Document of The World Bank FOR OFFICIAL USE ONLY Report No: 33801-CN IMPLEMENTATION COMPLETION REPORT (SCL-43540 TF-25509) ON A LOAN IN THE AMOUNT OF US$300 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE IRRIGATED AGRICULTURE INTENSIFICATION II PROJECT December 21, 2005 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Rural Development and Natural Resources Sector UnitEast Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective June 30, 2005)
Currency Unit = Yuan Y1.0 = US$ 0.12
US$ 1.0 = Y8.11
FISCAL YEARJanuary 1 - December 31
ABBREVIATIONS AND ACRONYMS
ADP Agricultural Development ProjectCAD Comprehensive Agriculture DevelopmentCAS Country Assistance StrategyCATEC County Agrotechnical Extension CenterCOCAD County Offices of Comprehensive Agricultural DevelopmentERR Economic Rate of ReturnICB International Competitive BiddingICR Implementation Completion ReportIPM Integrated Pest ManagementMIS Management Information SystemMTR Mid-Term ReviewMOF Ministry of FinanceMWR Ministry of Water ResourcesNCB National Competitive BiddingNDRC National Development and Reform CommissionNPV Net Present ValueO&M Operation & MaintenancePAD Project Appraisal DocumentPIP Project Implementation PlanPLG Project Leading GroupPMO Project Management OfficePOCAD Provincial Office of Comprehensive Agricultural DevelopmentPPMO Provincial Project Management OfficeQAG Quality Assurance GroupRMB Renminbi (Yuan)TM Task ManagerSIDD Self-financing Irrigation and Drainage DistrictSOCAD State Office of Comprehensive Agricultural DevelopmentWSC Water Supply CompanyWUA Water Users’ Association
Vice President: Mr. Jeffrey Gutman (Acting), EAPVPCountry Director Mr. David Dollar, EACCF
Sector Director Mr. Mark Wilson, EASRD Task Team Leader/Task Manager: Ms. Qun Li, EASRD
CHINA
IRRIGATED AGRICULTURE INTENSIFICATION II PROJECT
IMPLEMENTATION COMPLETION REPORT
CONTENTS
Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 86. Sustainability 97. Bank and Borrower Performance 108. Lessons Learned 159. Partner Comments 1610. Additional Information 17Annex 1. Key Performance Indicators/Log Frame Matrix 18Annex 2. Project Costs and Financing 22Annex 3. Economic Costs and Benefits 25Annex 4. Bank Inputs 31Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33Annex 6. Ratings of Bank and Borrower Performance 34Annex 7. List of Supporting Documents 35Annex 8. Environmental Assessment 36Annex 9. Borrower's Completion Report 38
Project ID: P049700 Project Name: Irrigated Agriculture Intensification II Project
Team Leader: Qun Li TL Unit: EASRDICR Type: Core ICR Report Date: December 21, 2005
Country/Department: CHINA Region: East Asia and Pacific Region
Sector/subsector: Irrigation and drainage (40%); General agriculture, fishing and forestry sector (32%); Law and justice (14%); Roads and highways (7%); Power (7%)
Theme: Other rural development (P); Water resource management (P); Other environment and natural resources management (P); Land administration and management (P); Rural services and infrastructure (S)
KEY DATES Original Revised/ActualPCD: 08/19/1997 Effective: 09/15/1998 12/22/1998
Borrower/Implementing Agency: People's Republic of China/State Office of Comprehensive Agricultural Development
Other Partners:
STAFF Current At AppraisalVice President: Jeffrey S. Gutman (Acting) Jean-Michel SeverinoCountry Director: David R. Dollar Yukon HuangSector Manager: Mark D. Wilson Geoffrey FoxTeam Leader at ICR: Qun Li Richard ReidingerICR Primary Author: Qun Li; Lang S. Tay
3. Assessment of Development Objective and Design, and of Quality at Entry
3.1 Original Objective:
3.1.1 The objectives of the project were: (a) to increase agricultural production; (b) to increase farmers' incomes; and (c) to establish institutional mechanisms for the sustainable use, development and management of water and land resources in the Huang-Huai-Hai Plain.
3.1.2 The objectives were relevant and in line with the Bank’s Country Assistance Strategy (CAS) for China (Report No. 16321-CHA) in supporting: (a) the continued development of sustainable techniques to upgrade marginal land; (b) rational and sustainable food security programs; (c) the reduction of poverty in some areas; and (d) the expansion, improvement and rehabilitation of existing irrigation and drainage facilities to increase agricultural production. The objectives were also consistent with China’s Ninth Five Year Plan (1996-2001) to raise domestic grain output while also increasing cotton, oilseed and other crop production to meet the demand from an increasing population and higher per capita consumption. The project was also intended to contribute substantially to meeting the production targets of the Ninth Plan.
3.2 Revised Objective:
3.2.1 There was no revision of the project objectives throughout the project implementation period.
3.3 Original Components:
3.3.1 The components of the project are summarized below; the estimated costs at appraisal included physical and price contingencies.
(a) Irrigation and Drainage Component (US$554.4 million). The component consisted of investments in: the construction of farmland irrigation water distribution facilities; the rehabilitation and improvement of irrigation and drainage pumping stations and power-driven tubewells; spreading of water-saving irrigation technologies; increasing the area of irrigated land and enhancing the reliability of irrigation and drainage standards; and the expansion of associated rural road and electric service networks. These improvements were to be implemented over an existing irrigation service area of about 1,534,700 ha.
(b) Agricultural Intensification and Support Services Component (US$163.9 million). The component included investments in: the improvement of land and soil through land levelling and deep plowing, including support for increased use of organic and compound fertilizers, over 770,000 ha; the improvement and strengthening of the service delivery system for agricultural technology, agricultural mechanization, compound fertilizers, and improved seeds and crop varieties at the county and township levels; the dissemination and extension of both improved agricultural sciences and technology; training of farmers to enhance the levels of their scientific farming technologies and to promote Integrated Pest Management (IPM); and the supply of modern agricultural production materials, mainly chemical fertilizers, low-toxicity pesticides and plastic membranes for agriculture, as needed to increase agricultural input availability.
(c) Afforestation, Environment Protection and Monitoring Component (US$46.9 million). The component consisted of investments in the establishment of forest-shelter networks for farmland to increase forest coverage by about 30 percent, mainly as shelter-belts around fields and along canals; and the establishment of networks of stations to monitor the groundwater, quality of surface water and soil fertility
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in the project area.
(d) Institutional Development and Support Component (US$54.2 million. The component consisted of investments in: the support of institutional development through strengthening and development of a program approach in the State Office of Comprehensive Agricultural Development (SOCAD) and the Provincial Office of Comprehensive Agricultural Development (POCAD); the promotion and establishment of Self-financing Irrigation and Drainage Districts (SIDDs) and Water Users' Associations (WUAs); the development and establishment of a modern computerized management information system (MIS) for the project; and establishment of a national MIS and training center under SOCAD for the Comprehensive Agriculture Development (CAD) program.
(e) Survey, Design and Management Component( US$29.9 million). The component was made up of investments in: engineering survey, investigation and designs for project works and facilities; the supervision of works and facilities under construction; buildings, offices, equipment and vehicles for project management.
3.4 Revised Components:
3.4.1 There was no major revision of the project components during project implementation.
3.5 Quality at Entry:
3.5.1 There was no Quality at Entry assessment or Quality Assurance Group (QAG) analysis during the course of the project. However, the quality at entry was considered satisfactory as the project was based on SOCAD’s CAD program in the Huang-Huai-Hai Plain and the successful results of past Bank-financed agricultural development projects (i.e., the first Irrigated Agriculture Intensification Project (IAI) as well as the North China Plain Project, the Shandong Agricultural Development Project (ADP), the Hebei ADP, the Henan ADP, and the Anhui Pi-Shi-Hang project). Quality at entry was further ensured with feasibility reports prepared for all sub-project by the County Offices of Comprehensive Agricultural Development (COCADs). These sub-project feasibility reports were reviewed and approved by the POCADs and by the SOCAD. During the project appraisal, the Bank reviewed and spot-checked about twenty percent of the county feasibility reports to ensure soundness and adequacy of preparation.
4. Achievement of Objective and Outputs
4.1 Outcome/achievement of objective:
4.1.1 All project components (except SOCAD’s National Training Center) were completed by December 31, 2003 as scheduled, with all the main physical targets having been met. The Loan's Closing Date was extended by eighteen months to enable completion of the Training Center, which was delayed for reasons explained below (see paragraph 4.2.5). The primary objective of increasing agricultural production and incomes through more efficient and sustainable use of the land and water resources exceeded the expectations stated in the Project Appraisal Document (PAD). Irrigated farmland improved under the project totaled some 1.53 million ha (100 percent of the PAD estimates), of which some 672,100 ha (137 percent of the PAD estimates) were provided with water-saving irrigation facilities. Although the surface water irrigation area was reduced by about 3,900 ha, groundwater irrigation increased by about 41,000 ha (from 360,520 ha to 401,550 ha -111 percent of PAD estimates) based on a more efficient use of available water resources. Overall irrigation system efficiency improved from 0.68 to 0.74 (108 percent of PAD projections). Construction of canal linings, better canal control structures and the use of sub-surface PVC
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pipes for irrigation were completed to a high quality and have contributed to this good performance.
4.1.2 The outcome of the agricultural intensification and support services has been fully achieved. Increased production of quality seeds, together with land levelling, farm mechanization and input supply, has increased total crop production from about 16.3 to 22.4 million tons (137.4 percent of the PAD target), despite a decline in total food grain production of about 11 percent. This decline was caused by falling grain prices after the government withdrew the grain subsidy and freed the grain market, on accession to the World Trade Organization (WTO), and farmers shifted to higher-value crops. However, food grain production was sustained and increased from 9.3 to 11.2 million tons through higher yields achieved by the increased use of quality seeds, farm mechanization and production inputs when cropping patterns were appropriately adjusted to reflect market demand. Commodity cash crop planting was increased from 557,200 ha to 908,600 ha with total production increasing from 3.8 to about 11.2 million tons (295 percent of PAD target).
4.1.3 The net financial return to beneficiaries was higher than that estimated at appraisal. As a result of the improved irrigation facilities and agricultural production conditions and services, farmers’ incomes in the project area have increased substantially. The average per capita annual income has increased from Y714 to Y1,171 for low-income households (115 percent of the PAD estimate and 168 percent of the "without-project" scenario), from Y1,017 to Y1,497 for medium-income households (111 percent of the PAD estimate, and 147 percent of the "without-project" scenario), and from Y1,237 to Y1,769 for high-income households (109 percent of the PAD estimate and 138 percent of the "without-project" scenario). Farmers’ incomes are expected to increase further as the project reaches full development.
