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Implementation Completion Report (ICR) Review - Hai Basin Integrated Water And Environment Management Project


  
1. Project Data:   
ICR Review Date Posted:
05/13/2013   
Country:
China
PROJ ID:
P075035
Appraisal
Actual
Project Name:
Hai Basin Integrated Water And Environment Management Project
Project Costs(US $M)
 33.30  34.50
L/C Number:
Loan/Credit (US $M)
   
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
 17.00  16.96
Cofinanciers:
GEF
Board Approval Date
  04/15/2004
 
 
Closing Date
06/30/2010 06/30/2011
Sector(s):
Sewerage (35%), Central government administration (35%), Irrigation and drainage (15%), Sub-national government administration (15%)
Theme(s):
Water resource management (40% - P) Pollution management and environmental health (40% - P) Environmental policies and institutions (20% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Rimma Dankova
George T. K. Pitman Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
According to the GEF Grant Agreement (GA, page 17) the project development objectives was :


    " to assist the Recipient in reducing pollution in the Bohai Sea by developing an integrated approach to water resource management and pollution control in the Hai Basin".

The project development objectives stated in the Project Appraisal Document (PAD, page 35) was:

    “to improve integrated water and environmental management in terms of water quantity and water quality in the Hai Basin and reduce land-based sources of pollution to the coastal and marine environment of the Bohai Sea.”
This Review uses the PAD statement of the development objectives as they are more evaluable.

b. Were the project objectives/key associated outcome targets revised during implementation?
No

c. Components:

1. Integrated Water and Environment Management. (Appraisal cost US$14.7 million; actual cost US$14.8 million). This comprised: (a) strategic studies, including analysis of the institutions governing water resource management and pollution control in the Hai Basin; (b) integrated water and environment management planning, including development of integrated water and environmental management plans for selected counties in Beijing and Hebei, and for Tianjin municipality; (c) demonstration projects in selected counties addressing effective control of wastewater discharge, pollution control, water saving and effective management of water rights and well permits.

2: Knowledge Management. (Appraisal cost US$5.9 million; actual cost US$6.3 million).This comprised: (a) basin-wide integration of information and technical support to improve water resource management; and (b) establishment of remote sensing and evapotranspiration data systems.

3: Tianjin Coastal Wastewater Management. (Appraisal estimate US$4.1 million, actual cost US$4.5 million). This included: (a) development of an output-based subsidy model for pollution control in small cities; and (b) cleanup of the Dagu Canal.

4: Project Management, Monitoring and Evaluation, and Training. (Appraisal cost US$8.6 million, actual cost US$9.0 million). This included establishment of project management offices, Joint Expert Groups, and monitoring and evaluation systems; and training of project managers.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

Project costs:

  • Component funding was adjusted at Mid-Term to allow for: (a) addition of knowledge management systems for Tianjin and Beijing Municipalities; (b) addition of 3 County integrated water and environmental management plans in Tianjin; (c) addition of a Non-Point Source Pollution study; and (d) minor adjustments to the investment plan. Total actual project costs were US$1.2 million higher than the appraisal forecast.
  • Component 4 (project management, monitoring and evaluation, and training) accounted for 26 percent of the actual project cost. The Task Team Leader told IEG that this cost reflected the international consultant services and training programs that were funded (including a panel of international experts who made frequent visits to China, four international workshops, and several study tours and services by independent monitoring and evaluation experts).

Financing:
  • The GEF provided a Grant of US$ 17.0 million. By project completion, 99.8% of the grant had been disbursed. At project closing US$ 41,608 was cancelled.
  • The GEF Grant was executed in parallel with the Tianjin Urban Environment and Development Project and the Water Conservation Project, both financed by the World Bank.

Borrower contribution:
  • The Borrower contributed 7.7% more than planned (US$17.6 million vs. US$16.3 million).

