Documentof The World Bank FOR OFFICIAL USEONLY ReportNo: 36424 PROJECTAPPRAISALDOCUMENT ONA PROPOSEDGRANT FROMTHE GLOBALENVIRONMENTFACILITY (GEF) TRUST FUND INTHEAMOUNT OFUS$5.0MILLION TO THE PEOPLE'S REPUBLIC OFCHINA FOR A GEFNINGBOWATER AND ENVIRONMENT PROJECT June 6,2006 UrbanDevelopmentSectorUnit East Asia andPacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: May 4, 2006) CurrencyUnit = CNY CNY8.0139 = US$1 US$0.1248 = CNY 1 NINGBO FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CMSC Cixi Municipal Sewerage Company CNAO NationalAuditingOffice of People's Republic of China DRC Development andReformCommission EMP Environmental Management Plan EPB Environmental Protection Bureau FB Finance Bureau FMS Financial Management Specialist GEF Global Environmental Facility ICB' International Competitive Bidding L M E S Large MarineEcosystems MBDs ModelBiddingDocuments MOF Ministry of Finance NCB NationalCompetitive Bidding NMFB NingboMunicipalFinance Bureau NGO Non-Governmental Organization NWEP Ningbo Water Environmental Project PEMSEA GEF/UNDP/IMO Partnership for Environmental Management of the Seas of East Asia PMO Project Management Office QBS Quality BasedSelection QCBS Quality and Cost Based Selection SA Special Account SBD StandardBiddingDocuments SCIES South China Institute of Environmental Sciences SEPA StateEnvironmental Protection Administration WWF World Wide Fundfor Nature WWTP Wastewater Treatment P1ant UNDP UnitedNations Development Programme UNEP UnitedNations Environment Programme Acting Vice President: Jeffrey Gutman Country Managermirecta-: DavidDollar Sector Manager: Keshav Varma Task Team Leader: Greg Browder andLixin Gu CHINA GEFNINGBOWATERANDENVIRONMENTPROJECT CONTENTS A STRATEGIC CONTEXTAND RATIONALE . .................................................................... 1 Country and sector issues............................................................................................................ 1 Rationale for Bank involvement ................................................................................................. 2 Country Ehgibihty....................................................................................................................... . . . 3 Higher level objectives to which the project contributes ............................................................ 3 B PROJECTDESCRIPTION . .................................................................................................... 3 Financing instrument................................................................................................................... 3 Global EnvironmentalObjective (GEO) ..................................................................................... 3 Project development objective and key indicators...................................................................... 3 Lessonslearned and reflectedinthe project design.................................................................... 4 Alternatives considered andreasonsfor rejection....................................................................... 5 C IMPLEMENTATION . ............................................................................................................. 6 Partnership arrangements............................................................................................................ 6 Institutionaland implementation arrangements.......................................................................... 6 Monitoringand evaluation of outcomes/results.......................................................................... 7 Sustainability andReplicability .................................................................................................. 7 Criticalrisks andpossible controversial aspects......................................................................... 7 Loadcredit conditions andcovenants......................................................................................... 8 D APPRAISALSUMMARY . ...................................................................................................... 9 Economic andfinancial analyses ................................................................................................ 9 Technical ..................................................................................................................................... 9 Fiduciary.................................................................................................................................... 10 Social......................................................................................................................................... 10 Environment.............................................................................................................................. 10 Safeguardpolicies ..................................................................................................................... 11 Policy Exceptions and Readiness.............................................................................................. 12 Annex 1:CountryandSectoror ProgramBackground ......................................................... 13 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................16 Annex 3: Results Frameworkand Monitoring ......................................................................... 17 Annex 4: Detailed Project Description ...................................................................................... 20 Annex 5: Project Costs................................................................................................................ 26 Annex 6: ImplementationArrangements ................................................................................. 28 Annex 7: FinancialManagement and Disbursement Arrangements ..................................... 30 Annex 8: Procurement Arrangements ...................................................................................... 34 Annex 9: Economic and Financial Analysis .............................................................................. 38 Annex 10: Safeguard Policy Issues ............................................................................................ 41 Annex 11:Project Preparation and Supervision ...................................................................... 47 Annex 12: Documents inthe Project File .................................................................................. 48 Annex 13: Statement of Loans and Credits .............................................................................. 49 Annex 14: Country at a Glance .................................................................................................. 55 Annex 15: Incremental Cost Analysis ....................................................................................... 57 Annex 16: STAP Roster Review ................................................................................................ 61 Annex 17: Strategic Partnership Investment Fund ................................................................. 67 Maps: IBRD 34441 CHINA CHINA-GEF-NINGBO WATER AND ENVIRONMENT MANAGEMENT PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASUR Date: May 5,2006 Team Leader: Greg J. Browder Country Director: DavidDollar Sectors: General water, sanitation and flood Sector ManagerDIirector: Keshav Varma protection sector (100%) Project ID: PO90336 Themes: Other environment andnatural FocalArea: International Waters resourcesmanagement(P) LendingInstrument: GEFGrant Environmental screening category: B Project FinancingData [ ]Loan [ 3 Credit [XIGrant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Total Bank financing (US$m.): 5.00 ProDosedterms: L FinancingPlan (US$m) Source I Local t Foreign I BORROWBXKECIPIENT Total 12.1 0.0 12.1 GLOBAL ENVIRONMENTFACILITY 3.0 2.0 5.O Total: 15.1 2.0 17.1 (Cixi Wastewater Component Only) BORROWER 63.8 7.0 70.8 IBRD 17.2 40.0 57.2 Total: 80.9 47.1 128.0 Borrower: People's Republic of China ResponsibleAgency: Ningbo Municipal Government Contact People: 1. Ms.XuXu, Vice Director, WorldBankProjectManagement Office 1509/R. 15thFloor, Tianning Tower, 138West ZhongshanRoad Post Code: 315000, Ningbo China Tel: 86-574-8728-0409; Fax: 86-574-8728-0430; Email: xx@nbdpc.gov.cn 2. Mr.LiZhibo, Deputy Division Chief, Divisionof Foreign Capital Utilization NingboMunicipal Development andReformCommission Post Code: 315000, Ningbo China Tel: 86-574-8718-6863; Fax: 86-574-8736-7370; Email:zhibo@nbnet.corn.cn I Project implementation period: Start: September 1,2006 End:June 30,2010 Expectedeffectiveness date: September 1 2006 Expectedclosingdate: December 31,2010 Does the project depart from the CAS incontent or other significant respects? Ref. PADA.3 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Ref. PAD 0.7 [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Ref. PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Ref. PAD D.7 [XIYes [ ] N o Project development objective Ref. PAD B.2, TechnicalAnnex 3 The Project objectives are to reduce land-based pollution along the Cixi coast andthe East China Sea, promote the replicationof innovative low cost wastewater treatment techniques, and encouragecoastal zone conservation. Global Environment objective Ref. PAD B.2, TechnicalAnnex 3 The Project aims to reduce land-based pollution discharges that have an impact on the seas of East Asia, and ultimately catalyze the sustainable development of large marine ecosystems of East Asia. Project description [one-sentencesummary of each component] Ref. PAD B.3.a, Technical Annex 4 The Project has three components: 1.Constructed Wetland for Tertiary Treatment ofthe 100,000m3/dCixiWastewater Treatment Plant (US$7.1 million); 2. Development of aWetland Center, including: i)enhancement and restorationof degraded wetland and tidal mudflats; ii)Visitor Center Buildingand associatedfacilities. (US$S.O) 3. Designand Management (US$2.0) support, including: i)a Wetland Center Management Assistance Contract with a NGOKJniversityConsortium; ii)EngineeringDesign; andiii)Training andDissemination of ProjectExperience Which safeguard policies are triggered, if any? Ref. PAD 0.6, TechnicalAnnex 10 EnvironmentalAssessment: Category B assessment Natural Habitat: Conservation andEcological Enhancementof DegradedHabitat InvoluntaryResettlement:Minor ResettlementImpacts Significant, non-standard conditions, if any, for: Ref. PAD C.7 Boardpresentation: None Loadcredit effectiveness: a. A subsidiary grant agreement signedbetween the Ningbo Municipal Government and the Cixi City Government; b. A subsidiary grant agreementsignedbetweenthe Cixi City Government andthe Cixi Municipal Drainage Company (CMSC) for Component 1:ConstructedWetland; and c. A subsidiary grant agreementsignedbetween the Cixi City Government and the Wetland Center Management Company. Covenants applicable to project implementation: a. The Wetland Center Management Company shall formally appoint suitable staff, establish a financial management system, and complete training in Bank procedures by December 31,2006. b. Wetland Center management assistance consultants and ecological engineering design consultants shall be mobilizedno later than June 1,2007; and c. Wetland Center shall be openedto the public no later than June 1,2009. A. STRATEGICCONTEXTAND RATIONALE Country and sector issues East Asia's rapideconomic growth has beenaccompaniedby significant environmental degradation. Land-based pollution of the region's coasts, estuaries andrivers i s one of its most severe environmental problems and i s degrading the region's large marine ecosystems (LMEs). To help littoral states address this problem, the GEFandWorld Bank have agreedto establisha Partnership Investment Fundfor Pollution Reduction inthe Large MarineEcosystems of East Asia (the Fund).The objective of the Fundi s to reduceland-basedpollution discharges that have an impact on the seas of EastAsia by leveraging investments inpollution reduction through the removal of technical, institutional, and financial barriers. Inparticular, the Fundwill finance activities relatedto World Bank pollutionreduction investment projects that are ininnovative and can be replicated inother areas. Expectedoutcomes of the Fundwould be increased investment in activities that reduce land-basedpollution and the replicationof cost-effective pollutionreduction technologies and techniques demonstratedby the Fund. A Brief on the Fund (Tranche 1of 3 Tranches) inthe amount of US$25 million was approvedby the GEFCouncilin November 2005. The activities under this GEF-financed project were originally conceived as part of the IBRD- financed Ningbo Water and Environment Project (NWEP). The NWEPproject was approvedby the World Bank BoardinFY05, and this associatedGEFproject will be the first project financed under the Fund.NWEPhas three components: i)NingboWater Supply (US$157.9 million); ii) Cixi Wastewater (US$128.0 million); and iii)InstitutionalDevelopment (US$4.5 million). This GEFproject is anenvironmental enhancementto the Cixicomponent of NWEP.Cixi City covers an area of 1,100 km2,with a population of around 1million, and i s located on the northern coastline of NingboMunicipality bordering HangzhouBay. The proposed GEFproject i s designedto demonstrate simple andeffective wastewatertreatment methods -constructed wetlands - and sustainable wetland managementapproaches. The rapideconomic andpopulation growth inNingbo, as well as many other coastal cities in China, i s increasingpollution from cities into neighboring seas. Inaddition, non-point source pollutionfrom urban and agricultural run-off is a large and growing problem, and a significant contributor to marine pollution inChina. Consequently, the coastline of Ningbo andits neighboring East China Sea are severely polluted. As reportedinthe 2004 Environmental Quality Report on Near-Shore OceanAreas of China, the East China Sea i s the worst polluted sea inChina, and its major pollutants are nitrogen compounds and phosphates. Inappropriate wastewater treatment technology has further aggravatedcoastal pollution situation inNingbo, as well as inChinaingeneral.Wastewater treatment facilities inChinaareinmany cases designedwith advancedtechnologies with insufficient consideration of financial or operational implications. The advancedtreatment units may subsequently not be efficiently utilizeddue to budget constraints or lack of technical expertise. An Annual Audit Report releasedby the National Auditing Office of China (CANO) reportedthat in2004,60 out of 78 audited wastewater treatment facilities were under-utilized due to lack of operating funds or delay of the construction of auxiliary facilities, such as wastewater collection systems. Non-point water pollutioncontrol inChina i s still inits infancy, as the country i s focusing first on the control of point sources, such as dischargesfrom cities andlarge industries. 1 Inadditionto coastalpollution, lossof coastalwetlands is anotherchallenge facedbyNingbo, as well as inChina. China has the forth largest wetland area inthe world with 650,000 km2,or 10 percent of the world total. However, landreclamation, aquaculture and environmental pollution as a result of rapid population growth andeconomic development have causedserious loss and degradation of China's wetlands. It is estimatedthat over half of the country's coastal wetlands have been lost. Borderingto the northto HangzhouBay, Ningbo Municipality has acoast line of 788 km and about 1000km2of inter-tidal mudflat andmarshes. These inter-tidal mudflat and marshes and their neighboring estuary waters are important natural habitats for fishes, benthos, migratory and indigenous water birds, and wetland vegetation. Nevertheless, it i s reportedthat large-scale landreclamation inNingbo has ledto the loss of 46% of its coastal wetland areas. In addition, aquaculture activities (including snails, crabs, and fish) incoastal wetlands have inevitably eliminatednatural habitat for wetland flora and fauna. China has implemented extensive national regulations regarding the preservation of marine environment and wetland. The Marine Environmental Protection Law of People's Republic of China (1999)regulates the conservation of coastal areas and protection of marine ecosystems from land-basedpollution. As amember of the GEF/UNDP/IMO Partnership inEnvironmental Management for the Seas of East Asia (PEMSEA), China i s endeavoredto promote integrated coastal management to reducethe degradation of coastal ecosystem. As a signatory party of the Ramsar Convention on Wetlands, China i s implementing its National Engineering Planfor Wetland Conservation (2004-2030) to conserve90% of its natural wetlands, to restore 140,000 km2of wetland area, andto develop legal andpolicy measuresto more effectivelymanagethese areas. Coastal wetlands at HangzhouBay have been classified as one of the eight nationally significant wetland areas underthe National Engineering Planfor Wetland Conservation (2004- 2030). It is foreseeable that this GEF project will become an integralpart of China's efforts in reducing land-based pollutionto East Asia's L M E s and inrestoring the country's important wetland areas. Rationalefor Bankinvolvement Land-basedpollution reduction is akey priority of the Bank inits investment, policy and capacity buildingactivities inthe East Asia and Pacific Region. The objectives of the proposed GEFproject reflect this priority, andare inconsistent with the WorldBank's corporate and regional environment strategies. The Bank is already making a significant contribution to Cixi's sustainable development by financing the wastewater infrastructure investments under the NWEP.Through this proposedGEFproject, the Bankcan further enhancethese investments by supporting Cixi's efforts to manageits coastalresources and adopt simple and ecologically friendly wastewater treatment methods. Inparticular, the Bank, via its access to the Fundcan assist Cixi design and implement an innovative project which will serve as a demonstration model for other coastal cities inChina andEast Asia. `WorldBank, 2001. Making SustainableCommitments. An Environment Strategyfor the World Bank. World Bank, WashingtonD.C.; World Bank, 2005, Environment Strategyfor the WorldBank in the EastAsia and Pacific Region, WorldBank: WashingtonD.C 2 Country Eligibility China is eligible for GEFassistanceunder the International Waters FocalArea through the WorldBank. The GEFproject is eligible for financing under the Fundas it fulfills all seven necessaryconditions: a. it i s located within the coastal watersheds of one of the six East Asian Largemarine ecosystems; b. it demonstrates aninnovative technical mechanism to combat land-basedwater pollution; c. it has highlikelihoodof replication inChina andmore widely inEast Asia; d. it is unlikelyto proceedwithout grantfinancingfrom GEF; e. it has necessaryco-financing available; f. it hasbeenendorsedbyChina's GEFFocalPoint; and g. it meets all relevant World Bank Appraisal criteria. Higher level objectivesto which the project contributes This GEFproject will, at boththe national andinternational levels, showcaseinnovative wastewater treatment techniques and sustainable wetland managementpractices. The experience andlessonslearnedfrom the implementationof the GEFproject will assist the replication of such innovative techniques throughout China andEast Asia. Inaddition, sustainable wetland managementpractices demonstratedunder the project will provide a model for wetland managementin China and the rest of the world. As the first project under the Fund,this GEFproject will also be able to contribute to the success of the Fundby reducing land-basedpollutiondischarges that have an impact on the seas of East Asia, andultimately catalyze the sustainabledevelopment of large marine ecosystems of East Asia. B. PROJECTDESCRIPTION Financing instrument The financinginstrument is aUS$5 millionGEFgrant. The grant will becomplementedby counterpart funding from the NWEPandNingbo Municipal andCixi City Governments. GlobalEnvironmentalObjective (GEO) Underthe Fund,the objective of this project is to mobilize international anddomestic financial resourcesto demonstrate an innovativewastewater treatment technology - wetlandtreatment - to reduce land-basedpollution to East Asia's L M E s . Project developmentobjective and key indicators The Project objectives are to reduce land-basedpollution along the Cixi coast andthe East China Sea, promote the replicationof innovative, simple and effective wastewater treatment techniques, and encourage coastal zone conservation. 