4.1.4 Although poverty reduction was not one of the project’s stated objectives, the project has reduced poverty levels in some 19 State-designated poverty counties (with average per capita incomes of less than Y637) and 17 province-designated poverty counties in the project area. Located in Hebei, Henan and Anhui, a total of Y1,278 million was invested in these poverty counties in irrigation and drainage facilities, land and soil improvement, agricultural production technologies and services, quality seed production, rural roads and electricity, and SIDD/WUA development. As a result, these poor counties benefited from increased agricultural productivity and higher standards of living. Compared to pre-project levels, the average net per capita income of project-area farmers increased substantially (in Anhui by 60 percent, in Hebei by 92 percent , in Henan by 61 percent, and in Jiangsu by 103 percent) and some formerly poor households have reached medium income levels.
4.1.5 Institutional strengthening and development has achieved substantial results. The project staff under SOCAD, POCADs and COCADs in a total of 133 counties gained considerable experience in project preparation, implementation and management, especially on supervision, procurement and the use of computerized MIS for project accounting and financial reporting, and monitoring and evaluation. A major objective of SOCAD in undertaking the project was to improve its internal management capabilities, and the experience under the project will certainly further strengthen SOCAD’s national CAD program in the five provinces and also throughout the country. Development of SIDDs (both for Water Supply Companies (WSCs) and WUAs), introduced on a pilot basis under the project, substantially exceeded the physical targets; eleven WSCs were established (compared to eight planned) and 516 WUAs were established (compared to 181 planned). The completed SIDD/WUA program covers about nine percent (136,500 ha) of the total project area of 1.53 million ha, 365,550 households and a farming population of 1.43 million. The pilot SIDD program under the project has demonstrated substantial benefits, such as improved irrigation performance, better maintenance of irrigation facilities, water saving, reduced water conflict, and improved payment of water charges, and it has provided valuable experience and lessons for expanding and promoting similar development in the project area, in future similar comprehensive
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agricultural development projects and in the national CAD program.
4.1.6 The overall Economic Rate of Return (ERR) for the project at completion is estimated at 30 percent and is highly satisfactory compared to 24 percent estimated at appraisal (Section 4.3 and Annex 3). Overall, the project achieved its main objectives, reached or exceeded its expected outputs and outcomes, and developed and demonstrated an economically-viable and environmentally-sustainable integrated comprehensive irrigated agricultural development model (see section 4.3 and 10) which is already being replicated through the new project (Irrigated Agriculture Intensification III) and the national CAD program. The achievement of objectives is therefore rated as satisfactory.
4.2 Outputs by components:
4.2.1 The key outputs by components are described below. Outputs achieved are compared to the physical targets as revised during the mid-term review (MTR) and, where appropriate, to appraisal targets. Revised targets at MTR reflected changes mainly in investment policy for the irrigation component (e.g., in favor of water savings, as well as adaptation to local conditions and requirements). It should be noted that the project was designed as a “program approach” project and such changes in components were anticipated in the project design because of the nature of the project, with many small-scale works and activities scattered across some 1,100 sites in 133 counties. Flexibility to adapt to changing or unexpected conditions was built into the project design. Detailed outputs by each component are presented in Annex 1. Irrigation and Drainage Component:
4.2.2 Overall, the component achieved 105 percent of the revised physical targets agreed at the MTR. Although a few categories of work were slightly less than 100 percent (e.g., inverted siphons at 93 percent), all other categories of work exceeded their MTR targets, with tubewells at 115 percent mainly because of the increase in sub-surface pipeline length for tubewells which was expanded as a water-saving measure. For all categories of work under this component, expenditures greatly exceeded 100 percent of the appraisal targets. Comparison with appraisal targets is not meaningful in terms of project achievements because a number of the categories were vastly expanded as a result of policy change to emphasize water savings (e.g., the category of sub-surface pipeline was expanded by about 46 percent, from 16,623 km at appraisal to 24,333 km at completion).
Agriculture Intensification and Supporting Services Component:
4.2.3 Overall, the component achieved more than 100 percent of the revised physical targets agreed at the MTR. On quality seeds, production achieved 103 percent (219,000 tons compared to MTR target of 212,016 tons) and quality seed coverage has reached 97.2 percent of the project area. Production of blended fertilizer from new plants reached 394,270 tons (105 percent of the MTR target). On agricultural mechanization, 1094 agri-machinery stations were established (140 percent of the MTR target) and the overall degree of farm mechanization reached 72.7 percent compared to 69.3 percent projected at the MTR. Pest control and forecast now cover 96 percent of the project area (235,930 ha). On extension, 709 township agri-technology extension stations were established or improved with 39,272 new extension staff added. This enabled the training of technical farmers for about 54,000 man-months and of farmers for 100,665 man-months, and establishment of 205,100 ha of demonstration/pilot areas.
Afforestation, Environmental Protection and Monitoring Component:
4.2.4 Overall, the component achieved 106 percent of the revised physical MTR targets and 143 percent
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of the appraisal targets. Key outputs were the establishment of 3,873 ha of new nurseries and 87,718 ha of forest shelter belts. As a result, the vegetation cover in the project area increased from 11.6 percent at appraisal to 17.2 percent at completion, contributing to a more favorable ecological environment.
Institutional Strengthening and Development Component:
4.2.5 Overall the component achieved 110 percent of the MTR and 141 percent of the appraisal targets. All components were close to or exceeded the MTR targets except the SOCAD National Training Center. It was delayed due to the design changes for unforeseen works for bank protection during the construction of foundations, the adverse weather conditions and the consequent need for additional work. Compared to the expected targets at the MTR, the lowest target achieved was that of staff study tours (85.4 percent) reflecting SOCAD’s strict control to ensure that international study tours were most useful, and research and studies (94 percent) for which a number of research activities were considered duplicative. All studies and technical assistance provided under the project were fully completed, achieving good results in strengthening the management and technical capabilities of SOCAD and lower-level CAD offices and providing technical guidance to field staff and farmers.
4.2.6 The main output was in the establishment of WUAs which achieved 221 percent of the MTR target and 285 percent of the appraisal targets (increasing from 181 WUAs planned at appraisal to 233 planned at the MTR to 516 actually achieved); pilot WSCs achieved 100 percent of the MTR target. The increase in the number of WUAs was the result of greater emphasis on water savings, to which improved on-farm management by WUAs contributed substantially, and on increasing the capability and confidence of the various CAD offices in WUA development, which was introduced for the first time in the CAD system under the project. The pilot SIDDs (WSCs and WUAs together) now cover about nine percent (136,500 ha) of the total project area and serve 365,550 households with a total population of 1.43 million. The completed SIDDs and WUAs will serve as useful models to expand WUA development and better, more participatory water management in the project area as well in the national CAD program and future similar projects.
4.2.7 Training of project staff focused on local training and study tours to meet the urgent needs of project staff. At completion, training and study tours for staff totaled 40,717 man-months of domestic training, 8 man-months of international training, 4,915 man-months of domestic study tours and 123 man-months of overseas study tours covering 33 topics and in 22 countries (reflecting the technical breadth and size of the project). Technical assistance totaled 197 man-months mainly for domestic consultancy services. Some 120 applied research activities and studies were carried out by qualified national and provincial institutions in the five project provinces and by SOCAD. The applied research and studies covered irrigation and drainage (35 topics), agriculture (37), forestry (14), 34 others covering environment, SIDD and project management. The research and study results are relevant and have been disseminated in the agricultural production areas.
4.2.8 A major output of the project for SOCAD was to upgrade its own programs and staff capabilities, and the staff training, technical assistance and research/studies have been fully used and achieved good results. The overall impact of project institutional strengthening and development component is rated as substantial.
Survey, Design and Management Component:
4.2.9 The component achieved 98 percent of its MTR and 106 percent of its appraisal targets. At the MTR, the number of vehicles was substantially reduced and the number of computers for the MIS was
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increased. The computerized MIS with all sites linked through the internet played an important part in improving overall management of the project as well as at individual sites and was an important modern management tool introduced into SOCAD under the project. 4.2.10 Overall, the main outputs of project components were completed satisfactorily by the original December 31, 2003 Closing Date, except for the SOCAD National MIS/Training Center, delays in the construction of which necessitated the extension of the Closing Date to June 30, 2005. Similarly, safety and remedial measures and up-grading for three dams (Fuzhiling and Longhekou in Anhui Province, and Xiaotashan in Jiangsu Province) which were required by the legal covenants but not financed under the project, were delayed but were eventually completed by June 30, 2005. The delay in completion of the center and the upgrading of the dams did not affect project performance in achieving agricultural production and farmer income objectives.
4.3 Net Present Value/Economic rate of return:
4.3.1 Following the methodology used during the appraisal, the net present value (NPV) and the ERR were re-estimated for each sub- project area in Hebei, Jiangsu, Anhui, Shandong and Henan province, and for the project as a whole. The ERR for the project is estimated at 30 percent (NPV: Y7,953 million) compared to 23.9 percent estimated at appraisal. The principal reasons for this better-than-expected performance include: (a) an increase in irrigated cropping areas by about 9 percent; (b) the farmers' adjustment of their cropping patterns enabled by project investments and consequent increase in the total cash-crop area by 151 percent (from 603,442 ha estimated at appraisal to 908,603 ha at ICR); and (c) substantial increases in crop yields and output (e.g., the average yield of food field crops - including rice, wheat and corn - increased by about 28 percent from 4,655 kg/ha to 5,976 kg/ha in most sub-project areas) and the output value of the main cash crops increased by three times compared to the appraisal values. However, the actual project investment costs were very close to the estimated costs at appraisal (US$849.29 million at appraisal compared to US$867.3 million at ICR). Returns for all components have therefore far exceeded appraisal expectations (see Annex 3 for more details by province).
4.4 Financial rate of return:
4.4.1 Farm-level analysis was carried out to indicate the project's impact on beneficiary farmers’ incomes. The farm model analysis shows a substantial increase in beneficiary farmers’ incomes as a result of the comprehensive and integrated improvement in irrigation and drainage facilities, crop production and agricultural support services. In line with the appraisal approach, representative farm households were selected in five subproject areas for the ICR. The following assumptions have been considered to calculate and assess the financial impacts of the project on household incomes: (a) average farm holding size in each subproject area, combined with the actual cropping intensity in each area due to the change from rainfed and partially irrigated land to fully irrigated land; (b) the average 2003 financial farm gate prices prevailing in the project area were used to value outputs and inputs; and (c) from 1998 to 2004 the actual cropping pattern, intensity and the per ha financial crop budgets (for "with-project" and "without-project" analysis) were applied for annual and perennial crop production in each sub-project area, with increased crop yields derived from the development of irrigation and drainage systems and relevant agricultural technology. More details are included in Annex 3.
