Document of The World Bank Report No: ICR00004259 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-76920, IBRD-79370) ON A LOAN IN THE AMOUNT OF SDR 63 MILLION (US$ 150 MILLION EQUIVALENT) TO THE PEOPLE’S REPUBLIC OF CHINA FOR A YUNNAN URBAN ENVIRONMENT PROJECT April 23, 2018 Global Water Practice China Country Management Unit East Asia and Pacific Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Document of
The World Bank
Report No: ICR00004259
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-76920, IBRD-79370)
ON A
LOAN
IN THE AMOUNT OF SDR 63 MILLION
(US$ 150 MILLION EQUIVALENT)
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR A
YUNNAN URBAN ENVIRONMENT PROJECT
April 23, 2018
Global Water Practice
China Country Management Unit
East Asia and Pacific Region
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The World Bank (P096812)
ii
ABBREVIATIONS AND ACRONYMS
AF Additional Financing
COD Chemical Oxygen Demand
FY Fiscal Year
FYP Five-Year Plan
GEF Global Environment Facility
IBRD International Bank for Reconstruction and Development
IDA International Development Association
ICR Implementation Completion Results Report
ILBM Integrated Lake Basin Management
IO Intermediate Outcome Indicator
ISR Implementation Status and Results Report
M&E Monitoring & Evaluation
MTR Mid-Term Review
MS Moderately Satisfactory
MU Moderately Unsatisfactory
O&M Operation & Maintenance
PAD Project Appraisal Document
PDO Project Development Objective
PIU Project Implementation Unit
PMO Project Management Office
QEA Quality at Entry Assessment
QSA Quality of Supervision Assessment
RF Results Framework
RMB Renminbi
S Satisfactory
SDR Special Drawing Rights
SIL Specified Investment Loan
SWM Solid Waste Management
TA Technical Assistance
UNESCO United Nations Educational, Scientific, and Cultural Organization
USD United States Dollar
WTP Willingness To Pay
WWTP Wastewater Treatment Plant
Senior Global Practice Director: Guang Zhe Chen
Practice Manager: Sudipto Sarkar
Project Team Leader: Joanna Masic
ICR Authors: Scott Moore
Yan Li
The World Bank (P096812)
iii
CHINA
Yunnan Urban Environment Project
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Development Objectives and Design ............................................................ 1
2. Key Factors Affecting Implementation and Outcomes ........................................................... 8
3. Assessment of Outcomes ....................................................................................................... 18
4. Assessment of Risk to Development Outcome ..................................................................... 29
5. Assessment of Bank and Borrower Performance .................................................................. 29
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Unsatisfactory Government: Moderately Satisfactory
The World Bank (P096812)
v
Quality of Supervision: Moderately Satisfactory Implementing
Agency/Agencies: Moderately Satisfactory
Overall Bank
Performance: Moderately Satisfactory
Overall Borrower
Performance: Moderately Satisfactory
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments (if
any) Rating
Potential Problem Project at
any time (Yes/No): No Quality at Entry (QEA): None
Problem Project at any time
(Yes/No): Yes
Quality of Supervision
(QSA): None
DO rating before
Closing/Inactive status: Moderately Satisfactory
D. SECTOR AND THEME CODES
Original Actual
Major Sector/Sector
Social Protection
Social Protection 18 18
Water, Sanitation and Waste Management
Other Water Supply, Sanitation and Waste
Management 18 18
Public Administration - Water, Sanitation and Waste
Management 28 28
Waste Management 18 18
Sanitation 18 18
Major Theme/Theme/Sub Theme
Environment and Natural Resource Management
Environmental Health and Pollution Management 45 45
Air quality management 15 15
Soil Pollution 15 15
Water Pollution 15 15
Environmental policies and institutions 5 5
Water Resource Management 5 5
Water Institutions, Policies and Reform 5 5
The World Bank (P096812)
vi
Urban and Rural Development
Cultural Heritage 7 7
Urban Development 38 38
Urban Infrastructure and Service Delivery 38 38
E. BANK STAFF
Positions At ICR At Approval
Regional Vice President: Victoria Kwakwa James W. Adams
Country Director: Bert Hofman David R. Dollar
Practice Manager: Sudipto Sarkar Keshav Varma
Task Team Leader(s): Joanna Masic Takuya Kamata
ICR Team Leader: Joanna Masic
Senior Global Practice Director: Guang Zhe Chen
Co Task Team Leader1: Shunong Hu
Co Task Team Leader2: Scott Michael Moore
ICR Primary Author: Scott Michael Moore
ICR Author: Yan Li
F. RESULTS FRAMEWORK ANALYSIS
Project Development Objectives (from Project Appraisal Document)
To assist Yunnan Province in improving the effectiveness and coverage of critical urban infrastructure services in
selected counties and the effectiveness of lake basin management in Dianchi, through investment in systems for the
management of wastewater, water supply, solid waste, river environment and cultural heritage.
Revised Project Development Objectives (as approved by original approving authority)
PDO was not revised.
(a) PDO Indicator(s)
The World Bank (P096812)
vii
Indicator Baseline
Value
Original
Target Values
(from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years Indicator 1 : People in urban areas provided with access to wastewater services (cumulative) Indicator 1 : People in urban areas provided with access to wastewater services (cumulative)
Value
quantitative or
Qualitative)
350,000
n/a
806,000
828,800
Value
quantitative or
Qualitative)
Date achieved 12/31/2009 n/a 04/30/2017 04/07/2017 Date achieved
Comments
(incl. %
achievement)
103% achieved.
Note: Includes Lijiang, Huaping, Qiubei, Guangnan, Yanshan, & Zhaotong.
PO-1 added at restructuring so no original target value available.
Comments
(incl. %
achievement)
Indicator 2 : People in urban areas with access to solid waste management services (cumulative) Indicator 1 : People in urban areas with access to solid waste management services (cumulative)
Value
quantitative or
Qualitative)
182,000
n/a
448,000
455,000
Value
quantitative or
Qualitative)
Date achieved 12/31/2009 n/a 04/30/2017 04/07/2017 Date achieved
Comments
(incl. %
achievement)
102% achieved.
PO-2 added at restructuring so no original target value available.
Comments
(incl. %
achievement)
Indicator 3 : People in urban areas provided with access to water services (cumulative) Indicator 1 : People in urban areas provided with access to water services (cumulative)
Value
quantitative or
Qualitative)
319,000
n/a
404,000
502,000
Value
quantitative or
Qualitative)
Date achieved 12/31/2009 n/a 04/30/2017 04/30/2017 Date achieved
Comments
(incl. %
achievement)
124% achieved.
Note: Includes Zhaotong City and Qiubei County . PO-3 added at restructuring so no original target
value available.
Comments
(incl. %
achievement)
Indicator 4 : Improved capacity for Dianchi Lake Basin management Indicator 1 : Improved capacity for Dianchi Lake Basin management
Value
quantitative or
Qualitative)
Lack of
information to
assess pollution
load into Dianchi
Lake and absence
of planning
towards integrated
lake basin
management
Improved
management and
coordination by
responsible
agencies/bureaus
for Dianchi as
evidenced by
regular sharing of
data among all key
bureaus involved
Lessons included
in sector 13th
FYP, information
system for
Dianchi Lake in
place. Findings
from
integrated plan
incorporated into
sector plans
under the 13th
FYP
Plan completed. Lessons
incorporated into 13th FYP,
information system for
Dianchi Lake in place.
Findings from integrated
plan incorporated into sector plans
under plan for the 13th FYP.