3 ProjectDescription: The project i s a companion to the Ningbo Water andEnvironment Project (NWEP), an IBRD financed water supply and wastewater infrastructure project approved by the World Bankin 2005. Under NWEP, Cixi City Government will invest $128 million inthe provision of wastewater collection andtreatment services inthe city, includingfor the construction of two wastewater treatment plants. The GEF-NWEP(Components 1- 3 below) forms an integral part of Cixi's wastewater project as it provides improvedwastewater treatment through a constructed wetland and the preservation of enhancedwetlands for non-point sourcepollutiontreatment. Component1:ConstructedWetland(US$7.12million).The GEFproject will supportthe establishment of a wetland which will provide tertiary treatment for the new 100,000 m3/dNorth Cixi secondary wastewater treatment plant (WWTP) financed by NWEP. The Cixi City Government has allocated 86 ha of recently reclaimed landfor the constructed wetland associatedwith NorthWWTP. The proposedconstructed wetland will be a combination of vegetated submerged gravel bed andfree surface water wetland. Component2: EstablishmentofaWetlandCenter (US$S.O million).The Cixi City Government has designated an existing area inthe vicinity of the Ningbo-Shanghai Bridge as the Wetland Center. The Wetland Center covers an area of approximately 43.5 km2andincludes the following plots (see IBRDMap 34441): i)Plot Al-recently reclaimed, non-tidal landwithin the existing sea dike (4.3 km2);ii)Plot A3-tidal marshlandto the west of Plot A1 (1.4 km2);iii)Plot A5- alow lying islandto the north of Plot A3 (1.8 km2);and iv) the tidal mudflathay section adjacent to Plots Al, A3, and A5, andcovering approximately 36 km2.Plots A2 and A4 would remain agricultural or low-density buffer areas. Development of the Wetland Center consistsof two activities: i)the construction of a visitor center for wetland education andresearch, and ii) the enhancement and restoration of the Wetland Center's natural wetland area. The Wetland Center has three objectives: i)enhancethe ecological functions of the area; ii)serve as an educational and researchcenter for wetland management; and iii)improve water quality in surrounding canals by natural wetland treatment. Component3: DesignandManagementAssistance (US$2.0 million).The GEFproject will finance the following three activities: i)engineering design of the ConstructedWetland andthe Wetland Center; ii)Management Assistancefor the Wetland Center; and iii)Trainingand Dissemination of Project experience. Management assistance i s expected to be providedby a consortium of NGOsAJniversities. Lessonslearnedand reflectedinthe projectdesign The project design draws uponthe Bank's considerable experience inworking with China on environmental issues, includingthose relatedto wastewater treatment and wetland conservation. The Bank has beenworking closely with China on the implementation of other GEFprojects and lessonslearnedinthese projects have beentaken into account indesigning this project. Specific lessonsinclude: SimplifyWastewater Treatment: Chinahas stringent effluent standardsfor treatmentplants discharging into environmentally sensitive receiving water bodies, such as HangzhouBay. Inan effort to meet these standards, wastewater companies often select technologically sophisticated 4 treatment processeswhich are complex andexpensive to operate. Consequently, many wastewater treatment plants inChina do not perform as originally intended due to lack of operating funds and expertise.The GEFproject will take advantage of the abundant reclaimed landin Cixi to develop a constructedwetland for tertiary treatment for the North Cixi plant. Although the constructed wetland has higher initial capital costs than conventional tertiary treatment (chemical coagulation followed by filtration) it has lower operational costs and is a simple and robust treatment method. Consider Ecological Dimensionsof UrbanDevelopment: Chinese cities are growing rapidly and transforming agricultural or undevelopedlandinto industrial, residential, andcommercial areas. Inthe course of this transformation, it is also important to consider environmental and ecological amenities to enhancethe quality of life and support the eco-system. The Cixi City Government has taken the boldmove under the GEFproject of reserving significant amounts of landfor boththe constructed wetland (86 ha) and the WetlandCenter (43.5 km2)to help preserve coastal resources andprovide environmental amenities to its citizens and visitors. Take Into Account Non-Point Source Water Pollution: Run-off from urbanareas and agricultural landcan contain large quantities of pollution, particularly nutrients which are contributingto massive redtides inthe East Asia Sea. Inaddition to controlling municipal and industrial dischargers, it i s important for Chinese cities to beginto tackle non-point sources of pollution in order to achieve ambient water quality objectives. The GEFproject will demonstrate an innovate and ecologically friendly approachto non-point source controlby filtering water from nearby canals through an enhancedwetland system inthe Wetland Center to improve water quality. Fullinvolvementoflocalstakeholders. Thedevelopment of this projecthasinvolvedawide group of localstakeholders ingovernment as well as NGOs, and key researchinstitutes and universities which have been working on pollution andconservation issuesinHangzhouBay. Two stakeholder workshops were organized inJune andNovember 2005. Representativesfrom over twenty Ningbo and Cixi agencies and over 10NGOrepresentativesand wetland researchers were invitedfirst to develop a sustainable vision for the project andthento review the conceptual design of the project preparedby consultants. B y fully engaging all stakeholdersinthe project development process, the GEFproject has helped stakeholdersreach consensus on key activities of the project. It i s foreseeable that such consensus will facilitate the successfulimplementation of the GEFproject. Alternatives consideredand reasons for rejection MeetingDischarge Standards: Two alternatives were considered for the GEF/NWEPproject to achieveeffluent discharge standards. The first alternative i s to discharge treated wastewater from the two secondary wastewater treatment plants directly into Hangzhou Bay through an outfall. However, this option was rejected given the large tidal variation and shallow water along the Cixi coastline, and also does not reduce nutrient loads into the sea. Two options were considered for tertiary treatment: i)conventional chemical/filtration process; andii)constructedwetland. The constructed wetland option was selectedfor the North WWTP due to the availability of land, and lower operational cost and complexity. There i s limited land available for the East WWTP which makes the constructedwetland option more challenging. It was agreedthat GEFfunds would not be usedfor the East WWTP, and treatment will be provided through a conventional 5 tertiary treatment system, or some combination of the two options. The selection and implementation of the preferred approachfor the EastWWTP will be supervised by the NWEP task team. Wetland Center Size: Various plots of landwere consideredfor incorporation intothe Wetland Center. The selected combination was basedon obtaining landfor different types of eco-systems including: non-tidal wetland (inside sea dikes), tidal wetlands, tidal mudflats, and an off-shore island. The option of includingPlots A2 andA4 (see IBRDMap 344441) into the Wetland Center were considered andthen rejected as they have already beenpartly converted into agricultural land. Insteadthese plots will be zoned as agricultural and low-density buffer areas adjacent to the Wetland Center. C. IMPLEMENTATION Partnershiparrangements The GEFproject i s an integral part of the Bank loanproject (i.e. NWEP) andthe first project to be financed under the Partnership InvestmentFundfor PollutionReductioninthe Large Marine Ecosystemsof East Asia. Institutionalandimplementationarrangements Ningbo Municipal GovernmentLevel: A Ningbo Water andEnvironment LeadingGroup has beenestablishedto provide policy direction andplanningsupport for integrated water and environmental managementthroughout Ningbo Municipality. The LeadingGroup is headedby a Vice Mayor, includes high-level representativesfrom all relevant agencies, and provides oversight for boththe GEFproject andNWEP.The NWEPPMOi s under Ningbo Municipal Development andReform Commission and will also be the PMO for the GEFproject. The NingboMunicipalFinance Bureaui s responsible for managementof the Special Account. Cixi City GovernmentLevel: Cixi City Government has established a LeadingGroup specifically for the GEFproject, and inparticular for the Wetland Center. The Cixi LeadingGroup i s headed by a Vice Mayor andincludes relevant government agencies. The LeadingGroup i s supportedby a GEFProject Expert Group which consists of nationally renowned wetland experts from universities andtechnical representativesfrom specialized government agencies at the Cixi City andNingbo Municipal levels. The Cixi Construction Bureau i s the primary government agency responsible for oversight of the GEFproject andproviding any necessarycounterpart funding. ZmplementingAgencies: The implementingagency for Component 1:Constructed Wetland will be the Cixi Municipal SewerageCompany (CMSC) which i s also responsible for implementation of the NWEPCixi wastewatercomponent. The Cixi government has established a "Wetland Center Management Company" for the implementation of Components 2: Wetland Center, and Component 3: Design and Management. The Management Company, under the oversight of the Cixi government ,will be responsible for planning, construction, and operation of the Wetland Center. NGOKJniversity Consortium. The GEFproject will fund amanagement assistancecontract to helpthe Wetland Center Management Company duringthe detaileddesign, construction and start-up operationsof the Wetland Center. The Consortium will be selectedat the start of GEF 6 project implementation, and will have expertiseinecology, environmental education, andfund- raising. Monitoring and evaluation of outcomes/results Annex 3 presents the results framework andmonitoringprogram for the GEFproject. The primaryoutcome indicators relate to pollutionreduction, establishment of a viable Wetland Center with highquality habitat and a strong environmental education program, and dissemination of the GEFproject experiencedomestically andinternationally. Datacollection and analysis will be undertakenprimarily by the NGOKJniversityConsortium, with support from the CMSC for the constructed wetland. The terms of reference for the Consortium include a detailed monitoring program developed in collaboration with the Bank task team to meet GEF monitoring requirements. The Consortium is also expectedto develop an active ecological researchprogram on Cixi coastal zone management.The PMO will ensure that the necessary monitoring andreporting is undertaken, and the Bank supervision missions will review and comment on the monitoringreports. Sustainability and Replicability BothNingbo Municipality and Cixi City are committedto the success of the GEF project andthe associatedNWEP. The degree of importance attachedto bothprojects i s reflected inthe active participation of high-level government officials inthe LeadingGroups. Under the NWEP,the Ningbo PMO has been established as a permanentgovernment agency, and thus i s able to attract qualified individuals who are offeredjob security andpromotion potential. Under the GEF Project, the Cixi Wetland Center Management Company i s established with full funding support from the Cixi City Government. Ningbo and Cixi have investedsignificant amounts of their own funds inthe NWEPimplementationandpreparationof the GEFproject. The Cixi City Government has also committed a total of 86 ha of reclaimed lands to be usedfor constructed wetland and set aside another43.5 km2of area for the conservation of the Wetland Center. Operational funds for the constructed wetland will be providedby CMSC which generates revenuesthrough wastewater tariffs. Operational funds for the Wetland Center will be generated through a variety of sources includinguser fees, grants and donations, and fundingfrom the Cixi City government. This project has also includedoutreach activities to disseminate experience andknowledge learnedfrom the operation of the Wetland Center andconstructed wetland andto promote the replication of innovative use of wetland inwastewater treatment inChina andEast Asia. The potential for replication of GEFproject activities i s considered high. Constructed wetlands are an attractive treatment option for both secondary and tertiary treatment, as well as non-point source pollution treatment, in areas where landi s readily available. Wetland conservation i s now a national policy inChina, andmany other cities and provinces inChina will be eagerto learned from the experience of the Cixi Wetland Center. Critical risksand possiblecontroversialaspects The overall riskratingof the GEFproject is modest. Potential risks andproposedmitigation measures are describedinthe following table. 7 Potential Risks ProposedMitigation Measures Rating Wetland Center i s not financially(1) Strongfinancial commitment and Modest sustainable capability of the Ningbo Municipal and Cixi City Governments. (2) NGOLJniversityConsortium is expectedto helpdevelop a world-class Centerwhich will generateuser fees and attract donations. (3) Consortium i s expectedto develop a business plan and undertake an active fund raisingprogram. Wetland Center may not be (4) A significant amount of landhas been Low ecologically viable. dedicated to the Center (43.5 km2)and includes all important wetland ecosystems: non-tidal, tidalmarsh, tidalmudflats, and island. The non-tidal wetland (Plot Al) will beenhancedusingadvancedecological engineering methods. Constructed wetland fails to (5) Technical assistancewill be provided Modest achieve specified treatment duringconcept development, design, targets construction, and operations period. The constructed wetland area (86 ha) meets international design criteriarequirements. Overallrisk rating Modest Loadcredit conditions and covenants 2. Condition for Effectiveness. a. A subsidiary grant agreement signed between the Ningbo MunicipalGovernment andthe Cixi City Government; b. A subsidiary grant agreement signedbetween the Cixi City Government andthe Cixi Municipal Sewerage Company (CMSC) for Component 1:ConstructedWetland; and c. A subsidiary grant agreement signed between the Cixi City Government andthe Wetland Center Management Company for Component 2: Wetland Center. 3. DatedCovenants. The following three dated covenants will be includedinthe GEF grant agreement: 8 a. The Wetland Center Management Company shall formally appoint suitable staff, establish a financial management system, and complete training in Bank procedures by December 31,2006. b. Wetland Center management assistance consultants and ecological engineering design consultants shall be mobilizedno later than June 1,2007; and c. Wetland Center shall be openedto the public no later thanJune 1,2009. D. APPRAISAL SUMMARY Economic andfinancial analyses A formal cost-benefit analysis was not undertaken, butthe GEFproject will provide significant economic benefits associatedwith wetland conservation including: i)helpingto maintain the ecological health andaquacultureproductivity along the coastline by restrictingharvesting within the WetlandCenter and thereby creating a "seed bed" for the adjacent areas; ii)providing habitat for local andmigratory birds, andfacilitating birdwatching within the Wetland Center, and thereby generating benefits for people who place amenity and/or existence value on healthy birdpopulations; andiii)improvingthe quality of life inCixi City bypreserving wetland habitat which has beenthe defining geographical feature inCixi's historicalandcultural development. Inaddition, aproject specific analysis onGEFincremental cost analysis hasbeenpreparedand includedin Annex 15. The constructed wetland will be part of the CMSC's wastewater treatment plant andthus the appropriate level of financial analysis is CMSC. Under NWEP, a comprehensive financial analysis was undertakefor CMSC, and legal covenants were includedinthe NWEPloan agreement which requires Cixi City to raise tariffs to a level sufficient to covering operating costs and debt service. The Bank task team i s monitoringthe tariff increasesand financial status of CMSC during NWEPsupervision. Counterpart funding of the Wetland Center will be providedby the Cixi City government through the Construction Bureau to the Wetland Center Management Company. Revenue requirements for the operations of the Wetland Center are estimated to be around US$350,000. The financial analysis inAnnex 9 shows that most, if not all, of the revenue requirements can be metfrom visitor anduser fees (assuming 100,000- 200,000 visitors per year and anentrancefee of 15-30 RMB per person), with any necessarygaps to be filled with donations andfundingfrom the Cixi City Government. One of the first tasks of the NGOLJniversityConsortiumis to develop a BusinessPlanfor the Wetland Center. Technical Thetechnical viability of the GEFproject hasbeenconfirmedby the Bank task team. Independentinternational experts have also reviewedthe studies carried out duringproject preparation andfurther confirmedtechnical viability of the GEFproject. Technical assistance will be provided throughout project implementation of to ensure the success of the GEFproject The constructedwetland for the North Cixi wastewater treatment plant will utilize an areaof 86 ha, which will provide approximately 7 days of hydraulic residencetime andi s consistent with good international practice. The constructedwetlandwill utilize a combinationof vegetated subsurface and surface flow designs which are standardpractice for wetland design. 9 The Wetland Center contains sufficient area and diversity to betransformed into an ecologically viable unit.The total area of 43.5 km2includes all major wetland types: non-tidal wetlands, tidal marshes, tidal mudflat, and an off-shore island. The non-tidal wetlands in Plot A1will be restored and enhancedusingadvancedecological engineering methods. Harvesting andother aquaculture activities within the Wetland Center area will be prohibited andhabitat createdfor flora andfauna. One of the first tasks for the NGOKJniversity Consortium i s to develop a comprehensive wetland managementplanfor the Center. The Center will include an environmental education andresearchbuilding(s) which will be designed utilizing green building technology. The total number of visitors to the Center will be controlledand access to prime wetland habitat will be restricted so as not to unduly disturb the wildlife. Fiduciary The GEFproject will use the adequatefinancial managementsystem developed under the NWEP to provide, with reasonableassurance, accurateandtimely informationon the status of the GEF project in the reporting format agreedwith the Bank. The GEFproject will also rely on procurement capacity of the CMSC developedunder the NWEP.The Wetland Management Company is a new implementing agency, andthus will receive procurement andfinancial managementtraining from the PMO to ensure consistency with Bank requirements. The overall riskfor procurement is considered average. Social The constructed wetlands under Component 1will be built on 86 ha of recently reclaimed land which is undeveloped andunutilized, and will thus will not entail any resettlement activities or affect livelihoodactivities. The major social impact of the GEFproject will be the restriction on aquaculture activities inthe Wetland Center under Component 2. There are four overlapping groups of people currently utilizingthe Wetland Center Area: (1) crab or fish farming on Plots A3 and A5 (54 households, 168people); (2) fishingwith preset nets on mudflats (40 households, 120people); and (3) fishing with boats within the Wetland Center (50 households, 150people). Inaddition, almost all householdsinthe two neighboring towns areinformally pickingsea products (mainlyclam and snail) on mudflats. A resettlement action plan (RAP) meeting the World Bank's OP/BP 4.12 has beenprepared and provides for adequate compensation and livelihoodrestoration. The Cixi Construction Bureauwill be responsible for resettlement activities incoordination with local government officials. The resettlement office of the Ningbo NWEPPMO will superviseRAPimplementation. The capacity of the Cixi Construction Bureau and the NWEPPMOi s considered adequate. Environment The GEFproject i s a Category B project for environmental assessmentas it i s an environmental enhancement to the NWEP.Environmental design studies for the constructed wetland (Component 1)andthe Wetland Center (Component 2) were conducted duringproject. The studies provided comprehensive environmental analysis andcarried out extensive stakeholder consultation. These studies show that the GEFproject as a whole will have a significant net positive impact, as it will improve ambient water quality inCixi City andthe HangzhouBay, and promote sustainable development of Cixi City of NingboMunicipality. The negative impacts associatedwith the project are expected to be non-existent or minimal, and the impacts are 10 expected to be site specific, reversible, andeasily mitigated. Key environmental issues are discussedin Annex 10.An Environmental Management Plan hasbeenpreparedto address potential adverse impact associatedwith the construction andoperation of the constructed wetland and the Wetland Center. Safeguard policies Safeguard Policies Triggered by the Project Yes No EnvironmentalAssessment COP/BP/GP 4.01) [XI [ I NaturalHabitats (OPBP 4.04) [XI 11 Pest Management (OP 4.09) 11 [XI Cultural Property (OPN 11.03, being revised as OP 4.11) [ I [XI Involuntary Resettlement (OP/BP 4.12) [XI 11 Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OPBP 4.36) [ I [XI Safety of Dams (OP/BP 4.37) [ I [XI Projects inDisputedAreas (OP/BP/GP 7.60) [ I [XI Projects on International Waterways (OP/BP/GP 7.50) [ I [XI Inaddition to the Environmental Assessment andInvoluntaryResettlementpolicies discussedin the proceeding section, this project also triggers another safeguardspolicy -natural habitats. Natural Habitats. This GEFproject will help conserve, rehabilitate and create new natural habitats along the Cixi coastline. Inparticular, the constructedwetland andWetlandCenter will preserve, enhance or restore existing natural habitats for benthos, vegetation, andmigratory and indigenous waterfowls. Annex 4 lists detailedhabitat enhancement, conservation and creation activities to be carried out under the GEFproject. Ningbo Municipality i s a repeat borrower for the Bank with a highcapacity to implement safeguardspolicies. The ongoing Zhejiang UrbanEnvironmentalProject andNWEPhave proven that Ningbo has developed a good understanding andexperience in implementing World Bank safeguardspolicies. Study Disclosure and Consultation: With the Bank's assistance, the Cixi City Government organized two stakeholder workshops inJune andNovember 2005. The first workshop was designedto develop a "sustainable vision" for the GEFproject. The secondworkshop was carried out by havingkey stakeholderscomment on preliminary results of the two aforementioned studies. Boththe Component 1and Component 2 environmental design studies were disclosed locally andinthe Bank's InfoshopinFebruary and April 2006. RAP Disclosure and Consultation: Duringproject preparation consultation has taken place through field surveys and meetings with government officials andproject-affected people. These consultations influenced the design of the RAP. The fullRAPwas disclosedinNingbo and Cixi libraries and government websites inFebruary and April 2006. The draft RAPwas disclosed in the World Bank Infoshop inJanuary 2006 andthe updated RAPwas disclosed inApril 2006. 