Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Small Town Project (P126856)

Report Number: ICRR0022200

1. Project Data Public Disclosure Authorized

Project ID Project Name P126856 Jiangxi Poyang Lake Small Town Project

Country Practice Area(Lead) Water

L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-82340 31-Dec-2018 150,000,000.00 Bank Approval Date Closing Date (Actual) Public Disclosure Authorized 20-Mar-2013 31-Dec-2019 IBRD/IDA (USD) Grants (USD)

Original Commitment 150,000,000.00 0.00

Revised Commitment 150,000,000.00 0.00

Actual 150,000,000.00 0.00

Public Disclosure Authorized Prepared by Reviewed by ICR Review Coordinator Group Cynthia Nunez-Ollero Vibecke Dixon Ramachandra Jammi IEGSD (Unit 4)

2. Project Objectives and Components

DEVOBJ_TBL a. Objectives According to the Financing Agreement (FA, p. 4) and the Project Appraisal Document (PAD, paragraph 11) the Project Development Objective (PDO) was "to improve key public services in participating small towns of Jiangxi Province through improvements to prioritized infrastructure." Public Disclosure Authorized

b. Were the project objectives/key associated outcome targets revised during implementation?

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No c. Will a split evaluation be undertaken? Yes d. Components 1. Transport Infrastructure Improvement (US$100.39 million at appraisal, US$106.01 million, actual). This component would finance (i) the construction and upgrading of 76 km urban and country roads in seven selected counties and the construction of greenbelt and bus stops; and (ii) the construction of a new urban central bus station, including the main terminal building, maintenance facilities, and administration building in City.

In the 2016 restructuring, four sub-projects in two counties were replaced by five new sub-projects (see Dates below). At the same restructuring, the bus station construction in Gongqingcheng City was dropped.

2. Water Resources Management Infrastructure Improvement (US$45.02 million at appraisal, US$37.61 million, actual). This component would finance (i) flood protection and drainage systems in five selected counties; (ii) construction of a 10,000 m3 per day water treatment plant and associated water supply facilities in Luxi County; (iii) an integrated water management and flood control sub-project in that would construct about 7.8 km of wastewater and storm water collection pipes; (iv) construction and restoration of 160 hectares of wetlands along the Mianjiang River in City.

In the 2016 restructuring, the construction of the water treatment plant in Luxi County and two flood control sub-projects were replaced by a new Mianjiang River Improvement flood control sub-project in Ruijin City. This same sub-project, however, was later dropped in the 2018 restructuring.

Component 3. Project Management and Capacity Building (cost at appraisal US$4.21 actual Cost US$6.00 million). This component would support: Institutional strengthening and capacity building by providing technical and management training, technical assistance to develop transport sector plan for three counties and flood management plans for two counties; and developing a smart transport management system in Gongqingcheng City. Office equipment would also be financed. In addition, this component would finance project management, monitoring and evaluation (M&E), including a modern, computer-based management information system (MIS) for adoption by all provincial and county project management offices (PMOs). This component would also finance consultants to undertake detailed designs and engineering works supervision.

In the 2016 restructuring, several overseas study tours and procurement of some office equipment were cancelled; and replaced by additional equipment for the smart transport system in Gongqingcheng City.

e. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The total project cost was US$325.89 million including a loan of US$150 million. The loan was fully disbursed.

Financing: The International Bank for Reconstruction and Development (IBRD) financed this project with a loan of US$150 million.

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Borrower Contribution: The government committed to contribute US$175.89 million at appraisal. This was reduced to US$151.3 million during the 2016 restructuring and further reduced to US$141.77 million during the 2018 restructuring (see in Dates below). At closing, the government disbursed US$109.84 million.

Dates: The project was approved on March 20, 2013 and made effective on July 19, 2013. The Mid Term Review (MTR) was conducted on September 25, 2015. The loan was originally scheduled to close on December 31, 2018 but was extended by12 months, to close on December 31, 2019. There were three level 2 restructurings:

 On January 22, 2016 to reallocate resources among disbursement categories.  On December 21, 2016, to (i) drop one and reduce targets for outcome and intermediate outcomes; (ii) revise components and associated costs due to realized cost savings from competitively bid contracts and change in urban master plans; (iii) reduce government contributions from the original US$175.89 million to US$151.3 million; (iv) amend the financing plan; and (v) extend the loan closing date by 12 months, from December 31, 2018 to December 31, 2019. o The following targets were reduced: (1) direct beneficiaries of newly built or rehabilitated roads, reduced from 491,000 to 478,000 persons; (2) direct beneficiaries of flood protection reduced from 141,000 to 134,000; (3) length of newly built/rehabilitated roads from 76 to 65 km; (4) travel time saved from 157 to 152 minutes; (5) length of strengthened dikes from 36 to 35 km; and (6) increase in the area protected from floods from 22,400 to 20,200 km2. The following target was dropped - 10,000 cubic meter a day from Luxi County water treatment plant because the county updated its master plan (2015-2000) and self-financed a larger capacity water treatment plant. o The following components were revised: (1) under the transport sector, 4 roads in Gongqingcheng City and Nanfeng were replaced with 5 new roads in Dexing, Luxi, Gongqingcheng, and Yifeng, and a central bus station dropped after Gongqingcheng City updated its master plan in 2014 to follow the central government's development strategy toward greener growth. (2) Under the water sector, the Yuanhe River Flood Protection, Luxi Urban Water, and the Mianjiang River East Dike flood protection sub-projects were replaced by the Mianjiang River Improvement flood control sub-project.  On June 23, 2018 to (i) further reduce the already reduced targets in the Results Framework; (ii) revise costs and components; and (iii) reallocate resources. No changes were made to the indicators. o The following targets were reduced a second time: (1) direct beneficiaries of flood protection. further reduced from 134,000 to 100,000 persons; (2) length of strengthened dikes further reduced from 35 to 29.53 km; and (3) increase in the area protected from floods further reduced from 20,200 to 17,052 km2. o The following component was dropped - the Mianjiang River Improvement flood control sub- project added during the second restructuring - because detailed design revealed unwelcome impact on a high cultural value bridge and non-compliance with Bank safeguards if pursued.