4.4.2 Increased crop outputs and changed cropping patterns have greatly increased farmers’ incomes, especially for low-income farmers. Project monitoring indicators show that the per capita income of low-income, medium-income and high-income farm households in the project areas reached Y1,170.98, Y1,497.29 and Y1,769.54, respectively, in 2003. This represented an increase of 68 percent for
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low-income farmers, 47 percent for medium-income farmers, and 39 perent for high-income farmers, compared to appraisal estimates.
4.5 Institutional development impact:
4.5.1 Institutional strengthening and development included in the project have achieved good results and impact, in terms of both project implementation and strengthening of CAD capabilities, and especially through the introduction and demonstration of farmer-managed WUAs (see also Section 4.2). Exposure and participation of project staff with no prior experience with Bank-financed projects provided the rare opportunity of acquiring valuable project implementation and management skills and capabilities building. Project staff at all levels benefited from training and study tours in various aspects of project management, including planning, supervision, monitoring and evaluation, financial management, and computerized applications, as well as exposure to innovations including WUAs and farmer associations and cooperatives as applied in other countries. Through contact with the Bank Group experts and consultants and Bank project management, SOCAD and lower-level CAD staff were able to acquire new methodologies and technologies to enhance their technical capability, especially with the computerized MIS. The SIDD program, introduced as a pilot project for the first time under SOCAD’s CAD program, was successful and laid the foundation for democratic water management and for farmers eventually to take over the operation and maintenance of the tertiary irrigation facilities themselves through the WUAs established. Overall, the institutional development impact of the project is rated as substantial.
5. Major Factors Affecting Implementation and Outcome
5.1 Factors outside the control of government or implementing agency:
5.1.1 Only one major factor outside the control of the government or implementation agency affected project implementation. Bad weather affected project implementation to some extent. Severe droughts occurred in Henan and Shandong, and the Huai River floods in Anhui in 2003 slowed down project implementation as local governments had to divert financial resources to deal with the impact of natural disasters. In addition, the heavy rains and floods also affected the construction works for the SOCAD National MIS/Training Center and delayed its completion for about six months.
5.2 Factors generally subject to government control:
5.2.1 One of the most positive factors in project success was the firm commitment by central, provincial and local governments, including the city and county governments, to implement the project. Participation of the local government leadership and staff was active and effective, paving the way for smooth project implementation. At start-up, government establishment of the Project Leading Groups (PLGs) and Project Management Offices (PMOs) at all levels was rapid and well coordinated. However, government policies to free grain markets and withdraw the production subsidies had some negative impacts on the project as falling grain prices caused the grain cultivated area to decline and adversely affected farmers’ incomes. Other negative factors affecting project implementation included the delay in reviewing and approving detailed individual project feasibility reports, and reduced budget allocations and funding constraints faced by some project counties.
5.3 Factors generally subject to implementing agency control:
5.3.1 The project was fortunate to have an effective SOCAD and a POCAD in each of the five provinces in leading project implementation. SOCAD and POCADs, with their existing staff, were able to launch the
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project immediately after appraisal by organizing PMOs at the city and county levels. Many of the city and county PMOs were new to Bank-financed projects and required substantial training on project management and procedures, especially for procurement and reimbursement. The POCADs organized special training for them in procurement, disbursement, project supervision and financial management. Written manuals were also issued to project staff for their guidance. After an initial learning process, all city and county PMOs were able to operate efficiently, and project supervision and management at the county level was progressively improved.
5.3.2 SOCAD, located in Beijing, was able to keep frequent touch with the Task Manager (TM) who for most of the project implementation period was located in the Bank’s Beijing office. This close coordination and continuous dialogue had a substantial positive impact on the project, helping to resolve implementation problems and issues at all levels rapidly, and also enabled the Bank to monitor closely the project progress and problems before they became severe. With 131 project counties and many hundreds of sub-projects, difficulties in maintaining supervision and construction quality and engineering standards were encountered, especially for works carried out by township and village construction teams, but these were resolved rapidly with the proximity of the Bank’s TM to the field. Project expenditures using the MIS were prepared diligently by each Provincial PMO and sent to SOCAD for processing before being submitted to the Bank for disbursement. The timely disbursement of project funds greatly helped the cash flow of the project entities which had made payments in advance for works completed; project costs and expenditures were closely monitored and rigorously controlled by SOCAD and POCADs resulting in very low cost overruns.
5.4 Costs and financing:
5.4.1 Total project cost was estimated at US$849.3 million (Y7,083.6 million) at appraisal, US$854.8 million (Y7,083.6 million) at MTR in 2001, and US$867.3 million (Y7,181.7 million) at project completion. The increase of total project cost at completion was about US$18 million or 2.1 percent over the appraisal estimate. This marginal increase was primarily due to currency exchange differences, increases in labor and materials cost, and enhanced work quantities and engineering standards (see Annex 2 for a summary of costs for each component at appraisal, MTR and completion). At completion, Provincial and local governments had financed about 34 percent of total project costs, farmers had contributed 32 percent, and the Bank loan had provided 34 percent. This was only slightly different from appraisal estimates (see Annex 2 for a summary of project financing).
6. Sustainability
6.1 Rationale for sustainability rating:
6.1.1 Sustainability of the project is rated as likely.
(a) The project areas in the five provinces support a large rural population and are intensively cultivated for annual grain and commodity crops. Beneficiary farmers contributed labor and funds to construct the facilities, especially the tertiary and on-farm irrigation and drainage facilities upon which their livelihoods depend. They feel “ownership” for the facilities and are likely to take care of them and use them effectively.
(b) The existing government agencies involved (agriculture, irrigation and forestry) took over responsibility for project facilities for operation and maintenance as soon as they were completed. Their continued operation and maintenance is assured because the agencies are part of existing local government
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entities which provide basic services to farmers. Where farmer WUAs were established, they have taken over responsibility for operation and maintenance of the facilities, and in non-WUA areas local governments are providing satisfactory annual budgets to meet the annual operation and maintenance costs.
(c) Being a major agricultural production base, the project area has strong policy and financial support from the central government which will ensure that the project can continue to achieve good results and sustain its operations on a long-term basis.
(d) SOCAD has previously undertaken successfully major comprehensive agricultural development programs in the five project provinces and will continue to extend its program in a large part of the remaining area under their jurisdiction. SOCAD’s commitment and continued presence in the five provinces would help ensure that completed project facilities would continue to be sustainable.
6.2 Transition arrangement to regular operations:
6.2.1 There was no need for transition arrangements to regular operation. Operation and maintenance responsibilities for the project facilities were pre-determined and defined before appraisal. Upon completion, facilities at each sub-project were handed over to the concerned local units at county and township level for operation and maintenance, or to the farmer WUA established under the project, as appropriate.
7. Bank and Borrower Performance
Bank7.1 Lending:
7.1.1 The Bank's performance for lending is rated as satisfactory. The Bank responded promptly to the government's request for assistance. The project was first proposed to the Bank in late 1996 and an identification mission was sent to China in February 1997. The Borrower’s needs were assessed, the project scope and content were formulated and agreed with SOCAD, and the project was prepared and processed on a fast-track basis as requested by the government. Identification was followed by the Bank preparation and pre-appraisal missions in September and November 1997; the project was appraised in February 1998 and the loan was approved in June 1998. The whole process, from project identification to approval, took about 16 months. The relatively rapid processing of the loan was facilitated by the Borrower’s thorough project preparation, close cooperation with the Bank and timely provision of project data and information, and prompt action on Bank recommendations. In order to facilitate early project start-up during the idle period for farming activities, the Bank made provision for US$15 million for retroactive financing for small works construction through beneficiary/farmer participation during the 1997/98 season.
7.2 Supervision:
7.2.1 The Bank's performance for supervision is also rated as satisfactory. The project was supervised at roughly six-months intervals and a total of ten times over the implementation period. Bank supervision missions usually lasted two to three weeks each, covered several project sites in each of the five provinces, and generally was preceded by a SOCAD/POCAD internal supervision mission to each province whose findings were provided to the Bank for information. Appropriate technical experts were included in each Bank mission (see Annex 4), and Bank's supervision mission findings and recommendations were highly appreciated by SOCAD and the POCADs, especially on procurement, disbursement, project monitoring
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and specific technical issues. Mission Aide-Memoires were provided to SOCAD after each mission and were disseminated promptly by SOCAD to the POCADs for follow-up action. During 2000/2001, Bank missions assisted SOCAD in carrying out the MTR of overall project progress, expenditures and costs and in deciding on the adjustments needed. The review resulted in some adjustments in costs between the categories of works and of goods, an increased disbursement percentage for works under Category 1 (a) from 20 percent to 45 percent, and the revision of targets for a number of sub-components based on project experience to that date.
7.3 Overall Bank performance:
7.3.1 The Bank's overall performance is rated as satisfactory. The Bank responded promptly to the Borrower's requests and adequately prepared and appraised the project on a fast-track basis. It provided close and effective supervision and maintained close contact and interaction with the Borrower. Taking into consideration the various implementation constraints, the Bank approved revisions promptly and provided the appropriate extensions of the Loan Closing Date so that the project could be completed as planned.
Borrower7.4 Preparation:
7.4.1 The Borrower's performance in project preparation is rated as satisfactory. SOCAD has gained long experience in project preparation under its CAD programs throughout China. After agreeing with the Bank on the project's scope and content, and on the five provinces that will participate in the project, SOCAD together with the five POCADs prepared the project feasibility reports in adequate detail for review by Bank missions. SOCAD and the POCADs also jointly prepared the Project Implementation Plan (PIP) and the various specific subject reports according to Bank recommendations and requirements. Preparation by the Borrower was considered adequate and of satisfactory quality.
7.5 Government implementation performance:
7.5.1 The Government implementation performance is rated as satisfactory. Following project appraisal, each province established Project Leading Groups (PLG) at province, city and county levels. The Provincial PLG was headed by a Vice-Governor. Project implementation responsibility was assigned to the respective COCADs. The key role played by the provincial governments was in providing policy and technical guidance to the implementing units, effective inter-agency coordination, adequate and timely counterpart fund allocations, and prompt approval of staff for the PMOs. The central government implementation role was mainly delegated to SOCAD to monitor and supervise project implementation by POCADs and local governments, operate the loan Special Account for the project, handle international procurement and provide various required reports to the Bank.
