Completion Report
Project Number: 43049-013 Loan Number: 2943 July 2021
People’s Republic of China: Comprehensive
Agricultural Development Project
This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.
CURRENCY EQUIVALENTS
Currency unit – yuan (CNY)
At Appraisal At Project Completion (19 October 2012) (30 June 2018) CNY1.00 = $0.1600 $0.1510 $1.00 = CNY6.2503 CNY6.6225
ABBREVIATIONS
ACWF – All-China Women’s Federation ADB – Asian Development Bank ANR – agriculture, natural resources, and rural development CAD – comprehensive agricultural development COVID-19 – coronavirus disease DMF – design and monitoring framework EIRR – economic internal rate of return EMDP – ethnic minority development plan EMP – environmental monitoring report FIRR – financial internal rate of return FPA – farmer professional association GAP – gender action plan ha – hectare km – kilometer O&M – operation and maintenance PMO – project management office PPMS – project performance monitoring system PRC – People’s Republic of China SOCAD – State Office for Comprehensive Agricultural Development TA – technical assistance WUA – water users association
NOTE
In this report, "$" refers to United States dollars.
Vice-President Ahmed M. Saeed, Operations 2 Director General M. Teresa Kho, East Asia Department (EARD) Director Thomas Panella, Environment, Natural Resources and Agriculture Division (EAER), EARD
Team leader Shingo Kimura, Senior Natural Resources and Agriculture Specialist, EAER, EARD Team members Erika Joy Arcillas, Project Analyst, EAER, EARD Nogendra Sapkota, Senior Social Development Specialist, EAER, EARD
In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
CONTENTS Page
BASIC DATA I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1 A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 4 D. Disbursements 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Technical Assistance 5 H. Consultant Recruitment and Procurement 5 I. Gender Equity 6 J. Safeguards 6 K. Monitoring and Reporting 8 III. EVALUATION OF PERFORMANCE 8 A. Relevance 8 B. Effectiveness 9 C. Efficiency 10 D. Sustainability 10 E. Development Impact 11 F. Performance of the Borrower and the Executing Agency 12 G. Performance of the Asian Development Bank 13 H. Overall Assessment 13 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14 A. Issues and Lessons 14 B. Recommendations 15
APPENDIXES 1. Design and Monitoring Framework 16 2. Project Cost at Appraisal and Actual 18 3. Project Cost by Financier 19 4. Disbursement of ADB Loan Proceeds 21 5. Contract Awards of ADB Loan Proceeds 22 6. Status of Compliance with Loan Covenants 23 7. Gender Action Plan Implementation and Achievements 32 8. Environmental Management 39 9. Involuntary Resettlement or Land Use 43 10. Ethnic Minority Development Measures 49 11. Economic and Financial Reevaluation 58 12. Poverty Reduction Impacts 63
BASIC DATA
A. Loan Identification 1. Country People’s Republic of China 2. Loan number and financing source 2943, ordinary capital resources 3. Project title Comprehensive Agricultural Development Project 4. Borrower People’s Republic of China 5. Executing agency State Office for Comprehensive Agricultural Development 6. Amount of loan $200,000,000 7. Financing modality Project loan
B. Loan Data 1. Appraisal – Date started 25 March 2011 – Date completed 8 April 2011 2. Loan negotiations – Date started 10 October 2012 – Date completed 11 October 2012 3. Date of Board approval 20 November 2012 4. Date of loan agreement 5 December 2012 5. Date of loan effectiveness – In loan agreement 5 March 2013 – Actual 14 March 2013 – Number of extensions 0 6. Project completion date – Appraisal 30 June 2018 – Actual 30 June 2018 7. Loan closing date – In loan agreement 31 December 2018 – Actual 31 December 2018 – Number of extensions 0 8. Financial closing date – Actual 31 December 2018 9. Terms of loan – Interest rate London interbank offered rate (LIBOR) plus 0.60% less 0.20% credit – Maturity (number of years) 20 years – Grace period (number of years) 5 years
10. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 26 August 2013 19 July 2018 58 months
Effective Date Actual Closing Date Time Interval 14 March 2013 31 December 2018 69 months
b. Amount ($ million) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Works Anhui 26,363,650 3,008,250 0 29,371,900 28,315,020 1,056,880 Heilongjiang 24,480,850 4,712,850 0 29,193,700 29,463,211 (269,511) Henan 15,718,050 9,631,950 0 25,350,000 25,417,986 (67,986) Jilin 24,863,650 838,350 0 25,702,000 26,649,594 (947,594) Ningxia 20,657,800 3,442,200 0 24,100,000 21,727,470 2,372,530 Yunnan 26,210,000 1,454,200 0 27,664,200 28,134,718 (470,518) Equipment and 52,703,500 (20,343,400) 0 32,360,100 35,470,813 (3,110,713) Materials Training and 5,947,500 (2,261,100) 0 3,686,400 1,988,076 1,698,324 Study Tours FPAs and WUAs 1,149,000 1,422,700 0 2,571,700 2,833,113 (261,413) Unallocated 1,906,000 (1,906,000) 0 0 0 0 Total 200,000,000 0 0 200,000,000 200,000,000 0 ( ) = negative, FPA = farmer professional association, WUA = water users association.
C. Project Data 1. Project cost ($’000) Cost Appraisal Estimate Actual Foreign exchange cost 114.21 91.17 Local currency cost 240.62 208.42 Total 354.83 299.59 Note: Numbers may not sum precisely because of rounding.
2. Financing plan ($’000) Cost Appraisal Estimate Actual Implementation cost Borrower financed 146.67 90.98 ADB financed 200.00 200.00 Other external financing Total implementation cost 346.67 290.98 Interest during construction costs Borrower financed 8.16 8.62 ADB financed 0.00 0.00 Other external financing 0.00 0.00 Total interest during construction cost 8.16 8.62 ADB = Asian Development Bank. Note: Numbers may not sum precisely because of rounding.
3. Cost breakdown by project component ($’000) Component Appraisal Estimate Actual Improved irrigation and drainage infrastructure 164.25 146.53 Improved agricultural support 105.70 126.13 Improved project management 31.81 18.31 Contingencies 44.91 0.00 Financing charges during implementation 8.16 8.62 Total 354.83 299.59 Note: Numbers may not sum precisely because of rounding.
4. Project schedule Item Appraisal Estimate Actual Date of contract with consultants March 2014 February 2018 Completion of engineering designs May 2017 November 2017 Civil works contract Date of award January 2013–July 2017 30 December 2013–29 June 2018 Completion of work January 2013–July 2018 30 June 2018 Equipment and supplies Dates First procurement January 2013 5 March 2014 Last procurement July 2017 28 June 2018 Completion of equipment installation January 2013 30 June 2018 Start of operations Completion of tests and commissioning 30 June 2018 30 June 2018 Beginning of start-up July 2018 Other milestones
5. Project performance report ratings Ratings Implementation Period Single Project Rating From 14 March 2013 to 30 September 2013 On track From 1 October 2013 to 31 December 2013 Potential problem From 1 January 2014 to 31 December 2014 On track From 1 January 2015 to 31 December 2015 On track From 1 January 2016 to 31 December 2016 On track From 1 January 2017 to 31 December 2017 On track From 1 January 2018 to 31 December 2018 On track
D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person-Days of Members Fact-finding mission 25 March–8 April 2011 4 42 e, k, m, n Loan negotiations 10–11 October 2012 3 6 b, j, n Inception mission 15–20 April 2013 3 11 c, i, n Review mission 1 23 June–1 July 2014 3 21 c, i, n Review mission 2 20–29 April 2015 3 27 a, f, n Midterm review mission 23 May–1 June 2016 4 36 a, g, l, m Review mission 3 28 February–2 March 2017 4 16 d, h, l, m Review mission 4 22–28 November 2017 3 12 i, l, m Project completion reviewa a = associate project analyst, b = counsel, c = director, d = environment officer, e = environmental economist, f = natural resources and agriculture specialist, g = natural resources economist, h = principal environment specialist, i = project analyst, j = project officer, k = senior environment specialist, l = senior natural resources and agriculture specialist, m = senior social development specialist, n = senior water resources specialist. a The project completion review mission was not fielded because (i) the executing agency, State Office for Comprehensive Agriculture Development, ceased to exist and the agricultural investment related function of the Ministry of Finance was transferred to the Ministry of Agriculture and Rural Affairs in March 2018; and (ii) coronavirus disease (COVID-19) related travel restrictions limited the possibility of site visits.
I. PROJECT DESCRIPTION
1. The People’s Republic of China (PRC) has made impressive achievements in securing a stable food supply for the largest population in the world through substantial investments in agriculture and implementing institutional reforms. Nevertheless, food security remains a concern as the population is expected to reach about 1.46 billion in 2030.1 Feeding the growing population with a self-sufficiency rate above 95% required increasing grain production by 50 million tons between 2009 and 2020.2 Water availability is one of the greatest challenges to agricultural development in the PRC, aggravated by climate change that leads to more frequent droughts and floods, and subsequent reductions in grain output. Yet, the average irrigation water use efficiency was about 40% in 2008. Soil fertility has degraded in many regions because of the use of intensive farming techniques over long periods. Coupled with limited agricultural support systems to deliver technical advice and the absence of advanced mechanized plowing and harvesting equipment, these challenges were limiting agriculture productivity growth in the PRC.
2. On 20 November 2012, the Asian Development Bank (ADB) approved a $200 million loan for the Comprehensive Agricultural Development Project, which aimed to enhance food security in the PRC by supporting the government’s comprehensive agricultural development (CAD) program. Five provinces (Anhui, Heilongjiang, Henan, Jilin, and Yunnan) and one autonomous region (Ningxia Hui) were selected as the representative national food-surplus and food-balance regions.3 The project aimed to increase agricultural productivity through (i) developing improved irrigation and drainage infrastructure, (ii) improving agricultural support and capacity building to promote effective operation and maintenance of irrigation and drainage infrastructure, and (iii) introducing modern agricultural technologies.
3. At appraisal, the project’s impact was enhanced food security in the PRC. The project’s outcome was to increase agricultural productivity in the project area. The project delivered three outputs: (i) improved irrigation and drainage infrastructure; (ii) improved agricultural support; and (iii) improved project management.
II. DESIGN AND IMPLEMENTATION
A. Project Design and Formulation
4. The project was consistent with ADB’s country partnership strategy for the PRC, 2011– 2015, which supported the government’s goal of building a harmonious society by (i) addressing the rising income inequality and the widening regional disparities, and (ii) promoting environmentally sustainable development.4 The project interventions also contributed to ADB’s country partnership strategy for the PRC, 2016–2020.5 In particular, the project reflected ADB’s strategic objectives on managing climate change, protecting the natural environment, supporting
1 ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for the Comprehensive Agricultural Development Project. Manila. 2 Government of the PRC, National Development and Reform Commission. 2009. National Plan for Expansion of Grain Production Capacity by 50 Billion Kilograms (2009–2020). Beijing. The grain production in the PRC increased by 123 million tons between 2009 and 2020. 3 For the purposes of this paper, the Ningxia Hui Autonomous Region is included in the reference to the project provinces. 4 ADB. 2012. Country Partnership Strategy: People’s Republic of China, 2011–2015. Manila. 5 ADB. 2016. Transforming Partnership: People’s Republic of China and Asian Development Bank, 2016–2020. Manila.
2 inclusive economic growth, and supporting institutional and governance reform. The project was also in line with ADB’s Operational Plan for Sustainable Food Security in Asia and the Pacific.6
5. The project supported the government’s CAD program to enhance the nation’s food security and represented a holistic approach to addressing the common sector issues. It was also well aligned with the PRC’s Twelfth Five-Year Plan, 2011–2015, which highlighted the importance of food security, agricultural productivity, and water resources management.7 At completion, the project remains consistent with the PRC’s Thirteenth Five-Year Plan, 2016–2020, which continued to prioritize agricultural modernization to ensure national food security.8
6. The project design prepared under the project preparatory technical assistance (TA) was adequate.9 The design incorporated key lessons from the government’s CAD program and ADB’s and other development partners’ irrigation and drainage projects in the PRC. Project preparation included inputs from dialogue with provincial and county government officials as well as rural household interviews. Villagers, including female and ethnic minorities, were consulted about possible risks and benefits of the project, their rights, obligations, and responsibilities. This well- informed consultation ensured local participation and involvement in subproject identification and implementation and the operation and maintenance (O&M) of improved infrastructure. The investment loan lending modality aggregating 69 county projects to six provincial subprojects was appropriate and allowed the implementation of the geographically scattered project across six provinces.10 No change was made in the project design and monitoring framework (DMF) during implementation.
B. Project Outputs
7. Project outputs were implemented as designed. The achievement of project targets in the DMF is in Appendix 1.
8. Output 1: Improved irrigation and drainage infrastructure. At appraisal, this output aimed to (i) improve the drainage of about 117,000 hectares (ha); (ii) upgrade and/or complete surface water irrigation in 56,588 ha; (iii) develop or improve groundwater irrigation systems in 41,183 ha; (iv) introduce water-saving technology in 74,495 ha; (v) form or strengthen about 68 water users associations (WUA) with at least 35% female participation; and (vi) ensure that 50% or more of the project’s employment opportunities are taken up by women. By completion, the project had (i) improved drainage of 92,227 ha; (ii) upgraded and/or completed surface water irrigation in 72,769 ha; (iii) developed or upgraded groundwater irrigation systems in 32,754 ha; (iv) introduced water-saving technology in 105,523 ha; (v) supported the formation and operation of 33 WUAs with at least 35% female membership; and (vi) created 15,928 jobs, 50.1% of which were taken up by women. The outputs were completed almost as envisaged at appraisal except for the lower-than-expected number of WUAs formed and/or strengthened. This is largely
6 ADB. 2015. Operational Plan for Agriculture and Natural Resources: Promoting Sustainable Food Security in Asia and the Pacific in 2015–2020. Manila. 7 Government of the PRC, National Development and Reform Commission. 2011. The Outline of the Twelfth Five- Year Plan, 2011–2015. Beijing. 8 Government of the PRC, National Development and Reform Commission. 2016. The Outline of the Thirteenth Five- Year Plan, 2016–2020. Beijing. 9 ADB. 2011. Technical Assistance to the People’s Republic of China for the Agriculture Infrastructure Comprehensive Development Project. Manila. 10 At appraisal, the project included 69 counties based on geographical, financial, and environmental criteria as well as their water availability and potential for improving agricultural productivity. By completion, the project was implemented in 68 counties as one county was already implementing similar activities independently of the ADB project.
3 because some communities had informal water user groups or formal administrative bodies (e.g., irrigation district management bureaus and township water resources stations) that had the same capacity to collectively manage irrigation and drainage facilities as WUAs. The reallocation of loan proceeds, approved in January 2017, to increase in targeted areas surface water irrigation and water saving technology resulted in the performance targets of these outputs being exceeded at completion.
9. Output 2: Improved agricultural support. At appraisal, the project aimed to (i) improve soil quality in 67,138 ha; (ii) improve 1,866 kilometers (km) of farm access roads; (iii) increase mechanized farming to more than 80% of farmers; (iv) establish 117 farmer professional associations (FPAs), with at least 35% female participation as FPA members and as FPA management committee members; (v) provide 16,904 person-months of training, with at least 50% female participation; and (vi) ensure that 50% or more of the project’s employment opportunities are taken up by women. At completion, the project had (i) improved the soil quality of about 43,600 ha through land leveling, soil testing, appropriately applying fertilizers, returning crop residue to farmland, and reducing salinity; (ii) repaired 1,966 km of farm access roads; (iii) increased mechanized farming to more than 90% of farms by providing 448 tractors and 538 sets of plant protection equipment for field cultivation and harvest activities; (iv) established or strengthened 94 FPAs, with 42% female participation as FPA members and 28.5% female participation as FPA management committee members; (v) provided 4,798 person-months of trainings for 195,204 farmers on balanced fertilization application, farming technologies, and marketing skills; and (vi) created 10,619 jobs, with 50.1% taken up by women. Although the duration of the trainings (person-months) was much less than the original target, the project provided intensive training to the majority of farmers in the project area.
10. Although the quantitative performance targets were not defined in the DMF, the project also (i) improved agricultural practices in 1,226 ha, including quality seed storage warehouses, and seed drying and packaging areas; (ii) reduced land degradation in critical areas through the expansion of 3,069 ha of shelterbelt trees and 183 ha of environmental protection and economic forests; and (iii) demonstrated modern agricultural technologies, including greenhouse agriculture in 79 ha, pollution-free agriculture in 18,051 ha, and organic agriculture in 445 ha.
11. Output 3: Improved project management. At appraisal, the project was designed to (i) improve implementation and management capacity of the executing and implementing agencies through trainings; and (ii) establish an integrated management information system for the project. By completion, the project increased the capacity of the executing and implementing agencies in six provinces and 68 counties through conducting study tours (7 person-months international and 156 person-months domestic), training and capacity development (64 person-months international and 464 person-months domestic), and providing 1,434 sets of office equipment. The project upgraded the information management system and established an operational project performance management system (PPMS) in the State Office for Comprehensive Agricultural Development (SOCAD) in the Ministry of Finance to track the project’s physical progress and financial performance, and to manage loan withdrawals and disbursements.11
11 Because of the national government reorganization in 2018, the SOCAD moved under the Ministry of Agriculture and Rural Affairs, and the functions of the national project management office were delegated to the Budget Evaluation Center of the Ministry of Finance in December 2018.
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C. Project Costs and Financing
12. The estimated project cost at appraisal was $354.83 million. At completion, the actual project cost was $299.59 million, which is about 16% lower than the original cost estimate. The reduced project cost resulted mainly from (i) a lower than estimated contract price arising from competitive bidding and (ii) appreciation of the Chinese yuan during the latter part of project implementation between 2015 and 2017.12 The financing plan at appraisal included a $200.00 million loan from ADB (56.4% of the project cost), $8.16 million from the national government (2.3%), $119.86 million from provincial and county governments (33.8%), and $26.81million from beneficiaries in the form of in-kind contributions (7.5%). At the loan closing, all the ADB loan had been disbursed. The national government financed $8.62 million (2.9%), provincial and county governments financed $68.32 million (22.8%), while beneficiaries contributed $22.66 million (7.5%). The detailed project costs and financing plan at appraisal and actual are in Appendix 2.
13. As a result of the midterm review, the reallocation of loan proceeds was approved in January 2017 to increase the cost of civil works by $23.088 million to provide financing for (i) civil works, which were underestimated at appraisal; and (ii) the increase in targeted areas for surface water irrigation (from 56,588 ha to 89,000 ha) and water-saving technology (from 74,495 ha to 77,000 ha) under output 1, and to meet the higher cost of civil works and project management activities resulting from the depreciation of the Chinese yuan.13 In addition, $1.423 million was reallocated to FPA and WUA activities to increase support for O&M of the farm machines, and irrigation and drainage infrastructure, and enhance the sustainability of project outputs. The reallocation was financed from the savings from the reduction in study tours and equipment, and unallocated loan funds. These minor changes supported the relevance of the project design, accelerated the project implementation, and contributed to the timely completion of the project.
D. Disbursements
14. Disbursement of the loan was made from 26 August 2013 to 19 July 2018. The loan was financially closed on 31 December 2018 as originally planned. Final liquidation of the loan advance account was completed by 25 October 2018. The total loan amount of $200.00 million was fully disbursed. Of the disbursements, $159.71 million was for civil works, $35.47 million for equipment and materials, $1.99 million for training and study tours, and $2.83 million for FPAs and WUAs (equipment and training).
15. Disbursements were made using advance account and statement of expenditures procedures. The executing agency applied appropriate disbursement procedures, and ADB’s disbursement process was efficient. The executing agency reported no problems with the procedures and state auditors raised no significant issues on the management of the advance account. Retroactive financing was not applied under the loan. The projected and actual disbursements appear in Appendix 4.
