementation program is not less than 80%, and satisfaction not less than 70%.

Time of Unit Estimated scale Budget Project action Implementers implement- Budgetary item Funding source investment Key M&E indicators and note (yuan) ation (yuan)

12. M&E costs Third party EMDP Whole M&E (during and Participatory process of after project Project budget - 200000 M&E costs the Project implementation each)

Total 857000

7.3 Budget and funding sources

The funds required to ensure that the actions and safeguard measures outlined in this EMDP are implemented practically will be from the following sources:

1. “Other construction costs” in the project budget;

2. Counterpart funds of government functional departments concerned for public projects;

3. Funds raised by beneficiary groups of the Project;

4. Local counterpart funds

7.4 Note to funding

It should be noted that the following budget is limited to the minimum costs for the implementation of the actions and safeguard measures outlined in this EMDP, and does not include costs spent on the participation of non-ethnic minority groups in the Project.

For example, the costs for community consultation, project implementation, farmer training and M&E in the budget of Hongshui Town are limited to the two Hui communities only, and do not cover the other 13 Han communities.

All costs used to promote the participation of all affected communities and stakeholders in the Project, and ensure their benefits have been set out in detail in the Social Assessment Report, and are omitted here.

7.5 Annual investment plan

According to the project design, the preparation work of the Project will be completed by June 2012, and the construction period will be 54 months, from June 2012 to December 2016. In view of the application approval procedures for World Bank-funded projects, the completion of the preliminary identification work of the Project by the World Bank Identification Mission in December 2010 means that the preparation work will begin in January 2011 and end in May 2012. For this reason, this EMDP defines the period from January 2011 to May 2012 as the preparation period of the Project.

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Table 44:Annual investment plan of EMDP budget Expected time Demonstration Budget Project action frame of town (yuan)

Hongshui Town Town Hongshui implementation 1) Establishment of village project By the end of - implementation committees 2011 2) Training of Hui farmers Jun. 2012-Dec. 73600 2012 3) Fine mutton ewe feeding Jun. 2012-Dec. 441600 2012 4) Fine mutton ram feeding Jun. 2012-Dec. 107900 2012 5) silo construction Jan. 2013-Jun. 135000 2013 6) Alfalfa cultivation Jan. 2012- Jun. 22500 2014 7) Exemption of self-raised funds for five- Jun. 2012-Dec. - guarantee households in Hui villages 2012 8) Training of members of county/town PMOs, village project implementation Jan. 2012- Jun. 27000 committees and other project implementing 2016 agencies 9) Development of program for community participation and consultation, and project Jan. 2012- Jan. 20000 implementation at the implementation 2013 stage 10) Project M&E 200000 2014, 2016

Hongwansi Town Town Hongwansi Total 1027600 1) Establishment of community project By the end of 90000 implementation committees 2011 2) Establishment of ethnic characteristic By the end of 15000 product processing association 2011 3) Capacity building of Qilian Jade - 2012-2014 Association 4) Capacity building of Individual Business 2012-2014 Association 5) Conservation of traditional processing Jan. 2012-Dec. 320000 techniques of ethnic characteristic products 2012 6) Town-wide training of minority herdsmen Jun. 2012- Jun. 100000 2013 7) Training of minority specialized technicians Jun. 2012- Jun. 75000 2013 8) Capacity building of county/town PMOs, county functional departments, community Jan. 2012- Dec. project implementation committees, market 27000 2014 management agencies, trade associations, etc.

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9) Resettlement and compensation fees for By the end of - property demolition 2011 10) Compensation fees for temporary Jan. 2012- Dec. environmental impacts arising from project - 2014 construction 11) Development of program for community participation and consultation, and project Jan. 2012- Dec. 30000 implementation at the implementation 2014 stage 12) M&E costs 200000 2014, 2016 Total 857000

7.6 Institutional arrangements for monitoring and evaluation

M&E during project implementation includes self-M&E and evaluation by an independent monitoring agency. The responsibilities and obligations of different agencies and stakeholders in this process are as follows:

Table 45: Institutional arrangements for EMDP M&E Role in M&E Evaluation by an Agency Self-M&E independent monitoring agency Provincial and county PMOs Organizer, assistant Organizer, assistant Organizer, assistant, Town PMO Implementer information provider Village/community project implementation committees Farmers, herdsmen and residents, organizations, traders, enterprises, etc. Specialized cooperatives / associations Assistant, information Assistant, information Construction agencies provider provider Bazaar management committees and other dedicated management agencies County competent government departments Project monitoring agency - Implementer