7.6 Implementing Agency:
7.6.1 Project Organization and Management. PMOs were rapidly established at central, provincial, city and county levels. Project staff, mostly transferred or seconded from existing government offices and agencies, were effective and capable after the initial orientation and training. These PMOs were adequately maintained throughout project implementation. Other line agencies, especially the Water Resources, Agriculture and Forestry Bureaus, provided the necessary technical support, especially at the county level. The provincial, city and county PLGs were established accordingly, but met on an ad-hoc basis. These PLGs also provided some coordination but in some cases could have played a stronger leadership role and
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performed better.
7.6.2 Physical Construction. Physical construction of small-scale sub-project works and facilities, mainly tertiary canals and drains, land levelling, and tree planting, was mainly carried out by project beneficiaries through community participation during the idle season for farming activities (November to March). Larger works, such as canal ancillary structures, tubewells, rural roads, bridges and culverts, and small buildings were carried out by village and township contractors through price quotations or National Competitive Bidding (NCB) procedures managed by the respective county PMOs. Construction of sub-projects started during the first or the second year of project implementation, and over fifty percent of the sub-projects were substantially completed by the end of third year; Jiangsu and Shandong Provinces in particular progressed faster, particularly on the irrigation and drainage component. Construction of facilities for agricultural support services was comparatively slower because of the geographical dispersion and small size of many of the facilities. Project construction works were virtually completed by the end of the fifth year as scheduled, except for the SOCAD National MIS/Training Center. Construction quality has generally been satisfactory, but varied among the five provinces and also among the counties in each province. Bank and SOCAD/POCAD supervision missions helped to ensure good construction quality and standards as well as progress.
7.6.3 Procurement and Disbursements. Procurement under the project was in accordance with Bank guidelines and procedures and was carried out under three categories – works, goods and services. There was no International Competitive Bidding (ICB) for works as they were small, scattered and spread over five years. Most of the works were procured through 144 NCBs procedures, valued at US$76.4 million, by COCADs under the supervision of POCADs and 7,718 price quotations by COCADs valued at US$305.6 million. Some US$276.7 million in works (mainly irrigation canal earthworks, land levelling, and tree planting) were carried out through project beneficiaries’ participation. As covenanted in the Loan Agreement, each project county carried out at least one NCB for works which was submitted to the Bank for prior review to gain experience on Bank procurement procedures. Many counties completed multiple NCBs. NCB for works used model bid documents prepared by the Ministry of Finance (MOF) for Bank-financed projects and has now been widely adopted in non-project counties under SOCAD’s CAD program.
7.6.4 Sixteen ICB packages covering 61 contracts for goods (e.g., large, homogenous procurements of computers, vehicles, machinery, fertilizers, and PVC pipe) valued at US$71 million were carried out by SOCAD with assistance from the five provinces. Smaller items of goods were packaged and procured through 28 NCBs (US$25.7 million total) by the POCADs and through price quotations by COCADs (US$38.28 million). The value of actual procurement of works and goods under the project totaled US$794.4 million compared to US$775.7 million estimated at appraisal (see Annex 2 for the detailed breakdown by procurement method). Project procurement and the results were rated as generally satisfactorily and in accordance with Bank procurement procedures and requirements. The impacts of competitive procedures introduced under the project have been positively demonstrated. Project entities reported saving of 10-15 percent for works and 15-20 percent for goods due to competitive bidding, compared to the original cost estimate at the project appraisal. Project procurement also provided good opportunities for a wide range of domestic contractors and suppliers to gain valuable experience in competitive bidding. SOCAD and the five POCADs also built up a core staff experienced and competent in competitive bidding which has now been adopted in SOCAD’s own national CAD program throughout the country.
7.6.5. Disbursement of funds submitted to and processed by SOCAD was generally according to Bank requirements. During the MTR, the disbursement percentage for civil works under Category 1 (a) was
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increased from 20 percent to 45 percent, and the proceeds allocated for works was increased appropriately by reducing the amount allocated for goods. Although the Bank loan of US$300 million was fully disbursed by June 2005, the rate of disbursement from 1999 to 2001 was somewhat slower than the appraisal schedule, mainly because of project implementation delays for some counties at the beginning of the project implementation. However, after the MTR adjustments in January 2001, the rate of disbursement rose as the result of the accelerated investment in irrigation and drainage works and the increased disbursement percentage for works. Disbursements rose from only 9 percent of appraisal estimates in 1999 to 97 percent in 2004.
Social Impact
7.6.6 The project had significant positive social impacts on the local population. With the increased per capita incomes resulting from project investments (see paragraph 4.1 and Annex 1), farmers in the project area now enjoy a higher standard of living, better quality of life, and a better living environment than before the project. According to Shandong’s survey of monitored households, for example, household consumption has increased from Y1,708 in the base year to Y1,876 at completion, and in addition the consumption patterns have changed with less spent on staple foods like grain and more on higher proteins foods like meat. Household expenditures on children’s education and on consumer goods have also increased. Average family housing has improved from 20.7 sq. m in the base year to 26.9 sq. m at project completion, and is 1.4 sq. m higher than in the non-project area.
7.6.7 In addition to direct agricultural and income benefits, project investments provided short-term employment for construction as well as long-term employment for operation and maintenance of project facilities. Shandong’s monitoring statistics show that some 250,000 man-days of labor were used in project construction and an additional 20,000 persons would be required annually for operation and maintenance. It is estimated that over the five-year implementation period, the project provided short-term employment to about 1.1 million persons and an annual increment of 115,000 persons in long-term employment. With improved efficiency in irrigation and agricultural production which requires less labor inputs, surplus labor was channeled into sideline production, small family businesses and local manufacturing and processing enterprises, especially for women whose social status has now been enhanced. The off-farm and non-agriculture work have generated substantial additional income for the farm families.
Environmental Management
7.6.8 The project Environmental Impact was rated “B” by Bank management and a full environmental impact assessment was not required. However, a Project Environmental Management Plan (including the environmental monitoring plan) was prepared and implemented with satisfactory results. The results have confirmed the conclusion in the PAD that “there are no major environmental issues” in this project, and that it is unlikely that the project would have any major environmental issues during its operation and production stage. Overall, the project followed closely the relevant environmental laws and regulations of China during project construction and implementation. Consequently, the project did not have any significant negative environmental impacts to the environment or create any public health issues or public complaints. Close attention and effective measures to mitigate or offset adverse environmental impacts, or keep them to a minimum and/or an acceptable level, have been taken and were adequate.
7.6.9 Possible adverse impacts identified at appraisal were mainly related to four environmental issues: (a) possible lake eutrophication; (b) extra water diversion from the Yellow River by Shandong Province; (c) overdraft of groundwater in Hebei, Shandong, and Henan provinces; and (d) possible secondary soil salinization. Based on the information provided by the concerned provinces, the ICR mission reviewed the
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above issues and found insignificant or negligible adverse impacts. The mission's findings are contained in the supporting document on Environment Management (see details in Section 10. Additional Information).
Compliance with Legal Covenants
7.6.10 Legal covenants in the Loan and Project Agreements have been generally complied with by the Borrower. In particular, the Borrower has paid full attention to the following:
(a) Operation and Maintenance. Each sub-project on completion was properly taken over for operation and maintenance by the local entities concerned or transferred to a farmer WUA. Operation and maintenance rules and manuals have been prepared, based on local conditions and requirements, and issued to the local entities for compliance. The POCADs continued to monitor the operation and maintenance of completed sub-projects.
(b) Water Charges. Each province has collected increased irrigation water charges to cover full annual operation and maintenance cost and loan repayment. The charges vary from county to county, depending on the farmers’ incomes, ability to pay, methods of irrigation and original sub-project investment costs. Average water charges per ha in the five provinces have increased by 31 percent, from Y465 to Y607, in the project areas. This will provide additional resources for better long-term operation and maintenance of project irrigation facilities. Based on the substantial increased gross income per ha, these increases in water charges are within the means of project beneficiaries to pay without increasing their financing burden.
c) Future Operation Plans. To sustain future operations, the Borrower has envisaged: (i) to continue present efforts to collect water charges at cost and by volumetric measurement to meet full operation and maintenance costs of irrigation facilities; (ii) to promote further the establishment and development of SIDDs, especially WUAs, to take over operation and maintenance from the local government entities; and (iii) to pay due consideration to environmental aspects of future operation, particularly on water quality, groundwater over-extraction, and pollution caused by fertilizers and agro-chemicals.
(d) Dam Safety. The Borrower has undertaken satisfactory measures to ensure that dams serving the sub-project areas are safe and operational. For example, some 18 small- and medium-sized dams have been remedied in Jiangsu Province. Remedial works for four major dams were completed by June 2005 (Mahe Dam in Shandong, Xiaodashan Dam in Jiangsu, and Fuzhiling and Longhekou Dams in Anhui Province). For the two dams in Anhui, remedial works started late due to funding constraints and belated approval. All the dam safety works were funded from domestic sources – Ministry of Water Resources and Provincial governments.
(e) Resettlement and Land Compensation. Negative impacts such as resettlement, land acquisition and destruction of nurseries were avoided or minimized through proper project construction planning and measures taken during project implementation. In fact, some 2,087 ha of farmland were saved as result of re-alignment of canals and concrete lining of canals that reduced the canal size and through the use of underground pipelines. Similarly, improvement of rural road networks brought about a net saving of 436 ha. The available surplus of 2,523 ha was distributed to 26,233 households through a land adjustment and distribution process that was transparent and carried out by the local village committees with the participation of the affected people. Destruction of crops and nurseries in construction of on-farm distribution canals was avoided by scheduling construction in the fields after the cropping season; (i.e., after autumn each year). Land required for the construction of buildings, stores, drying yards, etc. was
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mostly provided by the project entities and beneficiaries themselves without acquiring farmers’ land.
7.7 Overall Borrower performance:
7.7.1 Based on the above, the Borrower’s overall performance is rated satisfactory. The government and PMOs at all levels were fully committed to achieving the project objectives and took appropriate measures promptly. Although completion of the project was delayed by 18 months as a request of the delayed start and completion of the SOCAD’s National MIS/Training Center, the project’s main components were completed on schedule and project results and benefits have been achieved, in some cases significantly exceeding the appraisal targets.