E. Project Schedule
16. The loan was approved by ADB’s Board of Directors on 20 November 2012, signed by the borrower on 5 December 2012, and declared effective on 14 March 2013. Changes in ADB’s
12 At appraisal, $1 = CNY6.2503; at completion, $1 = CNY6.6225. The exchange rate of the United States dollar to the Chinese yuan ranged from $1 = CNY6.0405 to $1 = CNY6.9638. 13 The reallocation of the loan proceeds by $0.8 million from the unallocated category to the consulting service was approved in December 2013 to improve the reporting processes of the environmental and social safeguard monitoring, but this funding was not utilized.
5 mission leader resulted in the prolonged period between appraisal and Board approval. The first withdrawal application for advance payment was made in August 2013. The first contract was awarded in December 2013. The project was implemented on schedule. The project was completed by 30 June 2018 as originally planned. The loan was closed on 31 December 2018 as originally agreed.
F. Implementation Arrangements
17. The project was implemented by the provincial and county governments in six provinces, while SOCAD in the Ministry of Finance was responsible for the overall planning, coordination, and management of the project as the executing agency and the national project management office (PMO). The implementation responsibility was shared between provincial and county governments. Provincial PMOs were responsible for (i) programming, planning, and coordinating project activities; (ii) implementing project activities relating to technical guidance and training; (iii) procuring goods; and (iv) monitoring and reporting provincial project performance. The existing county CAD offices served as the county PMOs, which served as the implementing unit of each project, responsible for the daily implementation of project activities, quality control, procurement of works and goods, and maintenance of project accounts. During project implementation, SOCAD oversaw all the subprojects effectively and professionally. The sharing of responsibilities between provincial and county PMOs and the experience of managing the national CAD program enabled the implementation of geographically scattered projects.
18. The implementation arrangements were appropriate. As a result of government reorganization, SOCAD ceased to exist and the agricultural-investment-related function of the Ministry of Finance was transferred to the Ministry of Agriculture and Rural Affairs in March 2018, while the management and supervision of implementing this project was transferred to the Budget Evaluation Center of the Ministry of Finance.
G. Technical Assistance
19. The project preparatory TA was implemented between October 2009 and June 2011 (footnote 9). The project was designed on the basis of the results of the TA, reports of the government feasibility study, findings of ADB missions, and discussions with government officials and stakeholders. The TA provided all the inputs needed to prepare the project for ADB financing. To determine the project’s scope and implementation arrangements, stakeholders were consulted during planning, design, and implementation.
H. Consultant Recruitment and Procurement
20. All the consulting services were financed by the counterpart funds as originally planned. SOCAD and provincial PMOs developed the terms of reference for the consulting services and recruited the consultants, following the government procedures and regulations on use of the consulting services. All consulting services were executed productively.
21. The provincial and county PMOs managed procurement and administered contracts effectively. During implementation, ADB awarded (i) 478 civil work contracts, (ii) 173 goods contracts, and (iii) 6 contracts for FPAs and WUAs (equipment and training). The contract packages were procured following ADB’s Procurement Guidelines (2010, as amended from time to time). Procurement methods comprised national competitive bidding, shopping, and community participation. No international competitive bidding was used during the project implementation.
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Community participation was used in small on-farm works, which provided employment opportunities for local farmers and households.
22. The original contract award projections were realistic (Appendix 5). The overall performance of consultants, contractors, and suppliers was satisfactory. There was no significant delay in contract implementation despite the large number of contracts involved in the project. Improving project management capacity through training and upgraded office equipment as well as establishing an information management system at the national PMO contributed to the effective implementation of the project.
I. Gender Equity
23. The project was classified effective gender mainstreaming. The team prepared a gender action plan (GAP) for the project, along with gender-specific measures to ensure that women fully participated in the project and enjoyed project benefits, and that adverse effects on women were avoided or mitigated. The project had a positive impact on women, particularly by (i) enhancing women’s participation and representation in WUAs and FPAs, (ii) increasing employment opportunities for women, and (iii) increasing women’s technical capacity in modern agricultural production technologies and irrigation-related techniques.
24. PMOs at national, provincial, and county levels effectively implemented and monitored gender-related activities and actions and collected gender-disaggregated data during project implementation. The project achieved all seven of the GAP’s gender activities and at least 80% of each of the 12 quantitative gender targets. Women were equally consulted on project implementation, including the publicity campaigns, assessment of farmers’ training needs, and preparation of annual work plans. The project created 24,263 employment opportunities during construction and 2,284 employment opportunities during operation. Women took up 50.1% of these opportunities (50.8% during construction and 42.7% during operation), achieving the original target of 50% at appraisal.
25. A main gender issue in the project area was women’s low participation in decision making. The project promoted participation of women in the WUAs and FPAs. Women comprised 35% of WUA members and 28.1% of WUA committee members. Similarly, women comprised 42% of FPA members and 28.5% in the FPA management committees. The ratio of women members in WUAs and FPAs met the appraisal target of 35%, but the ratio of women in WUA committees (28.1%) fell short of the target as did the ratio of women in FPA management committees (28.5%). In capacity and skills development, more than 50% of participants in the training were women, meeting the original target. PMO staff received training on gender awareness and GAP implementation. The project also enhanced the capacity of the All-China Women’s Federation (ACWF) through training ACWF staff and their participation in project meetings to foster women’s leadership and technical skills. The detailed achievement status of the GAP is in Appendix 7.
J. Safeguards
26. Environment. ADB classified the project as category B for impacts on the environment. During project preparation, an initial environmental examination (IEE) and consolidated environmental management plan (EMP) was prepared by SOCAD, following ADB’s Safeguard Policy Statement (2009). During implementation, no project activities were carried out in environmentally sensitive areas. Monitoring during implementation identified no major adverse impacts on the environment. Mitigation measures were undertaken effectively. No complaints on environmental impacts were recorded during project implementation. Overall implementation of
7 the EMP was satisfactory. By completion, the national PMO submitted 10 semiannual environmental monitoring reports (EMRs) to ADB. From early 2015, ADB provided capacity building and training to the national, provincial, and county PMOs focused on environmental monitoring and reporting, which improved the quality of the EMRs during project implementation. Details of the environmental impact analysis are in Appendix 8.
27. Involuntary resettlement. The project was categorized B for involuntary resettlement impact at the time of project preparation. Given the locations of subprojects were not known at project preparation, a resettlement framework was prepared describing procedures for screening of potential involuntary land acquisition and resettlement impacts and specifying under which conditions a resettlement plan would be prepared. The resettlement framework, including compensation options and entitlements for any involuntary resettlement impacts, was disclosed publicly in advance of detailed designs. The project’s detailed designs avoided involuntary resettlement impacts. In 2013, the PMO, with the support of consultants, screened involuntary land acquisition and resettlement impacts following the resettlement framework and it was found that (i) the subproject infrastructures would be constructed mostly in existing locations, and they would only involve some internal voluntary land use within the villages; (ii) no involuntary land acquisition and resettlement would be required for subprojects; and (iii) no resettlement plan was required.
28. Voluntary land use. The project’s detailed design and construction minimized land use by (i) upgrading the canals and field roads without changing their original locations; and (ii) removing curves from the original canals, which saved land areas within villages. By completion, the project works had used 52.9 ha of land permanently and 6.3 ha of land temporarily under voluntary land use arrangements within villages. The project works used land under village ownership, obviating the need for involuntary land acquisition and resettlement. The land use, temporary or permanent, per involved household was minor, as construction mainly involved the upgrade and use of existing structures. The permanent land use comprised less than 2% of the involved households’ area of land. Of the permanently used land, the use right of 20.3 ha was donated by the farm households, and the use right of the rest included various arrangements within the village, such as land readjustments, reduced labor contribution, and priority use of irrigation water. Measures for temporary use of land included payment of cash or in-kind support in case occupied during the growing season. By completion, there were no complaints received from the households regarding the permanent or temporary land use. Appendix 9 presents details on land use.
29. Indigenous peoples or ethnic minorities. The project was classified as category B for indigenous peoples and did not have significant impact on ethnic minorities. Ethnic minority populations live in Heilongjiang, Jilin, and Yunnan provinces and the Ningxia Hui Autonomous Region, and are among the project beneficiaries. As subproject details were not available during project preparation, SOCAD prepared an ethnic minority planning framework. During project implementation, local PMOs prepared ethnic minority development plans (EMDP) covering 12 counties in Heilongjiang, Jilin, Yunnan, and Ningxia. By completion, the project successfully achieved the implementation of measures for ethnic minorities.
30. The ethnic minorities were consulted equally and they participated in and benefited from the project, including training, jobs, and improved farmland. An emphasis was placed on ethnic minority participation during the FPA and WUA formulation and in the provision of training and extension services. While the ethnic minorities comprise 59% of the population in the project areas with EMDPs, they comprised 59.5% of farmers who received training and 68.8% of those
8 who received employment under the project. The ratio of ethnic minorities in WUAs and FPAs was higher than their population ratio in the project areas with EMDPs. The implementing agencies adequately established the grievance redress mechanisms, and there were no complaints received from the ethnic minorities by completion. Appendix 10 presents the implementation measures for ethnic minorities.
K. Monitoring and Reporting
31. The loan covenants were considered adequate and major covenants were complied with (Appendix 6). One exception is on the loan agreement, schedule 5, para. 2 and the project agreement, schedule, para. 2. Heilongjiang province did not provide counterpart financing because of a shortage of available financial resources. However, Heilongjiang province completed the implementation of the project on schedule with a slightly lower level of output on improved irrigation and drainage infrastructure. Monitoring and reporting of social safeguards for resettlement, ethnic minority development, and gender were initially inadequate because of insufficient awareness and understanding of reporting requirements. However, focused training on social safeguards for the national, provincial, and county PMOs and the engagement of dedicated experts improved the monitoring and reporting of social safeguards during project implementation.
32. The project supported the national PMO to establish the PPMS to monitor all the indicators listed in the DMF and the indicators reflecting the development results contributed by the project. Extensive data sets were collected, updated, and reported annually throughout the implementation period. The national PMO provided ADB with semiannual progress reports and consolidated annual reports. The PPMS and its findings raised great awareness in the PMOs of key issues.
33. The project accounts for the loan were audited annually by the China National Audit Office in accordance with auditing standards acceptable to ADB. Five audit reports were submitted, all on time with unqualified opinion. Audit reports were disclosed in the ADB website in compliance with the agreements.
III. EVALUATION OF PERFORMANCE
A. Relevance
34. The project is rated relevant. The intended project outcome was fully aligned with the PRC’s development priorities and ADB’s country partnership strategy (paras. 4 and 5). The project demonstrated an integrated approach to increase agricultural productivity, combining infrastructure development, and institutional and human capacity building. It supported water- saving irrigation and conservation agriculture, which became more relevant under the PRC’s new policy orientation to promote sustainable agricultural production.14 Project activities responded well to challenges faced by project beneficiaries such as outdated rural infrastructure, including canals and irrigation facilities, and poor farming access roads. The project supported the development of an enabling institutional environment for sustainable and inclusive management
14 National Agricultural Sustainable Development Plan, 2015–2030 released by the Ministry of Agriculture, National Development and Reform Commission, Ministry of Science and Technology, Ministry of Finance, Ministry of Land Resources, Ministry of Environmental Protection, Ministry of Water Resources, and State Forestry Administration on 20 May 2015; and Circular of the Ministry of Agriculture in 2015 on printing and distributing the Action Plan for Zero Growth in the Application of Fertilizer by 2020 and the Action Plan for Zero Growth in the Application of Pesticide by 2020.
9 of irrigation and drainage systems through strengthening WUAs. The project emphasized farmers’ capacity development for advanced agricultural production technology and marketing skills through training and strengthening FPAs. This integrated project design contributed effectively to a sustainable increase in agricultural productivity in the project area and provided a model of comprehensive agricultural development in other parts of the PRC.
35. The overall design was sound and considerate, and no scope change or revision to the DMF was necessary given its high and consistent relevance. The choice of an investment loan modality consolidating the large number of geographically scattered activities into a single project with six provincial subprojects was appropriate. The outcome of the project is appropriately defined as increased agricultural productivity, but the outcome-specific performance targets were defined only in terms of yield growth and irrigation water use efficiency, which were unable to assess the extent to which the project increased agricultural productivity from saving non-water inputs.
B. Effectiveness
36. The project is rated effective in achieving the expected outcome and outputs. All the outcome indicators were exceeded. The project outcome of increased agricultural productivity and irrigation water use efficiency in the project area was realized. Grain yields increased by 53% (target 27%), cash crop yields (excluding vegetables) by 353% (target 27%), and vegetable yields by 35% (target 27%) in the project area between 2010 and 2018. Improved irrigation and drainage infrastructure, and institutional and human capacity building increased overall irrigation water use efficiency to 55% (target 45%) for surface water irrigation systems and 76% (target 75%) for groundwater irrigation systems. The project’s emphasis on gender equality has improved the project effectiveness.
37. Improved irrigation and drainage infrastructure. Improved drainage of 92,227 ha of land (79% of the target) reduced the risk of waterlogging in the project area. The project improved or developed 72,769 ha for surface water irrigation (173% of the target) and 32,754 ha for groundwater irrigation (80% of the target) to provide a reliable water supply for high-yielding grain production. In addition to improving irrigation and drainage infrastructure, water-saving technology was introduced in 105,523 ha (142% of the target) to improve the efficiency of irrigation water use. The project also improved O&M of the irrigation and drainage infrastructure, which is another major cause of inefficient irrigation water use. The project formed or strengthened 33 WUAs (49% of the target). The project found that some existing informal water user groups can perform O&M of the irrigation infrastructure.
38. Improved agricultural support. The project addressed the structural problem of soil degradation by improving the soil quality of 43,600 ha of land (65% of the target) through land leveling, soil testing, appropriate application of fertilizers, returning crop residue to farmland, and reducing salinity. Despite the underachievement of the target, the project expanded shelterbelt tree coverage to 3,069 ha and forests to 183 ha, and demonstrated sustainable agricultural production practice, which complementarily addressed the soil degradation problem. Improvement in 1,966 km of farm access roads (105% of the target) and mechanized farming (113% of the target) reduced labor inputs and increased market access. The project also established or strengthened 94 FPAs (80% of the target). Although the project underachieved the provision of training in person-months (28% of the target), the training programs provided intensive training to a sufficient number of farmers, meeting the training needs in the project area.
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39. Improved project management. The improved project implementation and management capacity of the executing and implementing agencies through provision of training and office equipment contributed to the successful and timely implementation of this extensive project involving six provinces. The integrated management information system allowed the national PMO to consolidate the project data and monitor the project progress effectively.
40. Regarding safeguards and gender equity measures, the overall implementation of the EMP was satisfactory, the resettlement framework was adequately applied in compliance with ADB’s Safeguards Policy, the implementation of EMDPs successfully achieved their targets, and the GAP for effective gender mainstreaming was successfully implemented. In total, the project created 26,547 jobs, with 50.1% taken by women (the target: 50% or more).
C. Efficiency
41. In terms of investment and process efficiency, the project is rated efficient. Economic internal rates of return (EIRRs) were computed to reexamine the economic viability of six provincial subprojects and the overall project (Appendix 11). The reevaluation quantified the major benefits of higher crop yield and diversification of crop production. The reevaluated EIRRs are 16.4% overall with a range of 1.8%–30.8% across six provinces. Given ADB’s minimum required EIRR of 12% applied at appraisal, all the provinces evaluated, apart from Jilin (1.8%) and Heilongjiang (2.7%), are in the acceptable range (11.6%–30.8%). Compared with the appraisal estimates, the reevaluated EIRRs in Jilin and Heilongjiang provinces, and Ningxia Hui Autonomous Region were significantly lower. The reduced EIRRs in Heilongjiang and Jilin provinces are largely driven by (i) higher than estimated baseline production cost, and (ii) lower than estimated yield growth of rice. The economic returns in these two provinces are sensitive to rice prices because of their single-cropping farming system focusing on rice. The sensitivity analysis tested the robustness of the economic viability both at provincial and overall project levels. Overall, the project appears to have remained sufficiently robust in the tested scenarios. The overall EIRR remains higher than 12% across the scenarios, supporting the efficient rating. The project has been effectively implemented and completed on time. However, some contracts had cost overruns and needed the reallocation of loan proceeds after the midterm review.
D. Sustainability
42. The project is rated most likely sustainable. Financial reevaluation was conducted in six provincial subprojects. The reevaluated financial internal rate of return (FIRRs) are 19.6% overall with a range of 5.5%–38.3%, all substantially above the updated weighted average cost of capital of 4.2%. Compared with the appraisal estimates, Ningxia Hui Autonomous Region, together with Yunnan province, had a higher FIRR than estimated at project preparation largely because of higher crop prices and greater diversification to higher value crops. Jilin and Heilongjiang provinces, however, indicated a significantly lower FIRR than originally estimated mainly because of the higher production costs for rice and lower than estimated yield growth of rice.
43. The project provided an integrated model to agricultural productivity growth, combining infrastructure development with the institutional development of farmer organizations and capacity development of farmers. The project provided regular trainings to farmers in integrated pest management, farming skills, soil testing and balanced fertilization application, water-saving technologies, and marketing skills. Participating provinces continue to promote productivity growth in agriculture, using the improved infrastructure and institutional capacity developed through this project.
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44. In terms of project outputs, the increase in farmers’ incomes contributes to the financial sustainability of operating and maintaining the irrigation and drainage infrastructure developed in the project. Strengthening of the FPAs and WUAs has provided the institutional mechanism for farmers to take over the responsibility of O&M of small project facilities, including applying the cost-recovery scheme with the user-pay principle. This participatory approach to infrastructure management increased the sustainability of the project output. These farmer organizations provide an institutional platform for participating and collaborating in managing water resources and adopting more advanced production technologies and marketing strategies. The project also invested in project management capacity in the six participating provinces and 68 counties and established an integrated management information system that connects the national, provincial, and county PMOs. This institutional network allows them to design and implement the integrated project for agricultural development, and also enables them to share information and collaborate across the regions. In this context, the mode demonstrated through the project can be sustained and replicated in other parts of the PRC.
E. Development Impact
45. The development impact is rated highly satisfactory given the significant social, economic, and environmental impacts generated. The project had an intended impact on enhancing food security in the PRC. The project was expected to contribute to the ADB results framework by improving irrigation and drainage on 117,000 ha of land—the irrigation and drainage infrastructure developed by the project improved irrigation and drainage on 92,227 ha of land in the six provinces to better resist drought and floods.15 All the impact indicators had been surpassed by project completion. The grain output in the project area of Anhui, Heilongjiang, Henan, and Jilin provinces increased from 500,700 tons in 2009 to 781,124 tons in 2018, surpassing the original target of 662,700 tons in 2020. Similarly, the grain output in the project area of the Ningxia Hui Autonomous Region and Yunnan Province in 2018 exceeded by 24% the target level in 2020. Average per capita income for farmers in the project area increased by 168% between 2010 and 2018 in constant 2010 price, which far exceeded the original target of an 11% increase by 2020. The data shows that the grain yield and farm income in the project area grew faster than the provincial average in all the provinces, supporting the impacts of the project. However, many factors external to the project intervention contributed to an increase in grain output and growth of farm income, including the technological development and increase in non-farm income opportunities.
46. Poverty reduction impacts. The project prioritized the counties and villages with higher poverty rates and paid particular attention to poor farmers in the project area. At appraisal, of the 68 project counties, 18 were classified as national and 9 as provincial key counties for poverty reduction. By completion, the number of counties classified as national key poverty reduction counties had reduced to seven and no counties were classified as provincial poverty counties. The project contributed to reducing rural poverty through increasing both farm and non-farm
15 The project also contributed to the ADB Corporate Results Framework, comprising (i) roads built or upgraded— provincial, district, and rural roads (km), and (ii) land improved through irrigation, drainage, and/or flood management (ha) through improving 1,966 km of farm access roads, and irrigation and drainage on 92,227 ha of land. In addition, the project is expected to contribute to ADB’s country partnership strategy and results framework (ADB. 2021. Country Partnership Strategy People’s Republic of China, 2021–2025—Toward High-Quality, Green Development. Manila.), comprising (i) solutions to conserve, restore, and/or enhance terrestrial, coastal, and marine areas implemented, and (ii) solutions to enhance pollution control in urban and rural areas implemented through introducing water-saving technology (105,523 ha), balanced fertilizer application (17.351 ha), crop straw returning to farmland (16,559 ha) and integrated pest management program (10,619 ha) as well as demonstration of pollution-free agriculture (18,051 ha) and organic agriculture (445 ha).
