Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Report No.

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Report No. PID6890 Project Name China-Loess Plateau Watershed Rehabilitation Project II Region Sector Project ID Borrower Guarantor Contact East Asia Agriculture CNPE56216 The provinces of Shanxi, Shaanxi, Gansu, Inner Mongolia Government of China Date PID Prepared September 10,1998 Date PID Revised January 8, 1999 Project Appraisal Date January 18, 1999 Projected Board Date May 25, 1999 Sector Background Wang Yue, Ministry of Water Resources China's Ninth Five Year Plan ( ) places sustained and stable growth in agriculture and the rural economy at the top of its agenda, and its ambitious goals include major increases in grain production and farmers incomes. An important component of this strategy is to improve productivity in rainfed areas, particularly in the arid and semi-arid zones accounting for 30 percent of the total arable land. While productivity of China's irrigated areas is now among the highest in the world, progress in dryland agriculture has lagged behind. In the Loess Plateau of northwest China, poor resource endowment and high population pressure, combined with unsustainable agricultural practices, have resulted in widespread poverty that until recently had resisted any solutions. Early efforts to treat the Loess Plateau included campaigns to terrace the slope lands and to increase the vegetation cover on the plateau, and the building of thousands of dams to intercept sediment runoff in the gullies. These measures were aimed primarily at erosion control and little attention was given by planners or farmers to optimizing agricultural production and maximizing farm incomes. The Government's development strategy for the Loess Plateau has been modified in recent years. It now recognizes that soil conservation is compatible with sustainable and productive agriculture and that they are mutually reinforcing. Thus, a key element in this strategy is the comprehensive and integrated planning of individual watersheds. Project Objectives The primary objective of the project is to increase agricultural production and incomes in the Loess Plateau region through a more efficient and sustainable use of land and water resources in tributaries of the Yellow Plateau covering the Loess Plateau. A secondary objective, to reduce erosion and sediment inflows, is achieved by locating the project in parts of the basin with severe soil erosion. Factors such as poverty level, development potential, strong leadership and commitment at the local government level were

2 also considered in the selection of project areas. The project will (a) create sustainable crop production on high-yielding level farmland and thereby replace the areas devoted to crops on erodible slope lands, (b) plant the slope lands to a range of trees, shrubs and grasses for land stabilization and the production of fuel, timber and fodder, and (c) substantially reduce sediment runoff from slope lands and gullies. The feasibility of the projects components, the institutional arrangements, and the participatory process have been confirmed by the highly successful implementation of the Loess Plateau Watershed Rehabilitation Project (Cr.3540 CHA), under implementation since October, Project Description The project covers 19,500 sq. km in 11 river basins in 37 counties in Shanxi, Shaanxi, and Gansu Provinces, and the autonomous region of Inner Mongolia. Generally the poorer counties are selected for the project and, within the counties, the poorer areas. Counties and small watersheds were selected for inclusion in the project based on a variety of criteria. These included soil erosion, poverty level, experience in soil and water conservation works, development potential and repayment capacity, strong leadership and commitment at the local government level and proximity to science and research organizations involved in soil and water conservation. Also, the intent is to establish activities in a range of different but typical areas of the Loess Plateau. The large number of counties included in the project is a reflection of strong demand from county governments to participate. This will help disseminate the project models over a wide area. The project involves a range of crop development and slope protection activities as summarized below. 2. Project Components Cropland Development ($120 mn) Terracing Slopelands and old, irregular terraces on about 89,500 ha will be converted to wide, level terraces. Terrace widths range from 5 to 15 meters depending on slope. Access roads are built as a part of terrace construction. Terraced land retains water and resists soil erosion. The improved soil and water regime, and better access for inputs and outputs, give farmers the opportunity to plant a wider range of crops with much higher yields than on slopeland. In a year of average rainfall, grain yields on terraces can reach two to three times those on slopelands. Since farmers typically store several years of grain, the high yields in the good years provide insurance for the drought years. This security in staple grains allows farmers to take steep slopeland out of grain production and put it into more sustainable use such as tree and shrub plantations. Farmers report that level terraces with good road access require less family labor, and that this gives family members time for off-farm employment, as well as cultivation of cash crops. Warping Land Warping is a term used to denote the creation of land by the deposition of sediment. In the north of Shanxi province, and in Inner Mongolia, there are sites where good quality crop land has been reclaimed in the past by diverting sediment laden flood waters onto wasteland. This -2 -