8. Lessons Learned
Key lessons learned from implementation of the project include:
• Well Planned and Designed Sub-projects. The sub-projects were small-scale comprehensive agricultural development sub-projects, well planned and easily designed. Integrated with irrigation and drainage and with forestry, they proved to be effective and capable of being implemented rapidly and achieving the desired benefits. Such sub-projects could be replicated for repeater projects over the remaining large tracts of existing low- and medium-yield irrigated areas in China.
• Self-financing Irrigation and Drainage Districts (SIDDs). The SIDDs, introduced as a pilot project, were successful to a large extent. However, their promotion to a larger scale would need careful ground work and, in particular, the support of the local governments and farmers. Focus and priority for future development and expansion should be on WUAs with provision of appropriate incentives to encourage establishment and ensure sustainable operation and management. WSCs, primarily responsible for water delivery systems at the main and branch canal level, should only be promoted if there are no inherent problems of asset transfer, financial viability, staff retrenchment and large liability of social welfare support of retired staff. There is a need to follow up on the established WSCs and WUAs as to their continued effectiveness and long-term sustainability. • Adequate and Timely Counterpart Funds are Critical: Adequate and timely allocation of counterpart funds is critical for project implementation. The project was fortunate to have the support of the central and provincial governments in allocating the required counterpart funds in an adequate and timely manner. The project also enjoyed the concessionary terms for on-lending of funds from the central government, easing somewhat the financial burden of the local governments and project beneficiaries.
• Active Participation and Effective Coordination and Management: In addition to SOCAD under the MOF, the project involved five provinces (Jiangsu, Shandong, Anhui, Hebei and Henan), a total of 28 prefectures/cities and 131 counties. Active participation by government leaders at all levels and project beneficiaries is very important in ensuring smooth project implementation, especially in raising by local counterpart funds, organizing contributions of labor for large volume earthwork construction, and resolving day-to-day project implementation problems and issues. Effective coordination with governments and other government agencies is also important to avoid project delay.
• ICB Procurement: In the China context, ICB procurement of comprehensive agricultural development project requirements (e.g., agricultural machinery, equipment, fertilizer, plastic membranes
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and PVC pipes) the delivery of which was time-critical and spread over a number of provinces, is not practical and has no distinct price advantage. There was keen competition among the bidders but there were no foreign bidders and, in all cases, the successful bidders were local suppliers and manufacturers. As an alternative, it is recommended that NCB procedure be used instead for procurement of items with large quantity in phases. ICB procurement of goods did not appear to hold any advantages over NCB procedures in the China context. ICB procurement was often delayed due to complications in packaging and differing requirements and timing of delivery needed by the five provinces, different specifications, and in some cases lack of common technical performance standards. In some cases, the required goods when finally delivered missed the crop growing seasons or were not fully suited to the local conditions in terms of performance. SOCAD and POCADs found the ICB process to be excessively time-consuming, burdensome and expensive with no real price advantage. Project offices repeatedly made strong representations to the Bank missions either to waive the ICB requirement or simplify ICB procedures to save expenses and time in bidding and to improve the efficiency of the bidding process.
• Increased farmer incomes through valued-added production and marketability: IAIL2 project has demonstrated positive economic viability of non-grain production to meet changing market and demands when grain production was less attractive. Promotion of value-added production systems (such as green, non-polluted and organic food) and of specialized farmer professional associations or cooperative enterprises, could be considered under future similar irrigated agriculture intensification projects as has been the case under the IAIL3 project.
9. Partner Comments
(a) Borrower/implementing agency:
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(b) Cofinanciers:
There were no cofinanciers for this project
(c) Other partners (NGOs/private sector):
There were no other partners involved in the project .
10. Additional Information
The additional information for the post-evaluation on project environmental management is shown in Annex 8.
Irrigation and Drainage: The total irrigation area improved was 1.53 million ha as appraised. However, the total investment was increased by about 10 percent or Y335 million from Y4,574 million at appraisal to Y4,909 million at completion. This was due to higher engineering standards and the associated increased cost for the irrigation facilities constructed (canal lining, more ancillary structures, and tubewells). This has resulted in a larger area under water-saving irrigation from 555,243 ha estimated at appraisal and 637,780 ha revised at MTR to 762,097 ha at completion (119.5 percent of the MTR targets) and the overall irrigation system efficiency increased from 0.68 to 0.74 due to larger areas being served by lined canals and sub-surface pipelines.
Agricultural Intensification and Support Services: Quality seeds production, their coverage, fertilizer inputs, extension services, pest control and farm mechanization have all exceeded the original appraisal targets. Due to government’s withdrawal of grain production subsidies and freeing of the grain market, grain prices declined during 1998-2002 and the total area cultivated with grain crops dropped by 13.6 percent from 21.65 million ha to 18.71 million ha. However, due to higher yields, the total grain production was only reduced by about 1.32 million tons or 10.6 percent. To off-set the loss of farmers’ income from grain production, cropping patterns were adjusted to increase production of more commodity and high-valued crops. Commodity crops production increased from 3.8 million tons to 11.2 million tons (an increase of 195 percent). The total production value (grain crops and commodity crops) has increased by 57 percent from Y15.5 billion to Y24.3 billion. The total investment for agricultural improvement was 10.9 percent less than the appraisal estimate of Y945.2 million because of higher unit prices estimated at appraisal.
Afforestation and Environmental Monitoring: Outputs of afforestation were excellent with 3,873 ha of
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nurseries having been established against 1,561 ha planned at appraisal. On-farm windbreaks and protective forest belts established have all exceeded the targets (106 percent of the MTR target), resulting in increased vegetative coverage from 11.6 percent to 17.2 percent – a major ecological and environment improvement.
Institutional Development and Support: The SIDD pilot project exceeded its original targets, with 11 WSCs and 516 WUAs having been established compared to the 8 WSCs and 181 WUAs planned. The number of households covered was 247,602 compared to 227,583 estimated at appraisal. The SIDD pilot project, now covering about 136,500 ha or 8.9 percent of the total project area, has laid the foundation for promoting the program in the remaining project area as well as in other future CAD project areas.
As expected, the average per capita incomes of the five provinces have increased substantially, especially for the low-income households, where income was by 64 percent from Y714 to Y1,171. The substantial increase is due to low income benchmark estimated at appraisal. The increases for the high- and medium-income households were 43 percent and 47 percent, respectively.
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Annex 2. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)AppraisalEstimate
Actual/Latest Estimate
Percentage of Appraisal
Component US$ million US$ millionIrrigation & Drainage 470.69 593.07 126Agriculture Intensification & Services 139.21 157.73 113.3Afforestation, Environment & monitoring 39.85 51.97 130.4Institutional Development and Support 46.69 46.75 96.9Survey, Design & Management 25.42 17.83 70.1
TOTAL 91.4 188.2 527.7 42.0 849.3(71.0) (73.5) (155.5) (0) (300.0)
1. Figures in parenthesis are the amounts financed by the Bank Loan. All costs include contingencies.2. Includes civil works and goods procured through national shopping, consulting services, training, technical assistance and services.
Project Costs by Procurement Arrangements (Actual) (US$ million equivalent)
(18.56) (18.56)4. Engr. Survey, design, and management
0 0 0 19.48 19.48
0 (0.00)5. Land compensation 0 0 0 0 0.00
TOTAL 70.89 105.00 665.17 26.28 867.35(61.40) (49.65) (188.95) 0.00 (300.00)
1. Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2. Includes civil works and goods procured through national shopping, consulting services, training, technical assistance and services.
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Project Financing by Component (in US$ million equivalent)
Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal
Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Irrigation and Drainage 141.90 328.80 193.39 399.69 136.3 121.6Agriculture Intensification and Support Services
68.45 70.76 67.60 90.14 98.8 127.4
Afforestation, Environment Protection and Monitoring
Major economic benefits achieved by the project include the increase in agricultural production and farmers’ incomes and the reduction of poverty in the project area. The expected benefit targets have been accomplished through rehabilitation and/or completion of on-farm irrigation and drainage schemes, improvement of irrigation operation and maintenance practices, and strengthening of agriculture extension services in five sub-project areas in Anhui, Jiangsu, Shandong, Heibei and Henan provinces in the Huang-Huai-Hai Plain, the most important agricultural production region in China.
Agricultural Benefit
The project made a significant impact on agricultural production in the project area, compared to the “without-project” case and quantitative targets set at project appraisal. At completion, the expected agricultural benefit targets have been fully achieved and exceeded. The total agricultural production of grain and cash crops increased from 16.3 to 22.4 million tons (137.4 percent of PAD estimate), mainly the result of irrigation coupled with intensive agricultural extension and improved water management based on the improved and expanded irrigated land (about 1.535 million ha, 100.1 percent of PAD estimate). The average yields per hectare in the project area increased from 6.19 tons to 7.53 tons for rice (100 percent of PAD estimate, 122 percent of the baseline), from 4.12 tons to 5.24 tons for wheat (104 percent of PAD estimate, 127 percent of the baseline), from 4.96 tons to 6.35 tons for corn (103 percent of PAD estimate, 128 percent of the baseline), from 1.83 tons to 2.39 tons for soybean (103 percent of PAD estimate, 131 percent of the baseline), from 2.84 tons to 3.71 tons for peanut (105 percent of PAD estimateR, 130 percent of the baseline), from 0.86 tons to 1.09 tons for cotton (104 percent of PAD estimate, 126 percent of the baseline), from 30.9 tons to 37.9 tons for vegetables (103 percent of PAD estimate, 123 percent of the baseline), and from 1.9 tons to 2.4 tons for oil seeds (101 percent of PAD estimate, 124 percent of the baseline). The details for crop area, yield, and total production in each subproject area are presented in the table below:
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Areas ('000 ha)
Yield (ton/ha)
Production ('000 ton)
Areas ('000 ha)
Yield (ton/ha)
Production ('000 ton)
Areas ('000 ha)
Yield (ton/ha)
Production ('000 ton) Yield Area Prod.
Total Grain Production 2,000.8 4.7 9,313.5 2,165.1 5.8 12,504.0 1,871.1 6.0 11,182.4 103.5 86.4 89.4
Sources : Subproject provinces (POCADs) in Anhui, Jiangsu, Shandong, Henan and Hebei.
Note: At the full development defined as 5 years after completion of construction. The forestry products are not included in the table.