Dates:
  • The PAD and ICR both indicate that, at appraisal, the expected closing date was June 30, 2010. But the Grant Agreement reported the "expected closing date of the project" was December 31, 2009 (GA, page 19). The ICR does not explain this discrepancy.
  • The grant closing date was extended twice (ICR, page 5). The first extension was made at the Mid-Term review for an additional 6 months due to start-up delays caused by: (a) the lack of counterpart funding for the first 6 months; (b) the longer than expected time needed for project staff to learn Bank procurement and financial management procedures; and (c) the difficulties that project staff faced in trying to understand the project approach. Closing was subsequently extended from December 31, 2010 to June 30, 2011, due to: (a) delayed completion of the waste water treatment plant financed under the parallel Second Tianjin Urban Development and Environment Project; and (b) the additional time needed for project provinces, counties, the Ministry for Water Resources and Ministry for Environmental Protection to review and clear the project outputs and carry out the necessary follow-up work.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
High

  • The Bohai Sea has historically been an important fishing area due to its location adjacent to major population centers, and its role as a seasonal spawning and nursery ground for the larger and more productive Yellow Sea fishery. In contrast to the decline in the natural aquatic systems, at appraisal aquaculture had grown rapidly, and the Bohai Sea and northem Yellow Sea account for almost two-thirds of the China's total production. However, pollution, both from external sources and self-production, as well as diseases are increasingly affecting aquaculture production, and the threat of human disease and toxic contaminants are putting pressure on the government and the industry to clean up pollution problems.
  • The objectives of the project were and remain relevant to government strategies to address water pollution in the Bohai Sea and Hai Basin. This was a priority in the 9th (1995-2000) and successive National Five-Year Plans, as well as in Action Plans and investment programs. The project’s aims of “water-saving” and “pollution reduction” matched the “energy-saving” and “environment-friendly” goals of the 11th Five-year Plan (2005-2010), reducing groundwater extraction, evapotranspiration (ET), and pollution of rivers. Project objectives were further underpinned by government policies to conserve the Bohai Sea, amend the Marine Environmental Protection Law, and introduce the Blue Sea Action program.
  • The project objectives echoed the Bank's FY2006-2010 Country Partnership Strategy (Pillars 2 and 3) and were also in line with the Bank's Country Water Resources Assistance Strategy.
  • The project objectives were also in line with the goals of the International Convention on Biodiversity and the GEF International Waters Focal Area.

  • b. Relevance of Design:
    Substantial

  • The project design was relevant to achievement of the objective because the components were logically interlinked in a results chain to achieve desired outcomes through (i) improving integrated water and environment planning and management in the Hai Basin, (ii) basin-wide water and environment planning and management, (iii) enhancing capacity building in water and environment knowledge management and implementation, and (iv) reducing wastewater discharges from small cities along the rim of the Bohai Sea. The design tackled water scarcity by including steps to reduce the consumption of surface and groundwater, and supported water resources management to incorporate the control of consumptive water use and pollution load through developing Integrated Water and Environmental Management Plans at a basin level. To reduce wastewater discharges, the design suggested the use of financial incentive mechanisms (such as temporary subsidies) to facilitate construction of small wastewater treatment plants.
  • The design also promoted better integration of water and environmental management through supporting horizontal institutional integration and improving cross-sectoral cooperation between water resources and environmental protection ministries, and agriculture and construction ministries. It also reinforced vertical integration in the existing institutional system by facilitating direct linking and constant interaction between the Central and Hai Basin authorities and the smaller jurisdictions of Zhangweinan sub-basin, Tianjin municipality, and Beijingmebei counties. The horizontal and vertical linkages facilitated the sharing of information and decision-making between water and environmental agencies in the basin and at the center.


  • 4. Achievement of Objectives (Efficacy) :

    “To improve integrated water and environmental management in terms of water quantity and water quality in the Hai Basin and reduce land-based sources of pollution to the coastal and marine environment of the Bohai Sea.”

    The statement of objective contains three subobjectives (a): improve integrated water and environment planning and management in the Hai Basin; (b) improve water quality in the Bohai Basin and reduce pollution to the coastal and marine environment of the Bohai Sea; and (c) improve water quantity in the Bohai Basin. Achievement of each objective is reviewed below.