Value
quantitative or
Qualitative)
Date achieved 12/31/2009 06/30/2015 04/30/2017 04/30/2017 Date achieved
Comments
(incl. %
achievement)
100% achieved; lessons included in 13th FYP.
Note that PO-4 originally emphasized data-sharing; this was revised at restructuring to
emphasize completion of an Integrated Lake Basin Management plan (see below).
Comments
(incl. %
achievement)
The World Bank (P096812)
viii
Indicator 5 : Improved management & coordination by responsible agencies/bureaus for
Dianchi as evidenced by regular sharing of data among all key bureaus involved
Value
quantitative or
Qualitative)
n/a (No data entered)
n/a
Dropped
n/a
Date achieved 12/31/2009 06/30/2015 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
This PO dropped at restructuring and incorporated into PO-4. Online monitoring
and data-sharing platform developed and in use as of Project close.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally Revised
Target Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Total Chemical Oxygen Demand (COD) Pollutant Load Reduction (tons/year)
Value
quantitative or
Qualitative)
1800
n/a
2100
3815
Date achieved 12/31/2007 n/a 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
180% achieved, based on full-year data for 2017. This IO was added at restructuring to
comply with the Core Sector Indicators (2013). The PAD included a related but different
IO, “COD level at main discharge point”, measured in mg/L, for several WWTPs (see
below). Indicator 2 : Volume of Municipal Solid Waste (SW) Disposed in Landfill (tons/year)
Value
quantitative or
Qualitative)
143
n/a
480
535
Date achieved 12/31/2009 n/a 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
141% achieved.
IO-2 was added at restructuring so no original target value available. Original IOs from
PAD were 1) # of new population served by SWM services and 2) amount of SW being
disposed to sanitary landfills. 2nd IO revised to be Core IO (2013). Indicator 3 : Length of river section restored (km)
Value
quantitative or
Qualitative)
0
n/a
49.7
51.97
Date achieved 12/31/2009 n/a 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
103% achieved.
IO-3 was added at restructuring so no original target value available.
Indicator 4 : Increase in visitors to Lion Mountain
Value
quantitative or
Qualitative)
0
n/a
75,000
79,170
Date achieved 12/31/2009 n/a 04/30/2017 04/30/2017
The World Bank (P096812)
ix
Comments
(incl. %
achievement)
106% achieved.
IO-4 was added at restructuring so no original target value available. The PAD included an
IO “Development of rehabilitation plans in compliance with UNESCO protection codes and
other national cultural heritage regulations” (see below). Indicator 5 : Development of Flood Risk Management System for Zhaotong
Value
quantitative or
Qualitative)
n/a
n/a
Flood risk
management
adopted
Flood risk management
adopted
Date achieved 12/31/2007 n/a 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
100% achieved.
IO-5 was added at restructuring so no original target value available. The PAD includes an
IO for “Incidence and severity of floods as compared to historical data in terms of number
of people displaced and extent of material damage” (see below).
Indicator 6 : Number of people in urban areas provided with access to Improved Sanitation under the
project
Value
quantitative or
Qualitative)
190,200 319,300 Dropped
320,600
Date achieved 12/31/2009 06/30/2016 04/30/2017 12/31/2017
Comments
(incl. %
achievement)
100% achieved.
This was a core indicator but was dropped at restructuring. Incorporated in PO-1 following
re-structuring.
Indicator 7 : Number of people in urban areas provided with access to Improved Water Sources under
the project
Value
quantitative or
Qualitative)
270,050 347,600 Dropped
400,000
Date achieved 12/31/2009 06/30/2016 04/30/2017 12/31/2017
Comments
(incl. %
achievement)
115% achieved.
This was a core indicator but was dropped at restructuring. Incorporated in PO-3 following
re-structuring.
Indicator 8 : Number of population served by solid waste management services (104)
Value
quantitative or
Qualitative)
Songming: 5.56
Xundian: 5.73
Luquan: 5.02
Lijiang: 16.66
Funing: 3.52
Songming: 7.36
Xundian: 7.89
Luquan: 7.45
Lijiang: 24.89
Funing: 5.22
Dropped
Songming: 11.42
Xundian: 13.69
Luquan: 8.77
Lijiang: 37.9
Funing: n/a (dropped before
implementation)
Date achieved 12/15/2007 06/30/2015 04/30/2017 10/31/2014
Comments
(incl. %
achievement)
Achievement ranged from 118% to 173%; average of 150%. This indicator was dropped at
restructuring. Incorporated in PO-2 following re-structuring. No data is available after
restructuring. Latest data (herein reported) is from ISR17221 12/06/2014.
The World Bank (P096812)
x
Indicator 9 : Amount of solid waste disposed to sanitary landfills (tons/day)
Value
quantitative or
Qualitative)
Songming: 0
Xundian: 51.61
Luquan: 0
Lijiang: 142.7
Funing: 0
Songming: 79.5
Xundian: 70
Luquan: 80.5
Lijiang: 230.1
Funing: 62.10
Dropped
Songming: 125
Xundian: 62
Luquan: 70
Lijiang: 278
Funing: n/a (dropped before
implementation)
Date achieved 12/31/2009 06/30/2015 04/30/2017 12/31/2017
Comments
(incl. %
achievement)
Achievement ranged from 87% to 157%; average of 114%. Indicator was dropped at
restructuring. Incorporated in PO-2 following re-structuring. At Xundian and Lijiang
original amount was disposed to an old landfill replaced by Project-financed sanitary
Date achieved 12/15/2007 06/30/2015 04/30/2017 10/31/2014
Comments
(incl. %
achievement)
Achievement ranged from 9% to 88%; average of 38%. Indicator was dropped at
restructuring; at restructuring, the definition of cost recovery was modified to include
governments’ subsidies, thus this indicator became unnecessary.
Indicator 11 : Wastewater Management System – Population Served
Value
quantitative or
Qualitative)
Lijiang Town:
166,600
Huaping: 0
Qiubei: 39,600
Yanshan: 46,500
Guangnan: 0
Ljiang Town:
248,900
Huaping: 56,400
Qiubei: 53,050
Yanshan: 66,200
Guangnan:
68,300
Dropped
Lijiang Town: 192,200
Huaping: 49,000
Qiubei: 72,000
Yanshan: 75,000
Guangnan: 120,000
Date achieved 12/15/2007 06/30/2015 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
77% to 176% achieved; average of 118%. This indicator was dropped at restructuring.
Data provided by PMO as of Project close.
The World Bank (P096812)
xi
Indicator 12 : Lijiang Ancient Town District, Development Masterplan – Compliance with UNESCO and
National Protection Codes (Yes/No)
Value
quantitative or
Qualitative)
Y
Y
Dropped
Y
Date achieved 12/31/2007 06/30/2015 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014. This indicator was complied with but was
dropped at restructuring.
Indicator 13 : Lijiang Ancient Town District, Maintenance of UNESCO World Cultural Heritage Status
(Yes/No)
Value
quantitative or
Qualitative)
Y
Y Dropped Y
Date achieved 12/31/2007 06/30/2015 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014. This indictaor was complied with but not
deemed a useful indicator to measure subproject implementation.
Indicator 14 : Rainwater Drainage System – Population served
Value
quantitative or
Qualitative)
Yulong: 30000
60000
Dropped
n/a (no data entered)
Date achieved 12/31/2007 06/30/2015 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
This indicator was dropped in 2010 and incorporated into IO-3. No data in ISRs. No data
on achievement pre-restructuring.