Appraisal Estimate
Main Crops in Project Area
Summary of Crop Yield, Area and Production
Actual/Latest Estimate Percent of SAR (%)With ProjectWithout Project (1997)
The improvement and development of surface and groundwater irrigation also resulted in substantial increases in cropping intensities. Comparing the "with-project and without-project" scenarios expected at appraisal, the total cropping areas for grain and cash crops have increased from 2.56 million ha to 2.78 million ha (104 percent of the PAD estimate), due to the increased crop intensity (from 164.6 percent to 186 percent, 104 percent of PAD estimate). As shown above, achievements of the project overall have had a significant impact on agricultural production compared to the "without-project" scenario. Although total grain production and crop area declined by about 11 percent (89.4 percent of PAD estimate) due to the government’s withdrawal of the grain production subsidies and freeing of the grain market, and grain prices declined during 1998-2002 with the total area cultivated for grain crops dropped by about 294,000 ha (86.4 percent of PAD estimate), there is already a significant increase in total crop production. This is mainly due to the higher yields for both grain and cash crops, and significantly increased cropping area for cash and high-valued crops. The total annual cash crop production increased from 3.8 million tons in the PAD estimate to 11.2 million tons (about 295 percent of PAD estimate), of which annual vegetable production increased from 2.7 million tons to 9.8 million tons (almost 362 percent over the PAD target), annual cotton production increased from about 257,000 to 278,000 tons (108 percent of PAD estimate), and annual oil seed production increased from 333,000 to 412,000 tons (about 124 percent of PAD estimate). Overall, the total production value of grain crops and cash crops increased by about 57 percent from Y15.5 billion to Y24.3 billion.
Rural Incomes and Impact on Poverty:
The farm-level financial analysis was carried out to determine the project's impact on beneficiary farmers’ income. The project helped to raise farm incomes for some 4.5 million farm families benefiting directly from the project, of which 30-47 percent are low-income, 38-50 percent are medium income, and 15-23
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percent are high income families in various sub-project areas. The farm model analysis shows a substantial increase in beneficiary farmers’ incomes with comprehensive improvement in irrigation and drainage facilities, crop production and agricultural support services. The typical farmer households incomes (for 1,965 households) were monitored during project implementation. In line with the PAD’s approach, representative farm households were selected in five subproject areas as assumed in the PAD. The following assumptions were considered in assessing the financial impacts of the project on household incomes: (a) average farm holding size in each sub-project area, combined with the actual cropping intensity in each area due to the change from dry and partially-irrigated land to fully irrigated land; (b) the average 2003 financial farm-gate prices prevailing in the project area were used to value outputs and inputs; and (c) from 1998 to 2004 the actual cropping pattern, intensity and financial crop budgets (for with- and without-subproject) were applied for annual and perennial crop production in each sub-project area, with increased crop yields derived from the development of irrigation and drainage systems and relevant agricultural technology through the project. The summary table of incremental net income for typical farm households in each sub-project area is presented below:
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Project Impact on Typical Farming Households Income
The summary table of incremental net income for typical farm households (Unit: yuan)
Note: At SAR, the project at full development was defined as in year 9-11 (4 years after completion of construction). However, at ICR full development of the actual project was achieved two years early.
The project survey/monitoring indicators show that at completion, the overall average net per capita income for farm households in five sub-project areas reached Y1,171 (115 percent of PAD and 168 percent of "without-project" scenarios ) for low–income families, Y1,497 (111 percent of PAD and 146.8 percent of "without-project" scenarios) for medium-income families; and Y1,769.5 (109 percent of PAD and 138 percent of "without-project" scenarios) for high-income families. This indicates the strong financial incentives for farmers to participate in the project and direct poverty alleviation effects. The increased crop outputs and the adjusted cropping patterns for high-value cash crops have greatly facilitated raising farmers’ incomes.
Net Present Value/Economic Rate of Return
Following appraisal methodology, the NPV and the ERR were re-estimated for each sub-project area in
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Hebei, Jiangsu, Anhui, Shandong and Henan province, and for the project as a whole. The analysis compared "with-project" and "without-project" scenarios, and the quantifiable benefits derived through improvements in irrigation and drainage facilities, low yield farmland, agricultural services, and the estimated economic costs. The ERRs for individual sub-projects range from 27.1 percent in Jiangsu irrigation area to 34.8 percent in Shandong sub-project area, depending on the actual improved crop yields, cropping intensity and cropping pattern, the size of the irrigation and planted area, and the investment and O&M costs for each type of scheme at the time of implementation. The overall project ERR is estimated at 30 percent (with a net present value of Y7,953 million), significantly higher than the 23.9 percent estimated at appraisal. A comparison of detailed ERRs by each sub-project area is shown below:
The economic analysis of the sub-projects shows that the recalculated ERRs are all favorable, and higher than those estimated in the PAD. The main reasons for the better-than-expected results include: (a) the increased irrigated cropping area and cropping intensity (from 179 percent in the PAD estimate to 186 percent at completion); (b) the adjustment of the cropping pattern as the total high-value cash crop area has increased from 557,200 ha (without project) to 1,005,300 ha at completion (152 percent in the PAD estimate); and (c) substantial increase in crop yields and outputs. The average yield of grain (rice, wheat, corn) increased from 4,655 kg (without project) to 5,976 kg at project completion (about 104 percent of the PAD estimate) in most sub-project areas, and the output value of main cash crops increased by three times. However, the actual project investment costs at completion are very close to the cost estimates in the PAD (the total project investments were about US$867.3 million compared to US$849.3 million at appraisal. Returns for all sub-projects have far exceeded expectations at appraisal. This is considered to be a highly satisfactory result, particularly in view of the numerous non-quantifiable social and environmental benefits. These include increased employment opportunities for farmers, improved women’s status, a foundation laid for development of specialized farmers’ cooperative organizations, improved road access to communities and the rural social service system, increased reliability of water delivery brought by improved irrigation and drainage facilities, promotion of WUAs irrigation managerial system, the improved quality of soil and agricultural products due to IPM, and improved forestry coverage and farmland ecological environment. Main Assumptions for Financial and Economic Analysis
The ERR estimate was compared with the PAD, using revised estimates based on the latest data and information for actual costs and benefits and updated assumptions on future costs and benefits provided by SOCAD and POCADs in five project provinces in 2004. The framework of the analysis follows, to the extent possible, that of the PAD. Key assumptions have been changed only when clearly better estimates are available. The assumptions applied in the financial and economic analyses mainly cover the general concepts and field activities relating to on-farm crop development for the incremental production of crops made possible as a result of the project. The general assumptions are as follows:
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.(a) The project implementation period was six years, with 1998 being the first year of the project unless otherwise stated. The economic life of sub-projects is assumed to be 20 years for field development. The benefits and costs are presented in late 2003 constant prices. Input and output prices used in the crop budgets are actual 2003 farm-gate prices in project areas provided by the project authorities because, with China in the WTO, the prices used reflect more accurately undistorted international market prices for most traded commodities and services. In general, the financial prices at completion were lower than those at appraisal.
(b) At completion, total actual project investment costs in financial terms for the five sub-project areas was about US$867.3 million (or Y7181.8 million, 102 percent of the PAD estimate). Except the investment costs for SOCAD's institutional development sub-component (Y149.6 million, about 2.1% of the total investment cost), all the above project costs, agricultural production costs and O&M costs have been considered in estimating the economic costs of the project, but the taxes, duties, and other charges were omitted. The economic opportunity cost in the project area for farm labor is Y20 and the standard conversion factor of 1 was applied to all other non-traded items. A discount rate of 12 percent was applied to approximate the opportunity cost of capital in China.
(c) The project benefits are based on the actual performance of existing crops in each sub-project area. They reflect the actual irrigated land developed/improved with the actual cropping pattern and intensity by year in each sub-project area. The detailed crop budgets reflect actual scenarios for wheat, rice, corn, peanut, soybeans, sweet potato, fruit and other crops in each irrigation area. Projected yields are actual average yields from 1998-2003, and the estimated yields (to full development) are based on the experiences of the existing project in each sub-project area. The amount applied of seeds, fertilizers and farm chemicals are also the actual average and the incremental levels in each subproject area. The indirect social and envionmental benefits have not been included in the analysis because no information is available to quantify them.
(d) At appraisal, the project at full development was defined as in year 9-11 (4 years after completion of construction). However, at completion full development of the actual project was achieved two years early.
(e) The details of these and other assumptions applied in the financial and economic analysis are presented in the project files.
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Annex 4. Bank Inputs
(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty
Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA
SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA
Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA
Lending HS S U HUSupervision HS S U HUOverall HS S U HU
6.2 Borrower performance Rating
Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU
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Annex 7. List of Supporting Documents
A. The World BankSupervision/ICR Missions’ Aide Memoires (early ICR mission in April 2004, and the 1.follow-up ICR mission in December 2004.Environmental Management Evaluation2.Social Assessment3.Economic Benefit Analysis (Farmod and spreadsheet files) 4.
(Documents in Project Files Available upon Request)
B. The BorrowerSelf-financing Irrigation & Drainage District (SIDD) Evaluation1.Project Benefits Evaluation2.Social Assessment3.Environmental Management Report 4.Groundwater Monitoring and Evaluation5.Soil Fertility Monitoring and Evaluation6.Pollution Monitoring Report 7.Dam Safety8.Overseas Study Tours and Training9.Research and Studies10.Borrower's ICR11.Borrower's Comments12.
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Additional Annex 8. Environmental Assessment
The project environmental category was appropriately rated "B" at appraisal. Possible adverse impacts identified at appraisal were mainly related to four environmental issues (detailed in the PAD): (a) possible lake eutrophication; (b) extra water diversion from the Yellow River by Shandong Province; (c) over-extraction of groundwater in Hebei, Shandong, and Henan provinces; and (d) possible secondary soil salinization.
(a) Lake eutrophication:Four lakes in the project area are identified to have eutrophication problems. Industrial and urban waste-water are the major sources for eutrophication (80-90 percent of the total) in the four lakes. The project area from which agricultural drainage could reach the lakes only represents about 4-4.5 percent of the total lake basins area. Therefore, the impacts of drainage from the project area on eutrophication in the lakes are negligible. The project also implemented effective measures to reduce the loss of nitrogen and phosphorus (key nutrients for lake eutrophication) from the project areas such as land leveling, fertilizer conservation, reduction in use of nitrogen and increase in use of potassium, water-saving irrigation and water conservation. It is estimated that the loss of nitrogen and phosphorus from project area to the Chaohu Lake was reduced by 36 percent and 38 percent respectively, due to implementation of above-mentioned measures. The project succeeded in reducing the total amount of nitrogen and phosphorus run-off from the project area and mitigated to certain extent the eutrophication in the Chaohu Lake. The degree of eutrophication in Chaohu Lake was reduced from “heavy” in 1998 to “moderate” in 2002. Similar results exist for the other three lakes in the project areas.