    Not all achievements reported below can be attributed to the GEF project because pollution control measures were supported also by two other Bank projects: the Tianjin Urban Environment and Development Project and the Water Conservation Project. These projects ran in parallel and supported investments in wastewater treatment plants in the same locations. In addition, the Asian Development Bank assisted with pollution prevention and water conservation projects within the project area.

    (a) Improve integrated water and environment planning and management in the Hai Basin:Substantial

    Outputs:

    • 16 functioning inter-agency committees were established at the county level (target 10). This allowed integration of water resources management and pollution control functions, and improved coordination with the higher administrative levels (prefectures, provincial governments, Hai Basin Commission, Zhangweinan sub-basin administration, Ministry for Water Resources and and State Committee for Environmental Protection).
    • Improved institutional coordinating mechanisms for Integrated Water and Environmental Management were established and made functional. 22 Coordinating Leading groups (target 12) were established. 23 Joint Project Manangement Offices (target 13) and 23 Expert groups (target 13) were also established.
    • Integrated Water and Environmental Management Plans (IWEMPs) were developed under the project and approved by the respective governments in 16 pilot countries (target 10) and by the Municipal Government of Tianjin. The IWEMPs incorporate ecological flow requirements, water quality targets for the Bohai Sea, and control over consumptive surface and groundwater use.
    • 2 Strategic Action Plans (target 2) were formulated for the the Hai basin and the Zhangweinan sub-basin.
    • The project supported 43 domestic and 14 international study tours and 2 large international workshops that introduced participants to new ideas and lessons learned about integrated management of water resources and the environment.
    • The project filled knowledge gaps through completing studies on policy, law and institutions for integrated water and environmental management, ecological flow and water quality requirements for the Bohai Sea, groundwater assessments, pollution management and waste water reuse.
    • A Joint Decision Making Conference System for Integrated Water Resources Management in the Zhangweinan sub-basin and the Hai Basin was established.
    • The project supported the establishment of a Basin-wide Knowledge Management (KM) System, which made it technically possible to share water resources data among local governments and water use sectors at both basin and county levels. Integrated Water Resource – Water Quality Information Management System were created, tested, and implemented. The Management System was made functional in the Hai Basin, the Zhangweinan sub-basin, and Beijing, Tianjin and pilot counties.

    Outcomes:
    • The approach for integrated water and environment management was developed and tested at both river basin level and water user level, and introduced the maximum consumptive use of water and maximum discharge of water pollution loads as management targets to be enforced at both levels. The approach developed has been adopted in the national level policies and strategies, including the State Council’s "Number One Document‟ for 2011, the "Three Red Lines‟ policy and, in the Masterplan and 12th Five Year Plans at the Hai Basin, Provincial and County levels.
    • The environment departments in Hebei province and Tianjin municipality were better able to control pollution. A project pilot used joint review to approve water withdrawal and waste water discharge permit. The vertical planning and management integration also worked: county agencies coordinated better than before with higher-up agencies (prefectures, provinces, the Hai Basin Commission, the Ministry of Water Resources, and the State Environmental Protection Administration).
    • A data-sharing agreement for the Hai River Basin and the Zhangweinan sub-basin was signed and implemented. The Agreement included provisions for data sharing generated by 32 hydrological and 75 water quality stations, and provided a basis for the integrated management of the Water Function Zones and Water Environment Function Zones in the basins. The approach was adopted and incorporated into the National Water Resources Management System, and is considered for replication in river basin management across China.
    • The institutional support provided by the project resulted in the horizontal integration of local, municipal, provincial and basin- wide environmental planning and management: agencies in the basin. Information and decision-making using joint conferences was reportedly better than before (although indicators of performance outcomes are weak).