3. Relevance of Objectives

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Rationale

China has been rapidly urbanizing and expected to reach 70 percent urbanization by 2020 from a level of 48 percent at appraisal. Between 2000 and 2030, 300 million people would be migrating from rural to urban areas and at least 200 million off-farm jobs would be created. Smaller towns would absorb about 40 percent of the country's rural-urban migrants. However, these small towns had a few development problems in that there was a lack of regional development plans and there was also weak coordination with social and economic development plans and land use plans. These small towns needed infrastructure investments in flood protection roads, water supply, wastewater treatment and they lacked financing channels for these infrastructure needs. China selected the poorer Jiangxi Province to demonstrate a new development approach outlined in its 12th Five Year Plan (FYP) for small town development. In 2009, the State Council approved a national level development plan for the Poyang Lake Region - the Poyang Lake Ecological Economic Plan. A Regional level Master Plan for the Poyang Lake Ecological Economic Development Zone was prepared for 2010-2015 to cover 18 special sector specific master plans. This project supported the small town development for the Poyang Lake Ecological Economic Zone.

The PDO was relevant to the country's national priorities noted in the 13th FYP (2016–2020) and China’s National Plan on New Urbanization (2014–2020). The 13th FYP set new urbanization as a national priority, promoting small town development, and enhancing urban infrastructure. In addition, the 13th FYP also highlighted the importance of integrated water resources management in the Poyang Lake Basin, consistent with the water resources management interventions in this project. The National Plan on New Urbanization (2014–2020) included building more people-friendly and sustainable cities and providing basic urban services to all residents. The plan emphasized the need to enhance public services in small towns, including water supply, wastewater treatment, transport, solid waste management, and power supply.

The PDO was also relevant to the World Bank Country Partnership Framework (CPF) for China for FY2020–2025. This project provided support to the CPF's two engagement areas. The first, under the engagement area of Promoting Greener Development, the project would contribute to reducing water pollution and strengthening sustainable natural resource management. The second, under the engagement area of Sharing the Benefit of Growth, the project would promote shared development by geographically focusing on less developed regions and small towns.

The Bank had previously worked with small towns in China like the Sichuan Small Towns Development (P110632, closed in December 2016) and the China Integrated Economic Development of Small Towns (P118597, closed in December 2018). Other Bank supported urban-rural projects include the Small Cities Infrastructure Improvement Project, Sichuan Small Towns Development Project, the Chongqing Urban Rural Integration Project, Countryside Development Project, Agricultural Technology Project, and Jilin Agricultural Product Safety and Quality Project. These previous projects in China were testing grounds for new ideas and reforms. Lessons from these projects were shared with other municipalities in China, especially in lagging regions (PAD, paragraph 8).

However, while there was a clear alignment between the project's development objectives and the country and Bank strategies, the relevance of the objectives was pitched at a level that does not adequately reflect a potential solution to a development problem. A shortcoming here was that the objectives were not defined such that its achievements would be plausibly traceable to improvements envisioned to arise from "improved key public services." Focusing on "improved key public services" alone was not outcome focused and did not help in understanding what development results were expected as a consequence of the project, whether those results were economic growth or increased income (through smoother transport

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systems), improved health, or other. These may be longer term targets but tracking them and identifying them was an important aspect of a successful development operation. The PDO formulation was kept purposely vague, did not specify what kind of public services were to be improved, even though the sectors were identifiable from the proposed outcome indicators at appraisal, nor was it changed, clarified, or strengthened at restructuring.

In summary, the relevance of objective is rated substantial based on the continuing relevance of the objectives to the country's small cities development objectives and relevance to the World Bank's current partnership goals.

Rating Relevance TBL Rating Substantial

4. Achievement of Objectives (Efficacy)

EFFICACY_TBL

OBJECTIVE 1 Objective To improve key public services in participating small towns of Jiangxi Province through improvements to prioritized infrastructure.

Rationale Theory of Change. The overall Theory of Change (TOC) for this project outlined that activities in transport, water resources management, and capacity building would lead to outputs that would improve these services, which in turn would lead to sustainable and resilient small town development. The TOCs for each sector are outlined below:

Transport

Infrastructure construction and rehabilitation (of roads, bus station) was expected to lead to the output of constructed or rehabilitated roads and this would, in turn, lead to the outcome of reduced travel time. In the first restructuring, the bus station was dropped and four roads in two counties were replaced by five roads. Targets were reduced for both outputs and outcome.

Water resources management

Activities such as strengthening dikes, constructing urban pumping stations, constructing access roads in dikes, constructing cross-dike structures, and landscaping along rivers in 5 counties were expected to lead to outputs such as a sufficient length of dikes that would lead to the outcome of improved flood protection. The construction of wastewater and storm water collection pipes, together with the flood control sub-project in Jinggangshan was expected to lead to an integrated water management. Construction and restoring wetlands integrated to two wastewater treatment facilities and sewer pipes would lead to improved drainage system and wastewater management. In the first restructuring, the only water treatment plant was dropped

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and two flood protection sub-projects in two counties was replaced by one flood control sub-project. Targets were dropped and reduced for both outputs and outcome.

