CHINA Yangtze River Protection and Ecological Restoration Program Program for Results (Hubei) (P178338) TECHNICAL ASSESSMENT World Bank Task Team January, 2023 1 ABBREVIATIONS AND ACRONYMS APEC Asia-Pacific Economic Cooperation BP Bank Procedure CA Conservation Agriculture CCERs China Certified Emissions Reductions CPF Country Partnership Framework CPMO County Project Management Office CWRC Changjiang Water Resources Commission DARA Department of Agriculture and Rural Affaires Department DEE Department of Environment and Ecology DLI Disbursement Linked Indicator DOF Department of Finance DOFt Department of Forestry DOHURD Department of Housing and Rural – Urban Development DWR Department of Water Resources EIA Environmental Impact Assessment EMP Environmental Management Plan E&S Environmental and Social ESCP Environmental and Social Commitment Plan ESF Environmental and Social Framework ESMF Environmental and Social Management Framework ESRC Environmental and Social Risk Classification ESRS Environmental and Social Review Summary ESSA Environmental and Social Assessment FAO Food and Agriculture Organization FI Financial Intermediaries FM Financial Management FSA Fiduciary Systems Assessment FYR Five Year Plan GAP Good Agricultural Practices GDP Gross Domestic Product GEF Global Environment Facility (GEF) GHGs Greenhouse Gases GPL General Public License GRS Grievance Redress Service IBRD International Bank for Reconstruction and Development (IBRD) IDA International Development Association INT Integrity Vice Presidency IPF Investment Project Financing MARA Ministry of Agriculture and Rural Affairs M&E Monitoring and Evaluation MEE Ministry of Ecology and Environment MIS Management information System MNR Ministry of Natural Resources MOF Ministry of Finance 2 MWR Ministry of Water Resources NDRC National Development and Reform Commission NKEZP National Key Ecological Zone Program OP Operational Policy PAD Project Appraisal Document PAO Provincial Audit Office PAP Program Action Plan PDO Project Development Objective PDRC Provincial Development and Reform Commission PFD Provincial Finance Department PforR Payment for Results PMO Project Management Offices POM Project Operation Manual PPMO Provincial Project Management Offices PSC Project Steering Committee RAP Resettlement Action Plan RBECP River Basin Eco-Compensation Program RPF Resettlement Policy Framework S&T Science and Technology SEF Stakeholder Engagement Framework SORT Systematic Operations Risk-Rating Tool SWM Solid Waste Management TN Total Nitrogen TP Total Phosphorus TORs Terms of References WB World Bank YREB Yangtze River Economic Belt YRB Yangtze River Basin 3 Table of Contents 1 INTRODUCTION ..................................................................................................................................... 5 2 PROGRAM DESCRIPTION....................................................................................................................... 5 2.1 The Yangtze River Basin and Yangtze River Economic Belt .......................................................... 5 2.2 The Government Program ............................................................................................................ 8 2.3 The World Bank Financed Program .............................................................................................. 9 3 PROGRAM RESULTS FRAMEWORK AND MONITORING & EVALUATION ............................................ 13 3.1 Program Development Objectives .............................................................................................. 13 3.2 Theory of Change ........................................................................................................................ 13 3.3 Disbursement Linked Indicators and Verification Protocols....................................................... 15 4 PROGRAM EXPENDITURE FRAMEWORK............................................................................................. 19 4.1 Overview ........................................................................................ Error! Bookmark not defined. 4.2 Expenditure Scope ......................................................................... Error! Bookmark not defined. 4.3 Program Financing ......................................................................... Error! Bookmark not defined. 4.4 Expenditure Performance .............................................................. Error! Bookmark not defined. 4.5 Financial Sustainability ................................................................... Error! Bookmark not defined. 4.6 Recommendations ......................................................................... Error! Bookmark not defined. 5 STRATEGIC RELEVANCE AND TECHNICAL SOUNDNESS ...................................................................... 27 5.1 Strategic Relevance ........................................................................ Error! Bookmark not defined. 5.2 Technical Assessment by Results Area .......................................... Error! Bookmark not defined. 5.3 Institutional Arrangements for the PforR ...................................... Error! Bookmark not defined. 5.4 Disbursement Arrangements ......................................................... Error! Bookmark not defined. 5.5 Capacity Building ............................................................................ Error! Bookmark not defined. 5.6 Program Economic Evaluation ....................................................... Error! Bookmark not defined. 5.7 Greenhouse Gas Emissions Mitigation .......................................... Error! Bookmark not defined. 5.8 Gender Assessment……………………………………………..……………………………………………………………….71 6 ROGRAM ACTION PLAN ...................................................................................................................... 43 7 IMPLEMENTATION SUPPORT PLAN………………………………………………………………………………………………74 4 TECHNICAL ASSESSMENT 1 INTRODUCTION 1. The technical assessment has been carried out as part of the preparation of the Yangtze River Protection and Ecological Restoration Program for Results (Hubei) (YRPERP (Hubei)). YRPERP (Hubei) is based on Program-for-Results (PforR) financing. The purpose of this assessment is to present the World Bank's evaluation conducted with data and support from the Hubei province focusing on the following aspects: (a) strategic relevance and technical soundness; (b) expenditure framework; (c) results framework and monitoring and evaluation capacity; and (d) economic evaluation. 2. The PforR is anchored in the Government’s program for the Yangtze River Economic Belt (YREB) as implemented through a provincial YREB plan. The YREB is the strategic roadmap towards green, resilient, and inclusive development in the Yangtze River Basin. The plan encompasses cross-cutting and sector-based policies, regulatory and institutional actions, as well as priority investments. The PforR will support a sub-set of activities based on the priorities and targets articulated in the provincial YREB-related plan. These activities contribute to improving inter-jurisdictional cooperation and intersectoral coordination, ecological protection, and water pollution reduction. 2 PROGRAM DESCRIPTION 2.1 The Yangtze River Basin and Yangtze River Economic Belt 3. The Yangtze River Basin and its economic belt provide important cultural, socio-economic and ecological values. The Yangtze River Basin includes 19 provinces. It plays an important role in China’s cultural and historical identity, as it is referred as ‘mother river’ of the Chinese civilization. The Yangtze River Economic Belt (YREB) includes nine provinces and two municipalities1, which together generated US$7.8 trillion (CNY 53.0 trillion) of GDP in 2021, accounting for 46.6 percent of the national total. As the world’s third largest river, over 200 billion cubic meters (BCM) of water are withdrawn annually to support riparian economies and provide drinking water for almost 600 million people.2 The Basin is also one of the world’s most biologically diverse regions,3 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 1 Yunnan, Sichuan, Chongqing, Guizhou, Hubei, Hunan, Jiangxi, Anhui, Jiangsu, Zhejiang and Shanghai from west to east 2 This includes direct beneficiaries of the South-to-North Water Transfer (around 120 million people). 3 WWF. 2020. Living Yangtze Report. World Wildlife Fund, Beijing 5 of lakes and reservoirs in the Basin exhibiting ‘moderate’ eutrophication4 increased from 31 percent in 2009 to 42 percent 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 improved 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 accounts for a large share of China’s GHG emissions. A Climate and Disaster Risk Screening5 and peer-reviewed literature highlight that the basin can expect a hotter future with more variable rainfall. As a result of more intense precipitation and floods events, a 10–21 percent increase in runoff is forecasted for 2041–2070 relative to 1970–2000 6 , which will exacerbate flooding and associated economic costs7 and also increase the levels and variations in water pollution (including plastic debris). 