The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) Program Information Documents (PID) Appraisal Stage | Date Prepared/Updated: 28-Oct-2022 | Report No: PIDA269106 October 28, 2022 Page 1 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Program Data Country Project ID Program Name Parent Project ID (if any) China P178338 Yangtze River Protection and Ecological Restoration Program for Results (Hubei) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) EAST ASIA AND PACIFIC 26-Oct-2022 15-Dec-2022 Water Financing Instrument Borrower(s) Implementing Agency Program-for-Results Financing People’s Republic of China Hubei Provincial Development and Reform Commission Proposed Program Development Objective(s) To improve institutional coordination, enhance ecological protection and reduce water pollution loads along the Yangtze River Basin in Hubei Province COST & FINANCING SUMMARY (USD Millions) Government program Cost 1,074.00 Total Operation Cost 1,074.00 Total Program Cost 1,074.00 Total Financing 1,074.00 Financing Gap 0.00 FINANCING (USD Millions) Total World Bank Group Financing 200.00 World Bank Lending 200.00 Total Government Contribution 874.00 Decision October 28, 2022 Page 2 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) The review did authorize the team to appraise and negotiate B. Introduction and Context Country Context 1. China’s rapid economic growth has come at significant environmental costs. Transitioning to a more balanced and sustainable economic growth model has become a government priority. The implied economic cost of environmental degradation in China was estimated as 2.2 to 3.1 percent of gross domestic product (GDP) annually between 2004 and 2017.1 Recognizing such challenges, China’s 13th Five Year Plan (FYP) (2016 – 2020) emphasized the need for more balanced and sustainable economic growth. 2 Central government funding of environmental protection and pollution control increased to US$35.7 billion by 2019, five times more than in 2017.3 The 14th FYP (2021–2025), released in March 2021, reflected a strengthening of ambitions, including improved water pollution and land management, as well as an enhanced targets for greenhouse emission reduction. 2. Addressing water pollution and improving riverine ecological health are integral elements to this green vision. Although China had made significant progresses in tackling water pollution issues,4 a nationwide survey in 2018 revealed that 29 percent of China’s river and lakes still had poor water quality.5 The polluted water drained into the oceans, caused eutrophication in the coastal environment and further threatened the global marine ecosystems. Biodiversity faces continued threats from water pollution, over-withdrawal, and other human uses of the water environment, with climate change compounding these threats by shifting habitat ranges and amplifying weather extremes such as floods and drought. While there is a need for further research6, 1.32 to 3.53 million tons of plastics are estimated to enter China's oceans, primarily via rivers, every year. 7 Without interventions, this volume is expected to grow as the use of plastic products doubles over the next two decades.8 Sectoral and Institutional Context 3. The Yangtze River Basin and the economic belt it defines provide important cultural, social-economic and ecological values. The Yangtze River Basin includes 19 provinces, municipalities, and autonomous regions. It plays an important role in China’s cultural and historical identity, as the so-called mother river’ of the Chinese 1 Ma, G., et al. 2020. “The Valuation of China’s Environmental Degradation from 2004 to 2017.� ES&T. 2 See the 2015 Resolution of China State Council for Promoting Ecological Progress. 3 China Water Risk. 2019. 2018 State of Ecology and Environment Report Review . 4 Ministry of Ecology and Environment, China Environment and Ecology Status Report (Year 2001, 2005, 2010, 2015, 2020. Year 2000 is not available on the MEE website.) (link) 5 Defined as being worse than Class III according to China's Environmental Quality Standards for Surface Waters (GB3838-2002) which is not to be directly touched by human bodies - “Huang, J. et al. (2021) Characterizing the river water quality in China: recent progress and on-going challenges. Water Research 201: 117309.� 6 Including completion of the ongoing study funded by the ProBlue grant 7 Lebreton, L. et al. 2017. “River Plastic Emissions to the World’s Oceans.� Nature Communications 8 (15611). 8 WEF. 2016. The New Plastic Economy: Rethinking the Future of Plastics. World Economic Forum. October 28, 2022 Page 3 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) civilization. Among which, nine provinces and two municipalities9 are defined as the Yangtze River Economic Belt (YREB), which generated US$5.7 trillion (CNY 45.8 trillion) of GDP, accounting for 46.5 percent of the national total. As the world’s third largest river, over 200 billion cubic meters (CBM) of water are withdrawn annually to support riparian economies and provide drinking water for almost 600 million people.22 The Basin is also one of the world’s most biologically diverse ecoregions,25 supporting over 200 fish species, more than 84 mammal species, 60 amphibian species, and 87 reptile species. It is also home to some of China’s most iconic and endangered species, such as the Chinese sturgeon, finless porpoise and the giant panda, as well as 33 percent of the rare or endangered freshwater fish species in China and around 40 percent of the country’s rare or endangered plants. The Basin's lakes provide critical habitat for internationally migratory birds, including 95 percent of the wintering Siberian white crane population. 