People s Republic of China: Preparing the Silk Road Ecosystem Restoration Project

Transcription

1 1 -* Technical Assistance Report Project Number: December 2007 People s Republic of China: Preparing the Silk Road Ecosystem Restoration Project Asian Development Bank

2 CURRENCY EQUIVALENTS (as of 10 December 2007) Currency Unit yuan (CNY) CNY1.00 = $0.135 $1.00 = CNY7.403 ABBREVIATIONS ADB Asian Development Bank CBCLDP Capacity Building to Combat Land Degradation Project EA executing agency EIA environmental impact assessment GEF Global Environmental Facility GIS geographical information system IA implementing agency IEE initial environmental examination KPS knowledge products and services PLG provincial leading group PMO project management office PPTA project preparatory technical assistance PRC People s Republic of China RRP report and recommendation of the President UAR Uygur Autonomous Region TA technical assistance km 2 square kilometer WEIGHT AND MEASURE TECHNICAL ASSISTANCE CLASSIFICATION Targeting Classification General intervention Sector Agriculture and natural resources Subsectors Environment and biodiversity; agriculture production, agroprocessing, and agribusiness; forest Themes Environmental sustainability, sustainable economic growth, inclusive social development Subthemes Natural resources conservation, developing rural areas, global and regional transboundary environmental concerns and issues NOTES In this report, "$" refers to US dollars. Vice President C. Lawrence Greenwood, Jr., Operations 2 Director General H. Satish Rao, East Asia Department (EARD) Director K. Kannan, Agriculture, Environment, and Natural Resources Division, EARD Team leader Team members C. Edmonds, Rural Development Economist, EARD K. Emzita, Sr. Counsel, Office of the General Counsel S. Ferguson, Senior Social Development Specialist (Resettlement), EARD N. Zhiming, Project Officer, PRC Resident Mission, EARD

3 I. INTRODUCTION 1. During the 2006 Country Programming Mission, the Government of the People s Republic of China (PRC) requested the Asian Development Bank (ADB) to provide a project preparatory technical assistance (TA) for the Silk Road Ecosystem Restoration Project. 1 The TA will help prepare an investment project to meet the PRC s goals of promoting environmental sustainability through ecosystem restoration. At the request of the Government, ADB fielded a Fact-Finding Mission in July The Mission visited the project area and held discussions with representatives of the national and provincial governments and other key stakeholders to reach an understanding on the detailed TA design, implementation arrangements, cost estimates, and consultants terms of reference. The TA design and monitoring framework is in Appendix 1. The concept paper was approved on 23 May II. ISSUES 2. The drylands of western PRC cover about 40% of the country and contain some of the most severely degraded land in the country and in the world. The proposed project area covers districts and counties selected from some of the worst affected, poorer parts of Gansu and Shaanxi provinces, and Xinjiang Uygur Autonomous Region (UAR). 3 The connections between dryland degradation, poverty, and rapid population growth in the project area have been well documented. 4 Between 1980 and 2006, the combined population of Gansu, Shaanxi, and Xinjiang UAR increased from 59.8 million to 83.9 million, or by 40.2%. The population of their ethnic minorities grew from 9.2 to 15.2 million, or by 65%, over the same period. Land degradation is a critical environmental problem in all three project jurisdictions, seriously affecting 274,600 square kilometers (km 2 ) of land in Gansu (65% of its total area), 30,000 km 2 in Shaanxi (14.5% of the province), and 1.1 million km 2,or 64% of the total area of Xinjiang. The economic cost of land degradation is estimated at CNY3.1 billion in Gansu, and CNY11.6 billion in Shaanxi, or 15.9% and 3.6%, respectively, of provincial gross domestic product. 3. The project area includes three distinct ecological zones: the loess plateau, the central mountain region, and the oasis in Xinjiang UAR. The ancient Silk Road route ran through this area, starting in the west near Xian and running eastward through Gansu and Xinjiang. The loess plateau in the PRC is characterized by fine, wind-blown soil that is very deep up to 200 meters, in places and highly prone to erosion. This soil is the source of most of the sediment that gives the Yellow River its distinctive coloring downstream from the plateau to the sea and creates problems of sedimentation. Much of the area of eastern Gansu and Shaanxi provinces lies on the loess plateau. Agriculture is predominantly rainfed, producing relatively low-value and low-yielding annual crops. The region s natural environment is being improved by investment by the people of the area, with support from the local and central governments. The central mountain region includes the Qinling Mountains in Shaanxi province, the Qilian Mountains in Gansu province, and the Qianshan Mountains in Xinjiang UAR. It contains several national nature and forest reserve areas that provide important habitats for endangered and 1 Formerly the Ecosystem Restoration in Three Northwest Provinces Project. 2 The TA first appeared in ADB Business Opportunities on 27 July The project area covers 301,700 square kilometers (km 2 ), including 18 districts and 57 counties across Gansu, Shaanxi, and Xinjiang UAR. The area s population totals about 83.9 million, of whom 63.7% live in rural areas. In 2006, average annual urban income in the project area was CNY9,103 (equivalent to $1,097), while the average annual per capita rural income was only CNY2,377 ($286) which is about equal to the poverty line, defined as $1 per day. 4 ADB Financial Arrangement for a Proposed Global Environment Facility Grant and Asian Development Bank Technical Assistance to the People's Republic of China for Capacity Building to Combat Land Degradation Project. Manila.