11 Policy Exceptions andReadiness The GEFproject does not require any policy exceptions andi s ready for implementation. 12 Annex 1:CountryandSector or ProgramBackground CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT Ningboand Its CoastalEnvironment 1. Ningbo Municipality is located 175 kmsouth of Shanghai, borders Hangzhou Bay and the East China Sea (See MAPIBRD34441), andis China's second-largestport. The high suspendedsolids concentration inHangzhouBay, combined with hydrological andtidal currents, results inoverall sediment accretion along the northern Ningbo coastline inCixi City, Ningbo Municipality, with accretion rates onthe order of 50-100 metersper year.* Consequently, in contrast to most situations, wetland areas are actually beingcreated inCixi due to the sediment accretion along the coastline. Cixi thus has the unique opportunity to develop new tracts of land while at the same time preserving its wetland area. 2. According to Cixi City's Planfor IntegratedBeachDevelopment (1997-2010), approximately 130km2of landwill be enclosedby sea-dikes between 2000 and 2010. The reclaimed landwill be carefully planned and developed with a combination of agricultural and aquaculture areas, industrialestates, coastaltourism, and wetland conservation zones. The area outside of the sea dike is called the "beach-area" andthe width of the beach area varies depending on the tide but can extend hundredsof meters at low tide. Both the areainside and outside of the sea dike has rich benthosresourcesand vegetation, andprovide an excellent habitat for migratory and indigenous water birds.Inaddition, there i s considerable aquaculturein the near shore area (Le. just outside the seadikes) including snails, crabs, andfish. 3. The rapidpopulation growth inNingbo, as well as many other coastal cities inChina, is makingplanning and financing for utility services such as water and wastewater very challenging. Investments in water supply andpollution control inthe municipality have lagged far behindits rapideconomic development. Inaddition, non-point sourcepollution from urban and agricultural run-off i s a large and growingproblem, and a significant contributor to marine pollutioninChina. Inevitably, the coastline of Ningbo andits neighboringEast China Sea are severely polluted. As reported inthe 2004 Environmental Quality Report on Near-Shore Ocean Areas of China, the East China Sea i s the worst pollutedsea inChina and its major pollutants are nitrogen compounds and phosphates.As of 2005, Ningbo Municipality and Chinaingeneral has yet to identify effective means to addressland-basedpollution problems. 4. Inappropriate wastewater treatment technology has further aggravated coastal pollution situation inNingbo, as well as in China ingeneral. Wastewater treatment facilities inChina often designedwith advancedtechnologies andwithout considering the financial or operational implications. The advancedtreatment units subsequentlynot utilized due to budget constraints or lack of technical expertise. An Annual Audit Report releasedby the NationalAuditing Office of China (CANO) reported that in2004,60 out of 78 audited wastewater treatment facilities were under-utilized due to lack of operating funds or delay of the construction of auxiliary facilities, such as wastewater collection systems. The tides in HangzhouBay are the driving force for such coastline changes, with average tidal range varying from 1.7 to 5.3 meters, and water velocities on the order of 3 m3/salong the Cixi coast. 13 5. Inadditionto coastalpollution, lossof coastalwetlands is anotherchallenge facedby Ningbo and China ingeneral. China has the forth largest wetland areainthe world inwetlands with 650,000 km2,or 10percent of the world total. However, landreclamation, aquaculture and environmental pollution as aresult of rapidpopulation growth andeconomic development have caused serious loss and degradationof China's wetlands, andit i s estimated that over half of the country's coastal wetlands havebeen lost. It i s estimated that Ningbo Municipality has a coast line of 788 kmand about 1000km2of inter-tidalmudflat andmarshes.These inter-tidal mudflat and marshes and their neighboring estuary waters are important natural habitats for fishes, benthos, migratory andindigenous water birds, and wetland vegetation. Nevertheless, it i s reported that large-scale landreclamation inNingbo has led to the loss of 46% of its coastal wetland areas. Inaddition, aquacultureactivities (including snails, crabs, and fish) incoastal wetlands has inevitably eliminated natural habitat for wetland flora and fauna. Cixi City andThe HangzhouBayBridge 6. Cixi City, located northof NingboMunicipality on the shore of Hangzhou Bay, covers an ara of 1,100 km2and has a population of around one million people and one of the most dynamic county level economies inthe country interms of capacity andcompetitiveness. The newly startedconstruction of Cixi-Shanghai Bridge across the HangzhouBay (the Hangzhou Bay Bridge) i s seen by Cixi as a new opportunity to integrate Cixi into Shanghaiand Yangtze Delta Region and therefore will further strengthenCixi's economy. Millions of visitors are expectedto visit or stop by at Cixi andNingbo through the new Bridge to southeastcoastal area of China. Cixi City Government has taken opportunity for further improving the city's environment, livability and competitiveness. Inthe meantime, Cixi new city area on both sides of the Bridge along the Bay i s beingplanned, nature conservation for wetlands inHangzhou Bay area i s being initiated, andcontrol of water pollutioni s expectedthrough the implementation of the newly approved NWEP. The city has set its objective to become an "environmentally and ecologically friendly" city, and sees this as the approachto its sustainable development. Wetland ConservationinChina 7. Recognizing the important ecological and economic values of wetlands, the Chinese government has promoted soundmanagement and rational utilizationof wetlands after it ratified the Ramsar Convention on Wetlandsin 1992 and issued a China Wetland ConservationAction Plan in 2000. The Chinese government has also begun implementation of the National Engineering Planfor Wetland Conservation(2004-2030) which aims to conserve 90% of its natural wetlands, restore 140,000 km2of wetland area, and develop legal and policy measuresto more effectively managethese areas. As of 2005, China has established more than 260 wetland nature reserveswith a total area of 160,000 km2,including 21 wetland areas listedinthe Ramsar List of Wetlands of International Importance. Under the National Planfor Wetland Conservation (2004-2030),coastal wetlands at Hangzhou Bay have beenclassified as one of the eight nationally significant wetland areas. Inaddition, for all coastal wetland areas inChina, the NationalPlan proposes to evaluate impacts of developmental activities to these wetlands, to strengthen conservation of wildlife species andtheir habitats, to set up migratory birdresearch andconservation stations, and to demonstrate sustainable wetland uses. 8. As of 2005, wetland conservation inChina is heavily reliedon governmental investment, with a focus on the establishment of nature reserves. With assistance of international organizations, China has also implemented few wetland conservation projects since 2000 (see 14 Annex 2 for details). It is noted that, however, investment inwetland conservation inChina i s limited, uncoordinated andunsystematic, and consequentlyis of low effi~iency.~Identifiedkey barriers to effective conservation of wetland include: i)a lack of integration of wetland management andbiodiversity conservation into development planning; ii)no institutional mechanisms for multi-sectoral wetland management; iii)limitedawarenessof wetland values and functions at all levels; iv) lack of examples of sustainabledevelopment of wetland resources and involvement of local communities; and v) lack of technical capacity at national andlocal levels to manage and conserve wetlands and their bi~diversity.~ ConstructedWetlandfor Wastewater Treatment 9. Duringthe past20 years, constructed wetlands havebeenusedto helppurifywater ina controlled manner inthe North American andEuropean countries. Inthe US, the potential for achieving improvedwater quality while creating valuable wildlife habitat has leadto a wide use of constructed wetlands for treating andrecyclingwastewater. While landintensive, these systems offer an effective means of integrating wastewatertreatment and resource enhancement, often at a cost that is competitive with conventional wastewater treatment alternatives. 10. The concept of usingconstructed wetland for wastewater treatment was introducedinto China inthe mid-1990s. Inparticular, aEuropean Union financed project -Biotechnological Approach to Water Quality Improvement inTropic and Sub-tropic Areas for Reuseand Rehabilitation of Aquatic Ecosystems (Contract # ERBIC18CT960059) -from 1996 to 1999 assistedChineseresearchinstitutes to experiment constructed wetland inwastewater treatment. As of 2005, China hasbuilt up anumber of pilot constructed wetlands insmall scalefor wastewater treatment. For example, the largest size of built constructed wetlandby one leading Chinese institute is about 2,300 m2(or about 0.2 ha).5Inaddition to their pilot andexperimental nature, these reportedcases have yet to addressecological, aesthetic and education values of constructed wetlands. Cixi's Response 4. Cixi is implementing the NingboWater andEnvironment Project (NWEP), an IBRD financed water supply and wastewater infrastructure project approved by the World Bank in 2005. UnderNWEP, Cixi City Government will invest $128 million inthe provisionof wastewater collection andtreatment servicesinthe city, including for the construction of two wastewater treatment plants. Inaddition, the GEF-NWEP forms an integralpart of Cixi's wastewaterproject as it provides improved wastewater treatment through a constructed wetland and the preservation of enhanced wetlands for non-point source pollution treatment. Annex 4 provides more details on the project. Wen, Yali, 2005. "Investing andFinancing Wetland Conservation inChina." Beijing: Asia Regional Meetingin Preparationfor Ramsar COP9 (May 13-16,2005). Available at http://indaba.iucn.org/ramsarfilms/mtgregasia2005~ppt08.ppt. GEFProject Brief: ChinaWetland Biodiversity ConservationandSustainableUse (1999). Xu, Lijing, JinsongWei, 2005. "Constructed Wetland -A BlossomingFlower ofEnvironmentalProtection Industry." EconomicDaily August 16,2005 (inChinese). 15 Annex 2: Major RelatedProjectsFinancedby theBankand/or other Agencies CHINA: GEFNINGBOWATERAND ENVIRONMENTPROJECT Bank FinancedProject Targeted Sector Issues PerformanceRating China: Ningbo Water and Water Supply inNingboCity and Implementation Progress:S Environment Project (FY05) Wastewater inCixi City Development Objective: S China: Zhejiang Urban Environment Wastewater, Solid Waste, and Cultural ImplementationProgress: S Project (FYo4) Heritage in selectedcities inZhejiang Development Objective: S Province including a wastewater component inNingbo City. China Restoreand managehabitatsaroundthe ImplementationProgress:S (GEF)Lake DianchiFreshwater lake to secure the conservationof the Development Objective: S Biodiversity Restoration Project remaining endemic species of the lake and (FY02, ongoing) its immediate tributaries China II ConstructWWTPs to reduceland-based I ImplementationProgress: S Hai Basin: SecondTianjin Urban wastewater dischargeto the Yellow Sea Development Objective: S DevelopmentandEnvironment Project (FY03, ongoing) China Improvethe performanceof small city ImplementationProgress: S Hai BasinIntegratedWater and WWTPs to reduceland-basedwastewater Development Objective: S Environment ManagementProject dischargeto the Yellow Sea - (FY04, ongoing) China: Improveenvironmentalconditionof the ImplementationProgress: S GuangdongPearlRiver DeltaUrban SouthChina Sea by addressingone of the Development Objective: S Environment Project (FYO4, recognizedmajor trans-boundarythreats ongoing) to it - land-basedpollution Use(1999-2007) and interpretation centers UNDP (GEFmegional): II Reducestresses to the Yellow Seadue to land-based ReducingEnvironmental Stress inthe Yellow Sea pollution LargeMarineEcosystem(2000-2005) UNEP:(GEF/Regional): Improveregionalco-operation inthe management of the ReversingEnvironmental Degradation Trends inthe South China Sea and demonstratealternative remedial SouthChina Sea and Gulfof Thailand (2002-2007) actions to addresspriority trans-boundarypollutants WWF (WWF/HSBC/China) : Restoration of freshwater wetlands and their natural Yangtze River Wetland ConservationProject (2002- connectionsto the Yangtze River 2025) ADB: (GEF/ADB/China): Restoreand protect wetland reserves SanjiangPlainWetland ConservationProject (2005- 16 Annex 3: ResultsFrameworkandMonitoring CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT ResultsFramework Objectives Project Outcome Indicators Use of Project Outcome Information (1) Reduce land-based pollution (1)ReductioninBOD and (1)Track the performance of the along the Cixi coast and the nutrient dischargesfor two wastewater treatment systems East China Sea WWTPs; andnitrogenremoval and make modifications inO&M inPlotA1oftheWetland as necessary. Center. (2) Promotethe replicationof (2) Number of domestic and (2) Ensure that experience in simple, innovative low internationalworkshops in Ningbo i s shared broadly wastewater treatment which Ningbo participates or domestically and internationally. techniques organizes (3) Encourage coastal zone (3a) Number of visitors to the (3) Monitor the quality and conservation. Wetland Center attractiveness of the Wetland Center andassociatedfacilities. (3b) Increasedproductivity of tidal mudflats. (3c) Increase inbirdabundance and species variety. Intermediate Outcome Use of Intermediate Outcome Indicators Monitoring Constructed wetland (1) Providetertiary treatment for (1)Class 1Adischarge standards Track the progress ofphysical the NorthWWTP. met works, operational perforgxince, and ecological value of the (2) Provide wetland ecological (2) Constructed wetland with constructed wetland. services habitat value completed Wetland Center (1) Establishaninternationally (1)Visitor Center completed (1& 2 )Track the progressof recognized wetland physical works of boththe visitor education and research center center and enhancementof Wetland Center. (2) Create a wetland which i s (2) Restoration andEnhancement internationally renowned for of existing wetland and tidal its migratory birds areas. (3) Operate the Wetland Center (3) Financial sustainability (3) Make adjustments to business ina sustainablemanner achieved through user fees or planto ensure financial contributions. sustainability . 17 I N I t- Annex 4: DetailedProjectDescription CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT Component1: Constructionof the ConstructedWetland (US$7.1 million): 1. The GEFproject will finance a "constructed wetland" to provide tertiary treatment for the effluent from the 100,000 m3/day North Cixi secondary wastewater treatment plants (WWTP) financed by the NWEPinCixi City. As treatedwastewater will discharge into the inlandcanal network andthen into the East China Sea, a high level of treatment is required to avoid eutrophication and other water quality problems as the canals have arelatively low assimilative capacity. The WWTP is designedto meet Class 1A discharge standards, which are essentially 10 mg/lBOD and SS, with removal of nutrients to 15mg/ltotal-nitrogen and0.5 mg/lof phosphorus.The proposed treatment process i s a modifiedAZOprocess, with tertiary treatment. As dischargeinto HangzhouBay through an outfallis not an economically viable option given the large tidal variation and shallow water along the Cixi coastline, the Cixi City Government has selectedthe use of constructed wetland as the preferred tertiary treatment option. 2. Constructed wetlands are artificial wastewatertreatment systems, which consist of shallow ponds or channelsthat have beenplantedwith aquatic plants, and which rely on microbial, biological, physical, andchemical processesto treat wastewater. They typically have impervious clay or synthetic liners, and constructed structures to control the flow direction, liquiddetention time, andwater level. Dependingonthe type of system, they may contain an inert porous media such as rock, gravel or sand. Constructed wetlands provide advanced treatment to effluent from conventional wastewater treatment plants. Inparticular, the functions of the constructed wetland will include butnot limitedto: i)meeting effluent dischargestandards andminimizing impact on LMEs; ii)providing ecological functions such wildlife habitat, particularly for migratory birds; iii)aesthetic values; iv) opportunities for environmental education; v) low operational costs andease of operation and maintenance; and vi) potential to serve as a GEFmodel for constructed wetlands. Correctly designed wetlands can treat and remove some toxicants to lower levels than standardmethods such as activated sludge. The effect i s primarily due to the longer hydraulic residencetime of the wetland (- 7 days vs. 4-6 hours) that allows slow bacterially-mediated reactions to reach completion. Inturn, the longer hydraulic residencetime is due to a large area over which to spread water to be only about 60 cm deep. 3. The Cixi City Government has decided to allocate 86 ha of recently reclaimedlandfor the constructed wetland associatedwith NorthWWTP. Basedon the feasibility study on the constructed wetland completed by the South ChinaInstitute of EnvironmentalScience (SCIES) and suggestionsprovidedby international experts, the proposedconstructed wetland will be a combination of vegetatedsubmerged gravel bedand free surface water wetland. The vegetated submergedgravel bedportion of the constructed wetland will be usedto accept treated wastewater from the WWTP and improve water quality by absorption and degradation of biologicalmembrane, microorganism and wetland plants growing on the gravels. Free surface water portionof the constructed wetland then will be usedto further remove nitrogen from the wastewater after the submerged gravel bedthrough denitrificationprocess (conversion of nitrates inwastewater to nitrogen gas). Wastewater will be further purifiedthrough abiologicalfiltration 20 gravel bed section and a UV disinfection section before beingdischargedinto localinlandcanal network, and ultimately into the HangzhouBay. The biologicalfiltration gravel bed section of the constructed wetlandwill be similar to the submergedgravel bedsection butwith amain function of removingphosphorous. 4. The engineering of constructedwetland will be completely open to result in anet ecological, environmental and landscapebenefit to the wetland system's natural functions and values. A simple set of 3-5 mostly flat-bottomed cells of constantdepth (- 60 cm) ineach of the two wetlands with plantingsof emergent plants i s proposed. A small (- 1-2 ha) deeper area (>2 m)ineach wetlandwouldprovide the growthof large emergentplants andgive openwater for birdsto land andtake off.* Speciesof emergentplants that areeasy to grow andeffective in pollutant removal will be selected. Candidate species include cattails, which are much more efficient for providing carbon for denitrification and heavy metals removal, and bulrush, which are better at absorbing pesticides and organics. For the removal of TSS almost any close stand of plants will do while BOD i s also best treated with specific plants. 5. Detailedecological engineering design of the constructed wetland will be financed under Component 3 of the GEFproject. The NingboNWEPPMO will collaborate with the Cixi Construction Bureau and CMSC to supervise the design andconstruction of the constructed wetland. The CMSC will operate and maintainthe constructed wetland as an integral part of the WWTP financed under the NWEP. 6. The proposeddesign recognizesthat toxic ammonia insurface water wetland might create public health concerns as highammonia concentration will deter small fish from eating mosquito larvae, which as adults are vectors for malaria, dengue fever and others. As free surface water wetland i s most efficient innitrate removalbutminimalinammoniaremoval, the gravel bedfilters inthe vegetatedsubmergedgravel bedsection of the constructed is designedto nitrify ammonia from 5-8mgL (inflow from the North WWTP to the constructed wetland) to about 2mg/L inthe gravels prior to allowingit to reach the free surface water section of the constructed wetland. Incase that the gravel bedfilters are less effective innitrification, minor modification of the WWTP's operation can be easily made to nitrify ammonia to the desired level. (One of such modifications i s increase inretention time.) The transformation of ammonia to nitrate also helpsthe constructed wetland to remove effectively nitrogen, which is the limitingnutrient for algae growth inthe sea andneeds to be removed to protect environmental quality of East Asia's LMES . Component2: Establishmentof the Wetland Center (US$S.O million) 7. The Wetland Center will be established on a designatednatural wetland areaclose to the new Shanghai-Ningbo Bridge (see Map IBRD 344441). Component 2 includes two activities to be financed by the GEFproject: i)the construction of a visitor center and its auxiliary facilities andii)the restoration andenhancementof natural wetland areas of the Wetland Center. When the 36-km long bridge i s completed it will be the longest bridge inthe world, and will convey millions of vehicles per year across the Hangzhou Bay. The objectives of these two activities are: * A realisticestimateof open water at the Cixi constructed wetlands is about 10%. 21 i)Toestablishaworld-classWetlandCenterintegratedwithaninternationallyrecognized birdwetland conservation area with the potentialfor tourism, public education, wetland research, and economic self-support; ii)Todemonstrateameansofremovingpointandnon-pointsourcepollutantsintoHangzhou Bay and an internationally-recognized example for other parts of the region; and iii)Tocreateareserveofmarinewetlandsthatwouldbeacontinuingsourceofre-population for the over exploited fish and shellfish along the Cixi coastline. 