38 Appendix 2, page 1 POVERTY AND SOCIAL DIMENSIONS ANALYSIS, AND SUMMARY RESETTLEMENT ACTION PLAN A. Introduction 1. The Project specifically targets poverty intervention by addressing critical agricultural and water supply constraints in a poor inland province. Because the water supply and irrigation component necessitates some resettlement from the pump site and regulating reservoir, a resettlement action plan was prepared. B. Socioeconomic Profile of Potential Beneficiaries 2. Demographic features. Agricultural communities in West Henan constitute about 83 percent of the total population, rising to 95 percent in Yichuan and Songxian. Twelve of the 32 counties in the project area are nationally designated poverty counties.1 While 98.4 percent of the population is ethnically Han, there are 18 different ethnic minority groups in the project area. Most counties have one or more ethnic minorities, on average 12 minority groups each. Almost 80 percent of the total minority population is accounted for by the three largest minorities: Muslim Hui, 61 percent of all minorities and 1 percent of total population, are concentrated in Zhengping, Dengfeng, Yuzhou, and Xinmi counties; Manchus, 11 percent of minorities, are concentrated in Nanzhao County; and Mongols, 7 percent of minorities, are concentrated in Neixiang County. The average household size is 4.20, slightly smaller than the province average of 4.59. Average household sizes in counties range from 3.3 in Luoyang to 5.0 in Yichuan. The average family size in Henan Province is 3.86, suggesting that, on average, most families have one additional household occupant (often a grandparent). 3. Settlement pattern and production systems. Population density in West Henan is 463 households per square kilometer (km²), or 1,945 people per km². Households range from 91 per km² in Songxian to 1,101 per km² in Yima. On average, 41 percent of the population live in mountainous areas with over 90 percent in Xichuan, Lushi, Songxian, Nanzhao and Luanchuan. More than half of the slopes in the mountainous areas are over 25 degrees and, thus, crop cultivation on them is officially prohibited. 4. Due to the uneven distribution of good and poor land under agricultural reform, most farms comprise several plots of varying quality, resulting in diversified farming systems rather than monoculture. In the project area, almost half of the arable land is wholly or partially irrigated. 5. Many villages in the hilly areas are difficult to access by road and lack electricity. In addition, 14.8 percent of the households in the project area lack adequate drinking water.2 The average household size in 332 sample families in the project area was 5.47,3 compared with the average of 4.2 in West Henan. 1 They are Yiyuang, Xin’an, Ruyang, Luoning, Yichuan, Songxian, Luanchuan, Lushan, Mianchi, Lushi, Nanzhao, and Xichuan. 2 With the exception of Mengxia, all counties and 27 percent of the townships (i.e., 13,484 villages) in the project area experience potable water shortages. The situation is most severe in Shanxian (24 percent of households) and Luanchuan (14 percent). 3 Minority families are exempted from strict family planning targets. 39 Appendix 2, page 2 6. Labor availability and gender issues. The labor force in West Henan is about 8 million people, or 45.5 percent of the population. Total employment in the People’s Republic of China (PRC) increased by 9.46 percent from 1990 to 1998. At the same time, employment in Henan increased by 22.4 percent. Most new employment in Henan over 1990-1998 was absorbed in the rural areas, although not necessarily in agriculture. 7. The ratio of the male-to-female working population is 52:48. On-farm tasks are typically undertaken equally by men and women with few exceptions, such as men undertaking tree felling and women traditionally raising pigs. Survey data suggest that households relying primarily on their own labor are income maximizers, placing priority on increased economic activity over increased leisure. This work ethic contributes to effective labor availability. 8. There is a slight male bias in the total workforce, but the gender-biased seasonal migration of male labor to off-farm activities results in a developing female bias in farm labor. Women rarely undertake off-farm employment, using slack time for cottage industry and household tasks, but men increasingly take advantage of greater off-farm employment opportunities. Tree crops, requiring little labor input compared with arable crops except in harvesting, will increase the amount of slack time for both men and women. The result will be increased seasonal migration of male labor and increased farm-based activities, such as cottage industry, vegetable growing, and small livestock raising by women. 