Indicator 15 : Wastewater Management – COD level (mg/L) at discharge point
Value
quantitative or
Qualitative)
Huaping: 250-400
Qiubei: 250-400
Yanshan: 250-400
Guangnan: 250-
400
Huaping: 60
Qiubei: 60
Yanshan: 60
Guangnan: 60
Dropped Huaping: 24
Qiubei: 30
Yanshan: 36
Guangnan: 26
Date achieved 12/15/2007 06/30/2015 04/30/2017 10/31/2014
Comments
(incl. %
achievement)
100% achieved. This indicator was dropped at restructuring. No data is available after
restructuring. Latest data (herein reported) is from ISR17221 12/06/2014.
Indicator 16 : Frequency of water monitoring at Wenshan Prefecture Environment Monitoring Station
(times/year)
Value
quantitative or
Qualitative)
6
12
Dropped 12
The World Bank (P096812)
xii
Date achieved 12/31/2009 06/30/2010 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014.
Indicator 17 : Wenshan County Environment Monitoring – Percentage of polluters aware of new
regulation standards
Value
quantitative or
Qualitative)
0
100
Dropped 100
Date achieved 12/15/2007 06/30/2015 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014.
Indicator 18 : Dianchi Lake Basin Management – Number of monitoring on 3 rivers (times per year)
Value
quantitative or
Qualitative)
6
8,760
Dropped 2,190
Date achieved 12/15/2007 06/30/2015 04/30/2017 12/31/2017
Comments
(incl. %
achievement)
25% achieved.
This indicator was dropped at restructuring. Data provided by PMO for full year 2017.
Frequency based on sampling 6x/day, whereas original target assmed 1x/hour.
Indicator 19 : Dianchi Lake Basin Management – Number of monitoring on 14 streams (times/year)
Value
quantitative or
Qualitative)
0
8,760
Dropped 24
Date achieved 12/15/2007 06/30/2015 04/30/2017 12/31/2017
Comments
(incl. %
achievement)
<1% achieved.
This indicator was dropped at restructuring. Data provided by PMO for full year 2017.
Frequency based on sampling 2x/month, whereas original target assmed 1x/hour.
Indicator 20 : Dianchi Lake Basin Management – Online monitoring and information management
carried out (Yes/No)
Value
quantitative or
Qualitative)
N
Y
Dropped Y
Date achieved 12/15/2007 06/30/2015 04/30/2017 04/25/2014
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014.
Indicator 21 : Lake Basin Component, System terminal has capacity to receive & process monitoring
data (Yes/No)
Value
quantitative or
Qualitative)
n/a (No data
entered)
Y
Dropped Y
The World Bank (P096812)
xiii
Date achieved 12/31/2009 12/31/2011 04/30/2017 12/31/2011
Comments
(incl. %
achievement)
100% achieved.
This indicator was dropped at restructuring. No data entered after restructuring; Latest data
(herein reported) from ISR17221 12/06/2014.
Indicator 22 : Collection of tariffs covers O&M costs and some debt obligations (wastewater)
Value
quantitative or
Qualitative)
n/a (No data
entered)
n/a (No data
entered)
Dropped Lijiang: Revenue =
1.10RMB/m3 (expenses =
1.76RMB/m3)
Yanshan: Revenue =
0.8RMB/m3 (expenses =
1.26RMB
Qiubei: Revenue = 0.8
RMB/m3 (expenses
unknown)
Guangnan: Revenue =
1RMB/m3 (expenses =
1.1RMB/m3)
Zhaoyang: Revenue =
1.25RMB/m3 (expenses =
1.26RMB/m3)
Date achieved 12/31/2009 06/30/2015 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
0% achieved.
This indicator dropped at restructuring. No data entered pre-restructuring. Wastewater
tariff rate of 0.8RMB defined in Project Agreement (Section 4) and achieved. Lijiang,
Chaoyang & Guangnan on track to achieve full cost recovery w/o subsidies.
Indicator 23 : Increase in collection rate of Solid Waste services
Value
quantitative or
Qualitative)
n/a (No data
entered)
n/a (No data
entered)
Dropped n/a (No data entered)
Date achieved 12/31/2009 12/31/2011 04/30/2017 12/31/2011
Comments
(incl. %
achievement)
This indicator was listed in the PAD but not included in the Project Agreement results
framework (Annex B). No data in ISRs or entered pre-restructuring.
Indicator 24 : Incidence and severity of floods as compared to historical data in terms of number of
people displaced and extent of material damage
Value
quantitative or
Qualitative)
n/a (No data
entered)
n/a (No data
entered)
Dropped n/a (No data entered)
Date achieved 12/31/2009 12/31/2011 04/30/2017 12/31/2011
The World Bank (P096812)
xiv
Comments
(incl. %
achievement)
This indicator was listed in the PAD but not included in the Project Agreement results
framework (Annex B). No data in ISRs or entered pre-restructuring. Indicator incorporated
in IO-5 (see above).
Indicator 25 : Dianchi protection regulations are revised, approved and enforced
Value
quantitative or
Qualitative)
n/a (No data
entered)
n/a (No data
entered)
Dropped Regulations approved in
September 2012 and
enforced since January 1,
2013.
Date achieved 12/31/2009 12/31/2011 04/30/2017 01/01/2013
Comments
(incl. %
achievement)
100% achieved. This indicator was dropped at restructuring. Data provided by PMO as of
Project close.
Indicator 26 : ILBM Master Plan for Dianchi is developed and adopted, particularly conducting water
resource carrying capacity of the lake basin
Value
quantitative or
Qualitative)
n/a (No data
entered)
100%
Dropped 100%
Date achieved 12/31/2009 12/31/2011 04/30/2017 04/30/2017
Comments
(incl. %
achievement)
This indicator was dropped at restructuring and incorporated into PO-4. No data in ISRs or
entered pre-restructuring. However, development and adoption of ILBM Master Plan has
taken place based on data provided by PMO and verified during ICR mission.
G. RATINGS OF PROJECT PERFORMANCE IN ISRs
No. Date ISR
Archived DO IP
Actual Disbursements
(USD millions)
1 12/03/2009 Satisfactory Satisfactory 0.00
2 05/31/2010 Satisfactory Satisfactory 4.00
3 06/27/2011 Satisfactory Satisfactory 21.58
4 04/10/2012 Satisfactory Satisfactory 28.58
5 04/22/2013 Moderately
Satisfactory
Moderately
Satisfactory
37.32
6 11/08/2013 Moderately
Satisfactory
Moderately
Satisfactory
43.32
7 06/24/2014 Moderately
Satisfactory
Moderately
Unsatisfactory
53.49
8 12/06/2014 Moderately
Satisfactory
Moderately
Unsatisfactory
58.60
9 04/21/2015 Moderately
Satisfactory
Moderately
Unsatisfactory
69.80
The World Bank (P096812)
xv
10 06/22/2015 Moderately
Satisfactory
Moderately
Unsatisfactory
71.99
11 12/15/2015 Moderately
Satisfactory
Moderately
Satisfactory
82.30
12 06/24/2016 Moderately
Satisfactory
Moderately
Satisfactory
100.03
13 12/23/2016 Satisfactory Satisfactory 109.33
14 03/14/2017 Moderately
Satisfactory Satisfactory
117.15
15 04/29/2017 Moderately
Satisfactory
Moderately
Satisfactory
117.15
H. RESTRUCTURING (IF ANY)
Restructuring
Date(s)
Board
Approved
PDO
Change
ISR Ratings at
Restructuring Amount Disbursed at
Restructuring in USD
Millions
Reason for Restructuring & Key
Changes Made
DO IP
06/15/2015
MS MU 71.99
The Project underwent an
Additional Financing on
05/27/2010 to fund an additional
Project subcomponent (See Section
1.6). A subsequent Level 2
restructuring took place in 2015. In
addition to the reallocation of loan
proceeds amongst components due
to client decision to finance
subcomponents under Component
1 and to use loan savings from
cultural heritage management to
expand sewer restoration, the 2015
restructuring also included (a) a
revision of the indicators to better
reflect the Project’s scope and
context; (b) an extension of the
Project’s closing date by 22 months
to April 30, 2107 to allow for
completion of delayed and newly
added subcomponents (c) revision
of cost estimates; (d) increase in
disbursement percentages for civil
works; (e) revison of cost recovery
definition in the PA; ; and (f)
The World Bank (P096812)
xvi
change one project implementing
unit and revise another.