(b) Shandong Water Diversion from the Yellow River: Effective measures have been taken to control water diversions from the Yellow River to the project area in Shandong and to Shandong Province. The yearly average total water amount diverted from the Yellow River to Shandong Province was 7.15 billion cu.m. during the period of 1998-2002, less than the allocated quota of 7.0 billion cu.m. by the Yellow River Basin Commission.
(c) Groundwater: The project followed the Legal Agreement covenant requirements that: (a) no new wells were to be developed in overdraft areas; (b) well depth should to be limited to less than 50m in water short area; (c) permits would be required for each new well; and (d) groundwater levels should be closely monitored. In addition, the project implemented comprehensive water saving measures which helped minimized the overdraft of groundwater in the project area, and in some areas project investments were designed to increase groundwater recharge. However, as a result of the continuous drought years in Hebei, Shandong, and Henan provinces, the average groundwater level dropped by 1-2 m in the three provinces during the period of 1998-2002. This is within the normal range of variation in the water-table in drought years and could be recovered in wet years. For example, in Shandon province groundwater levels rose on average by 3.36m in 2003 because of the abundant rainfall received (1,034 mm); groundwater levels at the end of 2003 were some 0.9 m higher than the groundwater level in 1998 and 1.27 m higher than the long-term average groundwater level in the province.
(d) Soil salinity: In the project, the area with soil salinity potential is limited to the low lands along rivers, around lakes and near the coast which in total form a very small percentage of the total project area. The project developed well irrigation systems and complete drainage systems in such areas to lower the high groundwater levels so as to reduce potential soil salinity. During the project period, no soil salinity problems were reported in the project areas. In addition to dealing with these specific environmental issues, the project implemented a comprehensive
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environmental monitoring program covering three main categories: (a) pollution control monitoring including soil, water quality, and agricultural products; (b) groundwater; and (c) soil fertility. Annual monitoring reports on each category were prepared by each province and furnished to SOCAD which summarized the monitoring report by category and furnished it to the Bank. The continuous environmental monitoring results have shown that the project had no significant negative environmental impacts to the ambient environment, and due to implementation of comprehensive water-saving measures, IPM, balanced fertilizer use, increased forest coverage rate (from 11.6 percent to 17.2 percent), the project has helped improve the agro-ecology in the project area, and has increased soil fertility, improved grain quality, and improved local micro-climate conditions.
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Additional Annex 9. Summary of Borrower's ICR
China Irrigated Agriculture Intensification II ProjectImplementation Completion Report
Summary
The project was effective on the 22nd, December 1998, the implementation duration was from 1998 to 2003, and project account was closed on the 30th, June 2005. The project implementation agencies were the State Office of Comprehensive Agricultural Development under the Ministry of Finance, Hebei, Henan, Shangdong, Jiangsu and Anhui provinces. The project investment was 7182 million Yuan, of which 300 million US$ was the World Bank loan, the balance was count part fund.
1. Project objectives and main components
The objectives of the project set during the appraisal were to increase agriculture production; increase farmers’ incomes; and establish mechanisms for sustainable use, development and management of water and land recourses in irrigated areas in the Huang-Huai-Hai Plain. These three objectives are short term and also long term development objectives.
In order to fulfill the objectives, the following components were included in the project: (1) irrigation and drainage, including irrigation conveyance system, and pump station improvement; (2) strengthening agricultural production capacity and agricultural support service, including soil enrichment, strengthening seed supply and agricultural technology extension systems, providing agricultural inputs and conducting integrated pest management; (3) reforestations and environment monitoring and evaluation, including building seedling nurseries and shelter belts, providing reforestation and maintenance equipment; (4) institutional development, including providing training and study tours on project implementation and management, setting up SIDD, providing office equipment and establishing management information system; (5) project site survey, design and administration.
2. Accomplishment of the project objectives and project output
a. Accomplishment of the project objectives
By the efforts of many related organizations in the five years, the project objectives have been well accomplished. By the time of the project completion, low and middle productivity farm land have been improved, farmland infrastructure including irrigation facilities have been significantly enhanced, farmland capacity for disaster resistance have been strengthened, agricultural production structure has been optimized, agro-products quality and agricultural comprehensive benefits have been improved in an overall way and Farmers’ income has been increased considerably. In terms of natural resource management, sustainable water utilization management mechanism has been primarily established, and various environment performance indicators have been put under well monitoring and natural resources and environment been properly protected.
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b. Project output
All project components have been implemented smoothly and most project output targets have been fulfilled and some even over fulfilled. By the end of December 2004, the accumulated investment totaling 7182 million Yuan has been completed, which accounted for 101.4% of both SAR and MTR targets. The breakdown investments among the subprojects are as follows: irrigation subcomponent finished 4909.207 million Yuan, accounting for 125.7% and 101.8% of SAR and MTR respectively; agricultural support service component finished as 1307.142 million Yuan, 113.1% and 100.5% of SAR and MTR; Forestry and environment protection and monitoring finished as 430.772 million Yuan, of 130.2% and 102.4% of SAR and MTR; institutional development and support finished at 387.025 million Yuan, accounting for 96.7% and 99.7% of SAR and MTR; project design and management completed as 147.628 million Yuan, taking 119.6% and 101.4% of SAR and MTR respectively.
(i) Irrigation sub-project
Irrigation sub-project completed investment of 4909.207 million Yuan, or 68.4% of total project investment. Breakdown of different items under this component is as follows:
Excavation, construction of irrigation and drainage channel. Investment finished 1131.674 million Yuan, 103.6% of MTR target, of which branch canals were finished 52431 km at a cost of 227.362 million Yuan, completed 107.8% and 105.1% of MTR targets respectively; lateral/sub-lateral was completed 102357 Km at a cost of 430.929 million Yuan, taking 107.8% and 105% that of MTR targets; drainage ditch was finished 130897 km, costing 473.384 million Yuan, accounting for 100.1% and 101.6% of MTR targets;
Cannel lining. Investment totaled 842.443 million Yuan, 100.3% of MTR target, of which lining branch canals completed 9102 km at a cost of 149.594 million Yuan, accounting for 103.9% and 106.9% of MTR targets; lining lateral/sub-lateral finished 21789 km at a cost of 678.487 million Yuan, accounting for 102.3% and 98% that of MTR targets; sub-surface pipes were constructed 307 km, cost 14.364 million Yuan, accounting for 104.3% and 188.8% that of MTR targets;
Structures. Investment totaling 1126.971 million Yuan has been completed under this sub-component, finishing 100.7% of MTR adjusted target. 91141 bridges were built and cost 544.328 million Yuan, accounting for 101.6% and 101.3% of MTR targets; 80742 sets of culverts have been constructed and cost 184.964 million Yuan, taking 103.4% and 103% of MTR targets;
Pumping stations. Investment of 307.132 million Yuan has been completed, taking 98.3% of MTR adjusted target, of which new pumping stations cost 202.259 million Yuan, finished 98.7% of MTR target; improved pumping stations cost 104.872 million Yuan, accounting for 97.6% of MTR target;
Tube wells. Investment totaling 875.819 million Yuan has been completed which taking 101.9% of MTR target, of which 52878 new wells have be drilled and cost 408.440 million Yuan, investment value and no. of wells built completed 106.3% and 95.3% that of MTR targets;
Rural power transmission Lines. Investment completed 133.643 million Yuan, accounting for 100.6% of MTR target. Rural transmission line 6452 km have been cabled, cost 111.866 million Yuan, achieved 101.8% and 107% that of MTR targets; 8333 sets of transformers have been purchased, cost 21.777 million Yuan, finishing 97.5% and 76.9% that of MTR targets respectively.
Rural roads. Investment finished as 393.989 million Yuan, 105% of MTR target. Under this component,
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gravel road of 12952 km were built with cost of 267.404 million Yuan, accounting for 98.3% and 103.8% that of MTR targets; earth road of 27250 km were finished with cost of 126.584 million Yuan, accounting for 105.9% and 107.6% that of MTR targets;
(ii) Agricultural sub-project
Accumulated investment of agricultural sub-project has completed 1307.142 million Yuan, taking 18.2% of total project investment cost. The breakdown of each small component is as follows.
Land improvement. Investment has completed as 461.052 million Yuan, accounting for 100.5% MTR target, of the total investment of this part, land leveling was completed 464090 hectors, cost 185.881 million Yuan, finishing 104.6% and 103.4% of MTR targets; deep plowing was completed 576560 hectors with cost of 168.348 million, accounting for 102% and 102.9% that of MTR targets; straw shredding was completed 287904 hectors with cost of 61.864 million Yuan, accounting for 99% and 101% that of MTR targets;
Integrated pest management (IPM). Investment of totaling 33.856 million Yuan was completed, taking 96.9% of MTR target, of which IPM areas extended to 235930 hectors with cost of 17.641 million Yuan, taking 99.6% and 110.2% that of MTR targets; 340 pest and disease forecasting stations were built under the project with cost of 2.71 million Yuan, accounting for 100.6% and 99.5% that of MTR targets;
Quality seed production and processing. Investment of 163.273 million Yuan were completed and finished 96.9% of MTR target. Under this subcomponent, 36936 hectors of improved seed farms were built, costing 37.228 million Yuan, taking 102.3% and 102.1% that of MTR targets respectively; storage rooms of 89135 m2 were built with investment of 48.995 million Yuan, accounting for 86.3% and 95.8% that of MTR targets; drying floor of 211296 m2 were completed with cost of 19.354 million Yuan, taking 107.1% and 104.8% that of MTR targets respectively; 1083 sets of instruments and equipment were procured, costing 18.953 million Yuan, taking 86.3% and 95.8% that of MTR targets; 28 vehicles were purchased with cost of 2.701 million Yuan, finishing 75.7% and 71.5% that of MTR targets. The procurement of equipment and vehicles did not reach the MTR targets because of the complicated procurement procedure. The project units did the procurement with funds of other sources since the progress of the project procurement tended to always lag behind the actual needs of the project.
County agro-technology extension centers. Investment totaling 60.631 million Yuan were completed and finished 93.7% of MTR plan. Of the total investment for this subcomponent, 1678 sets of equipment were purchased with cost of 7.457 million Yuan, taking 103.6% and 100.2% that of MTR targets respectively; technical training conducted 13790 pms, costing 7.47 million Yuan, accounted for 91.5% and 95.1% of MTR targets.