Capacity building

Training, overseas study tours, technical assistance, and equipment would serve as inputs to transportation and flood management plans and to pilot a smart transportation management in one city. The underlying assumption here was that training would automatically lead to uptake of new knowledge and a change in behavior by those who received training and thus also to improved performance. There were no related outcome indicators for capacity building.

OUTPUTS under the TRANSPORT services:

The following targets were exceeded or achieved:

, Dexing City, and Gongqingcheng City prepared integrated transport plans, which identified priorities and recommended sector policy and regulations (original target 3)  2,617 project officials and staff at the provincial and county levels participated in 41 domestic and overseas training, workshops, and study tours (original target 2,000)  All local government provided budgets for operation and maintenance (O&M) of completed infrastructure projects.

The following targets were not achieved:

 Central bus station in Gongqingcheng City was not completed and later dropped (original target 1 central bus station) because of changes to the master plan.  Constructed 10 roads equivalent to 47.2 km (original target 14 road projects equivalent to 76 km)

OUTCOMES under TRANSPORT services:

The following targets were exceeded or achieved :

 565,850 residents benefited from access to new built or rehabilitated roads (original target 491,000). The Task Team confirmed in its December 30, 2020 email to IEG that the implementing entity conducted a census to count the number of beneficiaries. The increase was due to the influx of new residents to the area attracted by the new schools, hospitals constructed outside the project to accompany the project-funded roads (ICR, paragraph 30(a)).  Travel time saved 160.9 minutes (original target 157 minutes). According to the ICR travel time saved was measured for each road sub-project following the methodology established at appraisal. Travel time for minibuses and cars were measured from starting to destination points at designated speeds. Results were compared to corresponding time before the project.  The Dexing and Gongqingcheng integrated transport plans were incorporated into their respective 13th FYPs. Gongqingcheng City self-financed the construction and rehabilitation of some of the priority roads from its plans.  The project resolved bottleneck issues and improved connections to national networks.

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o In , where the new Yuanming Bridge for motorized vehicles (previously only a small pedestrian bridge) over the Yexi River improved access between the old town and the new urban Development Zone in the south. o The ‘Nanmen Area Trunk Avenue’ sub-project in Dexing County established the link between the new urban area in Nanmen Area and the old downtown. o The ‘Yiyuan New District Road Network’ in Ganxian County linked the Yiyuan new development area with the old county and surrounding villages. o The ‘Chengfu Road’ sub-project in Hengfeng County linked the new industrial park and the urban areas and improved the daily commute of the workers in the industrial park. the new/rehabilitated roads improved access to other essential services, such as schools and hospitals. o The road subproject in Yifeng County improved public access to the emergency services of the Yifeng County Hospital and to the Chongwen Middle School. o The project facilitated around 230,000 passengers in Dexing to enjoy high-speed rail service in 2017 and the number increased to 300,000 in 2018 o The project connected Yifeng County to the No. 320 National Road and the Menghua Railway and enhanced the link between Luxi County and the No. 320 National Road. o The new/rehabilitated roads improved access to other essential services, such as schools and hospitals. . The road subproject in Yifeng County improved public access to the emergency services of the Yifeng County Hospital and to the Chongwen Middle School. . the road subproject in County created new access to the Third Middle School, the First Elementary School, and the Jiujiang County Hospital to solve the traffic congestion issues. . It also established the fire lane in the project area to ensure the access of fire protection services in the event of an emergency.  As part of the planned technical assistance, the Gongqingcheng pilot smart transport management and early warning system helped detect responsible parties for traffic accidents, assisted in the search for missing persons, and provided evidence for criminal cases since 2017. The city government used its own funds to expand the smart accident investigation subsystem from 25 percent of the city to cover the entire city.  The Jiangxi Provincial Project Management Office conducted a beneficiary satisfaction survey in April 2019 across all 11 participating counties with 609 households, including 167 low-income households and 335 women. Respondents indicated 83.4 percent were highly satisfied and 16.6 percent satisfied with the improved public transport services supported by the project. The Task Team indicated in their December 30, 2020 email to IEG that "the task team vetted the questionnaire, the survey methods and procedures, The team interviewed some beneficiaries in different project counties during supervision missions and noted that their feedback was consistent with the reported survey results." The 100 percent satisfaction of the beneficiaries was an unusual metric.

OUTPUTS under the FLOOD CONTROL services

The following targets were achieved:

 Jiujiang County and Jinggangshan City completed its integrated urban flood control and management plans, identifying infrastructure and institutional gaps in flood management and recommended actions to enhance natural disaster management capacity (original target 2)

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 Completed the Jinggangshan Longjiang River Flash Flood Early Warning System design and development study.  Local governments provided budgets for agencies designated to provide O&M of project-funded flood control sub-projects.

The following targets were not achieved:

 Strengthened 29.35 km of dikes (original target 36 km) o In , located next to the Qinglan Lake, the project completed eight dikes to form a closed dike look around the lake to increase the flood protection level in Jinxian. o In Jiujiang County, the project constructed and rehabilitated dikes and cleaned the Shahe River channel. o In Jinggangshan County, along the Longjiang River, the project constructed new dikes and rubber dams, along with a flash flood warning system to manage the floods.  An area of 17,680 km2 was protected from floods (original target 22,400 km2)  Construction of a 10,000 m3 per day water treatment plant sub-project and associated water supply facilities in Luxi County were dropped.