7.7 M&E indicators

The M&E indicators for minority communities and groups involved in the Project are as follows:

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Table 46: Types and explanation of M&E indicators involving ethnic minorities Type of Core indicators Reference indicator

Project Components involving ethnic minorities, times and locations Feasibility implementation of implementation, and financial, material, personnel and Study Report and engineering management construction Social Assessment Inputs/outputs Investment in components involving ethnic minorities, and Report funding sources; output/input ratios, and direct and indirect outputs of components involving ethnic minorities

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Project benefits, Livelihood impacts of the Project on minority communities or Social impacts and groups, including reserve and variable indicators of material, Assessment risks natural, financial, human and social resources; Report

Social impacts of the Project on minority communities or “Introduction” groups, including social division by gender, social equality, of this EMDP benefit equality, benefits for vulnerable groups, and changes in customs and religious believes before and after project implementation;

Environmental impacts of the Project on minority communities or groups, including ethnic minorities’ satisfaction with compensation measures for noise, dust and temporary land occupation, and other environmental management measures;

Impacts of the Project on the organizational and institutional building in public governance of minority communities, including scope, modes and feasibility of organizational and institutional building, and ethnic minorities’ satisfaction with community governance;

Human resources and capacity building of ethnic minorities in the Project, including number of trainees, gender ratio, and satisfaction with the scope, form and schedule of training

Community Scope, modes and level of participation of ethnic minorities in Chapter 5 participation the Project; “Community participation” of Ethnic minorities’ satisfaction with community participation; and Appendixes to Ethnic minorities’ satisfaction with appeal handling this EMDP

Note: (1) The indicators on project implementation and construction, and inputs/outputs have been described in detail in the Feasibility Study Report, the Social Assessment Report and this EMDP, and are not repeated here; (2) The community participation monitoring indicators for ethnic minorities have been described in detail in the chapter on community participation and the Appendixes to this EMDP, and are not repeated here.

7.8 Appeal handling

See the Appeal Handling Mechanism for the appeal and handling procedures and requirements during the implementation of this EMDP.

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Appendixes

Appendix 1: Items and requirements for participation of Hui people in high-quality alfalfa cultivation

Project element Items and requirements

Scope High-quality alfalfa cultivation

Project activities to - Community mobilization be conducted - Community consultation on willingness for cultivation, quota allocation criteria and procedure, and alfalfa marketing services

- Implementation and management of seed purchasing and cultivation process

- Monitoring and reporting of benefits and impacts of cultivation

Are ethnic minorities Yes directly involved?

Key participation - In minority communities, farmers involved in community activities for ethnic mobilization and consultation are not less than 15% of all farmers; minorities and indicators thereof - Women involved in community mobilization and consultation are not less than 30% of all participants;

- Women involved in M&E are not less than 30% of all participations;

- Community mobilization / consultation includes representatives of vulnerable groups;

Necessary - The PMO will contact local cow farms and other major demanders safeguard measures of alfalfa forage, and assist them in purchasing surplus forage from minority farmers at market price.

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Appendix 2: Items and requirements for participation of Hui people in demonstration silo construction

Project element Items and requirements

Scope Silo demonstration construction

Project activities to - Community mobilization be conducted - Consultation on farmer self-raised amount, quota allocation criteria and allocation program

- Compensation program for farmers not benefiting from this component

- Supervision over silo construction and management

- M&E of silo allocation program, construction quality and impacts

Are ethnic minorities Yes directly involved?

- Women involved in M&E are not less than 30% of all participations;

- Community mobilization / consultation includes representatives of vulnerable groups.

Necessary - Include the technical standard for silo construction, operating safeguard measures requirements and method in the training program for farmers and herdsmen of the Project.

- Include minority farmers who have not been funded for silo construction under the Project but have a strong desire for silo construction in the scope of funding of technical extension and other rural programs of the agriculture and animal husbandry bureau, and other competent departments

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Appendix 3: Items and requirements for participation of Hui people in high-quality mutton sheep feeding

Project element Items and requirements

Scope Funding for ethnic minorities and poor households in mutton sheep feeding

Project activities to - Community mobilization, establishment of community project be conducted implementation teams

- Consultation on farmer self-raised amount

- Consultation on stockbreeding quota allocation criteria

- Consultation on the purchasing procedure of mutton ewes and breeding rams

- Monitoring and reporting of allocation and stockbreeding

Are ethnic minorities Yes directly involved?