    (b) Improve water quality in the Bohai Basin and reduce land-based sources of pollution to the coastal and marine environment of the Bohai Sea: Substantial
    Outputs:
    • The project provided technical assistance and financial support to rehabilitation of the Dagu Canal
    • Discharge targets of pollution loads from provinces, cities and counties to rivers and to Bohai Sea have been set up and used as total control indicators and by the national pollution control standards.
    • Study on industrial source pollution control was completed and the results were incorporated into the Municipal Integrated Water and Environmental Management Plan, including the use of advanced technologies for the disposal of polluted sludge.
    • Small city financial incentives mechanisms were tested and became functional in at least one small city. A small town integrated sewage wastewater management study was completed.
    • The project complemented the the Tianjin Urban Environment and Development Project activities by providing technical assistance on the issues of industrial pollution control, remediation of contaminated canals flowing into the Bohai Sea, and on institutional and financial aspects of small city wastewater management.
    • Demonstration projects on control of wastewater discharge, pollution control and environmental water improvements were prepared and implemented, and findings incorporated into the respective Integrated Water and Environmental Management Plan.

    Outcomes:
    • A new system of incentives for Small-town Waste Water Treatment and Management was tested in Tianjin municipality. Investors in small wastewater treatment plants were given temporary subsidies to cover the cost of building, operating and maintaining the plants. The subsidies are to be phased out over five years as water consumption charges are stepped up. Chemical Oxygen Demand pollution loading to Bohai Sea was reduced through construction of two small city wastewater treatment plans by 9,855 tons/annually (target 10,000 tons); and the reduction in Ammonia Nitrogen pollution was 620.5 tons/annually (target 500 tons/annually).
    • Pollution to the Bohai Sea basin was targeted to be reduced by 10%. Chemical Oxygen Demand was reduced by 38,615 ton/year or 23% from a baseline of 164,000 tons/year. The volume of Ammonia Nitrogen (NH3-N) was reduced by 4,665 ton/year or 24% from a baseline of 19,000 tons/year.
    • The project achieved the reduction of disposal of 6.26 million m3 (target 2.2 million m3) of contaminated sediment from the Dagu canal and a one time reduction of 28,670 tons of oil (taget 10,000 tons), 1,822 tons of Zinc (target 2,000 tons), and 13,
    • 379 tons of total Nitrogen (target 5,000 tons).
    • The experience of the project on non-point pollution control in the Zhangweinan sub-basin is acknowledged by the Ministry for Environmental Protection as an effective approach and replicable to other areas across the country with problems of non-point pollution regulation.

    Objective (c): Improve water quantity in the Bohai Basin: Substantial
    Outputs:
    • Demonstration projects on the “real water savings” approach, establishment and management of water rights and well permits were implemented in pilot counties of the Hai basin.
    • The project supported the establishment of Water User Associations (WUAs) as a basis for participatory water management, water saving and conservation. A total of 407 WUAs were established (target 65).

    Outcomes:
    • The project introduced the concept of “real water savings” aiming at reducing the consumptive use of water in agriculture. The concept was tested and proved to be effective in physical water scarcity areas such as the Hai Basin. The project introduced a new regulatory approach to quantitative management of water use based on evapotranspiration quotas. The quotas are established based on the measurement of actual evapotranspiration using remote sensing technology and surface water and groundwater systems modeling. This approach has been incorporated into the Water Resources Master Plan of the Hai River basin to control agricultural water use in the basin.
    • Groundwater overdraft for irrigation purposes was reduced by 266 million m3/year in pilot counties, considerably exceeding the appraisal target value of 42 million m3/year.

    5. Efficiency:

    No economic or financial rate of return was calculated in either the ICR or the PAD. The largely technical assistance and capacity building nature of the project made it difficult to calculate the rates of return, but cost effectiveness should have been measured by comparing unit costs from this project with those from similar projects. While procurement was rapid and efficient according to the ICR, the project closed one year later due to a delay in counterpart funds and resulting start-up delays.