12 income opportunities. The project villages achieved a larger reduction of poverty incidence between 2013 and 2018 (12.3%–1.5%) than the average incidence among the participating provinces in the same period (9.5%–1.8%). The project had a positive impact on the poor, women, and ethnic minorities in the project area, particularly by (i) enhancing their participation and representation in WUAs and FPAs, (ii) increasing employment opportunities, and (iii) increasing their technical capacity in modern agricultural production technologies and irrigation-related techniques. The gender mainstreaming and ethnic minority development measures played crucial roles in ensuring the inclusive participation and benefits for poor women and ethnic minorities (paras. 23–25 and 29–30). Appendix 12 presents details for poverty reduction impacts.
47. Environmental impacts. The project increased the efficiency of water use, helping farmers adopt more environmentally sustainable practices. The major environmental impacts include (i) water savings on existing irrigated lands, (ii) reduced use of agrochemicals per hectare, (iii) reduced soil loss and improved soil quality, (iv) reduced salinization and water logging, and (v) increased climate resilience. In addition to improving irrigation and drainage systems, the project promoted water-saving technology in 105,523 ha of land. As a result, water use efficiency increased from 40% in 2010 to 55% by completion (2018) for surface water irrigation systems, and from 60% to 76% in the same period for groundwater irrigation systems. The project helped farmers to adopt deep ploughing (15.403 ha), balanced fertilizer application (17.351 ha), returning crop straw to farmland (16,559 ha), and integrated pest management (10,619 ha) through training and soil testing in the project provinces. The use of deep ploughing reduced nutrient loss and improved the moisture retention and storage capacity of the soil. Balanced fertilizer application reduced the use of chemical fertilizer. Returning of crop straw also increased the use of organic fertilizers and the sequestration of soil organic carbon. A wider adoption of integrated pest management—together with the demonstration of pollution-free agriculture (18,051 ha) and organic agriculture (445 ha)—also reduced the use of agrochemicals in the fields. The soil-testing results show that soil quality improved with most project counties reaching the requirements of good fertility. Soil salinity is a specific problem found in Ningxia Hui Autonomous Region. Over the project, the average rate of salinity declined by 18.6%, contributing to overall soil quality improvement.
F. Performance of the Borrower and the Executing Agency
48. The overall performance of the executing agency and implementing agencies was satisfactory. The borrower and the executing agency fulfilled their obligations during project implementation. The borrower government has been promoting the CAD program since 1988, which provided the basis for the project to (i) adopt an integrated approach to agricultural productivity growth combining infrastructure development, and institutional and human capital development; and (ii) effectively manage geographically scattered projects in 68 counties in six provinces in the PRC. The lending modality of this project required the implementation agencies to manage and administer an unusually large number of contracts (657). The national CAD office as executing agency coordinated effectively with the provincial and county PMOs to fulfill the compliance requirements set in the loan and project agreements, including safeguards, auditing, and financial management. During project implementation, most of the provincial governments provided sufficient counterpart funds and adequate staff resources to ensure effective delivery of project outputs. Heilongjiang province and the participating counties provided less than half of the planned counterpart fund because of the shortage of available financial resources. However, Heilongjiang province implemented the project activities on schedule with a slightly lower level of output on improved irrigation and drainage infrastructure. Effective measures were taken to ensure the project’s sustainability.
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G. Performance of the Asian Development Bank
49. ADB’s performance is rated satisfactory. ADB fielded six missions during implementation: an inception mission, four loan review missions, and a midterm review mission.16 ADB’s review and supervision of project implementation was adequate and timely; processing of the project took longer because of changes in mission leaders. ADB’s response to the inquiries and requests of the executing agency and the provincial and county PMOs was prompt and constructive. ADB reallocated the loan proceeds for effective implementation of the project and provided focused training on environmental and social safeguard monitoring and reporting to the provincial and county PMOs to fulfill the safeguard reporting requirements appropriately. The project preparatory TA was considered relevant and effective. With joint efforts made by all project-related parties, the project has been awarded as “The Best Performing Project in 2016” by the PRC Resident Mission.
H. Overall Assessment
50. Based on its ratings under the four core evaluation criteria following the methodology provided in the Guidelines for the Evaluation of Public Sector Operations, the project is rated successful overall.17 The project was implemented successfully and delivered substantial outputs. It is rated relevant because (i) the intended project outcomes remained fully aligned with country development priorities, and ADB country and corporate strategies; and (ii) the project design was innovative in combining development of irrigation and drainage infrastructure with institutional and human capacity building to improve agricultural productivity. The project is rated effective based on its achievement of the intended outcome and most of the output targets. It is rated efficient based on its high efficiency as an investment supported by the reevaluated EIRRs, and its efficient implementation process. The project is rated most likely sustainable because of (i) the institutional and financial stability of the executing and implementing agencies, which will enable them to continue and scale up the model of comprehensive development of agriculture; (ii) the improved skills of farmers acquired through the training in adopting modern agricultural technologies; and (iii) the higher level of farm income and organizational institutions (WUAs and FPAs) supported by the project, which will enable sustainable operation and management of the irrigation and drainage infrastructure.
Overall Ratings Criteria Rating Relevance Relevant Effectiveness Effective Efficiency Efficient Sustainability Most likely sustainable Overall Assessment Successful Development impact Highly satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory ADB = Asian Development Bank. Source: Asian Development Bank.
16 A completion mission was not fielded because (i) the executing agency, SOCAD, ceased to exist and the agricultural- investment-related function of the Ministry of Finance was transferred to the Ministry of Agriculture and Rural Affairs in March 2018; and (ii) coronavirus disease (COVID-19)-related travel restrictions limited the possibility of site visits. 17 ADB. 2016. Guidelines for the Evaluation of Public Sector Operations. Manila.
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IV. ISSUES, LESSONS, AND RECOMMENDATIONS
A. Issues and Lessons
51. Well-defined project impact and outcome indicators, and monitoring system. The original DMF defined the performance indicators of the impacts as increase in grain output and farm income in the project area in absolute terms. The outcome-specific performance targets were defined in terms of yield growth and irrigation water use efficiency. However, many factors external to the project intervention contributed to the rapid growth of grain yield and farm household income during the project implementation period. Under such circumstances, the impact and outcome of the project cannot be assessed by the absolute changes in grain production, yields, or farm income. The comparison of indicators between the project and non- project areas in the provinces supported the positive impacts of the project, but a clear definition of the baseline assumption and control group together with a monitoring system at appraisal would strengthen the project design.
52. Managing the geographically scattered project. The project covered six provinces and 68 counties in the PRC. The project consolidated county activities into provincial subprojects by replicating and applying a single integrated and comprehensive agricultural development model in all the counties. This lending modality allowed ADB to consolidate the large number of activities scattered across six provinces into six provincial subprojects. However, it required the processing and administering of an unusually large number of contracts (657) as well as environmental and social safeguard monitoring during implementation. The preparation of standardized templates for the civil works and goods bidding documents, combining semiannual project progress reports, EMRs, and social monitoring reports, were useful for effective project implementation. The implementation of the project gender action plan was satisfactory, and most gender targets were achieved. The capacity of project management differs substantially between the implementing agencies. The trainings for the staffs in the provincial and county PMOs and the establishment of the integrated project management information system in SOCAD assisted the successful completion of this project under the effective coordination of SOCAD, which had substantial experience in implementing similar projects supported by the World Bank.
53. Integrated approach, including institutional development, technical support, and training, are crucial for project sustainability. Based on the experience gained from the PRC’s CAD program and ADB’s and other development partners’ irrigation and drainage projects, this project adopted an integrated approach, including (i) investments in irrigation and drainage infrastructure, (ii) participatory institutions to operate and manage the improved infrastructure, and (iii) helping farmers access more advanced technologies and market information. The project’s sustainability was further strengthened by the inclusive design of institutions and capacity development for women and ethnic minorities. The Independent Evaluation Department’s sector-wide evaluation also indicates that the project design, complementing investment in hard infrastructure with institutional development and capacity building, is more likely to contribute to a project’s overall objective and to support sustainable results. 18 The experience of this project endorses that the integrated approach, complementing infrastructure investment with institutional and human capacity building, is key to ensuring the sustainability of the project outcome and outputs.
18 Independent Evaluation Department. 2018. Sector-wide Evaluation: ADB Support for Agriculture, Natural Resources, and Rural Development. Manila: ADB.
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B. Recommendations
1. General
54. Careful design of project performance indicators and targets, and effective monitoring system. The performance indicators and targets for the project and their monitoring framework should be carefully designed at appraisal to allow the assessment of the completed project’s effectiveness. The impact and outcome indicators could be better defined, relative to the baseline or control group, to isolate the project impacts. The selection of baseline or control group matters particularly in countries with a rapidly evolving economy such as the PRC with an effective project performance monitoring system. An effective project performance monitoring system should also be in place to allow the project to monitor the performance of the impact and outcome indicators and targets.
55. More flexible procurement and disbursement procedures, and lending modalities for agriculture, natural resources, and rural development (ANR) sector projects. Investment projects in the ANR sector tend to have a large number of small-scale contracts. Consolidating the numerous geographically scattered activities into a single project with six provincial subprojects allowed this project to adopt an investment loan modality. Although the effective coordination and supervision by the national PMO allowed the implementing agencies to manage and administer an unusually large number of contracts, the long review time of bidding documents delayed the implementation of the project initially. A more flexible procurement and disbursement procedure for small-scale contracts could reduce the transaction costs, enabling a smoother implementation of the ANR sector projects. Other financing modalities such as result-based and policy-based lending, anchored to the achievement of the government’s program or the fulfillment of policy actions, should also be considered. However, this has to be associated with capacity development in implementing agencies on financial management, procurement, and disbursement.
2. Project Related
56. Further action or follow-up. The project was closed successfully and requires no further extension. However, to ensure the sustainability of project outputs, it is recommended that the provincial government and county governments continue to support the O&M of the irrigation and drainage infrastructure over the long term with the participation of farmers. The governance of WUAs and FPAs needs to be followed up, particularly in relation to (i) WUAs charging farmers a fee that covers water charges, (ii) the cost of maintenance of the lower-level systems, and (iii) the participation and representation of women and ethnic minorities. Groundwater extraction levels should be monitored continuously to ensure no overdraft occurs and groundwater recharge equals or exceeds groundwater extraction.
57. Timing of the project performance evaluation report. It is recommended that a performance evaluation review be conducted in 2023 or later, allowing at least 5 years since the physical completion of the project. This is necessary to properly evaluate the project’s effect on increasing agricultural productivity and improving the efficiency of water use through the established or strengthened institutions of WUAs and FPAs.
16 Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design Summary Performance Indicators and Targets Project Achievements Impact As of December 2018: Enhanced food security in Grain output in Anhui, Heilongjiang, In the project area, it achieved 781,124 tons the PRC Henan, and Jilin provinces increased in total in grain output in Anhui (224,300 from 500,700 tons in 2009 to 662,700 tons), Heilongjiang (169,768 tons), Henan tons in 2020; and in the Ningxia Hui (174,056 tons) and Jilin (213,000 tons) Autonomous Region and the Yunnan Provinces Province from 162,300 tons in 2009 to 211,300 tons in 2020 in the project area Also achieved 110,597 tons in Ningxia and 151,901 tons in Yunnan.
Average per capita income for farmers Average per capital income for farmers increased by 11% from CNY3,614 in increased by 168% from CNY3,614 in 2010 2010 to CNY4,012 in 2020 in constant to CNY9,675 in 2018, in constant 2010 2010 values in the project area values in the project area Outcome As of December 2018: Increased agricultural Grain yields increased by 27% from Grain yields increased by 53% from 5.74 productivity in the project 5.74 ton/ha in 2010 to 7.31 ton/ha by ton/ha in 2010 to 8.76 ton/ha in 2018. Cash area 2018, cash crop yields (excluding crop yields (excluding vegetables) by 353% vegetables) by 27% from 1.90 ton/ha from 1.90 ton/ha in 2010 to 8.6 ton/ha by in 2010 to 2.41 ton/ha by 2018, and 2018, and vegetables by 35% from 25.2 vegetables by 27% from 25.2 ton/ha in ton/ha in 2010 to 34 ton/ha by 2018 2010 to 32.0 ton/ha by 2018 Overall irrigation water use efficiency Overall irrigation water use efficiency increased from 40% in 2010 to 55% by 2018 increased from 40% in 2010 to 45% by for surface water irrigation systems, and from 2018 for surface water irrigation 60% in 2010 to 76% by 2018 for systems, and from 60% in 2010 to groundwater irrigation systems 75% by 2018 for groundwater irrigation systems Output As of December 2018: 1. Improved irrigation and Drainage of about 117,000 ha land Drainage of about 92,227 ha land improved drainage infrastructure improved
Surface water irrigation upgraded Surface water irrigation upgraded and/or and/or completed in 56,588 ha completed in 72,769 ha
Groundwater irrigation systems Groundwater irrigation systems developed or developed or improved in 41,183 ha improved in 32,754 ha
Water-saving technology introduced in Water-saving technology introduced in 74,495 ha 105,523 ha
About 68 WUAs formed or About 33 WUAs formed or strengthened, strengthened, with at least 35% female with 37.5% female participation as WUA participation as WUA members and as members and 28.1% female as WUA WUA committee members committee members
About 50% or more of employment The project created 15,928 jobs, with 50.1% opportunities created under the project taken by women. taken up by women 2. Improved agricultural Soil improvement implemented in As of December 2018: support 67,138 ha Soil improvement implemented in 43,600 ha
1,866 km of farm access roads 1,966 km of farm access roads improved improved
Appendix 1 17
Design Summary Performance Indicators and Targets Project Achievements Improved mechanized farming from Improved mechanized farming from 74% of 74% of farmers in 2010 to over 80% farmers in 2010 to over 90%
Establishment and strengthening of Establishment and strengthening of 94 117 FPAs, with at least 35% female FPAs, with 42% female participation as FPA participation as FPA members and as members and 28.5% women as FPA FPA management committee management committee members members
Farmers’ farming skills improved by Farmers‘ farming skills improved by provision provision of 16,904 person-months of of 4,798 person-months of training, with training, with at least 50% female 51.1% female participants participation
50% or more of employment The project created 10,619 jobs, with 50.1% opportunities created under the project taken by women. taken up by women 3. Improved project As of December 2018: management Implementation and management 47 PMs for international training and 439 capacity of the executing and domestic training carried out, 8.27 PMs implementing agencies improved international study tours and 144 domestic through training study tours have been organized for project management staff
Integrated management information A PPMS has been established at NPMO system for the project established and level, all PPMOs and CPMOs accessed operational successfully and recorded project progress sufficiently. CPMO = county project management office, FPA = farmer professional association, ha = hectare, km = kilometer, NPMO = national project management office, PM = person-month, PPMO = provincial project management office, PPMS = provincial project management system, PRC = People’s Republic of China, ton/ha = ton per hectare, WUA = water users association. Source: Asian Development Bank.
18 Appendix 2
PROJECT COST AT APPRAISAL AND ACTUAL ($’000) Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost A. Investment Costs 1. Civil Works a. Anhui Province 12.30 28.37 40.67 9.95 30.83 40.78 b. Heilongjiang Province 10.71 24.99 35.70 10.25 24.94 35.20 c. Henan Province 8.73 21.63 30.36 8.86 28.65 37.52 d. Jilin Province 10.88 22.55 33.42 9.39 30.17 39.57 e. Ningxia Hui Province 9.04 21.24 30.28 7.50 23.61 31.10 f. Yunnan Province 12.23 29.07 41.29 9.93 33.03 42.95 Subtotal (1) 63.89 147.84 211.73 55.88 171.23 227.12 2. Equipment and Materials a. Equipment 20.10 13.40 33.51 18.09 14.01 32.10 b. Materials 9.60 9.60 19.20 7.54 6.18 13.72 Subtotal (2) 29.70 23.00 52.70 25.63 20.19 45.82 3. Research and Monitoring 2.33 21.00 23.34 0.00 6.54 6.54 4. Training and Study Tours a. Training 0.76 6.83 7.59 0.25 2.29 2.54 b. Study Tours 0.45 4.09 4.55 0.07 0.66 0.73 Subtotal (4) 1.21 10.92 12.14 0.32 2.95 3.27 5. Consulting Services 0.07 0.63 0.70 0.62 5.58 6.20 6. FPAs and WUAs (equipment & training) 0.06 1.09 1.15 0.10 1.93 2.03 Subtotal (A) 97.27 204.49 301.76 82.55 208.42 290.98 B. Contingencies 1. Physical 7.78 16.36 24.14 0.00 0.00 0.00 2. Price 1.00 19.77 20.76 0.00 0.00 0.00 Subtotal (B) 8.78 36.13 44.91 0.00 0.00 0.00 C. Financing Charges During Implementation 1. Interest During Implementation 7.41 0.00 7.41 7.50 0.00 7.50 2. Commitment Charges 0.75 0.00 0.75 1.12 0.00 1.12 Subtotal (C) 8.16 0.00 8.16 8.62 0.00 8.62 Total (A+B+C) 114.21 240.62 354.83 91.17 208.42 299.59 Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.
Appendix 3 19
PROJECT COST BY FINANCIER
Table A3.1: Project Cost at Appraisal by Financier National Provincial & County ADB Government Governments Beneficiaries Total Costa % of Cost % of Cost % of Cost % of Cost Taxes and Item Amount Category Amount Category Amount Category Amount Category Amount Duties A. Investment Costs 1. Civil Works a. Anhui Province 26.36 64.8 0.00 0.0 10.92 26.9 3.39 8.3 40.67 2.71 b. Heilongjiang Province 24.48 68.6 0.00 0.0 7.83 21.9 3.39 9.5 35.70 2.35 c. Henan Province 15.72 51.8 0.00 0.0 7.88 26.0 6.76 22.3 30.36 1.92 d. Jilin Province 24.86 74.4 0.00 0.0 5.17 15.5 3.39 10.1 33.42 2.39 e. Ningxia Hui Province 20.66 68.2 0.00 0.0 6.73 22.2 2.89 9.5 30.28 1.99 f. Yunnan Province 26.21 63.5 0.00 0.0 12.18 29.5 2.90 7.0 41.29 2.69 Subtotal (1) 138.29 65.3 0.00 0.0 50.71 24.0 22.72 10.7 211.73 14.05 2. Equipment and Materials a. Equipment 33.51 100.0 0.00 0.0 0.00 0.0 0.00 0.0 33.51 4.83 b. Materials 19.20 100.0 0.00 0.0 0.00 0.0 0.00 0.0 19.20 2.77 Subtotal (2) 52.70 100.0 0.00 0.0 0.00 0.0 0.00 0.0 52.70 7.60 3. Research and Monitoring 0.00 0.0 0.00 0.0 23.34 100.0 0.00 0.0 23.34 2.24 4. Training and Study Tours a. Training (ADB financed) 3.72 49.0 0.00 0.0 3.87 51.0 0.00 0.0 7.59 4.83 b. Study Tours (ADB financed) 2.23 49.0 0.00 0.0 2.32 51.0 0.00 0.0 4.55 2.77 Subtotal (4) 5.95 49.0 0.00 0.0 6.19 51.0 0.00 0.0 12.14 7.60 5. Consulting Services 0.00 0.0 0.00 0.0 0.70 100.0 0.00 0.0 0.70 0.11 6. FPAs and WUAs (equipment & 1.15 100.0 0.00 0.0 0.00 0.0 0.00 0.0 1.15 0.11 training) Subtotal (A) Total Base Cost 198.09 65.6 0.00 0.0 80.94 26.8 22.72 7.5 301.76 24.00 B. Contingencies 1.91 4.2 0.00 0.0 38.91 86.7 4.09 9.1 44.91 2.81 C. Financial Charges During Implementation 1. Interest During Implementation 0.00 0.0 7.41 100.0 0.00 0.0 0.00 0.0 7.41 0.00 2. Commitment Charges 0.00 0.0 0.75 100.0 0.00 0.0 0.00 0.0 0.75 0.00 Subtotal (C) 0.00 0.0 8.16 100.0 0.00 0.0 0.00 0.0 8.16 0.00 Total Project Cost (A+B+C) 200.00 56.4 8.16 2.3 119.86 33.8 26.81 7.6 354.83 26.81 % Total Project Cost 56% 2% 34% 8% 100% Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.