Key participation - Farmer representatives involved in community mobilization / activities for ethnic consultation not less than 15% of all households in the minorities and community; indicators thereof - Women representatives involved in community mobilization / consultation reach or exceed 30% of all participants;

- Women involved in M&E are not less than 30% of all participations;

- Community mobilization / consultation includes representatives of vulnerable groups

Necessary - Include few poor Hui households that cannot afford the single self- safeguard measures raised amount in government discount loan and small-grant woman loan programs, etc.

- Include new breeding techniques for high-quality mutton sheep in the training program of the Project.

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Appendix 4: Items and requirements for participation of Hui people in training system building of production base

Project element Items and requirements

Scope Training system building of production base

Project activities to - Solicitation and consultation of training needs of farmers be conducted - Consultation and determination of training program for farmers

- Consultation of allocation program of training quotas for farmers

- Monitoring and reporting of training process and effectiveness

Are ethnic minorities Yes directly involved?

Key participation - Community mobilization and consultation is carried out in the two activities for ethnic Hui communities. minorities and indicators thereof - Training on cultivation and stockbreeding related to the Project is given in the two Hui communities.

- Households attending farmer training are not less than 40% of all households in the community.

- Women representatives involved in community mobilization / consultation in farmer and herdsman training are not less than 20% of all farmer representatives involved.

- Women attending farmer training are not less than 40% of all trainees, and this proportion is not less than 35% for Hui communities.

Necessary - Fully respect Hui farmers’ religious believes and customs in safeguard measures farmer training.

- Give full play to the role of government departments concerned in farmer training.

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Appendix 5: Items and requirements for participation of Yugu people/Tibetans in refrigerated warehouse construction and operation

Project element Items and requirements

Scope Construction of two 500-ton refrigerated warehouses

Project activities to - Consultation with Tiancheng Grassland Co., and traders and be conducted enterprises engaging in animal product circulation and marketing in Hongwansi Town on the O&M and use of the completed refrigerated warehouse, and the benefit distribution criteria and program

- Consultation with Qilianshan Biology Co., and traders and brokers engaging in horse and deer stockbreeding, product processing and marketing in Hongwansi Town on the O&M and use of the completed refrigerated warehouse, and the benefit distribution criteria and program

- Supervision over project construction and management

- Project M&E

Are ethnic minorities Yes directly involved?

Key participation - Representatives of ordinary breeders and traders involved in activities for ethnic community consultation before refrigerated warehouse minorities and construction are not less than 30% of all participants, and indicators thereof representatives of minority breeders and traders are not less than 20% of all people involved in consultation.

- A written program for refrigerated warehouse O&M, use and benefit distribution is developed and disclosed, public awareness in the urban area is not less than 30%, the awareness among ethnic minorities is not less than 30%, the awareness in agricultural and pastoral communities is not less than 15%, and the awareness in minority communities is not less than 15%.

Necessary - The two enterprises will disclose the O&M and use of the safeguard measures refrigerated warehouses to the public regularly, and be subject to public supervision;

- The local government will designate a functional department to supervise the O&M of the refrigerated warehouses on its behalf, and define its responsibilities and obligations.

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Appendix 6: Items and requirements for participation of Yugu people/Tibetans in farm product bazaar construction

Project element Items and requirements

Scope Farm product bazaar construction in Hongwansi Town

Project activities to - Consultation with directly and indirectly affected be conducted traders/enterprises on the loss compensation and resettlement program

- Consultation with existing users and tenants of the existing bazaar (which will be a temporary resettlement site) on the loss compensation and resettlement program

- Consultation with traders on the O&M and use program of the completed integrated bazaar

- Supervision over project construction and management

- Project M&E

Are ethnic minorities Yes directly involved?

Key participation - Among those involved in consultation, trader representatives are activities for ethnic not less than 70%, and minority representatives are not less than minorities and 20%. indicators thereof - A written program for loss compensation and resettlement is developed and disclosed, public awareness in the urban area is not less than 30%, and the awareness among ethnic minorities is not less than 30%.

- Minority traders have priority in entering the new bazaar as they did for the existing bazaar.

- Minority traders involved in project M&E are not less than 30% of all participants.

Necessary - The PMO will grant priority to traders in the existing bazaar, safeguard measures especially minority traders, to enter the new bazaar, and exempt them from operating expenses partly.