OUTCOMES under the FLOOD CONTROL services

The following targets were achieved:

 Juijiang County Integrated Urban Flood Management Plan and Jinggangshan City and Longjiang River Flash Flood Early Warning System and development study established a flash flood early warning system with Longjiang River basin hydrologic model to simulate the dynamics of flash floods, optimize the dam/reservoir operation, and provide flood early warning services.  The Jinggangshan Flood Management Office operated the flash flood early warning system and ensured timely evacuation of local residents and reduced some RMB 2 million of losses in the 2019 floods in Longjiang River basin.  A significant flood estimated to be close to 1 in 10 year flood occurred in Longjiang River Basin with very little related loss in Longshi Town from the flood. The flood protection level (design flood) for the beneficiary areas of both the Shahe River in Jiujiang Countyand the Qinglan Lake areas in Jinxian County was raised from 1-in-5 years to 1-in-20 year floods while that for the Longshi Town with a population of 50,000 in Jingangshan City was raised from 1-in-5 year to 1-in-10 year floods.  According to a beneficiary survey, 82.2 percent indicated high satisfaction and 17.8 percent indicated satisfaction with project investments in flood control.

OUTPUTS under the WASTEWATER MANAGEMENT services

The following target was almost achieved:

 Reduced annual wastewater flow into Poyang Lake from the Mianjiang River Tributary to 18,666,000 m3 (original target 18,800,000 m3)

The following target was not achieved:

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 Increased area of improved wetlands to 128.63 hectares (original target 160 hectares)

OUTCOMES under the WASTEWATER MANAGEMENT services

 The Chemical Oxygen Demand (COD, a measure of the amount of oxidizable pollutants in effluent) entering the Poyang Lake was reduced by 110.25 tons (original target 40 tons). This outcome was due to the influx of new residents moving to the project areas as part of new town development (ICR, paragraph 39(e)).  The beneficiary satisfaction survey showed that 84.9 percent of respondents were highly satisfied, and 15.1 percent were satisfied with the improved wastewater management services.

In summary, the efficacy of the project to achieve the original objective is rated modest because most of the original targets in outputs and outcomes were not achieved. Planned outputs such as the central bus station, several roads, flood control sub-projects, and water treatment plant were dropped.

Rating Modest

OBJECTIVE 1 REVISION 1 Revised Objective The objective was not revised.

Revised Rationale The Theory of Change was not revised. The 2016 restructuring introduced changes to the indicators under the transport services and water resources management sectors. Gongqingcheng City revised its urban master plan in 2014 to follow the shift in the country's development strategy toward green and sustainable growth. As a result, four road sub-projects in two counties were replaced by five new road sub-projects in four counties and the construction of the bus station in Gongqingcheng City was dropped. The PDO level target outcome indicator of direct beneficiaries of roads was reduced from 491,000 to 478,000 residents or a 2.6 percent reduction. The target values of the following intermediate indicator targets were also reduced (i) length of newly/built upgraded roads (in kilometers) from 76 to 65 km. (ii) travel time saved (in minutes per trip) from 157 to 152 minutes.

Under the water resources management sector, Luxi County developed a new urban plan (2015-2030), which included a larger capacity urban water treatment plant. As a result, the construction of the only water treatment plant sub-project in Luxi County was dropped. Two flood control sub-projects in two counties were replaced by the Mianjiang River Improvement flood control sub-project in Ruijin City. The PDO target outcome indicator was reduced: (i) the number of population protected from flooding from the original target of 141,000 to 134,000. The intermediate outcome indicator for daily water supply capacity (in m3) was cancelled. The following intermediate outcome indicators were reduced: (i) length of dike strengthened (km) from 36 to 35 km; and (ii) increase in flood protected area from 22,400 km2 to 20,200 km2.

The risk in the original TOC that the priorities established by the existing plans could change materialized during implementation with the updating of urban master plans resulting in changes in outcome indicators.

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REVISED OUTPUTS under the TRANSPORT services

The following target was achieved:

 66.1 km of newly built roads (revised target 65 km)

REVISED OUTCOMES under TRANSPORT services

The following targets were exceeded:

 160.9 minutes of travel time per trip was saved (revised target 152 minutes)  An increase of 565,850 residents with access to newly built or rehabilitated roads (revised target 491,000)

REVISED OUTPUTS under FLOOD CONTROL services

The following targets were not achieved:

 Strengthened 29.35 km length of dike (revised target 35 km). The achievement was equivalent to completing three flood control sub-projects.  Two flood control sub-projects in two counties were dropped and replaced by a new Mianjiang River Improvement for flood control sub-project.  Increase in the area protected from floods reached 17,680 km2 (revised target 20,200 km2)  Construction of a 10,000 m3 per day water treatment plant sub-project and associated water supply facilities in Luxi County was not completed and was dropped.

REVISED OUTCOMES under the FLOOD CONTROL services

The following targets were not achieved:

 99,880 residents benefited from flood control sub-projects (revised target 134,000). The number of beneficiaries was identified from detailed local census.  The replacement sub-project was not completed and was canceled in the third restructuring because detailed design revealed severe impacts on a bridge with high cultural value and would affect safeguards compliance (see Section 10, Other Issues below).

In summary, after the first restructuring, the efficacy of the project to achieve the objective is rated substantial. The reduced values of the outcome indicators were exceeded in transport although not achieved under flood control services. Nevertheless, the project improved public flood control service using the flood protection dikes and other affiliated basic structures to protect the beneficiary communities against floods. The early warning system added to the city's resilience to flood-related disasters. Flood management plans offered directions for future flood control investments and service delivery.

Revised Rating Substantial

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OBJECTIVE 1 REVISION 2 Revised Objective The objective was not revised.

Revised Rationale There was no change in the Theory of Change except that the activities were now limited to flood control only activities. Water related activities were no longer part of the causal chain. As a result of the reduced scope of this objective, target outcome indicators were reduced by a third and intermediate outcome indicators were also reduced.

