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World Bank Document PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6680 GEF Huai River Basin Marine Pollution Reduction Project Project Name Public Disclosure Authorized Region EAST ASIA AND PACIFIC Sector Sector: General water, sanitation and flood protection sector (55%); Pollution Control and Waste Management (45%) Project ID P108592 GEF Focal Area International waters Borrower(s) THE PEOPLE’S REPUBLIC OF CHINA Implementing Agency Dongying Municipal Government, Shandong Province, China Office of Foreign Economy No. 127 Lishan Road, Lixia District Jinan Shandong 250013 Public Disclosure Authorized Tel: (86-531) 8697-4445 Fax: (86-531) 8694-2489 [email protected] Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 23, 2011 Date of Appraisal July 8, 2011 Authorization Date of Board Approval October 31, 2011 1. Key development issues and rationale for Bank involvement 1.1 Over the past 30 years, China has seen impressive and unprecedented economic growth. Public Disclosure Authorized However, this rapid growth, compounded by population growth and urban migration, has been achieved at the cost of considerable deterioration of the water environment caused mostly by land-based pollution from industries, farming and domestic sources. This has alerted Chinese policy makers and general public to give pollution reduction and control a much higher priority and this is clearly articulated in the 12th Five Year Plan (2011-2015), which aims to sustain the rapid and steady development of China’s “socialist market economy” following a green growth path. 1.2 The Huai River Basin covers four provinces, i.e. Shandong, Jiangsu, Anhui and Henan. The key development challenge in the Huai River Basin is to maintain the balance between socio-economic development and environmental protection. With rapid economic growth in the region, many river systems in the Huai River Basin have become increasingly polluted rendering it one of the most polluted rivers in China, and consequently more and more nutrients and pollutants are discharged into the Bohai Sea and Yellow Sea contaminating these international waters. Shandong Province, with the longest coastlines of the Bohai Sea and the Yellow Sea within the Huai River Basin, is contributing more polluting loads to these seas than any of the other three provinces. Public Disclosure Authorized 1.3 Coastal cities such as Dongying in Shandong Province are both significant contributors to and direct victims of such pollution. Dongying has been the central city of the Yellow River delta since its establishment in 1983, with over 350km coastlines along the Bohai Sea, and a total population of some 1.8 million. Oil, natural gas, salt, coal and geothermal energy are the major resources of Dongying. Over the past two decades, the city has seen continued growth in different sectors. However, the delicate eco- system of Dongying city has been heavily impacted by increasing water pollution. 1.4 Water pollution in Dongying originates from both urban and rural areas, point and non-point sources such as industries, domestic and animal wastes, and agricultural runoff. In spite of the government’s efforts in pollution control over the years, the total nutrients and pollutants discharged into the Bohai Sea from Dongying city, in terms of COD, BOD, NH+-H, TP and TN, have not decreased substantially. The identified main sources of nutrients and pollutants at Dongying City bordering the Bohai Sea are municipal and industrial sewage, rural wastes and agricultural runoff. 1.5 The main issues with existing water pollution control practices are basically twofold: (a) lack of detailed information on the environmental impact of different water pollution sources, in particular rural wastes and agricultural runoff, and the cost-effectiveness of water pollution control investments; and (b) a supply-driven and infrastructure-focused approach, neglecting potentially more cost-effective demand- side management interventions through introducing incentive mechanisms for nutrient/pollutant loads reduction and enforcing higher standards of effluents, etc. 1.6 Based on stakeholder consultation, the government proposes to select Guangli river watershed which is in Dongying City, Shandong Province and also within Huai River Basin, as the pilot area. Guangli river is a man-made drainage channel for Dongying central district and Kenli county. The river is 48.8km long and has a catchment area of 792km2 covering one urban district and a county with a total population of 745,000. It is chosen as the demonstration watershed because: (a) it is easier to measure and evaluate reliably the project impact, as this watershed is entirely within the jurisdiction of Dongying City and is not subject to interference from