4. Rapid urbanization, agricultural and industrial pollution, as well as policy failures have driven the loss of ecosystem services and biodiversity in the river basin. With urbanization, lakes and wetland areas have decreased, with more than 800 lakes in the middle reach lost to land reclamation. The proportion of lakes and reservoirs in the basin exhibiting ‘moderate’ eutrophication increased from 31% in 2009 to 42% in 2018. The resulting degradation of water quality and loss of ecological function is driving losses of globally significant biodiversity and undermining the river’s contributions to human uses. Moreover, broader and sustained improvements will require strengthening institutions and management systems. These include harmonized and better-enforced standards, integrated monitoring platforms, basin-wide data and management systems that can improve coordination between branches and levels of government and technical understanding of pollution hotspots and sources. 5. Many of the challenges facing the Yangtze River Basin are also exacerbated by climate change, while the region is itself a source of GHG emissions. A Climate and Disaster Risk Screening10 and peer-reviewed literature highlight that the basin can expect a hotter future with more variable rainfall. A 10–21 percent increase in runoff is forecasted for 2041–2070 relative to 1970–2000,11 which is likely to exacerbate flooding and associated economic costs12 and increase the levels and variations in water pollution (including plastic debris) due to more intense precipitation and floods events resulting in spikes in runoff. Changes in the hydrological regime are likely to increase pressure on biodiversity and ecosystems, particularly sensitive wetland and floodplain species. Water pollution also contributes to GHG emissions, notably due to methane released from the eutrophication process in eutrophic waters. 13 For example, the largest lake in Hubei province, i.e. Hong Lake, is identified as a significant source of atmospheric mathane (CH4) due to the high nutrient loads from the catchment area. 9 Yunnan, Sichuan, Chongqing, Guizhou, Hubei, Hunan, Jiangxi, Anhui, Jiangsu, Zhejiang and Shanghai from west to east 10 The Program area was assessed using the World Bank Group’s Climate and Disaster Risk Screening Project Level Tool. Results highlighted risks from extreme precipitation and flooding, informing the Program’s activities on pollution management under climate extremes (see para. 25). 11 CWR. 2016. Yangtze Water Risks, Hotspots, and Growth . China Water Risk, Hong Kong SAR, China. 12 Floods in 2020, for example, affected 63 million people and caused estimated economic costs of US$26 billion. See Pike, L. 2020. “China’s Summer of Floods is a Preview of Climate Disasters to Come.� Inside Climate News, August 17, 2020. 13 The process of eutrophication is driven by changes in the concentration of nutrients (that is, phosphorous and nitrogen). It is a serious environmental problem that leads to reduced oxygen levels in the water, toxicity from algal blooms, and ecological decline. Tang, et al. 2020. “Response of Eutrophication Development to Variations in Nutrients and Hydrological Regime: A Case Study in the Changjiang River (Yangtze) Basin.� Water 12: 1634. October 28, 2022 Page 4 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) 6. China launched a national strategy of Yangtze River Protection in 2016, guided by an overarching YREB Development Plan issued in 2018 and the first basin legislation effective in 2021. The overall national strategy for “prioritizing ecological protection, river basin coordination and integrated development of the Yangtze River� is articulated in the YREB Development Plan issued by the National Development and Reform Commission (NDRC) and supported by an Action Plan for the Yangtze River Protection and Restoration jointly issued by NDRC and the Ministry of Ecology and Environment (MEE) in 201914. As a critical element of the national strategy, the National People’s Congress approved the Yangtze River Protection Law15 on December 26, 2020, which came into effect in March 2021 and is the first legislation for a large river basin in China. The law calls for governments to establish water quality baselines, prepare total phosphorus pollution control plans, reduce pollutant discharge through investments in wastewater treatment facilities and piped networks, and control agricultural non-point source (NPS) pollution. The law also calls on governments to improve systems for information sharing and inter-jurisdictional cooperation. China’s National Biodiversity Conservation Strategy and Action Plan (2011–2030) prioritizes water pollution reduction efforts in the Yangtze River Basin to improve conservation of rare and critically endangered species. 