December, 2000
China Receives $174 Million for Two Loans for Urban Transport and Water Conservation

Contact Person:
Kimberly Versak 202-473-4919
kversak@worldbank.org

WASHINGTON, December 20, 2000--The World Bank's Board of Executive Directors has approved two loans totaling $174 million for two projects: the Urumqi Urban Transport Improvement project (US$100 million) and the Water Conservation project (US$74 million).

The Urumqi Urban Transport Improvement Project will add needed urban transport infrastructure, promote safer and more efficient use of existing road capacity via area traffic management and improved public transport, and better the environment through vehicle emissions control and landscaping programs. It will benefit both residents and business enterprises in Urumqi, the capital city and the political, economic and cultural hub of Xinjiang Uygur Autonomous Region, by improving the operation of the urban transport system and boosting longer-term economic development.

"The Urumqi Urban Transport Improvement Project is addressing rapid urban development challenges in Urumqi by promoting a cost-effective and environmentally balanced framework for urban transport development," said Edward Dotson, task team leader for the project. "Its objective is to foster an urban transport system which is planned, designed and used for the safe, efficient and healthy movement of people and goods."

The project's components include:
* improving the road network through building a "Ring Road", and other local road works to support the functioning of the ring road, a road maintenance management system and road maintenance equipment.
* implementing traffic management and road safety through programs focusing on investment and technical assistance, including: junction channelization, traffic signals and Area Traffic Control (ATC); pedestrian facilities; parking system improvement; enforcement and user education; accident analysis and road safety.
* developing public transport as a viable and sustainable travel alternative to the car by improving the level of existing bus services, and supporting ongoing reforms towards the strengthening of the regulatory and planning capabilities of agencies responsible for public transport.
* improving environmental management and protection through greening/ring road landscaping and Motor Vehicle Emission Control Strategy (MVECS).
* strengthening local institutional capacity and development for urban transport, planning, programming and budgeting, and system management.

Total project costs are estimated at $270 million, to be financed by the IBRD loan of $100 million [variable spread & rate single currency loan], and $170 million by the Government of China.

For more information on the project and its associated documents - including Environmental Assessment, Socioeconomic Survey, and Resettlement Action Plan, please see www.worldbank.org/eap , "What's New".

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The Water Conservation Project aims to enhance the beneficial use of water resources, agriculture production capacity and farmer incomes by increasing the value of agriculture production per unit of consumed water through increasing yields and reducing non-beneficial water losses; and establishing mechanisms for sustainable use and management of water resources in irrigated areas. It will do this supporting integrated improvements to irrigated agricultureincluding investments in irrigation and drainage works, agriculture support and services, forestry and environmental monitoring, and institutional developmentin the Chinese provinces of Hebei and Liaoning, and in the municipalities of Beijing and Qingdao.

The project addresses the serious situation of water scarcity in China's Northern Plain, where the ever increasing water demand for agriculture, industry and municipalities usage is no longer able to be met through construction of hydraulic infrastructure; where groundwater overexploitation continues, and water pollution increases, caused by heavy industrialization and urban population growth. The project is part of a broader strategy for agriculture water savings in the North China Plain: boost agriculture production per unit of consumptive water use by an integrated package of measures (engineering, agronomic and management measures) based on reduction of non-beneficial water losses. This is different from the traditional local water saving concept which mainly focuses on engineering measures to improve irrigation water use efficiencies.

The project will enable China to increase the effective use of its water resources by supporting investments in:

* irrigation and drainage works and onfarm systems, including canal lining, low-pressure pipes, drains, wells, small structures, surface irrigation improvements, sprinkler systems, and micro-irrigation systems.
* agriculture support and services, including land-leveling, non-tillage in the dry season, deep plowing in the rainy season, soil fertility improvements including incorporation of green manure and stalk, organize and plastic mulching, cropping pattern adjustments, seeds improvements and development of drought resistant varieties, balanced fertilization, and improvements to planting and cultivation.
* forestry and environmental monitoring, including forestry development for windbreak protection and soil conservation, tree nurseries, and environmental monitoring systems to monitor the project's environmental impact on soil and water.
* institutional development and irrigation management, including training, technical assistance and research, water measurement, volumetric water pricing, soil moisture management through irrigation scheduling, as well as the establishment and strengthening of operation and maintenance entities made up mostly of water users.

The project will generate substantial benefits by,
* implementing water-saving facilities and technologies for irrigation and distribution systems at the tertiary and on-farm level in an area of about 107,000 ha;
* increasing water and agricultural productivity, and improving quality and yields of a wide range of crops, by enhancing the extension of irrigated agronomy, improving onfarm irrigation management, and replacing water-intensive crops with higher-value cash crops that use less water to improve productivity (and value) per unit of water consumed;
* increasing per capita income and rural employment for about 2 million farm laborers, and a smaller general increase in per capita income for other households which will indirectly benefit from increased agricultural production;
* protecting and enhancing the ecological-environmental system of the Project area through forestation, protection of groundwater from overexploitation through County Groundwater Management Plans; protection of groundwater quality from salinization, chemical fertilizers and pesticides, and rational use of land and water resources;
* developing and implementing a program approach for irrigated agriculture investment and development which will support sustainable use, development and management of water and land resources;
* developing and establishing Water Users Association and Water Supply Corporation, which will contribute to a better link between the irrigation service, agricultural extension service and farmers participation, and also contribute to better collection of water charges and lower fiscal burdens for irrigation operation and maintenance on local governments.

The project's focus on the environmental, sustainability and food security aspects of substantial reduction of non-beneficial water losses ("real" water savings) is top priority for China and will benefit all Chinese including the poor.

The US$185.67 million project is being funded by an IBRD loan [variable spread & rate single currency] of US$74 million, by government of China contributions of US$52.82 million, and by US$58.85 million in funds.