- The PMO will disclose the entry procedure and the criteria of stall rental and other relevant costs to the public after the new bazaar is completed.

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Appendix 7: Items and requirements for participation of Yugu people/Tibetans in infrastructure construction for Qilian jade processing zone construction

Project element Items and requirements Scope Infrastructure construction of the Qilian jade processing zone

Project activities to - Consultation with farmers and residents affected by land be conducted acquisition and property demolition on the compensation and resettlement program - Consultation with farmers, residents, traders, enterprises and entities affected temporarily by construction on the loss compensation program - Consultation on the O&M and use program of the Qilian jade processing zone - Supervision over project construction and management - Project M&E Are ethnic minorities Yes directly involved? Key participation - Representatives of farmers and residents affected by land activities for ethnic acquisition and property demolition involved in consultation are minorities and not less than 20% of all farmers and residents, and minority indicators thereof representatives are not less than 20% of all representatives. - Minority representatives involved in consultation are not less than 30% of representatives of stakeholders affected temporarily by construction. - There are not less than 20 representatives of Qilian jade processors involved in consultation, of which representatives of minority processors are not less than 30%. - A written program for loss compensation and resettlement is developed and disclosed, public awareness in the urban area is not less than 30%, the awareness among ethnic minorities is not less than 30%, the awareness in agricultural and pastoral communities is not less than 15%, and the awareness in minority communities is not less than 15%. Necessary safeguard - Reasonable resettlement and compensation will be provided to measures farmers, herdsmen and residents affected by land acquisition and property demolition; - Households affected by land acquisition and property demolition will have priority in obtaining new jobs during construction and after completion; - After the new bazaar is completed, Qilian jade processors in households affected by land acquisition and property demolition will have priority in entering the new bazaar, and exempted partly from operating expenses; - Under the same conditions, Yugu, Tibetan and other minority jade processors will have priority in entering the new bazaar; - Include all professional skills for jade processing in the training program of the Project, and obtain training resources from government functional departments to ensure that all jade processors are trained at least once.

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Appendix 8: Items and requirements for participation of Yugu people/Tibetans in the construction of the Ethnic Characteristic Product Processing and Startup Training Center Project element Items and requirements Scope Construction of the Ethnic Characteristic Product Processing and Startup Training Center Project activities to - Consultation with farmers and residents affected by land be conducted acquisition and property demolition on the compensation and resettlement program - Consultation with farmers, residents, traders, enterprises and entities affected temporarily by construction on the loss compensation program - Consultation on the O&M and use program of the Ethnic Characteristic Product Processing and Startup Training Center - Monitoring and reporting of loss compensation, property demolition program, O&M and use Are ethnic minorities Yes directly involved? Key participation - Representatives of farmers and residents affected by land activities for ethnic acquisition and property demolition involved in consultation are minorities and not less than 20% of all farmers and residents, and minority indicators thereof representatives are not less than 20% of all representatives. - Minority representatives involved in consultation are not less than 30% of representatives of stakeholders affected temporarily by construction. - There are not less than 10 representatives of processors of ethnic characteristic products involved in consultation, of which representatives of minority processors are not less than 50%. - A written program for loss compensation and resettlement is developed and disclosed, public awareness in the urban area is not less than 30%, the awareness among ethnic minorities is not less than 30%, the awareness in agricultural and pastoral communities is not less than 15%, and the awareness in minority communities is not less than 15%. Necessary - The tourism authority will take ethnic characteristic products as an safeguard measures important component of tourism communication in the project areas, and expand the market demand for ethnic characteristic products; - Include all professional skills for ethnic characteristic product processing in the training program of the Project, and obtain training resources from the tourist bureau, women’s association and other government functional departments as an input into the Project. - Clarify the position of the Ethnic Characteristic Product Processing and Startup Training Center as a provider of public services and a site for business operations, so that local young people interested in ethnic characteristic product processing can be trained here. - Define the O&M agency of the center, and its responsibilities and obligations, and disclose the institutions and procedures on O&M to the public. - Ensure that minority practitioners or learners of ethnic characteristic product processing have priority in operating or learning at the center.

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Appendix 9: Items and requirements for participation of Yugu people/Tibetans in professional training

Project element Items and requirements

Scope Training of specialized technicians

Project activities to - Survey/determination of composition and number of trainees be conducted - Solicitation of training needs and willingness

- Consultation and determination of training program

- Monitoring and reporting of training process and effectiveness

Are ethnic minorities Yes directly involved?