20 Appendix 3
Table A3.2: Project Cost at Completion by Financier National Provincial & County ADB Government Governments Beneficiaries Total Cost % of Cost % of Cost % of Cost % of Cost Taxes and Item Amount Category Amount Category Amount Category Amount Category Amount Duties A. Investment Costs 1. Civil Works a. Anhui Province 28.43 69.7 0.00 0.0 9.83 24.1 2.52 6.2 40.78 2.45 b. Heilongjiang Province 29.29 83.2 0.00 0.0 2.43 6.9 3.48 9.9 35.20 2.11 c. Henan Province 25.33 67.5 0.00 0.0 4.77 12.7 7.42 19.8 37.52 2.25 d. Jilin Province 26.84 67.8 0.00 0.0 9.07 22.9 3.66 9.2 39.57 2.37 e. Ningxia Hui Province 21.42 68.9 0.00 0.0 6.59 21.2 3.09 9.9 31.10 1.87 f. Yunnan Province 28.36 66.0 0.00 0.0 12.12 28.2 2.47 5.8 42.95 2.58 Subtotal (1) 159.67 70.3 0.00 0.0 44.81 19.7 22.64 10.0 227.12 13.63 2. Equipment and Materials a. Equipment 28.85 89.9 0.00 0.0 3.24 10.1 0.02 0.1 32.10 2.57 b. Materials 7.94 57.9 0.00 0.0 5.78 42.2 0.00 0.0 13.72 1.10 Subtotal (2) 36.78 80.3 0.00 0.0 9.02 19.7 0.02 0.0 45.82 3.67 3. Research and Monitoring 0.00 0.0 0.00 0.0 6.54 100.0 0.00 0.0 6.54 0.00 4. Training and Study Tours a. Training 1.54 60.6 0.00 0.0 1.00 39.5 0.00 0.0 2.54 0.20 b. Study Tours 0.43 59.1 0.00 0.0 0.30 40.9 0.00 0.0 0.73 0.06 Subtotal (4) 1.97 60.2 0.00 0.0 1.30 39.8 0.00 0.0 3.27 0.26 5. Consulting Services 0.00 0.00 0.00 0.0 6.20 100.0 0.00 0.0 6.20 0.50 6. FPAs and WUAs (equipment & 1.58 77.8 0.00 0.0 0.45 22.2 0.00 0.0 2.03 0.14 training) Subtotal (A) 200.00 68.7 0.00 0.0 68.32 23.5 22.66 7.8 290.98 18.19 Total Base Cost B. Contingencies 0.00 0.0 0.00 0.0 0.00 0.0 0.00 0.0 0.00 0.00 C. Financial Charges During Implementation 1. Interest During Implementation 0.00 0.0 7.50 100.0 0.00 0.0 0.00 0.0 7.50 0.00 2. Commitment Charges 0.00 0.0 1.12 100.0 0.00 0.0 0.00 0.0 1.12 0.00 Subtotal (C) 0.00 0.0 8.62 100.0 0.00 0.0 0.00 0.0 8.62 0.00 Total Project Cost (A+B+C) 200.00 66.8 8.62 2.9 68.32 22.8 22.66 7.5 299.59 18.19 % Total Project Cost 67% 3% 23% 8% 100% Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.
Appendix 4 21
DISBURSEMENT OF ADB LOAN PROCEEDS
Table A4.1: Actual Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) Actual Annual Disbursement Actual Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2013 10.00 5.0 10.00 5.0 2014 1.28 0.6 11.28 5.6 2015 32.34 16.2 43.62 21.8 2016 62.96 31.5 106.58 53.3 2017 67.55 33.8 174.13 87.1 2018 25.87 12.9 200.00 100.0 Total 200.00 100.0 200.00 100.0 ADB = Asian Development Bank. Source: Asian Development Bank.
Table A4.2: Projected Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) Projected Annual Disbursement Projected Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2013 3.00 1.5 3.00 1.5 2014 17.00 8.5 20.00 10.0 2015 25.00 12.5 45.00 22.5 2016 58.00 29.0 103.00 51.5 2017 60.00 30.0 163.00 81.5 2018 37.00 18.5 200.00 100.0 Total 200.00 100.0 200.00 100.0 ADB = Asian Development Bank. Source: Asian Development Bank.
Figure A4.1: Actual and Projected Disbursement of ADB Loan Proceeds ($ million)
250.00
200.00 Projected Annual Disbursement
150.00 Actual Annual Disbursement
Projected Cumulative $million 100.00 Disbursement Actual Cumulative 50.00 Disbursement
- 2013 2014 2015 2016 2017 2018
22 Appendix 5
CONTRACT AWARDS OF ADB LOAN PROCEEDS
Table A5.1: Actual Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million) Actual Annual Contract Awards Actual Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2014 14.17 7.1 14.17 7.1 2015 58.84 29.4 73.01 36.5 2016 78.27 39.1 151.28 75.6 2017 39.09 19.5 190.37 95.2 2018 9.63 4.8 200.00 100.0 Total 200.00 100.0 200.00 100.0 ADB = Asian Development Bank. Source: Asian Development Bank.
Table A5.2: Projected Annual and Cumulative Contract Awards ($ million) Projected Annual Contract Awards Projected Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2013 4.00 2.0 4.00 2.0 2014 20.00 10.0 24.00 12.0 2015 34.00 17.0 58.00 29.0 2016 64.00 32.0 122.00 61.0 2017 59.00 29.5 181.00 90.5 2018 19.00 9.5 200.00 200.0 Total 200.00 100.0 200.00 100.0 ADB = Asian Development Bank. Source: Asian Development Bank.
Figure A5.1: Actual and Projected Contract Awards ($ million)
250.00
200.00 Projected Annual Contract Awards 150.00 Actual Annual Contract Awards
Projected Cumulative Contract $million 100.00 Awards Actual Cumulative Contract 50.00 Awards
0.00 2013 2014 2015 2016 2017 2018
Appendix 6 23
STATUS OF COMPLIANCE WITH LOAN COVENANTS Reference in Loan/Project Covenant Agreement Status of Compliance The Borrower shall, through SOCAD, make the LA, Article III, Complied with. proceeds of the Loan available to the Participating Section 3.01 All the provincial and Provinces on a grant basis in the amounts specified in county PMOs fulfilled their the PAM. responsibility as The Borrower shall, through SOCAD, cause covenanted. governments of the Participating Provinces to make the proceeds of the Loan available to Project County Governments on a grant basis. The Borrower shall, through SOCAD, cause the Project County Governments to ensure that the proceeds of the Loan are applied to the financing of expenditures on the Project in accordance with the provisions of this Loan Agreement. The Borrower shall cause SOCAD and the Participating LA, Article IV, Complied with. Provinces to carry out the Project with due diligence Section 4.01 and efficiency and in conformity with sound applicable technical, financial, business, and development PA, Article II, practices. Section 2.01 In the carrying out of the Project and operation of the Project facilities, the Borrower shall cause SOCAD and the Participating Provinces to perform all obligations set forth in Schedule 5 to this Loan Agreement. The Borrower shall cause SOCAD to make available to LA, Article IV, Complied with. the Participating Provinces, promptly as needed and on Section 4.02 The necessary resources terms and conditions acceptable to ADB, the funds, were timely provided by facilities, services, land and other resources, as PA, Article II, SOCAD. required, in addition to the proceeds of the Loan, for the Section 2.02 carrying out of the Project and for the O&M of the Project facilities. Whenever applicable, in the carrying out of the Project, LA, Article IV, Complied with. the Borrower shall, through SOCAD, cause the Section 4.03 Participating Provinces to ensure that competent and qualified consultants and contractors, acceptable to PA, Article II, ADB be employed to an extent and upon terms and Section 2.03 conditions acceptable to the Borrower and ADB. Except as ADB may otherwise agree, all Goods, PA, Article II, Works, and Consulting Services to be financed out of Section 2.04 the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where Goods, Works, or Consulting Services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. The Borrower shall, through SOCAD, cause the Participating Provinces to ensure that the Project be carried out in accordance with plans, design standards, specifications, work schedules, and construction methods acceptable to the Borrower and ADB, as applicable. The Borrower shall, through SOCAD, cause
24 Appendix 6
Reference in Loan/Project Covenant Agreement Status of Compliance the Participating Provinces to furnish to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. The Borrower shall ensure that the activities of its LA, Article IV, Complied with. departments and agencies with respect to the carrying Section 4.04 out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. The Borrower shall enable ADB's representatives to LA, Article IV, Complied with. inspect the Project, the Goods and Works, and any Section 4.05 relevant records and documents related to the Project. PA, Article II, Section 2.09 The Borrower shall, through SOCAD, (i) maintain LA, Article IV, Complied with. separate accounts and records for the Project; (ii) Section 4.06 Separate project accounts prepare annual financial statements for the Project in were established and timely accordance with financial reporting standards PA, Article II, settlement were made. acceptable to ADB; (iii) have such financial statements Section 2.06 Annual audit reports audited annually by independent auditors whose were submitted on time. qualifications, experience and terms of reference are Audit report found weak acceptable to ADB, in accordance with international accounting management in standards for auditing or the national equivalent some provinces and acceptable to ADB; (iv) as part of each such audit, have counties, but corrective the auditors prepare a report (which includes the measures were taken to auditors’ opinion on the financial statements, use of the strictly conduct accounting Loan proceeds and compliance with the financial management based on the covenants of this Loan Agreement as well as on the project accounting use of the procedures for the imprest account and regulations. statement of expenditures) and a management letter; The audit reports were and (v) furnish to ADB, no later than 6 months after the disclosed on ADB’s end of each related fiscal year, copies of such audited website. financial statements, audit report and management letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request. ADB shall disclose on its website the annual audited financial statements for the Project and the opinion of the auditors on the financial statements within 30 days of the date of their receipt. The Borrower shall cause SOCAD and the Participating Provinces to enable ADB, upon ADB’s request, to discuss the financial statements for the Project and the Borrower’s financial affairs where they relate to the Project with the auditors appointed pursuant to subsection (a)(iii) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. This is provided that such discussions shall be conducted only in the presence of an authorized officer
Appendix 6 25
Reference in Loan/Project Covenant Agreement Status of Compliance of the Borrower unless the Borrower shall otherwise agree. The Borrower shall ensure that any facilities relevant to LA, Article IV, Complied with. the Project are operated, maintained and repaired in Section 4.07 accordance with sound applicable technical, financial, business, agricultural development, and O&M PA, Article II, practices. Section 2.10 The Borrower shall take all actions which shall be LA, Article IV, Complied with. necessary on its part to enable SOCAD and the Section 4.08 Participating Provinces to perform their obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. Implementation Arrangements LA, Schedule 5, Complied with. The Borrower through SOCAD and the participating para. 1 Project implementation was provinces, shall ensure that the project is implemented in accordance with the in accordance with the detailed arrangements set forth PA Schedule, arrangements in the PAM. in the PAM. Any subsequent change to the PAM shall para. 1 become effective only after approval of such change by the Borrower, Participating Provinces and ADB. In the event of any discrepancy between the PAM and the Loan and Project Agreement, the provisions of these Agreements shall prevail. Counterpart Financing LA, Schedule Complied with, except in The Borrower shall, through SOCAD, ensure and 5, para. 2 Heilongjiang province. cause the Participating Provinces and the Project However, Heilongjiang County Governments to ensure that the counterpart PA, Schedule, province implemented the financing necessary for the completion of the Project is para. 2 project activities on provided in time. schedule with slightly lower level of output on improved irrigation and drainage infrastructure.
The Participating Provinces shall take out and maintain PA, Article II, Not applicable for small with responsible insurers or make other arrangements Section 2.05 scale irrigation and drainage satisfactory to ADB for insurance of the Project facilities infrastructure. to such extent and against such risks and in such amounts as shall be consistent with sound practice. Without limiting the generality of the foregoing, the Participating Provinces shall undertake to insure, or Not applicable as there are cause to be insured, the Goods to be imported for the no imported goods under Project and to be financed out of the proceeds of the the project. Loan against hazards incident to the acquisition, transportation, and delivery thereof to the place of use or installation and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. ADB and the Participating Provinces shall cooperate PA, Article II, Complied with. fully to ensure that the purposes of the Loan will be Section 2.07 accomplished. The Participating Provinces shall cooperate fully with ADB to ensure that the purposes of the Loan will be accomplished.
26 Appendix 6
Reference in Loan/Project Covenant Agreement Status of Compliance The Participating Provinces shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of their obligations under this Project Agreement, or the accomplishment of the purposes of the Loan. ADB and the Participating Provinces shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, the Participating Provinces, the Project Counties and the Loan. The Participating Provinces shall furnish to ADB all PA, Article II, Complied with. such reports and information as ADB shall reasonably Section 2.08 Reports were submitted to request concerning (i) the Loan and the expenditure of ADB as required. the proceeds thereof; (ii) the Goods, Works and Consulting Services, and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations, and financial condition of the Participating Provinces and the Project Counties; and (v) any other matters relating to the purposes of the Loan. Without limiting the generality of the foregoing, the Participating Provinces shall furnish to ADB semiannual reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following reporting period. Promptly after physical completion of the Project, but in A project completion any event not later than 3 months thereafter or such report including details on later date as ADB may agree for this purpose, the the on the execution and Participating Provinces shall furnish to ADB a report, in initial operation of the such form and in such detail as ADB shall reasonably project was prepared and request, on the execution and initial operation of the submitted to ADB. Project, including its cost, the performance by the Participating Provinces and the Project Counties of their respective obligations under this Project Agreement and the accomplishment of the purposes of the Loan. The Participating Provinces shall promptly as required, PA, Article II, Complied with. take all actions within their powers to maintain their Section 2.10 corporate existence, to carry on their operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of their business. The Participating Provinces shall at all times conduct their business in accordance with sound administrative,
Appendix 6 27
Reference in Loan/Project Covenant Agreement Status of Compliance financial, environmental and agricultural development practices, and under the supervision of competent and experienced management and personnel. Except as ADB may otherwise agree, the Participating PA, Article II, Complied with. Provinces shall not sell, lease or otherwise dispose of Section 2.11 any of their assets which shall be required for the efficient carrying on of their operations or the disposal of which may prejudice their ability to perform satisfactorily any of their obligations under this Project Agreement. Except as ADB may otherwise agree, the Participating PA, Article II, Complied with. Provinces shall apply the proceeds of the Loan to the Section 2.12 Items of expenditure financing of expenditures on the Project in accordance financed out of the with the provisions of the Loan Agreement and this proceeds of the Loan were Project Agreement and shall ensure that all Goods, used exclusively in the Works, and Consulting Services financed out of such carrying out of the project. proceeds are used exclusively in the carrying out of the Audit report found a case of Project. misuse of machinery and equipment for the project, but corrective measure was taken. The Participating Provinces shall promptly notify ADB PA, Article II, Complied with. of any proposal to amend, suspend, or repeal any Section 2.13 provision of their charter and shall afford ADB an adequate opportunity to comment on such proposal prior to taking any action thereon. Project Sustainability PA, Schedule, Complied with. The Participating Provinces shall ensure that the para. 3 Provincial and county PMOs POCADs and the COCADs promote the Project promoted the sustainability sustainability particularly with respect to the WUAs, of the irrigation and FPAs, and farm machinery service providers by drainage infrastructure ensuring that (a) these organizations prepare and developed in the project implement a management plan aimed at improving cost through strengthening FPAs recovery for services provided; (b) the WUAs charge and WUAs to take over the farmers a fee that covers water charges as well as the responsibility of O&M of cost of maintenance of the lower-level systems; and (c) small project facilities, the FPAs and other farm machinery service suppliers including applying the cost- are cognizant of the future need to replace their recovery scheme with user- machinery pool. The Participating Provinces shall pay principle. ensure that the Project County Governments conduct tariff reviews and adjustments as needed following national guidelines and public awareness programs. Groundwater Use PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 4 Groundwater extraction and the COCADs to (a) monitor ground water level was monitored to extraction level in any Subproject using groundwater to ensure no overdraft will ensure no overdraft will occur; and (b) where occur and groundwater groundwater monitoring shows that excessive recharge equals or exceeds extraction can be a problem, stop or reduce groundwater extraction. groundwater extraction in those Subproject areas to ensure that groundwater recharge equals or exceeds groundwater extraction.
