Documentof The-World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 12527-CRA STAFF APPRAISAL REPORT CHINA Public Disclosure Authorized XIAOLANGDI RESETTIE4ENT PROJECT MARCH25, 1994 Public Disclosure Authorized Agriculture Operations Division China and Mongolia Department East Asia and Pacific Regional Office Public Disclosure Authorized This doacnent has a restridted distdbution and may be used by redpients only in theperformance of their official duties. Itscontents may not otherwise be disclosed wthout World Bank authorization. ClRRENCY EQUIVALENTS11 (As of January 1, 1994) Currency Uit = Yuan (Y) $1.00 = Y 8.70 Y100 = $0.115 FISCAL YEAR Jawuary1 to December31 WEGHTS AND MEASURES I meter (m) = 3.28 feet (ft) 1 klometer (km) = 0.62 miles 1 hectare (ha) = 15 mu i ton (t) = 1,000 kg = 2,205 pounds 1 kilogram (kg) = 2.2 pounds PRINCIPALABBREVATIONS AND ACRONYMSUSED CIECC - China nternationalEngineering Consulting Company CMIEC - China MachineryImport and Export Company CNTIC - China National TechnicalImport Corporation COE - County-OwnedEnterprise CRO - County ResetdementOffice CYJV - CanadianYellow River Joint Venture EIA - EnvironmentalImpact Assessment EMO - EnvironmentalManagement Office EL - ElevationLevel ERR - EconomicRate of Return FRR - FinancialRate of Return FSL - Full Supply Level GOC - Governmentof China GPDIWH - General Planningand Design Institute of Water and Hydropower GWh - Gigawatt-hour HPG - Henan Provincial Government ITrC - InternationalTendering Company kWh - Kilowatt-hour M&I - Municpal and Industrial MW - Megawatt 1I This project was appraisedin October/November1993 when the exchangerate was $1 = Y 5.7. All cost and fincing have been recalculatedat the rate of $1 = Y 8.7, effective January 1, 1994. Economicand financialanalysis is based on original appraisalparamers. rne devaluationwould improve economicand financialresults to some extent FOROFFICIAL USE ONLY MWR - Ministry of Water Resources MWRRO - MWR ResetdementOffice PRO - Provincial ResettlementOffice RLO - ResetdementLiaison Office RPDI - Reconnaissance,Planning and Design Institute (of YRCC) SPC - State PlanningCommission TVE - Township and Village Enterprise XEC - XlaolangdiEngineering Corporation YRCC - Yellow River ConservancyCommission YRCCRO - YRCC ResetdtementOffice YRWVIIDC- Yellow River Water and HydroelectricDevelopment Corporation Thisdocument has a restricteddishnbution and may be usedby recipientsonly in thepufanan of their lofficialduties Its contnts maynot oterwise be disclosedwithout Wortd Bank authorzation. CINA XIAOLANGDIRESETtEMENT PROJECT CREDrr AND PRojEcT SummARY Borrower: People's Republicof China Bendiclary: YellowRiver ConservancyCommission Amount: SDR 79.9 million ($110 millionequivalent) Terms: Standard, with 35 years' maturity Objectives and Description: The major goal of the project is to restore and improve the livelihoodsof 154,000resettlern and 300,000 host people affectedby constructionand operationof the Xiaolangdimultipurpose dam, and to minimizethe adverse effects of their social adjustmentto their new environments. The project comprises four major components: (a) housing and irasucture development-this component will consist of constructingall infrastructureincluding housing for 276 villagesand 10 towns for the resettlers. Host communities will receive substantial infrastructure improvements; (b) transfer of resettlers-this componentmakes special provisionsfor transfer of all salvageablematerials and personalbelongings, factory machinery and other goods from the present to the new sites. The transport will be contracted to local truclkng companies that will move the goods at an appropriate time; (c) livelihood development-for agricudurallivelihood reestablishment, 11,100 ha of land will be developed, of which about 7,000 ha will be irrigated and the rest will be dryland. A totalof 252 existingsmall industries and mines will be relocated and reconstructedand the workers will move with these industries. Eighty-fournew county, townshipand village industries wiU be established. These new industies will create 20,500 new industrial jobs to absorb those switching from agricultureregistration to nonagriculture;and (d) aplanning, design, monitoringand resetlementmanagement training component. Benefitsand Risks: At full development,the projectis expectedto expandthe irgated and drylandfarming area by 11,100ha. The projectwould benefit about0.5 millionpeople, and createabout 75,220 full-time jobs and about 37,400 part-time jobs with significant contributions toward incrsing incomesof resettlers.The economic rate of returnfor the overall project is estimatedto be about 32 percent. A resettlement projectof this magnitudefaces a rangeof potentialrisks including: (a) delaysin implementationof