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 eutrophic waters. 8 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. 6. China launched a national strategy for the Yangtze River Protection in 2016, followed 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) in 2016 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 20199. In addition, the National People’s Congress approved the Yangtze River Protection Law10 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 4 Eutrophication is a process in which a water body becomes enriched with nutrients (notably phosphorus and nitrogen), leading to rapid algal growth and consequent oxygen depletion and ecological degradation (including fish deaths). 5 The Program area was assessed using the World Bank Group’s Climate and Disaster Risk Screening Project Lev el Tool. Results highlighted risks from extreme precipitation and flooding, informing the Program’s activities on pollution management under climate extremes (see para. 25). 6 CWR. 2016. Yangtze Water Risks, Hotspots, and Growth . China Water Risk, Hong Kong SAR, China ( link). 7 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 (link). 8 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 (link). 9 MEE, NDRC, Action Plan for the Uphill Battle for the Conservation and Restoration of the Yangtze River, Jan. 24, 2019. (link) 10 The Yangtze River Protection Law of the People's Republic of China (March 2021) (link). 6 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 to improve the 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 management system, 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.11 The Government established the River Chief System (RCS), a network of government officials at the provincial, municipal, county, township and village levels, who are assigned responsibility for outcomes along each section of every significant waterway. It helped to raise the importance of water-related issues and proved very useful in addressing challenges of coordination and cooperation between responsible departments and regions. 12 Implementation of the RCS is supported by River Chief Offices (RCOs) that usually sit within water departments at the respective levels.13 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.14 8. The implementation of the Yangtze River Protection Law and national strategy has made significant progress, providing an enabling environment for the Bank’s support to be effective. On December 24, 2021, China issued the Wetland Protection Law, specifying measures to protect wetland and their ecosystem functions. The Yangtze River Law proposes the establishment of a National Yangtze River Basin Coordination Mechanism15. Supported by the World Bank Yangtze River Protection and Ecological Restoration Program (YRPERP), a Yangtze River Basin RCS coordination mechanism was established and the first meeting held in Hubei in July 2022 and chaired by the governor of Hubei province, attended by provincial leaders of the Yangtze River Basin provinces, along with the Vice Minister of MWR and commissioner of the Changjiang Water Resources Commission (CWRC), marking a major milestone towards integrated river basin management. 9. Located in the 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 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 the largest number of lakes (over 750) in the country.16 11 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 (link). 12 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) (link). 13 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. 14 Wu, et al. 2020. “Public Participation of the River Chiefs System in China: Trends, Problems, and Perspectives .� Water 12: 3496 (link). 15 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 Yangtze River basin� 16 Lakes are densely covered in this province and this province has been called ‘A Province with One Thousand Lakes’. 7 Hubei province is rich in biodiversity resources with 3,476 endemic species and many important wetland natural reserves, including four wetlands of international importance. Located in the Yangtze’s middle reach, Hubei is also the economic engine of Central China. With more than 58 million residents, Hubei's GDP exceeded 5 trillion RMB in 2021, ranked 4th in the YREB (only below provinces on the Yangtze River Delta) and first in Central China. Hubei has been the largest producer of freshwater aquacultural products in China for over 20 years. The Danjiangkou Reservoir annually supplies the equivalent amount of water of 5 River Thames (i.e. 9 BCM) to northern China through the South-North Water Diversion Project. 10. 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 system17. 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. 11. 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 979 lakes existed in 2005. Some lakes had vanished completely because of cultivation and urban development, among other reasons. 18 In the 1980s, overfishing and other human activities, such as pollution from cities and agricultural production, became sources of pressure on the largest lake in Hubei, Hong Lake. The poorest municipality, Enshi Prefecture, is also the water source region of the second largest tributary of the Yangtze River in Hubei. Water quality deterioration, riverbank erosion, and recurrent flooding are key factors undermining living standards and sustainable economic development in the region. Climate change is further exacerbating those challenges by altering water availability and variability, increasing disaster frequency and severity, causing habitat loss and so on. The remaining core challenges that the Program aims to address include (i) insufficient coordination, including data and information sharing, in the planning and implementation of ecological and water management actions across jurisdictions and sectors; (ii) lack of integrated water and environment management regulations and policies considering water quality, quantity and ecology in the same time; and (iii) sub-optimal and uncoordinated investments for point and non-point source pollution management and reduction, including plastics. 2.2 The Government Program 12. 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 17 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 18 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 8 institutional mechanisms for green development. Since the Hubei province is almost entirely within the Yangtze River Basin, 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. 13. The Government program has the following themes, with specific mandatory and recommended results targets related to each thematic area: (i) Land-based ecosystem protection and restoration; (ii) Integrated water environment management for key basins; (iii) Coordinated basin ecological environment improvement; (iv) Agriculture green development; (v) Deepening inter-jurisdiction cooperation in green development; (vi) Solid waste classification and resource utilization; (vii) Upgrading urban and township environmental infrastructure; (viii) Rural living environment improvement; (viii) Establishment of long- term mechanisms for protection of Yangtze River in Hubei province; and (ix) Supporting green development demonstration pilots. The Government program pools a range of financing sources including earmarked funds from national, provincial, municipal, and county governments, as well as private sector contributions. 2.3 The World Bank Financed Program 14. 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. 15. Demonstration sub-basins and demonstration counties were selected based on their relative importance in the ecology of the basin. 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 province19. Hong Lake is the largest lake in Hubei and thus selected as another demonstration sub-basin. There are a total of 10 counties in the Qing River basin and two in Hong Lake basin. For the proposed Program, a total of 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 Basin20. The geographical boundary and expenditure framework of the PforR is defined at the abovementioned six counties for physical investments and at the provincial level for institutional interventions. 19The largest tributary of the Yangtze in Hubei Province, Han River, runs across provinces, i.e. Shaanxi and Hubei 20County 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. 