28 Appendix 6
Reference in Loan/Project Covenant Agreement Status of Compliance Land Acquisition and Involuntary Resettlement The Participating Provinces shall cause the POCADs PA, Schedule, Complied with. and the Project County Governments to ensure that all para. 5 land and all rights-of-way required for the Project are made available for the Project implementation in accordance with the agreed schedule and all land acquisition and land use adjustments are implemented in compliance with (a) all applicable laws and regulations of the Borrower relating to land acquisition and land use; (b) the Involuntary Resettlement Safeguards; (c) the RF; and (d) all measures and requirements set forth in the respective RP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. The Participating Provinces shall cause the POCADs PA, Schedule, Not applicable, as there and the Project County Governments to ensure that RP para. 6 were no involuntary land be prepared for all Subprojects in the Project Counties acquisition and resettlement for which they are required following the procedure set during implementation. out in the RF before physical commencement of Project Land use was arranged Works. through voluntary process within the villages. Details are provided in Appendix 9. Without limiting the application of the Involuntary PA, Schedule, Same as above. Resettlement Safeguards or the RP, the Participating para. 7 Provinces shall cause the POCADs and the Project County Governments to ensure that no physical or economic displacement takes place in connection with the Project until: (a) compensation and other entitlements have been provided to affected people in accordance with the RP; and (b) a comprehensive income and livelihood restoration program, if required, has been established in accordance with the RP. Ethnic Minority Development The Participating Provinces shall cause the POCADs PA, Schedule, Complied with. and the COCADs to ensure that the preparation, para. 8 Details are provided in design, construction, implementation and operation of Appendix 10. the Project and all Project facilities comply with (a) all applicable laws and regulations of the Borrower relating to ethnic minority peoples; (b) the Indigenous Peoples Safeguards of ADB; (c) the EMPF; and (d) all measures and requirements set forth in the EMDP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. The Participating Provinces shall also cause the PA, Schedule, Complied with. POCADs and the COCADs to ensure that EMDP be para. 9 EMDPs were prepared prepared for all Subprojects in the Project Counties for covering 12 counties in which they are required following the procedure set out Heilongjiang, Jilin, Yunnan, in the EMPF before physical commencement of Project and Ningxia, following the Works. EMPF. Environment PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 10 All first NCB document and the COCADs to ensure that the preparation, (model) for civil works were
Appendix 6 29
Reference in Loan/Project Covenant Agreement Status of Compliance design, construction, implementation, operation and reviewed and noted that all decommissioning of the Project and all Project facilities applicable laws and comply with (a) all applicable laws and regulations of regulations of the Borrower the Borrower relating to environment, health and relating to environment, safety; (b) the Environmental Safeguards; and (c) all IEE, and EMP were measures and requirements set forth in the IEE, the incorporated. Details are EMP, and any corrective or preventative actions set provided in Appendix 8. forth in a Safeguards Monitoring Report. Safeguards Monitoring and Reporting PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 12 The semiannual and the Project County Governments to do the environmental monitoring following: (a) submit semiannual Safeguards reports, and social Monitoring Reports to ADB and disclose relevant monitoring reports were information from such reports to affected persons submitted as required. promptly upon submission; (b) if any unanticipated environmental and social risks and impacts arise during construction, implementation or operation of the Project that were not considered in the IEE, the EMP, the RP, and the EMDP, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan; and (c) report any actual or potential breach of compliance with the measures and requirements set forth in the EMP, the RP or the EMDP promptly after becoming aware of the breach. Safeguards Related Provisions in Bidding PA, Schedule, Complied with. Documents and Works Contracts para. 11 The Participating Provinces shall cause the POCADs and the COCADs to ensure that all bidding documents and contracts for Works contain provisions that require contractors to: (a) comply with the measures relevant to the contractor set forth in the IEE, the EMP, the RP, and the EMDP and any corrective or preventative actions set forth in a Safeguards Monitoring Report; (b) make available a budget for all such environmental and social measures; and (c) provide the Participating Provinces with a written notice of any unanticipated environmental or social risks or impacts that arise during construction, implementation or operation of the Project that were not considered in the IEE, the EMP, the RP, and the EMDP. Human and Financial Resources to Implement PA, Schedule, Complied with. Safeguards Requirements para. 13 Human and financial The Participating Provinces shall cause the POCADs resources to implement and the Project County Governments to make available safeguard requirements necessary budgetary and human resources to fully were provided. implement the EMP, the RP and the EMDP. Prohibited List of Investments PA, Schedule, Complied with. The Participating Provinces shall ensure that no para. 14 No proceeds of the loan proceeds of the Loan are used to finance any activity were used to finance any included in the list of prohibited investment activities activity included in the list provided in Appendix 5 of the SPS. of prohibited investment
30 Appendix 6
Reference in Loan/Project Covenant Agreement Status of Compliance activities provided in Appendix 5 of the SPS. Gender and Development PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 15 PMOs at provincial, and and the COCADs to, ensure that: (a) the GAP is county levels effectively implemented, monitored in a timely manner, and implemented the GAP and reported to ADB annually in accordance with principles monitored gender-related of ADB's Policy on Gender and Development (1998) activities and actions; and and adequate resources are allocated for this purpose; reported to ADB as (b) progress in achieving the GAP targets are reflected required. Details are in the Project progress reports and the Project provided in Appendix 7. completion report through collection and compilation of gender-disaggregated data, wherever relevant; and (c) bidding documents include provisions as specified in the GAP. Grievance Redress Mechanism PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 16 The grievance and the COCADs to ensure that within 3 months of the redress mechanism was Effective Date, complaint and problem management well established mechanisms acceptable to ADB and in accordance with the PAM, the IEE, the RP and the EMDP respectively, are established for environmental, social and other matters arising out of the Project, and functioning effectively to (a) review and document eligible complaints of the Project stakeholders; (b) proactively address grievances; (c) provide the complainants with notice of the chosen mechanism/action; and (d) prepare periodic reports to summarize (i) the number of complaints received and resolved; (ii) chosen actions; and (iii) final outcomes of the grievances and make these reports available to ADB. Eligible complaints shall (a) be those related to the Project and on (i) any of the service providers; and (ii) any person responsible for carrying out the Project; and (b) include (i) grievances due to any safeguards; (ii) social and/or economic issues; and (iii) complaints on misuse of funds and other irregularities. Poverty Reduction PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 17 Details are provided in and the COCADs to ensure that (a) the Project provide Appendix 12. targeted benefits to the poor in an equitable manner; (b) the poor receive an equal share of agricultural training provided under the Project; and (c) the Project contractors maximize the employment of local poor people. The Participating Provinces shall further cause the POCADs and the COCADs to ensure that early facilitation is provided for the formation of WUAs and FPAs in accordance with the Project planning during the Project implementation. Labor Standards PA, Schedule, Complied with. The Participating Provinces shall cause the POCADs para. 18 The project created 26,457 and the COCADs to ensure that the construction employment, of which, contractors (a) provide timely payment of wages and women took up 50.1%. All
Appendix 6 31
Reference in Loan/Project Covenant Agreement Status of Compliance safe working conditions to all workers; (b) provide PRC labor laws, and core women’s employment, where appropriate, and pay labor standards were equal wages to the female and male employees for respected and included in equivalent labor, and special consideration will be bidding contracts and given to hire ethnic minority people, women, and other ensured women received disadvantaged and vulnerable persons; and (c) not equal pay for equal work as employ child labor as required by the relevant laws and men. regulations of the Borrower. The Participating Provinces shall further ensure that the POCADs and the COCADs cause the contractors involved in the Project implementation to maximize the employment of local poor people who meet the job and efficiency requirements for construction and maintenance of the Project irrigation systems. Governance and Anticorruption The Participating Provinces shall cause the POCADs PA, Schedule, Complied with. and the Project County Governments to (a) comply with para. 19 ADB’s Anticorruption Policy (1998, as amended to date) and acknowledge that ADB reserves the right to investigate any alleged corrupt, fraudulent, collusive or coercive practice relating to the Project; and (b) cooperate with any such investigation and extend all necessary assistance for satisfactory completion of such investigation. The Participating Provinces shall cause the POCADs PA, Schedule, Complied with. and the Project County Governments to ensure that the para. 20 anticorruption provisions acceptable to ADB are included in all bidding documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of the executing and implementing agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project. ADB = Asian Development Bank, COCAD = County Office for Comprehensive Agricultural Development, EMDP = ethnic minority development plan, EMP = environment management plan, EMPF = ethnic minority planning framework, FPAs = farmer professional associations, GAP = gender action plan, IEE = initial environmental examination, LA = loan agreement, NCB = national competitive bidding, O&M = operation and maintenance, PA = project agreement, PAM = project administration manual, POCAD = Provincial Office for Comprehensive Agricultural Development, RF = resettlement framework, RP = resettlement plan, SOCAD = State Office for Comprehensive Agricultural Development, WUAs = water users associations. Source: Asian Development Bank.
32 Appendix 7
GENDER ACTION PLAN IMPLEMENTATION AND ACHIEVEMENTS
A. Introduction
1. The project was classified as effective gender mainstreaming (EGM) following the Asian Development Bank (ADB) guidelines. A gender action plan (GAP) was prepared to ensure women participate in and benefit from the project. The GAP was implemented successfully during the project implementation. Monitoring of GAP implementation was done with the assistance of local consulting firms, and monitoring results were included in the project’s progress reports and consolidated social monitoring reports submitted to ADB.
B. Project Gender Design Features
2. The project’s gender design features focused on (i) participation of women in water users’ associations (WUA); and (ii) training and capacity building of women; (iii) women’s economic empowerment and participation in decision making; (iv) women’s federations’ participation in project implementation; and (v) providing benefits to ethnic minority women farmers in a culturally appropriate manner.
C. The GAP Implementation and Achievements
3. As shown in Table A7.1, GAP has 7 activities and 12 targets. By completion, the project completed 7 out of 7 gender activities (100%) and each of 12 gender targets achieved at least 80% of the numerical target value.
4. GAP emphasized women’s participation and women’s access to employment opportunities during the project implementation. The project created a total of 26,547 jobs including 23,897 unskilled jobs and 2,650 skilled jobs. In total, 50.1% of the jobs were taken by women. Of the unskilled jobs, 60% were taken by women respectively. The project also trained 2,900 project managers on gender and implementation of the GAP. Women benefited from the project’s emphasis on equal pay to equal value of work, and women’s income increased.
5. Women’s workload was reduced due to the improved irrigation system. For example, it was reported during interviews of key informants such as managers of the WUAs, farmer focus group discussions and households survey in Ningxia subproject that time spent on irrigation reduced by almost half, from about 120 hours per hectare per year before the project to about 60 hours per hectare per year after the project. Women diversified their income by taking up project created employment opportunities, by partly shifting the cropping pattern from grain-crop concentration to cash crops and vegetable production facilitated by the improved irrigation systems, and by more engagement in off-farming work enabled by reduced farm work. For example, the share of female farmers engaging in off-farming activities increased from 32% to 47% between 2013 and 2018 in the project area in Ningxia.
6. The project put great efforts to promote women’s participation and decision making in WUAs and farmers professional association (FPA). By completion, women accounted for 37.5% of the WUA members, 28.1% of the WUA managers, 42.6% of the FPA members, and 28.5% of the FPA managers, respectively. While the targets of 35% women members in WUAs and FPAs were achieved, the women managers of WUAs and FPAs were less than 35% due to the long tradition of men’s dominant position in community affairs in rural areas in the People’s Republic of China.
Appendix 7 33
Gender equality and women empowerment in Ningxia Autonomous Region In most of the project areas, the married men are often out of their village to engage in off-farm employment in cities, while most of the married women stay in their village. As a result, women become the main labor force in agriculture. The project supported the improvement of irrigation and drainage infrastructure, and agricultural support, which relieved the physical workload of women and allowed women to participate more in off-farm activities. The project also empowered women in the project area by providing opportunities to participate in the decision making.
For example, Ms. Wang Chunyan in Xinjiepu Village of Wuzhong city in Ningxia Autonomous Region, participated in the project preparation and proactively settle many disputes in the village during the implementation. In the village, women took up 55% of project employment, obtaining CNY90 of daily wage. In addition to improving economic welfare of women, the interview revealed that (i) participation in the training helped women upgrade their knowledge and skills in modern faming technology; and (ii) participation in project implementation and WUAs and FPAs increased women’s motivation to engage more in village decision making. All these activities increased the awareness of the communities that women are equally important, and they play more important role in the project activities and in agricultural production. For example, in later part of the project implementation, the village committee became more eager to mobilize women farmers for interviews and group discussions. The case in Wuzhong city provides an example that the inclusive design of institutions and capacity development for women contributed to the sustainability of project output.
7. In terms of conclusion and lessons learned, the GAP activities were well implemented and targets were met. The focused design of the GAP, which was strongly centered around enhancing capacities for women to participate more actively and in leadership positions in the WAUs and FPAs, helped to guide the successful implementation of the gender actions and to achieve results towards improved leadership capacities and leadership roles of women in natural resource management community organizations. Furthermore, the implementation of a project gender action plan helped to raise awareness and to enhance the project stakeholders’ understanding on gender equality issues.
Table A7. 1: Implementation Achievements of the Gender Action Plan (by completion) Gender Outputs Equality and/or Component Activities Planned Targets Completion Status 1. Project Component: Improved Irrigation and Drainage Infrastructure Gender- Project Women beneficiaries will be Activity completed and balanced information will informed about target achieved. information be disclosed to opportunities to access During the project disclosure and women. project funds, technical design, 700 village participation advice, training, and meetings or focused employment opportunities. group discussion was organized to disclose the
project information for approximately 200,000
farmers of which 52.0%
were women. This activity allowed the
county PMOs to assess the training and
employment needs of women.
34 Appendix 7
Gender Outputs Equality and/or Component Activities Planned Targets Completion Status Women will be consulted Activity completed and Consultation of about how irrigation and target achieved. women on drainage infrastructure will During the project project be made more beneficial to implementation, 6,990 implementation them. village meetings or focused group discussion was organized for approximately 500,000 farmers, of which 55% were women. Women were equally consulted and their priorities were incorporated on irrigation channel lines, locations of irrigation and drainage infrastructure, and development of annual work plans of the project. The improved irrigation and drainage infrastructure were made more beneficial to women. Employment Employment At least 50% of employment Activity completed and opportunities opportunities created under target achieved. will be made the project will be taken up 15,928 jobs created, with equally by women. 50.1% taken by women. accessible to Jobs were related to both women project construction and and men. operation. Capacity and Women will About 50% or more of Activity completed and skills have equal training opportunities will be targets achieved. development access to all provided to women. 92,576 farmers trained training and training curricula programs. included irrigation related techniques, WUA
management, etc. Of which, 51.5% were
women.
At least 1/3 of the training Activity completed and Programs will sites will be selected in the targets achieved. contain gender- local communities and at 413 trainings organized, sensitive times sensible to enable of which 76.8% located in curricula. active participation of both villages. men and women. Through information Women will be consulted disclosure at the project about how capacity design stage and development content will be consultations at the adapted to their needs. project implementation stage, training needs
Appendix 7 35
Gender Outputs Equality and/or Component Activities Planned Targets Completion Status including content, time, location, and methods were assessed and adapted by equally consulting women and men. Participation of Women will About 35% or more women Activity completed and women participate participating in WUAs, with 1 of 2 targets achieved. equally in the relevant participation in the Supported 33 WUAs with strengthening WUA management bodies. 6,660 members including and/or 37.5% of women 153 formation of all ； WUAs. managers including 28.1% of women. 2. Project Component: Improved Agricultural Support Gender- Project Women beneficiaries will be Activity completed and balanced information will informed about indicators achieved Information be disclosed to opportunities to access During the project disclosure and women. project funds, technical design, 700 village participation advice, training, and meetings or focused employment opportunities. group discussion was organized to disclose the
project information for approximately 200,000
farmers of which 52.0%
were women. This activity allowed the
county PMOs to assess the training and
employment needs of
women.
Consultation of During the project women on Women will be consulted implementation, 6,990 project about how agricultural village meetings or implementation support will be made more focused group discussion beneficial to them. was organized for approximately 500,000 farmers, of which 55% were women. Women were equally consulted and their priorities were incorporated on organizations of WUAs and FPAs, skill development and development of annual work plans of the project. The improved agricultural support was made more beneficial to women.
36 Appendix 7
Gender Outputs Equality and/or Component Activities Planned Targets Completion Status Employment Employment At least 50% of employment Activities completed opportunities opportunities created under and target achieved will be made the project will be taken up 10,619 jobs created equally by women. under the project, with accessible to 50.1% taken by women. both women Jobs were related to and men. project construction and operation. Capacity and Women will At least 50% of training Activities completed skills have equal opportunities will be and targets achieved development access to all provided to women. At least 86,790 farmers trained training 1/3 of the training sites will on agricultural skills, programs. be selected in the local FPAs, etc., Of which, communities and at times 51.1% were women. sensible to enable active 338 farmer technical participation of both men trainings organized, with and women. 76.8% located in villages Programs will Women will be consulted Through information contain gender- about how capacity disclosure at the project sensitive development content will be design stage and curricula. adapted to their needs. consultations at the project implementation stage, training needs including content, time, location, and methods were assessed and adapted by equally consulting women and men. Participation of Women will About 35% or more women Activities completed women participate will be participating in FPAs, and 1 of 2 targets equally in the with relevant participation in achieved
strengthening/ FPA management bodies. 94 FPAs were supported: formation of all A total of 6,110 members FPAs. participated with 42.6% of women; and of these, a total of 276 managers with 28.5% of women in management bodies 3. Project Component: Improved Project Management Strengthen Staff training Staff training curricula for Activities completed gender includes gender six provincial and 68 and target achieved awareness awareness and COCADs include capacity Staff trainings for the among project the GAP. enhancement measures for management staff of six staff gender awareness and the provincial and 68 GAP implementation. COCADs (IA) included capacity enhancement measures for gender
Appendix 7 37
Gender Outputs Equality and/or Component Activities Planned Targets Completion Status awareness and the GAP implementation Enhance the Effective Three or more provincial Activities completed ACWF’s role implementation and six or more county and targets achieved and monitoring and/or village ACWF offices ACWF staff in six of gender- will be upgraded by provinces trained on the related providing staff training on related topics (leadership activities and leadership and thematic and skills training) by actions skills related to community participating in the empowerment, ethnic provincial trainings, minorities (where workshops, project applicable), and gender meetings, etc. issues. 68 County ACWFs
The county ACWF and/or village level chairwoman will be a ACWFs participated in member of the county-level the project trainings project leading group. related to leadership and thematic skills County ACWF chairwomen were members of the county- level project leading group. County ACWF participated in the county level project meetings for the project designs, implementation, monitoring, etc. Ensure Women’s At least 30% female Activities completed women’s rights economic and representatives should run and target achieved in project political for village council elections 33.3% female decision empowerment to ensure consultation and representatives ran for making and in the participation during project village council elections implementation community decision making and implementation.
Sex- Gender- Gender-sensitive indicators Activities completed disaggregated sensitive will be set up in areas such and targets achieved M&E indicators will as access to technical Gender-sensitive be included in advice and training, indicators were set up in the project M&E employment and income, areas of consultation, system. and women’s participation in WUAs representation in decision and FPAs, and access to making. employment opportunities. M&E systems were able to gather sex-disaggregated data. Gender sensitive indicators included quotas and participation
38 Appendix 7
Gender Outputs Equality and/or Component Activities Planned Targets Completion Status of women in relevant activities. ACWF = All-China Women’s Federation, COCAD = County Office for Comprehensive Agricultural Development, FPA = farmer professional association, GAP = gender action plan, IA = implementing agency, M&E = monitoring and evaluation, WUA = water user’s association. Sources: The consolidated external social monitoring reports, the domestic PCR, the PMOs, etc. between March and May 2020.
Appendix 8 39
ENVIRONMENTAL MANAGEMENT
A. Environment Categorization and Due Diligence
1. The project was classified as an environmental safeguards category B project by the Asian Development Bank (ADB) for which an initial environmental examination (IEE) was prepared. Environmental analysis was carried out in accordance with national environmental regulations and the ADB Safeguard Policy Statement (SPS, 2009).1 The State Office for Comprehensive Agriculture Development (SOCAD) engaged a qualified local institute, the China Agriculture University Environmental Impact Assessment Center, to complete the environmental assessment and prepare the domestic environmental impact assessment reports. IEE and consolidated environmental management plan (EMP) prepared by SOCAD, was following ADB‘s Safeguard Policy Statement (SPS, 2009), and consistent with and complementary with the domestic environmental impact assessment report that meets the requirements of the People’s Republic of China’s (PRC) Environmental Impact Assessment Law (2003) and relevant regulations.2
B. Institutional Setup and Capacity Development
2. Institutional arrangements and responsibilities for the implementation of measures and activities were defined in the IEE, EMP, and environmental monitoring plan. The provincial project management offices (PMO) were responsible to ensure compliance with environmental safeguards during implementation. Each PPMO recruited one environmental monitoring agency after the project effectiveness to carry out the monitoring activities required in the EMP and oversee environmental compliance. These agencies were adequately staffed and worked in consultation with staff at county environmental protection bureaus (EPB), as well as with staff of water conservation bureaus, to monitor compliance with the environmental regulations of the PRC during construction and operation. The inspections mainly covered construction activities, but they also reviewed the affected environment. Each county project management office (CPMO) appointed at least one environmental safeguards officer to be responsible for the coordination of EMP implementation in its level, including grievance redress mechanism (GRM), and submit its environmental monitoring report (EMR) to their provincial project management office (PPMO) for the consolidation and submission to ADB.
3. The project provided technical support and training, as well as domestic consultants during implementation to assist the Central and provincial PMOs to oversee the monitoring of environmental impact and mitigation measures. Training was also provided to civil work contractors, farmers and farmer professional associations to raise environmental awareness and implement environmental mitigation measures. In accordance with the EMP and the project administration manual (PAM), the provincial PMOs and county PMOs organized training on (i) environmental laws, regulations, and policies; (ii) implementation of mitigation measures; (iii) establishing GRM and handling of environmental conflicts with nearby residents; (iv) environmental technologies and procurement; (v) facility maintenance and operation; (vi) environmental monitoring and supervision; and (vii) documentation and reporting.
1 ADB. 2009. Safeguard Policy Statement. Manila. 2 Government of the PRC, National People’s Congress. 2003. Environmental Impact Law of the People’s Republic of China. Beijing.
40 Appendix 8
C. Environment Safeguard Monitoring and Reporting
4. The EMP defined the environmental protection measures to be undertaken for the project in each province covering the potential environmental impacts and mitigation measures, environmental monitoring program, public consultation program, reporting and supervision, feedback and adjustment mechanism, and institutional responsibilities. The project EMP was implemented well in general based on the quality of work being significantly improved over the life of the project, construction and rehabilitation works were small and relatively simple, no project activities were carried out in environmentally or socially sensitive areas, and no major adverse impacts were identified. Additionally, all environment related project covenants were complied with throughout project implementation.