4 2 protected species. The third zone the desert oasis areas in Xinjiang UAR is home to virtually all of the UAR s people and agricultural activities, but makes up only 4% of its territory. The oases require irrigation for agriculture, and their desert climate features harsh winters and summers of extreme heat and high winds. To improve economic prospects and living conditions in this region, the establishment of shelter-belt green areas to prevent the shifting of the desert sands, and the construction of water management infrastructure e.g., canals, wells, high efficiency irrigation are vital. Oasis farming of grapes, melons, and such traditional crops as cotton and wheat, forms the core of the local residents agricultural activities. 4. The TA fits within the framework of the PRC-Global Environmental Facility (GEF) 5 partnership for land degradation in dryland ecosystems, which seeks to combat land degradation, reduce poverty, and conserve biodiversity through capacity-building investments and demonstration investment projects (footnote 4). ADB s first project under the partnership, the Capacity Building to Combat Land Degradation Project (CBCLDP), has been underway in six western provinces and autonomous regions since July 2004, including Gansu, Shaanxi, and Xinjiang UAR Experiences from the implementation of CBCLDP emphasize the need for (i) a multisectoral approach to the land degradation problem, (ii) policies at the central and provincial levels to support integrated ecosystem management, (iii) the continual building of provincial and local implementation and coordination capacities to address land degradation problems, (iv) the adoption of environmental laws and policy frameworks by the Government, and (v) strengthening the capacity of local stakeholders to manage their resources. 6. Promoting environmental improvement by reversing natural resource degradation and preserving farmland is one of the strategic priorities in the country strategy and program update ( ) of ADB s operations in the PRC, 7 and is also consistent with the PRC s 11 th Five- Year Plan. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 7. The proposed Project is expected to have a positive impact on poverty and land degradation through targeted interventions that will contribute to restoring the productive and protective functions of the ecosystem along the old Silk Road covering three provinces in the western PRC. To achieve this impact, the TA will produce a feasibility study to design an investment project for sustainable use of natural resources in the project area. The targeted interventions may include (i) sustainable livelihood development, (ii) protection and 5 The Global Environment Facility (GEF) provides grants to developing countries for projects that benefit the global environment and promote sustainable livelihoods in local communities. The GEF is the world's largest provider of grants and concessionary in the focal areas of climate change, biodiversity, land degradation, international waters, ozone depletion, and persistent organic pollutants. ADB has been working closely with GEF since the mid 1990s. With the approval of ADB's direct access to full project resources in 2002, the partnership has been further strengthened. Direct access to GEF resources enables ADB to (i) identify, prepare, appraise, and implement GEF projects on behalf of GEF and ADB's developing member countries; (ii) submit full project proposals for GEF financing directly; and (iii) receive project grants directly from GEF and be directly accountable for their use. The ADB-GEF partnership provides substantial opportunities to blend ADB resources for sustainable development with GEF resources for the global environment. 6 The partnership also covers Inner Mongolia, Ningxia Hui Autonomous Region, and Qinghai province. 7 ADB Country Strategy and Program Update Manila.

5 3 management of rainfed and oasis areas, and (iii) strengthening local institutional capacity for effective project implementation. B. Methodology and Key Activities 8. The TA will use a participatory approach and will be implemented in two phases over 8 months. There will be a 1-month break after the end of phase 1. During phase 1, the consulting team, conferring with the provincial and local authorities, will (i) conduct assessments of sectors, institutions, strategies, policies, and plans; 8 (ii) appraise the project proposals prepared by the provincial governments; (iii) assess a range of problems constraining economic and ecosystem development, including ecosystem protection, rehabilitation, and sustainable land and farm management; (iv) undertake wide stakeholder consultations and workshops, and, during the inception and midterm phases, conduct social, poverty, institutional, and environmental assessments and surveys, as well as any others that are necessary; (v) conduct ecosystem surveys and comprehensive assessments to determine the existing baseline situations, including those of habitat, land degradation, and biodiversity, in the project area; and (vi) evaluate the impact of the ongoing progress on land degradation mitigation in dryland ecosystems, including lessons learned. The initial poverty and social analysis is in Appendix Phase 2 will build on the outputs of phase 1. Based on the phase 1 outcome and consultations with the stakeholders, the consulting team will prepare a comprehensive, detailed feasibility report covering (i) project impact, outcome, outputs, and activities; (ii) financial, economic, social, and environmental safeguards; (iii) relevant sector analysis; (iv) the roles and institutional capacities of participating agencies; (v) implementation arrangements; and (vi) interrelated issues of poverty reduction, gender, good governance, and private sector development. To create a stronger sense of ownership, it will be important to ensure that the investment plans are (i) consistent with the government strategies and plans; and (ii) endorsed by the stakeholders, including beneficiaries, participating institutions, and other development partners. C. Cost and Financing 10. The TA is estimated to cost the equivalent of $1.2 million. ADB will finance $800,000 on a grant basis through its TA funding program. The Government will contribute $400,000 equivalent for office space, counterpart staff, site transportation, and other services. The Government has been informed that approval of the TA does not commit ADB to finance any ensuing project. Detailed cost estimates are in Appendix The proposed GEF-financed components will be prepared in coordination with this TA when the project preparatory grant funds become available from GEF. These will focus on aspects of the Project that will generate environmental benefits of global significance, including biodiversity conservation through management of protected areas along the Silk Road Corridor, carbon sequestration, promotion of sustainable land management practices, and institutional capacity building for effective implementation of the GEF-financed components. 8 Production of reports suitable for public dissemination based on this analysis will be encouraged, and the preparation of such reports will be coordinated with the ongoing technical assistance to combat land degradation (footnote 4).

