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         Agricultural Development in the North China Plain
  

The North China Plain Agriculture Project (NCPA), which aimed to rehabilitate and expand irrigation and drainage works in three northern provinces, inaugurated Bank lending to China. It was approved in 1982, two years after China claimed its seat in the World Bank. Implementation coincided with rapid price and market reforms led by the rural sector. The project achieved or exceeded most targets set at appraisal, thanks to straightforward design, sound technology, effective cooperation between the Bank and borrower, and favorable organizational arrangements. A recent OED impact evaluation, carried out five years after project completion, finds that project impacts are being sustained.

Background

China's agriculture feeds a population of 1.2 billion people, of whom 900 million are rural. Land resources are scarce: with 22 percent of the world's population, China has only 8 percent of the world's farmland, or about 0.1 hectares per capita. Water resources are abundant in the south but scarce in the north, and the agriculturally important North China Plain suffers from frequent drought.

China implemented numerous large irrigation and drainage projects between 1949 and 1978, expanding its irrigated area from 16 million to 45 million hectares. But weaknesses in system design, construction, operation, and maintenance lowered their efficiency and left many of them prematurely in need of rehabilitation.

The promise of China's new production responsibility system and newly emerging markets--which replaced production brigades with family farms and offered increasing incentives to individuals--provided an auspicious setting for NCPA.

The project area of NCPA was chosen because it was representative of 6 million hectares of land affected by waterlogging and salinity in the North China Plain. NCPA aimed to rehabilitate and expand existing irrigation and drainage systems over 200,000 hectares of waterlogged, saline, and heavy soils. A population of about 1.2 million people, or 280,000 families, was to benefit directly from the project. Control of the water table was expected to raise productivity of land and water resources, and lead to expanded production of cereals, cotton, and oilseeds.

NCPA was approved before the Bank completed its initial economic and sector work on agriculture in China. Total project cost was $178 million, of which $60 million was provided by an IDA credit disbursed between 1982 and 1986. Implementation was through established branches of provincial ministries of agriculture in Anhui, Henan, and Shandong, assisted by project management offices (PMOs) at provincial, prefectural, and county levels.

Outcome

The social impact of NCPA has been positive, and project ERRs remain high in all three project provinces, at 35-37 percent, although lower than forecast at audit. Improvements in the productivity of land and water resources allowed rural households to capitalize quickly on the price and market reforms that were opening the agricultural sector to individual initiative.

Improvements to irrigation and drainage required project investments in rural electrification and feeder roads, which brought additional benefits to project communities, including the growth of township and village enterprises. Growth in earnings from such enterprises has helped to raise household income in the years since project completion.

NCPA also provided complementary new sources of farm credit, seeds, fertilizers, farm machinery, tree nurseries, and strengthened research and extension services, which have been maintained.

Project investments are well maintained by government agents and local contractors whose performance is monitored by village leaders and farmers who seek to maintain the profitability of the renovated systems.

Technology. The tubewells and drains used to lower the water table and reduce salinity had been pilot-tested before appraisal and refined during implementation, and remain effective. No recurrence of waterlogging or salinity has been reported since project completion. Irrigation has been expanded in the project area using domestic funds, and project experience has been built directly into new Bank-supported projects in Anhui, Henan, Shandong, and Jiangsu.

The cropping pattern has continued to evolve in response to market opportunities, and cropping intensity has been raised by 6 percentage points to 166 percent since completion through innovations in relay cropping. Farm mechanization has proceeded well beyond expectations at appraisal, and routine use of fertilizer at close to recommended levels has become widespread.

Social Impact. Overall, farm income in the project area has increased by more than 50 percent since project completion. In 1982, per capita income in the project area ranged from 100-300 yuan ($189-568 at the 1982 exchange rate of 1.9 yuan: $1.00); by 1991 incomes ranged between 300 and 1,000 yuan. Gains in purchasing power have been more modest because of high inflation. But poverty has been eliminated. Compared to just a decade earlier, when 70 percent of the project area residents had incomes close to the official poverty line of 167 yuan, by 1991 all incomes were above the adjusted poverty line of 210 yuan. Even during the severe drought of 1988, NCPA communities maintained themselves without recourse to relief rations, which had been common in the past.

While income distribution has become more uneven, increases in income have enabled project households to improve their housing, nutrition, clothing, and possession of consumer goods. Beneficiaries point with pride to new and larger brick houses and tiled roofs. Rice and wheat have replaced roots and coarse grains as food staples; bicycles, televisions, radios, watches, and electric fans are commonplace; refrigerators and washing machines are now actively sought after.

Primary school attendance has risen modestly--from 97 to 99 percent in Shandong and from 90 to 98 percent in Henan--because the base was already high. Middle school enrollment has doubled in Anhui. Rates of school attendance by girls are now more comparable to rates for boys.

The supply of health services has expanded, and users now pay for the services they receive. The barefoot doctor has been displaced by increasingly professional and specialized health services. Homes for the elderly who do not have families to care for them have been established for the first time.

NCPA has generated significant amounts of new employment. Time spent on income-earning activities outside the home by men and women increased by 75 and 55 days a year respectively between 1982 and 1991. But increases in employment for women have not yet been offset by reductions in women's labor in the home.

NCPA funds have helped establish numerous new county, township, and village enterprises. Project funds originally lent to NCPA farmers for agricultural inputs and improvements were recycled into non-farm enterprises, some of which are owned by the PMOs themselves. PMO earnings, intended to repay the IDA credit, may be insufficient because the real value of PMO financial assets has fallen.

Reasons for Success

- Officials at all levels, from county magistrates to provincial governors and senior cadres in Beijing, were committed to the project.

- Project management offices had stable and competent staff--along with enough financial resources to purchase services from other contributing agencies.

- Beneficiaries, who must now pay for the services they receive, employ transparent contracts that spell out the obligations of all parties. This "openness" contributes to accountability and efficient use of resources.

- Monitoring and evaluation was built into the project from the outset, and has been maintained. Consistent use of M&E has helped make project management more effective.

- The residual influence of the former collective system is apparent in decision-making about the provision of public goods, and helps ensure disciplined arrangements for system maintenance, without interfering unduly with individual farmers' responses to market opportunities.

- Expanding markets for food and fiber crops have enabled farmers to sell all their surplus production profitably.

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