Document of
                       The World Bank


                                                      Report No:




                    RESTRUCTURING PAPER

                             ON A

               PROPOSED PROJECT RESTRUCTURING
                             OF

   MAINSTREAMING CLIMATE CHANGE ADAPTATION IN IRRIGATED
                   AGRICULTURE PROJECT

CHINA: SPECIAL CLIMATE CHANGE FUND ADMINISTERED BY THE GLOBAL
        ENVIRONMENT FACILITY- GRANT AGREEMENT (TF092393)

                         August 15, 2008


                            TO THE

                  PEOPLE’S REPUBLIC OF CHINA


                        October 19, 2011
                    ABBREVIATIONS AND ACRONYMS




GEF        Global Environmental Facility
IAIL III   Irrigated Agriculture Intensification Loan III
PDO        Project Development Objective
POCAD      Provincial office for Comprehensive Agriculture Development
RMB        Renminbi
SOCAD      State Office for Comprehensive Agriculture Development
USD        United States Dollar




            Regional Vice President:        James Adams
                   Country Director:        Klaus Rohland
           Sector Manager / Director:       Paul Kriss /John Roome
                  Task Team Leader:         Rabih H. Karaky

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                                      Reallocation of Proceeds

    CHINA — MAINSTREAMING CLIMATE CHANGE ADAPTATION IN IRRIGATED
                        AGRICULTURE PROJECT
                               TF092393
                                       Restructuring1 Paper

1.     Proceeds for China, Mainstreaming Climate CHANGE ADAPTATION IN
IRRIGATED AGRICULTURE PROJECT, [ TF092393], P105229 will be reallocated as
follows:

     Category of Expenditure           Allocation (expressed in                % of Financing
                                                USD)
        Current   Revised               Current       Revised               Current          Revised
(1) Civil       Civil Works             217,600       277,995                100              100
Works
(2) Goods          Goods                 405,300          421,212             100              100
(3) Consultants Consultants             1,046,800         847,074             100              100
    Services      Services
(4) Studies,      Studies,              1,743,000        2,093,970            100              100
    training    training and
    and          workshops
    workshops
(5) Sub-grants   Sub-grants             1,097,300        1,201,596            100              100
(6) Incremental Incremental              490,000          158,153             100              100
    Operating    Operating
    Costs           Costs
TOTAL           TOTAL                 5,000,000         5,000,000             100              100
AMOUNT          AMOUNT


2.       Summary of Project Implementation Progress

•     The PDO is to enhance adaptation to climate change in agriculture and irrigation
      water management practices through awareness raising, institutional and capacity
      strengthening and demonstration activities in the 3H Basin. The PDO is on track to be
      achieved and the rating is satisfactory. The project was conceptualized and designed
      to complement the Irrigated Agriculture Intensification Loan (IAIL III) project by
      addressing the gaps on adaptation to climate change in the latter project.

•     Implementation progress is rated satisfactory. Most of project activities are under
      implementation, with some activities progressing at a faster rate than others. All of
      IAIL III funds (counterpart funds) have been fully disbursed since the IAIL III project
      closed in December 2010. The overall implementation progress to date is 66% with

1
  This restructuring was initiated based on an official request submitted by SOCAD to the World Bank
through the Ministry of Finance, dated August 30, 2011.
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    an aggregate disbursement rate of 61%. The project is scheduled to close on June 30,
    2012.

•   A total of approximately 8000 ha of demonstration areas for adaptation measures
    have been established with close to 40,000 households adopting and implementing
    these new measures. Nine Water users associations have been formed; around
    200,000 m2 of greenhouses area has been established; and more than 2000 biogas
    digesters have been built. Furthermore, a number of adaptive research studies on
    various topics related to adaptation to climate change in agriculture, are currently
    under finalization and expected to be completed in December 2011.

•   The emphasis over the remaining project period is to (a) complete the implementation
    of all project activities; (b) continue to monitor their outcomes and impacts,
    particularly for the new adaptation measures that are being demonstrated; and (c)
    disseminate the findings in order to share the lessons, expand the outreach, and
    inform the overall efforts of agricultural adaptation to climate change in China.

•   Some improvement is needed on fiduciary aspects particularly with respect to (a)
    regularly updating the procurement plan to properly reflect all packages and changes
    made; and (b) simplifying internal financial management procedures to avoid lags
    between physical and financial progress and time delays between disbursement and
    reimbursement.

3.     The proposed reallocation is necessary to adjust for the appreciation of the
Chinese currency over the US dollar since the time of project effectiveness (from
RMB7.5/USD in 2008, to RMB 6.5/USD in 2011), and to shift resources away from slow
progressing      activities      towards       faster       moving         activities.




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