the resetdementsite developmentor industral developmentas a result of delaysin counterpartfunds; (b) the resettlementcost estimatecould vary considerablyover the period of implementation;and (c) some of the sites selected, especiallythe smaller ones, may not prove viableduring the detailed implemenitationphase. Delays in funding of resetdementsites or factoriescannot be tolerated since delays in resetdementwill delay the entire dam coustruction,which would be extremelycostly to the government. The governmenthas agreedto have in place a revolvingfund for financingof possibleannual delays in fundingto overcomeshortages from any source. In addition, to anticipate cost increases, governmentis indexingall costs to an acc-ptableindex to determie costs during construction. Govermmentwill budget accordingto t .- indexedcosts. To overcomethe possiblelack of viabilityof some sites,additional sites havealready been studied and will be planned as safetynets. Fstimated Costs Loa Foreign Total ----- ($ miion) - Planning & Design 7.1 3.4 10.5 Infrastructureand Housing 186.9 48.8 235.7 Transfer of Resettlers 6.0 - 6.0 Lilidvm ent Agicultre Development WengmengtanIrrigated Agriculture 27.6 14.1 41.7 Houhe Dam and Irrigation 9.2 4.6 13.8 DownstreamDevelopment 1.8 - 1.8 AgriculturalSupport 8.1 - 8.1 Industrial Development 90.7 53.3 144.0 Monitoring 5.4 1.7 7.1 Subtotal 342i I252 468. EnvironmentalManagement Plan 2.7 0.8 3.5 Base Cost 345.5 126.7 472.2 Physical Contingency 23.8 8.6 32.4 Price Contingency 48.9 17.8 66.7 Totl Proiect C /la 418.2 151 571.3 Fhandng "7an: Central Government 322.3 37.6 359.9 ProvincialGovernments 0.2 0.1 0.3 Enterprises 27.7 20.2 47.9 People's ConstructionBank of China 27.7 25.5 53.2 IDA 40.3 69.7 110.0 T1a 418.2 .J5 71. Estimated IDA Disbursements: D)AEY 19 1996 1997 1998 1999 2000 2001 - -($ miiffion) __ Annual 15 15 25 30 15 7 3 Cumulative 15 30 55 85 100 107 110 Poverty Category: Not applicable Economic Rate of Return: 32 percent la Proect is exempt from taxes and duties. CONTENTS I Baclcgiouuiid ~ . ~~. # . A. Introductio ....... ....... .... ..... ... * 1 B. -Project Origin and Objectives . .... .. .. .. .. 1 C. intChina .................... 3 D. Rationale for Bank GrompInvolvement ................. 5 2 Th~ePirojed Areas . .. ... .. .. .. ............. 6 A. Location of1 he andHttle reand.. st. re.. 6 B. Physica, Demogrphicand SocialCondWons 6 C. Agriclture, WaterRs .. 63urcesandlrrigti D. Reoent Agicultu Development ........ .. ... 7 E. I ieNonagricultural Sectors .............. 8 F. RuradIncomes and Poverty . ............ .... 9 G. InundationImpact .............................. 9 H.Rsttein Strategy .. .. .... .. ..... ..... O.. 12 A. P'roject Ovarview . ....... ...... .. .. .. ...... .15 E. PgrojectDescription ........... ........... .S C. De Fea ...................... 15 D. Sus of Prparation.... .. 25 T report is based on the findingsof an appraisl missionin October1993. Members of the appraisalteam included D. Gunaratnam(mission leader, IDA),rang Ping, ZhMang Weizen, Zhang Chaohua, Z. C. Lin, S. Feson, M. Buitela, and 0. Litens (consultants).Others involved in the prepartion and preappraisalwere J. M. Voegele, A. Ghani, S. Gulyani (IDA), Li Qun (Consultant). Peer reviewers comprised W. Partridge,C. Diewald,B. Trembath,and M. Cernea. The DivisionChief is Joseph Goldbergand the Acing DepartmentDirector is ZaferEcevit. -vi- E. PopularParticipation and Compensation................. 25 F. ImplementationSchedule ... .... 28 0. CostEstimates ........................ 29 H. Financing ......... ...... 30 I. Procurement....................... 30 J. Disbursement .. ............. .... 33 K Acwmts andAudits. ...................... 35 L. EnvironmentalImnpact ....... .35 4 Ognand......n...e....... ... 37 A. AgenciesParticipating in ResetdementImplementation... 37 B. InplementationManagement and Responsibilitis. 41 C. FinancialControl .... 42 D. Supervsion and Monitoring .. .42 E. SupportServices forResetders . .44 F. SafetyNets/Support Mechanisms . 46 5 Eon AspectsofLivellhoodDevelopment ..... _ 47 A. AgriculturlLivelihoodDevelopment .... 47 B. IndustraLivelihoodDevelopment . .49 C. Tota IncomeDevelopment. ... 51 D. lir,jectRisks ...... 52 6 AgrmentandRec,mmendaion . .......... 54 ANNEFs 1. Comparisonof Alternatives to the Xiaolangdi Poject .57 2. ResettlementPolicyand Legal Framework .58 3. InundationImnpacts.... .. ... 62 4. CompensationStandardsandEntitlement.. .. 73 5. ResettlementStrategies, Site Selection,and Alternatives.......... 82 6. Costand Financing Tables ............................ 92 7. HousingConditions Before and After Resetllement .107 8. IncomeAnalysis .. 110 9. Financialand Economic Analysis .142 10. Social AdjustmentSupport Services ..... 158 11. OrganizationArrangements .. 166 12.