7. A series of national-level reforms have been carried out aimed at improving coordination of water resources management. Water-related responsibilities were reorganized within the government system in 2018, with water pollution control responsibilities transferred to the MEE. While the institutional reforms of 2018 signaled an important shift toward environmentally oriented water policies, they also created challenges such as the division of responsibilities between water quantity and quality management. Key water-related data are still segregated across various platforms and agencies with data collection and sharing protocols yet to be standardized.16 The Government established the River Chief System (RCS), a network of officials at the provincial, municipal, county, township and village levels, who are assigned responsibility for outcomes along each section of every major waterway. It helped raise the priority level of water-related issues and proved very useful in addressing challenges of coordination and cooperation between responsible departments and regions.17 Implementation of the RCS is supported by River Chief Offices (RCOs) that usually sit within water departments at the respective levels.18 China now has over 1.2 million river chiefs with more than 0.46 million in the Yangtze River Basin, providing opportunities to address information asymmetries, promote integrated river basin management, and increase public participation in the decision-making process.19 8. The implementation of the Yangtze River Protection Law and national strategy has made significant progress but with challenges remain. On December 24, 2021, China issued the Wetland Protection Law, specifying measures to protect wetland and their ecosystem functions. The Yangtze River Protection Law 14 MEE, NDRC, Action Plan for the Uphill Battle for the Conservation and Restoration of the Yangtze River, Jan. 24, 2019. 15 The Yangtze River Protection Law of the People's Republic of China (March 2021) (link). 16 Zhang, B., et al. 2021. “Big Data Challenges in Overcoming China’s Water and Air Pollution: Relevant Data and Indicators.� SN Appl. Sci. 3: 469. 17 River chiefs at the village-level are required to patrol no less than once a week while also promoting river protection and mobilizing the community to assist in the removal of waste. See "Opinions on Full Implementation of the River Chief System across the Country" (2016). 18 The six complementary mechanisms supporting the river chiefs are (a) River Chief Meetings; (b) Information Sharing; (c) Information Reporting; (d) Supervision; (e) Accountability and Incentives; and (f) Completion and Acceptance. 19 Wu, et al. 2020. “Public Participation of the River Chiefs System in China: Trends, Problems, and Perspectives .� Water 12: 3496. October 28, 2022 Page 5 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) stipulates that the river chiefs will take charge of the river protection and proposes the establishment of a National YRB Coordination Mechanism.20 Supported by the Yangtze River Protection and Ecological Restoration Program for Results (YRPERP), the government took the initiative to establish a YRB RCS coordination mechanism for monitoring, information-sharing and related coordination, which marks a step forward in implementing the Law, further improving the enabling environment for Bank engagement. 9. Located in the Yangtze River’s middle reach, Hubei’s economy plays an important role in the development of the YREB and the protection and sustainable use of natural resources of the Yangtze River Basin. Hubei as the economic engine of Central China, is the riparian province traversed by the longest portion (over 1,000 km) of the Yangtze River. It has two of the eight major tributaries of the Yangtze River and over 750 lakes in the country.21 Hubei province is rich in biodiversity systems of national and international significance, including 3,476 endemic species and many important wetland natural reserves. The province has high potential of reducing the methane emissions from its polluted rivers and lakes. Hubei is a disproportionate polluter, within the YREB, Hubei makes up 13 to 15 percent of water pollutant loads with less than 10 percent of GDP and population. In addition, Hubei is among the top five provinces of plastic uses and a very important player in marine plastic pollution reduction. 10. Hubei is also emblematic of the challenges facing protection of complex river and lake systems in the Yangtze River Basin while balancing development needs. Climate change and human activities have led to a drastic reduction in the size, ecological integrity, and ecosystem services of Hubei’s wetland areas. There were 1,309 lakes in Hubei province in 1950s, but only 755 lakes existed in 2021. Some lakes had vanished completely because of cultivation or other reasons.22 In the 1980s, overfishing and other human activities used to put the largest lake in Hubei, Hong Lake, in crisis. Pollutants discharged by residents living in the area went directly into the lake, and water quality went from bad to worse. The poorest municipality, Enshi Prefecture, is also the water source region of the second largest tributary of the Yangtze River in Hubei, i.e. Qing River. However, in addition to poverty, water quality deterioration, riverbank erosion, and recurrent flooding are key factors undermining living standards and sustainable economic development in the region. 