Key participation - Minority representatives are not less than 50% of all trainees in activities for ethnic ethnic characteristic product processing. minorities and indicators thereof - Minority representatives are not less than 50% of all trainees in jade processing and marketing.

Necessary - Give full play to the role of the jade association, ethnic safeguard measures characteristic product processing association (to be organized) and other trade associations in professional training;

- In addition to the training resources of the Project, those owned by the county science and technology bureau, women’s association, poverty relief office, tourist bureau and other competent departments will also be taken as an input into the Project.

- Ethnic characteristic product processing skills that are hard to master are not recommended for short-term training in the Project.

- Traders entering the Ethnic Characteristic Product Processing and Startup Training Center will offer opportunities of long-term learning and practice to those wishing to master special skills (e.g., Yugu embroidery) through long-term training.

- Ethnic characteristic product processing skills that are hard to master will be included in long-term support programs of the science and technology bureau, women’s association, poverty relief office, tourist bureau and other competent departments, and traders offering such training will be funded directly.

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Appendix 10: Items and requirements for participation of Yugu people/Tibetans in the training of farmers and herdsmen

Project element Items and requirements

Scope Training of project management staff, specialized technicians, farmers and herdsmen

Project activities to - Solicitation of training needs and willingness of farmers and be conducted herdsmen

- Consultation and determination of training program for farmers and herdsmen

- Consultation of allocation program of training quotas for farmers and herdsmen

- Monitoring and reporting of training process and effectiveness

Are ethnic minorities Yes directly involved?

Key participation - Communities where training for farmers and herdsmen is offered activities for ethnic are not less than 80% of all communities, and include the 3 minorities and minority communities in the urban area. indicators thereof - Trained farmers and herdsmen are not less than 40% of all farmers and herdsmen in each community, Yugu and Tibetan trainees are not less than 50% of trainees, and women not less than 30% of trainees.

Necessary - Since pastures are scattered, intensive training will be the main safeguard measures form, and be arranged in winter (stable feeding) where possible.

- This training will be integrated with training resources of the agriculture and animal husbandry bureau, poverty relief office, women’s association and other competent departments, and these resources will be taken as an input into the Project.

- Since horse and deer breeders are few and scattered, and all of them cooperate with Qilianshan Biology Co., the skills training on horse and deer breeding for these breeders will be offered by Qilianshan Biology Co.

- Respect Yugu or Tibetan religious believes and customs during training. For few Yugu and Tibetan herdsmen who are not good at Mandarin Chinese, translation service will be provided.

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Appendix 11: Requirements for village project implementation committees of Hui villages Institutional Requirements element Name of agency Village project implementation committee Jurisdiction All 15 administrative villages (including 2 Hui ones) in Hongshui Town Composition Composed of members of village committees and CPC branches, religious leaders (for Hui communities) and farmer representatives: - Farmer representatives are not less than 50% of all members; - Women members are not less than 30% of all members; - Women members are not less than 25% for Hui communities; - There are not more than 15 members. Features 1) All members are elected at the village meeting and render services gratuitously without being paid under the Project; 2) The division of labor among the members is determined through internal consultation and disclosed on the village affairs billboard; 3) The committee will hold village meetings or congresses regularly to report the progress of the Project, and conduct community consultation on key issues. Objective Assisting in the successful implementation of the Project in the village, and ensuring the fairness and justness of project implementation Responsibilities 1) Assisting in organizing villagers to discuss the quota allocation criteria and allocation programs for the funding of mutton ewe and breeding ram feeding, silo construction and alfalfa cultivation, specially breeding ram feeding and silo construction, which have limited quotas for the huge demand 2) Assisting the PMO in purchasing purebred mutton ewes and breeding rams, and ensuring that mutton ewes and breeding rams to be allocated are suited to the village’s practical conditions and farmers’ needs 3) Assisting the PMO in community consultation, discussing and determining the funding allocation program for silo construction, and ensuring that over 85% of farmers in the village are aware of the funding procedure and the allocation program, and agree with the allocation program 4) Assisting the PMO in community consultation, discussing and determining the funding allocation program for alfalfa cultivation, and ensuring that over 85% of farmers in the village are aware of the funding procedure and the allocation program, and agree with the allocation program 5) Assisting the Town PMO in community consultation, soliciting training needs from farmers in the village, and carrying out farmer training 6) Discussing the implementation program of silo construction (self- construction or construction by contractual teams), and supervising construction quality 7) Conducting material and financial management during project implementation to prevent material damages and financial corruptions 8) Communicating project information between the village and the Town PMO, collecting farmer appeals related to the Project, and assisting in appeal handling