8. The Wetland Center covers an area of approximately 43.5 km2and includes the following plots (see IBRDMap 34441): i)Plot Al-recently reclaimed, non-tidal land within the existing sea dike (4.3 km2);ii)Plot A3-tidal marshland to the west of Plot A1 (1.4 km2);iii)Plot A5- a low lying islandto the northof Plot A3 (1.8 km2);andiv) the tidal mudflathay section adjacent to Plots Al, A3, and A5, andcovering approximately 36 km2. Plots A2 andA4 would remain agricultural or low-density buffer areas. 9. The Environmental Baseline Study carried out by the Wetlands International andEDAW, Inc. revealed that the Wetland Center, as part of Cixi coastalwetland area, has been usedas a secondary stopover site to the Chongming Islandwetland area inShanghaifor feeding for migratorybirdsmoving to andfrom northern breeding areas in Siberia and wintering ground to as far as Australia. It is notedthat most migratory birds, dominated by smalland large wading birdssuch as sandpipers, use the Chongming Islandwetland becauseof minimalhumanpresence at the Chongming Islandwetland but ubiquitous human presenceinCixi coastal area. 10. As of 2005, all the proposedWetland Center i s owned andmanagedby the Cixi City Government. Inparticular, Plot A1 was usedas a wetland conservation area, Plots A3 and A5 were contracted to local farmers for crab farming, andthe beach andbay areas were contracted to local farmers for shellfish harvest andfor fishing. Information about these farmers and impacts of this GEFproject on these farmers' livelihood i s discussedindetails inthe Resettlement Action Plan of the project. 11. Basedon conceptual design of the Wetland Center completed by the Wetlands International andEDAW Inc., the area will be developed mainly as a large enhancednatural wetland for migratory birds.The now-farmed tidal marshareas of Plot A3 and the islandof Plot A5 will be re-gradedto natural slopes for free tidal access, andthe few crab andfish farms there will be closed. A physical barrier will be established along the Wetland Center perimeter to prevent unauthorized access of humansto the marshes and mudflats to fish or collect clams and crabs. A series of floating buoys will be placed inthe shallow offshore areato restrict boat access to only those visiting the site for ecological purposes. 12. Itis proposedthat about 300 ha, or 90% of the landarea, of PlotA1be ecologically enhancedto establish fluctuating levelfreshwater wildlife birdponds and surroundings, or high andlow tide habitat for migratory birds. All together, Plots Al, A3 A5, andthe tidal mudflats will form an integratedecological system with birds flying to andfrom the sites at highand low tides, and the removal of human competition from the enhancednatural wetland will provide a better feeding ground and support more birds. Inparticular, a goal i s to establish a new wintering population center with excellent viewing facilities for endangeredbirds, such as the black-faced spoonbill, which i s one of the 50 rarest birdsinthe world and would attract manyinternational birdwatchers. This endangeredspoonbill migrates up anddown the Chinacoast onits way back andforth from Vietnam to N.Korea andJapan. By enhancing fish and shrimp populations in 22 shallow water habitat inthe Wetland Center, and especially areas near Plots A3 an A5, it i s expectedthat this endangeredspoonbill will eventually migrate to the enhancednatural wetland. The remaining 10%of the landarea of Plot A1 (about 33 ha at the east edge of Plot Al, will be usedfor the Visitor Center buildings and auxiliary facilities, includingbut not limitedto a parkingarea, avisitor automobile road, boardwalks, andbirdviewing blinds. 13. The Wetland Center will focus onecological management andresearchof the enhanced natural wetland, birdwatching and general education of the public, includingintroduction of GEF,PEMSEA andthe Fund,exhibits of sustainablewetland andmarine ecosystems, andother activities to benefit its sustainable operation. The needs of the casual visitor are primarily educational and outdoor experience. For the birdwatchers the focus will be on the migratory birdsespecially rare ones such as the black faced spoonbill. The WetlandCenter will have good access from the bridge. However, access to the primebirdinghabitat will be limitedto bird watchers. Group tours will be organized on seawalls and canals surrounding Plot A1 usingmini- buses andtour boats, respectively. 14. Another function of the Wetland Centeri s that its PlotsA3 and A5 will act as a nucleus for repopulating the mudflats and marshesoutside the new seawalls. The entire coastalregioni s heavily exploited for shallow water animals. There i s a danger that some economically valuable species, their young stages or those of their prey will be eliminatedby over-harvesting. The settingasideof the mudflats andmarshesaround Plots A3 and A5 will assist inprovidinga safety valve to repopulate the over-harvestedareas to the east of the new bridge. 15. The 300 ha of wetlands to be enhancedinPlot A1 andenhancedwill have a function of piloting ecological engineering measuresfor removingnon-point source pollutants from the water inthe inlandcanal systemthat will be pumpedthrough Plot Al. Water residencetimes will be around 14days as a minimum. The water from Plot A1 will reach the inshore Hangzhou Bay via the sea gates. Inaddition, once re-graded andwith the farmers removed, the tidal marshesin Plots A3 andA5 will resumetheir natural pollutioncontrol functions with no further need of maintenance.The ability of wetlands to remove nitrate will decrease the threat of eutrophication andredtides inthe area. Inaddition, the ability of the large area of free surface wetlands to remove heavy metals and petroleum products inPlot A1 will be of benefit to boththe birds feeding inthe shallow marine waters but also to the people who gather and eat the shellfish east of the new bridge. 16. The dual use of the Wetland Center as abirdhabitat and pollutionremoving system is fairly unique and will provide international recognition for the Cixi andNingboregions. It i s estimatedthat annually upwards of 200,000 persons will visit the Wetland Center. Component 3: Ecological Engineering Consultancy and Management Contract (US$2.0 million) 17. The GEFproject will finance the following three activities under Component 3: 18. Engineering Consultancy for the Constructed Wetland, the EnvironmentalCenter and EnhancedNaturalWetland KJS$500,000):As the ecological engineering design of the constructedwetland and Wetland Center components are closely related and complementary activities, the GEFproject will finance an engineering consultancy contract for bothcomponents. The consultant team would beresponsible for: i)detailed ecological engineering design of the constructedwetland; ii)detailed engineering design of the environmental center buildingand its 23 auxiliary facilities; andiii)ecological enhancementdesign for Plots Al, A3 andA5. The engineering contract will be competitively procured by a selection committee composedof Cixi andNingbo municipal officials. 19. Based on the feasibility study andinternational experts' comments, the ecological engineering design of the constructedwetland will develop detailed engineering design for the constructed wetland. The design will focus on three mainfunctions of the constructedwetland: removingpollutantsfrom the effluent of a secondary treatment plant andtwo secondary purposes: wildlife habitat andhuman enjoyment. 20. For the engineering design for the Visitor Center buildings,three functions of the Visitor Center will be emphasized: environmental education, wetland research, and birdwatching. Green buildingdesign principles andstandards are requiredto be adoptedinthe design. Ingeneral, the design should consider the useof recycledor recyclable materials andrenewable energy for the construction and operation of the Center. Concepts such as renewable insulationsuch as sod or reedroofing combined with solar panels on the south side andbird-friendly windmills can be usedininteractive displays such as sedimentremovalby wetlands incut-away exhibits. The use of a forested car park with permeablesurfaces will be considered and located at small distance from the site enticing the visitors to walk from a wood to the center through a wetlands-lake complex. 21. The ecological engineering design for A1plot will highlighttwo functions of the area: an undisturbed roostingsite for migratory birds at hightide when their feeding areas are inundated, and a wetland arearemovingpollutants from the water inthe canals that will feed these wetlands. Two kinds of pond-wetland systems will be required; the fluctuatinglarge and small seasonalponds. Each will attract its own fauna. Water levels inthese ponds will be managedto ensure open mudflats and shallow water for the roosting migratorybirds. Measuresto protect migratory birds from their predatorswill also be considered in the ecological engineering design of Plot Al. For Plots A3 and A5, the ecological engineering design will mainly concern how to re-grade the landto approximate the natural condition of a tidal marsh. 22. Management Assistance Contract for the Wetland Center (US$ 1,300.000): As the Ningbo and Cixi implementation agencies have goodexpertise inproject management and construction, but understandably do not have the ecological expertise necessary to managethe Wetland Center, this GEFproject will fund a four-year management assistancecontract for a consortium of NGOs, researchinstitutes and universities (the NGO Consortium) to participate in the detailed design andmanagementof the Wetland Center. The NGOconsortium could bring the energy andexpertise of the academic andNGOcommunities, and perhapsbringadditional fundingandlower overall costs. The NGOConsortiumis expectedto provide technical assistancefor the effective and adaptive management and monitoringof the Wetland Center. In particular, the consortium will carry out research to identify appropriate management practices that help the natural wetland evolve to a highquality habitat for international migratory birds and for continuous repopulation of over-exploited coastal resources. The consortiumwill also monitor how pollutionreduction of inland and coastal waters has been achieved at the enhanced natural wetland. By organizing birdwatching, environmental education, andother activities that 24 are beneficial to the sustainableoperation of the Wetland Center, the consortium i s expectedto develop a financing mechanismfor the sustainable operations of the Center after four years. 23. ReplicationandDissemination Activities WS$200.000): It is expected that training and workshops may be neededduringproject implementation as local implementation agenciesare relatively new to concepts andpractices relatedto constructedwetland, wetlandconservation, birdwatching andwetland education. As part of thePartnershipInvestment Fundfor Pollution Reduction inthe Large MarineEcosystemsof East Asia, this GEFproject will fundnecessary I activities to promote the dissemination of knowledge andexperience learnedfrom the project and the replicationof innovative wastewater treatment techniques inChina andinEast Asia. These activities will include but not limited to organizing international and domestic workshops . inNingbo and participating in workshops organized by other international organizations such as the GEF, the Fund, andthe PEMSEA. 25 Annex 5: ProjectCosts CHINA: GEFNINGBOWATER AND ENIVORNMENTPROJECT ProjectCostsby Component US$Million RMBMillion Component1:NorthWWTP ConstructedWetland 7.12 58.00 Component2: CixiWetlandCenter 8.00 65.20 EcologicalRestoration Works 3.77 30.70 EnvironmentalEducation and ResearchCenter 3.64 29.70 Resettlement 0.59 4.80 Component3: Designand Management 2.00 16.30 Wetland Center Management Assistance 1.30 10.60 EcologicalEngineering and Visitor Center Design 0.50 4.08 TrainingandExperience Sharing 0.20 1.63 TotalProjectCost 17.12 139.50 ProjectFinancingPlan US$ Million RMBMillion GlobalEnvironmentFacility 5.00 40.8 Cixi City Government 5.39 43.9 Cixi Municipal SewerageCompany 6.12 49.9 Ningbo Municipal Government 0.61 5.0 Total 17.12 139.50 ProjectFinancingByExpenditureCategory US$ Million RMBMillion Works 14.92 121.57 Consulting Services 1.8 14.67 Goods 0.2 1.63 Training and Outreach 0.2 1.63 Total 17.12 139.5 GEFFundAllocationByExpenditureCategory US$ Million RMBMillion 1.Works 2.8 22.82 Constructed Wetland 1 8.15 Wetland Center EcologicalRestoration 0.9 7.335 Environmental Education BuildingandFacilities 0.9 7.335 2. Goods 0.2 1.63 3. Consulting Services 1.8 14.67 4. Training and Outreach 0.2 1.63 Total 5.00 63.57 26 CostEstimatesfor the Associated Cixi Component of the Ningbo Water andEnvironmentLoanProject I =.-0 C Description sea 5% = $ 5 3 E o a E P i NorthernWastewater Treatment Works 128.7$ 15.6 9.; Mid Trunk Sewer System 148.2; 17.: 9.: Western Trunk Sewer System 153.11 18.4 9.( Eastern Wastewater Treatment Works 91'3, 11.c 6.1 EasternTrunk Sewer System 126.2, 15.; 8.( City and Town Link Sewer System 239.3' 28. 14.1 81.61 1 9.E 0.1 46.63 5.E 0.1 IDC and Commitment Fee ........................ 0.1 SUb-tO&lS ----------6.1 50.9 1065.91 t ----_ 6 128.4 57.! 27 Annex 6: ImplementationArrangements CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT 1. A number of government agenciesinthe Ningbo Municipal Government andthe Cixi City Government are involvedinthe implementation of the GEFProject. Key institutional arrangements are outlinedinthe following figure. EnvironmentLeadingGroup I NingboFinance Bureau I I Cixi City Ningbo Cixi City I I GEFProiect Ningbo Other municipalagencies I I Leadingbroup GEF I Project Ningbo Development and Expert ReformCommission Other Cixicity Group agencies 1 NWEPPMO Cixi Construction 4 1 b Bureau ~ ~ CixiWetland Cixi Municipal SewerageCompany NingboMunicipalGovernment 2. Water and Environment Leading Group: The LeadingGroup is incharge of the complex regional water supply and water quality issuesconfrontingthe Municipality. The LeadingGroup i s headedby an Executive Vice Mayor and i s composed of Directors from the Ningbo Development andReform Commission (the Ningbo DRC), EnvironmentalProtectionBureau (EPB), Water ResourcesBureau, Construction Bureau, andFinance Bureau. The Leading Group's mandateis to provide policy direction and planningsupport for integrated water and environmental managementthroughout the Municipality. The Leading Group is supportedby an active Office. Both the Leading Group andits Office were actively involved inNWEP preparation and will play a guidingroleinimplementation. Ina manner similar to the NWEP arrangements, the LeadingGroup andits Office were actively involved inthe preparation of the Ningbo GEFProject and will play a guidingrole inimplementation. 3. NWEP Project Management Ofice (PMO): The PMOis locatedunder the NingboDRC, and is composedof a qualifiedproject manager, an experienced chief engineer, and a procurement specialist, a project accountant, an environmental specialist, a resettlement unit, and a translator. The PMO has been establishedas a permanent government agency, andthus i s able to attract qualifiedindividuals who are offeredjob security andpromotion potential. The PMO i s 28 responsible for overall project coordination and implementation of NWEPand the Ningbo GEF Project andthe primary liaisonwith the Bank (project monitoring and reporting). 4. The Ningbo DRC Foreign Capital Utilization Division: The Division serves as a liaison with international development agencies. It will be an important bridge between the PMO and Finance Bureau, and the Bank during project implementation. 5. The Ningbo Municipal Finance Bureau: The Bureauwill managethe GEF special account. Cixi City Government 6. Cixi City Ningbo GEF Project Leading Group: InAugust 2005, the Cixi City Government established aLeadingGroup for the GEFproject under the direction of a Vice Mayor. The LeadingGroup's mandate is to provide policy direction andplanningsupport for the GEFProject. The leadinggroup includes 12directors of the CixiDRC, EPB, andConstruction, Urban Planning, Water Resources, Agriculture, LandResources, Tourism, andFinance Bureaus. The Cixi Construction Bureauhas servedas the Office of the Leading Group. The director and one deputy director of the Construction Bureau serve as director and deputy director of the Office of the LeadingGroup. 7. Cixi City Ningbo GEF Project Expert Group: Inaddition to the LeadingGroup, the Cixi City Government has also establishedanExpert Group ledby a nationally renown wetland expert from Fudan University. Two professors from the NanjingNormalUniversity andthe Zhejiang Forestry Survey andDesign Institute and sevenengineers and senior engineers from the Cixi Environmental Protection, Water Resources, Planning, Agriculture andConstruction Bureaus and CMSC are members of the Expert Group. The Expert Group i s expectedto provide technical support to the LeadingGroup on the design and implementation of the GEFproject. 8. Cixi Construction Bureau: The Cixi Construction Bureaui s the lead Cixi government agency for project implementation and has oversight responsibility for the Cixi Municipal SewerageCompany (CMSC) andthe Cixi Wetland Center Management Company. The Cixi Construction Bureau will also provide counterpart funding for the Wetland Center. ImplementingAgencies 9. Cixi Municipal Sewerage Company (CMSC): The CMSC will be the implementing agency for Component 1:ConstructedWetland. The CMSC is responsible for wastewater collection and treatment inCixi City and i s the implementingagency for the Cixi component of NWEP.CMSC was legally establishedin2004, andis experienced inWorld Bank procedures. 10. Wetland Center Management Company. The Cixi Government has established a small company in2006 to be responsible for the Wetland Center component. The Management Company staff i s experienced people drawn from the Construction Bureau. The Management Company will be assistedby the PMO andthe Construction Bureau incomplying with World Bankprocedures. BecauseCixi andNingbo agencieshave limitedecological expertise essential to the managementof the WetlandCenter, a consortium of NGOs anduniversities (the NGO consortium) will be selectedthrough a competitive process to provide assistanceinthe detailed design and managementof the Wetland Center. This NGO consortium will bringthe energy and expertise of the academic and NGO communities, andperhapsbringadditional funding and lower overall costs. 29 Annex 7: FinancialManagementandDisbursementArrangements CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT 1. A FinancialManagement Specialist (FMS) from the Bankhasconductedan assessment of the adequacy of the project financial managementsystem of the GEF NingboWater Management Project. The assessment, basedon guidelines issuedby the FinancialSector Board on November 3,2005, has concludedthat the project meets minimumBank financial management requirements, as stipulatedinBP/OP 10.02. Inthe FMS's opinion, the project will have inplace an adequateproject financial managementsystemthat can provide, with reasonable assurance, accurate andtimely informationon the status of the project inthe reporting format agreedwith the project and as requiredby the Bank. 2. Fundingsources for the project include the GEFgrant andcounterpart funds. TheGEF grants will flow from the Bank into the designatedaccount, to be set up at and managedby the Ningbo Municipal Finance Bureau (NMFB),andfinally to the project implementing entities through Cixi county finance bureau. 3. The GEF grant will be signed with the People'sRepublic of China, through the Ministry of Finance (MOF), which will then enter into a grant agreement with Ningbo Municipality. The NMFBwill have asubsidiary grant agreementwith the CixiCity Government. The CixiFinance Bureau will then have grant agreements with the project implementingentities. Counterpart funds will come from the NingboMunicipal andCixi City Governments. Audit Arrangement 4. The project's financial statementswill be auditedinaccordance with standards acceptableto the Bank, Inline with other Bank financed projects inChina, the project will be audited inaccordancewith International AuditingStandardsandthe Government Auditing Standards of the People's Republic of China (1997 edition). The Ningbo MunicipalAudit Office has beenidentified as auditors for the project. Annual audit reports will be issued inthe name of the Ningbo Municipal Audit Office. 5. The annual audit report of project consolidated financial statements will be due to the Bank within six months of the end of each calendar year. The consolidated project financial statements will be submitted through the municipal PMO. DisbursementArrangement 6. Inlinewith the agreementbetweenthe Bank andMOF, the project will usetraditional disbursementtechniques andwill not use report-baseddisbursement. Allocationof GrantProceeds 7. Proceedsof the GEFgrant will be disbursed against expenditure categories as shown in the table below. 30 Amount of the GEFTrust Fund Category Grant Allocated (Expressed in % Of Expenditures US$Equivalent) (1)Works under 1,000,000 30% Component 1:Constructed Wetland (Contract Wl) (2) Works under 900,000 50% Component 2 for ecological restoration of wetlands (3) Works under 900,000 50% Component 2 for construction of buildings and facilities. (4) Goods 200,000 100% (5) Consultants' services 1,800,000 100% (6) Training and workshops 200,000 100% Use of Statement of Expenditures (SOEs) 8. The proceeds of the grant may be disbursed on the basis of SOEs as indicated inthe table below. Expenditure Category Contracts Less than US$ Equivalent Works None Goods us$loo,ooo Consulting Firms us$100,000 IndividualConsultants US$50,000 9. Expenditures exceeding the above limits will be made in accordance with respective procurement guidelines and signedcontracts. DesignatedAccount (SA) 10. One designatedaccount (DA) will be established inthe NMFB.The authorized allocation will beUS$500,000. GEFfunds wouldbe disbursed from the DA set up at the Finance Bureau to the project implementing entities and/or supplier andcontractors. 