11. Hubei has established a relatively comprehensive institutional and regulatory structure to implement the Yangtze River protection national strategy. In 2012, Hubei issued its provincial Lake Protection Regulation, aimed at enhancing lake protection, reducing lake pollution and area loss, restoring lake ecological functions. A provincial ‘Water Pollution Prevention and Control Regulation’ was further issued in 2014, clarifying institutional responsibilities for water pollution management. Hubei has designated over 30,000 official River Chiefs across a five-layer government system, including 16 Provincial River Chiefs, 340 Municipal River Chiefs, 2,067 County River Chiefs, 8,355 Town River Chiefs and 19,986 Village River Chiefs. In addition, a series of sector plans and policies have been issued to support the YREB national strategy, including the Qing River Water Environment Protection Regulation that was issued in 2019. 20 The coordination mechanism has the responsibility of “coordinating, guiding and supervising Yangtze River protection work; coordinating and negotiating the management work between relevant State Council departments and provincial-level governments along the river; organizing and coordinating joint law enforcement, information sharing and other systems in the YRB� 21 Lakes are densely covered in this province and this province has been called ‘A Province with One Thousand Lakes’. 22 Zhang et al. (2010) Change Characteristic of Lakes in Hubei Province in the past 100 Years (https://en.cnki.com.cn/Article_en/CJFDTOTAL-KXSD201001004.htm) October 28, 2022 Page 6 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) 12. The proposed Program, YRPERP (Hubei), is well aligned with the World Bank Group’s Country Partnership Framework (CPF) for China and it emphasizes contributions to global public goods. The Program is well aligned with the World Bank Group’s CPF for China (FY 2020–2025) (Report No. 117875-CN), which was discussed by the World Bank Board of Executive Directors on December 5, 2019. Specifically, the program focuses on institutions and systems for integrated river basin management that can make a significant contribution to global public goods such as reduction of marine plastic pollutions, climate change mitigation and biodiversity conservation through pollution abatement, watershed management and ecological restoration interventions. It contributes to Engagement Area 2 of the CPF, "promoting greener growth." Moreover, lessons and knowledge generated by the Program are expected to be relevant for addressing integrated natural resource management issues elsewhere and can be scaled up (including with non-World Bank Group resources) in other river basins in China and internationally. The Program also aligns with the World Bank Group’s Green, Inclusive, and Resilient Development (GRID) framework and the Climate Change Action Plan (2021-2025). 13. The Yangtze River Protection and Ecological Protection Program (YRPERP) has been requested to support the Government of China’s national strategy in the Yangtze River and envisaged as a series of linked operations that contribute to the broader goals in the Yangtze River. Given the scale and complexity as well as the administrative realities of China’s fiscal responsibilities at the provincial level, it is proposed to use individual loans to the participating provinces in the Yangtze River basin. The State Council approval of World Bank financing for the Yangtze River Program in early 2021, covered the provinces of Hunan, Jiangxi and Hubei. The YRPERP was approved by the World Bank’s Board of Executive Directors on December 17, 2021 for US$400 million IBRD loan to support Hunan and Jiangxi provinces along with a US$7.5m Investment Project Financing (IPF) Central Basin Component to be implemented by the Changjiang (Yangtze) Water Resources Commission under the Ministry of Water Resources. The provincial PforR programs support interventions on three levels: Improving institutional coordination at the provincial level (Results Area 1); Advancing ecological protection through Integrated Basin Management in sub-basins, i.e. Poyang Lake Basin in Jiangxi and Dongting Lake Basin in Hunan (Results Area 2) and Reducing water pollution and transmission of plastic waste at demonstration counties (Result Area 3). The Central Basin Component supports basin-level activities, including operationalization of the basin-level RCS coordination mechanism, as well as research and capacity building activities on managing river water pollution. 14. The YRPERP and YRPERP (Hubei) together aim to target the entire middle reach of the Yangtze River, where challenges between development and protection are pressing. The YRPERP (Hubei) will support river protection and ecological restoration in Hubei Province. The middle reach provides a variety of important and key ecosystem functions for the entire basin, including regulation, provision, habitat and cultural services of nature. The two kidneys of Yangtze, i.e. Dongting Lake and Poyang Lake, supported under YRPERP are connected by the complex river and lake system within Hubei province which has the longest Yangtze mainstream. 