6 4 D. Implementation Arrangements 12. The State Forestry Administration will be the Executing Agency (EA) for the TA, and the forestry departments of Gansu, Shaanxi, and Xinjiang UAR will be the implementing agencies (IAs). The EA will (i) facilitate coordination among the three provinces, TA consultants, local experts, and ADB; and (ii) provide access to data and other information that will be required in the formulation of the Project. A national leading group at the State Forestry Administration and three provincial leading groups (PLGs) will be established to coordinate the overall project preparation. The PLGs will be chaired by the vice-governor, and represented by the relevant provincial government departments and other stakeholders to ensure provincial level coordination for project preparation. The PLGs will be supported by the technical management office (TMO) to oversee the overall TA implementation and provide guidance. The PLGs will (i) provide support to the TA consultants and be responsible for assisting the TA team in gathering and compiling data; (ii) assist in liaising with local authorities, and in securing timely government approvals related to land acquisition, environment, resettlement plans, and subproject designs; (iii) help the TA team organize meetings and workshops with stakeholders to help prepare a less complex project design for project sustainability; and (iv) provide technical support to the TA team in finalizing the feasibility study. The TMO will be supported by full-time staff to assist the TA team. 13. The TA will be implemented over 8 months from March to October It will require 16.5 person-months of international and 62 person-months of national consulting services. A consulting firm will be engaged, according to ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). ADB will select and engage the consulting firm on the basis of the quality of their proposals and cost of the services to be provided with a qualitycost ratio of 80:20 following simplified technical proposal procedures. The consulting firm will submit (i) an inception report 4 weeks from the start of its services; (ii) an interim report, within 20 weeks; (iii) a draft final report, within 30 weeks; and (iv) a final report, within 32 weeks, after incorporating the comments of the EA and ADB. The consultants will submit six copies of each report in both English and Chinese to the Government, and three copies of the English version to ADB, including one electronic copy on a compact disc. The draft final report will be structured in accordance with ADB s format for the report and recommendation of the President (RRP), and will cover each topic by chapter sufficiently for ADB to prepare the RRP. Three stakeholder consultations workshops will be held, one each before the finalization of the inception, the interim, and the draft final reports. The proposed workshops, training, and surveys will be administered by the consultants, in consultation with the EA. Equipment for the TA will be procured by the consultants in accordance with ADB s Procurement Guidelines (2007, as amended from time to time), and will be handed over to the EA upon completion of the TA. The outline terms of reference for the consultants are in Appendix 4. IV. THE PRESIDENT'S DECISION 14. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $800,000 on a grant basis to the Government of the People s Republic of China for Preparing the Silk Road Ecosystem Restoration Project, and hereby reports this action to the Board.

7 Appendix 1 5 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Restored productive and protective functions of the ecosystem along the old Silk Road in western PRC Performance Targets/Indicators By 2014, the incomes of farm families increased by 30% By 2014, the protected forest and buffer zones increased by 90,000 hectares By 2014, natural vegetative cover to protect vulnerable assets increased by 160,000 hectares Data Sources/Reporting Mechanisms Comparison of survey results at project completion with the baseline survey collected at project inception Employment statistics, forestry statistics, measures of land use and land degradation, and household income surveys Land use surveys carried out by the Project and project implementation monitoring (use of remote sensing and GIS to track expansion of forest cover in project areas) Assumptions and Risks Assumption Project design is implemented effectively. Risks The Government s priorities change or it is reluctant to accept the recommended measures. Macroeconomic environment in the PRC suffers a major downturn. Outcome Project design and feasibility study acceptable to the Government and ADB Agreement reached between the Government and ADB on the final loan project design by 2008 MOU signed by the Government and ADB Assumptions Government priorities for the environment and western development do not change. The Government obtains necessary counterpart funding. Outputs Feasibility report suitable for ADB processing completed, including: The report accepted by ADB and the Government Assumptions The EA has adequate capacity and support from provincial authorities. Consulting team is given access to required data. 1. Initial assessment of subproject prefeasibility study reports, and overall project objectives completed 2. Detailed assessment of subproject technical design, and initial financial and economic evaluation, completed 3. Project design finalized by undertaking Inception report (week 4) Midterm report, end of phase 1 (week 20) Draft final report (week 30) Timely delivery to ADB of high-quality reports, including relevant KPS Risks Competing demands from forest, land, and water users resist short-term costs of improving ecosystem in the project area. Data required to carry out analyses specified under the TA is not made accessible to the consulting team.