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Appendix 12: Requirements for community project implementation committees of Yugu/Tibetan communities Institutional Requirements element Name of agency Community project implementation committee Jurisdiction Longchang, Hongwan and Yuhong Communities in Hongwansi Town Composition Composed of key members of the community committee, community religious leaders, individual operators, households affected by land acquisition and property demolition, and representatives of the poor and residents, where: - Representatives of ordinary residents are not less than 50% of all members; - Minority representatives are not less than 40% of all members; - Women representatives are not less than 25% of all members; - In any community affected by property demolition, representatives of displaced households are not less than 30% of all members. Features 1) All members are elected at the village meeting and render services gratuitously without being paid under the Project; 2) The division of labor among the members is determined through internal consultation and disclosed on the village affairs billboard; 3) The committee will hold village meetings or congresses regularly to report the progress of the Project, and conduct community consultation on key issues. Objective Assisting in the successful implementation of land acquisition, property demolition and resettlement in the community, and ensuring the fairness and justness of distribution of project benefits Method of The community committee organizes a community meeting to elect the establishment members of the committee. - Over 50% of all community residents are present at the community meeting. - The list of the elected committee members will be disclosed for not less than 7 days in the manner specified in the Community Participation Handbook. Responsibilities 1) Assisting the Town PMO in the community background survey to learn composition, household condition, housing structures and occupations of community members, and the number of persons engaging in jade processing and ethnic characteristic product processing in the community 2) Assisting the Town PMO in community consultation, discussing and determining the compensation and resettlement program for land acquisition and property demolition, determining the population and structure of vulnerable groups, and developing a special compensation or support program for the benefit of these groups 3) Discussing with the PMO, the construction agency, the completed the Qilian Jade Processing Zone and the ethnic cultural center to provide temporary or permanent jobs to community residents affected by land acquisition and property demolition, especially vulnerable groups 4) Assisting the Town PMO in conducting material and financial management 5) Soliciting training needs from community residents, and assisting in training 6) Soliciting appeals related to the Project from farmers, and assisting the PMO in appeal handling

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Appendix 13: Requirements for the Minority Characteristic Product Processing Association of Sunan County Institutional Requirements element Name of agency Minority Characteristic Product Processing Association of Sunan County Composition All individuals or businesses of all ethnic groups engaging in ethnic characteristic product processing, marketing and research in Sunan County, not limited to Yugu people and Tibetans Features The association should have a complete organizational structure and sound management systems, including its purpose, functional position and routine management tasks. These should be determined by the members through collective discussion. Objective Promoting the development and conservation of ethnic characteristic products in the project area, and assisting in the O&M of the Ethnic Characteristic Product Processing and Startup Training Center and project activities Method of - A meeting of ethnic characteristic product processors in the project establishment area is held to elect the association members; - Electors should include processors, salespersons and tourist service workers for the main types of handicrafts, including Yugu head accessories, traditional clothing, jewelry, embroidery, and cattle and sheep heads. - The articles of association, members and leading group of the association should be disclosed as specified in the Community Participation Handbook. Responsibilities 1. The main responsibilities and position of the association should be as follows: 1) Promoting the inheritance, development and conservation of production and processing techniques of Yugu and Tibetan characteristic products 2) Promoting the innovation of production techniques and presentations of Yugu and Tibetan characteristic products to further meet modern requirements 3) Providing professional skills training to those wishing to pursue the industry and regulating the professional behavior of the industry, so as to promote the benign development of the industry 4) The association should be positioned as a non-profit NGO. 2. The role and functions of the association in the Project should be as follows: 1) Assisting in community mobilization and consultation at the preparation stage to learn the present situation of production, processing, marketing, conservation and development of ethnic characteristic products in the project area, key issues and difficulties, so as to provide basic information for improving the project design 2) Assisting in the O&M of the Ethnic Characteristic Product Processing and Startup Training Center, and regulating the production and operating behavior of practitioners at the center 3) Discussing the program for using the center’s facilities and services with the PMO and the center’s management team on behalf of the members and other practitioners, including prices, modes of use and management arrangements, and protecting the basic rights and interests of practitioners, especially minority practitioners 4) Assisting the PMO in giving professional skills training to producers and processors of ethnic characteristic products, and others interested therein 5) Soliciting rational opinions and suggestions from traders entering the

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center and industry practitioners, summing up appeals related to the Project, and assisting the PMO and other competent departments in appeal handling

Appendix 14: Requirements for the Qilian Jade Association of Sunan County

Institutional Requirements element

Name of Qilian Jade Association of Sunan County agency

Background The association was established at the end of 2010, and is at the startup stage.