15. The Program for Results (PforR) was identified under YRPERP as the most appropriate instrument and will continue to be used under the YRPERP (Hubei). The PforR instrument was selected in consideration of the Government capacity and the ability to leverage financing under the government program. It provides an opportunity of introducing performance-based incentives that are intended to improve the efficiency and effectiveness of public spending and institutional mechanisms for sustainability of the investments. The PforR October 28, 2022 Page 7 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) instrument leverages significant resources under existing Government programs, providing for impact beyond traditional IPF. The PforR focuses on a subset of activities where the Government aims to enhance efficiency, effectiveness, and impact of expenditure by linking the disbursement of funds to the achievement of specific results. 16. The YRPERP Program leverages ongoing World Bank analytical work and experiences from other World Bank lending operations. The Water Governance Strategy23 jointly prepared with the Development Research Center of the State Council calls for integrated and coordinated management of water resources, tackling cross- sector and inter-jurisdiction challenges. The forthcoming report on “Water and Global Public Goods� in China quantified GHG emissions from polluted rivers and lakes and identified the complex river and lake system in Hubei as hotspots for freshwater ecosystems and biodiversity conservation. The ongoing analytic work ‘Green Agriculture Development’ and flagship report ‘Green China’ both highlighted importance of institutional improvement to manage water pollution issues, such as integrated management, market-based mechanism and circular economy. In addition, the Program design learned the lessons from the IEG Evaluation: The Natural Resource Degradation and Vulnerability Nexus24, endeavoring to balance the short-term development needs and long-term sustainable management outcomes. The Program also benefited from the experiences of other lending operations, such as the China Plastic Waste Reduction Project (P174267) and the proposed Green Agriculture and Rural Revitalization Program Phase 2 (P178907). For example, to improve municipal waste management, municipal waste collection, sorting and transportation services in urban and peri-urban areas in demonstration counties are integrated and outsourced to private operators via performance-based contracts. PforR Program Scope 17. The government program at the provincial level is outlined in the Hubei 14th Five-Year Plan for YREB Green Development, issued on November 21, 2021. The objectives of the government program are to establish the basic system for green economy, strengthen ecological environment protection, increase the efficiency of resource use, upgrade green infrastructure, promote green lifestyle and improve institutional mechanisms for green development. Since the Hubei province is almost entirely within the YRB, the plan covers all the 103 counties of the province. It prioritizes reducing water pollution and protecting the ecological environment in important river and lake basins in Hubei, including the Yangtze River, Han River, Qing River, Hong Lake and other lakes through well-coordinated joint efforts of different sectors and levels of government. 18. The government program has the following themes, with specific mandatory and recommended results targets related to each thematic area: (a) land-based ecosystem protection and restoration; (b) integrated water environment management for key basins; (c) coordinated basin ecological environment improvement; (d) agriculture green development; (e) deepening inter-jurisdiction cooperation in green development; (f) solid waste classification and resource utilization; (g) upgrading urban and township environmental infrastructure; (h) rural living environment improvement; (i) establishment of long-term mechanisms for protection of Yangtze River in Hubei province; and (j) supporting green development demonstration pilots. The government program 23 World Bank and Development Research Center (2019). Watershed: A new era of water governance in China (Policy Brief). Washington, D.C. and Beijing. 24IEG World Bank Group (2022), The Natural Resource Degradation and Vulnerability Nexus: An Evaluation of the World Bank’s Support for Sustainable and Inclusive Natural Resource Management (2009–2019) (https://ieg.worldbankgroup.org/evaluations/natural-resource-degradation-and-vulnerability-nexus) October 28, 2022 Page 8 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) pools a range of financing sources including earmarked funds from national, provincial, municipal, and county governments, as well as private sector contributions. 19. The Program supports three tiers of government structure, in line with the governance structure of the YREB national program. The activities of the Program will be undertaken at three different levels of government within the Hubei Province: (a) at provincial level, focusing on the formulation and implementation of policies, regulations, guidelines and institutional coordination; (b) at the demonstration sub-basin level, focusing on integrated basin water environment management planning, water quality and quantity monitoring and ecological flow enforcement; and (c) at demonstration county level, focusing on priority point and non- point water pollution reduction interventions. 