5. Based on the IEE analysis the key environmental issue for the project was water which noted potential impacts, including (i) use of additional water resources; (ii) ground water tables; (iii) irrigation water quality; (iv) impact of irrigation tail water on ambient water quality; (v) lake eutrophication; (vi) water impoundments; and (vii) pollution prevention and public health. The PMOs reported on water quality, and water resources provided a water balance for each EMR. The project maintained a positive water balance, where water use did not exceed water availability throughout the project as water resource use efficiency was improved in the project from improved infrastructure and services as discussed in paragraph 10.
6. The project was required to submit semi-annual EMRs to ADB. A total of 10 reports were submitted to ADB, with the quality of the reports improving as project implementation progressed and capacity of the PMOs was improved. From 2013 through the end of 2014 the semi-annual EMRs were submitted as part of the semi-annual progress report and focused on impact of construction and operation, soil monitoring, water quality, water balance, agriculture product quality and provided an overall evaluation and assessment. From early 2015 ADB with domestic consultants provided additional capacity building and training support to the central, provincial and county PMOs to increase the understanding and raise awareness about environmental monitoring and improve the quality of the EMRs. From 2015, the provincial PMOs submitted individual semi-annual EMRs. All semi-annual progress reports submitted by the provincial PMOs to ADB included extensive ambient environmental quality data, which was focused on the domestic reporting requirements. Upon the request of ADB, since the second half of 2017 reporting period, the Central PMO started to consolidate the six-provincial semi-annual EMRs and submit to ADB one consolidated report. All PMOs gradually enhanced their environmental safeguard monitoring arrangements during project implementation for the project, which enhanced the environmental safeguard monitoring arrangements during project implementation. The provincial PMOs, together with recruited environmental monitoring and evaluation agencies, conducted regular field visits to the project counties for monitoring and supervision.
7. The project is considered in compliance with the project’s safeguard documents and national environmental regulations. This was confirmed by the field visits during the annual review mission. The implementation of the project did not cause serious environmental concerns, and that all impacts were being mitigated. No complaints on environmental impacts were recorded during project implementation.
D. Environmental Benefits
8. The project comprised two investment components (i) improved irrigation and drainage infrastructure, and (ii) improved agricultural support and a third capacity development component.
Appendix 8 41
9. Output 1 improved irrigation infrastructure and drainage infrastructure achieved 92,227 ha of improved farmland drainage and 72,769 ha of farmland with upgraded surface water irrigation infrastructure and 32,754 ha of farmland with upgraded ground water irrigation infrastructure. The project introduced water saving technology to 105,523 ha of farmland. The environmental benefit generated from these activities was significant water savings from improved irrigation water use efficiency and reduced salinization3 and waterlogging of farmland that cause reduced yields. Project achievements saw water use efficiency increased from 40% in 2010 to 55% by close of the project in 2018 for surface water irrigation systems, and from 60% in 2010 to 76% by 2018 for groundwater irrigation systems.
10. Output 2 improved agricultural support focused on (i) improving soil quality for 43,600 ha that included applying soil testing and analysis for appropriate fertilizer application, and salinity improvement, (ii) constructing 1,966 km of farm access roads, (iii) applying improved agriculture practices including quality seed production, storage and distribution, plant protection and integrated pest management, and machinery, (iv) land degradation addressed through planting of farm shelterbelts, promoting the return of crop residue to farmland, and (v) greenhouse demonstrations with pollution free and organic agriculture production systems. The environmental benefits from these activities were reduced use of agrochemicals, reduced soil loss and improved soil quality and fertility levels,4 recovery of plastic mulch and recycling, and promotion of green and organic agriculture.
11. The project helped farmers to adopt integrated pest management (10,619 ha), deep ploughing (15.403 ha) and balanced fertilizer application (17.351 ha) through training, demonstration and soil testing in the project provinces. The use of deep ploughing facilitated the release of soil nutrients, improved the physical properties of the soil, promote the growth of roots, reduced nutrient loss and improved the moisture retention and storage capacity of the soil. The soil testing results show that soil quality improved with most project counties reaching the requirements of good fertility. Soil salinity is a specific problem found in Ningxia Hui Autonomous Region. Over the project the average rate of salinity declined by 18.6% contributing to overall soil quality improvement.
E. Environmental Management Plan Implementation Costs
12. During project preparation, no specific cost estimate was prepared for the implementation of the EMP, however it did include an estimate for total costs for the monitoring program during project implementation at $300,000. There was also an additional allocation from the institutional strengthening and training program during project implementation, estimated at $200,000. These costs, in line with PRC common practices, were incorporated into the total project investment and management costs. ADB has been unable to determine the actual expenses for environmental monitoring, administration, compliance inspection, institutional strengthening, and training because the PPMOs and CPMOs accessed multiple sources of funding for the implementation of the plan.
3 Soil salinity is a specific problem found in Ningxia Hui Autonomous Region. Over the project the average rate (g/kg) of salinity declined by 18.6% contributing to overall soil quality improvement. 4 Soil quality was assessed and rated against the domestic classification of soil fertility. Key parameters included soil pH, organic matter, available phosphorous, potassium, and nitrogen, as well as calcium and sulphate and salinity. Soil quality had increased with most project counties reaching the requirements of level V, indicating good fertility.
42 Appendix 8
F. Conclusion and Lessons
13. The project EMP was implemented well as no major adverse impacts occurred and the expected minor, temporary, and localized impacts were addressed through proper environmental management and associated mitigation measures that were properly implemented during construction and operation. The project PMOs gained considerable capacity and understanding on environmental issues during project implementation. The project met the initial objectives and delivered substantial environmental benefits through improved irrigation water use efficiency and hence water savings, reduced agrochemicals used, soil erosion halted, soil quality improved, plastic mulch recovered from the fields, and overall climate resilience increased.
14. Implementation arrangements. Initially the PMOs found it difficult to coordinate the monitoring of the large number of counties and small subprojects. Additionally, expectations for domestic environmental assessments and ADB requirements are quite different. While the domestic requirements focus on ambient environmental quality, ADB focuses on the monitoring of specific impacts to control project implementation if needed. Combining the implementation of the two approaches has proven to be difficult. It is important to provide support to the PMOs through domestic consultants and ADB guidance to build their understanding of ADB safeguard requirements and associated capacity and skills to enable them to prepare extensive environmental monitoring reports. An example is the provision of the EMR template prepared by EAER, that helped guide the provincial PMOs to prepare better quality reports.
15. Linking environmental benefits to project activities. Training to farmers was provided throughout project implementation however, there were still gaps between project achievement and targets. The infrastructure targets were mostly met, and it was found that local village committees or related parties’ paid attention to the maintenance of project infrastructure as tangible outputs of the project. However, there was still a gap in farmers awareness and understanding about the environmental benefits that can be found from better farming practices. It is suggested that training programs should pay attention to increase farmers awareness and understanding about the environmental benefits to ensure local farmers and village committees pay adequate attention to good agriculture/environment practices.
Appendix 9 43
INVOLUNTARY RESETTLEMENT OR LAND USE
A. Introduction
1. Involuntary resettlement. The project was categorized as B for involuntary resettlement during the project preparation phase. Given the locations of subproject were not known at project preparation, a resettlement framework was prepared describing procedures for screening of potential involuntary land acquisition and resettlement impacts, and specifying under which conditions a resettlement plan would be prepared. The resettlement framework including compensation options and entitlements for any involuntary resettlement impacts was disclosed publicly in advance of detailed designs. The project’s detailed designs avoided involuntary resettlement impacts. In 2013, with the support of consultant, the PMO screened involuntary land acquisition and resettlement impacts following the RF. It was found that (i) the subproject infrastructures would be constructed mostly in existing locations and they would only involve some internal voluntary land use within the villages; (ii) no involuntary land acquisition and resettlement would be required for subprojects; and (iii) no resettlement plan was required. By completion, the project did not involve any involuntary land acquisition and resettlement.
2. Voluntary land use. By completion, the project works used 52.9 ha of land permanently and 6.33 ha of land temporarily under voluntary land use arrangements within villages. The land uses for project works were within the village lands that remains under village ownership. The land use, temporary or permanent, per involved household was minor, as construction was mainly upgrade and use of existing structures. The permanent land use comprised less than 2% of the involved households’ area of land. Of the permanently used land, the use right of 20.3 ha was donated by the farm households, and the use right of the rest included various arrangements within the village, including land readjustments, reduced labor contribution and priority use of irrigation water. Measures for temporary use of land included payment of cash or in-kind support in case occupied during the growing season. By completion, there were no complaints received from the households regarding the land use.
B. Institutional Arrangements and Capacity of the Executing Agency/Implementing Agencies
3. The State Office of Comprehensive Agricultural Development (SOCAD), as the project executing agency (EA), was responsible for the overall coordination, monitoring, and supervision of the project, including land use and safeguard compliance. The participating provinces/region and counties, as the project implementing agencies (IAs), were responsible for implementation of the project activities and the land use and related safeguards in their jurisdictions. PMOs were set up under the EA and each IA for daily project coordination and monitoring including land use and safeguards. Each of the project participating provinces/region recruited an institution for its external monitoring on social issues as well as submitting progress reports. The project recruited an individual consultant for consolidated external social monitoring reports to ADB since January 2018.
4. The PMOs had strong capacity in implementation of domestic projects. The project provided training to develop capacity on ADB social safeguards. Two trainings on social safeguards were conducted for the participating provinces/region in May 2016 and February 2017, respectively. Immediately after these trainings, the provincial PMOs organized similar trainings to the county PMOs, county level IAs, and other relevant stakeholders.
44 Appendix 9
C. The Land Use
5. By the project completion, (i) a total of 794.1 mu1 (52.9 hectares) of land was permanently used within the villages. The land was still collectively owned by the villages and did not need to be transferred or acquired. Only the land use rights were adjusted within the villages; and (ii) a total of 9.33 ha of land was temporarily used, which was restored immediately after the project construction were done. Specific information is presented in the following paragraphs.
Permanently Used Land
6. The permanently used land for the project is presented in Table A9.1. For involved households, the average amount of land use accounted for less than one percent of the total farmland.
Table A9.1: The Permanently Used Land (by the project completion) Involved Involved Involved Land used Land used villages2 households people Land used ratio ratio (mu) (No.) (No.) (persons) (mu/household) (mu/person) Anhui 17.3 55 1,993 7,329 0.009 0.002 Heilongjiang 0.5 45 0 0 0 0 Henan 9.4 115 3,130 12,725 0.003 0.001 Jilin 3.2 3 8 22 0.4 0.145 Ningxia 1.0 36 0.001 Yunnan 762.7 38 12,380 48,614 0.06 0.015 Total 794.1 293 17,250 68,485 0.044 0.011 Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March and June 2020.
7. The land use was mainly for additionally constructed irrigation canals/ditches and widening of field roads. The land use in Yunnan includes construction of new service roads, new canals and drainage ditches, and widening of old field roads. For example, in Qilin subproject area, construction of a canal (36 km length and 1 m width) used 55.3 mu land; and widening and lengthening of an old service road (from 2.1 km long and 2.2 m wide to 13.8 km long and 4.5 m wide) used 86.3 mu land. Permanently used land in the other participating provinces was little, which was mainly for construction of tube wells and irrigation pumping stations.
8. The permanent land use has been minimized by updating the canals and field roads in their original locations as much as possible, and cutting off curves of the original canals. The cutting off the curves of the original irrigation canals also saved a certain area of farmland for villages.
9. The permanent land use did not affect ownership of the land, and only involved the land use rights. Ownership of the land still belongs to the villages collectively. There was no involuntary land acquisition and house reallocation. The permanent land use involved less than 2% of each of the involved households’ total land, which was obtained for land use rights through voluntary
1 A mu is a Chinese unit of measurement (1 mu = 666.67 square meters). 2 Administrative villages.
Appendix 9 45 processes within the villages, which included voluntary donation or other forms of arrangements. Except for 0.5 mu (0.03 ha) of the permanently used land in Heilongjiang that had use rights in the villages, use rights of the other permanently used land were contracted to individual farm households before the project. After the project, all the permanently used lands are being used collectively. Of the permanently used land, use rights of 20.3 hectares (38.3%) were donated by the involved farm households and there was no payment involved. The other farm households involved in land use-right changes were satisfactorily paid or supported in different ways. As the screening and assessment undertaken in 2013, the scope of land use of each involved household was minor, the project mainly upgraded existing infrastructures, and land use rights were donated or arranged through other voluntary means in the villages.3
10. Measures to address the land use-rights changes varied across the participating provinces and from one subproject to another. These measures were consulted and discussed with and agreed by the involved farmers. In Anhui, Heilongjiang, Henan, and Jilin provinces, the permanently used land was mainly for construction of new tube wells and irrigation pumping stations. Each well used 2 m2 of farmland in Henan and Heilongjiang, 0.5 m2 in Anhui, and 0.5 m2 to 8 m2 in Jilin. In Heilongjiang, the new tube wells were constructed in the area between field roads and farmland, and the wells used the collective land. After the project, the land is still used collectively and no payment or support was needed. In Anhui, Henan, and Jilin, the total used land area and change of land use right for each household was very small, less than 0.5% of total land. The involved households were provided priorities to use the irrigation water and employed in maintenance of the irrigation systems. The involved households were satisfied with these measures; and did not ask for other compensation.
11. In Ningxia, only cutting-off the irrigation curves permanently used 1 mu farmland. The involved households were supported with either a reduction of labour contribution to the communities4 or getting same amount of the collectively-held farmland. In Yunnan, most of the permanently used land contracted to households was addressed with the measure of reallocation of collectively-held farmland with the same size or more. In some participating villages in Yunnan, the involved households donated their land use rights. For example, construction of field roads in Yiliang County permanently used 0.1 mu farmland of Mr. Hongbin’s family. His family has use rights of more than 5 mu of farmland and donated use right of the used farmland.
12. By the project completion, there were no complaints from involved households about the permanent land use.
Temporarily Used Land
13. Impacts of temporary land use were avoided or minimized by carrying out the project construction in non-growing seasons, occupying non-farmland instead of farmland, using ready- mix concrete, and so on. All the 9.33 hectares (ha)5 of temporary used land including 3 ha in Yunnan and 6.33 ha in Anhui had been restored immediately after completion of the project
3 The voluntary process within the villages, which included voluntary donation or other forms of arrangements was considered adequate by the project executing agency supported by the consultant, which undertook screening and assessment on land use in 2013; and the resettlement plan was not required. 4 In some communities, activities for community welfare are done by community members for free. Compulsory labor contribution is required of each household. 5 It does not include temporarily used land in the other four participating provinces/region, because no crop was involved and the land was immediately restored after the activities completed.
46 Appendix 9 construction work. By the project completion, there were no villagers’ complaints about the temporarily used land.
14. Measures to address the temporarily used land also varied from place to place. All the measures were consulted and discussed with and agreed by the involved farmers. In Heilongjiang, Henan, Jilin and Ningxia, almost all construction work was conducted during off- farming seasons, and land was restored immediately after completion of the construction. No crops were affected and the land areas were timely restored which did not affect crop cultivation in farming seasons.
15. In Anhui, 7,539 trees were cut down due to the project construction, involving 1,069 farmer households with 4,361 people living in 34 administrative villages. Some of the trees were collectively owned and some belonged to individual households. All the cut-down trees including the collectively-owned trees were given to the involved households for free as agreed. The households have rights to use the trees at their discretion. After the construction was completed, the project planted young trees for the involved households at no charge. In Yunnan, 3 hectares of farmland were temporarily used for the project construction, which involved more than 1,000 households with 3,800 people. All the involved households were provided with cash for loss of their crops by the project contractors.
D. Consultation and Participation
16. Throughout the project cycle, involved villages and households and other stakeholders were consulted by the project executing agency, implementing agencies, and consultants involved in the project.
17. The involved farmers, including women and the poor, were consulted and participated through various means during the socioeconomic survey, design and construction of the project facilities and implementation of land use arrangements. By the project completion, a total of 115,720 farmers were consulted through 751 consultation events. Of the participants, 51.5% were women (Table A9.2).
Table A9.2: Consultation and Participation Events No. Participants Total (person) Women (%) Anhui 72 9,720 56.5 Heilongjiang 129 32,980 53.4 Henan 91 7,240 50.7 Jilin 196 28,580 50.3 Ningxia 168 17,450 49.6 Yunnan 95 19,750 49.5 Total 751 115,720 51.5 Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March to May 2020.
18. Many consultation events were conducted regarding the land use. For example, in Yunnan, (i) each village involving project-related land use conducted at least two consultations; (ii) 95 consultations were carried out; and (iii) 19,750 farmers were consulted. All the households involved in permanent land use and 90% of households involved in temporarily land use were
Appendix 9 47 consulted. Their concerns and suggestions were adequately integrated into the project designs and arrangements of land use-right changes or adjustments.
E. Grievance Redress Mechanism
19. The six participating provinces have established grievance redress mechanisms (GRM) during the project implementation. The project related information boards including contact details were set up in the subproject areas. Involved people can complain and ask for solutions using the four-layers of GRM process: village management committees, project county PMOs, municipality PMOs, and provincial PMOs, as needed. Farmers can also directly complain to county or provincial PMOs.
20. The GRM was effective because it was in line with usual ways that farmers express their complaints if any; and it was geographical, socially, and economically accessible for farmers. It is a formal way/channel in the PRC that farmers complain to or communicate with their village committees whenever needed, orally or in written form, and most of issues could be resolved by the village committees. The project information was disclosed to all village households before the detailed design. All the infrastructure activities and related matters of land use, compensation, etc. were consulted and discussed with and agreed by the villagers. Scope of the project-related land use on each of the involved households was minor. By the project completion, there were no complaints from the villagers.
F. Monitoring
21. Implementation of social measures, including the resettlement framework and land use related affairs were monitored. Due diligence on the land use impacts was undertaken in 2013. Monitoring were undertaken annually for 2014 and 2015 and semi-annually since 2016. Each of the project participating provinces recruited an institution for social external monitoring of the project within their areas between. Monitoring of land use related affairs was included in the external social monitoring reports submitted to PMO and ADB. Annual external social monitoring reports for 2014 and for 2015 were prepared and submitted by each of the six participating provinces. Semi-annual external social monitoring reports for 2016 and for the first half of 2017 were submitted by each of the participating provinces. Consolidated external social monitoring reports covering all the six participating provinces were submitted for the second half of 2017 and for 2018.
22. Quality of the social monitoring reports before 2017 was not satisfactory, as these were prepared by local firms and poorly written. Quality of the external monitoring reports much increased since 2017 after conducting training as well as engaging an experienced consultant for social monitoring.
G. Conclusions
23. Involuntary resettlement. The project did not involve involuntary land acquisition and house demolition.
24. Voluntary land use. The project involved voluntary use of land, permanently or temporarily, through various voluntary arrangements within villages. The project permanently used 52.9 ha of land. The permanent land use was minimized by updating canals and field roads
48 Appendix 9 in their original locations as much as possible, and cutting-off curves of original canals. The temporary land use was minimized through carrying the project construction work in non-growing seasons, occupying non-farmland, using ready-mix concrete, and so on.
25. The permanent land use did not affect land ownership, and it just involved land use rights changes or modifications. The scope of land use was minor for each of the involved households. The involved farmers were adequately and satisfactorily consulted for their agreements on land use right changes, including donations or other measures. Many involved households donated their land use rights, and other involved households were supported with collectively-owned land or other ways. Cash payment was a small amount, which was either paid by the project contractors or by the village committees, and it was not an issue. Farmer-accessible GRM processes were set up by each of the implementing agencies, and these were effective. By the project completion, there were no complaints from the involved households.
26. The EA, IAs and the PMOs paid great attention to the project related land use affairs. Public participation was emphasized throughout the whole process of the project implementation. Monitoring on land use were included in monitoring reports submitted during the project implementation.
H. Lessons and recommendations
27. The following points can be drawn from the project: (i) consultation with and participation of the involved farmers in the project design made great contribution to minimization of the land use for project construction, and avoidance of involuntary land acquisition and house demolition impacts; (ii) the EA and IAs consulted with involved farmers and stakeholders; and implemented the land use through voluntary agreements with involved farmers; and (iii) the EA/IAs’ capacity in monitoring and reporting was weak in initial years, but improved in later years through training of project staff and engagement of experienced consultant on ADB social safeguards.