8 6 Appendix 1 Design Summary technical and economic financial analysis, and preparing environmental and social safeguard documents Performance Targets/Indicators Final report (week 32) Data Sources/Reporting Mechanisms Assumptions and Risks Activities with Milestones 1.1. Analyze the baseline situation, including lessons learned in the restoration of degraded dryland ecosystems in the project area, and in other similar projects, by week Assess ongoing and proposed dryland ecosystem restoration and development activities by week Review the existing dryland ecosystem restoration development plan and relevant environmental regulations and policies by week Carry out an institutional analysis of relevant institutions at provincial, municipal, and county levels by week Submit the inception report by week Prepare the subproject selection criteria of potential subprojects appropriate to the local situation, in compliance with all regulations and policies, by week Analyze relevant findings and lessons learned from other projects to strengthen project design by week Prepare stakeholder analysis, problem and objective analysis, and preliminary project design framework by week Undertake alternative analysis in week Prepare project components, in consultation with stakeholders, by week Conduct stakeholder workshops at provincial and county levels to agree on the project design and scope by week Submit the interim report by week Prepare project financial and economic analyses, and financial management assessments of EA and IAs, by week Prepare social and gender impact assessments, and resettlement plans, by week Prepare summary environmental impact assessment by week Prepare participatory and capacity building plans for local stakeholders, and complete all remaining assessments for subprojects, by week Develop project monitoring and evaluation system by week Submit the draft final report by week Finalize and submit the detailed feasibility report by week 32. Inputs ($) ADB 800,000 Consulting services 626,000 Reports and communications 15,000 Equipment 8,000 Workshops 30,500 Surveys 15,000 Miscellaneous administration and support costs 20,000 Representative for contract negotiations 8,000 Contingencies 77,500 Government 400,000 Office accommodation and transport 100,000 Remuneration and per diem of counterpart staff 150,000 Others 150,000 ADB = Asian Development Bank, EA = executing agency, GIS = geographical information system, IA = implementing agency, KPS = knowledge products and services, MOU = memorandum of understanding, PRC = People's Republic of China, TA = technical assistance.

9 Appendix 2 7 Country/Project Title: INITIAL POVERTY AND SOCIAL ANALYSIS People s Republic of China/Preparing the Silk Road Ecosystem and Restoration Project Lending/Financing Modality: Project Department/ Division: East Asia Department/Agriculture, Environment, and Natural Resources Division I. POVERTY ISSUES A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy The country strategy and program for the People's Republic of China (PRC) ( ) outlines the Asian Development Bank's (ADB) strategy in supporting the Government s ongoing poverty reduction efforts. The majority of the poor live in the western provinces that lag well behind the eastern provinces in progress towards achievement of the PRC s Millennium Development Goals. Poverty is strongly correlated in the western region with land and environmental degradation because the lack of alternative livelihoods has led to unsustainable land-use practices. The Project is aimed at creating pro-poor economic growth in these provinces. Ongoing ADB-supported policy work is addressing poverty-related issues, including land degradation. The Project will support the Government s fight against poverty by addressing environmental problems related to land degradation and promoting rural development in Shaanxi and Gansu provinces and the Xinjiang Uygur Autonomous Region (UAR) in the western PRC. The poverty partnership agreement, signed between the Government and ADB in September 2003, sets out strategies and interventions for poverty reduction. The PRC and ADB will continue to cooperate on a broad range of activities related to policy and regulatory reform, and capacity building, in the environment sector, and to support projects to address environment problems. To sharpen the poverty focus, ADB is supporting the implementation of the PRC-Global Environmental Facility partnership for degradation in dryland ecosystems. It aims to reduce poverty, arrest land degradation, and restore dryland ecosystems in the western region. The project area has a population of about 83.9 million, of whom 63.7% reside in the rural areas. In 2006, the average annual income of the urban residents was CNY9,103 ($1,097 equivalent) while the average annual per capita income of the rural population in the project area was CNY2,377 the equivalent of $286, which is about equal to the poverty line at the equivalent of $1 per day. The area includes 123 national poverty counties. In recent years, most of the Hexi Corridor in Gansu part of the old Silk Road has been designated as natural reserve zone, or an enclosure zone, for ecological protection, with stringent land use regulations being put in place. A grazing ban has been imposed by the Government and some highly sloped farmland is designated for conversion back to forest and grassland; it is suitable for the establishment of economical fruit orchards and ecological forest. The Government considers increasing urbanization an important way to reduce poverty. Urban population growth is increasing rapidly, but urban employment opportunities can be scarce for unskilled laborers from the countryside, many of whom have minimal elementary education and are ill-equipped for the demands of migration and urban living. The Project promises to create significant new job opportunities through fruit orchard development and increased growth in service industries that derive business from tourism and other traffic along the old Silk Road. The Project will build capacity for participatory and community-oriented ecological system restoration, and for sustainable land use that protects biodiversity while improving rural livelihoods. B. Targeting Classification 1. Select the targeting classification of the project: General Intervention Individual or Household (TI-H); Geographic (TI-G); Non-Income MDGs 2. Explain the basis for the targeting classification: The Project will be carried out in municipalities with high poverty incidence in rural households, and will enable farmers to develop fruit orchards and other tree crops. By focusing on rural households, the Project is targeting a group experiencing a high level of poverty. C. Poverty Analysis 1. If the project is classified as TI-H, or if it is policy-based, what type of poverty impact analysis is needed? 2. What resources are allocated in the PPTA/due diligence? 3. If GI, is there any opportunity for pro-poor design (e.g., social inclusion subcomponents, cross subsidy, pro-poor governance, and pro-poor growth)?