    Efficiency is rated: Modest


    a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:


    Rate Available?
    Point Value
    Coverage/Scope*
    Appraisal:
    No
    %
    %
    ICR estimate:
    No
    %
    %

    * Refers to percent of total project cost for which ERR/FRR was calculated

    6. Outcome:

    Project objectives were highly relevant. Relevance of design was substantial. Efficacy is rated substantial on all objectives; it should be noted however that not all of the result is attributable to this project because two other projects that were simultaneously being implemented in the same locations adopted similar measures. Efficiency is rated modest.

    a. Outcome Rating: Moderately Satisfactory

    7. Rationale for Risk to Development Outcome Rating:

    Government Ownership: Government policies and plans—including the 12th Five-year Plan (2011-2015) and the Hai River Basin Integrated Water Resources Master Plan—have incorporated lessons learned from the project. The Central Committee of the Communist Party of China supports a doubling of the 2010 investment in water resources development over the next ten years. Central government policy will probably consolidate project achievements because it emphasizes control of the total amount of water use, water use efficiency, and pollutant discharge. The government has already committed funding to the Hai Basin Center to ensure further development and implementation of the approach tested by the project.


    Agency Cooperation: The horizontal and vertical integration promoted by the project is likely to continue. Cooperation between the Ministry of Water Resources and the State Environment Protection Administration is likely to remain close. At project start-up, the Administration was promoted to a Ministry, giving it equal seniority to the Ministry of Water Resources. The two Ministries have collaborated well since the project closed, signing data sharing agreements and harmonizing the Water Function Zones structuring.

    Continued Funding: Government has consolidated project achievements by setting up the Hai Basin Evapotranspiration Center to promote water saving and conservation as part of the integrated water and environmental management approach, and has continued to fund this as well as other institutions set up under the project.

    a. Risk to Development Outcome Rating: Negligible to Low

    8. Assessment of Bank Performance:

    a. Quality at entry:
    The Bank worked closely with government to ensure that project design took account of matters of greatest concern to policy makers and addressed the most pressing needs of water and environment management. Fiduciary arrangements and safeguard provisions were sound. The technical aspects of the design were well thought out, using international experts where necessary. The Bank promoted cooperation between agencies, data sharing, joint reporting, management of evapotranspiration and planning. The complexity of some of the details was underestimated by the Bank, resulting in minor implementation delays that required an extension of the closing date.

    Quality-at-Entry Rating: Satisfactory

    b. Quality of supervision:
    Supervision was strongly staffed and the team included environmental specialists, groundwater experts, and financial management specialists, with backup from a panel of international experts. The Bank conducted two supervision missions a year and implementation bottlenecks were swiftly identified, discussed and resolved.

    Quality of Supervision Rating: Satisfactory

    Overall Bank Performance Rating: Satisfactory

    9. Assessment of Borrower Performance:

    a. Government Performance:
    The central government was committed to project objectives, which were well grounded in national policy. Both central and local government supported project implementation and worked closely with the Bank, although there was a six month delay at project start-up in release of counterpart funds by provincial and county governments. The Ministry of Finance participated in the project, both at the center and in the localities. Central and local government ensured that the project management offices were adequately financed and staffed.

    The central government was initially skeptical about the proposed use of Joint Project Management Offices, the lead role given to local agencies, and data sharing -- all of which were unusual in China. But it ultimately endorsed the project approach. The Offices were quick to resolve implementation delays and were responsive to the Bank’s recommendations. However there was a shortcoming: local government counterpart funds were released 6 months late, delaying project start-up and requiring an eventual extension of the closing date by one year.

    Government Performance Rating: Moderately Satisfactory

    b. Implementing Agency Performance:
    The project was complex to implement because of the large number (twenty three) of project management offices (PMOs) involved and because the innovative approach called for a lengthy period of staff training. The Central PMO performed well in this complex environment, providing sound direction and support to the other PMOs. Project guidelines were clear, staffing was adequate, training was sufficient, and financial management and procurement were well handled.