28. It is recommended for future agriculture projects to (i) continue consultations with involved villages and households in design and implementation of project facilities as well as land use for the project; (ii) avoid involuntary land acquisition and resettlement impacts by adopting suitable designs; (iii) adopt consultative, participatory and voluntary land use arrangements when there is no need of involuntary land acquisition; and (iv) recruit experienced consultants for monitoring and reporting to ADB.
Appendix 10 49
ETHNIC MINORITY DEVELOPMENT MEASURES
A. Introduction
1. The project was classified as category B for indigenous peoples as sizeable ethnic minority populations live in Heilongjiang, Jilin, and Yunnan provinces and the Ningxia Hui Autonomous Region; and are among the project beneficiaries. Subproject details were not available and an ethnic minority planning framework (EMPF) was prepared during the project preparation. During the project implementation, ethnic minority development plans (EMDP) were prepared covering 12 counties in four provinces: two in Heilongjiang, two in Jilin, two in Ningxia and six in Yunnan. No ethnic minority farmers lived in the project area in Henan and Anhui provinces. EMPF and EMDPs were prepared to ensure that (i) ethnic minorities equally participate in project activities; (ii) project benefits would be distributed equitably among relevant communities and individuals; and (iii) culturally appropriate measures would be taken to avoid or mitigate adverse impacts and enhance benefits for ethnic monitories.
B. Institutional Arrangements and Capacity of the Executing Agency/Implementing Agencies
2. The State Office of Comprehensive Agricultural Development (SOCAD), as the project executing agency (EA),1 was responsible for the overall coordination, monitoring, and supervision of the project, including social safeguards. The six participating provinces/region and the participating counties, as the project implementing agencies (IA), were responsible for implementation of the project activities including social safeguards in their jurisdictions. Project Management Office (PMO) were set up under the EA and IAs for daily coordination and monitoring. Each of the project participating provinces/region recruited an institution for external monitoring on social issues and submitting progress reports. The project recruited an individual consultant for consolidated external social monitoring since January 2018.
3. The PMOs had strong capacity in implementation of domestic projects. The project provided training to develop capacity on ADB social safeguards. Two trainings on social safeguards were conducted for the participating provinces/region in May 2016 and February 2017, respectively. Immediately after these trainings, the provincial PMOs organized similar trainings to the county PMOs, county level IAs, and other relevant stakeholders.
C. Ethnic Minorities in the Project Area
4. Heilongjiang and Jilin provinces. Except counties of Dumeng, Hailin, Dunhua, and Helong percentages of ethnic minorities in the other county-level subproject areas in Heilongjiang and Jilin provinces were all less than 5%. Ethnic minorities in the four subproject areas which have significant proportion of ethnic minorities are presented in Table . Mongolian and Korean are the major ethnic minority groups in these subproject areas.
1 The EA was SOCAD between 2012–2018 and changed to the Budget Evaluation Center of Ministry of Finance in 2019 due to institutional reform in the PRC.
50 Appendix 10
Table A10.1: Ethnic Minorities in the Heilongjiang and Jilin subprojects (by 2018) Population Participating Participating Total Mongolian county Village2 (#) (person) Female (%) EM (%) (%) Korean (%) Heilongjiang 3 3,869 Dumeng 2 3,240 48.4 47.0 47.0 0 Hailin 1 629 49.0 44.0 0 44.0 Jilin 16 10,255 - - - - Dunhua 7 5,063 48.0 5.2 0 5.2 Helong 9 5,192 48.0 71.0 0 71.0 EM = ethnic minority. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March to June 2020.
Table A10.2: Ethnic Minorities in the Ningxia Subprojects (by 2018) Population Participating Total Female Hui Participating county Village (#) (person) (%) EM (%) (%) Others (%) Helan 3 5,060 48.9 6 5.1 0 Lingwu 4 4,188 48.5 75.1 74.9 0.2 Nongken 03 3,170 48.9 3.5 3.5 0 Yongning 2 9,060 48.2 1.9 1.5 0.4 Qingtongxia 9 5,762 46.5 2.8 2.7 0.1 Wuzhong 7 16,819 49.2 44.2 43.2 1.0 Pingluo 5 3,017 48.8 4.2 4.0 0.2 Zhongwei 7 17,622 49.2 0.3 0.3 0 Total 37 64,698 48.7 17.8 17.4 0.4 EM = ethnic minority. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March and June 2020.
5. Yunnan province. Ethnic minorities in subprojects in Yunnan province are presented in Table A10.3. Bai, Dai, Yi and Naixi are the first four ethnic minority groups. The ethnic minorities were concentrated in subproject areas of Changning, Eryuan, Heqing, Mangshi, Shiping, and Yulong. Ethnic minorities in other subproject areas were all less than 5%.
Table A10.3: Ethnic Minorities in the Yunnan Subprojects (by 2018) Participating Population Participating villages Total Women EM Bai Yi Lisu Miao Hui Tibetan Pumi county (#) (persons) (%) (%) (%) Dai (%) Naxi (%) (%) (%) (%) (%) Changning 9 8,309 47.4 14.4 - 6.9 - - - 7.5 - - - Tengchong 10 25,574 51.2 0.7 - - - - 0.3 - 0.4 - - Yaoan 7 30,072 46.7 3.2 - - 1.6 - - - 1.6 - - Eryuan 10 22,100 49.9 78.0 77.3 ------0.7 - Heqing 9 25,429 50.2 80.5 80.1 - - 0.2 - - - 0.2 - Mangshi4 1 8,295 50.1 95.0 - 95.0 ------
2 Administrative villages 3 Nongken is a national farm. 4 The formal name was “Luxi”.
Appendix 10 51
Participating Population Participating villages Total Women EM Bai Yi Lisu Miao Hui Tibetan Pumi county (#) (persons) (%) (%) (%) Dai (%) Naxi (%) (%) (%) (%) (%) Shiping 5 25,399 51.4 40.1 - - 40.1 ------Yiliang 6 55,174 50.1 0 ------Songming 2 5,698 48.8 0 ------Yulong 8 19,151 46.9 63.9 4.2 - - 37.8 19.6 - - 1.3 1 Qilin 7 24,743 49.6 0 ------Zhaoyang 4 16,919 47.9 0.5 - - 0.5 ------Total 78 269,235 49.4 26.7 14.0 3.3 4.0 3.1 1.6 0.2 0.2 0.2 0.1 EM = ethnic minority. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March to June 2020.
D. Implementation of Subprojects in Counties Covered by EMDPs
6. Subproject activities implemented in the participating counties covered by EMDPs are presented in Table A10.4. Major activities carried out include a total of 1,868 small bridges built, 546.4 km of canals lined, 494.5 km of irrigation or drainage canals dredged, 190.6 km of field roads improved, seven WUAs with about 1,000 members and six FPAs with about 400 members supported, pollution free and safe agricultural technology demonstrated in 1,286.7 hectares of farmland, and organic and green agriculture demonstrated in 444.7 hectares. Fish farming in paddy field, catching insects using coloured cards, and solar energy-based insect pest trap were also major activities.
52 Appendix 10
Table A10.4: Activities Implementation in the Participating Counties covered by EMDPs (by 2018)
L&M Irrigation and/or Small Pollution free/ Organic/green farmland drainage canal bridge Canal WUA FPA Field road IPM Greenhouse safe Agri. Tech agriculture Improved dredged built lined supported supported Improved introduced demonstrated demonstrated demonstrated (hectares) (km) (#) (km) (#) (#) (km) (hectares) (hectares) (hectares) (hectares) Heilongjiang Dumeng 226 2.2 Hailin 1,666 6 16 7 3.1 906 Jinlin Dunhua 1,333 12.9 17 3.7 31.9 0.3 Helong 1,333 13.2 2 1 Ningxia Lingwu 1,766 175.2 111 156.8 1 1 4.5 100 Wuzhong 1,562 226.8 309 156.8 1 2 11.2 200 Yunnan Changning 1,865 0 0 49 3 0 28.1 0 Eryuan 1,326 79.6 137 42.9 0 0 13.1 304 Heqing 1,618 0 1,029 43.7 0 0 25.6 0 Mangshi 1,627 0 2 0 0 2 34.7 66.7 444.7 Shiping 1,420 0 201 17.4 0 0 27.3 600 0 Yulong 1,350 0 56 44.7 0 0 7.2 159 10 Total 17,092 494.5 1,868 546.4 7 6 190.6 1,059 3.39 1286.7 444.7 agri = agriculture, FPA = farmer professional association, IPM = integrated pest management, km = kilometer,L&M = low- and medium-farmland, tech = technology, WUA = water users association. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March to June 2020.
Appendix 10 53
E. Implementation of EMDPs
7. By the project completion, all planned actions in the 12 counties covered by EMDPs have been implemented and targets mostly achieved.
8. The project information was equally disclosed to both Han and ethnic minority people during the project preparation and implementation. Ethnic minority people were consulted equally and in culturally appropriate manners in their villages in both Chinese and ethnic minority people’s languages including Mongolian, Korean, Dai, Bai, Yi, Naxi, and other relevant ethnic minority languages and/or dialects. The ethnic minority farmers participated in the project activities, trainings, water user associations (WUAs), and jobs created under the project. Potential negative impacts such as involuntary land acquisition and construction disturbance were avoided, minimized, or mitigated by taking technical and management measures.
9. The only target which has not been met in a few subprojects is the one related to the project created jobs. For example, it was stated in the EMDPs for Dumeng and Hailin subprojects in Heilongjiang Province that the project would create a total of 390 unskilled jobs for local farmers, with 270 being taken by ethnic minority. However, these subprojects created only 30 unskilled jobs in Dumeng and 140 unskilled jobs in Hailin since most of the construction activities were done by machines.
The EMDP Implementation Achievements
10. The EMDP implementation achievements are summarized in Table A10.5 and described in the following paragraphs.
11. Wide and equal consultation with ethnic minority farmers. A total of 81,156 farmers including 62.0% ethnic minority farmers in the county-level subproject areas covered by EMDPs were consulted for the subproject preparation and implementation including development of the yearly work plans. The ethnic minority farmers were consulted at rates higher than the percentages of ethnic minorities in the total population of the subproject areas respectively.
12. Ethnic minority farmers’ access to training. 27,409 farmers including 59.5% ethnic minority farmers in the county-level subproject areas covered by EMDPs were trained on agricultural techniques, irrigation knowledge, and/or management of water user associations, and/or management of farmer professional cooperatives/associations. Of the trained farmers, the share of ethnic minority farmers was higher than the proportion of ethnic minorities in the total population of the subproject areas.
13. All consultations and training in the subproject areas covered by EMDPs were carried out in both Mandarin and ethnic minority languages including Mongolian in Dumeng subproject area; Korean in Hailing, Dunhua and Helong subproject areas; and Dai, Miao, Yi and other local languages in the counties of Yunnan Province. More than two thirds of the consultations and training were organized in the participating villages, which greatly facilitated equal participation of ethnic minority people.
14. Ethnic minority farmers’ participation in WUAs and FPAs. By the project completion, 5 WUAs with about 1,000 members and 6 FPAs with about 400 members were established and/or
54 Appendix 10 supported by the project in the subproject areas covered by EMDPs. Percentages of ethnic minority farmer members in WUAs and FPAs were higher than percentages of ethnic minorities in the total population in the subproject areas.
15. Employment of ethnic minority farmers. A total of 6,539 farmers including 68.8% of ethnic minority farmers were employed during the project construction in the subproject areas covered by EMDPs. The ethnic minority farmers were highly targeted for the employment, compared to the 59% of ethnic minorities in the subproject area total population.
16. Ethnic minorities benefited from improved low- and medium- farmlands. 17,092 hectares of farmland in the subproject areas covered by EMDPs have been comprehensively upgraded including improved irrigation canals, field roads, and land level. It benefited 152,501 farmers including 89,972 (59%) ethnic minorities farmers, which is equal to the percentage of the ethnic minorities in the total population of the subproject areas.
Appendix 10 55
Table A10.5：EMDP Implementation Achievements Beneficiaries of improved L&M Farmers Project construction farmland consulted Project trainees WUA FPA workers EM in total EM EM Participating population Total EM Total EM Total EM member EM Mana. member EM Mana. county (%) (person) (%) (person) (%) (person) (%) (%) staff (%) (%) staff (%) Total EM (%) Heilongjiang Dumeng 47.0 7,095 48.2 2,700 48.1 240 48.0 N/A N/A N/A N/A 30 46.7 Hailin 42.0 3,660 42.0 2,900 45.2 780 44.9 N/A N/A N/A N/A 140 42.1 Jinlin Dunhua 5.2 5,150 5.3 4,300 5.3 2,250 7.2 18.8 20.0 N/A N/A 210 5.2 Helong 71.0 6,920 71.7 5,400 73.7 2,900 75.9 N/A N/A N/A N/A 208 78.4 Ningxia Lingwu 75.1 4,188 75.1 2,100 75.8 1,680 75.5 77.1 100.0 76.5 100.0 600 78.0 Wuzhong 44.2 16,788 44.2 8,000 48.0 6,129 48.5 44.3 50.0 52.5 50.0 636 52.1 Yunnan Changning 14.4 8,300 14.4 5,300 20.0 750 19.5 16.0 25.0 N/A N/A 200 25 Eryuan 78.0 22,076 78.0 9,000 85.0 610 81.0 N/A N/A N/A N/A 1,180 83.3 Heqing 80.5 25,256 80.5 11,000 90.0 570 90.0 N/A N/A N/A N/A 1,550 88.5 Mangshi 95.0 8,239 95.0 5,000 98.0 1,600 95.3 N/A N/A 98.0 100.0 480 53.1 Shiping 40.1 25,226 40.1 13,000 50.1 1,400 50.0 N/A N/A N/A N/A 1,025 60.0 Yulong 63.9 19,603 63.9 12,456 70.0 8,500 69.0 N/A N/A N/A N/A 280 63.6
Total 59.0 152,501 59.0 81,156 62.8 27,409 59.5 6,539 68.8 EM = ethnic minority, FPA = farmer professional association, L&M = low- and medium- farmland, mana = management, WUA = water users association. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March–June 2020.
56 Appendix 10
Impact of the EMDP Implementation
17. Increased ethnic minorities’ access to improved farmland. With the improved irrigation systems and the agricultural support, ethnic minority farmers’ cultivated farmland in relevant subproject areas were improved. This made great contributions to increased agriculture productivity and production.
18. Raised ethnic minority farmers’ participation and awareness. Wide consultation measures implemented under the project has raised the ethnic minority farmers’ awareness and participation in local affairs. For example, after the project completion, ethnic minority farmers in Eryuan subproject of Yunnan Province participated more in their village meetings.
19. Improved ethnic minority farmers’ knowledge on organic/green products. After participation in projects ethnic minority farmers have increased knowledge on organic/green products. For example, over 2,000 Dai farmers demonstrated increased knowledge on organic and/or green agricultural products.
20. Enhanced ethnic minority farmers’ capacity. After participation in the training, the ethnic minority farmers applied the learned technique and skills to using irrigation water efficiently and cultivating crops with modern techniques. For example, organic and/or green fish farming in paddy fields were demonstrated in Hunong Village in Mangshi subproject of Yunnan Province. Over 95% of farmers in the village are Dai people. The Dai farmers learned from the project trainings on using coloured sticky traps to catch insects instead of using pesticides. Hui farmers in Lingwu subproject area in Ningxia learned from the project training on planting of corn and soil fertilization.
21. Increased income of the ethnic minorities. The ethnic minorities’ income has increased because of the improved low- and medium- productivity farmland, enhanced irrigation systems, modern agricultural technology, and project jobs. For example, in Changning subproject of Yunnan Province, about half of the improved farmland can be cultivated for two times a year after the project, which was cultivated only for one season before the project. The productivity increased from 5.6 ton per hectare to 7 ton per hectare, which increased income for the farmers including ethnic minority farmers in the subproject area.
F. Grievance Redress Mechanism
22. The implementing agencies established grievance redress mechanisms (GRM) during the project implementation. The project related information boards including contact details were set up in the subproject areas. Affected ethnic minorities could complain and ask for solutions using the four-layer of GRM process: village management committees, project county PMOs, municipality PMOs, and provincial PMOs, as needed. Farmers could also directly complain to county or provincial PMO.
23. The GRM was effective because the GRM was in line with usual way that farmers express their complaints if any; and it was geographical, socially, and economically accessible for farmers. It is a formal way/channel in the PRC that farmers complain to or communicate with their village committees whenever needed, orally or in written form, and most of issues could be resolved by the village committees. The project information was disclosed to all village households before the detailed design. All the infrastructure activities and the related social matters were consulted and discussed with and agreed by the villagers. By the project completion, there were no complaints from the ethnic minorities.
Appendix 10 57
G. Monitoring
24. Implementation of social measures, including EMDPs were monitored annually for 2014 and 2015 and semi-annually since 2016. Each of the project participating provinces recruited an institution for social external monitoring of the project within their areas. Monitoring of the EMDP implementation were included in external social monitoring reports. Annual external social monitoring report for 2014 and for 2015 were prepared and submitted by each of the six participating provinces. Two semi-annual external social monitoring reports for 2016 were submitted separately by each of the participating provinces. Consolidated external monitoring reports covering all the six participating provinces were submitted for 2017 and 2018.
25. Monitoring reports indicated that all EMDP targets were achieved except that the number of project jobs was less than the target due to use of machines in construction works. The majority of the EMDP actions did not require extra funds and funding was not an issue, since these actions were part of the main project contents.
26. Quality of the social monitoring reports before 2017 was not satisfactory, as these were prepared by local firms and poorly written. Quality of the external monitoring reports much increased since 2017 after conducting training as well as engaging an experienced consultant for social monitoring.
H. Conclusions
27. The EA and IAs have paid great attention to the ethnic minorities’ needs and have satisfactorily implemented EMDPs. Ethnic minorities were equally consulted during the project preparation and detailed design; and their engagement was emphasized throughout the whole process of the project implementation. The ethnic minorities have adequately participated in and benefited from the project activities. Monitoring on EMDPs were included in social monitoring reports submitted during the project implementation. By the project completion, there were no complaints from the ethnic minorities.
I. Lessons and Recommendations
28. The following points can be drawn from the project: (i) consultation with and participation of ethnic minority farmers in the project design and implementation has ensured equitable benefits to ethnic minorities; (ii) the EA and IAs have achieved most EMDP targets except for construction jobs due to use of machines; and (iii) the EA/IAs’ capacity in monitoring and reporting was weak in initial years, but improved in later years through training of project staff and engagement of experienced consultant on ADB social safeguards.
29. It is recommended for future agriculture projects to (i) continue consultations with ethnic minorities in project design and implementation to ensure equitable benefits for ethnic minorities in the project area; (ii) EMDP targets on jobs should be set realistically, considering construction methods; and (iii) recruit experienced consultants for monitoring and reporting to ADB.
58 Appendix 11
ECONOMIC AND FINANCIAL REEVALUATION
A. General Approach
1. Financial and economic reevaluation was undertaken to reassess the financial and economic viability of the project based on the actual costs incurred and the benefits achieved and expected over the full project life for the project completion review at project completion. Due to the coronavirus disease (COVID-19) situation combined with a change in responsibility for comprehensive agricultural development (CAD) projects, the consultants were unable to visit the project areas and had to rely on a combination of data collected electronically from the provincial and central authorities and information included in the government’s Project Completion Report. Specifically, an updated set of crop budget data was collected from each province using the data format used for both the project preparation and mid-term financial and economic analysis. The format was circulated with the mid-term data included as an example of the required format, and respondents were requested to update this information to reflect the actual situation at project completion, including input and output prices in 2019 values. Actual project costs were obtained from the government’s PCR, which did not include financing charges during implementation. The prices of major traded commodities, as required for the economic analysis, were obtained from the World Bank Commodity Price Projections for October 2019.