10 8 Appendix 2 The poverty analysis will comprise participatory focus group discussions with vulnerable groups such as women, migratory groups, herders facing a grazing ban, and people living on the desert margins to determine the linkage between income poverty, non-income poverty, and the environment. The table below summarizes comparative poverty rates across selected PRC provinces. Table A2: Comparative Poverty Rates Across Selected PRC Provinces Poverty Incidence (%) Provinces by Region North Hebei Shanxi Northeast Liaoning Jilin East Jiangsu Jiangxi Central Henan Hubei Southwest Guizhou Yunnan Northwest Shaanxi Gansu Qinghai Ningxia Xinjiang UAR Source: Estimates based on figures reported in Ravallion and Chen China s (uneven) Progress Against Poverty. Journal of Development Economics, 82, These are unofficial approximations based on National Bureau of Statistics data and trends estimated in the paper. A. Initial Social Analysis Based on existing information: II. SOCIAL DEVELOPMENT ISSUES 1. Who are the potential primary beneficiaries of the project? How do the poor and the socially excluded benefit from the project? The primary beneficiaries have been affected by environmental externalities associated with land degradation in western PRC, and include small farm households, agricultural laborers, and people who use forests for a living. The poor and the socially excluded will benefit from the Project through developing fruit orchards and forest plantations, thereby enhancing their income generation prospects and improving the environmental sustainability of the area. 2. What are the potential needs of beneficiaries in relation to the proposed project? The potential needs of the beneficiaries include technical assistance and capacity building in the selection of sites and cultivation practices for orchard and other tree crops, financial assistance for establishing tree crops, and alternative income-generating activities before orchard production begins. 3. What are the potential constraints in accessing the proposed benefits and services, and how will the project address them? Potential constraints include financial and credit limitations, lack of technical know-how, and land scarcity. The Project will provide support to address these constraints.

11 Appendix 2 9 B. Consultation and Participation 1. Indicate the potential initial stakeholders. The main stakeholders include small farm households, agricultural laborers, and forest users affected by ecosystem degradation. Other stakeholders include the provincial, municipal, county, and village agencies that will be responsible for planning, implementing, and evaluating the project activities. Both formal and informal consultations will be held with key project stakeholders during project preparation. 2. What type of consultation and participation (C&P) is required during the PPTA or project processing (e.g., workshops, community mobilization, involvement of nongovernment organizations and community-based organizations, etc.)? Workshops will be conducted, communities mobilized, and community-based organizations will be extensively consulted during the project preparatory technical assistance (PPTA.) National and local steering committees will also be actively consulted during the PPTA. 3. What level of participation is envisaged for project design? Information sharing Consultation Collaborative decision making Empowerment 4. Will a C&P plan be prepared? Yes No Please explain. C. Gender and Development 1. What are the key gender issues in the sector/subsector that are likely to be relevant to this project/program? There are two key gender issues: (i) women's welfare, and (ii) a lack of women participating in the community decisionmaking process. These gender issues are influenced by cultural factors, environmental conditions, education, and employment opportunities. Traditional religious practices are common among indigenous and ethnic minority groups in Gansu and Xinjiang UAR, and need to be taken into account. During PPTA implementation, there will be an assessment of women s roles in the proposed project activities. The need to support gender-specific community groups and other measures will be assessed. 2. Does the proposed project/program have the potential to promote gender equality and/or women s empowerment by improving women s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No Please explain 3. Could the proposed project have an adverse impact on women and/or girls or to widen gender inequality? Yes No Please explain The Project is not expected to have significant negative impacts on women, but a gender plan will be developed, given that traditional religious practices may adversely influence women s participation in the opportunities generated by the Project. Issue Involuntary Resettlement Indigenous Peoples III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Nature of Social Issue No significant resettlement appears necessary to carry out the proposed activities of the Project. However, this will be verified during PPTA implementation. Gansu province and Xinjiang UAR have large numbers of ethnic minority households. Shaanxi province does not contain a sizeable indigenous population. The Uygur population in Xinjiang faces issues of economic participation, traditional culture, and would appear to merit a separate plan for addressing indigenous peoples concerns. Significant/ Limited/ No Impact/Not Known Limited impact Initial assessments and information from the Government suggest indigenous peoples concerns are significant in the Xinjiang UAR, but limited in Gansu, and not an issue in Plan or Other Action Required Full Plan Short Plan Resettlement Framework No Action Uncertain Plan (in Xinjiang) Other Action Indigenous Peoples Framework (indicated for Gansu Province)