9. Current income status. The latest detailed income survey of the project area was undertaken in 19954 (Table A2.1). In 1995, about 36 percent of the horticulture households had incomes in the band immediately above the poverty threshold, corresponding to the international poverty standard. In total, almost 70 percent of the target horticulture households were below or only marginally above the international poverty standard.5 Around 61 percent of target livestock households were below or only marginally above the international poverty line.6 10. The per capita net income of rural dwellers in the PRC increased 46.8 percent from 1990 to 1998. The growth rates of farmers' income in the project area and Henan Province were 119 percent and 72.4 percent, respectively, during the same period. The disposable income of residents in urban areas in the PRC and Henan increased 66.5 percent and 61.1 percent, respectively, from 1990 to 1998. Despite this growth, the majority of the project beneficiaries have annual incomes below the average rural incomes in the PRC and below the Henan annual average rural income of Y1,864.7 4 Although there have been changes in project design since 1995, the target group of beneficiaries has remained the same. 5 In 1995 prices, the officially determined poverty threshold income for Henan was Y530 per capita (currently Y700). In target groups for horticulture development, 32.7 percent of households had incomes below Y530, including 17 percent with incomes below Y400 per capita. 6 The proportion of households below the official poverty level in 1995 was 23.1 percent. About 38 percent of livestock households were in the marginal group above the poverty level. 7 One third of beneficiaries were estimated to be below the official absolute poverty level in Henan Province of Y700 per annum (compared with 29.9 percent in 1995). This suggests that the distribution of poverty among potential beneficiaries remains as in the 1995 survey. 40 Appendix 2, page 3 Table A2.1: Income Status of Farmer Households in the Project Area (1995) Water Supply Item Horticulture Livestock and Irrigation Total Total Households 185,222 21,000 18,645 218,367 Persons 775,034 89,073 51,277 916,104 Per Capita Income in 1995 (yuan) <400 Households 31,780 1,381 0 33,101 Persons 136,804 5,383 0 142,267 400 – 530 Households 28,814 3,467 0 32,281 Persons 121,660 13,874 0 135,534 531 – 850 Households 66,118 7,905 210 74,233 Persons 280,065 33,301 840 315,000 851 - 1,232 Households 40,799 3,020 2,422 49,041 Persons 164,576 26,261 10,210 201,047 1,232 – 1,578 Households 11,269 2,207 5,404 18,880 Persons 43,421 9,261 21,580 74,262 > 1,578 Households 5,442 200 4,609 11,331 Persons 20,428 993 18,647 40,068 11. Social development. Social development has progressed significantly in Henan and the PRC after the economic reforms. From 1978 to 1998, life expectancy at birth rose from 68.2 to 70.8 years in the PRC, and from 68 to 70 years in Henan. The adult illiteracy rate declined from 22.8 to 15.78 percent in the PRC, and from 21 to 14.44 percent in Henan. C. Poverty Focus 12. Poverty in the PRC. The PRC has made significant progress in reducing the incidence of poverty and improving the living standards of the majority of its population. From 1990 to 1998, the input of funds from the central Government to poverty reduction increased almost three times. Using international standards, currently about 106 million people, or around 13.5 percent of the rural population, live in poverty.8 Only 0.8 percent of the urban population live below the poverty line of $1 per day, but consumption requirements are higher and a poverty line of at least $2 per day is more relevant. As a by-product of enterprise and other structural reforms, poverty is reappearing in urban centers and non-income poverty indicators may be more important. 8 In this period, the incidence of official absolute poverty declined from 9.4 percent to 4.6 percent in the PRC. Such absolute poverty is concentrated in the remote and interior provinces. The latest official statistics suggest that currently about 34 million inhabitants live in absolute poverty. 41 Appendix 2, page 4 13. Government policy toward poverty reduction has followed an area-based concept rather than beneficiary targeting. In 1994, 592 counties were identified as particularly poor, and Government investments were concentrated in these areas. The Poverty Alleviation and Development Office (PADO) was set up at the national, provincial, and county levels to promote area-based development in poverty counties. Funds were used according to local plans for labor-intensive infrastructure (particularly farm-to-market roads and irrigation), agricultural development, and livelihood and rural micro-credit projects.9 PADOs at the local levels are responsible for identifying projects and beneficiaries and maintain a very good recording system of poor households.