9 Figure 1. Overview of the Program and Geographic Boundary Table 1. Overview of Government Program and PforR program Program supported by the Government program Reasons for non-alignment PforR To improve institutional To promote ecological coordination, enhance protection and green ecological protection and Objective development of the reduce water pollution in Yangtze River Basin in Hubei province of the Hubei Yangtze River basin Duration 2020-2030 2023-2027 50 percent of counties within Geographic 6 demonstration counties 103 counties the two demonstration sub- coverage (in two sub-basins) basins Themes related to green Results development cover an agenda Nine themes RA1-3 areas that is much broader than the objectives of this PforR. US$1,074 million Overall (Government funding: US$25,793 million Financing US$874 million; IBRD loan: US$200 million) 16. 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 10 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 inter-jurisdictional cooperation and cross-sectoral coordination in Hubei province. Program activities under Results Area 1 include: (a) Supporting Hubei Province’s participation in a multi-provincial cooperation mechanism for water environment protection with focus on river/lake protection; (b) Strengthening of RCS coordination through the integration of county and municipal, provincial, and basin-level RCS information platforms with required data-sharing mechanisms; (c) Development of provincial-level policies, regulations and guidelines on integrated water environment, ecological protection and management; and (d) 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 enhancing climate change 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 of the Provincial Department of Finance (DoF), 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), etc. The Implementation Agencies of each indicator are detailed in Annex 1. RA 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 integrated water environment protection plans; (b) Connecting the Yangtze water environment information platform under DEE with RCS information platform to enhance cross-sector coordination; (c) Improving water environment monitoring systems on both water quantity and quality; (d) Determination of ecological flow requirements and incorporation into county water allocations to ensure long-term restoration and protection of the freshwater ecosystems; (e) Financing of sustainable soil and water conservation activities, with emphasis on sustainability of outcomes and climate change considerations. Activities supported by Results Area 2 will be implemented by the PPMO/PDRC as the coordinating agencies, 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, e.g. 11 changes in precipitation, collection and climate-sensitive planning and ecological restoration, as well as through improved water management under climate-change-exacerbated 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 RA will lead to reduction in GHG emissions by increasing carbon sequestration through increased vegetation cover. 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) Improved wastewater services in county seats and rural towns by integrating the O&M for treatment plant and collection network and outsourcing to private sector through performance- based contracts; (b) Prevention of plastics entering waterbodies through increased collection of agricultural plastic film and establishment of a monitoring system; (c) Reduced nutrient runoff via improved management and utilization of livestock/poultry manure, focusing on large-scale animal farms; and (d) Improved integrated urban-rural domestic solid waste collection and transportation systems and services in the demonstration counties. Activities supported by Results Area 3 will be implemented by the demonstration counties with oversight and guidance from 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 reduced GHG emissions by county-level investments delivering substantial GHG reductions through reducing point and non-point pollution discharges and resultant methane emissions from eutrophication. Additionally, the activities will reduce pollution loads from point and non-point sources and increase the sub-basins’ resilience towards water pollution risks, especially under drought conditions, thus, protection of freshwater biodiversity. 17. Program financing. Total Program financing over 2023–2027 is expected to be US$1,074 million (Table 2), 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$20 million equivalent or more per contract. Table 2. Overview of Program Financing Source Amount % of Total (US$ Million) Counterpart Funding 874.00 81 12 Borrower/Recipient 4,200.00 81 International Bank for Reconstruction and 200.00 19 Development (IBRD) Total Program Financing 1,074.00 100 3 PROGRAM RESULTS FRAMEWORK AND MONITORING & EVALUATION 3.1 Program Development Objectives 18. The Program Development Objectives (PDO). To be in line with the overall objectives of the YRPERP, the PDO of YRPERP (Hubei) Program is ‘to improve institutional coordination, enhance ecological protection and reduce water pollution along the Yangtze River basin in Hubei Province’. 19. The achievement of the PDO will be measured through the following outcome indicators: (a) Strengthened River chief system (RCS) for institutional coordination - River Chief System platforms integrated; (b) Improved water environment management system for the demonstration sub-basins; and (c) Reduced pollutant loads entering waterways in the demonstration counties. (a) PDO#1: River Chief System platforms integrated: It supports establishing and maintaining the connection of county and municipality river chief information platforms to the provincial information platform and connection of the provincial platform to the basin platform supported under the YRPERP central component (for integrated data sharing from local to basin scale). (b) PDO#2: Improved water environment management system for the demonstration sub- basins: measured by the number of defined water environment management actions undertaken at sub-basin level, including: (a) approval of sub-basin water environment protection plans for the two sub-basins; (b) operationalization of a big-data water environmental information platform which will be established and operated by the DEE and will be connected with the RCS information platform for improved cross-sector coordination; and (c) compliance of ecological flows (meeting defined flow targets) in the Qing River Basin and water depth requirement in the Hong Lake basin. (c) PDO#3: Reduced pollutant loads entering waterways in demonstration counties: measured by the number of key pollutant reduction targets met (yes/no) by the 6 demonstration counties. The pollution reduction targets refer to 6 targets: 3 annual targets per county, (i.e. COD reduction, agricultural plastic film collection and manure utilization), and 3 one-off targets (i.e. wastewater management strategy, wastewater integrated agreements and urban-rural domestic solid waste integrated agreements). 3.2 Theory of Change 20. The Program contributes to a long-term vision of an economically productive, ecologically sustainable, and climate resilient YRB. Aimed at addressing the above-mentioned challenges, the Program will 13 support interventions at three levels: (a) provincial-level coordination, including data sharing, and development of policies, regulations, and guidelines, as well as participation in a tri-provincial cooperation mechanism on water environment management with other two middle-reach provinces; (b) sub-basin-level ecological protection and integrated water environment management; and (c) county- level activities to reduce plastics and nutrient pollution discharges. The expected results are captured in the five outcomes linked to three parts of the Program Development Objective (PDO) – respectively on (a) institutional strengthening; (b) ecological protection; and (c) water pollution load reduction. Enabling environment activities (provided through the YRPERP central component) include: (i) basin-level inter- jurisdictional collaboration and data sharing; (ii) research-based technical guidance related to key activities, such as guidelines for the evaluation of river health and ecological flows, strategies for total phosphorous pollution prevention and control; and (iii) overall coordination and technical support. That the proposed YRPERP (Hubei) Program aims to support institutional strengthening and mechanism for better coordination and cooperation, while addressing immediate challenges related to ecological protection and pollution management, through results-based financing, but the long-term sustainability of water pollution management and ecological protection will only be realized only when institutional mechanism is established and well -functioning. The program endeavors to lay a foundation for long- term institutional sustainability. 