20. Demonstration sub-basins and demonstration counties were selected based on their relative importance in the ecology of the basin (see paragraph 48 for details). Qing River Basin is selected as a demonstration sub-basin as it is the second largest tributary of the Yangtze in Hubei which runs entirely within the province25. Hong Lake is the largest lake in Hubei and thus selected as another demonstration sub-basin. There are 10 counties in the Qing River basin and two in Hong Lake basin. For the proposed Program, six counties were selected including five in Qing River Basin – Lichuan, Enshi, Jianshi, Xuan’en and Badong, all of which are within Enshi Prefecture, and Honghu city in Hong Lake Basin 26. The geographical boundary and expenditure framework of the PforR are defined at the level of the abovementioned six counties for physical investments and at the provincial level for institutional interventions. 21. The Program’s results areas support a nested hierarchy of activities, at provincial, sub-basin, and county levels. The proposed PforR will support a sub-set of the priority activities of the Government Program which are reflected in the planned investment project database for the 14th FYP period of the six demonstration counties as outlined below, subject to exclusion of high-risk interventions: Results Area 1: Improving Institutions and Innovations (provincial level). This results area will support institutional coordination improvements for cross-sectoral coordination and inter-jurisdictional cooperation in Hubei province. Program activities under Results Area 1 include: (a). Strengthening of river chief system coordination through improvement in data-sharing among different levels of governments; (b). Development of provincial-level policies, regulations and guidelines on integrated water environment, ecological protection and management; and (c). Public engagement in river and lake protection and management, through awareness campaigns, participatory approach, and development of public engagement guidance for river/lake management, targeted at climate awareness and women’s participation. Implementation of the activities supported by Results Area 1 will be coordinated by the Provincial Development and Reform Commission (PDRC) through the provincial program management office (PPMO), with participation 25 The largest tributary of the Yangtze in Hubei Province, Han River, runs across provinces, i.e. Shaanxi and Hubei 26 County selection has considered the importance of ecological protection in the respective demonstration basins therefore counties at the upstream Qing River and Hong City that occupies the majority of Hong Lake basin are selected. October 28, 2022 Page 9 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) of the Department of Water Resources (DWR), Department of Ecology and Environment (DEE), Department of Housing and Urban-Rural Development (DHURD) and Department of Agricultural and Rural Affairs (DARA). Results Area 1 will help enhance resilience to climate vulnerabilities exacerbated in the program area by sharing of climate-relevant hydrological and ecological data necessary for coordinated climate-sensitive management actions, strategies, and plans, leading to improved cross sector coordination and inter-jurisdictional cooperation. Results Area 2: Advancing Ecological Protection through Integrated River/Lake Basin Management (sub- basin level). This results area will support ecological protection and climate resilience of river and lake ecosystems in the demonstration sub-basins of Qing River Basin and Hong Lake Basin. Activities under Results Area 2 include: (a). Strengthening of integrated water environment management systems, including an integrated water environment protection plan; (b). Improving water environment monitoring systems on both water quantity and quality; (c). Determination of ecological flow requirements and incorporation into county water allocations to ensure long-term restoration and protection of the freshwater ecosystems; (d). Financing of sustainable soil and water conservation activities, with emphasis on sustainability of outcomes and climate considerations. Activities supported by Results Area 2 will be implemented by the PPMO/PDRC as the coordinating agency, with the DWR and DEE as well as Enshi Prefecture PMO/DRC and six demonstration counties. These activities will also contribute to climate adaptation and mitigation through climate-related data collection and climate- sensitive planning and ecological restoration, as well as through improved water management under climate- change-induced runoff and water quality extremes. Moreover, water allocation plan implemented is expected to increase adaptation capacity toward drought conditions by preventing exploitation of resources and ensure water resources are allocated efficiently. Finally, the activities within this Results Area are expected to contribute to reduction in GHG emissions and biodiversity conservation. Results Area 3: Reducing Water Pollution and Transmission of Plastic Waste (county level). This results area will support reduction of point and non-point-source pollution, including plastic debris, in demonstration counties. Activities under Results Area 3 include: (a). Integrated wastewater management systems, i.e. collection network and treatment plant, and improved services in urban and peri-urban areas; (b) Prevention of plastics entering waterbodies through increased collection of agricultural