I. DISBURSEMENT PROFILE
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
1. At appraisal, China’s Yunnan Province was benefiting from years of strong
economic growth. Gross Domestic Product (GDP) averaged 8.9 percent between
2000 and 2005. Tourism was a key driver of growth. Tourists were attracted to
Yunnan for its scenery and ethnic diversity. Approximately 30 ethnic groups
(representing 40 percent of the population) resided in Yunnan. Economic growth
was accompanied by rapid urbanization in the Province’s largest cities and a
number of county seats, heavily straining existing urban water supply, wastewater
treatment, and solid waste disposal infrastructure. The urbanization rate for
Kunming Municipality, for example, was 57% in 2005, while the province-wide
rate was almost 30%. The strain on sanitation infrastructure was resulting in
considerable environmental degradation, especially water pollution. For example,
at the time of Project appraisal, the Province-wide wastewater treatment rate was
40.5 percent, far below the national level of about 50 percent.1
2. The Provincial Government was focused on sustaining rapid economic
development and reversing environmental degradation. In its 11th Five Year Plan
(2007-2012), the Provincial Government outlined a growth strategy centered on
exploiting its natural resource base, promoting tourism, and providing basic
services to urban residents. The strategy also highlighted the importance of
reducing water pollution in the Province’s smaller cities and county seats. The
strategy targeted one of the most visible signs of water pollution in the Province,
the severe eutrophication of Dianchi Lake. The water quality in Dianchi Lake,
Yunnan’s largest lake and a primary water source, had deteriorated from Grade II
in the 1980s to Grade V2 by the mid-2000s. One reason for the deterioration in
water quality was local authorities’ lack of coordination and capacity to implement
pollution control regulations.
3. Sector Details. Yunnan’s urban sector was under-developed at the time of appraisal,
especially in the semi-urban county seats that were the focus of the Project.
Yunnan’s local governments, which included municipal and county governments,
were primarily responsible for the sector, with financial and technical support from
the provincial government. County-seat towns, and the county-level governments
under whose responsibility they fell, were identified as the focus of the Project
because they played a key role in the province’s development strategy at the time
of appraisal, as they were expected to absorb a substantial share of rural-urban
1 See Project Appraisal Document, Report No. 41199 – CN. 2 Water quality ratings in China correspond to qualitative standards like “Good” and “Very Good.” Grade V represents
water that is not judged as being suitable for human contact or consumption.
2
migration and employment generation from tourism, natural resource-based
manufacturing, trading, and other services. Access to basic urban services,
including WW and water supply services, was very low at appraisal. For example,
Huaping County in Lijiang Municipality did not have any wastewater treatment
plants.3 Meanwhile, as noted above, the province-wide wastewater treatment rate
was well below the national average.
4. Rationale for Bank Involvement. The Yunnan Urban Environment Project (YUEP)
represented a continuation of the Bank’s prior engagement in the Province. YUEP
built upon similar past projects, including the Yunnan Environment Project
(P003599), which financed construction of wastewater treatment systems and other
urban infrastructure in several cities and attempted to address the eutrophication of
Dianchi Lake. In addition, YUEP complemented the Bank’s Global Environment
(P068239). YUEP also aimed to replicate the cultural heritage management
dimension of the China Yunnan Earthquake Reconstruction Project (P114107).
5. Higher-Level Objectives. The Project’s focus on improving natural resource
management and expanding urban wastewater and solid waste management
(SWM) services directly supported Pillar Three, To manage resource scarcity and
environmental challenges, of the World Bank’s 2006 to 2010 Country Partnership
Strategy (CPS) for China (Report No. 35435).4 The Project also directly supported
China’s 11th Five-Year Development Plan (2006 to 2010), which included targets
for improving water use efficiency and solid waste collection and reducing
pollution discharges.5 Finally, the Project’s emphasis on expanding the coverage of
urban infrastructure services attempted to help Yunnan Province achieve the
Millennium Development Goals pertaining to water supply and sanitation.6
1.2 Original Project Development Objectives (PDO) and Key Indicators
6. The Project Development Objective (PDO) as stated in the Loan Agreement and
Project Appraisal Document (PAD) was “to assist Yunnan Province in improving
the effectiveness and coverage of critical urban infrastructure services in selected
counties and the effectiveness of lake basin management in Dianchi, through
investments in systems for the management of wastewater, water supply, solid
waste, river environment and cultural heritage.”
7. The original PDO outcome indicator was “Improved management and coordination
by responsible agencies/bureaus for Dianchi as evidenced by regular sharing of data
3 See Project Appraisal Document. 4 World Bank. 2006. China - Country partnership strategy . Washington, DC: World Bank.
https://hubs.worldbank.org/docs/imagebank/pages/docprofile.aspx?nodeid=7089669 5 NPC & CPPCC National Committee Annual Sessions. 2006. Facts and figures: China’s main targets for 2006-2010.
http://www.gov.cn/english/2006-03/06/content_219504.htm 6 See United Nations. 2015. Millennium Development Goals. http://www.un.org/millenniumgoals/environ.shtml
among all key bureaus involved.” This was the only PDO outcome indicator prior
to restructuring.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators,
and reasons/justification
8. The PDO was not revised during implementation. In 2015, however, the results
framework was substantially modified via a Level 2 Project restructuring. The
original outcome indicator concerning Dianchi Lake management was broadened
to focus on institutional capacity and inter-jurisdictional cooperation instead of
simply data-sharing. In addition, three Project-level outcome indicators (See Table
1 below) were added to measure the Project’s impact on coverage of critical urban
infrastructure. These Project-level outcome indicators incorporated several
intermediate indicators (IOs) from the pre-restructuring results framework (See
Data Sheet).
Table 1. Project Outcome Indicators Before and After Restructuring BEFORE RESTRUCTURING AFTER RESTRUCTURING
IMPROVED MANAGEMENT AND
COORDINATION BY RESPONSIBLE
AGENCIES/BUREAUS FOR DIANCHI AS
EVIDENCED BY REGULAR SHARING OF DATA
AMONG ALL KEY BUREAUS INVOLVED
Improved capacity for Dianchi Lake Basin management
N/A People in urban areas with access to wastewater services
(cumulative)
N/A People in urban areas with access to SWM services
(cumulative)
N/A People in urban areas provided with access to water
services (cumulative)
1.4 Main Beneficiaries
9. The PAD identified Yunnan’s approximately 20.4 million urban residents7 as the
primary beneficiaries of the Project. Yunnan’s urban residents in selected Project
sites were expected to benefit primarily from improved SWM, WW treatment and
access to clean water. The selection of Project sites emphasized Yunnan’s poorer
regions; the poverty rates in Project areas were higher than provincial and national
averages (See Section 2.1). In addition, the Province as a whole was expected to
benefit from the Project’s comprehensive approach to improving urban
infrastructure. For example, the cultural heritage management subcomponent was
expected to benefit both local residents and tourists at Lion Mountain, while the
Integrated Lake Basin Management (ILBM) Plan was expected to substantially
improve the overall natural environment (and thus recreational and tourism
opportunities) in the Kunming area.