REVISED OUTPUTS under FLOOD CONTROL services

The following reduced targets were exceeded or achieved:

 Area protected from floods increased to 17,680 km2 (revised target 17,052 km2)  Strengthened 29.35 km length of dikes (revised target 29.35 km). The added Mianjiang River improvement flood control sub-project was not completed and was canceled in the third restructuring because detailed design revealed severe impacts on a bridge with high cultural value (ICR, paragraph 23(e)) and would affect safeguards compliance (see Section 10 Other Issues below).

REVISED OUTCOMES under FLOOD CONTROL services

The following reduced target was achieved:

 99,880 residents benefited from flood control sub-projects (revised target 100,000). The number of beneficiaries was identified from detailed local census. In the third restructuring (2018) the baseline value of the PDO outcome indicator was revised from 0 to 21,320 to include the population originally protected by the degraded flood control systems before the project. However, the PAD defined the indicator as additional population protected by improved flood control services and the baseline value should not have changed (ICR, footnote 20).  The ICR stated that project eliminated schistosomiasis in Jiujiang County and improved local public health, which is plausible but the ICR did not offer supporting health statistics as evidence. Schistosomiasis is an acute and chronic disease caused by larval forms of parasitic worms released by freshwater snails. Freshwater snails were found in over 274,000 m2 of Jiujiang County and infected around 2.62 percent of the local population in 2005 alone. Molluscicide (niclosamide) was applied twice in the snail spreading areas before and after construction; to excavated surface silt, and buried in landfills. Some riverbanks were concreted to avoid freshwater snail habitats. Public awareness on schistosomiasis prevention and control were implemented. The Jiujiang Schistosomiasis Control Station investigated the area after the project was completed. Results showed that all freshwater snails were eliminated in the infected area.

In summary, the efficacy of the project to achieve this objective is rated substantial because all the revised intermediate outcome indicators were exceeded, and the outcome indicator substantially achieved.

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Revised Rating Substantial

OVERALL EFF TBL

OBJ_TBL OVERALL EFFICACY Rationale The overall efficacy of the project to achieve the outcomes is rated substantial. After the first restructuring, the reduced outcome indicators were substantially achieved. After the second restructuring, the efficacy of the project to achieve the outcome is rated substantial. The outputs that were dropped were replaced by similar activities to retain the project's original level of ambition while responding to updates in master plans of the target areas.

Overall Efficacy Rating Substantial

5. Efficiency Economic and Financial Efficiency: A cost-benefit analysis was used at appraisal and at closing for the transport, flood control, and wastewater sub-projects, covering approximately 95 percent of total project costs. For road sub-projects, benefits included (i) cost savings in passenger traveling time, (ii) reduced vehicle operation cost due to improved road condition in project areas, and (iii) avoided losses from traffic accidents due to improved transportation conditions. For flood control subprojects, reduced expected future losses caused by floods were the economic benefits. The flood loss data were used to estimate losses under the ‘without project’ and ‘with project’ situations and the differences provided the expected economic benefit (saved costs) of reduced flooding. All subproject costs included both the investments and regular O&M costs. Local government budgets regularly allocate O&M funding for the transport and water resources management facilities. At appraisal, the economic rates of returns (ERRs) for all road sub-projects and flood control projects was above 10% (PAD, paragraph 33). The ERR for each sub-project ranged from 10 to 17 percent. A cost effectiveness approach (CEA) was applied to both water supply investment and environmental improvements (wetlands, river restoration). The water supply investment yielded a financial rate of return of 8.2%.

The same cost-benefit approach was used at closing covering the roads and flood control components, while a cost effectiveness approach (CEA) was applied to the wastewater and wetland restoration sub-projects to ensure the least-cost option was implemented. The sub-projects generated ERRs from 11 to 18 percent, reflecting their individual economic viability. The analysis excluded the multiplier effects for adjacent land value appreciation, improved public health, accelerated tourism, agricultural development, and impact on growth.

Administrative and operational efficiency: The project spanned 11 counties and involved sector administrations such as the Development and Reform Commission, Housing and Urban Rural Development, Transportation, Water Resources, Ecology and Environment, Urban Administrative and Law Enforcement, and Civil Affairs. Project implementation was administered at the provincial and the county levels. Several factors resulted in implementation delays. Counties lacked experience in managing World Bank-funded projects. Some

Page 12 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Jiangxi Poyang Lake Small Town Project (P126856) had slow internal approvals of sub-projects, some were delayed in obtaining counterpart funds that were addressed through budget reallocations and the use of cost savings from lower sub-project contract costs. Some counties and provinces experienced high staff turnover. Customized training workshops addressed these capacity issues. (ICR, paragraph 62). The project was extended once, for twelve months, to complete the additional works from the two restructurings. During implementation, updated master plans and revised local development priorities (ICR, footnote 10) revised components and reduced targets at the PDO and intermediate outcome levels. Land acquisition issues, design impact on safeguards compliance, and changes in government requirements slowed implementation.

In summary, the shortcomings presented by the delays in implementation highlighted operational inefficiencies, which were addressed with targeted capacity building technical assistance and the restructurings. The operational delay caused a 12 month extension to the project but did not eliminate the economic and financial efficiencies calculated by the cost benefit analyses and cost effective analyses of the completed sub-projects. ERRs ranged from 11 to 18 percent while the financial rate of return yielded 8.2 percent. No comparison figures at appraisal and closing were provided below for the completed sub projects. Project efficiency is rated substantial.

Efficiency Rating Substantial

a. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0  Not Applicable 0 ICR Estimate 0  Not Applicable

* Refers to percent of total project cost for which ERR/FRR was calculated.