31 11. NMFBwill bedirectly responsiblefor the management,monitoring, maintenance, and reconciliationof the DA activities of the project. Supporting documents required for Bank disbursements will be preparedand submitted by respective project implementing entities to NMFBfor final verification andconsolidation beforesubmissionto the Bank. Theflow ofthe withdrawal application is as follows: 1 I I I 1 I 1 i - Implementing Approvedby Approvedby Approvedby World Entities Cixicounty +NingboPMO -+ NMFB -b Bank FinancialManagementandReportingArrangements 12. Zmzdementinx Entitv. The PMO has been set up under the NingboMunicipalPlanning Commission. The Cixi Municipal SewerageCompany will be the implementing entity for the constructed wetland component, the Cixi Wetland Management Center will be the implementing entity for the Wetland Center andComponent 3: Design and Management Assistance. 13. Funds Flow. Funds flow for Bank loan will follow the Bank andMOF requirements, as follows: World DA CixiCity Implementing Bank managed FB entities 14. Accounting Organization and Stafinq. Adequate project accounting staff with educational background andwork experience commensuratewith the work they are expectedto perform i s one of the factors critical to successfulimplementation of project financial management. Basedon discussions, observation andreview of educational background and work experience of the staff identified for financial and accounting positions in the implementing entities, the task team noted that the financial staff recruited should be able to meet the Bank's minimumrequirements. 15. To strengthenfinancial managementcapacity and achieve consistent quality of accounting work, the task team has suggestedthat a project financial managementmanual (the Manual) be preparedbasedupon the existingNWEPManual. The Manual will provide detailed guidelines on financial management, internalcontrols, accounting procedures, fund and asset management and withdrawal application procedures. The NMFB agreedto preapre the Manual for the GEFproject. The Manual will be finalized and distributedto all the financial staff before project effectiveness. 16. Accounting Procedures. The administration, accounting, andreportingof the project will be set up inaccordancewith Circular#13: "Accounting Regulations for World Bank Financed Projects" issued inJanuary 2000 by MOF.The circular provides in-depthinstructions of accounting treatment of project activities and covers the following: chart o f account, detailed 32 accounting instructions for eachproject account, standardset of project financial statements, and instructions on the preparation of project financial statements. 17. The standard set of project financial statementsmentioned above has been agreed betweenthe Bank andMOF and applies to all Bank projects appraisedafter July 1, 1998 and includes the following: Balance Sheet, Statement of Source andUse of Fund, Statementof Implementation of Grant Agreement, and Statementof Designated Account. 18. Each of the implementing entities will be managing, monitoring, and maintaining the respective project accounting records. Original supporting documents for project activities will be retainedby originating implementing entities. Inaddition, eachimplementingentity will preparefinancial statements, which will be submitted to the Ningbo PMO for review and approval. The NingboPMO will furnishthe consolidated project financial statementsto the Bank on a regular basis. 19. Internal Audit. There i s no formal independentInternalAudit department for the project. However, this will not impact the project's financial management as PMOmanagementand monitoring, and yearly external audits, will ensurethat financial managementcontrols are functioning appropriately. 20. Financial Management Action Plan. The following proposedtime-bound actions were agreedwith the PMO: Action ResponsibIeEntity Completion Date 1.Financial management Ningbo PMO andNMFB Preferably before trainingto all relevant project effectiveness andno later than staff December 31,2006 2. Financial management NingboPMO andNMFB Preferably before manual issuedto related effectiveness andno later than financial staff December 31.2006 33 Annex 8: Procurement Arrangements CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT A. General 1. Procurement for the proposedproject would be carried out in accordance with the World Bank's "Guidelines: ProcurementUnderIBRDLoans andIDA Credits" datedMay 2004; and "Guidelines: Selection andEmployment of Consultants by World Bank Borrowers" datedMay 2004, andthe provisions stipulated inthe Legal Agreement. The various items under different expenditure categories are describedingeneralbelow. For each contract to be financed by the Grant, the different procurement methodsor consultant selection methods, the needfor pre- qualification, estimated costs, prior review requirements, and time frame are agreedbetween the Borrower and the Bank inthe ProcurementPlan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutionalcapacity. 2. Procurement of Works: Works procuredunder this project would include: northern WWTP constructedwetland, environment educational center andecological restoration of natural wetland. The procurement will be done using the ChineseModel BiddingDocuments (MBDs).ICBis not expected.Butifthereis ICB, the Bank's StandardBiddingDocuments (SBDs)would be used. Priorreview will berequiredwill berequiredon all civil works contracts to ensure GEFgrant funds are utilizedin an optional manner. 3. Procurement of Goods:The Wetland Center will require items such as vehicles, computers, projectors, boats, etc. These will be procuredusingWorld Bank Goods procurement procedures.For contracts less than US$lOO,OOO national shopping can be used. For contracts greater than US$lOO,OOO NCB goods procurement will be used. Since the GEFgrant allocation for goods i s only US$200,000, no ICB procurement of goods i s expected. 4. Selectionof Consultants: There will be two major consultant contracts. The first consultant contract will be for the engineering design of the constructed wetland, ecological restoration of the Wetland Center, anddesign of the Wetland Center buildings and facilities. This will be procuredunder the QCBS method. The secondcontract will be for assistanceinthe design and managementof the Wetland Center. This will most likely be providedby consortia of NGOs, universities andor researchinstitutes. Therefore these contracts couldbe procured using QBS procedure. Short lists of consultants for services estimated to cost less than US $300,000 equivalent per contract may be composedentirely of national consultants, inaccordance with the provisions of paragraph 2.7 of the Consultant Guidelines. B. Assessment of the agency's capacity to implement procurement 5. Procurement activities for Component 1:Constructed wetlands will be carried out by the Cixi MunicipalSewerageCompany (CMSC) incollaboration with the Ningbo PMO and Cixi Construction Bureau. Procurement activities for Components 2 and3: ecological restoration, environment education center and the consulting services will be carried out primarily by the Cixi Construction Bureau with Cixi Wetland Management Office as the actual implementation agency, with direct assistancefrom NingboPMO. A professional tendering company will be the procurement agent for the three civil works contracts, constructed wetland, ecological restoration of the natural wetland, andthe environment education center. This tendering company i s also the 34 procurement agent for the on-going Ningbo Water andenvironment Project. The Ningbo PMO will provide overall coordination and instruction for all procurement activities. 6. For this GEF-financed project, the Cixi Construction Bureauhas established an office, Cixi Wetland Office, with four staff to be responsible for the preparation of the project, This office will be transferred to an entity with legal capacity to signcontracts. The assessment found that the four staff have experiencewith localprocurement procedures, and capacity to coordinate the procurement activities. With the assistancefrom the tendering company andguidancefrom Ninbo PMO, this office has the capacity to conduct the procurement. CMSC i s implementing a component of the Ningbo Water andEnvironment Project andthe general performance i s satisfactory. Insidethe Ningbo PMO, the chief engineer will be responsible for the overall coordination and overseeingof the procurement activities, who is also managing the on-going Ningbo Water andEnvironment Project. 7. An assessment of the capacity of the Implementing Agency to implement procurement actions for the project has beencarried out by Zhentu Liu, senior procurement specialist of the World Bank Office, Beijing, on March29,2006. The assessment found that the organizational structure for implementing the project andthe staffing of the related entities are adequatefor implementingthe project. 8. The major risk concerning the procurement component for implementation of the project was identifiedwhich i s the lack of experience with the World Bank projects by Cixi Wetland Office. The corrective measureswhich have been agreedare (1)The Ningbo PMO will provide direct guidance; and (2) A professionaltendering company will be employed as the procurement agent. 9. The overall riskfor procurement under the GEFproject is average. C. ProcurementPlan 10. The NingboPMO, at appraisal, developed aprocurementplanfor project implementation which provides the basis for the procurement methods. This plan hasbeen agreedbetween the Borrower andthe Project Team on March 29,2006 andi s available at the NingboPMO and through the World Bank Internet Site. The Procurement Plan will be updated annually, in agreementwith the Bank to reflect actual project implementation needs, andimprovements in institutionalcapacity. The Procurement Plan i s providedinTable B below. D. Frequency ofProcurement Supervision 11. Inaddition to the priorreview supervisionto becarried out from Bankoffices, the capacity assessment of the ImplementingAgencies has recommended procurement supervision missions every six month to visit the field (includes special procurement supervision for post- review/audits). 35 Table A: Thresholds for Procurement MethodsandPrior Review 1.Works Less than $15 million NCB All 2. Goods Less than US$500,000 NCB None Less than US$lOO,OOO National None Shopping 2. Consulting Above $100,000 QBS andQCBS All service (Firms) Individual Other Above $50.000 w 1 1.Northern 86 ha $7,120,000 NCB N Prior N May 2007 8 months WWTP constructed works Constructed wetland and Wetland associated facilities W2 2. Wetland Earthworks, $4,770,000 NCB N Prior N December 12 Center ponds, works 2007 months Ecological vegetation, Restoration boardwalks, etc. W3 3. Wetland Buildingand $3,640,000 NCB N Prior N May2007 12 Center associated works months Buildings infrastructure and Facilities Goods Wetland Too Be <$200,000 NSor N None Y TBD TBD Center Defined NCB 36 C1 ConstructedWetland and 500,000 QCBS Prior August 2006 Start: December WetlandCenter 2006, Duration EngineeringDesign 18 months C2 WetlandCenter 1,300,000 QBS Prior August 2006 Start: December ManagementAssistance 2006, Duration: Contract 4 years C3 Training, Workshops, 200,000 SOE Misc. 2.000.000 37 Annex 9: Economicand Financial Analysis CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT 1. Economic Analysis: The GEFproject will generateconsiderable economic benefits associatedwith wetland conservation including: i)helping to maintainthe ecological health and aquaculture productivity along the coastline by restricting harvesting within the Wetland Center andthereby creating a "seed bed" for the adjacent areas; ii)providinghabitat for local and migratorybirds, and facilitating birdwatching within the Wetland Center, andthereby generating benefits for people who place amenity and/or existence value on healthy birdpopulations; and iii)improvingthequalityoflifeinCixiCitybypreservingwetlandhabitatwhichhasbeenthe defining geographical feature inCixi's historical and cultural development. These benefits are difficult to quantify andthus a formal cost-benefit analysis was not undertaken for the project. 2. FinancialAnalysis for Component 1: Constructed Wetland: The constructed wetland will be part of the CMSC's wastewatertreatment plant andthus the appropriate level of financial analysis i s CMSC. Under NWEP, a comprehensivefinancial analysis was undertake for CMSC, and legal covenants were includedinthe NWEPloan agreementwhich requires Cixi City to raise tariffs to a level sufficient to covering operating costs and debt service. The Bank task team i s monitoringthe tariff increasesandfinancial status of CMSC duringNWEP supervision. Thefollowingparagraphshighlight the key CMSC financial issues. 3. UntilApril 2004, the city government appliedwastewater chargesonly to commercial and special use groups. However, as of May 2004, new wastewater tariffs were introduced that apply to all customer grou s. The average wastewater tariff in Cixi i s now RMB 0.37/m3 compared to RMB 0.49/m inthe Ningbo urbancore. CMSC, incontrast to NWSC, will depend P heavily on equity contributions to fundits capital investment program. Cixi City will contribute approximately 350 millionRME3 to CMSC, about one-third of the total project cost. An analysis of the fiscal impact indicates that the project counterpart contributions to be allocated by the Cixi Weighted Average Tariff Existing Projected 2004 June. 2006 Jan. 2008 Jan. 2010 Water Supply 2.06 2.37 2.72 2.72 WastewaterTariff 0.37 0.86 1.43 1.69 Total 2.43 3.23 4.15 3.41 Increase inWastewater Tariff 132% 66% 18% 4. The financial projections preparedfor CMSC indicate that very significant tariff increaseswill be requiredto enable it to operateon a financially viable basis. The average tariff will needto be increasedby about 130% as of 2006, andthen by a further 66%, to RMB 1.43/m3, by the beginningof 2008. The increasein2008 i s designedto fully recover NWEPoperating and maintenancecosts and to meet debt service on the NWEPproject loans. Additional, but smaller increasesare projectedto be required in 2010 and 2012, of 18% and 15%respectively, which would bring the average tariff tojust under RMB2/m3.Evenwith these very large tariff increases, debt service will place a considerable strain on CMSC, particularly over the 2010 - 38 2014period. Assuming that the requiredtariff increases are successfully implementedbeginning in2006, the company shouldbe ableto comply with the cost recovery covenant inall years. However, the projections indicate that CMSC might experience some difficulty inmeetingthe debt service covenant inthose years inwhich debt service i s greatest. 5. Changes inkey variables havebeen assessedinterms of their potential impact on the financial position of CMSC. A one year delay inimplementingthe required tariff increases would have the greatest adverseimpact on the company. A delay inthe implementation of the first two increases now plannedfor the beginning of 2006 and 2008 couldconstrain CMSC's capacity to provide its share of project counterpart funding. The estimated shortfall i s about RMB20 million, which couldbe addressedthrough an increaseinthe city government's contribution. The city government has agreedto meet all counterpart requirements not met by CMSC. 6. FinancialAnalysisfor Component2: Wetland Center:All of the counterpart funding for the Wetland Center, which i s estimatedat around US$6.9 million, will be providedby the Cixi City Government through the Construction Bureau. The estimated annual cost of running the Center i s around RMB 2.8 million per year (US$350,000 year) as shown inthe table below: 7. There will be at least three potential sources of revenue for the Center: i) user fees, ii) donations; andiii)budget transfers from the Cixi City Government. The table below identified various scenariosfor meetingrevenue requirements: Scenario Low Base High Number of Vistors 100,000 150,000 200,000 Visitor Fee (RMB/per person) 20 20 15 User Revenue(RMB/Year) 2,000,000 3,000,000 3,000,000 Cixi Government Transfers (RMB/Year) 1,000,000 0 0 39 8. The analysis shows that inthe base scenario, the Wetland Management Company can meet is operational cost with a reasonablefee of 20 RMB/person (US$2.5). Inthe high scenario, the user fee could be dropped to 15 RMB. Under the low scenario, the Cixi City government may be required to subsidizethe operation of the Center. Fortunately, the Cixi City government has a strong fiscal position andhas made a commitment to support the Wetland Center as necessary. 9. One of the first tasks of the NGOKJniversity Consortium is to develop a BusinessPlan for the Wetland Center to more accurately estimate costs andrevenuerequirements. Inaddition, the Consortium will include a professionalfundraiser who will solicit donations and grants from companies and individuals to support the Wetland Center operations. 40 Annex 10: SafeguardPolicyIssues CHINA: GEFNINGBOWATERAND ENVIRONMENTPROJECT 1. The project is classified as a Category B project andthe following safeguardpolicies are triggered: i)environmental assessment; ii)natural habitats; andiii)resettlement. Ningbo Municipality is a repeat borrower, with experienceof a completed project (Zhejiang Multi-Cities Project), the ongoing Zhejiang UrbanEnvironmental Project which includes four componentsin Ningbo City, andthe ongoing NWEP.The Ningbo Municipal and Cixi City authorities have developed a good understanding andexperienceinimplementing World Bank safeguardpolicies. EnvironmentalAssessment(OPBP4.01) 2. The GEFNingboProject i s an environmental enhancement to the NWEP. Two studies were undertaken during preparationto provide comprehensiveenvironmental analysis and project design: i)ConstructedWetland Feasibility Study; andii)Wetland Center DesignStudy. These studies show that the GEFproject as a whole will have a significant net positive impact, as it will improve ambient water quality inCixi City andthe HangzhouBay, and promote sustainabledevelopment of Cixi City of NingboMunicipality.The negative impacts associated with the project are expectedto be nonexistent or minimal, andthe impacts are expectedto be site specific, reversible, andeasily mitigated. An Environmental Management Planhas been preparedand outlines necessarymitigation measures, institutionalarrangements, andmonitoring plan to avoid, minimize or otherwise compensatefor the adverse impact associatedwith the construction and operation of the constructed wetland treatment system and the wetland center. Component 1: Constructed Wetland Treatment System 3. The overall wastewater managementapproachinCixi City, includingthe constructed wetland, was reviewedinthe approved NWEPEIA.The NorthernWWTPs i s designedto meet dischargestandardClass lA, with limits of lOmg/lBOD and SS, andremoval of nutrientsto 15 mg/ltotal-nitrogen and0.5 mg/lof phosphorus.The proposedtreatment processis amodified A/O (anaerobic followed by aerobic) with tertiary treatment. Since the landinthe vicinity of the plants i s recently reclaimedcoastal landwith no development and i s ownedby the Cixi City government, there are no land acquisition requirements or resettlement issues. The constructed wetland was therefore chosen as the preferred alternative becauseit provides robust treatment with considerablebuffering capacity. Another objective of the constructed wetland i s to help maintain andenhance a wetland ecological habitat as the surrounding area develops. 4. The use of constructed wetlands for tertiary treatment was reviewedinthe approved NWEPEIA at aconceptual level. In2006, the exact locationand size of the constructed wetlands were decided after two rounds of broad stakeholder consultations and multiple rounds of internal discussion within the Cixi City Government (see Map IBRD34441). A total of 86 ha of landhavebeenassigned as the constructedwetland site to the Northern WWTP. 5. Overall environmental impacts of the constructedwetland are expected to be positive. The study on the ConstructedWetland was carried out by the South ChinaInstitute of Environmental Sciences (SCIES) of the StateEnvironmental Protection Administration (SEPA). The study has clearly defined the objective of the constructed wetland program andprepared 41 alternative constructed wetland designs without considering landrequirements. Basedon Cixi's decision on land-related issues, the study has proposed, and the Cixi City Government has accepted, a preferredconfiguration of wetland design and landuse, i.e. a gravel bedplusfree surfacewetland. International wetland expertshavereviewedthe study and the preferred design and agreedthat the proposed designcan serve the function of tertiary wastewater treatment and achieve the targeted discharge standards. Technical assistance will be continuously provided under the GEFproject to ensure international best practice i s followed inthe detailed design, construction, start-up and operations andmonitoringof the constructed wetlands. Component 2: Establishment of the Wetland Center 6. The Cixi City Government has designatedan existingarea inthe general vicinity of the Ningbo-Shanghai Bridge as the Wetland Center (see Map IBRD34441 for exact location and boundary of the area). The Wetland Center would cover an area of approximately 43.5 km2and include the following plots: i)Plot Al-recently reclaimed and within the sea dike on the border of the lothSea Dike andto the west of the Ningbo-Shanghai Bridge (4.3 km2);ii)Plot A3-tidal marshland to the west of Plot Al(1.4 km2);iii)Plot AS-island to the north of Plot A3 (1.8 km2); and iv) the tidal mudflathay section adjacent to Plots Al, A3, and A5 and covering approximately 36 km2.Plots A2 and A4 would remainagricultural or low-density buffer areas, 7. Duringthe project preparation, astudy onthe WetlandCenter hasbeencompletedby Wetlands International andthe EDAWInc., a UnitedStates-basedurban planningfirm. This study i s comprised of three parts:i)investigating environmental baseline of the Cixi coastal area; ii)designingtheWetlandCenterconceptually;andiii)developingalanduseplanforthe Wetland Center. This study concludesthat the Wetland Center will help promote environmental awareness, andprotect wetland andcoastalresources. Inaddition, the environmental impacts of the Wetland Center will be expectedto be positive by preserving habitat for plants, aquatic species, andbirds, andby educating general public on environmental protection, wetland conservation andbirdwatching. Negative environmental impacts associated with the construction of the visitor center andthe restoration and enhancement of the natural wetland areas are believedminor, site specific andnone are irreversible. 