7 Per the PAD, page 16, Yunnan’s total population is some 41 million, of whom approximately half are estimated to
live in cities.
4
1.5 Original Components
10. The Loan Agreement referenced three components, which are summarized
below:8
11. Component 1: Urban Environment Infrastructure Development: The objective
of this component was to help key counties develop SWM service systems,
wastewater and water supply systems, cultural heritage management, riverbank
improvement measures, and capacity for environmental monitoring and project
management. This component supported the construction of a wide range of works,
including wastewater treatment plants (WWTPs), landfills, solid waste transfer
stations, and pumping stations (See Annex 2).
12. Component 2: Integrated Lake Basin Management: The objective of this
component was to assist the Kunming municipality in establishing better integrated
lake management systems for Dianchi Lake through technical assistance (TA) to
support policy implementation and the development of monitoring systems. This
component supported the construction of several water quality monitoring and data
management platforms, TA to Dianchi Lake management authorities, and the
development of an ILBM Plan.
13. Component 3: Resettlement: This component was intended to support
resettlement of displaced persons in conjunction with the works completed under
Component 1.9
1.6 Revised Components
14. The Fiscal Year (FY) 2011 Additional Financing (AF, See Section 1.7) and the
2015 Restructuring included the following adjustments to the Project’s components
(See Table 2 and Annex 1).
Table 2. Revised and Additional Subcomponents
Note: The Zhaotong Subcomponent, linked to Component 1, was added as part of the AF SUBCOMPONENT ORIGINAL ADJUSTMENT RATIONALE
I.B.2 (ii) Stormwater drainage in Yulong
County (US$6.3 million)
Dropped in 2015
restructuring.
Borrower financed
this activity
separately. IBRD
financing directed to
other subcomponents.
I.C.1 SWM in Funing County (US$5.2
million)
Dropped in 2015
restructuring.
Borrower financed
this activity
separately. IBRD
8 Component 3 did not appear in the PAD due to human error, but was fully incorporated into the project design. 9 No costs were allocated to this component but was instead included in the cost of each subcomponent. Costs were
financed by domestic funds rather than loan proceeds.
5
financing directed to
other subcomponents.
I.B.3(i) Capacity enhancement for Lion
Mountain (US$44.29 million)
Reduced in 2015 restructuring
to US$10.66 million.
Reduced because of
delays in confirmation
of no objection from
National Government
and UNESCO10 that
led to a reduction in
the sub-component’s
scope and domestic-
financing for several
works. Works
accordingly reduced
and savings
reallocated to a new
subcomponent, Shuhe
Ancient Town sewer
expansion.
I.B.3(ii) Lion Mountain study tours
(US$0.02 million)
Dropped in 2015 restructuring Same rationale as
above—surplus funds
reallocated to new
subcomponent, Shuhe
Ancient Town sewer
expansion.
3.B.2 Support for Resettlement activities Inadvertently left out of PAD,
included in LA and
Restructuring Paper
Resettlement financed
by domestic funds
and not loan proceeds.
SUBCOMPONENT
ZHAOTONG
(LINKED TO
COMPONENT 1)
Water supply, WW treatment, and
riverbank restoration in Zhaotong
Added as part of AF Added in response to
client demand.
1.7 Other significant changes
15. As shown in Table 3, the AF introduced a subcomponent under Component 1 for
Zhaotong Municipality. This subcomponent aimed to substantially expand access
to water supply and wastewater services in Zhaotong given the low quality of
service. This subcomponent supported the (1) construction of (i) two water supply
plants (US$22.73 million) with a total capacity of 60,000 cubic meters per day to
increase the population served by an estimated 194,350 people (from 270,050 in
2010 to 464,400 in 2020); and (ii) a 20,000 meter per day WWTP (US$8.22
million) to expand WW access to an estimated 306,700 people (from 190,200 in
2010 to 496,900 residents in 2020); (2) rehabilitation of 48.2 km of river bank
structures (US$27.69 million); and (3) provision of implementation support,
including TA, equipment, and training in operation and management (O&M) of
water supply and wastewate treatment works (US$1.2 million).11
10 Interventions in this site required approvals from State Administration for Cultural Heritage and UNESCO. 11 See Project Paper, Report No. 53586-CN.
6
Table 3. Other Significant Changes
AF
05/27/2010
The Project received an AF of US$60 million to “a)
include Zhaotong [municipality] to support water supply,
WW treatment and riverbank rehabilitation works and b)
continue to improve the effectiveness and coverage of
critical urban infrastructure services in selected counties
through investment in systems for the management of
wastewater, water supply and river rehabilitation in
Yunnan province.”12 LEVEL II
RESTRUCTURING
06/15/2015
In addition to the changes to the Project-level indicators
and subcomponents reflected in Table 1 and 2
respectively, the restructuring included: (a) a revision of
the IOs to better reflect the Project’s scope and context
as well as to promote alignment with the Bank’s core
indicators. Several indicators originally listed in the RF
were dropped (See Data Sheet); (b) an extension of the
Project’s closing date by 22 months to April 30, 2017 to
allow for completion of delayed works, including the
Lion Mountain Cultural Heritage site, Qiubei water
supply system, Puzhehei Lake environmental
improvements, and Zhaotong civil works, and to provide
time to complete additional work in Lijiang financed
with loan savings re-directed from the Lion Mountain
subcomponent; (c) a revision of cost estimates; (d) the
reallocation of loan proceeds amongst categories and
sub-components (See Table 4); (e) an increase in
disbursement percentages for civil works; and (f) the
amendment of the Project Agrrement to include
Government subsidies in cost recovery calculations.
16. As further indicated in Table 3, the restructuring included an adjustment of cost
estimates as well as a reallocation of loan proceeds. Under the restructuring,
US$16.46 million was reallocated between works, goods, and consulting service
categories (See Table 4). At the request of the client, the restructuring also re-
directed US$500,000 from the Zhaotong sub-component to develop a flood risk
warning system in Zhaotong. The restructuring further redirected funds
(approximately US$7 million) from the two dropped subcomponents to add an
additional 20,000 cubic meters per day of wastewater treatment capacity and an
additional 68 km of sewage pipelines in Lijiang to serve an additional 41,500
residents by 2020 (See Section 1.6). The restructuring also amended the definition
of cost recovery contained in the Project Agreement to, in line with common
practice in China, include the Government’s subsidies in the calculation of
“revenues.”
12 See Loan Agreement, August 23, 2010, Loan Number 7937-CN.
13 This subcomponent dropped and funds re-allocated to Funing Water Environment subcomponent (I.C.3(II)).
8
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
17. Background Analysis. The Project directly supported the Provincial Government’s
growth strategy, which emphasized enhancing urban environmental services,
especially solid waste and wastewater services. The Province was focused on
facilitating sustainable urbanization to preserve Yunnan’s natural scenery and
environment and to maintain its economic growth rates, especially in the tourism
sector. Accordingly, the Project adopted a comprehensive approach to improving
the Province’s urban environment, including cultural heritage management aspects.