6. Outcome

The project outcome is rated satisfactory using a split rating. There were no changes to the original PDO but there were substantial changes made to two of three outcome indicators, without altering the Theory of Change. The relevance of objective remained rated substantial under both original design and after the restructurings. Efficiency of the project also remained substantial throughout the project implementation. The efficacy of the project to achieve the original objective is rated modest but substantial after achieving or exceeding reduced targets. The overall efficacy of the project is rated substantial. Efficiency is also rated substantial. The overall outcome is rated satisfactory. Following is the calculations used to arrive at the split rating of the outcome:

Original After Restructuring

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Relevance of Objective Substantial Efficacy Modest Substantial Efficiency Substantial Outcome Rating Moderately Satisfactory Satisfactory Value of Rating 4 5 Disbursement (in millions) US$63.13 US$86.87 Share of Disbursement 0.42 0.58 Weighted Value of Outcome 4 x 0.42 = 1.68 5 x 0.58 = 2.9 Final Outcome Rating 1.68 + 2.9 = 4.56, rounded off to 5 or Satisfactory a. Outcome Rating Satisfactory

7. Risk to Development Outcome

The development outcomes related to the improved delivery of transport, flood control, and wastewater services were: more access by lagging communities to more urbanized areas of the Poyang Lake Economic Zone and to the national network; reduced flooding in the areas where the dikes were strengthened, and health impacts from reduced pollution in lake Poyang. Since the project is aligned with updated master plans and central government urbanization strategy of green growth and sustainability in less developed counties like those covered by this project, risks to development outcome appear low.

According to the ICR, there was very low risk to development outcome for the following reasons: First, sector experts at the county and provincial levels were heavily involved in ensuring the quality of the sub-projects implemented, and reviewed feasibility studies and designs, construction quality control and oversight, and planning for O&M of project facilities. Road and water management works designs considered the impact from climate change. Second, dedicated entities and teams were appointed to implement the approved O&M plans of completed sub-project facilities. Third, each county committed to allocate adequate O&M budgets. Fourth, at closing, there were no outstanding obligations against social and environmental issues or grievances, compensation, or livelihood arrangements. All disturbed sites were restored. Construction wastes were properly disposed.

 Technical Risks: The project introduced several technological innovations and software systems that require maintenance and periodic updating. Risks remained that such periodic updating may not have the required financial backing. According to the Task Team in its December 30, 2020 email to IEG, the authorities have budgeted O&M needs to ensure that technological innovations were periodically updated as needed.  Government Ownership Risk: The M&E system was customized for this project. To maintain its usefulness, the Task Team confirmed in its December 30, 2020 email to IEG that local governments budgeted O&M resources to update and maintain the system. Another example was the pilot smart transport management and early warning system introduced in Gongqingcheng City, which demonstrated disruptive technologies in modern transport management practices. Gongqingcheng City expanded the smart accident system to cover the entire city but according to the Task Team in its December 30, 2020 email to IEG "this smart transport management system was listed as a demonstration project in Jiangxi province but no information available on its replication." With regard to another pilot system using an endowment insurance mechanism to ensure the farmer’s basic

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income after land acquisition, the Task Team in its December 30, 2020 email to IEG noted "this endowment insurance mechanism was replicated in some other counties of Jiangxi Province.  Financial Risks. There is also a risk that competing priorities arising from the updating of master plans may displace commitment to the O&M needs of the project investments. Entities were indeed identified to undertake the O&M needs, allocated funds in local budgets, but competing priorities arose during project implementation, which redirected resources. Budgetary commitments could still be reallocated based on emerging government priorities or changes in policy or master plan changes.  Environmental Risks and Natural Disasters: According to the ICR, impact from climate change were considered in the design of the sub-projects such as roads. The risk from natural hazards and unusual environmental events remain.

8. Assessment of Bank Performance a. Quality-at-Entry The project was strategically relevant and supported the government's efforts to pilot Jiangxi province for small town development using the small cities in the Poyang Lake Ecological and Economic Zone because of its ecological and economic significance. This economic zone formed a third of the total area of the province, half of the provincial population, and contributed over 60 percent to the provincial Gross Domestic Product (GDP). Design was informed by lessons from experience with similar projects in China and in the East Asia region including: (i) establishing strong links between sub-projects and local master plans; (ii) ensuring that investment sub-projects were consistent with planned networks; and ensuring that design standards adapted to established local standards. The project was ambitious, across transport and water sectors, and across 11 counties, not all of whom were familiar with Bank funded processes. The overall implementation risk was rated moderate at appraisal. Training was expected to strengthen governance and address implementation capacity gaps. The project designed both hard investments and soft activities such as piloting innovations in public services to guide sector development planning. The project was closely aligned with the local development priorities but did not foresee the risk from a change in the country's development strategy toward green growth, which affected priorities contained in local master plans. At appraisal, the project prepared technical, financial, and economic feasibility of investment sub-projects. A customized M&E system would be designed.

In summary, the quality at entry is rated satisfactory with minor shortcomings borne out by unforeseen risks that materialized during implementation, including the timely availability of local funding that were addressed at implementation through restructurings.

Quality-at-Entry Rating Satisfactory b. Quality of supervision

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The World Bank team conducted 15 supervision missions over the 6-year implementation period. Restructurings were utilized thrice to respond to changing priorities in local master plans. Fiduciary and safeguard aspects were adequately supervised, using third party consultants to monitor compliance with environmental and social safeguards. Fiduciary and procurement compliance were embedded in the MIS structure of the M&E system. The World Bank team delivered customized and targeted training workshops to address capacity gaps and enhance local institutional capacity. The performance reporting was candid in identifying shortcomings of mismatched indicators - output vs. outcome although these remained unaddressed even after restructurings. Transition arrangements, including the outcome of piloted interventions were not provided but confirmed by the Task Team in its December 30, 2020 email to IEG, as part of the local governments' commitment to O&M.