external pollution sources; (b) it is the main river following through Dongying city to Bohai Sea, so Dongying’s pollution distribution data largely represents the situation with Guangli watershed; and (c) there is in the watershed a substantial wastewater treatment capacity in operation and this is the only watershed in Dongying covered under DMG’s major water pollution control program. The GEF project is intended to pilot land-based rural waste and non-point agricultural pollution management, water purification using wetland and necessary institutional development, while the complementary government programs continue to concentrate on municipal and industrial water pollution control measures. Successful experiences of the pilot will subsequently be replicated in Dongying, Shandong and Huai River Basin. 1.7 Government strategy. The Master Plan for Dongying Municipality aims to transform Dongying into a Water City and Guangli River into an eco-corridor through improving the water quality and environment. Within this strategy the GEF project seeks to: (a) reduce nutrient and pollution loads from agricultural and rural sources through pilot interventions, complementary to the M&I point source pollution (sewage) treatment being covered by government programs; (b) ‘purify’ the water in the Gunagli river through a constructed wetland at the downstream end of the river; and (c) increase the carrying capacity of the river system by improving the circulation of water through optimal operation of regulating sluice gates along the river. New management mechanism such as farmer environmental protection associations (FEPA) would be established to institutionalize the pilot interventions for sustainability. The project serves dual purposes: to help improve water environment in Guangli river contributing to reduction in pollution of Bohai Sea, and to gain experience for replication over a much wider scope. 1.8 Rational for Bank Involvement. The proposed project is part of the World Bank and GEF Strategic Partnership Investment Fund for Pollution Control in Large Marine Ecosystems of East Asia (the IF), a program approved by GEF in 2005 to finance innovative demonstration projects for pollution control. Compliant with the IF, the proposed project is expected to provide incremental benefits to the baseline Bank-financed China Huai River Basin Flood Management and Drainage Improvement Project (HRBFMDI Project) which became effective in January 2011. 1.9 The proposed project supports China’s national priorities. The “12th Five-Year Plan for Environmental Protection” includes the following priorities: (a) reduction of SO2 and COD; (b) actions taken to control pollution in heavily polluted basins including Huai River, Hai River, Liao River, Tai Lake, and Songhua River basins; (c) expediting treatment of urban sewage and wastes; (d) prevention and control of rural and agricultural point and non-point source pollution; (e) reduction of land-based pollutants to seas; and (f) cleaner water in Bohai Sea. 1.10 The proposed project is consistent with the current Bank Group’s Country Partnership Strategy for China (CPS dated May 23, 2006), which requires that the Bank Group help mainstream environmental concerns into the development process. "Taking steps to minimize water pollution" and piloting and scaling up "policies and mechanisms to address agriculture non-point pollution" are among priority Bank engagement areas. The project also fits with the regional PEMSEA strategy (of which the IF is a partner), which promotes sustainable development in the region. Proposed project development objective(s) 2.1. The project development objective is to demonstrate innovative and cost-effective water pollution control practices in Guangli river catchment of Dongying Municipality, contributing to pollution reduction in the Bohai Sea. 2.2 The main outcome indicators of the proposed project are: (a). reduction in pollutants and nutrients through the constructed wetlands; (b) reduction in pollutants and nutrients from farm fields of the pilot villages; (c) reduction in pollutants and nutrients discharged from the pilot villages; and (d) reduction in pollutants and nutrients entering Bohai Sea from Guangli River Watersheds. 3. Preliminary description 3.1 The proposed GEF project will consist of the following components. The total cost of the proposed project is estimated at US$38.98 million, with an anticipated GEF grant of US$5 million, and the remainder coming from Dongying government budget, participating entities and beneficiary rural households. The implementation period is from 2012 to 2015. Component A. Constructed Wetland and Sluice Gate Operation Optimization (Base Cost: US$22.37 million): This component aims at treatment of Guangli
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