21. Critical assumptions required for the Program’s success are that: (a) provincial policies developed and approved under the Program are enforced and not contradicted by county- or municipality-level actions; and (b) there are no major external changes to pollution loads, such as pollution accidents from industrial activities that are beyond the PfoR scope. Figure 2. Theory of Change 14 3.3 Disbursement Linked Indicators and Verification Protocols 22. The Program’s DLIs quantify the parameters and values that need to be achieved to trigger disbursements (Table 3). The province is responsible for measuring achievement of DLIs within a framework that is consistent with the one established for YRPERP, allowing for aggregation and reporting at the Program level. The choice of these DLIs is based on four factors: (i) the importance of the indicator to signal a critical action/output along the results chain to achieving the PDO; (ii) relevance of the indicator in fostering a strong financial incentive to deliver the results; (iii) feasibility and robustness of verification of results achievement; and (iv) capacity of the Borrower to achieve the DLI during the implementation period of the Program. The selected DLIs prioritize the use of existing indicators and reporting mechanisms within the Government system where possible, to ensure efficiency in implementation and sustainability. Table 3. Overview and Rationale for Disbursement Linked Indicators Disbursement Linked Rationale for Selection Indicators Results Area 2: Advancing Ecological Protection through Integrated River Basin Management The purpose of this DLI is to improve environmental water management. It DLI 1: Improved water supports approval of water environment protection plans for the environment demonstration sub-basins, enhancement of inter-jurisdictional cooperation management system in through facilitating information and data sharing, and monitoring the demonstration sub- compliance of ecological flows of the Qing River Basin and ecological depth basins of the Hong Lake Basin. DLI 2: Land area where The purpose of this DLI is to improve sustainable landscape management, reduce sustainable land water and soil erosion and non-point source pollution, increase carbon management (SLM) sequestration and contribute to biodiversity conservation with emphasis on practices outcome sustainability and longer-term institutional impacts, including by with climate change promoting stakeholder participation, emphasizing O&M and implementing considerations were implemented climate considerations. Results Area 3: Reducing Water Pollution and Transmission of Plastic Waste DLI 3: Improved township The purpose of this DLI is to improve wastewater management systems in domestic wastewater demonstration counties and reduce point-source pollutions to the waterways service systems through establishing longer-term sustainable institutional systems. DLI 4: Demonstration The purpose of this DLI is to improve manure resource utilization, including as counties meeting annual organic fertilizer, to improve management of rural and agriculture non-point targets for manure source pollutions, promoting the development of circular economy and utilization contributing to reduction of greenhouse gas emissions (fugitive methane). 23. Verification will be carried out by a third-party agent based on data collected by the provincial and 15 county level agencies. At the county level, inspection will be conducted by the county Program Management Office (PMO) on behalf of the county government; at the province level, sample inspections will be conducted by the Provincial PMO (PPMO) on behalf of the provincial government. County-level inspections will cover county-level Program activities (DLI 2-4); provincial-level inspections on DLI 1 will randomly review a percentage of the reported accomplishments throughout the province as specified in the Program Implementation Plan. The verification agencies will be contracted by the PPMOs using a consistent and agreed verification protocol. The World Bank will review and provide feedback on the terms of reference (TOR) for the verification agent, with the final agreement subject to confirmation of acceptability by the World Bank. The Program verification procedures and implementation arrangements are to be detailed in an M&E plan for the Program. 24. DLI 1: Improved water environment management system in the demonstration sub-basins. DLI 1 is a composite index with a series of discrete actions with recurrent compliance monitoring, including: (a) approval of water environment protection plans covering the demonstration sub-basins (Qing River Basin and Hong Lake Basin); (b) establishment and operationalization of a big-data water environment information platform for Yangtze River basin in Hubei; and (c) implementation of ecological flows (meeting defined flow targets) in Qing River Basin and water depth requirements in Hong Lake Basin. Public disclosure of the integrated water environment management plans will be required for verification, along with publication of monthly ecological flow and water depth monitoring bulletins. This information, plus the status of the information platform, will be collected by the DEE and provincial RCO, and verified through the verification agency. 25. DLI 2: Land area where sustainable land management (SLM) practices with climate change considerations are implemented. SLM involves the use of land resources, including soils, water and plants, for the production of goods to meet human needs, while simultaneously ensuring the long-term productive potential of these resources and the maintenance of their environmental functions. DLI 2 measures the annual increase of land area under soil and water conservation measures which: (i) meet national technical standards; (ii) consider climate change impacts; and (iii) have Operation & Maintenance (O&M) plans, including the O&M requirements and implementation responsibilities;. Verification will be conducted based on national technical standards listed in Annex 2 combining site- verification with remote sensing technology. Data will be collected by PPMO and demonstration counties and verified through the verification agency. 26. DLI 3: improved township domestic wastewater service systems is defined by: (a) integrated wastewater management strategies issued considering institutional arrangements, financial sustainability, O&M for plant and network, climate resilience for infrastructure investment or rehabilitation, social inclusion and low-carbon technologies; (b) integrated institutional arrangements for plant and network O&M; (c) annual COD reductions during project implementation at WWTPs due to improved utilization of plant capacity. Confirmation of improved wastewater systems is based on (a) county-level integrated wastewater management strategies are publicly disclosed at county government websites; (b) signed contracts of integrated county wastewater collection and treatment; (c) verification of COD concentrations according to environment bureau real-time monitoring data records and random sample check. 27. DLI 4: demonstration counties meeting annual targets for manure utilization is defined by the number of counties meeting their annual livestock and poultry manure utilization ratio targets in the 16 demonstration counties. Unutilized and improperly managed manure is a source of NPS water pollution and GHG emissions. Utilization of manure includes generation of biomass energy and use as organic fertilizer (a partial substitute for GHG-intensive synthetic fertilizer). Regular data on the quantities of livestock and poultry manure produced and utilized are reported in the direct reporting system of the Ministry of Agriculture and Rural Affairs (MARA). Reported quantities will be verified based on random sampling of large-scale farms 21 and other supporting documents (for example, manure utilization contracts, annual inspection reports from DARA) by the verification agencies. 