In summary, the performance of the World Bank Team in its supervision of the project is rated satisfactory. There were only minor shortcomings in implementation. This included the misplaced outcome indicator that remained unaddressed in the restructurings. There were also challenges posed by missed risks (changes in local priorities in master plans) and availability of counterpart financing.

With both the quality at entry and supervision rated satisfactory, the overall bank performance is rated satisfactory.

Quality of Supervision Rating Satisfactory

Overall Bank Performance Rating Satisfactory

9. M&E Design, Implementation, & Utilization a. M&E Design According to the PAD, the project management offices at the provincial and county levels would implement a customized results-based monitoring and evaluation (M&E) system. This M&E system would consist of (i) a computer-based Management Information System (MIS) to monitor physical and financial progress to generate periodic reports; and (ii) a computer-based evaluation system (PAD, paragraph 27). Annex 1 provided indicators at the outcome and intermediate outcome levels and broken further by project components to be monitored under the results framework (PAD< Annex 1). Baselines and target values for overall and intermediate outcome indicators were included in this evaluation system. The key activities and outputs in the results framework were reflected in the outcomes in the Theory of Change presented at closing (ICR, Figure 1).

The objective was vague in that it did not specify the key public services to be addressed. The indicators did not cover all possible outcomes of the PDO. At closing, beneficiary assessments only measured satisfaction with the project interventions. Intermediate results indicators measured contributions to achieving PDO outcome level indicators. However, the choice of targets for indicators were not adequately explained, e.g., reducing travel time by 150 minutes and not by some other number and how then this saving of travel time contributed to productivity or economic activity. There were no indicators to show the

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impact of the project interventions on the quality of economic life and health of beneficiaries (e.g., new businesses generated, impact on local revenues from the influx of new residents, increase in fees and charges from additional economic activities, improved health of residents from improved access to facilities, benefits from increased access to educational facilities). One outcome from the project's impact in concreting riverbanks, applying molluscicides as part of the project eliminated the incidence of schistosomiasis but this indicator was not part of the results framework nor of the theory of change (see Section 4, Efficacy above). The ICR did present some of these outcomes (see ICR, Section E, Other Outcomes and Impact) but did not form part of the M&E design. The indicators that were used were specific, timebound, and measurable. The targets were made achievable after restructurings. There were no baselines reported except for that related to those benefiting from flood control clarified during the 2018 restructuring. The Task Team confirmed in its December 30, 2020 email to IEG that customized computer- based M&E of the customized MIS established baselines.

b. M&E Implementation An external monitoring agency supported by dedicated M&E staff at the provincial and county level project management offices (PMOs) implemented the customized MIS system of the M&E. In addition, third party monitoring entities were contracted to monitor resettlement and indicators associated with wastewater management sub-projects. Two restructurings reduced some of the Intermediate and PDO outcome level targets (see Section 4 Efficacy above). The customized MIS allowed for collecting and reporting consistent, comparable data across all counties, using indicators of the results framework. Data complied with sector requirements in meeting progress and works quality overseen by local government authorities, such as the bureaus of Transport, Water Resources, Ecology and Environment, and City Administration and Law Enforcement. In some cases, local authorities confirmed data, e.g., travel time saved, water quality, and number of beneficiaries at the subproject level. Residents were not noted to have been involved in defining targets but the sub-projects were taken from master plans that were generated in a consultative manner.

c. M&E Utilization The M&E data informed stakeholders of physical and financial project progress. M&E data informed the Mid Term Review and provided justification to extend the project closing. Reports from the use of M&E, including third party monitoring reports provided the evidence for the reported outcomes of the project. For example, the elimination of schistosomiasis incidents in Jiujiang County. Of the indicators that were included in the M&E design to be monitored, these were used to justify the reduction of targets and reasons behind revisions in components reflected in the three restructurings. M&E captured the innovations introduced by the piloted interventions and was used to enjoin its expansion (in the case of the smart transportation management system introduced in Gongqingcheng City.

In summary, the M&E quality is rated substantial. Moderate shortcomings were identified in the M&E system design with missing or inadequately defined indicators. The customized M&E system was designed and implemented to assess achievement of objectives, the links in the results chain.

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M&E Quality Rating Substantial

10. Other Issues

a. Safeguards The Project was classified as an Environmental Category "B" and triggered five safeguards. (i) Environmental Assessment OP/BP 4.01; (ii) Natural Habitats (OP/BP 4.04); (iii) Safety of Dams (OP/BP4.37); (iv) Involuntary Resettlement OP4.12; and (v) Physical Cultural Resources (OP/BP 4.11) The project was implemented using environment-friendly practices that promoted the use of green infrastructure and cost-effective nonstructural interventions. At closing, all compensations were fully paid; all necessary livelihood arrangements in place; all disturbed sites restored; and all construction wastes properly disposed. According to the ICR, the project complied satisfactorily with safeguards policies (ICR para 69).

Construction activities involving two sub-projects could have some limited negative impacts on soil, air, water, acoustic environments, and on surrounding communities and triggered OP/BP 4.04 Natural Habitats. The first was the dike strengthening sub-project in Jinxian County that could have potential adverse impacts on Qinglan Lake, a provincial natural reserve. The second was the Mianjiang River (Lucao Lake) Protection and Utilization sub-project in Ruijin city. The Environmental Code of Practice (ECOP) and the Environmental Management Plan (EMP) included appropriate mitigation measures (PAD paragraphs 53 and 54) and according to the ICR were adequately implemented but not specified (ICR, paragraph 69). Few sub-projects were anticipated to affect some rural households' graves, triggering OP/BP 4.11 Physical Cultural Resources. The Resettlement Action Plan provided compensation and relocation measures for the affected graves (PAD para 47). Two other sub-projects triggered OP/BP 4.37 Safety of Dams. The first was the Luxi Water Supply System Improvement sub-project, which would withdraw water from a dam under construction. The second was the Longjiang River Integrated Management sub-project, which relied on an existing dam.