3 process is planned for numerous sites that will total about 2,800 ha. Sediment control dams Sediment control dams will be built to retain sediment, control flooding, create land for crop production, and store water for irrigation and village water supply. About 150 key dams will be constructed to control sediment runoff and floods from drainage basins of 3 to 5 sq. km. About 335 warping dams, about 3-10 m in height, with much smaller catchment areas, will be built in the gullies of the plateau with the main purpose of intercepting sediment and creating land. The area to be formed by key dams will be about 1,500 ha and land formed by warping dams is expected to reach about 935 ha. It takes about three years for land to be ready for farming behind warping dams and 8-10 years for key dams. Gully Stabilization This consists of : --small check dams built of rock or brushwood that slow down the flow in the gullies and prevent undercutting of the gully sides; and --low dikes and shrubs planted at the heads of gullies to stabilize the gully head Irrigation Irrigation works will consist of: -- water-storage tanks (about 34,000) that will be located to catch run off from roads, and be spaced far enough apart to allow sufficient water collection; in some areas they may be combined with irrigation for orchards; --small surface water diversions serving about 1,500 ha; and --small-scale groundwater irrigation schemes mostly in Inner Mongolia serving about 3,850 ha Slopeland Conservation ($88 mn) The main objective of this component is to increase the vegetation cover and erosion control capacity in the project watersheds through means that bring financial benefits to farmers. At present, slopeland is cultivated with crops and large expanses of wasteland remain untreated. The slopeland conservation component will both diversify and raise farmer incomes, and reduce soil and water loss from untreated areas. It will provide farmers with an important cash alternative to raising sheep and goats. Overgrazing by sheep and goats on slopeland seriously damages the vegetation cover and causes major soil erosion throughout the project area. Decrease in the number of grazing sheep and goats, (and increase in pen feeding) may be the single most important factor in permanently restoring vegetation cover in the project area. Accordingly, the component includes some investment in livestock, particularly in the poorest areas where few farmers are currently able to afford the purchase of cows. In other areas, it will serve as incentive to switch from goat to cow raising, and will encourage the farmers to plant and maintain grass. Afforestation and Vegetative Cover Trees of various species ( pine, poplar, and black locust etc. for timber) will be planted on narrow terraces or fish-scale pits on about 104,000 ha of slopeland. The tree species that have been selected are all income-producing and can be selectively harvested for their poles in ten to 15 years. Intercropping with beans is often practiced for several years after the trees are planted. Shrubs (caragana, seabuckthorn) will be planted on about 110,000 ha of land too steep for trees, but this may be a mix of trees and shrubs. -3 -

4 About 40 W of the land in the project areas is classified as unused wasteland, and after the trees and shrubs are planted the land will be contracted to individual farmers. Artificial Grassland A variety of pasture grasses will be planted on 56,000 ha of land, mostly unused waste land. These will be harvested to feed pen-fed animals or used for controlled grazing. Natural Revegetation This will protect 27,000 ha of unused land to allow natural revegetation. In Inner Mongolia, the vegetation will be native grasses, but in other areas there will be a mix of trees, shrubs and grasses. Horticulture Fruit and nut-bearing trees will be planted on 70,000 ha of slopeland in narrow benches and fish scale pits. Apples and pears will also be planted on newly constructed terraces. Marketing of fruit produced under the project will be enhanced by investments in fruit stores to be owned and operated by farmer groups or individuals. Also, an overall marketing approach for the three provinces will be set up, designed to unify and raise standards for apples. Existing seedling nurseries will be improved and new ones will be set up to provide high quality planting material. Project Support Services ($28 m) The support services component of the project will fund research and extension, training and study tours, monitoring and evaluation, survey and design, vehicles and office equipment. Research conducted under the project and applied in project areas includes topics in dryland farming techniques, forest construction techniques, and forage and grazing management. Training is both international and domestic, and covers project management, agriculture and forestry techniques, water-saving irrigation, computers, nursery management, grassland management, etc. Training is given to project managers, technicians and farmers. The project funds small watershed land use surveys and plans, and technical designs for fruit storage, and irrigation and sediment retention structures. Project management costs, and some vehicles and office equipment are also included in this component. Project Costs and Financing The total project cost is US$250 million equivalent. Bank/IDA financing will be US$150 million equivalent. The provinces and local governments will finance US$100 million equivalent. The farmers--the main beneficiaries of the project--will repay the proceeds of the Loan/Credit and part of the locally financed portion. Project Implementation The Ministry of Water Resources (MWR) is the central government agency with overall responsibility for the project. MWR's mandate includes stewardship of the land and water resources of China's major basins. It exercises this responsibility through seven river basin conservancy commissions. The lead agencies in MWR for the proposed project are the Yellow River Conservancy Commission (YRCC), based in Zhengzhou, Henan Province, and its Upper and Middle Reaches Bureau (MRB), based in Xian, Shaanxi ProvinceThe MRB and the governments of Shanxi, Inner Mongolia, Shaanxi and Gansu provinces will be - 4 -