2. Financial and economic analyses were undertaken in accordance with the relevant guidelines of the ADB.1 The analysis was conducted for aggregates of all provincial subprojects since individual subprojects in each province were considered to be fairly similar in terms of the crops and technologies involved. The main assumptions include the following:
(i) A project life of 20 years is assumed following completion of all project infrastructure by the end of 2018. The residual value of infrastructure at the end of the project life is assumed to be zero. (ii) Project investment costs are based on actual costs, in local currency, incurred during project implementation adjusted to constant 2019 values based on the Chinese Consumer Price Index (CPI) index. Hence physical and price contingencies are zero. (iii) The financial prices of farm inputs and outputs were based on actual prices for 2019. (iv) Operation and maintenance (O&M) costs are assumed to commence in the year following completion of the investment and are estimated at 2.5% of the cost of the civil works and equipment, which is consistent with the approach used for project preparation and the mid-term review. This was considered to be reasonable given the nature of the investments and is in line with the normal practice of the State Office for Comprehensive Agricultural Development. (v) Economic costs and benefits are expressed in constant 2019 terms and are valued in local currency using the world price-level numeraire. (vi) Taxes and subsidies are excluded in the economic evaluation of the subprojects and overall project by adopting the same percentage taxes and duties as in project preparation. (vii) Economic prices for the major traded crops (wheat, maize, rice, soybeans, cotton, and groundnuts) and fertilizers (triple superphosphate, urea, and potassium chloride) are estimated by adjusting world market prices by transportation and
1 ADB. 2017. Guidelines for the Economic Analysis of Projects. Manila, Philippines.
Appendix 11 59
processing costs to obtain the economic market prices in the project area (Annex 1).2 (viii) Economic costs and benefits for non-tradable inputs and outputs were derived by adjusting their values by a standard conversion factor (SCF) of 0.98, which is consistent with current ADB guidelines. (ix) The opportunity cost of surplus labor is estimated as 0.95 of the prevailing wage rate reflecting the relative scarcity of farm labor in recent years, and the opportunity cost of scarce labor for skilled labor is estimated as 1.0. (x) The opportunity cost of capital used in the analysis is 12% in accordance with the assumption at appraisal.
3. The financial and economic analyses were undertaken using with- and without-project scenarios based on the crop budget data obtained from the provinces and the project costs from the government’s PCR. Project investment costs were aggregated and converted to economic values based on the same principles as used in project preparation and the mid-term review.
B. Financial Reevaluation
4. The project’s financial viability is assessed on the basis of the financial internal rate of return (FIRR) being greater than the weighted average cost of capital (WACC), which is estimated to be 4.19%, a positive financial net present value (FNPV) using the WACC as the discount factor, and sensitivity tests. The WACC was estimated as the weighted value of the proportion of the project costs proposed to be financed by ADB using an interest rate of LIBOR +0.40% and the proportion proposed to be financed by counterparts, including beneficiary, contributions using an interest rate of 10%. 3 The same WACC was used for the financial assessment at project completion.
5. The analysis at project preparation indicated that the overall FIRR was 18.7% with an FNPV of CNY3.63 billion (Table A11.1), which is well above the cut-off point for financial viability. At project completion the FIRR increased to 19.6% and the FNPV to CNY3.24 billion (Table A11.1), which are close to the estimation at project preparation.
6. Comparison of the results by province provides the opportunity to further evaluate the differences in the analyses at appraisal and completion (Table A11.1). In consistent with the estimations at the project preparation, the investment in all provinces remained financially viable with an FIRR greater that the WACC. By project completion, while all provinces remained financially viable, the FIRR for all apart from Ningxia and Yunnan, declined compared to the appraisal. Ningxia and Yunnan provinces had higher FIRRs than estimated at project preparation largely due to higher crop prices but for Yunnan also the opportunity for greater diversification into higher value crops. The reduced FIRRs in both Heilongjiang and Jilin were due to the higher production costs for rice and lower than expected yield growth, while the reduction in Anhui was due to increased production costs for all crops.
2 The World Market prices used in the analysis are derived from the World Bank Commodities Price Forecast of 29 October 2019. 3 10% is selected as the appropriate interest rate for the opportunity cost of counterpart funding as this is widely considered to be the achievable financial rate of return for locally financed agricultural projects in the PRC.
60 Appendix 11
Table A11.1: Summary of Financial Indicators by Province and for Overall Project At Appraisal At Completion WACC FIRR FNPV FIRR FNPV Province/ (%) (%) (CNY (%) (CNY Autonomous Region million) million) Anhui 4.29 31.1 1,394.2 25.9 1,144.7 Heilongjiang 3.96 12.9 327.1 5.5 38.3 Henan 4.29 17.4 606.0 14.5 289.3 Jilin 3.96 13.9 394.4 8.7 140.1 Ningxia 3.96 10.8 204.8 18.4 490.8 Yunnan 4.63 21.1 664.9 38.3 1,077.4 Overall Project 4.19 18.7 3,631.4 19.6 3,242.1 FIRR = financial internal rate of return; FNPV = financial net present value (using WACC as discount rate); WACC= weighted average cost of capital. Source: Asian Development Bank estimates.
7. Key risks that could affect the project’s financial viability of the project are incorporated into standard sensitivity tests, including a 10% cost increase, a 10% benefit decrease, a 10% cost increase combined with a 10% benefit decrease, and a one-year benefit lag. The results are summarized by province and for the overall project at project preparation and project completion in Table A12.2A11.2. The financial viability of overall project appears to have remained sufficiently robust with respect to all changes, while the financial viability in Heilongjiang fell below the WACC in certain risk scenarios.
Table A11.2: Sensitivity Tests of Financial Analysis by Province and for Overall Project at Project Preparation and Project Completion Sensitivity Test/Indicator Cost increase + benefit 1-year benefit Province 10% cost increase 10% benefit decrease decrease lag FIRR FNPV SV FIRR ENPV SV FIRR FNPV FIRR FNPV (%) (CNY (%) (CNY (%) (CNY (%) (CNY mn) mn) mn) mn) Project Preparation Anhui 28.5 1352.3 149.2 28.3 1212.9 59.9 25.9 1170.9 25.2 1267.6 Heilongjiang 11.3 287.5 5.4 11.1 254.8 5.1 9.6 215.2 10.9 278.5 Henan 15.8 564.2 39.3 15.6 503.6 28.2 14.0 461.9 14.9 533.8 Jilin 12.4 355.2 12.7 12.2 315.7 11.2 10.7 276.5 11.9 341.5 Ningxia 9.3 171.1 7.4 9.1 150.6 8.0 7.7 117.0 9.1 168.5 Yunnan 19.1 627.2 64.5 18.9 560.7 39.2 17.1 523.1 17.7 590.1 Overall 16.9 3397.5 46.5 16.7 3397.5 31.8 15.0 2800.6 15.8 3218.8 Project Completion Anhui 23.8 1100.3 153.1 23.5 985.9 60.5 21.5 941.5 21.6 1034.8 Heilongjiang 4.1 2.7 20.0 3.9 (1.1) 24.9 2.6 (36.8) 4.4 12.2 Henan 12.1 240.7 26.0 11.8 211.7 20.6 9.7 163.1 11.6 241.4 Jilin 7.1 99.2 1.6 6.9 85.2 1.7 5.4 44.3 7.2 103.4 Ningxia 16.5 455.9 69.5 16.3 406.8 15.2 14.5 371.9 15.4 434.1 Yunnan 34.3 1039.6 193.1 33.9 931.8 65.9 30.4 893.9 28.6 974.0 Overall 17.4 2999.7 71.1 17.2 2675.5 41.6 15.2 2433.0 16.1 2860.1 FIRR = financial internal rate of return, FNPV = financial net present value, SV = switching value. Source: Asian Development Bank estimates.
C. Economic Reevaluation
8. The economic analysis was undertaken separately for each province and the results aggregated to generate an overall economic analysis. At appraisal, the analysis indicated that the
Appendix 11 61 overall project is economically viable with an economic internal rates of return (EIRR) of 20.7%, and an economic net present value (ENPV) of CNY926.1 million. The reevaluation at completion indicates a lower EIRR of 16.4% and ENPV of CNY451.9 million (Table A11.3).
9. At project preparation, each of the provincial-level investments was expected to be economically viable with EIRRs ranging from 15.0% for Heilongjiang to 29.3% for Anhui. The relatively low EIRRs for Heilongjiang and Jilin were due to the farming systems being based on single-cropping, particularly of rice, due to the short growing season. The higher EIRRs in Anhui and Yunnan were largely due to the opportunities for crop diversification and increases in crop intensity following the improved availability of irrigation, while the high EIRR in Ningxia was explained by the yield increases associated with the improved systems. By completion, the economic viability of Yunnan and Henan subprojects increased compared to project preparation largely due to crop diversification and the expansion of high-value crops. The EIRRs of other provinces reduced, but still economically viable in Anhui. For Ningxia, the EIRR indicates that the project was marginal, which is most likely due to the limited opportunity to diversify into more profitable crops. However, the EIRRs for Heilongjiang (2.7%) and Jilin (1.8%) were substantially lower, indicating that investments in these two provinces were not economically viable. These two provinces are dependent on single-cropping of rice and lower than expected economic return from rice reduced the EIRRs. The lower economic return from rice is led by (i) higher than estimated baseline production cost and (ii) lower than estimated yield growth.4
Table A11.3: Summary of Economic Indicators by Province and for the Overall Project At Appraisal At Completion EIRR ENPV EIRR ENPV Province (%) (CNY million) (%) (CNY million) Anhui 29.3 367.6 20.9 193.8 Heilongjiang 15.0 47.2 2.7 (102.0) Henan 21.1 184.7 21.3 217.5 Jilin 14.6 44.6 1.8 (115.6) Ningxia 17.8 77.9 11.6 (7.6) Yunnan 23.2 204.2 30.8 266.4 Overall Project 20.7 926.1 16.4 451.9 ( ) = negative, EIRR = economic internal rate of return, ENPV = economic net present value. Source: Asian Development Bank estimates.
10. Key risks that could affect the economic viability of the project are incorporated into standard sensitivity tests, including a 10% cost increase, a 10% benefit decrease, a 10% cost increase combined with a 10% benefit decrease, and a one-year benefit lag. The results are summarized by province and for the overall project at project preparation and project completion in Table. A11.4. The overall project appears to have remained sufficiently robust and exceeded the minimum required EIRR with respect to all changes.
4 Higher than estimated baseline cost reduced the net income from rice production by 50% in the base year. In addition, the actual yield growth of rice was 6.6% relative to 23.0% estimated at appraisal.
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Table A11.4: Sensitivity Tests of Economic Analysis by Province and for Overall Project at Project Preparation and Project Completion Sensitivity Test/Indicator Cost increase + benefit 1-year benefit Province 10% cost increase 10% benefit decrease decrease lag EIRR ENPV SV EIR ENPV SV EIRR ENPV EIRR ENPV (%) (CNY R (CNY (%) (CNY (%) (CNY mn) (%) mn) mn) mn) Project Preparation Anhui 26.8 340.0 133.2 26.6 303.2 57.1 24.3 275.6 23.9 291.8 Heilongjiang 11.0 (16.2) 3.6 10.8 (17.1) 3.5 9.3 (42.5) 10.7 (21.6) Henan 19.2 157.4 68.1 19.0 139.1 40.5 17.3 112.0 17.8 130.8 Jilin 13.0 18.9 17.3 12.9 14.4 14.8 11.4 (11.3) 12.5 9.2 Ningxia 15.9 56.2 35.9 15.7 48.4 26.4 13.9 26.7 14.9 43.5 Yunnan 21.1 179.2 81.7 20.9 158.8 45.0 19.0 133.8 19.9 150.7 Overall 18.4 735.6 58.3 18.2 646.83 36.8 16.4 494.4 17.1 564.0 Project Completion Anhui 19.1 165.1 67.6 18.9 145.8 40.3 17.2 117.1 17.7 137.3 Heilongjiang 1.4 (125.2) (44.0) 1.3 (115.0) (78.6) (0.1) (138.2) 1.9 (117.1) Henan 19.3 184.6 67.0 19.1 162.9 40.1 17.3 130.5 17.9 153.2 Jilin 0.4 (140.9) (45.7) 0.3 (129.3) (84.0) (1.1) (154.7) 1.0 (131.7) Ningxia 10.1 (36.2) 2.7 9.9 (35.4) 2.7 8.5 (64.0) 9.8 (40.6) Yunnan 27.7 242.1 109.7 27.4 215.4 52.3 24.5 191.2 24.0 206.6 Overall 14.6 289.5 27.8 14.5 244.3 21.8 12.8 81.9 13.9 207.7 EIRR = economic internal rate of return, ENPV = economic net present value, SV = switching value. Source: Asian Development Bank estimates.
D. Conclusions
11. Based on the information collected and the analysis conducted, it appears the overall project remains financially and economically viable at project completion, and that the estimates remain robust. However, when considered by province there are considerable variations. From an economic perspective, the two northern most provinces—Jilin and Heilongjiang—have problems with economic viability and even Ningxia is marginal. This is clearly due to the type of activities being supported—rice production in areas where there is limited, or no potential for crop diversification due to the length of the growing season. In the remaining three provinces, the investments remained economic viable.
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POVERTY REDUCTION IMPACTS
A. Introduction
1. Poverty and social analysis was carried out during project preparation. The assessment concluded that poverty is linked strongly in terms of access to social services and income, and particularly to opportunities for improving their livelihoods and living standards. The project addressed poverty by (i) improving agricultural infrastructure and services related to agricultural production, thus providing the rural households with better and more secure access to services and income opportunities; (ii) reducing agricultural production costs and increasing the availability of farmland with better irrigation facilities; and (iii) increasing the availability of water for year round irrigation so that production is more predictable and can be organized more efficiently. The improved irrigation helped for expanding agriculture and bringing down production costs. In many areas, waterlogging had reduced the availability of land for cultivation before the project. With improved drainage systems under the project, increased and more stable yields was guaranteed. The construction and improvement of agricultural infrastructure improved conditions for developing new agro-industries. Land, where formerly only rice and wheat were planted, can now be used for growing vegetables in greenhouses. With the same amount of land, the value of greenhouse crops is several times higher than that of traditional agriculture.
B. Increased Rural Income and Poverty Reduction
2. The project prioritized poor counties and villages as project area and took various measures to improve the livelihood of poor households in the project area. Of the 68 project participating counties, 18 counties were national poverty counties, and nine were provincial level poverty counties at appraisal. By completion, the national poverty counties reduced to seven and provincial poverty counties became zero by completion. Similarly, poverty incidences in the project area were higher than that the average in all the participating provinces at appraisal. By completion, poverty incidence in the project participating villages declined from 12.3% to 1.5% (Table A12.2). Per capita disposable income of farmers in the project area also grew faster than the provincial average in all the provinces (Table A12.3).
Table A12.1: Number of Poverty Counties 2014 2018 Project participating NPC PPC Total NPC PPC counties Anhui 2 6 8 2 0 8 Heilongjiang 6 1 7 3 0 16 Henan 1 0 1 0 0 9 Jilin 1 2 3 1 0 15 Ningxia 0 0 0 0 0 8 Yunnan 8 0 8 1 0 12 Total 18 9 27 7 0 68 NPC = national poverty county, PPC = provincial poverty county. Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, etc. between March and June 2020.
64 Appendix 12
Table A12.2: Rural Poverty Incidences (%) Project Area Participating Provincea 2013 2018 Reduced 2013 2018 Reduced Anhui 11.7 1.7 10.0 8.2 0.93 7.3 Heilongjiang 6.7 1.4 5.3 5.9 0.65 5.3 Henan 8.9 1.2 7.7 8.8 1.2 7.6 Jilin 7.5 1.0 6.5 5.9 0.5 5.4 Ningxia 6.5 0.1 6.4 4.0 1.2 2.8 Yunnan 22.0 1.2 20.8 17.8 5.39 12.4 Total 12.3 1.5 10.8 9.5 1.81 7.7 a The poverty incidences for Ningxia were situation of the project participating counties. Sources: The PMOs between March and June 2020.
Table A12.3: Per Capita Farmers Disposable Income (current price) Project Area Participating Province Growth rate 2010 2018 (%) 2010 2018 Growth rate (%) Anhui 3,713 9,918 167.1 5,285 13,996 164.8 Heiongjiang 5,508 13,717 149.0 6,211 13,803 122.2 Henan 5,154 13,019 152.6 5,523 13,830 150.4 Jilin 4,930 11,086 124.9 6,237 13,748 120.4 Ningxia 4,682 12,210 160.8 4,674 11,708 150.5 Yunnan 3,204 9,440 194.6 3,952 10,768 172.5 Sources: The PMOs, the government PCR, the consolidated external social monitoring reports, the PPMS, National Statistic Yearbooks for 2010 and 2018.
C. Channels of Increasing Rural Income
3. Reduced production cost. The improved irrigation and drainage system saved labor cost and water loss. For example, in Ningxia, the project updated irrigation systems reduced labor cost on dredging the canals by 7.5 working days per hectare per year. At a daily rate of CNY126 as an average rate in the project area for local farmers, the reduction of labor-inputs in dredging canals reduced labor cost is estimated at CNY282.6million ($40.3 million). The project promoted balanced use of fertilizer and integrated pest management (IPM) to reduce production cost. For example, in Liuhe County of Jilin Province. Bacillus subtilis, a kind of microbial fungicide, was used for dealing with rice plague in about 1,333 hectares for three years during the project implementation, which reduced loss of rice by 1.6 million kg. In Ningxia, cost on fertilizer, pesticide, and the related labor decreased by CNY3,000 ($428.6) per hectare per year due to application of the balanced fertilizer use and the IPM, which amount to the reduction of production cost by CNY159.3 million ($22.8 million).
4. The project supported farmers professional associations (FPA), which allowed 6,110 small farmers households to collectively purchase production materials in large scales and at relatively lower prices. The FPAs also organized trainings to farmers to improve farmers’ marketing and production skills. For example, the Gold-seeds Wheat Farmers Cooperative in Yanjin County, Henan Province, provided production materials, techniques, and information to its 500 household members. These farmer households collectively purchased production material and produced wheat.
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5. Income diversification. Improved irrigation system and agricultural service saved labor inputs and gave many farmers opportunities to migrate to urban area for wage jobs and earn cash income. The improved irrigation system also enabled cropping systems to be shifted from grain- concentrated to more valuable crops, and created more income. For example, in Xiangfu, Qixian, Mengzhou, and Yanjin counties of Henan Province, more watermelon, garlic, Chinese chives, and detoxification sweet potatoes were planted instead of wheat or maize. In Anhui, more floriculture, Chinese medicines, grapes, yellow pears, tomatoes, and lotuses in shallow pond substituted for wheat or maize. Demonstration, training and application of modern agriculture technologies also enabled farmers to produce high value crops. For example, Mrs. and Mr. Zheng in Shizhai Village, Anhui Province, planted lotuses in shadow pond along a river, and generated average yearly net income of CNY60,000 ($8,571) per hectare, which was about two times of income from cultivation of paddy in the surrounding area.
6. Employment by project. The project employed 26,457 farmers for the construction and operation, generating CNY124 million ($17.7 million) of income. Among them, 4,088 poor farmers worked for the project construction and operation. For example, farmers in Guanhui Village in Ningxia had very limited non-farming employment opportunity, because the irrigation facility was poor which required limited labor inputs. His family was lifted out of poverty. For example, Mr. Jun Zhang, in his fifties, was living with his wife and a disabled son in Houjing Village, Yunnan Province. With the project support, maize production of his family increased which enabled his family to raise 6 pigs and to receive extra income from employment. As a result, his family’s per capita net income increased from CNY2,600 ($371) to CNY6,500 in 2018, which was higher than the poverty line of CNY3,535 ($505).
D. Lessons and Recommendations
7. The project contributed to poverty reduction and income growth in the project area. However, it is not possible to isolate the impact of project in income changes of the poor without baseline socioeconomic information at the household level and the definition of control group. For future projects it is recommended to clearly define the project baseline and control groups and monitor and assess the poverty reduction impacts of the project through periodical sample surveys.