The Project also built on experience from previous World Bank-funded projects
like the Yunnan Environment Project (P003599), which highlighted the need for an
integrated, inter-agency approach to improving water quality and overall
management of Dianchi Lake, a signature part of Yunnan’s natural heritage.14
Finally, the Project integrated lessons from World Bank knowledge products such
as “Stepping Up: Improving the Performance of China’s Urban Water
Utilities,” 15 which recommended raising utility tariffs to support sustainable
operation of urban infrastucture. The Bank Team also conducted a technical
analysis during appraisal that evaluated different wastewater treatment
technologies and identified appropriate solutions, such as a hydro-geological
assessment to ensure proper siting of landfills for solid waste management.
18. Assessment of Project Design and Quality at Entry. The Project’s PDO was well-
aligned with Government and sector priorities. Other elements of the Project design,
such as selection of Project sites, were also well-thought-out. The selection of
Project sites followed a criteria-focused two-step process, first for the selection of
municipalities/prefectures and second for the selection of counties within each
municipality/prefecture,16 to ensure that the Project’s investments targeted areas
where urban infrastructure services were most needed, the environment was most
clearly degraded, and institutional and fiscal capacity was favorable. The Project
14 World Bank. 2006. China - Country partnership strategy . Washington, DC: World Bank.
https://hubs.worldbank.org/docs/imagebank/pages/docprofile.aspx?nodeid=7089669 15 See World Bank, Stepping Up: Improving the Performance of China’s Urban Water Utilities.” Washington, DC:
World Bank, 2008. 16 Criteria for the first-stage selection were: National and provincial strategic priority economic development areas;
high degree of pollution; danger of flood and other issues to be remediated through infrastructure investment;
fiscal/budgetary need; inclusion into a group of five high-priority areas; rapid urbanization rates status; status as rural
areas or small towns; speed of tourism development; willingness for World Bank financing; institutional capacity; and
readiness of Project implementation. Criteria for second-stage selection were: Municipal and provincial/prefectural
strategic economic development priority areas; high degree of pollution; urgency; fiscal/budgetary need; urbanization;
rural and small town status; tourism development; willingness of World Bank financing; institutional capacity; and
readiness of Project implementation. On this basis, the following Project counties and municipalities/prefectures were
selected: Kunming Municipality (Luquan, Songming, and Xundian Counties); Lijiang Municipality (Lijiang Ancient
Towen, Huaping, and Yulong Counties); and Wenshan Prefecture (Funing, Guangnan, Qiubei, and Yanshan Counties).
All four of the Wenshan counties were at appraisal nationally-designated poor counties, while two of the Kunming
counties were at appraisal provincially-designated poor counties.
(OP4.10), and Safety of Dams (OP4.37). The Project adequately complied with all
safeguard preparation requisites. The Project was classified as Category A. The
Environmental Management Plan (EMP) prepared for each Project city/county was
comprehensive. Public consultations were carried out with residents of different
ethnicities, gender, and socioeconomic backgrounds. Information about the Project
and announcements of public meetings were widely disseminated online and in
local newspapers in order to facilitate stakeholder engagement.
2.2 Implementation
24. Project implementation was affected by four principal factors: (i) restructuring and
subcomponent changes, which paved the way toward achievement of Project
objectives in the post-restructuring phase; (ii) implementation delays as a result of
weak contract management of some PIUs and slow approval of the cultural heritage
management component; (iii) supervision by the Bank Team; and (iv) government
commitment and capacity at provincial and local levels. These factors are discussed
briefly below.
25. Restructuring and subcomponent changes: Several adjustments made at Project
restructuring enhanced the impact of the Project. For example, the cultural heritage
subcomponent was substantially delayed due to the need to obtain no objection
19 The required tariff level was 0.8 RMB per cubic meter. See Project Agreement Section IV.
11
from the State Administration for Cultural Heritage (and address comments from
UNESCO). As a result of this delay, some of the proposed investments on Lion
Mountain became prohibitively expensive to proceed with. Therefore the
investments were downscaled to include only those critically important to improve
the environment of the area and the allow safe access of visitors (See Section 1.6).
Savings were subsequently re-directed toward expansion of wastewater access in
Lijiang City, which helped the Project achieve its objective to expand coverage of
critical urban infrastructure services and benefitted the operation of the Project-
financed WWTP in Lijiang (See Section 1.7). In Zhaotong Municipality, in
response to client demand, funds were directed to an innovative flood warning
management system, which was requested by the client and met a critical need for
the City to provide flood warning for its rapidly growing urban area. These changes
helped increase coverage of urban infrastructure services, ensuring that the
coverage aspect of the PDO was met. The AF also helped the Project increase and
meet its coverage goals. Restructuring moreover amended the Project Agreement
to aid implementation, as described below.
26. Implementation delays: The Mid-Term Review (MTR) conducted in December
2013 identified two primary issues that contributed to implementation delays,
namely i) low capacity of some county-level PIUs in contract management; and ii)
unexpectedly long time needed to obtain approval for the Lijiang subcomponent
(Lion Mountain) from cultural heritage management authorities. Although these
issues were eventually resolved, the restructuring extended the Project by 22
months. Overall, though, restructuring substantially aided Project efficacy and the
achievement of Project coverage targets, as detailed below. At restructuring the
Project Agreement was also amended to allow for government subsidies, which
was much more appropriate for the Project context.20
27. Supervision by the Bank Team: The Bank Team ably executed several important
supervision tasks, and the 2015 restructuring addressed several important flaws in
the original Project design (see above). The Fiscal Year (FY) 2016 procurement
post-review documented several instances of non-compliance, including the
rejection of a large number of bids based on deviations that could not constitute
“substantial non-responsiveness” as specified in World Bank guidelines, which the
Bank team helped to correct through intervention by the procurement specialist.
Finally, some minor environmental issues were encountered at one of the Project
sites (See Section 2.4). However, timely intervention by the Team and detailed
coordination with PIUs and the PMO helped ensure that these issues had been
corrected by the time of Project’s close (See Sections 2.4 and 5.2). A participatory
process was also adopted for the selection of village sanitation technology in
20 Covenants concered cost recovery for water utility financial covenants, financial statements, and dam safety. Cost
recovery was defined slightly differently for WW and solid waste, but mandated that operating expenses be met
without subsidies. The PA amended the definition of cost recovery so as to define total operating revenues and total
revenues “including government subsidies.”
12
Puzhehei to ensure local needs were addressed in the implementation of the
Puzhehei subcomponent.21 Perhaps most important, however, as noted above, the
Bank team addressed most of the Project’s initial design flaws at restructuring,
paving the way to achieving Component 1 and 2 objectives post-restructuring in
combination with subcomponent changes also processed at restructuring.
28. Government commitment and capacity at provincial and county levels: Overall, the
Provincial and Local Government Authorities demonstrated commitment to the
Project played a key role in facilitating implementation. Vice-mayors frequently
chaired the PIU inter-agency working group, helping improve inter-agency
coordination and advance smooth implementation. This coordination helped ensure
that an environmental issue concerning a leachate spill was quickly resolved (See
Section 2.4). Moreover, at the Provincial level, the Government diligently allocated
the necessary funds for Project implementation and supported compliance with the
Legal Agreement. 22
29. In general, the PMO evidenced a high level of capacity that greatly enhanced
Project efficacy and efficiency and ensured that the Project met and in many cases
exceeded its coverage targets under Component 1 and lake management objectives
under Component 2. However, some gaps were noticeable in the capacity of some
county-level PIUs that negatively impacted Project implementation, particularly by
causing implementation delays of works, as cited above (See para. 26) and, for
example, the mention in one ISR of: “Weak capacity in contract management and
supervision” at county level.23
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
30. M&E Design. The original M&E design included several indicators to track
progress toward improving the coverage of urban infrastructure services as well as
improving Yunnan’s urban environment. However, the initial Project design
contained two flaws: (i) an excessive number of IOs, many of which were not well-
aligned with Project components and which hindered M&E implementation; and
(ii) a failure to explicitly define “effectiveness of critical urban infrastructure
services.” In the absence of a clear definition of “effectiveness,” a restrictive and
inappropriate focus was placed on cost recovery for Project implementing utilities.