28. The Program contributes to both climate change mitigation and adaptation in the Yangtze River Basin in line with China’s Nationally Determined Contributions (NDCs). The impacts of climate change have been a key consideration in Program design. All demonstration sub-basins are vulnerable to climate change and are affected by extreme temperatures and rainfall events, with a high frequency of floods and droughts, as particularly demonstrated in the summer of 2022. The Program makes substantial contributions to both climate change mitigation and adaptation through the following activities, which are also summarized in the Table 4 below: Climate Change Adaptation: - DLI.1: climate change adaptation measures are incorporated into the provincial integrated water environment management plans and an ‘Emergency Preparedness Plan’ is prepared based on the Smart Yangtze Information Platform, which are expected to improve the institutional capacity towards climate-exacerbated risks at provincial level; - DLI.2: improved vegetation coverage through soil and water conservation measures can act as effective nature-based solutions to improve the resilience of the demonstration sub-basins towards both droughts and floods through increasing water storage capacity and reducing peak runoffs; - DLI.3: the resilience of basic infrastructure, i.e. wastewater facilities, will be improved through incorporating climate considerations into design of wastewater treatment plants and integrated wastewater management strategy; - DLI.3&4: reduced pollution loads from point and non-point sources increase the sub- basins’ resilience towards water pollution risks, especially under drought conditions, which reduces public health risks due to water pollution. - Other Indicators: besides DLIs, other program activities are also expected to generate substantial climate change mitigation benefits. For instance, the tri-provincial cooperation mechanism (IO.1) includes mechanisms to mitigate environment risks, including pollution, droughts, floods etc., at the basin level across provincial boundaries; public participation document issued for river and lake protection (IO.4) would include guidance on increasing people’s awareness and preparedness for weather extremes, which will be embedded in public participation activities (IO.5). Ecological flow / depth targets established under (IO.7) with water allocation plan implemented under (IO.6) are 21A large-scale animal farm is defined as 500 or more head of pigs, 2,000 or more egg chickens, 10,000 or more meat chicken, or 30 or more head of cattle. 17 also expected to increase adaptation capacity toward drought conditions. Climate Change Mitigation: quantifiable GHG emission reduction benefits include: - DLI.2: increasing carbon sequestration in soil and vegetation due to soil and water conservation measures; - DLIs 3&4: reducing fugitive methane emissions from polluted water bodies due to reduced pollutant discharges from point sources (DLI 3) and non-point sources (DLI 4). In addition, other elements of the Program are also expected to have substantial GHG mitigation benefits that are challenging to quantify. - DLI.1: (i) Incorporating climate mitigation measures into integrated water environment management plans is expected to lead to longer-term water quality improvements through reduced nutrient pollution and thus reduced eutrophication22; (ii) Mitigation is also expected due to implementation of environmental water flows due to stabilized water levels that supports aquatic vegetation and mitigates methane emissions.23 - DLI.3: county-level integrated wastewater management strategies are expected to include an assessment of cost-effective climate change mitigation measures, such as installing solar panel, energy efficiency improvement etc. to be incorporated into future plant design, which are expected to reduce GHG emissions through the life-cycle of wastewater management. Table 4. Summary of climate co-benefits associated with DLIs DLI Activity Climate Adaptation Climate Mitigation Support the sharing of climate-relevant hydrological and ecological data necessary for coordinated climate-sensitive management Hubei Provincial Water actions, strategies, and plans Environment Information Platform An Emergency Forecasting and Preparedness Plan is developed DLI 1 and issued based on the Platform Integrated water and Improve climate impacts, management responses and mitigation environmental measures incorporated in infrastructure investment planning management plan Ecological flows Increase resilience to Mitigate methane emissions determination and temperature extremes and from large flow variations and implementation drought build up carbon stocks Improved vegetation cover and Increased vegetation cover Sustainable land improved land management act contributes to increased carbon DLI 2 management as effective nature-based sequestration and climate solutions that increase water change mitigation 22 Eutrophication causes methane emissions due to anaerobic decomposition and has been an issue within the Program’s sub -basins. Notably, Hong Lake has experienced instances of eutrophication. A recent study calculated the present value of the global social cost of eutrophication- driven methane emissions from lakes at an annual amount of US$0.21–2.31 trillion (US$ 2015). See Downing, J. A., et al. 2021. “Protecting Local Water Quality Has Global Benefits.� Nature Communications 12: 2709. 23 Rosentreter, et al. (2021). Half of global methane emissions come from highly variable aquatic ecosystem sources. Nature Geoscience, 14: 225-30 18 storage capacity and improves Reduced soil and water erosion flood resilience by reducing peak reduced nutrition load leaching runoffs to water bodies and therefore reduced methane emissions from eutrophication Promote options to improve Promote low-carbon Integrated Wastewater treatment plant resilience technologies (e.g. smart energy Management measures (e.g. flood resilient site management systems Strategies DLI 3 selection) development) COD Reduction from County-level investments will Reduced pollution loads from Wastewater Treatment deliver substantial GHG point and non-point sources Plants reductions through reducing increase the sub-basins’ resilience DLI 4 Increased manure point and non-point pollution towards water pollution risks, utilization rate at large- discharges and resultant especially under drought scale animal farms methane emissions from conditions. eutrophication 4 ROGRAM EXPENDITURE FRAMEWORK 4.1 Overview 30. The Expenditure Framework Assessment (EFA) was conducted based on information provided by Hubei government, a review of public financial management regulations and interviews with government officials during the field visits. The EFA included the following dimensions: (i) fiscal sustainability and resource predictability; (ii) well-functioning budget allocation and execution; and (iii) incentives for efficient service delivery and value for money. 31. The duration of the PforR is from 2023 to 2027. The PforR covers 6 counties in Hubei (out of total 64 counties). The total Program financing is estimated at USD 1074 million, of which USD 874 million will be financed by government and USD 200 million will be financed by IBRD Loan (Table 5. ). Table 5. Program Financing (2023-2027) Hubei Province Amount Source % of Total (USD Million) Government 874 81 IBRD 200 19 Total 1074 100 Note: The exchange rate is USD1 for RMB 7. 4.2. Expenditure Scope 32. The Program consists of three result areas (RAs). Table2 provides the breakdown of the Program financing by RAs and by provinces. Of the estimated total Program financing USD 874 million from 19 government, RA1 accounts for 6.15 percent, RA2 for 41.74 percent and RA3 for 52.11 percent. The RA2 and RA3 involves massive investment, while RA1 put more emphasis on the institutional innovation or improvement of water environment management mechanism, for which the budget expenditure is negligible. Therefore, the following expenditure framework assessment will mainly focus on the budget expenditure related to the program activities under RA2 and RA3, namely, water ecological protection enhancement and water pollution reduction. Table 6. Program Financing by Result Areas (2023-2027) 2018-2021 actual (US million)1 2023-2027 estimated (US million) Result Areas all project counties in Hubei all project counties in Hubei Share（%） RA1 42.96 53.70 6.15 RA2 291.70 364.63 41.74 RA3 364.16 455.20 52.11 Sub-total 698.82 873.53 Note: 1. Data source: Table 3. 33. The provincial governments in China adopt a uniform budget classification to prepare budget and report government expenditures following the instruction of the central Ministry of Finance. Hubei have developed an integrated financial management system to track budgetary expenditures. Through the interviews with government officials it was found that the Department of Natural Resources and Ecological Environment (DNREE) takes the main responsibility for implementing the government program of “Pollution Prevention� and records the related expenditures under the budget line “Pollution Prevention� (code 21303), such as “Water Pollution Prevention and Treatment� (code 2110302). Department of Housing Construction (DHC) takes the main responsibility for implementing the government program of “Urban and Rural Communities� and records the related expenditures under the budget line “Urban and Rural Communities (code 212), while expenditures related to urban waste and sewage treatment are mainly recorded under the budget line “Other Urban and Rural Community Expenses� (code 2129901).Department of Agriculture and Rural Affairs (DARA) takes the main responsibility for implementing the government program of “Agricultural and Rural Modernization� and records the related expenditures under the budge line “Agriculture and Rural Affairs� (code 21301) and “Rural Environment Protection� (code 2110402). Department of Water Conservancy (DWC) takes the main responsibility for implementing the government program of “Water Conservancy� and records the related expenditures under the budget line “Water Conservancy Affairs� (code 21303),such as “Soil and Water Conservation� (code 2130310) and “Water Resource Conservation Management and Protection� (code 2130311). It is noteworthy that some expenditures on institutional strengthening related to water affairs, such as the construction of river and lake chief systems, are recorded under the budget line “Other Water Conservancy Expenses� (code 2130399). 