Purpose Becoming an important social organization that assists in the O&M of the Qilian Jade Processing and Trading Center and project activities, and plays an important role in the normative management of Qilian jade processors, skills training and the deep processing of Qilian jade, so as to ensure that Qilian jade processors, especially minority processors, benefit from the Project

Expected 1) Assisting the PMO in collecting basic information on Qilian jade responsibilities processors and traders, and conducting community mobilization and consultation therewith to learn their needs, difficulties and willingness to enter the Qilian Jade Processing Zone

2) Assisting in the O&M of the Qilian Jade Processing Zone, and regulating the operating behavior of its members and industry practitioners

3) Assisting the PMO in the professional training for Qilian jade processors, and offering training services

4) Soliciting opinions, suggestions and appeals from its members and industry practitioners, and assisting the PMO and other competent departments in appeal handling

Scope of 1) Empowering the association to participate in project implementation funding and management

2) Including the association’s capacity building and skills training for members in the training program of the Project

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Appendix 15: Requirements for the Association of Individual Businesses of Sunan County

Institutional Requirements element

Name of Association of Individual Businesses of Sunan County agency

Background Presently, the association is an NGO that represents individual business owners, and is registered with the industry and commerce authority. However, it plays a limited role due to unsound organizational structure and systems.

Purpose Assisting the integrated bazaar management committee and the PMO in integrated bazaar reconstruction, and compensation and resettlement for traders, and assisting in the O&M of the new bazaar to ensure that traders’ lawful rights and interests are protected

Expected 1) Assisting the PMO in conducting a survey of traders in the integrated responsibilities bazaar to learn the number, types, degrees of impact and acceptable compensation modes of directly and indirectly affected traders, and the maximum rental that traders entering the new bazaar are willing to pay and can afford

2) Assisting the integrated bazaar management committee in the O&M of the bazaar, and regulating the operating behavior of its members and traders

3) Assisting in the professional training for industry practitioners, and offering training services

4) Soliciting opinions, suggestions and appeals related to the Project from its members, traders and practitioners, and assisting the PMO and other competent departments in appeal handling

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Appendix 16: Demographic data of directly affected Yugu people/Tibetans in the urban area of Hongwansi Town Yugu Indicator Tibetans Remarks people Total Yugu population in the urban area of 2731 1758 Hongwansi Town Yugu population in town with the identity of urban 2504 1531 resident Yugu population in town with the identity of 227 227 farmer or herdsman Yugu population in town enjoying urban MLS Urban MLS rate: 230 862 215 yuan/month Yugu population in town enjoying rural MLS Rural MLS rate: 1,096 105 93 yuan/year Population of Yugu urban residents: 2504 1531 Working at administrative agencies and public 927 620 institutions Working at enterprises 734 422 Individual operations 196 22 Jade processing Highest annual income 25,000 32 29 yuan; average annual income about 13,000 yuan Ethnic characteristic product processing Highest annual income 50,000 22 20 yuan; average annual income about 22,000 yuan Circulation and marketing of animal products Highest annual income 21,000 269 202 yuan; average annual income about 16,700 yuan Tourist services, such as tourism guide, Highest annual income 35,000 catering and accommodation 282 201 yuan; average annual income about 17,000 yuan Without a regular occupation 42 15 Population of Yugu herdsmen in town: 227 227 Stockbreeding Per capita pasture area 1,770 63 46 mu; per capita annual income about 9,120 yuan Circulation and marketing of animal products Highest annual income 20,000 17 15 yuan; average annual income about 11,000 yuan Jade processing Highest annual income 25,000 19 28 yuan; average annual income about : 12,000 yuan Ethnic characteristic product processing Highest annual income 48,000 24 17 yuan; average annual income about : 20,500 yuan Tourist services, such as tourism guide, Highest a nnual income 36,000 catering and accommodation 90 115 yuan; average annual income about 16,200 yuan Without a regular occupation 14 6

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