12 10 Appendix 2 Shaanxi. No Action (Shaanxi Province) Labor Employment Opportunities Labor Retrenchment Core Labor Standards Affordability Other Risks and/or Vulnerabilities HIV/AIDS Human Trafficking Others (environment improvement, economic risk) In general, the Project is expected to increase employment due to the higher labor input requirements of perennial crops. Household cultivation of fruit crops may be associated with an increase in female labor requirements. No significant affordability issues. However, conversion of land from annual cereal or other crops to perennial crops will involve a loss of income while perennial crops reach maturity. Accordingly, the PPTA proposes to prepare a sustainable livelihoods plan to address income concerns during the fruit orchard establishment period. The Project is expected to reduce household vulnerability to economic risk. The Project will also undertake a thorough market analysis. Not significant None Limited impact Plan Other Action No Action Uncertain Action No Action Uncertain Plan Other Action No Action Uncertain IV. PPTA/DUE DILIGENCE RESOURCE REQUIREMENT 1. Do the TOR for the PPTA (or other due diligence) include poverty, social and gender analysis and the relevant specialist/s? Yes No If no, please explain why. 2. Are resources (consultants, survey budget, and workshop) allocated for conducting poverty, social and/or gender analysis, and C&P during the PPTA/due diligence? Yes No If no, please explain why.

13 Appendix 3 11 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank (ADB) Financing a 1. Consultants a. Remuneration and Per Diem i. International Consultants ii. National Consultants b. International and Local Travel Reports and Communications b Equipment c Workshops d Surveys d Miscellaneous Administration and Support Costs Representative for Contract Negotiations Contingencies 77.5 Subtotal (A) B. Government Financing 1. Office Accommodation and Transport Remuneration and Per Diem of Counterpart Staff Others (maps, surveys, data collection, and translations) Subtotal (B) Total 1,200.0 a Financed by ADB s technical assistance funding program. b Reports will include preparation of knowledge products. c Items to be purchased include computers, printers, fax machines, and copiers. d Training, seminars and conferences, and surveys, will be carried out by the project preparatory technical assistance team. Source: ADB estimates.

14 12 Appendix 4 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1 A. Natural Resources Economist and Team Leader (international, 7.0 person-months) 1. The expert will have a postgraduate degree in economics and over 10 years of experience in designing rural development projects following the integrated ecosystem management approach in a variety of countries. The expert will take the lead in formulating and developing the project design by coordinating inputs of government agencies and the technical assistance (TA) team, and delivering quality TA outputs on time. The scope of work will include, but will not be limited to, these tasks. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) Prepare a detailed TA implementation plan and personnel schedule, and further elaborate specific tasks and outputs for both international and national consultants. Synthesize lessons learned from similar projects within the country and elsewhere, and summarize international best practices for similar interventions at the outset, so that the project design benefits from such experience. Organize briefings, field visits, and workshops in consultation with key stakeholders, and help set up a mechanism for regular consultations, including the project leading groups. Assess the institutional capacity of various project-related agencies, and make recommendations for improvement. Prepare a list of required expertise, inputs (in person-months), and terms of reference for consulting services to support implementation of the ensuing investment project. Establish the linkages between ecosystem conservation, economic growth, and poverty reduction. Identify policy and market failures that prevent increased investments in the project area. Analyze the role of public sector investments in the sector, and identify their fiscal and macroeconomic impacts. Review the Government s national poverty reduction strategy and provincial poverty reduction interventions, and incorporate specific measures for poverty reduction in the project design. Prepare detailed project costs with COSTAB software. Undertake economic analysis of the Project following Asian Development Bank's (ADB) Guidelines for Economic Analysis of Projects. Compute the economic internal rate of return of the Project, and, as appropriate, internalize the externalities in the analysis, including the impact on natural environment and price distortions. Assess the robustness of the Project s economic and financial viability by carrying out a sensitivity and risk analysis, following ADB s Handbook for Integrating Risk Analysis in the Economic Analysis of Projects; undertake distribution analysis of project outputs, and identify the proportion of benefits that will accrue to the poor. Compute the poverty impact ratio, following ADB s Handbook for Integrating Poverty Impact Assessment in the Economic Analysis of Projects. 1 This appendix presents abbreviated terms of reference. Detailed terms of reference are available with the project team upon request.