34. The scope of budget expenditure for the PforR Program (Program Expenditure Boundary) is defined as selected sub-items of the government expenditure that cover the RA1,RA2 and RA3 activities under the Program in 6 project counties(see Table 3). The total amount of budget funding for the Program activities during the Program implementation period (2023-2027) is estimated based on the 2018-2021 budget expenditure data of the project counties (see Table 7). Table 7. Program Expenditure Boundary 2018-2021 (USD, million) 20 Government PforR Program Program Code Budget Line Result 6 project Hubei Area counties 2110302 Water pollution prevention and Treatment 3342.57 RA3 134.12 2110399 Other pollution prevention and Treatment 1302.61 RA3 15.42 2110401 Ecological protection 558.15 RA1 37.91 2110402 Rural environment protection 1409.41 RA3 129.06 2129901 Other urban and rural community spending 4417.21 RA3 58.38 Protection, Restoration and Utilization of Agricultural 2130135 609.23 RA3 27.18 Resources 2130305 Water conservancy project construction 5402.02 RA2 129.21 Operation and maintenance of water conservancy 2130306 991.92 RA2 26.92 projects 2130308 Preliminary work on water conservancy 56.98 RA1 2.52 2130309 Water conservancy law enforcement supervision 78.38 RA1 2.53 2130310 Soil and water conservation 130.55 RA2 8.57 Water resource conservation management and 2130311 268.68 RA2 6.69 protection 2130319 integraterd management of rivers, lakes and reservoirs 298.31 RA2 4.93 2130399 Other water conservancy expenses 1768.77 RA2 115.38 Total 20634.78 698.82 4.3. Program Financing 35. China is a very decentralized country, with responsibilities for providing public services being highly decentralized to sub-national governments (SNGs). As of 2019, SNGs accounted for about 85.30 percent of total public expenditure. In particular, the local share of the expenditure on �Agriculture, Forestry and Water Conservancy�, is as high as 97.7%. 36. On the revenue side, it is highly centralized. Tax rates are set centrally, and the tax revenue are collected by the State Administration of Taxation and allocated to subnational governments in the forms of shared tax revenues, general transfers and earmarked transfers. The counties rely heavily on the transfers from upper-level governments to finance public services to the local residents. 37. For this PforR Program, county governments will undertake the activities of RA2, RA3 and the corresponding expenditures are recorded under the county government’s budget. Counties rely on the higher-level government (HLG) transfers from central government and provincial governments to finance these activities. Tere are two HLG transfer items that provide funds to county governments for carrying out the Program activities, namely, �Transfer for central-local shared functions on agriculture, forestry and water affairs� and “Special transfer for agricultural, forestry and water affairs� (see Table 4), of which 21 the “Special transfer for agricultural, forestry and water affairs� is ear-marked transfer and the other one is general transfer. The ear-marked transfer plays an instrumental role in steering counties to implement the Program activities, while general transfer helps to fill in the gap of budget funds needed. As Table 8 shows, the amounts of the two funding sources (1453 USD, million) are much higher than those of the expenditures (698.82 USD, million) listed in Table 3, which indicates the budget funding for the Program is overall adequate and largely predictable. Table 8. Program Funding Sources during 2018-2021 (USD, million) 2018 2019 2020 2021 Total General transfers Transfers for central-local common functions on agriculture, 0.0 217.0 281.8 282.9 781.7 forestry and water affairs Ear-marked transfers Ear-marked transfers for agricultural, forestry and water 314.7 115.1 124.5 117.0 671.3 affairs Total 314.7 332.1 406.2 400.0 1453.0 Share of Earmarked transfers 100.0 34.7 30.6 29.3 46.2 4.4. Expenditure Performance 38. The quality of expenditure program management will be critical to achieving the program objectives. While the county governments are taking main accountability for developing and implementing the Program, the provincial governments incentivize and/or mandate the counties to deliver the expected results through (i) earmarked transfer that mandates the use of the funds for implementing activities critical to the achievement of expected results; (ii) expenditure performance evaluation and rewards; (iii) technical guidance and suasion; etc. 39. Ear-marked transfer programs supporting the Program activities. Table 9 lists the main HLG ear- marked transfer programs that supports RA2 and RA3 activities allocated by Ministry/Department of Finance or Development and Reform Commission during 2018-2021, of which the transfer programs arranged by the central government account for more than 80%. In general, from 2018 to 2021, the amount of HLG ear-marked transfers supporting the Program showed an upward trend. Table 9. Relevant ear-marked transfer programs in Hubei (unit: USD million) Provincial Central Total Program sub- sub- 2018 2019 2020 2021 2018 2019 2020 2021 Total total total Allocated by Finance Department Water Conservancy Development 0.0 0.0 0.0 0.0 0.0 17.0 25.7 20.6 27.42 90.7 90.7 Water Pollution Prevention and Control 0.0 0.0 0.0 0.0 0.0 0.0 11.8 12.5 7.4 31.8 31.8 Water Conservancy Reform and 14.8 5.7 5.9 2.6 29.0 0.0 0.0 0.0 0.0 0.0 29.0 Development 22 Key Ecological Protection, Restoration and 0.0 0.0 0.0 0.0 0.0 0.0 12.9 13.6 2.5 28.9 28.9 Governance Agricultural Resources and Ecological 0.0 0.0 0.0 0.0 0.0 0.1 4.6 11.1 4.5 20.4 20.4 Protection Township Domestic Sewage Treatment 0.0 0.9 4.7 6.3 11.9 0.0 0.0 0.0 0.0 0.0 11.9 Urban Pipe Network and Sewage Treatment 0.0 0.0 0.0 0.0 0.0 0.0 5.1 1.7 4.7 11.5 11.5 Fishery Development Subsidy 0.0 0.0 0.0 0.0 0.0 0.0 1.5 1.2 7.1 9.9 9.9 Modern Agriculture Transfer 3.0 1.6 2.5 1.3 8.5 0.0 0.0 0.0 0.0 0.0 8.5 Urban and Rural Domestic Waste Innocuous 0.8 1.1 0.8 0.0 2.7 0.0 0.0 0.0 0.0 0.0 2.7 Treatment sub-total 18.6 9.3 13.9 10.2 51.9 17.2 61.6 60.7 53.7 193.2 245.2 Allocated by Development and Reform Commission Qing River Treatment Project 0.1 8.8 0.0 0.0 8.9 0.0 8.6 0.0 0.0 8.6 17.5 Green Development under Yangtze River Economic Belt Project (Treatment of 0.0 0.0 0.0 0.0 0.0 0.7 0.2 0.0 16.4 17.3 17.3 Ecological Pollution in Yangtze River) Ecological Protection and Restoration in Key Areas Project (Control of Rocky 1.4 0.0 0.0 0.0 1.4 3.9 3.6 6.9 0.0 14.4 15.7 Desertification) Ecological Environment System 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.8 14.8 14.8 Improvement Project of Honghu Small and Medium River Governance Project 0.0 0.0 0.0 0.0 0.0 0.7 5.0 6.4 0.5 12.7 12.7 Management of Water Environment in Key 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.1 9.3 11.5 11.5 River Basins Project Yangtze River Economic Belt Green Development Project (Green Development 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.7 6.9 9.1 9.1 Demonstration) Ecological Protection and Restoration in Key Areas (Water Conservancy Management 0.0 0.0 0.0 0.0 0.0 1.0 0.0 4.1 0.0 5.1 5.1 Project) sub-total 1.5 8.8 0.0 0.0 10.3 6.3 18.8 20.3 47.9 93.3 103.6 Total 20.1 18.0 13.9 10.2 62.2 23.5 80.4 81.0 101.6 286.5 348.7 40. Specific usages of ear-marked transfer programs supporting the Program activities. Table 10 illustrates the specific activities in RA2 and RA3 the government funds supported during 2018 to 2021, such as soil and water conservation (RA2), livestock poultry manure treatment (RA3), etc. Table 10. Specific usage of main funds in Hubei (2018-2021) 23 (2018-2021,(USD million) Provincial Central Total % of Total Water Conservancy Development 0.00 90.71 90.71 37.00 Management of small and medium rivers 0.00 42.17 42.17 17.20 Soil and water conservation 0.00 7.71 7.71 3.14 Water resources conservation and protection 0.00 2.23 2.23 0.91 Other 0.00 38.60 38.60 15.75 Water Pollution Prevention and Control 0.00 31.77 31.77 12.96 Drinking water source protection 0.00 1.43 1.43 0.58 Basin water ecological protection and restoration 0.00 18.34 18.34 7.48 Basin water pollution control 0.00 12.00 12.00 4.89 Water Conservancy Reform and Development 28.95 0.00 28.95 11.81 River and lake chief system 5.51 0.00 5.51 2.25 Confirmation of rights and demarcation of rivers and lakes 0.70 0.00 0.70 0.29 Soil and water conservation 0.69 0.00 0.69 0.28 Water resources conservation and protection 0.03 0.00 0.03 0.01 Management of small and medium rivers 1.07 0.00 1.07 0.44 Water ecological protection and restoration 19.30 