All 22 sub-projects required land acquisition and population relocation (PAD paras 46 and 47) and thus triggered OP/BP 4.12 Involuntary Resettlement. At appraisal, an estimated 4,300 mu (285 ha) of land from collective villages would be acquired and impact about 7,200 people in over 1,600 households. In addition, anticipated house demolition would relocate 900 people from 230 households. Each sub-project prepared a Resettlement Action Plan (RAP) and consolidated to an overall project RAP. Project restructuring introduced a change in scope and location of sub-projects resulting in a revised Resettlement Plans. According to the ICR (paragraph 70), resettlement impact at closing was higher than at appraisal due to the added new transport sub-projects. At closing, the project affected 10,873 people (8,100 estimated at appraisal). All compensation was paid. House compensation standards applied in Luxi, Hengfeng, and Dexing Counties were higher than those in the resettlement plan because assistance was added to restore the livelihood of those who lost 20 percent of farmlands. A transparent and effective Grievance Redress Mechanism was established. According to the ICR, an implementation evaluation on resettlement was conducted and showed that affected households were generally satisfied with the results (ICR paragraph 71).

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b. Fiduciary Compliance Financial Management: According to the ICR, financial management was satisfactory at closing (ICR, paragraph 72). Targeted training and the customized MIS used in M&E enhanced the financial management capacity of the implementing agency (see Section 9 M&E above). Unaudited interim financial reports were submitted on time. The annual audits were submitted on time. External auditors issued unqualified audit opinions. External auditors reported some project management weaknesses that were remedied by relevant authorities (e.g., delays in counterpart funding, contract payments).

Procurement: According to the ICR, procurement management was satisfactory (ICR, paragraph 73) and complied with Bank procurement procedures.

c. Unintended impacts (Positive or Negative) --- d. Other Gender. The Social Assessment included a gender analysis, based on consultations held separately with men and women. Women's views on priorities in transport, water supply network, and flood protection were solicited to promote a more gender sensitive and socially sound design. Gender disaggregated information was also collected and used in the Resettlement Action Plans to ensure that women's interests were safeguarded during resettlement.

At closing, the ICR reported that project design did not specify specific gender-based outcomes and the project did not address any gender related issues.

11. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory

Bank Performance Satisfactory Satisfactory

Quality of M&E Substantial Substantial

Quality of ICR --- High

12. Lessons

The operation offered five lessons that may benefit task teams in designing future similar operations. These have been taken from the ICR with slightly modified language:

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 Integrating hard and soft interventions may be a cost effective means to improve delivery of public services in small towns. In this project 'hard’ infrastructure investments such as transport and water infrastructure were accompanied by low-cost ‘soft’ interventions to achieve least cost and sustainable public services. These ‘soft’ activities included: (i) technical assistance to develop strategic sector development plans, (ii) a smart transport management system that demonstrates innovation and efficiency in delivering services to maximize benefits from that service, and (iii) green infrastructure, e.g., constructed wetlands, as nature-based solutions to wastewater management and an early warning system for floods to enhance the resilience of towns.  Strengthening capacity of small towns may be used as incentives to coordinate the implementation of multi-sector sub-projects scattered in many locations. In this project, the project management office was in a government department that had already demonstrated its coordination capacity. However, these offices may not necessarily have technical experts in sub-projects that local authorities decide to implement. A corrective measure was to convene a panel of experts from relevant sector authorities to strengthen the local Project Management Office's technical capacity. This approach enhanced project ownership among the sector agencies.  Technical and management innovations may be demonstrated in pilot activities. in Gongqingcheng City a pilot sub-project demonstrated a smart transport management system. The pilot used drones, big data, and cloud technologies to improve road safety. Another innovation was piloted in flood protection to address public health concerns such as the incidence of schistosomiasis. Still another innovation was piloting an endowment insurance mechanism to assure farmers of basic income after their lands were acquired.  Projects may find restructuring a useful mechanism when implementing projects in centrally planned environments. In this project, centrally directed strategies adjusted priorities. Changes in components were anticipated because prior similar small-town development projects in China also encountered changes in priorities and replacement sub- projects readily identified. Restructurings were effectively used to achieve new targets that adjusted to the changes in priorities and strategies, both at the central and local government levels, but did not clarify the PDO.  Using customized M&E tools may be exploited to support implementation. In this project, a Management Information System (MIS) was customized to monitor project progress and results. Indicators were linked to physical and financial progress, counterpart funding, loan disbursements, procurement and contracts payments. In addition, third party entities were contracted to monitoring safeguards compliance. Their monitoring of safeguards assisted in rapidly identifying possible choke points and informed the adoption of corrective measures. Bank teams may find using customized MIS and third party safeguards monitors helpful in implementing projects with moveable targets and changeable components.

13. Assessment Recommended?

No

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14. Comments on Quality of ICR

The ICR is well written, succinct and candid. It is clear and tidy and provides relevant information and useful analysis. The report is evidence-based and results-oriented. Project outcomes included numerous contributions to various sectors of the provincial economy beyond those financed by the project. These outcomes were not identified in the results framework but they nevertheless strengthened the argument supporting the effective use of resources to achieve outcomes. The ICR is internally consistent. The annexes provided helpful additional information to highlight the importance, for example, of identified entities to ensure ownership of O&M functions of completed investment sub-projects. The quality of analysis justified the ratings. Lessons were based on evidence provided by the operation, particularly the innovations piloted to improve the delivery of services and the experience in land acquisition.

a. Quality of ICR Rating High

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