8. The proposed visitor center will be a medium-sized buildingwith aparkinglot and access road. The parkinglot will be built insoutheast forest comer of Plot A1 of the natural wetland area. The access roadwill be built on an existing road. The conceptual design of the visitor center has suggestedthat international green buildingprinciplesbe followed to minimizethe consumption of energy, water and non-recyclable materials, minimize waste generation and discharge, and maximumthe use of recycled materials andrenewable energy. The conceptual design of the Wetland Center is benefited from an international study tour organized during project preparation. 9. The study has suggestedthat eco-tourism, namely, birdwatching activities, be carried out at the Wetland Center. The study estimates that annual visitors couldpotentiallybe around 200,000 person visits andthe maximumallowednumber of visitors should be no more 3,000 per day. A visitor automobile roadi s suggestedto be constructedon an existingroadalong the east boundary of Plot A1 of the natural wetland area. According to the land-use planof the natural wetland, a number of birdwatching board walk andbirdviewing blindnext to the visitor automobile roadwill be constructed to facilitate environmental education andbirdwatching 42 activities. B y limitingthese construction activities to the east boundary of Plot Al, future impacts related to these constructions will be minimized. NaturalHabitats(OPBP4.04) 10. Currently, none of the coastal area along Cixi i s designatedby national authorities as legally defined protected areas. The objective of the GEFNingbo project i s to help conserve, rehabilitate, enhance and create new natural habitats along the Cixi coastline. B y doing so, the constructed wetland and the Wetland Center will preserve or enhance existing natural habitats for benthos, vegetation, and migratory andindigenous waterfowls. 11. The Environmental Baseline Study of the Cixi CoastalArea (as a part of the Study on Environmental Center and Associated NaturalWetlands), carried out by the Wetland International andthe EDAWInc., identifiedthat the ecological function of the Cixi coastal area was secondaryhabitats for migratory birdsbefore these areas were either enclosed by the sea- dikes or usedfor crab farming, fishingor shellfish collection. This study suggests that wetland should be restoredor enhancedto improve habitat quality. 12. Based on the findings of the Environmental Baseline Study andtechnical comments of international experts, the study onnatural wetland has proposedto establish an enhancednatural wetland for international migratory birds around the Wetland Center. Within this area, only guided birdwatching activities will be allowed. Fishing, crab farming, shellfish collection activities will be prohibited. 13. The study also proposesminor land-use modifications inthe WetlandCenter to enhance its ecological function. Inparticular, Plot A1 of the Wetland Center will have diverse resting habitats (such as hills, deep and shallow ponds) for different types of migratory waterfowl. Existingcrab farms inareas outside of the seawalls, namely Plots A3 and A5, will be leveled to restore to natural condition, andthus to provide undisturbed feeding areas for waterfowls. Consequently, these project activities are expected to greatly improve quality of natural habitat for international migratingbirds andother species. 14. Based on technical suggestions of international experts, the study on the constructed wetland, carried out by SCIES, has incorporatedecological and aesthetical values into the design of the constructed wetland. Various islands and slopes havebeen proposedfor the constructed wetland to attract different types of migratory andindigenous waterfowl. Involuntary Resettlement (OPBP4.12) 15. The project does not involve any residents or permanent structures inthe constructed wetland or the Wetland Center. All of the landi s ownedandregulated by the Cixi City government. No landacquisition i s required. Fieldtrips by the Bank team have confirmedthat the constructed wetland site was recently reclaimed land andno agricultural or industrial activities exist on the sites. Therefore, no resettlement action i s neededfor the constructed wetland component of the project. Instead, resettlement action will focus only on aquaculture activities existing inthe Wetland Center. 16. After the Cixi City Government designated the specific areas for the Wetland Center, field surveys were carried out by the resettlement consultant -HehaiUniversity -inNovember andDecember 2005 and March and April 2006. The Weltland Center would affect households in 43 two townships: Zhouxian Town and Andong Town. It i s confirmedthat all rural households affected by the establishment of the Wetland Centerhave agricultural (with an average 2.4 muin Zhouxian and or 3.9 mu inAndong) inaddition to their aquaculture activities inthe Wetland Center. The establishment of the Wetland Center will not affect their use of these agricultural lands. 17. Cixi City has hadextensive experience incoastal zone reclamation and compensation issues associated with the termination of temporary userights. Users of landunder the reclamation process understandthat their landuse rights are temporary and there are long- establishedlocal procedures for dealing with this issue. Cixi has an impressive recordin providingadequate compensation for local farmers affected by reclamation activities. For this GEFproject, Cixi has adaptedtheir compensationpolicies to meet the Bank's resettlement requirements . 18. The project identifiedthat the households affected by the Wetland Center can be classified into four types basedon aquaculture activities: (1)households engaging incrab or fish farming intidal marsh, Le., aquaculturefarmers; (2) households engaging infishing with preset nets on tidal mudflats, Le., aquaculturenetters; (3) households usingboats to fish inthe Wetland Center, i.e., fishermen; and (4) householdsoccasionally picking sea products (mainly clam and snail) on tidal mudflats, Le., pickers. The following table summarizes the number of households engagedineach activity. Aquaculture Fishermen Aquaculture Occasional and Farmers: Tidal Netters: Tidal InformalPickers Wetlands Mudflats Households 54 40 50 -- Population 168 120 150 13 villages Area (Mu) 2508 -- Tidal Mudflats Note: All fishermen were also aquaculture farmers, andthere i s an overlap of 30 households betweenaquaculture farmers andnetters. 19. Resettlement Entitlement:Due to the common practice of landreclamation along the Cixi Coast the use rightsof households for aquaculture activities are universallyunderstood to be temporary and subject to government regulation. Inorder to comply with Bankpolicy, Cixi City government agreedto compensate aquaculture farmers, fishermen, andnetters with replacement costs for ponds, huts, gates, bamboo, nets, boats, etc. at the replacement cost. Aquaculture farmers and fishermen are required to obtain a license to utilize the coastal area, and approximately 80% of the households have paidtheir license fees. Households which do not have a license canpurchaseone andreceive full replacement cost, or receive a reducedpayment for their assets. 20. Many rural households inthe two towns nearthe wetlandcenter have been involvedin occasionally pickingor diggingof sea products on the entire mudflats outside of the sea dyke (inside and outside of the Wetland Center). The Bank team andCixi officials recognize that the pickers have access to other parts of the mudflats and the establishment of the Wetland Center should actually improve overall productivity along the coastline. Although the pickers in these 44 towns would probably be inconvenienced,it i s not clear ifthey would not suffer an economic loss (and could infact reap economic benefits due to increasedyield). It i s agreedthat the Cixi government would provide an infrastructure development fund assistanceto the affected villages of the two towns as compensationfor the inconvenience from the Wetland Center. Such infrastructure development assistance should be providedbasedon broadconsultation with farmers inthese villages. Participatory consultation planand methodology and the budgetfor village infrastructure development projects are detailed inthe RAP. 21. Zncome Restoration: All aquaculturefarmers, fishermen andnetters would be offered the following income restoration opportunities: i)additional agriculture landwill offered for leaseto the displaced households basedon their requests, including a 10,000RMB cashbonus from Cixi City (Cixi City has an abundanceof available agricultural landdue the reclamation activities); ii) free vocational training to take advantage of the booming economic development and strong localjob market; and iii)eligibility for the local social insuranceprogram which i s usually not available to rural households. 22. Information Disclosure: The RAP has been disclosed locally and at the World Bank Infoshop, and all potentially affected householdshave been surveyed andconsulted. The draft RAPwas disclosed inthe World BankInfoshop inFebruary 2006 andthe updatedRAPwas submitted in April 2006. The affected households would be informed would be informedagain before the project starts at the appropriatetime, and the PMO andTownship government would support the affected farmers inreceiving their entitlements. 23. Zmplernentationand Monitoring:The Cixi Construction Bureau will be responsible for fundingresettlement activities incoordination with localgovernment officials.Theresettlement office of the NingboNWEPPMO will superviseresettlement. Resettlement funds will be channeledthrough the Cixi Construction Bureaudirectly to households and villages, thus reducing opportunities for delay or unauthorized commissions. Village committees will play an important role in monitoringresettlement activities. An independent monitoring institute will superviseresettlement activities twice a year as required by the Bank. An appropriate grievance system has beenformulated and will be set up to deal with any complaints. An independent resettlement monitor will be contracted to report on resettlement activities for Bank supervision missions. Consultation and Disclosure 24. Wide local consultation anddissemination of the project preparation documents and descriptions of the issueshave beencarried out since these are the primary means of informing stakeholders. Key stakeholdersinclude the Ningbo and Cixi City government agencies, the Andong andHangzhou Bay Economic Development Zones, the BridgeCompany, local research institutes investigatingHangzhou Bay issues, citizens andfishermen along the Cixi coastline, and local andinternational NGOs. With the Bank's assistance, the Cixi City Government organized two stakeholder workshops inJune andNovember 2005. Mayor and vice mayors of the Cixi City, key officials from Ningbo and Cixi government agencies, representatives from international and domestic NGOs, andprofessors from researchinstitutes and universities working on Hangzhou Bay wetland issuesparticipated the two stakeholder workshops, and heatedly debatedhow to pursuethe GEFproject inCixi. 45 25. The first workshop was designedto develop a "sustainable vision" for the GEJ? project. This workshop was successfulinterms of informingall stakeholders about proposedproject activities andmotivating all stakeholders to present their personalor agencies' views on the project. This workshop also decided that two studies on the constructed wetland and on the Wetland Center to be carried out to help stakeholders makescientifically sound decision. The secondworkshop was carried out by havingkey stakeholderscomment on preliminaryresults of the two studies. Results of the two studies and suggestionsof an internationally renown wetland scholar and practitioner provided scientific inputs for all stakeholders to reach an agreement on the proposeddesigns and the size of boththe constructed wetland andWetland Center. Both stakeholder workshops were recorded and broadcastedon local television channels. Inaddition, local newspapers have reportedmajor milestones inproject preparation. 26. Inaddition to these two stakeholder workshops, aninternational studytour inAugust 2005 providedan precious opportunity for key government officials from boththe Ningbo Municipal and Cixi City Governments, representativesfrom the Wetlands International and SCIES to learn international practices in wetland construction and conservation and to develop a shared vision on the design of the wetlands of their interests. 27. The final reports of the Studies on the Constructed Wetland andthe WetlandCenter were disclosed inthe World Bank Infoshop inFebruary and April 2006, andinNingbo and Cixi libraries and government websites inFebruary andApril 2006. 46 Annex 11:ProjectPreparationandSupervision CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT Planned Actual PCNreview August 18,2005 August 18,2005 InitialPID to Infoshop August 18,2005 August 18,2005 Initial ISDS to Infoshop September29,2005 September29,2005 Appraisal April 10,2006 April 4,2006 Negotiations May 2006 May 10-12,2006 BoardRVP approval June 15,2006 June 29,2006 Planneddate of effectiveness September 1,2006 Planneddate of mid-termreview December2008 Plannedclosingdate December2010 Key institutionsresponsiblefor preparationof the project: 1.NingboMunicipalDevelopmentandReformCommission 2. NingboMunicipalFinance Bureau 3. Cixi City Government 4. Cixi ConstructionBureau 5. Cixi Municipal Sewerage Company Bankstaff andconsultantswho workedonthe projectincluded: Name Title Unit GregBrowder Sr. EnvironmentalEngineer EASUR LixinGu Sr. UrbanEnvironmentalSpecialist EASUR JiangRu EnvironmentalSpecialist/Consultant EASEN ZhefuLiu Sr. SocialDevelopmentSpecialist EAPCO Alex Horne EnvironmentalEngineer Consultant ZhentuLiu Sr. ProcurementSpecialist EAPCO PeishenWang Sr. EnvironmentalSpecialist EAPCO Yi Dong FinanceAnalyst EAPCO MargaretPng Lawyer LEGEA Bankfunds expendedto date onprojectpreparation: 1. Bankresources:US$150,000 2. Trust funds: US$lOO,OOO 3. Total: US$250,000 EstimatedApproval andSupervisioncosts: 1, Remainingcosts to approval: US$25,000 2. Estimatedannualsupervisioncost: US$60,000 47 Annex 12: DocumentsintheProjectFile CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT World Bank PCN PID at PCNStage ISDS at PCNStage Minutes of PCNReview at PCN Stage PID at PAD Stage ISDS at PAD Stage Minutes of ISDS Review at PCN Stage Minutes of DecisionMeeting Minutes of Negotiation GEFPDF-B Proposal GEFReview Sheet for Pipeline Entry PDF-B Output Reports: 1) Environmental Baseline Study of the Cixi Coastal Area 2) FeasibilityStudy of Constructed Wetland 3) Conceptual Design of the EnhancedNatural Wetland Associated with the Environmental Education and ResearchCenter GEFProject Brief 48 Annex 13: Statementof LoansandCredits CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT Difference between expectedandactual OriginalAmount inUS$Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. ID Rev'd PO57933 2005 CN-TAIBASIN 61.30 0.00 0.00 0.00 0.00 61.00 1.85 0.00 URBANENVMT PO75730 2005 CN-HUNANURBAN 172.00 0.00 0.00 0.00 0.00 172.00 0.00 0.00 DEV PO73002 2004 CN-Basic Educationin 100.00 0.00 0.00 0.00 0.00 96.04 -3.96 0.00 WesternAreas PO84003 2004 CN-GEF 0.00 0.00 0.00 10.00 0.00 10.00 0.00 0.00 GUANGDONGPRD URBENV PO65035 2004 CN-Gansu& Xinjiang 66.27 0.00 0.00 0.00 0.00 61.37 7.50 0.00 PastoralDevelopment PO69852 2004 CN-WuhanUrban 200.00 0.00 0.00 0.00 1.00 198.00 125.12 0.00 Transport PO66955 2004 CN-ZHEJIANG 133.00 0.00 0.00 0.00 0.00 131.67 0.92 0.00 URBANENVMT PO65463 2004 CN- JiangxiIntegrated 100.00 0.00 0.00 0.00 0.00 99.00 8.46 0.00 Agric. Modern. PO75035 2004 CN- GEF-HaiBasin 0.00 0.00 0.00 17.00 0.00 16.55 0.96 0.00 Integr.Wat. Env.Man. PO77137 2004 CN-4thInland 91.00 0.00 0.00 0.00 0.46 90.55 2.33 0.00 Waterways PO77615 2004 CN-GEF-Gansu& 0.00 0.00 0.00 10.50 0.00 10.50 1.90 0.00 XinjiangPastoral Develop PO81749 2004 CN-HubeiShiman 200.00 0.00 0.00 0.00 1.00 199.00 0.00 0.00 Highway PO75728 2004 CN- 128.00 0.00 0.00 0.00 0.00 128.00 0.00 0.00 GUANGDONGPRD URENVMT PO75602 2004 CN-2ndNational 200.00 0.00 0.00 0.00 0.00 200.00 10.00 0.00 Railways(Zhe-Gan Line) PO67337 2003 CN-2ndGEFEnergy 0.00 0.00 0.00 26.00 0.00 14.60 20.97 0.00 Conservation PO40599 2003 CN-TIANJINURB 150.00 0.00 0.00 0.00 0.00 143.82 8.67 0.00 DEV I1 PO68058 2003 CN-YixingPumped 145.00 0.00 0.00 0.00 0.00 132.38 -0.44 0.00 StorageProject PO76714 2003 CN-2ndAnhui Hwy 250.00 0.00 0.00 0.00 0.00 238.50 29.83 0.00 49 PO70191 2003 CN-SHANGHAIURB 200.00 0.00 0.00 0.00 0.00 184.92 15.25 0.00 ENVMTAF'Ll PO70441 2003 CN-Hubei Xiaogan 250.00 0.00 0.00 0.00 0.00 116.33 -23.67 0.00 Xiangfan Hwy PO58847 2003 CN-3rd Xinjiang Hwy 150.00 0.00 0.00 0.00 0.00 92.81 19.47 0.00 Project PO64729 2002 CN-SUSTAINABLE 93.90 0.00 0.00 0.00 0.00 71.77 15.94 0.00 FORESTRY DEV. PROJECT PO60029 2002 CN-Sustain.Forestry 0.00 0.00 0.00 16.00 0.00 12.08 6.20 0.00 Dev(Natura1Forest) PO58846 2002 CN-Natl Railway 160.00 0.00 0.00 0.00 0.00 29.76 11.43 0.00 Project PO68049 2002 CN-Hubei 105.00 0.00 0.00 0.00 0.00 79.75 25.42 0.00 HydropowerDev in Poor Areas PO70459 2002 CN-Inner Mongolia 100.00 0.00 0.00 0.00 0.00 72.71 6.38 0.00 Hwy Project PO71147 2002 CN-Tuberculosis 104.00 0.00 0.00 0.00 0.00 71.97 -32.03 0.00 Control Project PO56199 2001 CN-3rd Inland 100.00 0.00 0.00 0.00 0.00 68.67 10.84 0.00 Waterways PO56516 2001 CN - WATER 74.00 0.00 0.00 0.00 0.00 29.04 9.34 0.00 CONSERVATION PO58845 2001 JiangxiI1Hwy 200.00 0.00 0.00 0.00 54.77 52.40 15.50 0.00 PO47345 2001 CN-HUAIRIVER 105.50 0.00 0.00 0.00 0.00 74.60 -30.90 0.00 POLLUTION CONTROL PO51859 2001 CN-LIAO RIVER 100.00 0.00 0.00 0.00 0.00 52.64 26.11 0.00 BASIN PO56596 2001 CN-Shijiazhuang 100.00 0.00 0.00 0.00 0.00 81.58 60.91 0.00 UrbanTransport PO45915 2001 CN-Urumqi Urban 100.00 0.00 0.00 0.00 0.00 46.16 46.16 0.00 Transport PO58843 2000 CN-GuangxiHighway 200.00 0.00 0.00 0.00 0.00 71.94 37.94 0.00 PO64730 2000 CN - YangtzeDike 210.00 0.00 0.00 0.00 0.00 99.91 99.91 0.00 StrengtheningProject PO42109 2000 CN-BEIJING 349.00 0.00 0.00 25.00 0.00 272.26 201.29 0.00 ENVIRONMENTI1 PO64924 2000 CN-GEF-BEIJING 0.00 0.00 0.00 25.00 0.00 23.11 21.51 8.15 ENVMT I1 PO58844 2000 3rdHenanProv Hwy 150.00 0.00 0.00 0.00 0.00 38.31 22.64 . 0.00 PO45910 2000 CN-HEBEI URBAN 150.00 0.00 0.00 0.00 0.00 107.53 54.53 0.00 ENVIRONMENT PO56424 2000 CN-TONGBAI 320.00 0.00 0.00 0.00 100.00 107.47 103.34 0.00 PUMPEDSTORA PO45264 2000 CN-SMALLHLDR 93.50 0.00 0.00 0.00 0.00 5.08 1.65 0.00 CATTLE DEV 50 PO49436 2000 CN-CHONGQING 200.00 0.00 0.00 0.00 3.70 140.43 83.13 0.00 URBANENVMT PO41268 1999 CN-Nat Hwy4Mubei- 350.00 0.00 0.00 0.00 0.00 37.87 31.21 0.00 Hunan PO57352 1999 CN-RURAL WATER 16.00 30.00 0.00 0.00 0.00 17.69 15.68 13.66 I V PO38121 1999 CN-GEF- 0.00 0.00 0.00 35.00 0.00 21.87 31.40 13.08 RENEWABLE ENERGY DEVELOPMENT PO58308 1999 CN-PENSION 0.00 5.00 0.00 0.00 0.00 1.09 1.06 0.00 REFORMPJT PO60270 1999 CN-ENTERPRISE 0.00 5.OO 0.00 0.00 0.00 1.80 3.30 3.08 REFORMLN PO46829 1999 CN-RENEWABLE 100.00 0.00 0.00 0.00 0.00 9.03 96.03 6.16 ENERGY DEVELOPMENT PO46564 1999 CN - Gansu & Inner 60.00 100.00 0.00 0.00 13.30 22.26 22.51 -13.24 Mongolia PovertyRed. PO46051 1999 CN-HIGHER EDUC. 20.00 50.00 0.00 0.00 0.00 5.69 7.31 0.00 REFORM PO03653 1999 CN-Container 71.00 0.00 0.00 0.00 18.61 2.71 21.32 1.27 Transport PO43933 1999 CN-SICHUAN 150.00 2.00 0.00 0.00 0.00 80.95 90.04 33.22 URBANENVMT PO42299 1999 TEC COOP CREDIT 10.00 35.00 0.00 0.00 0.00 33.18 -14.18 0.00 I V PO41890 1999 CN-Liaoning Urban 150.00 0.00 0.00 0.00 0.00 16.87 16.87 0.00 Transport PO36953 1999 CN-HEALTH IX 10.00 50.00 0.00 0.00 0.40 29.39 22.17 0.27 (ShiyongWang, Back- UP) PO56216 1999 CN- LOESS 100.00 50.00 0.00 0.00 0.00 10.77 12.91 -3.59 PLATEAUI1 PO51888 1999 CN - GUANZHONG 80.00 20.00 0.00 0.00 0.00 21.30 20.40 0.00 IRRIGATION PO51856 1999 ACCOUNTING 27.40 5.60 0.00 0.00 0.00 16.21 16.11 0.00 REFORM& DEVELOPMENT PO51705 1999 CN-FujianI1Highway 200.00 0.00 0.00 0.00 0.00 43.45 43.45 0.00 PO50036 1999 Anhui Provincial Hwy 200.00 0.00 0.00 0.00 9.60 20.23 29.83 0.00 PO49665 1999 CN-ANNING 90.00 30.00 0.00 0.00 0.00 12.93 12.10 0.00 VALLEY AG.DEV PO03606 1998 ENERGY 63.00 0.00 0.00 22.00 0.00 30.14 20.02 0.00 CONSERVATION PO03566 1998 CN-BASIC HEALTH 0.00 85.00 0.00 0.00 0.00 33.63 25.76 0.00 (HLTH8) PO03539 1998 CN - SUSTAINABLE 100.00 0.00 0.00 0.00 2.06 42.18 44.24 0.37 51 COASTAL RESOURCESDEV. PO36414 1998 CN-GUANGXI 72.00 20.00 0.00 0.00 10.19 58.34 67.53 36.27 URBANENVMT PO35698 1998 HUNANPOWER 300.00 0.00 0.00 0.00 145.00 21.52 166.52 0.01 DEVELOP. PO03619 1998 CN-2ndInland 123.00 0.00 0.00 0.00 37.00 14.13 51.13 4.94 Waterways PO03614 1998 CN-GuangzhouCity 200.00 0.00 0.00 0.00 20.00 98.98 118.98 98.98 Transport PO36949 1998 CN-Nat Hwy3-Hubei 250.00 0.00 0.00 0.00 0.00 21.15 21.15 0.00 PO37859 1998 CN-GEFEnergy 0.00 0.00 0.00 22.00 0.00 0.71 22.06 0.00 Conservation PO45788 1998 CN-Tri-Provincial 230.00 0.00 0.00 0.00 0.00 15.14 15.14 0.00 H W Y PO46952 1998 CN- FOREST.DEV. 100.00 100.00 0.00 0.00 0.00 21.97 -76.59 14.60 POOR AR PO49700 1998 CN- IAIL-2 300.00 0.00 0.00 0.00 0.00 1.21 1.21 1.21 PO51736 998 E.CHINNJIANGSU 250.00 0.00 0.00 0.00 86.00 33.39 119.39 16.97 PWR PO40185 998 CN-SHANDONG 95.00 0.00 0.00 0.00 1.40 20.07 21.47 15.60 ENVIRONMENT PO03590 997 CN - QINBA 30.00 150.00 0.00 0.00 0.00 3.16 6.55 3.91 MOUNTAINS POVERTY REDUCTION PO03654 1997 CN-NatHwy2Munan- 400.00 0.00 0.00 0.00 0.00 21.04 21.04 21.04 Guangdong PO36405 1997 CN - WANJIAZHAI 400.00 0.00 0.00 0.00 75.00 11.91 86.91 3.20 WATER TRA PO44485 1997 SHANGHAI 400.00 0.00 0.00 0.00 0.00 68.18 50.18 54.39 WAIGAOQIAO PO03650 1997 TUOKETUO 400.00 0.00 0.00 0.00 102.50 28.32 130.82 28.32 POWEMNNER PO03637 1997 CN-NAT'L RURAL 0.00 70.00 0.00 0.00 0.00 0.56 3.77 3.35 WATER 3 PO03594 1996 CN- GANSU HEX1 60.00 90.00 0.00 0.00 0.00 71.13 62.81 0.00 CORRIDOR PO03599 1996 CN-YUNNAN 125.00 25.00 0.00 0.00 19.48 30.16 51.40 15.45 ENVMT PO03602 1996 CN-HUBEIURBAN 125.00 25.OO 0.00 0.00 47.32 10.77 60.13 3.14 ENVIRONMENT PO34618 1996 CN-LABOR 10.00 20.00 0.00 0.00 0.00 5.48 7.61 0.00 MARKET DEV. PO40513 1996 2nd HenanProv Hwy 210.00 0.00 0.00 0.00 19.00 12.88 31.88 27.88 PO03596 1995 CN-YangtzeBasin 100.00 110.00 0.00 0.00 1.92 0.08 4.47 4.47 Water Resources Project 52 PO03603 1995 CN-ENT HOUSING& 275.00 75.00 0.00 0.00 57.46 37.63 92.94 14.60 SSR PO03639 1995 CN-SOUTHWEST 47.50 200.00 0.00 0.00 0.01 0.80 24.87 24.87 POVERTY REDUCTION PROJECT PO03540 1994 CN-LOESS 0.00 150.00 0.00 0.00 0.00 0.01 -0.67 0.00 PLATEAU PO03632 1993 CN-ENVIRONMENT 0.00 50.00 0.00 0.00 0.00 0.76 1.31 0.99 TECH ASS Total: 11,911.37 1,552.60 0.00 827.18 5,126.93 2,755.95 456.62 208.50 CHINA STATEMENTOF IFC's HeldandDisbursedPortfolio InMillions of USDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2002 ASIMCO 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 2003 Anjia 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 2004 Antai 40.00 0.00 0.00 30.00 0.00 0.00 0.00 0.00 2003 BCIB 0.00 0.00 11.60 0.00 0.00 0.00 0.00 0.00 1999/00/02 Bank of Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 2002 CDHChina Fund 0.00 10.92 0.00 0.00 0.00 0.00 0.00 0.00 2003 CSMC 0.00 9.45 0.00 0.00 0.00 8.92 0.00 0.00 2004 CUNA Mutual 0.00 12.00 0.00 0.00 0.00 1.47 0.00 0.00 1998 ChengduHuarong 5.61 3.20 0.00 6.25 5.61 3.20 0.00 6.25 1992 China Bicycles 4.50 0.00 0.00 0.00 4.50 0.00 0.00 0.00 2004 ChinaGreenEner 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 China I1 28.