0.00 19.30 7.87 Other 1.65 0.00 1.65 0.67 Key ecological protection, restoration and governance 0.00 28.93 28.93 11.80 Ecological protection, restoration and governance 0.00 28.93 28.93 11.80 Agricultural Resources and Ecological Protection 0.00 20.41 20.41 8.32 Treatment and resource utilization of livestock and poultry 0.00 19.39 19.39 7.91 manure Reduction of chemical fertilizers andand efficient use of 0.00 1.02 1.02 0.42 organic fertilizers Township domestic sewage treatment 11.88 0.00 11.88 4.85 Township domestic sewage treatment 11.88 0.00 11.88 4.85 Urban sewage pipe network 0.00 11.54 11.54 4.71 Urban sewage pipe network 0.00 11.54 11.54 4.71 Central Fishery Development Subsidy Fund 0.00 9.85 9.85 4.02 Pond aquaculture tail water treatment 0.00 9.85 9.85 4.02 Modern Agriculture Transfer 8.46 0.00 8.46 3.45 Resource utilization of livestock and poultry waste 4.63 0.00 4.63 1.89 Other 3.83 0.00 3.83 1.56 Urban and rural domestic waste innocuous treatment 2.65 0.00 2.65 1.08 Urban and rural domestic waste innocuous treatment 2.65 0.00 2.65 1.08 Total 51.95 193.21 245.15 100.00 42. A series of documents on management of the ear-marked funds has been issued by MOF,MARA, as well as DARA,DHC and DWC in Hubei, according to which the funds shall only be used for the specified usages. The allocation of the funds is factor-based or project-based and shall all be subject to performance evaluation. The performance evaluation results are taken as an important factor for the fund allocation. Therefore, there are strong incentives for the counties to achieve the desirable objects on ecological 24 protection enhancement and water pollution reduction and to ensure value for money. Taking the biggest earmarked transfer program-Water Conservancy Development as an example, the funds are allocated through the factor-based method, and the performance factor is one of the important reference factors, accounting for 20%. Specifically, the Finance Department will cooperate with the Water Conservancy Department to score the performance on five dimensions including project decision-making, management, output, outcome and public satisfaction. 42. For the funds allocated by the Development and Reform Commission, the counties obtain the funds through application and competition. Similar to the ear-marked funds allocated by the Finance Department, a specific fund management document is issued for each sub-program, which strictly stipulates the allocation, usage, supervision and performance evaluation of the funds. The county development and reform bureaus will submit data such as start-up, investment completion, and progress of the projects to the National Development and Reform Commission through the Major Construction Project Database (MCPD) every month to ensure the effective use of funds. 4.5. Financial Sustainability 43. The overall financial situation in Hubei Province is not so stable (see Table 11), partly due to the negative impacts brought about by the CODIV-19 Pandemic. However, the total budget expenditure of the PforR Program accounts for only about 0.45% (=1.1/244*100) of the general public budget revenue from 2023 to2027 in Hubei. Overall, the financial sustainability is not deemed as a major concern for the Program. Table 11. Financial Situation in terms of General Public Budget in Hubei Hubei 2018 2019 2020 2021 General public budget revenue (GPBR),USD billion 47 48 36 47 Transfer from central government (TFCG),USD billion 62 68 89 77 GDP,USD billion 600 649 614 714 Debt balance (DB),USD billion 95 115 144 170 Debt repayment amount of this year (DRA) 51 59 68 —— Debt-to-GPBR ratio (=DB/GPBR+TFCG),% 88 99 115 137 Debt-to-GDP ratio (=DB/GDP),% 16 18 23 24 Debt repayment ratio (=DRA/GPBR+TFCG),% 43 46 50 —— Note: According to the figures of the general public budget revenue from 2018 to 2021, it can be predicted that the general public budget revenue of Hubei from 2023 to 2027 is 222.5 billion USD ((52+53+39+51)/4*5=244), According to Table1,the program financing of Hubei from 2023 to 2027 is 1.1 billion USD. 4.6. Recommendations 44. In general, the expenditure framework presents an adequate basis for the government to deliver ecological protection enhancement and water pollution reduction. Budgets appear largely adequate relative to expected results, expenditure performance evaluation is in place, and aggregated fiscal sustainability issues were not identified as a core concern associated with the expenditures. However, the Program rely heavily on general HLG transfers as budget funding source, some funds were blended with 25 other financial resources. This makes it challenging to monitor the usages of the funds and to evaluate its efficiency. It is recommended that blue-tagging for the Program funding in the provincial budgeting system be implemented. 26 5 STRATEGIC RELEVANCE AND TECHNICAL SOUNDNESS 5.1 Strategic Relevance 45. The proposed YRPERP (Hubei) Program will be embedded within the Government’s national program for the YREB at the central basin level and within the sub-national program at the provincial level of Hubei Province. These provide a nested hierarchy of activities and objectives, aligned with administrative responsibilities of the different levels of government and the provisions of the Yangtze River Protection Law. The law’s passage was a key step toward ecological protection and restoration of the Yangtze River and reflects the importance placed by the Government on the strategy for the YREB. The activities supported by the Program contribute to implementation of the law and more broadly to the YREB national priority. 46. Selection of the two demonstration sub-basins. Qing River is the second largest tributary of the Yangtze River in Hubei and runs entirely within the province24. It is rich in biodiversity resources and provides a range of ecosystem services including soil and water conservation, flood buffer among others in the upstream of the Yangtze River. The Qing River Basin covers 10 counties within two municipalities (Enshi and Yichang). Among the ten counties in the Qing River, nine were considered national-level poverty counties prior to 2021, including all seven counties in the Enshi Municipality. By 2021, GDP per capita in Enshi, US$ 5,890, still ranked the last among all 13 municipalities in Hubei. In addition, climate change and human activities have led to a drastic reduction in the size, ecological integrity, and ecosystem services of Hubei’s wetland areas. Lake protection and restoration have been emphasized in high-level government priorities. Hong Lake is the largest lake in Hubei and the seventh largest freshwater lake in China, and it faces challenges (e.g. water pollution from urban development and intensive agricutrual cultivation) in balancing development and protection. The protection of the largest intra-provincial River Basin (Qing) and Lake Basin (Hong) in Hubei Province, which has probably the most complex labyrinth of river and lake systems in China, thus represents key challenges and opportunities in balancing development needs with environment and ecological protection for Yangtze River Protection and Ecological Restoration in the development of YREB. 5.2 Technical Assessment by Results Area 47. The technical assessment confirmed the soundness of the activities and their connection to the Program's desired outcomes. Three distinct and complementary sets of activities will be included in the Program design that are integral to the Government program: improvement of institutional mechanisms for coordination around ecological protection and water pollution control (Results Area 1); enhanced integrated water environment planning and ecological flows in target sub-basins (Results Area 2); and activities that contribute to reduce pollutants entering waterways (Results Area 3). 48. Institutional coordination mechanisms: Based on discussions with Hubei PDRC, DWR and DEE on institutional coordination, including coordination mechanisms, information sharing platforms, financing mechanisms and so on, main conclusions of the technical assessment are summarized below: 24 The largest tributary of the Yangtze River in Hubei, Han River runs across both Shaanxi and Hubei provinces. 