This definition of cost recovery was not suitable for the context, wherein
government subsidies are regularly allocated to support critical urban infrastructure.
The Project restructuring addressed most of these issues. Additional Project-level
outcome indicators were added to reflect the Project’s focus on increasing the
coverage of critical urban infrastructure services as well as on improving
institutional capacity for ILBM. The IOs were streamlined to focus on the Project’s
21 Initially biofiltration was considered as an alternative to conventional wastewater treatment plants, but was rejected
because it was unclear this technology could meet national water quality standards. However, the biofiltration facility
as piloted in Puzhehei where it serves serves a small rural community in which the discharge standards are lower. 22 See Restructuring Paper, Report No. RES18711. 23 ISR Sequence 4, March 29, 2012.
13
direct scope. The restructuring also adjusted the definition of cost recovery to
reflect the Chinese Government's typical practice of subsidizing public services,
better reflecting the Project’s context.
31. Although the PDO itself was not changed at restructuring, the results framework
was substantially modified in a way that improved M&E implementation and
utilization. Several intermediate indicators were dropped and incorporated into
three new Project-level indicators. These were: Number of people in urban areas
provided with access to improved sanitation, which was incorporated into PO-1
(People in urban areas provided with access to wastewater services); Number of
people in urban areas provided with access to improved water sources, which was
incorporated into PO-3 (People in urban areas provided with access to water
services); and Number of new population served by solid waste management
services, which was incorporated into PO-2 (People in urban areas with access to
solid waste management services). These helped to assess achievement of the
coverage dimension of the PDO. However, the post-restructuring results
framework did not include indicators explicitly linked to “effectiveness,” which
could have included indicators linked to fiscal sustainability when government
subsidies are accounted for. Thus, while the restructuring corrected most M&E
design flaws, the definition of effectiveness remained an outstanding issue. Overall,
however, the post-restructuring results framework was greatly strengthened and
better reflected Project objectives.
32. For example, the Project-level outcome indicator described in the PAD, Improved
management and coordination by responsible agencies/bureaus for Dianchi as
evidenced by regular sharing of data among all key bureaus involved, was
incorporated into PO-4 (Improved capacity for Dianchi Lake management). This
new Project-level outcome indicator more accurately captured the underlying
issues with respect to Dianchi Lake management, which pertained not simply to
data-sharing but also a lack of inter-jurisdictional coordination and capacity more
generally. A total of 11 IOs cited in the PAD were dropped during restructuring,
and a further five IOs related to volume of waste deposited in landfills, cultural
heritage management, water quality, flood protection, drainage, and Dianchi Lake
management were revised (See Table 5).24
33. M&E Implementation. Pre-restructuring, the sheer number of indicators was
unwieldly and hindered M&E implementation. This was rectified post-
restructuring however. County-level PIUs consistently provided data on a timely
basis, which the provincial PMO collected along with other data, such as water
quality data on landfills and rivers and waterways feeding into Dianchi Lake,
relevant to assessing Project outcomes.
24 See Restructuring Paper, Report No. RES18711.
14
Table 5: Comparison of Pre- and Post-Restructuring Results Framework. Note: PO-level
indicators underlined; intermediate indicators in italics.
COMPONENT (FROM
PAD)
PRE-
RESTRUCTURING
INDICATOR (FROM
PAD)
POST-
RESTRUCTURING
INDICATOR
URBAN
INFRASTRUCTURE
DEVELOPMENT
Number of new population
served by expanded
wastewater management
service
People in urban areas
provided with access to
wastewater services
URBAN
INFRASTRUCTURE
DEVELOPMENT
COD level at main
discharge points
Total COD pollutant
load reduction (tons/yr)
URBAN
INFRASTRUCTURE
DEVELOPMENT
Collection of tariffs covers
O&M costs and some debt
obligations
Dropped
URBAN
INFRASTRUCTURE
DEVELOPMENT
Number of new population
served by solid waste
management services
People in urban areas
provided with access to
solid waste management
services
URBAN
INFRASTRUCTURE
DEVELOPMENT
Amount of solid waste
being disposed to sanitary
landfills
Volume of municipal
solid waste disposed in
landfill (tons/yr)
URBAN
INFRASTRUCTURE
DEVELOPMENT
Increase in collection rate
(of SWM tariffs)
Dropped
URBAN
INFRASTRUCTURE
DEVELOPMENT
Incidence and severity of
floods as compared to
historical data in terms of
number of people
displaced and extent of
material damage
Development of Flood
Risk Management System
for Zhaotong
URBAN
INFRASTRUCTURE
DEVELOPMENT
Increased frequency and
regularity of water quality
monitoring
Dropped
URBAN
INFRASTRUCTURE
DEVELOPMENT
% targeted pollutant
producers aware of new
regulatory standards
through surveys
Dropped
URBAN
INFRASTRUCTURE
DEVELOPMENT
n/a Length of river section
restored (km)
URBAN
INFRASTRUCTURE
DEVELOPMENT
n/a People in urban areas
provided with access to
water services
CULTURAL
HERITAGE
MANAGEMENT
Development of
rehabilitation plans in
compliance with UNESCO
protection codes and other
national cultural heritage
regulations
Increase in visitors to
Lion Mountain
DIANCHI LAKE
MANAGEMENT
Improved management
and coordination by
responsible
agencies/bureaus for
Dianchi as evidenced by
regular sharing of data
among all key bureaus
involved
Lessons included in
sector 13th FYP,
information system for
Dianchi Lake in place.
15
34. M&E Utilization. The results framework was used by both the PMO and the Bank
Team to assess implementation progress. In particular, the Bank Team used the
coverage indicators to identify and correct potential delays in construction works.25
The revised results framework also benefitted the Provincial Government by
greatly increasing the knowledge base pertaining to Dianchi Lake management.
The Kunming Municipal Environmental Protection Bureau uses the data generated
from the 12 water quality monitoring stations constructed as part of the Project to
track progress towards pollution reduction goals. These stations are being used to
sample water quality once a month on the basis of 35 separate indicators. The
Project also financed the development of information-sharing systems to facilitate
data-sharing between the various entities involved in Dianchi Lake management.
Information provided by the borrower indicates that this data continues to inform
decision-making by these entities, especially related to targeting enforcement of
pollution regulations based on water quality data from different streams and
waterways feeding into Dianchi Lake (See Section 3.2).
2.4 Safeguard and Fiduciary Compliance
35. Compliance with safeguards was rated Moderately Satisfactory throughout
implementation. The Bank received no complaints regarding social and
environmental issues and safeguards compliance. However, as discussed below, the
Project encountered a minor environmental issue during implementation.