plastic film; (c). Improved integrated urban-rural domestic solid waste collection and transportation systems and services in the demonstration counties; and (d) Reduced nutrient runoff via improved management and utilization of livestock/poultry manure, focusing on large-scale animal farms. Activities supported by Results Area 3 will be implemented by the demonstration counties with oversight and guidance from PPMO/PDRC, DHURD and DARA as well as Enshi Prefecture PMO/DRC (for the five counties under Enshi Prefecture). In addition to the benefits of reduced water pollution loads and more efficient wastewater and solid waste management operations, activities supported by Results Area 3 are expected to contribute to October 28, 2022 Page 10 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) reduced GHG emissions and protection of freshwater biodiversity. C. Proposed Program Development Objective(s) Program Development Objective(s) 22. The Program Development Objectives (PDO). To be in line with the overall objectives of the YRPERP, the PDO of YRPERP (Hubei) is ‘to improve institutional coordination, enhance ecological protection and reduce water pollution along the Yangtze River basin in Hubei Province’. 23. The achievement of the PDO will be measured through the following outcome indicators: (a) PDO#1: Strengthened River Chief System (RCS) for institutional coordination; (b) PDO#2: Improved water environment management system for the demonstration sub-basins; and (c) PDO#3: Reduced pollutant loads entering waterways in the demonstration counties. D. Environmental and Social Effects 24. An Environmental and Social Systems Assessment (ESSA) was conducted to provide a comprehensive review of appliable environmental and social (E&S) systems , including regulatory framework, institutional arrangement, tracked E&S performance and outcome, at national and provincial levels. The ESSA explored a combination of approaches, including E&S risk screening, desktop review, site visits and observations, and meaningful stakeholder engagement. The ESSA recommends actions to address identified gaps and opportunities to enhance E&S performance and sustainability during the PforR implementation. 25. The Program is expected to bring overall E&S benefits. The Program supports the selected activities among the numerous development projects of the “14th Five-Year Plan for Green Development of the Yangtze River Economic Belt in Hubei Province�, with the Program aiming to improve institutional coordination, enhance ecological protection and reduce water pollution in Hubei province of the Yangtze River basin. The significant and broad E&S benefits in the Program regions in Hubei Province mainly include reduced domestic wastewater, solid waste, plastic waste, and livestock/poultry waste; improved river and lake water quality; and rehabilitated ecological environment. The Program implementation is essentially to be regulated by the existing national and provincial environmental and social management system and in-place institutions and capacity to manage underlying E&S risks and impacts. 26. The ESSA deems the E&S risk for the Program is Substantial. After applying the exclusion criteria, the Program will support pollution control and ecological restoration activities including county and township domestic wastewater treatment plants and pipelines, domestic solid waste collection and transfer, agricultural mulch film collection, waste treatment and utilization of existing livestock/poultry farms, soil and water conservation, and technical assistance (TA) activities, etc. The Program will have adverse E&S impact including construction-related impacts such as dust, noise, disturbance of water body, soil erosion, wastewater and solid waste management, construction worker and community’s health and safety, labor management, small scale of land acquisition (e.g., ranging from about 500 m2 to less than one ha for sitting a solid waste transfer station), temporary land occupation, and potential impacts to vulnerable groups; impacts during operation such as effluent discharge from wastewater treatment facilities, safe operation of facilities, workers’ health and safety, safe application of fertilizers, and impacts on farmers’ livelihood; and also the potential downstream indirect October 28, 2022 Page 11 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) impacts of TA activities. These adverse E&S impacts are well identified and readily avoided, minimized, and mitigated through mature technologies and good management practices of China’s domestic existing E&S management system. Neither OP/BP 7.50 International Waterways nor OP/BP 7.60 Disputed Areas is applicable to the Program. 