    Implementing Agency Performance Rating: Satisfactory

    Overall Borrower Performance Rating: Moderately Satisfactory

    10. M&E Design, Implementation, & Utilization:

    a. M&E Design:
    Project design made comprehensive arrangements for M&E reporting, with provision for reports to be submitted annually to the Bank. There were 12 key outcome indicators used to evaluate the project performance, out which 6 were measurable. Some of the quantifiable indicators were not representative of project impacts: the indicators on reduction in pollution discharge in the basin, pollution load to Bohai Sea, disposal of contaminated sediment and reduction of total nitrogen load referred equally to the impacts of two other projects that were underway in parallel (Second Tianjin Urban Development and Environment Project and Water Conservation Project ); these indicators needed tracking but the results reported could not be wholly attributed to the GEF project.The qualitative indicators had only limited use in tracking the implementation progress and achievement of project outcomes because their design was weak.

    b. M&E Implementation:
    Central and local government M&E groups routinely tracked the performance indicators. The central government group consolidated the findings reported by local government units. The local M&E groups drew on data collected by field stations, the Hai Basin Commission, and project counties and cities. The central government unit reported on progress, measured against the results of a baseline survey conducted before project startup, reporting regularly to the Ministry of Water Resources, Ministry of Environment, and the Bank. The M&E design proved to be harder to implement than expected and time was needed to train staff in the many project management offices, resulting in a delayed start.

    a. M&E Utilization:
    The M&E information was used by the implementing agencies to make mid-course corrections in project management, procurement and financial management.

    M&E Quality Rating: Modest

    11. Other Issues:

    a. Safeguards:
    The project was rated as an environmental Category C under OP4.01 Environmental Assessment. Thus preparation did not call for an environmental impact assessment because the proposed operation was mainly limited to institutional development. An environmental management plan was developed to mitigate possible damage caused by small-scale civil works undertaken under the pilot demonstration projects.

    b. Fiduciary Compliance:
    According to the ICR, financial management was generally of good quality. Capacity was built through the

    development of standardized written procedures and by intensive training. Issues detected
    through the supervision process were promptly resolved, and audit reports were timely and of
    acceptable quality. Procurement performance was good. The Management Information System
    (MIS) allowed real-time tracking of procurement and the prompt identification of issues. As a
    result, procurement was rapid and efficient and in line with Bank requirements despite the very
    large number of contracts and contracting units. The ICR does not indicate if audits were unqualified.

    c. Unintended Impacts (positive or negative):

    d. Other:



    12. Ratings:

    ICR
    IEG Review
    Reason for Disagreement/Comments
    Outcome:
    Satisfactory
    Moderately Satisfactory
    Efficiency is rated modest because of the lack of relevant evidence. 
    Risk to Development Outcome:
    Negligible to Low
    Negligible to Low
     
    Bank Performance:
    Satisfactory
    Satisfactory
     
    Borrower Performance:
    Highly Satisfactory
    Moderately Satisfactory
    The availability of counterpart funds was delayed by 6 months; this led to postponing of the project closing by one year. It is not known if audits were unqualified. 
    Quality of ICR:
     
    Satisfactory
     
    NOTES:
    - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
    - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

    13. Lessons:
    The ICR includes the following lessons:

    • The tested approach to water resources planning and management using units of evapotranspiration (ET) proved to be useful in the situations of water scarcity and when irrigated agriculture is the major water user. The ET –based water consumption control was accepted as the basis for allocation of water rights and quotas at the basin, sub-basin and farmer levels.
    • Incentives are required to make the water consumption approach work at farm level. Government support to engineering works but also agricultural extension services and improving irrigation management is necessary to reduce water consumption and raise farmer incomes.

    IEG proposes a further lesson:
    • GEF Grant funding can play an important role in creating new knowledge and promoting integrated approaches to water resources and environmental management. Carefully designed demonstration projects can showcase the benefits of advanced technologies and more efficient water resources management options, helping to build support for replication.

    14. Assessment Recommended?

    Yes
    Why?
    This is an innovative project that tested a number of advanced management and technological approaches. It would be useful to document lessons learnt and assess sustainability of the project results.

    15. Comments on Quality of ICR:

    The ICR provides a comprehensive overview of the project experience, with sufficient output and outcome evidence to assess whether the stated objectives were achieved. The assessment of outcomes is more qualitative than quantitative but, to large extent, this is unavoidable for institutional development projects like this. The analysis is internally consistent, logical and of good quality. The lessons are based on the project experience.

    a. Quality of ICR Rating: Satisfactory

    (ICRR-Rev6INV-Jun-2011)
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