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 ChinaReLife 0.00 15.41 0.00 0.00 0.00 15.41 0.00 0.00 1994 ChinaWaldenMgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2004 Colony China 0.00 17.31 0.00 0.00 0.00 0.33 0.00 0.00 2005 DMK 0.00 4.00 0.00 0.00 0.00 3.00 0.00 0.00 2002 Darong 10.00 1S O 0.00 8.00 0.00 1S O 0.00 0.00 1995 Dupont Suzhou 6.23 0.00 0.00 0.00 6.23 0.00 0.00 0.00 1994 Dynamic Fund 0.00 7.79 0.00 0.00 0.00 6.13 0.00 0.00 2004 Fenglin 19.00 6.00 0.00 18.00 0.00 0.00 0.00 0.00 2003 Great Infotech 0.00 3.50 0.00 0.00 0.00 2.80 0.00 0.00 2002 HuarongAMC 9.00 2.5 1 0.00 0.00 9.00 0.01 0.00 0.00 2004 IB 0.00 52.18 0.00 0.00 0.00 52.18 0.00 0.00 2002 IEC 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 Jiangxi Chenming 0.00 12.90 0.00 0.00 0.00 0.00 0.00 0.00 1998 LeshanScana 3.46 1.35 0.00 0.00 3.46 1.35 0.00 0.00 53 2001 MaanshanCarbon 8.25 2.00 0.00 0.00 8.25 2.00 0.00 0.00 2001 MinshengBank 0.00 23.50 0.00 0.00 0.00 23.50 0.00 0.00 2001 NCCB 0.00 26.58 0.00 0.00 0.00 26.46 0.00 0.00 1996104 Nanjing Kumho 34.00 2.23 0.00 0.00 0.00 0.00 0.00 0.00 2001 New ChinaLife 0.00 13.21 0.00 0.00 0.00 5.83 0.00 0.00 1995 Newbridge Inv. 0.00 1.95 0.00 0.00 0.00 1.95 0.00 0.00 1997 Orient Finance 5.71 0.00 0.00 7.14 5.71 0.00 0.00 7.14 2003 PSAM 0.00 1.93 0.00 0.00 0.00 0.00 0.00 0.00 2003 SAIC 12.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2000 SEAFSSIF 0.00 4.50 0.00 0.00 0.00 1.02 0.00 0.00 2004 SIBFI 0.00 0.08 0.00 0.00 0.00 0.08 0.00 0.00 1998 ShanghaiKrupp 26.25 0.00 0.00 57.74 26.25 0.00 0.00 57.74 ShanghaiMidway 0.00 16.02 0.00 0.00 0.00 16.02 0.00 0.00 1999 Shanxi 12.61 0.00 0.00 0.00 12.61 0.00 0.00 0.00 1993 ShenzhenPCCP 3.76 0.00 0.00 0.00 3.76 0.00 0.00 0.00 2002 Sino Gold 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2001 Sino-Forest 5.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1995 SuzhouPVC 0.00 2.48 0.00 0.00 0.00 2.48 0.00 0.00 Wanjie High-Tech 12.27 0.00 0.00 0.00 12.27 0.00 0.00 0.00 1996 Weihai Weidongri 0.36 0.00 0.00 0.00 0.36 0.00 0.00 0.00 2004 wumart 0.00 4.32 0.00 0.00 0.00 4.32 0.00 0.00 2004 X ColonyChina 0.00 0.96 0.00 0.00 0.00 0.01 0.00 0.00 2003 XACB 0.00 19.94 0.00 0.00 0.00 3.25 0.00 0.00 2004 Xinao Gas 25.00 10.00 0.00 0.00 25.00 10.00 0.00 0.00 1993 Yantai Cement 3.13 0.00 0.00 0.00 3.13 0.00 0.00 0.00 2003 Zhengye-ADC 15.00 0.00 0.00 7.00 6.14 0.00 0.00 2.86 2002 Zhong Chen 0.00 5.00 0.00 0.00 0.00 5.OO 0.00 0.00 Total portfolio: 329.14 335.40 11.60 134.13 137.28 238.90 0.00 73.99 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. 2004 CCB-MS NPL 0.00 0.00 0.00 0.00 2003 Cellon 0.00 0.01 0.00 0.00 2004 ChenmingLWC 0.06 0.00 0.00 0.16 2004 ChinaGreen 0.00 0.00 0.01 0.00 2002 HuarongAMC 0.02 0.00 0.00 0.00 2002 IEC 0.00 0.00 0.01 0.00 2005 MSShipping 0.02 0.01 0.00 0.00 2004 NCFL 0.00 0.02 0.00 0.00 2005 NHC 0.00 0.00 0.05 0.00 2003 PeakPacific2 0.00 0.01 0.00 0.00 2004 SIBFI 0.00 0.00 0.00 0.00 2002 SML 0.00 0.00 0.00 0.00 2002 Sino Mining 0.01 0.00 0.00 0.01 2005 Vetroarredo 0.01 0.00 0.00 0.00 2002 Zhong Chen 0.00 0.00 0.00 0.03 Totalpendingcommitment: 0.12 0.05 0.07 0.20 Annex 14: Countryat a Glance CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT East POVERTY and SOCIAL Asia & Low- Vletnam Pacific Income Development dlamond' 2004 Population,mid-year(millions) 822 1870 2838 GNIpercapita (Atlas method, US$) 540 1280 5x) Lifeexpectancy GNI(Atlas method,US$billions) 44.6 2,389 1184 Average annual growth, 1998-04 T Population(%) 12 0.9 l.8 Laborforce (%) 17 11 2.1 GNI Gross per primary Most recent estlmate (latest year available, 1998-04) capita nrollment Poverty(%ofpopulationbelownationalpovertyline) 29 Urbanpopulation(Xoftotalpopulation) 26 41 31 Lifeexpectancyat birth(years) 70 70 58 Infant mortality(per1000livebirths) 19 32 79 Childmalnutritmn (56ofchihjrenunder5) 34 5 44 Accessto improvedwatersource Accessto an improvedwatersource(%ofpopulation) 73 78 75 Literacy(Ohofpopulationage754 90 90 61 Gross primaryenrollment (%ofschool-agepopulafion) 101 10 94 -Vietnam Male x)5 It3 x)1 ......... Lowincomegroup Female 97 1P 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1984 1994 2003 2004 Economlc ratios' GDP (US$ billions) .. 13.3 39.7 452 GrosscapitalformatiorVGDP 255 35.4 35.6 Exportsof goods andServiceslGDP 34.0 592 66.4 Trade Gross domesticsavingslGDP ...... 13.0 27.4 28.3 Grossnationalsavings/GDP .. 14.5 315 322 Current account balancdGDP -82 -4.9 -3.8 Interest paynents/GDP 0.6 0.8 0.7 Total debt/GDP ...... 152.3 39.9 38.4 Totaldebt serviceleuports .. 5.7 3.4 2.5 1 Presentvalue of debffGDP 34.6 Presentvalueof debffexports 582 Indebtedness 1984-94 1994-04 2003 2004 2004-08 (averageannualgrouth) GDP 5.9 7.0 7.3 7.7 7 5 -Vietnam GDP DercaDita 3.6 5.6 62 6.6 6.3 - - Lowincomeorou~ STRUCTURE of the ECONOMY I 1984 1994 2003 2004 (56ofGDP) Growth of capital and GDP (%) I Agriculture 27.4 22.5 21.8 15 hdustry 28.9 395 40.1 10 Manufacturing 14.9 20.5 20.3 Services ........ 43.7 38.0 382 5 0 Householdfinalconsumptionexpenditure 75.7 66.3 65.3 I ss 00 01 02 03 Generalgov't finalconsumptionexpenditure 8.3 6.3 6A 0 4 1 Importsof goodsandservices ...... 43.5 67.0 73.6 -GCF -GDP 1984-94 1994-04 2003 2004 (averageannualgrowth) Growth of exports and imports (%) 1 Agriculture 3.3 4.1 3.6 35 Industry 6.6 10.3 10.5 102 Manufacturing 3.4 112 n5 x).1 Services 82 6.0 6.5 7 5 Householdfinalconsumptionexpenditure 5.3 8.0 7.1 Generalgov't finalconsumptionexpenditure .... 4.0 72 7.8 Grosscapitalformation 24.9 W.2 14.1 105 Importsof goods andsewices . 18.6 18.0 25.3 252 55 Vietnam ~~ ~ ~ PRICES and GOVERNMENT FINANCE 1984 1994 2003 2004 Domestic prices Inflation (X) (56change) 15 Consumer prices 9.3 3.0 9.5 10 ImplicitGDP deflator V.0 6.7 7.9 5 Government flnance (%of GDP, includescurrent grants) 0 Current revenue 232 22.6 23.1 -5 Currentbudget balance 4.8 5.8 8.6 Overallsumlusldeficit -12 -2.0 -1.4 - --=GDPdellator -CPI I TRADE 1984 1994 2003 2004 (US$millions) Export and Import levels (US$ mill.) 1 Totalexports (fob) 438 4,054 20,l76 26,503 Rice 40,000 429 721 950 Fuel 866 3,821 5,671 Manufactures 1,355 lo,748 14,842 Total imports (cif) 923 6,509 25227 31954 Food Fuelandenergy 696 2,433 3,574 I Capitalgoods 1,772 7,9a 8,624 Export priceindex(2000=WO) lo1 x)5 lo7 98 9s 00 01 02 03 04 Importprice index(200QWO) 99 100 DB Exports Inports Terms of trade (2000=nO) lo3 lo5 lo1 BALANCE of PAYMENTS 1984 1994 2003 2004 (US$millions) Current account balance to GDP ( O h ) Exportsof goods andservices 5,337 23,439 30,363 6 T Importsof goods andservices 6,509 26,805 33,608 Resource balance -l,l78 -173 -3,366 -3245 Net income -77 -337 -815 -940 Net currenttransfers 26 l70 2239 2,484 Current account balance -1z9 -1,340 -1,942 -1,701 Financingitems (net) 914 18Q 3,870 2,381 Changes innet reserves 315 -472 -1,928 -680 98 99 00 01 02 03 04 1 Memo: Reservesincludinggold (US$ millions) 876 5,620 6,300 Conversion rate(DEC, iocaVUS) 1.0 lo,962.1 15,463.0 15,772.3 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$ millions) :ompooltion of 2003 debt (US$ mlll.) Total debt outstanding anddisbursed 55 24,799 15,8l7 7,374 IBRD 0 0 0 0 IDA 47 mi 2,472 2,78 Total debt service 2 306 805 777 IBRD 0 0 0 0 IDA 0 1 l7 27 Composition of net resourceflows Officialgrants Officialcreditors 2 m 1,373 1,8Q Privatecreditors 0 -29 -258 -738 Foreigndirect investment (net inflows) 62 449 3 8 Portfolio equity(net inflows) E:8.819 World Bank program Commitments 0 475 5 8 480 \ - IBRD E- Bilateral Disbursements 2 P6 567 255 3- IDA D Other Mltilatwal - F Private - Principalrepayments 0 1 2 8 >-IMF G- Short-term 56 Annex 15: Incremental Cost Analysis CHINA: GEFNINGBOWATER AND ENVIRONMENTPROJECT ProblemStatement 1. Unprecedented economic growth inEast Asia has resulted inrapidurbanization, especially incoastal cities. The urban population concentration incoastal regions has causedthe seas of East Asia to largely bear the brunt of the environmental impact of this development. The result is that municipalpollutionof East Asia's seas, estuaries andrivers i s a severe problemthat i s well-recognized by the countries in the region, particularlyChina. In addition, the rapid population growth incoastal cities such as Ningbo i s makingplanning, financing, and operation of utility services such as water and wastewater very challenging. 2. Non-point source pollutionfrom urban and agricultural run-off i s also a large and growing problem, and a significant contributor to marine pollution. Coastal wetlands provide natural purificationfor the run-off before it flows into the sea, as well as an important habitat for migratory birds and marine life. Knowledge of the important eco-systemfunctions providedby wetlands i s lackingthroughout East Asia. There i s a clear need to increase awarenessand mobilize public opinion to preserve coastalhabitats andreduce land-basedsources of pollution. Baseline Scenario 3. Many of the trends identifiedabove -increased urbanization particularly incoastal cities, wetland degradation, and pollutionof the sea - are unavoidable inthe short term but the extent andpace can be managed. Inthe baseline scenario, i.e. no World Bankproject inthe Ningbo coastal area, these trends will continue, as will Ningbo's challenges with long-term wastewater treatment. Moreover, important opportunities to conserve wetland habitat, promote environmental education, and disseminateknowledge will be foregone. GEFAlternative Scenario 7. Under the GEF alternative scenario, IBRDfinancing would support Cixi City waste water collection and treatment investments. However, lack of localexperience with innovative solutions and concerns about cost would limit the scale of Bank investments to conventional treatment facilities. GEFco-financing would support a further enhancement of the Cixi wastewatercomponent of the NWEP.With GEF support, Cixi would utilize the constructed wetland to provide tertiary treatment for the North wastewater treatment plant.It would also establish a Wetland Center with a total area of 43.5 km2to protect andconservethe coastal wetland areas. Finally, GEFfunds will be usedto support the operation of the Wetland Center. 8. The IBRD-financedNWEP includes the following wastewater comDonent: Cixi Wastewater (US$128.4 million): The component includes: i)two wastewater treatment plants, one located inthe north of Cixi (the North WWTP, 100,000 mYday) and one inthe east (50,000 m3/d); andii)associatedcollection system mains and link sewers. The proposedtreatment process for bothWWTPs i s a modifiedA20process, with conventional chemical coagulation/ filtration methodfor tertiary treatment. 57 9. The GEFenhancedNWEPfurther adds the following components: 10. GEFComponent 1- Constructed Wetland For Tertiary Treatment (US$7.12 million). This component will finance a constructed wetland for tertiary treatment for the NorthWWTP. The constructed wetland area i s approximately 86 ha and includes a combination of subsurface and surface flows and will be design to maximizeecological habitat while meeting the required discharge standards. Cixi Municipal Sewerage Company (CMSC) will be the implementing agency andfinancing will be providedthrough a combination of sources including IBRDloan under NWEP, CMSC counterpart funding, and a GEFcontribution of US$l.O million. 11. GEFComponent 2: Establishmentof aWetland Center (US$8.0 million) This component will finance the creation a43.5 km2Wetland Center includingan environmental education andresearchbuildingand facilities, which will help Cixi reduce non-point water pollution into Hangzhou Bay. The Wetland Center will also promote environmental education relatedto wetland conservation and the importance of protecting the marineenvironment, as well enhanceexistingdegradedcoastal habitat. The component will be implemented by the Cixi Wetland Center Management Company, andwill be financed through counterpart funding providedby the Cixi City government, Ningbo Municipal Government, and a GEFcontribution of US$2.0 million. 12. GEFComponent 3: DesignandManapement Assistance (US$2.0 million) The Ningbo andCixi implementation agencies have good expertise inproject managementand construction, but understandably do not have the ecological expertise necessary to independently design of the constructed wetland and Wetland Center, and to manage the Wetland Center. The GEFproject will therefore finance the following three activities: i)engineering design of the Constructed Wetland and the Wetland Center; ii)Management Assistance for the Wetland Center for four years; andiii)Training andDissemination of Project experience. Management assistancei s expectedto be providedby a consortium of NGOsAJniversities. The estimated cost of this component i s about US$2million and will be fully supported by the GEF grant. IncrementalCosts 13. As discussedinthe Baseline Scenario section above, without IBRDandGEFsupport, the no-project scenario would prevail. Inthe GEFAlternative scenario, the additional costs would be $128.4 million investment under the Cixi Component of NWEPplusthe $17.1 million under the GEF-NWEPproject. 15. There i s some overlap between the cost estimates under NWEPand GEF-NWEPfor tertiary treatment at the North Cixi Wastewater Treatment Plant. Cost estimates under NWEP for the North Cixi Wastewater Treatment Plant assumeda conventional tertiary treatment with a capital cost of $1.1 million. The capital costs for the constructed wetland under GEF-NWEPare around US$7.1 million. The higher capital costs for the constructed wetlands are due to two factors: i)the extensive earthworks involved increating a 86 ha constructed wetland; and ii)the wastewater needs to be pumped about 2.1 kms to the site. The constructed wetland, incontrast, 58 has lower operational costs and simplerobust operational requirements, as well as providing ecological habitat, reducing nitrogen levels below the effluent standards, and potentially removingnon-conventional pollutants such as heavy metals. The constructed wetland i s thus more likely to meet the discharge standard andcontribute to the reduction of pollutioninto international waters, as well as demonstrating low-operational cost treatment technology. 16. The incremental cost for this component is therefore conservatively estimated at US$134.4 milliong,of which GEF will provide US$l.O million. 17. Components 2 and 3 of the GEFproject were not includedinthe NWEPproject, nor previously contemplated by the Cixi City Government. Component 2 cost estimates do not include the cost of land contributed by the Cixi City government, which i s significant. The successfulmanagement and operation of the Wetland Center will serve as an international show case for sustainable use and wetland conservation for China andthe East Asia Region. The incremental costs are conservatively estimatedat US$lO.O million, of which GEFwill provide US$4.0 million. 18. The total incremental cost for the project i s $144.4 million ($134.4 million for Component 1 plus $10 million for Components 2 and3) of which GEFwill provide$5.0 million. The following table summarizes the incremental costs andbenefits for the project: 1.No 0.0 None None project 2. GEF 1. Cixi $134.4 (1)Effluentdischarge (1)Pollution Alternative: wastewater meets Class 1A reduction to LMEs; NWEPand with standards; (2) Demonstration GEF-NWEP constructed of innovativelow wetland operational-cost treatment; (3) Additional ecological services; 2. Wetland $10.0 (1)Protection of Cixi's (1)Pollution Center coastal ecology reduction to L M E s (2) Increasedpublic awareness of L M E s 9 The total cost of the Cixi Wastewater project is $134.4 calculatedas $128.4 million(total cost of componentunder NWEP) minus$1.1 million(estimateof conventional tertiary treatment inNWEP)plus $7.12 million (cost of constructedwetland at North WastewaterTreatment Plant inGEF-NWEP). 59 (3) Biodiversity I conservation (migratory birds) i (4) Showcasefor sustainable coastal andmarine conservation/ Total Baseline US$ 0 million ~ I GEFAlternative US$ 144.4 million I I Increment US$ 144.4 million 60 Annex 16: STAPRosterReview CHINA: GEFNINGBOWATER AND ENVIORNMENTPROJECT Reviewed By: Dr.Eric Wolanski, PhD,DSc (Hon. Causa), FTSE, FIEAust Australian Instituteof Marine Science, PMB No 3, Townsville MC, Queensland4810, Australia Telephone: (07) 47534243, Facsimile (07) 47725852 E-mail: e.wolanski @aims.gov.au Reviewed on: March 10,2006 Note: Review has been undertakeprior to the appraisal mission. The Project Document has beenmodified to taken into account both the Reviewer's comments and the changes made duringappraisal. 1.STAPExpert'sComments A. Technicalcomments The document details a proposal for tertiary treating wastewater usinga constructeda freshwater wetlands out of reclaimed landintidal wetlands inHangzhou Bay, andfor restoring an adjoining, degraded, brackish-water, saltmarsh, wetlands. This proposal i s praiseworthy because the scheme would be beneficial to water quality inHangzhouBay, to wildlife (especially migratory birds andmarineorganisms), and will be usedas an educational centre as well as for eco-tourism. The schemei s expectedto be economically self-sustainable after a few years. There are no obvious or significant environmental negatives. The document is well written. The proposal i s to be encouraged. Ihavethefollowingcommentsandsuggestions. a. The proposal i s for levelingthe restoredtidal wetlands (A3 and A5) andfor creating a freshwater wetland at site Al. There i s considerable literature (e.g. see the review by Wolanski andRichmondEncyclopediaof Ecology: Ecological Engineering: Estuary restoration. rns # 55 inthe forthcomingElsevier Encyclopedia of Ecology) that shows that levelingi s not enough to restore the natural ecology beside the plants. There i s also a needfor recreating a drainage pattern approximating that of a natural tidal creek drainingasaltmarsh. Experience further suggeststhat this creek shouldbe meandering inorder to attract crustaceans.That is a simple engineeringtask; it does make ahuge difference to the ecology. b. The proposal will only succeedinthe long-term inreducingthe Pnutrientloadin Hangzhou Bay if the deadplants from the freshwater wetland (site Al) are annually removedanddisposed on land (they couldbe usedfor fertilizers). Thus if Pi s the nutrient causing eutrophication incoastal waters the proposal should be modifiedsuch as the plants from site A1 are annually removed (maybe on a rotationbasis so that birdlife can still remain). (If Ni s the nutrient causing eutrophication then there i s problemno 61 problem as the plants should convert the Ninto Ngas). Otherwise, after a few years necessaryfor the plants to establishtheir below groundbiomass, this wetland will simply start to export nutrients to HangzhouBay. While some nutrients (N)are lost by respiration, others are not. This is a basic principle of ecohydrology, a program supported by UNESCO. See http://www.unep.or.jp/ietc/publications/freshwater/watershed manual/index.asp C. Since the wetland area i s still very small, canthe visitor center be built outside site Al, for instance insite A4. This i s necessarybecause250,000 people yearly visiting the site will frighten the birdlife away andthus negatethe ecotourism benefits that are needed for the scheme to be economically self-sustained. d. Some of the informationinthe proposal is contradictory. Inpage 17 for instancethe outcome indicator i s removingabout 640 MT of Nand 640 MT of phosphorus. Onpage 36 these amountsbecome, respectively, 550 and600tons. The discrepancy is not huge but puzzling. e. Onpage 36, the US$14user fee per visitor is incorrect; that should be US$1.40 f. There is considerable discrepancy withinthetext as to the areaof the freshwater wetland Al. Inthe map, basedon the scale shown on the map, the areais 4.4 km'. Inthe text however this area i s listedas havin an area of 300 ha (see page4; this is 3 km'), 60 ha (page 3; this i s 0.6 km') and42 km (page 39). Since 33 ha (0.33 km') are lost for the Q visitor centre andparking, the true size of the wetlands i s unknowninthis report. This is notjust of academic interest -it is fundamental to calculate the residencetime of wastewater inthe wetland. A residencetime T of 1week i s proposed (page 19). This figure i s acceptable although experience elsewhere suggests that 2 weeks i s better for more thorough water treatment. Hence the surface area A of the actual wetland (minus the visitor centre and parkinglot area) should be A> T Q/h where hi s the mean water depth (reported inthis proposal to be 0.6 m) and Q is the wastewater flow rate (50,000 m3d-'). Inview of the discrepancy inthe value of A, this needs checking before final approval. It is imperative that this World Bank-sponsored project adopts best science-basedengineering practice, and the minimumresidencetime should be one week, though two weeks i s preferable. A residence time less than one week i s not acceptable to treat wastewaterby wetland filtering - inthat case the wetland area has then to be increasedor the wastewater discharge reduced. B. Generalcomments a. Global environmental benefits and/or drawbacks of theproject. This project has great environmental benefits inessentially usingecohydrology, which is advocatedby UNESCO (see http://www.unesco.org/water/ihp/ihp-six.shtml) to gain social, economic, and environmental benefits from wastewater. Drawbacks are likely if the residencetime i s too small (less than 1week minimum). b. How the.projectfitswithin the context of the goals of GEF, as well as its operational strategies,program priorities, GEF Council guidance and the provisions of the relevant conventions. 