36. Environmental Assessment: Despite the existence of the EMPs, the operation of
landfills was sometimes deficient. For example, operators did not consistently spray
water to reduce dust. In addition, the Bank Team encountered and corrected a
leachate spill at one of the landfills caused by improper O&M procedures. The
Team visited the landfill in question and reported that the environmental issues had
been satisfactorily resolved and that landfill management training procedures had
been conducted. Site visits during the ICR mission to the Luquan County and
Songming landfills demonstrated progress in implementing sound O&M, such as
regular compaction and groundwater and leachate monitoring. No subsequent
environmental issues were reported.
37. Natural Habitats: Several of the Project sites fell within protected areas, notably
the Puzhehei National Wetland. For these areas, mitigation measures were
incorporated into the EMPs. The environmental monitoring required in the EMPs
was conducted for most subcomponents, with the exception of the leachate spill, in
a timely manner in order to control potential impacts. The reporting on the
safeguard was exemplary, and the reports have been shared with other project teams
as a demonstration of good practice. Dedicated staff responsible for implementing
the EMPs were stationed at most sites.
25 See for example Aide-Memoire for Third Supervision Mission, April 4 – 9, 2011.
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38. Physical Cultural Resources: The potential impact of the Project on physical
cultural resources was identified in the environmental assessments completed for
each subcomponent; mitigation measures were included in the EMPs and were
implemented adequately.
39. Indigenous Peoples: At appraisal it was estimated that approximately 400,000
indigenous people might be affected by the Project. As a result, extensive
consultations were undertaken with these populations. An Indigenous Peoples Plan
was prepared and implemented. A social assessment report prepared at appraisal
concluded that the Project was likely to have a highly beneficial impact on
indigenous communities by improving the urban environment, expanding urban
spaces, and improving tourism and other economic development opportunities. The
assessment also concluded that the risk of tariff increases significantly depressing
indigenous peoples’ income was relatively low.26
40. Involuntary Resettlement: At appraisal, the Project estimated that resettlement
would take place in 17 villages and would impact 376 households (1,570 people),
who were resettled under the client-financed Component 3. Individual
Resettlement Action Plans were completed for each subcomponent. Compliance
with resettlement policy was assessed to be Satisfactory during supervision
missions. The Provincial PMO’s highly competent management was essential to
ensuring compliance with applicable Bank policies related to resettlement. The
engagement of an external entity, Hohai University, to monitor resettlement efforts
also contributed to the Satisfactory rating on compliance with safeguards pertaining
to resettlement. The University prepared a report during implementation identifying
experiences, lessons learned, and beneficiary feedback, which helped ensure
compliance with safeguards. There were no complaints registered from displaced
people affected by the Project.
41. Dam Safety: A dam safety review was conducted by an independent dam safety
specialist from the Nanjing Dam Safety Center. The specialist recommended
remedial and supplementary work at two Project sites. The Provincial PMO ensured
that the recommendations were implemented during Project implementation and
proper measures in place for future management.
42. Financial Management: Except for minor issues concerning delays in
disbursement due to staff changes in the Provincial Finance Bureau, the financial
management system for the Project proved to be adequate. The audits revealed no
major issues during implementation, and there were no outstanding audit issues at
the time of the Project’s closure. The Project closed with a Satisfactory financial
management rating.
26 China Cross-Cultural Consulting Center, Sun Yat-sen University. 2007. Social Assessment (Summary Report).
Report No. IPP252-V2.
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43. Procurement: The appraisal process concluded that the overall procurement risk
was modest, and that agencies at all levels had allocated sufficient resources to
implement the Project. However, the FY16 post review found a few instances of
non-compliance with respect to a bid evaluation that did not constitute substantial
non-responsiveness. Bidders were not given the opportunity to make necessary
clarifications. As a result, the Bank Team directed the PMO to take remedial actions
to prevent recurrence of these issues. These issues were satisfactorily resolved.
Overall, the procurement performance throughtout Project implementiton was
Satisfactory.
2.5 Post-completion Operation/Next Phase
44. As anticipated in the financial analysis conducted at appraisal, the most significant
risk post-completion is, in the eventual absence of subsidies, the fiscal capacity of
local governments to continue providing financial support to PIUs. At Project
completion, several of the SWM operators remained below cost recovery levels
when subsidies are excluded. In China, however, the tariffs are often set below cost
recovery rates given that the Government, especially in China’s poorest provinces,
subsidizes debt service. In recognition of this reality, the Project team amended the
Project Agreement to include government subsidies as part of utilities’ operating
revenue. The Loan Agreement, which stresses the provision of support for
operation and management of solid waste and wastewater facilities,27 does not
define cost recovery, and was not amended. The strong fiscal position of the
Yunnan Provincial Government and Chinese Central Government mitigates cost
recovery concerns substantially and indicates that subsidies will be maintained. The
urban infrastructure services financed by the Project are central to both
governments’ development plans, and both levels of government have proven more
than willing to subsidize elements of utility operation, especially debt service, for
extended periods. The governments’ active involvement will help ensure that a high
quality of service will be maintained post-Project, and in the case of the solid waste
operators that have not achieved cost recovery, the planned transfer to county-
owned enterprises is likely to assure fiscal sustainability (See Section 3.3). Likewise,
the strong commitment of both levels of government to improving environmental
protection make it highly likely that funding for the continuation of environmental
protection activities under Component 2 post-Project will be secure. The continuing
use of data generated by Project-financed monitoring stations for Dianchi Lake
Management further suggests these are likely to be maintained by the province well
into the future.
27 See Schedule 1, Part 1 e)ii)B).
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3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
Relevance of Objectives: Substantial
45. The PDO continues to be highly relevant to Yunnan’s development needs given the
Province’s continued focus on expanding urban infrastructure provision and
enhancing environmental protection. The PDO is aligned with the Provincial
Government’s 13th Five Year Plan, 2016 to 2020 (developed to complement that of
the Central Government), which emphasizes providing cleaner water and
promoting environmental protection.28 The PDO also remains highly relevant to
Strategic Theme 1, Supporting Green Growth, in the current Country Partnership
Framework.29
Relevance of Design and Implementation Pre-Restructuring: Modest. Post-
Restructuring: Substantial.
46. Overall, the Project design was well aligned with the PDO, and the implementation
arrangements with the PMO overseeing PIUs helped the Project achieve its primary
objectives. The Project’s two primary components targeted two issues, urban
infrastructure service provision and Dianchi Lake management, that are of clear
and substantial importance for Yunnan’s urban environment. The Project design
pre-restructuring, however, had several notable shortcomings related to the results
framework. As mentioned earlier, the original results framework lacked a Project-
level outcome indicator related to Component 1 and did not adequately define
“effectiveness.” Moreover, the initial Project-level outcome indicator for
Component 2 emphasized data sharing but did not include other relevant
institutional aspects critical to effective ILBM, especially coordination among
Dianchi Lake management authorities. Finally, the pre-restructuring definition of
cost recovery was overly ambitious given the Government’s typical practice of
subsidizing service. These design-related shortcomings negatively impacted the
Project’s overall efficacy pre-restructuring. Because of these deficiencies, pre-
restructuring relevance of design and implementation is rated Modest.
47. At restructuring, these shortcomings were largely corrected. The revised Project-
level outcome indicator concerning lake basin management addressed the broader
issue of institutional capacity and inter-agency coordination through preparation of
the ILBM Plan and inclusion of lessons learned in the 13th FYP, which guides all
28 Provincial Five-Year Plans closely reflect those of the country as a whole, but emphasize some region-dependent
issues. 29 World Bank. 2006. China - Country partnership strategy . Washington, DC: World Bank.