Township technical service stations. Investment of 157.629 million Yuan were completed, accomplishing 97.3% of MTR plan. Of which, building were completed 10934 m2, and cost 60.697 million Yuan, accounting for 100.6% and 100.3% that of MTR plan respectively; equipment of 2411 sets were procured with cost of 8.729 million Yuan, taking 100.2% and 84.7% that of MTR plan; farmers training finished 100665 pms, costing 3.0851 million Yuan, accounting for 100.7% and 94.6% that of MTR plan.
Fertilizer blending plant. The investment of 77.417 million Yuan was completed which accounted for 134.3% of MTR plan. New workshops of 5250 m2 were built, finishing 86.1% of MTR plan; 1343 m2 existing workshops were refurnished, finished 29.8% of MTR plan; 56 sets of equipment and 66071 tons of fertilizer were procured, taking 119.2% and 141% that of MTR targets respectively;
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Agricultural inputs. Investment of 27.123 million Yuan was completed, taking 106% of MTR plan, of which pesticides procured 172 tons with cost of 20.65 million Yuan, finishing 105% and 126.4% that of MTR plan; agricultural films were purchased 321537 kg with cost of 4.665 million Yuan, taking 35.7% and 60.1% MTR plan respectively. The procurement of agricultural film did not reach the MTR plan because of failure to meet seasonal requirement by the time consuming competitive bidding procedures. Project units made direct shopping using their own funds in order to not miss the season.
Agro-machinery and service station. Investment of 326.164 million Yuan has been completed, accounting for 96.8% of MTR plan, of which 254.044 million used to procure 21337 sets of agro-machinery, accounting for 121.6% and 98.3% that of MTR plans; renew agro-machinery service station 41422 m2, cost 18.95 million Yuan, taking up 102.5% and 97.1% of MTR.
(iii) Reforestation and Environment Monitoring subcomponent
This subcomponent has completed a total investment of 430.772 million Yuan, taking 6% of total project investment.
Tree nursery: 3873 hectors of seedling nursery were built with cost of 65.129 million Yuan, taking 106.3% and 102.9% of MTR plans respectively;
On farm shelter belts: 86718 hectors of shelter belts were planted, costing 333.971 million Yuan, taking 105.9% and 103.4% of MTR targets;
Machinery and equipment. 462 sets of equipment were purchased with cost of 3.655 million Yuan, accounting for 105.7% and 120.7% of MTR plan;
Integrated pest management. Investment totaling 12.83 million Yuan has been completed, accounting for 78.2% of MTR plan, of which investment 2.25 million Yuan for 133 ton pesticide, finishing 85.4% and 68.8% of MTR plans; procurement cost 3.078 million Yuan for 2267 sets of equipment; IPM application areas reached 15179 hectors with cost of 7.502 million Yuan, taking 109.2% and 96.7% of MTR plans; procurement of equipment and chemicals were below the MTR targets due to the contradiction between timely request of IPM and time consuming bidding. In order not to miss the season, project units made direct shopping by using their own funds;
Environment protection and monitoring: Investment of 15.187 million has been completed, taking 100.7% of MTR plan, of which water resource protection and monitoring finished 7.904 million Yuan, 100.6% of MTR plan; agricultural environment protection and monitoring cost 7.283 million Yuan, taking 100.9% of MTR plan.
(iv) Institutional Development and Support
Investment of the institutional development and support subcomponent has completed 387.025 million Yuan, accounting for 5.4% of total project investment.
Training. Five provinces finished domestic training 40717 PMs for project management staff at cost of 70.109 million Yuan, taking 103.6% and 100.6% of MTR plans respectively; overseas project management training finished 8 PMs with cost of 1.125 million, taking 91.1% and 83.5% that of MTR plans;
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Study tour. Domestic study tours for project management staff was 4915 PMs with cost of 24.151 million Yuan, taking 104% and 97.7% of MTR plan; overseas study tours conducted 123 PMs, costing 11.061 million Yuan, accounting for 85.5% and 86.4% that of MTR plans;
Adaptive research. 440 adaptive research projects have been completed in 5 provinces, costing 49.664 million Yuan, completed 100.9% of MTR target;
Setting up SIDD. At SIDD pilot stage and during the process of its popularization, the project areas established 11 complete SIDD, taking 100% that of MTR target; 516 WUA were set up, finishing 187.6% of MTR plan. WUA coverage reached 136500 hectors, taking 8.9% of total project area, covering 1199 villages and 366269 farmer households.
3. Benefits of the project
a. Economic benefits
(i) The project areas have witnessed drastic improvements in the basic agricultural production conditions, enhanced flood control capacity and considerable increase in agricultural output.
(ii) Noticeable increase of farmers’ income and improvement of life quality
(iii) Contribution to poverty reduction by the project
(iv) Agricultural restructuring and optimization
(v) Financial and economic evaluation of the project
The financial rate of return of various project provinces was 19.6-22.3%, 0.7-4.1 percentage points higher than the SAR prediction. The financial rate of return of the whole project was 20.3%, 2 percentage points higher than the SAR target; the net benefit of the whole project was 6,684 million yuan, 2,364 million yuan more than the SAR target.
The economic rate of return of various project provinces was 27.1%-34.8%, 2.7-10.7 percentage points higher than SAR value. The net benefit of the whole project was 7,953 million yuan, with an economic rate of return 30%, 1,720 million yuan more or 6.1 percentage points higher than the SAR targets.
IAIL 2 project benefited the farmer households of 4.5 million directly. Monitoring indicators of the project indicate the per capita income of low-income, medium-income and high-income farming households in the project areas reached 1,170.98 yuan, 1,497.29 yuan and 1,769.54 yuan respectively, increased by 67.8%, 46.8% and 38.6% from the SAR values respectively.
b. Social benefits
(i) More employment opportunities for farmers, improvement of women’s status
(ii) Scientific and technological progress of project areas promoted
(iii) Qualities of project managerial staff and farmers improved
(iv) Establishment of SIDD promoted managerial system reform at irrigated areas and enhanced
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farmers awareness of democracy
(v) Foundation laid for development of specialized farmers’ economic cooperative organizations in project areas
(vi) Rural social service system perfected, enhancing overall development of the project areas
(vii) Extensive demonstrative effects of World Bank project on non-project areas
c. Ecological benefits
(i) Improvement of forestry coverage of project zone
(ii) Protection of water resources, improvement of water resource utilization rate
(iii) Application of integrated pest management improved farmland ecological environment
(iv) Soil quality improved
(v) Quality of agricultural products improved
4. Sustainability of the project
Analysis of the factors affecting the future of the project shows that this project is highly sustainable, which is manifested in the following aspects:
a. Emphasis by the Government on agriculture provided policy guarantee for sustainable development of the project.
b. Achievements of the project laid solid foundations for sustainable development of the project.
c. Arrangements for the maintenance and operation of the project guaranteed sustainable development of the project.
d. Establishment of new operational mechanisms further fortified sustainable development of the project.
e. Sustainability of the project guaranteed by organizational arrangement for the execution of the project
The National Comprehensive Agricultural Development Office and the comprehensive agricultural development departments at the provincial, district/municipal, and county levels are responsible for the implementation of the project. These bodies are the permanent, fixed bodies of governments at various levels with reliable and increasing earmarked funds from the State. Such an organizational arrangement for the management of the project is conducive for the sustainability of the project.
f. Scientific inputs and outputs of the project created conditions for sustainable development of the project
5. Performance of the World Bank and the Borrower
a. Performance of the World Bank
(i) Advanced management concepts and methods provided
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(ii) Experts from the World Bank are highly industrious and efficient
(iii) Timely supervisions and guidance
b. Performances of the Borrower
(i) Local governments at all levels accorded close attention to the project
(ii) Sound management body
6. Experiences and lessons
a. Successful experiences of the project
(i) Great concern by governments at various levels and the sound project management offices are fundamental to the success of the project
(ii) Scientific planning is a prerequisite for the success of the project
(iii) Build a complete management system of the project
(iv) Emphasize human resource development
(v) Strengthen supervision and inspection on the project
(vi) Set up complete management and maintenance mechanisms, stress both construction and management.
(vii) Promote WUA to mobilize farmers to participate actively in construction and management of the project
(viii) Design of irrigation works suitable to the local circumstances
(ix) Stick to the comprehensive utilization of water resources in areas with scarce water resources.
(x) IPM achieved remarkable results.
b. Lessons and recommendations
(i) Financial management needs to be further strengthened
(ii) A comprehensive MIS system has been established during the project implementation and showed the important roles for the project management regarding the monitoring and evaluation, although it was delayed at the beginning of the project implementation. The IAIL 3 project has taken this lessons to implement a comprehensive project MIS system at the early stage for the improvement of the software program, training program and the establishment of the MIS networks in new counties.
(iii) Procurement procedure is too complicated, affecting progress of the project to a certain extent. The main reason are as following. First, the procurement duration is too long. International competitive bidding in procurement takes a fairly long duration as the result of complicated procedures, ranging from the formulation
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of the procurement plan to the examinations and verifications needed for the completion of the procurement. Consequently, the technological requirements specified in the bidding document cannot catch up with the rapid technological development. Second, the method of procurement is not suitable. For certain goods, for instances the widely used PVC tubes in the construction of the project, there is no attraction to any overseas bidders at all although the procurement employs the international competitive bidding approach. Bidders are mainly domestic producers. In fact, all goods of the bids are locally made. In IAIL3 project, we will arrange the goods procurement plan scientifically based on the progress of civil works. For PVC procurement, based on the lesson from IAIL 2 and agreed by the WB, we will adopt the NCB method for PVC procurement instead of ICB.
(iv) Water saving becomes a more important issue in the project areas during the project implementation, and the irrigation and drainage component had been revised to increase the investment in the water saving activities, although it is not the main project objective for IAIL 2. In addition, the implementation of certain agronomic measures was not very satisfactory, such as the promotion of technologies for the return of straw to the farmland encountered some difficulties in certain project areas, and the project formulated fertilization principles such as control of nitrogen fertilizers, stabilizing phosphor fertilizers and increase of potassium fertilizers remain to be fully applied. IAIL 3 project have taken these lessons. The water saving has been set up for the one of the main project objectives, and designed a specific integrated water saving component. In the design of IAIL 3, we have highlighted the promotion of agronomic measures.
(v) Trees species used for the forest network need to be diversified.
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