27. Consistent with the Bank Guidance on PforR ESSA, a Program-specific E&S exclusion list was established. The Program excludes activities with the potential to cause significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or people are excluded, including (a) activities that would involve large-scale infrastructure construction or large-scale land acquisition; (b) activities that would involve acquisition of basic farmland; (c) activities that involve lake/river restoration through returning of water/fishing/farmland to lake; (d) activities involving closure or relocation of livestock or poultry farming; iv) activities involving relocation of minority households in ethnic minority communities/villages; (e) TA activities that implementation of whose outputs may lead to downstream activities of high E&S risks; (f) activities that are classified as domestic Category A (Environmental Impact Assessment Report category) projects; (g) activities that would be conducted in environmentally sensitive areas; (h) activities that would be conducted in areas with significant legacy pollution; and (i) activities that would construct treatment/disposal facilities for domestic solid waste and wastewater sludge, etc. 28. The ESSA concludes that China has established comprehensive systems and capable institutions for managing the related E&S issues at national, provincial, and local levels. The systems consist of legal frameworks (laws, regulations, guidelines, and standards) that are principally consistent with the World Bank’s PforR Policy and Directive and have corresponding implementation mechanisms and institutional arrangements for enforcing the legal frameworks. A well-financed and staffed institutional structure covering various government levels exists and operates efficiently in general in executing the existing legal framework and achieving sound performance on the ground. The track records show that the management capacity and performance is generally sufficient and that the systems can provide an acceptable basis for addressing the possible E&S issues related to the activities supported under the PforR. 29. Meaningful stakeholder engagement was conducted throughout the process of ESSA preparation. In June 2022, the World Bank task team, with the coordination of provincial/municipal/county government, explored various means (both face-to-face and virtual) to meaningfully engage with relevant stakeholders, including line government departments at provincial/municipal/county levels, enterprise representatives, the workers, and local communities in the six demonstration cities/counties. The draft ESSA report was shared with Hubei provincial government and the six demonstration cities/counties in late August 2022. The Bank task team carried out consultation workshops (both face-to-face and virtual) with the key stakeholders at the provincial, municipal and county levels during the mission in September 2022. All relevant provincial, municipal and county-level authorities voiced their support in implementing the proposed Program, provided feedbacks to the draft ESSA, and concurred with the findings and recommendations of the draft ESSA, which were considered relevant and valuable for strengthening the actual effectiveness of the implementation of the existing environmental and social system. Some participants provided valuable opinions to improve the accuracy of the ESSA description in local context, which have been reflected in the revised ESSA. The revised ESSA was disclosed locally and on the World Bank’s website in October 2022. 30. Grievance Redress. Communities and individuals who believe that they are adversely affected as a result of a Bank supported PforR operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance mechanism or the Bank’s Grievance Redress Service (GRS). The October 28, 2022 Page 12 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted at any time after concerns have been brought directly to the Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, please visit https://accountability.worldbank.org. . E. Financing 31. Program financing. Total Program financing over 2023–2027 is expected to be US$1,074 million (see Table 1), of which an expected US$874 million (81 percent) will be funded by the Government and US$200 million (19 percent) financed through IBRD. The proposed PforR will exclude high-risk activities with potentially adverse impacts on the environment and/or affected people. In addition, it will exclude activities that involve the procurement of: (a) works estimated to cost US$75 million equivalent or more per contract; (b) goods and non-consulting services estimated to cost US$50 million equivalent or more per contract; or (c) consulting services estimated to cost US$20 million equivalent or more per contract. Table 1. Overview of Program Financing Sources Amount % of Total (USD Million) Counterpart Funding 874.00 81 Borrower/Recipient 874.00 81 International Bank for Reconstruction and 200.00 19 Development (IBRD) Total Program Financing 1074.00 100 . CONTACT POINT October 28, 2022 Page 13 of 14 The World Bank Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (P178338) World Bank Name : Xiaokai Li Senior Water Resources Management Designation : Role : Team Leader(ADM Responsible) Specialist Telephone No : 5720+7761 / Email : xli@worldbank.org Name : Giovanni Ruta Designation : Lead Environmental Economist Role : Team Leader Telephone No : 5788+7760 / Email : gruta@worldbank.org Borrower/Client/Recipient Borrower : People’s Republic of China Acting Director, Finance & Portfolio Contact : Xiang Peng Title : Management Division Telephone No : 010-68552866 Email : pengxiang@mof.gov.cn Implementing Agencies Implementing Hubei Provincial Development and Agency : Reform Commission Director, Yangtze River Economice Contact : Tao Liu Title : Belt Division Telephone No : 027-87238093 Email : hbssjsjxmb_32093@163.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects October 28, 2022 Page 14 of 14