5 responsible for overall project implementation. The management structure includes Project Leading Groups (PLGs) and Project Management Offices (PMOs) set up at the provincial, prefecture, county, township and village levels. The organizational structure described above is in place for Loess Plateau I and will be extended to areas included in the new project. Environmental The overall effect of changes in land use under the project will be to preserve the agricultural land resource, and increase productivity in an environmentally sustainable manner. The land under forest and other vegetative cover will increase from around 280,000 to over 600,000. The more steeply sloping land presently devoted to field crops will be converted to forests, and the more gently sloped cropping land will be converted to terraces (around 90,000 ha). There will be a small increase in the area of grassland, but much of the existing grassland will be improved to allow for higher livestock carrying capacities, and will be managed by individual farmers or farmer groups. The key dams and warping dams will intercept virtually all of the sediment from the areas they control, and this will have significant downstream benefits; the dams will eliminate destructive flash floods, provide water for irrigation and other uses, and the sediment deposited upstream of the dams will form high quality farm land. The project will not convert natural forests or wetlands in the project areas and thus will have little impact on wildlife. The project will, however, increase forest cover, and evidence from recently developed areas suggests that this will lead to a higher and more diverse population of birds and small mammals. The higher standards of crop management will not lead to any increase in the runoff of fertilizers (herbicides and insecticides are seldom used in field crops) since most of the crop land will be terraced. The expansion of orchards will lead to some increase in pesticide use, but an objective of the project is to disseminate techniques for safer and more efficient use of chemical controls and extend IPM technology. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C Telephone No. (202) Fax No. (202) Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending January 22,

6 Annex Executive Summary to the Environmental Assessment (environmental impact section) Prepared by the China Green Environment Development Center and Reconnaissance, Planning and Design Institute, the Yellow River Conservancy Commission, Ministry of Water Resources ENVIRONMENTAL IMPACTS Major Environmental Factors The project will bring about enormous environmental benefits, but also some adverse impacts. As screened on the basis of the project construction and operation activities, significant impacts will be caused by the following environmental factors: environmental impacts during the construction stage, plan disease and insect pest control, chemical fertilizer and pesticide application, water quality impact and project safety during the operation stage. Impacts on Runoff-Sediment Regime With various conservation measures implemented as proposed, the project will be able to retain water and soil. Thus, te percentage of erosion management will be increased from to 52.3w, the efficiency of sediment reduction will be increased from the present 27.5w to 52.3w at the end of the project, an annual average increase of 2,980 million t in sediment reduction, and million m3 in water storage. In small, thanks to the retention effect of conservation measures, runoff and sediment reduction will be achieved downstream of managed gullies. This will mitigate flood risks caused by rainstorm in the downstream areas, and ensure safety of villages and roads there. Large volumes of flood retained in the managed areas will provide groundwater recharge, and increase the regular flow of streams from year to year. In large, the implementation of subbasin-based conservation measures will achieve runoff and sediment reduction in all tributaries distributed in the project area. Further in large, the development of water and soil retention benefits of various conservation measures will undoubtedly mitigate sedimentation in the lower Yellow River, reduce sediment removal work in irrigation areas fed by the Yellow River, and save on dike raising cost. Al these will provide significant economic and social benefits for flood control in the lower Yellow River and construction in the Huang-Huai-Hai plain. The implementation of the proposed conservation measures will cause some impacts on the downstream runoff, but such impacts will be minor because the downstream runoff variation is associated with may factors, including precipitation, irrigation, water diversion, etc. In comparison with water retention benefits to the realized in the project area, the effect on downstream water reduction is negligible. Impacts on Water Quality Runoff retention and flood detention by various conservation measures and - 6 -