15 Appendix 4 13 (xv) Formulate the overall project design, based on inputs from the TA team, the Executing Agency (EA), the implementing agencies (IAs), and key stakeholders, defining its scope and implementation arrangements, estimating costs, and undertaking economic and financial analyses. (xvi) Prepare project reports, including the project feasibility report, suitable for appraisal by ADB and the Government. B. Environment Specialists (international, 3.0 person-months; 2 national specialists, 3.5 person-months each) 2. The specialists will have requisite educational qualifications and practical experience in environmental impact assessment (EIA) and preparing project reports. The specialists in accordance with ADB s Environment Policy (2002), and Environmental Assessment Guidelines (2003), and the People's Republic of China's (PRC) laws and regulations on forestation, agricultural pollution, and water resource use will conduct EIAs of activities, and prepare a report, and a summary EIA report. The specialists will undertake these tasks. (i) (ii) (iii) (iv) (v) (vi) (vii) Familiarize the executing agency and implementing agency with ADB and PRC processes for environmental assessments, and ADB's guidelines for preparing initial environment examination (IEE) for category B projects. Review national environmental regulations and standards related to forest development and land use, including regulations at national and provincial levels, environmental standards for perennial crop development and fruit agroprocessing enterprises, land planning regulations, and international conventions. Conduct EIA or IEE and prepare reports whichever is determined necessary under the environmental categorization determined by the project preparatory technical assistance once an indicative list of proposed activities and subprojects is developed. Help the Government to conduct public consultations required to prepare EIA or IEE. Prepare environmental management plans including description of each mitigation measure and cost estimate and summary EIA or IEE reports. Assist the Government to prepare an environmental assessment and review procedure, and propose measures capacity-building activities, for example to ensure its implementation under the loan. Prepare environmental monitoring plans, outline institutional arrangements, develop an implementation schedule, and carry out and report on public and stakeholder discussions regarding environmental aspects of proposed activities for proposed subprojects. C. Ecosystem Management Specialists (Forestry) (international, 3.5 person-months; national/deputy team leader, 7.0 person-months) 3. The national specialist will be the deputy team leader and have demonstrated experience in managing agricultural and forestry projects in the PRC and understanding of the country s agricultural, forestry, water resources, and environmental protection conditions and policies. 4. The specialists will jointly prepare a report on the ecosystems of the project area, including current degradation problems, opportunities, and challenges for restoration, national

16 14 Appendix 4 and global significance, as per the State Forest Administration's ecological functions of the area. The specialists will undertake these tasks. (i) (ii) (iii) (iv) (v) (vi) Review national and provincial programs and plans in the project area, and international and bilateral development projects on biodiversity conservation. Prepare a strategic plan for ecosystem management and sustainable utilization, and set logistic linkages of initiatives to be undertaken in the entire project area. Advise on development of facilities in project areas, including introduction of species, integrated management of species, science education for the public, and building habitats for animal species. Undertake ecosystem assessments of the project area. Assess the current desertification issues in the project area, identify the specific areas where there is a need for intervention to prevent further economic losses, and recommend cost-effective desertification control measures for those sites. Collect and assess the natural resources data required by the team as the baseline for developing improved ecosystem management practices. The work entails collection of (a) all reports, maps, and satellite data documenting the natural resources (soils, vegetation, water resources, climate, etc.); and (b) data on land degradation, and preparation of maps showing the distribution and severity of different land degradation processes water erosion, wind erosion, vegetation degradation, soil fertility decline, salinization, etc. Using Arcinfo geographical information system software, global positioning system field data, and other data, overlay various thematic maps to assist the team in identifying priority areas for future investment. Overlays may include soil type, geology, topography and land forms, vegetation cover, land capability, land suitability, current land use, incidence of land degradation, water resource distribution (groundwater and surface water), population density, major infrastructure, major mineral resources and operating mines, incidence of poverty, biodiversity species distribution, etc. D. Water Resources Management Specialists (international, 1.5 person-months; national, 2.5 person-months) 5. Working closely with the environmental specialists, these specialists will examine the current use and future plans for surface water and groundwater resources in relation to water quality and quantity. The specialists will undertake these tasks. (i) (ii) (iii) Estimate the current and future water demand in project areas, compare this with the available resources, and assess the impact of proposed perennial crops, windbreaks, shelter belts, and other project-supported interventions on water demand. Assess the current and future water demand of the agro-forestry sector and compare this with the available resources. Identify alternative land and water management practices for perennial crop, rainfed, and oases farming enterprises to achieve improved efficiencies in water use and sustainable land-use methods such as plant residue retention, no-till, cover crops, intercropping, low-water requirement orchard varieties, and rainwater harvesting with microirrigation and fertigation. E. Financial Analyst/Agribusiness Specialists (international, 1.5 person-months; national, 2.5 person-months)