62 Idonotknowtherelevantconventionswellenough.Icommentedonthetechnology,the engineering, and the science. c. Regional context. As discussedinmy new book (E. Wolanski (2006). The environment inAsia Pacific harbours. Springer, Dordrecht, 497 pp), nearby coastal waters in China have practically collapsed ecologically. Thisproject i s excellent regionally as startingto apply remediation measures. d. Replicability of theproject (added valuefor the global environment beyond the project itself. The successful demonstration of the ideas and concepts behindthis project find wide replicability all over the Asia Pacific. e. Sustainability of theproject. The system will require trainingof staff and maintenance of the wetlands. & Linkages to otherfocal areas. g. Linkages to other programs and actionplans at regional or sub-regional levels. IamawareofthePEMSEAproject-thisnewprojectwilladdenormouslytothevalue of PEMSEA which i s too much reliance on engineering andnot enough life sciences and no use of the ability of usingnatural processes(e.g. filtering by wetlands) to enhance the robustnessof the aquatic ecosystem. As my new book (E.Wolanski (2006). The environment in Asia Pacific harbours. Springer, Dordrecht, 497 pp) shows, such engineering approaches(the `Dutch' approach) have failed to deliver a healthy water environment to 100million people inthe Asia Pacific. This new project i s excellent in adding the major new idea of usingnatural processesto reduce eutrophication risks in coastal waters while providingsignificant social, economic, andenvironmental benefits. h. Other beneficial or damaging environmental efsects. No damaging environmental effects. i. Degree of involvement of stakeholders in the project. Looks very good from what Iread. j . Capacity-building aspects. Not clear who does the training and who gets trained k. Innovativeness of theproject. Sound. 63 2. Responsesto STAPExpert's Comments The following table summarizes the responses to the seven technical andthree general comments raised b y the STAPexpert. STAP Reviewer Comments Responses Literature shows that leveling andplanting i s We agree that the restorationof mainnaturaltidal creeks not enoughto restorethe naturalecology i s necessary to restorethe ecology of Plots A3 and A5. besidethe plants. There is also aneedfor Theproject has confirmed that maintidal creeks are recreatinga drainagepatternapproximating presentand are functional. However, the project will rely that of anatural tidal creekdraining a salt on tides to recreatesecondaryandtertiary drainage marsh. Experiencefurther suggests that this channels. creek shouldbe meanderinginorder to attract crustaceans. The proposal will only succeed inthe long- The largeA1 wetland has wildlife (migratory birds)as term inreducing the P nutrientload in its mainfunction with nutrient and other contaminant HangzhouBay if the deadplantsfrom the removal as a secondarygoal. freshwater wetland (site Al) are annually (1) For this project, removalofphosphorusis not a removedanddisposedon land (they could be major needat Cixi sincethe flows from A1 will usedfor fertilizers). Thus ifPis the nutrient almost directly enter the oceanwhere nitrogen i s the causingeutrophication incoastalwaters the primarily nutrient simulating new nuisancealgae proposal shouldbe modified suchas the production andeutrophication ingeneral. plantsfrom site A1are annuallyremoved Denitrification canpermanentlyremove about 200 (maybe on a rotation basisso that birdlifecan g/m2/y (Horne, 1995) of the nitrate pollutant without still remain). (IfNi s the nutrientcausing the needto harvest. eutrophication thenthere is no problemas the (2) The proposeddesign i s basedon one usedin plants shouldconvert the NintoNgas). California for about 15 years for mixed wildlife- nutrient removal wetlands with comparablesize (100-220 ha) to that proposedfor Plot Al. Recent researchshows that these wetlands havebeenable to overcomethe needfor biomassremoval and disturbanceof the wildlife (Reilly et al., 2000; Bachand& Home, 2000 a-b; Mitchet al., 2000). Insteadof removing the deadvegetation, the peat accumulatedby the deadplants is designed to becomethe main repository for the sequestration and/or destructionof contaminants (Horne, 2000; Horne & Fleming-Singer 2006). (3) Vegetation removal is not economically feasible primary becausethe Pcontent of plantsis about 0.3% as dry weight and about 0.03% of fresh weight. Thus massiveamounts of plant matter would haveto be harvestedinthe 300 ha of Al. Even without vegetationremoval, some permanent P-removal will occur - 1g/m2/y (the one gramrule of Richardson, Duke University, 2000) andthis will be a benefit. 64 Sincethe wetland area is still very small, can Underideal circumstancesthis would bedesirable. the visitor center be built outside site Al, for However, there i s no landavailable inthe adjacentplots instanceinsite A4? This is necessary because suchas A4. The project views these areas as abuffer 250,000 peopleyearly visiting the site will zone betweenfull development andthe freshwaterA1 frightenthe birdlife away andthus negatethe andits tidal component.Development inthese areas will ecotourismbenefits that are neededfor the be kept to a minimumwith the encouragementof open scheme to beeconomically self-sustained. areas betweenbuildings. Some of the information inthe proposalis The data is inconsistency.The 640 M T of Nand640 contradictory. Inpage 17for instancethe M T of phosphorusare referring nutrient removalto be outcome indicator i s removing about 640 M T achievedby boththe constructedandenhancednatural of Nand 640 M T ofphosphorus. Onpage 36 wetlands. However, the 550 MT of Nand600M T of these amounts become, respectively,550 and phosphorusare referring nutrient removal to be achieved 600 tons. The discrepancyi s not hugebut by the constructedwetland only. puzzling. PostAppraisal Note: Annex 3 contains the updated pollutionreductiontargets. Onpage 36, the US$14 user fee per visitor Updated. shouldbeUS$1.40 There is considerablediscrepancywithin the The estimated4.4 km' basedon the scale of the map is text as to the area of the freshwater wetland correct but it includesabout 1.07 km' water surfaces of Al. Inthe map, basedonthe scale shownon canals surroundingPlot Al. So the actual size of Plot A1 the map, the area is 4.4 km'. Inthe text i s about 3.33 km', i.e. 333 ha. The 300 ha on Page4 however this area i s listed as having an area refers to the wetland area to be enhanced, which of 300 ha (see page4; this is 3 km'), 60 ha excludesthe area of the Environmental Center, which is (page 3; this is 0.6 km') and42 km' (page about 33ha. The 60 ha on Page 3 refers to the size of the 39). Since33 ha (0.33 km') are lost for the constructedwetland for the northWWTP. The 42.5 km' visitor centre andparking, the true size of the refersto the total area of the enhancednatural wetland wetlands is unknown inthis report. areas, including Plots Al, A3, A5, andmudflat andopen water areas marked inthe map. PostAupraisal Note: The size of the NorthWWTP constructedwetland has beenincreasedto 86 ha, andthe EastWWTP constructedwetland has beendroppedfrom the GEF project. A residencetime T of 1week is proposed ~ We agree that one week hydraulic residencetime is not (page 19). This figure is acceptablealthough ideal. As noted, the removal of contaminants is experienceelsewheresuggests that 2 weeks i s secondaryto migratory birdhabitat inPlot A1andthe better for morethorough water treatment. nearfuture contaminant loading (and thus flow) for Plot Hencethe surfaceareaA of the actual A1is yet to be determined(the flow rate of 50,000 m3d'' wetland (minusthe visitor centre andparking i s the flow rate for the east constructedwetland). The lot area) shouldbe project will consider the reviewer's suggestionwhen A> T Qlh determining the flow rate of water to be pumpedinto where his the meanwater depth(reportedin Plot A1fromneighboring canal. this proposalto be 0.6 m) andQ is the wastewaterflow rate (50,000 m3d-'). Inview of the discrepancyinthe value of A, this needs checkingbeforefinal approval. 65 General Comments Global environmental benefits andor See the above response. drawbacks of theproject. Drawbacks are likely if the residencetime i s too small (less than 1week minimum). Sustainability of theproject. Sufficient training of staff and maintenance of the The system will require training of staff and wetlands are well considered inthe project. maintenance of the wetlands. Capacity-building aspects. Qualified consultants will be hired competitively to train Not clear who does the training and who gets the management and operating staff of the constructed trained wetland. The NGOConsortium i s expected to train local staff inthe management of the Wetland Center. Reference 1. Bachand, P. A. M. & A. J. Home. 2000a. Denitrification in constructed free-surface wetlands I.Very high nitrate removal rates in a macrocosm study. Ecological Engineering 14: 9-15. 2. Bachand, P. A. M. & A. J. Horne. 2000b. Denitrification in constructed free-surface wetlands 11.Vegetation community effects. Ecological Engineering 14:17-32. 3. Horne, A. J. 1995. Nitrogenremoval from waste treatment pond or activated sludge plant effluents with free-surface wetlands. Wat. Sci. Tech. 31: 341-351. 4. Horne, A. J. 2000. Phytoremediation by Constructed Wetlands. Pp. 13-60 in N. Terry (Ed.) Phytoremediation of Contaminated soil and Groundwater. CRC Press. Boca Raton, Florida. 5. Horne, A. J. & M. Fleming-Singer. 2006. Phytoremediation using constructed wetlands: An overview.pp 329-376 in M.Fingerman & R. Nagabhushanam (eds.) Bioremediution ofAquatic and Terrestrial Ecosystems. Science Publishers Enfield (NH)USA. 6. Mitsch, W. J., A. J. Horne & R. W. Nairn. 2000. Nitrogen and phosphorus retention in wetlands - ecological approaches to solving excess nutrient problems. Ecological Engineering 14: 1-7. 7. Reilly, J. F., A. J. Horne & C. D. Miller. 2000 Nitrogen removal in large-scale free- surface constructed wetlands usedfor pre-treatment to artificial recharge of groundwater. Ecological Engineering 14:33-47. 8. Richardson, C.J., P-Vaithiyanathan, R.J. Stevenson, R.S. King, C.A. Stow, R.G. Qualls, and S.S. Qian. 2000. The ecological basis for a phosphorus (P) threshold in the Everglades: Directions for sustaining ecosystem structure and function. Duke University Wetland Center, Duke University, Durham, North Carolina. 66 Annex 17: StrategicPartnershipInvestment Fund CHINA: GEF-NingboWater and Environment 1. In 1995, twelve EastAsian countries came together with acommon vision to ensurethe sustainabledevelopment of their sharedwaters.loThis partnershipof governments, with the support of the GlobalEnvironment Facility (GEF), UnitedNations Development Program (UNDP), andthe International Maritime Organization (IMO), createdthe Partnerships in Environmental Managementfor the Seas of East Asia (PEMSEA). One of the main achievements of the countries through their contribution to PEMSEA has been the development and adoption of the Sustainable Development Strategyfor the Seas of East Asia (SDS-SEA), which was endorsed by each of the twelve countries inDecember 2003. The SDS-SEA i s significant as it i s the first, and the broadest, partnership agreementinthe region to address the managementof the regional seas. One of the highest priorities for action inthe SDS-SEA i s the reduction of land-basedpollutionthat has an impact on the marine environment. 2. The countries of East Asia have recognized that a coordinated andinnovative approach with a strong focus on scaling up investment i s urgently neededto implement the SDS-SEA. GEF's new operational modality-the Strategic Partnership-has providedEast Asia with an opportunity to undertake the necessaryactions with coordinated support from GEF andthe World Bank. The WB/GEF Partnership Investment Fundfor Pollution Reduction in the Large Marine Ecosystems of East Asia (the Fund), an US$SO million grant financing facility managed by the World Bank, was approved by GEFinNovember 2005. The Fundforms the key financing arm of the East Asia Seas Strategic Partnership. 3. The objective of the Fundi s to scale-up investments incoastal land-based pollution reduction inEast Asia through co-financing of projects that remove technical, institutional, and financial barriers which currently limit efficient investment inpollution reduction. The US$SO million grant financing providedby GEFi s expected to leveragebetweenUS$SOO million and US$1.5 billion incounterpart financingfrom the World Bank and other sources, including the public and private sectors. The Fundhas adopted a coordinated approach to monitoringsuch that the contribution of all projects to the overall objectives of the Fundcan be measured. Tables 1 and 2 below show the overall Fundindicators and the expectedcontributionof the project. 4. The GEF - Ninrrbo Water andEnvironmentProiect i s the first project to be financed by the Fund. This project provides a significant environmental enhancementto the IBRD-financed Ningbo Water andEnvironment Project (NWEP), which was approvedby the World Bank in March2005. UnderNWEP, Cixi City, which i s located on the coast of HangzhouBay andthe East China Sea, will construct two wastewater treatment plantswith a total treatment capacity of 150,000 m3/d. This project will enhance Cixi's wastewater treatment strategy and coastal management through the provision of a constructed wetland to provide tertiary treatment at the largest of the two wastewater treatment plants. This pilot i s expected to prove the technical and economic viability and increasedenvironmental benefits of wetland treatment compared with the chemical tertiary treatment process more conventionally usedinChina. Inaddition, the project loThe original twelvecountries includedBruneiDarassalam, Cambodia, China, Indonesia, Japan, DPR Korea, R.O. Korea, Malaysia,Philippines,Singapore,ThailandandVietnam. Three additional countriesjoined in2005 (Lao PDR, Myanmar and Timor-Leste)makingacurrent total of 15. 67 will support innovations incoastal managementinChina through the conservation of anatural coastal wetland for non-point source pollution control, establishment of a wetland education center, and policy reform to support coastalwetland conservation and management. 5. ReplicationPotential: Finding simple andeffective methods for wastewater treatment and buildingpublic support for pollutioncontrol andenvironmental conservation inChina, and throughout the region, i s critical. The overwhelming majority of Chinese -- 94 percent -- live in the easternthird of the country. Of China's 1.2 billion people, over 677 million (56 percent) residein 13 southeast and coastal provinces and two coastal municipalities -- Shanghai and Tianjin. Along much of China's 18,000 kilometers of continental coastline, populationdensities average over 600 per square kilometer. Much of the wastewater generatedalong the coast i s untreatedand flows into the sea, resulting inmassive and frequent redtides, adverse impacts on marine fisheries and aquaculture, and consequentpublic health problems. 6. Examples of innovate wastewater treatment and pollution reduction methods, if properly disseminated andreplicated, will have a significant impact on reducing pollution inthe L M E s of East Asia. The GEF-supported constructed wetland will provide tertiary treatment for the new North Cixi wastewater treatment plant. It will reduceBOD and suspendedsolids, as well as nutrients such as phosphorous andnitrogen, which are the key culprits inthe redtide phenomena. Constructed wetlands can also be usedas the primary treatment process incertain situations. Constructed wetlands offer the advantages of generally low capital costs (assuming landcosts are not prohibitive), robust treatment performance, low operating costs and simplicity of operations, and environmental amenities. Plot A1 of the Wetland Center will also be designed to reducenon-point source pollution. Non-point source pollution from agriculturaland urban run-off i s amajor contributor to pollutant loadings into East Seas. The Wetland Center will demonstrate that wetlands can be integrated into both the urban andrurallandscapes to provide wildlife habitat, aesthetic amenities, as well as provide purificationof non-point sources. 8. ReplicationStrategy: The project will fund a multi-prongedreplication strategy, including: (i)a series of workshops inNingbo to share experiences for both the constructed wetland andnatural wetland conservation. Stakeholders from throughout China, including other coastal cities and national environmental authorities, will be invited. The workshop material will be inbothinEnglish and Chinese, and representativesfrom PEMSEA will be invitedto attended and helpdisseminate the experience and workshop documents; (ii) Ningbo representativeswill participate inconferences sponsoredby GEFor PEMSEA, such as the biannualGEF InternationalWaters Congress and the PEMSEA East Asia Seas Congress; (iii) proposed the Wetland Center will serve as acomprehensive source of information as people from throughout China andEast Asia can visit the center and learn more about the GEF-supported activities in Ningbo. Incollaboration with GEFandPEMSEA, the environmental education center can also present exhibits about other efforts throughout East Asia to reduce marine pollution andprotect marineeco-systems.The WetlandCenter will be akey replicationmechanismfor the project. Inaddition to the project-funded replication activities describedabove, the overallProgram will also include separately funded-activities to disseminate and promote the adoption of various technologies andpilot projects financed under the Program. 68 A4 8 & 8 24 1g 1g 8 s CI Y Y 0 z 0 z g: e: a e: =a a 42 24 s T t II :ntProject contrik tion to Fundtargets Target Indicators Explanation 2010 Total investmentincoastal wastewatertreatment ($ million) US$128Million by Cixi City Governmentthroughthe projectand NWEP. CumulativeBOD: 2010: 20,000 2015: 60,000 Pollution Reductionby two wastewater treatment CumulativeT-N: plantsconstructedunderthe project andNWEP Reductionindischarge of BOD to seas of East 2010: 4,000 (including tertiary treatment providedby Asia (tonnes) 2015: 14,000 constructedwetland); AndenhancedwetlandinPlot A of Wetland CumulativeT-P: Center for non-pointpollution. 2010: 500 2015: 1,500 ResultIndicators Removalofbarriersto pollution reduction: 1. Constructedwetlandas a form of tertiary Numberof cost-effectivetechnologies/ wastewater treatment. techniquesdemonstratedinspecific country 2 contexts 2. Enhancednaturalwetlandfor non-pointsource I I II .. . . .removalof nitrogen) VetlandCenter with associated IFinancingthroughrevolving funds: Number of countriesthathaveestablisheda revolving fund Not applicableto this project. Minimumamountofcapitalinvestedin revolvingfunds ($ million) Not applicableto this project. IDisseminationandreplicationof demonstratedtechnologies, techniquesandmechanisms: Products: Numberof publications WetlandCenter Management Consultants Expectedto Be Active inResearchandPublication Products: Number of ro'ect websites Establishproject website Events: Numberof country workshops Participateinfour domestic workshops Organizeone domesticworkshop Events: Numberof regional Participateinfour internationalworkshops conferencedworkshoisparticipatedin 4 Mainstreamingof SDS-SEA inWorld BankEAP operations: Number of StrategicPartnershipCouncil meetingsparticipatedinby World Bank Fundlevelindicator,not applicableto iridividual staff (eventslyear) projects. Number of World BankCAS which include Fundlevel indicator, not applicableto individual Fund projects. 70 MAP SECTION 118° 119° JIANGSU 120° 121° 122° RUSSIAN Tai Hu SHANGHAI FEDERATION 31° 31° HEILONGJIANG ANHUI Area of Main Map Haining MONGOLIA Sea JILIN of HANGZHOU CixiCixi 30° LIAONING D.P.R. OF Japan 30° Shaoxing KOREA NINGBO MONGOL BEIJING Tonglu NEI BEIJING TIANJIN JAPAN Sheng Xian HEBEI REP. OF KOREA Jiande Xiangshan SHANDONG Yellow SHANXI Sea Lanxi QINGHAI NINGXIA JIANGSU 29° Qu Xian 29° GANSU SHAANXI HENAN Z H E J I A N G SHANGHAI E a s t Linhai ANHUI C h i n a SICHUAN ING HUBEI ZHEJIANG S e a JIANGXI Lishui CHONGQ HUNAN Yunhe FUJIAN GUIZHOU JIANGXI 28° Longquan Wenzhou 28° TAIWAN YUNNAN GUANGXI GUANGDONG P h i l i p p i n e BRIDGE UNDER CONSTRUCTION HONG KONG MACAO S e a FUJIAN ROADS UNDER CONSTRUCTION LAO VIETNAM PLATFORM ALREADY BUILT P.D.R. HAINAN PHILIPPINES 118° 119° 120° 121° 122° 30°26'N CHINA GEF NINGBO WATER ENVIRONMENT PROJECT WETLAND CENTER COMPONENT 30°24'N Hangzhou Bay NATURAL WETLAND AREA PARCEL BOUNDARIES 30°22'N WETLAND CENTER WETLAND CENTER Constructed Wetlands ROAD UNDER CONSTRUCTION (60 ha.) BRIDGE UNDER CONSTRUCTION 10th Sea Dyke SEA DYKES 30°20'N Constructed A2 11th 9th Sea Dyke Wetlands Sea A5 A3 A1 (26 ha.) Dyke 8th Sea Dyke 30°18'N A4 North Waste Water Treatment Plant East Waste Water Treatment Plant 7th Sea Dyke 30°16'N 121°04'E 121°06'E 121°08'E 121°10'E 121°12'E 121°14'E 121°16'E 121°18'E 121°20'E 0 1 2 3 4 5 To Ningbo KILOMETERS 121°04'E 121°06'E 121°08'E 121°10'E 121°12'E Hangzhou Bay 121°22'E 121°24'E 121°26'E 121°28'E 121°30'E 30°22'N WETLAND CENTER WETLAND CENTER BUFFER ZONE, HIGH RECREATION USE 30°20'N WETLAND CENTER VISITOR CENTER COMPLEX A2 PLOT A3 MAIN MARSH TO BE RESTORED A1 PLOT A5 CORE HABITAT ZONE TO BE RESTORED PLOT A1 CORE HABITAT ZONE TO BE ENHANCED PLOT A2 BUFFER ZONE A5 A3 PLOT A4 BUFFER ZONE NO HUMAN ACCESS EXCEPT GUIDED BIRD TOURS 30°18'N ROAD UNDER CONSTRUCTION A4 BRIDGE UNDER CONSTRUCTION This map was produced by the Map Design Unit of The World Bank. 0 1 2 The boundaries, colors, denominations and any other information IBRD shown on this map do not imply, on the part of The World Bank JUNE KILOMETERS Group, any judgment on the legal status of any territory, or any 30°16'N endorsement or acceptance of such boundaries. 34441R 2006