7 moisture retention by plants will result in less silt and suspended load, lower mineral degree, hardness and coliform content, and higher oxidibility of waters, enable control of soil erosion and nutrient loss, reduce non-point pollution sources, and finally help improve runoff water quality. During the project implementation, more pesticide and chemical fertilizer will be applied. In terms of the implementation of stage I, there is an increase in the amount of application, but it is still lower than the national average. Moreover, they are applied as appropriate, almost without impact on water quality. Standards and safety procedures for the application of pesticide and chemical fertilizer in China are discussed herein, to ensure that no adverse environmental impact will result from improper use of such. Impacts on Soil The project will directly improve the moisture, fertility and physical property of soil. The most obvious soil improvement will be found in basic farmland. Terraced fields will ameriliorate soil arability, control soil and water loss, retain surface runoff and sediment, increase soil moisture, retain soil fertility, improve soil cluster structure and microhabitat in favor of formation and accumulation of organic matter in soil. Afforestation will not only enlarge the micropopulation of s oil, which will help accumulation of nitrogen, transformation of organic matter and enhancement of fertility, but also increase the content of humus. Sorts of silted land come from siltation of slopeland topsoil. Plentiful organic matter of weed and animal manure contained in such soil will build up soil fertility. Also, irrigated land and floodland development will bring about great improvements to soil arability. Impacts of Terrestrial Biosphere Upon completion of the project, the eco-environment in the project area will be significantly bettered. There will be an increase of 295,000 km2 in vegetation, with vegetation coverage raised from 16.4% to 34.7%. Also, the enlargement of vegetation will provide a ground for the development of poultry and animal husbandry. Plant diseases and insect pests will be the major impact on plants and animals in the growth and development period, so pest control is considered herein as an important task of the environmental management under the project. Common plant diseases and insect pests and animal diseases are given in the EIA main report, which includes a preventionoriented pest control program. The Ministry of Agriculture has developed laws and regulations on pest control and animal disease control. Compliance with such laws and regulations will control the attack of plant/animal diseases and insect pests. With complete plant protection and animal disease control agencies available at different levels in the project area, pest control under the project will be guaranteed. Impacts on Microclimate and Air Quality Extensive afforestation reduces wind speed. Farmland under the protection of shelter belts generally cuts down wind speed by 10-80%, thus preventing crops - 7 -

8 from the adverse impacts of strong wind. fix sand dunes and avoid desertification. Afforestation in desert is able to Afforestation improves microclimate to some extent. Vegetation is capable of air purification. According to the test results provided Shaanxi Province, the dust content of air in forestland is 20-38t less than that in bare land. In addition, plants absorb harmful gas such as S02 and C02, etc. Enlargement of vegetation coverage greatly increases air humidity, prevents dry and hot wind nuisance, and subsequently provides high crop yields. Environmental Impacts in Construction Stage Construction activities under the project will be completed in a decentralized manner, involving a small number of construction workers. Most of them will be local works of considerable mobility, for the purpose of controlling severe water and soil loss, generally they will not cause adverse environmental impacts. This is already proven by practice of Stage I. However, some problems may be caused by defaults during the project construction, so countermeasures to this effect are proposed in the EIA main report as appropriate, mainly recultivation and afforestation of areas upon completion of the construction, to prevent additional soil and water loss. Project Safety The project is designed and will be implemented according to the "Specifications of Soil and Water Conservation", so that it will be of adequate flood resistance. Also, perfect project safety supervision and monitoring systems will be incorporated into the project construction, allowing early identification and solution of any problem during construction, and ensuring adequate safety of the project. Compliance with Laws The project EIA is carried out under the guidance of applicable laws and regulations of China. It is considered that the project construction meets the environmental laws/regulations of China. Public Participation The proposed project includes wide public participation, and fully represents the interests of the local residents. The project per se is proposed on the basis of the planning efforts made by the project provinces, and the project proposal is prepared by planners and designers on the basis of wide public consultation. Farmers in the project area will be major implementers and beneficiaries of the project, so grassroots implementation agencies at village level area all composed of local farmers. The project proposal, feasibility report, EIA terms of reference and EIA report have experienced many a time consultation of experts and review of responsible authorities, thus the project feasibility is ensured. ENVIRONMENTAL MANAGEMENT To fully develop environmental benefits and mitigate/offset possible adverse environmental impacts of the project, a detailed environmental management - 8 -

9 program is incorporated in the EIA. Environmental management under the project mainly involves provision of environmental management offices at different levels, to be responsible for environment protection and management. Their principle responsibilities are as follows: To incorporate the environment management program specified in the EIA into the project management plan. To undertake environmental management and monitoring during construction and operation of the project; To initiate follow-up studies, so as to gain more environmental benefits; To perfect the environmental management program on the basis of its performance; and To prepare reports according to the Government and the World Bank reporting systems. The environmental management program is already incorporated into the project management system as specified in the EIA, which will effectively insure the implementation thereof. CONCLUSIONS As an environmental improvement and enhancement, the project will generate considerable economic benefits, wide-ranging social achievements and good ecological benefits. Main functions of the project are to (a) enable reasonable development and utilization of water and soil resources toward economic development in the project area; (b) increase vegetation coverage to a considerable extent, mitigate water and soil loss, retain moisture, regulate micro-climate, effectively restrain various natural disasters, and improve eco-environment; (c) greatly reduce sediment yield into the Yellow River, and help mitigate aggravation in the lower reaches. The project may cause some adverse environmental impacts, which, however, can be mitigated or offset provided remedy measures are taken as appropriate. Furthermore, the EIA includes a detailed environmental management program and appropriate environment protection measures, which will ensure construction and operation of the project in compliance with environment protection requirements. 9