17 Appendix The specialists will have expertise in agricultural and forestry projects in the PRC and an understanding of PRC s fruit industry, including fruit agro-processing, knowledge of fruit markets and supply chains, long-term supply and demand forecasts, orchard and native tree plantation conditions, and policies relevant to these areas. The specialists will undertake these tasks: (i) (ii) (iii) (iv) (v) Identify the financial analysis of the Project, covering the requirements to design fund flow mechanism. Identify appropriate ADB disbursement procedure, based on the project needs and executing agency and implementing agency capacity to manage funds flow and disbursement. Examine the financial history of fruit-based agro-enterprises in the proposed provinces, with regard to how they have raised capital to develop their facilities from government, development banks, commercial banks, their own capital, and foreign capital sources. Propose implementation arrangements for the Project, including the potential for public-private partnerships. Assess the financial performance of candidate farms to be supported or associated with the Project, and assist in preparing criteria for selecting financially viable enterprises. F. Natural Resources Economists (2 national, 3.5 person-months each) 7. The economists will have expertise and demonstrated capacity in natural resources management and rural finance, and will have full working knowledge of ADB and PRC procedures for financial and economic assessment. The economists will undertake project economic and financial analyses, and prepare the required materials for the loan documents. The specialists will undertake these tasks. (i) (ii) (iii) Undertake economic analysis of proposed project interventions, in accordance with ADB s Guidelines for the Economic Analysis of Projects. Conduct sensitivity and risk analysis of possible pricing changes in factor inputs and output markets, including costs of water, the exchange rate, fertilizers, energy, value of carbon credits, and labor. Assist the team leader to prepare the costing of project components, and to review the proposed investment project design and costs, including arrangements and costs of maintenance and options for cost recovery, where applicable. G. Social Development Specialists (2 national, 2.5 person-months each) 8. The specialists will undertake these tasks. (i) (ii) Assess the impact of proposed project activities on ethnic minorities, women, and vulnerable groups, recommend appropriate measures to address impacts and promote development opportunities, and, if the social analysis indicates that the Project will affect ethnic minorities, prepare an ethnic minority development plan, as set out in ADB s Indigenous People s Policy. Determine action necessary to ensure the participation of key stakeholders, minority peoples, and nongovernment organizations, assess the need for a participation strategy and framework, and set guidelines for contractors and

18 16 Appendix 4 (iii) (iv) others involved with Hui and Uygur communities to assess the numbers and status of ethnic minorities in the project area. Prepare the appropriate ethnic minority development plans, in line with ADB s safeguard policies, as needed. Direct household surveys to establish the baseline against which the project impacts on welfare and gender may be monitored, with appropriate monitoring indicators, help design the repeat households survey to be carried out during implementation, and support the team in designing a monitoring system to track project implementation and use of resources. H. Perennial Crop Specialists (2 national, 2.5 person-months each) 9. The specialists will review current fruit orchard, grape, wolfberry, and other potential perennial crop management practices. They will advise on improving productivity, on options for introducing organic or other environment-friendly practices for improving profitability and sustainable use of soil and water, on land degradation control, on biodiversity conservation, and on carbon sequestration. A horticulturalist and perennial crops agronomist, with qualifications in agronomy and experience in the development of fruit orchards and other perennial crops in western PRC, will undertake these tasks. (i) (ii) (iii) Assess the impact of current annual and perennial crop production methods on local ecosystem resources, and determine the expected impact of the proposed expansion, with regard to yield potential, product quality, water usage, and wider environmental impacts, such as silting of rivers, groundwater pollution, and impact on biodiversity. Review the experience from the development of fruit orchards and other perennial crops in Gansu, Shaanxi, and Xinjiang, and advise on suitable technical interventions, based on proven best practices, both domestically and internationally. Taking into consideration findings from these two tasks, examine the perennial crop production models proposed and take the lead in designing proposed interventions to expand the production of perennial crops, including implementation arrangements, demonstrations, support services, applied research, and field practices. I. Resettlement Specialist (national, 2.5 person-months) 10. The specialist will undertake these tasks. (i) (ii) (iii) Identify instances where proposed activities will trigger the need for land acquisition, changes in land use and/or restricted access to land that will entail involuntary resettlement. Advise the consulting team regarding resettlement concerns and ways of adapting proposed project activities to minimize resettlement impacts. Prepare needed plans that meet ADB s Involuntary Resettlement Policy (as amended from time to time), and documentation required for related safeguard requirements.