27 (a) Tripartite Cooperation Mechanism on Yangtze River Protection: It was learnt that three provincial governments of Hubei – Hunan – Jiangxi have signed an ‘Action Plan to promote high-quality development in the Middle Reaches of the Yangtze River’, which includes cooperation in the field of ecological protection and restoration of the Yangtze River. However, this tripartite agreement is yet to be fully operationalized. (b) River/Lake Chief System (RCS): Hubei is the first province to integrate both river chief and lake chief in the RCS system in the country. An innovative five-level RCS system was established with multiple-stakeholder engagement in 2018 with expanded responsibilities for integrated river and lake planning. In 2020, Hubei Provincial River Chief Office issued the "Four-Linkage" (Joint working, Joint Patrol, Joint Prevention and Control) Mechanism for Transboundary Rivers and Lakes, to strengthen the management and protection of transboundary rivers and lakes, and to encourage river basin coordination. The Mechanism specific targets on the institutional gaps for the management and protection of transboundary (county-level and above) rivers and lakes within Hubei that do not have a common upper-level river and/or lake chief, to integrate the management in both upstream and downstream, left bank and right bank, mainstream and tributaries, larger and the smaller lakes. Successful implementation of these plans and mechanisms heavily relies on timely and adequate cross- sector data sharing to support the decision and actions. Hubei has over 30,000 official river chiefs, including 16 Provincial River Chiefs, 340 Municipal River Chiefs, 2067 County River Chiefs, 8355 Town River Chiefs, 19986 Village River Chiefs. In terms of public participation, Hubei has over 60,000 river/lake patrols and about 100,000 volunteers. However, there is no specific policy or guidelines to guide the organization of public awareness activities in Hubei. The female representation in civil river/lake chief averages at only 6.5 percent among the six demonstration counties. (c) Water Environment Information Platform: In terms of information platform, Hubei has just established a provincial River Chief Information platform, which is expected to be used by all county and municipal river chief offices. The River Chief Information Platform has enabled functions on river/lake inspection and water-related information reporting and sharing but yet to be routinely updated. Hubei DEE has established a Smart Yangtze (Water) Environment Information Platform, which contains information on water quality and water ecology. During the mission it was agreed that the DEE would seek to connect this information platform with the provincial RCS information platform for cross-sectoral information sharing. 49. Provincial policies, regulations, plans and guidelines: Technical assessment found that besides different sector five year plans, e.g. Hubei Provincial Ecological and Environment 14 th FYP, Water Security 14th FYP, some key policy documents Hubei issued during the 13th Five Year period that are related to the program activities include (i) ‘Hubei Municipal wastewater treatment quality and efficiency improvement action implementation plan (2019-2021)’ that implemented a three-year program to improve wastewater treatment efficiency in Hubei through actions such as network maintenance and so forth; (ii) Hubei provincial municipal waste sorting plan (2021-2025) and Hubei provincial working plan to promote municipal waste sorting to promote waste sorting, collection and recycling, supported by Hubei municipal waste fee management method issued in March 2021; (iii) In terms of soil and water management, Hubei has issued a Soil and Water Management Plan in 2016, setting a path forward until 2030; (iv) Hubei DWR has issued River/Lake Health Assessment Evaluation Guidelines in December 2021, guiding the establishment and implementation of water allocation and ecological flows. 28 50. Regarding the two demonstration basins, Hubei has issued a ‘Qing River Water Ecology and Environment Protection Regulation’ in 2019, effective in 2020, to protect the ecology and environment of the Qing River Basin. The regulation has made several requirements on water pollution control and water ecological restoration, including chemical fertilizer reduction, agricultural mulch recycling, manure treatment and resource utilization, limiting production, sales and use of P-containing detergent and so forth. In addition, Hubei Province promulgated the Lake Protection Regulation, providing the regulatory framework for lake protection. 51. Hubei also plans to develop and issue the following key policy documents: (i) Pollution Reduction: ‘Hubei Provincial Water Pollution Control Regulation (Amendment) (2022) and ‘Hubei TP Pollution Control Action Plan’ (2026); (ii) River/Lake Chief System: ‘Hubei Provincial River/Lake Chief Working Rules’ (2023); (iii) Solid Waste Management: ‘Hubei Urban and Rural Municipal Waste Management Regulation’ (before 2025); (v) Lake Protection: ‘Honghu Lake Protection Regulation’ (2025); (vi) Agricultural NPS Pollution Control: Hubei Good Agricultural Practice (2025). 52. Water allocation and ecological flow determination in the demonstration sub-basins: River/lake restoration and protection is highlighted in the 14th Five-Year Plan for Ecological Environment Protection of Hubei province with Qing River and Hong Lake as high priorities. In particular, the Plan intends to: (i) promote the restoration and protection of the ecological functions of lakes and wetlands such as Hong Lake and implement the wetland protection and restoration project in the four lake basins with Hong Lake and Chang Lake as the key areas; (ii) establish the buffer zone for lake watershed; and (iii) strengthen the ecological restoration of ecologically damaged and eutrophic lakes in the four lakes basins. The provincial target, principles and timeline for the water allocation are to: (i) ensure ecological flow of rivers and lakes; (ii) accelerate the completion of water allocation in important rivers and key large and medium-sized reservoirs across municipalities; and (iii) strictly control the development of water resources in river basins and areas where the total withdrawal exceeds the withdrawal cap. 53. The 14th Five-Year Plan for Ecological Environment Protection of Hubei province also requires accelerating the formulation of assurance measures and management systems for ecological flow and ecological water level. By the end of 2023, the water allocation of important river basins and the determination of ecological flow targets for key rivers and lakes should be largely completed. By 2025, the target for the overall ecological base flow satisfaction rate of important control sections in key rivers and lakes should reach more than 90%. The discussions at the provincial, prefecture and counties levels indicate that water resources (in terms of annual total water withdrawal) has been allocated to the municipality/prefecture level and will be further allocated to county level; the government has determined the cross-sections and corresponding ecological flows for the Qing River and its tributaries (and in the case of Hong Lake, the ecological water level). The six counties have a reasonably good water quality and hydromet monitoring network, some of the water quality and hydrological stations are managed vertically by the provincial authorities (DEE or DWR) and CWRC. The counties plan to upgrade some of the existing stations and/or build selected number of new stations to support the water quality and flow monitoring, basin management and RCS operation. 54. The important lakes in Hubei province still suffer from various levels of eutrophication due to the water pollution. The water quality of Hong Lake has remained largely Class IV and sometime Class V over the past years, with relatively high TP level discharged into the water bodies from agricultural sources and wastewater. The three key drivers for lake water quality deterioration in the past include water pollution, solid waste mismanagement and long-term and large-scale lake reclamation. A large quantity of wastewater 29 untreated or treated but not to the right level was discharged into the lakes. Secondly, non-point source pollution due to the overuse of chemical fertilizers, pesticides and non-standard aquaculture in the basin brought major nutrient loads to the lakes. Thirdly, over exploitation of lakes through land reclamation and large-scale aquaculture development also contributed to the deterioration of lake quality. 55. Water pollution control has synergy with GHG emission reduction. Both the Yangtze River Protection Law and the provincial Lake Protection Plan require the local government to improve sewage treatment and sewer networks coverage and promote integrated network and treatment management for more efficient and sustianble wastwater services. They also call for strengthening the prevention and control of agricultural Non-point sources (NPS), reducing the application of chemical fertilizers and promoting organic fertilizer application, collecting and recycling the agricultural plastic films. These interventions could substantially reduce the pollutant and nutrient loads to the lakes, improve lake water quality and reduce the GHG methane emissions. 56. Entropic lakes contribute signicantly to Greenhouse Gas (particularly Methane) Emission. Lakes play a critical role in the global carbon cycle and climate change. Eutrophication as a serious global challenge to water quality affects lake GHGs emission, making lakes hotspots of atmospheric methane (CH4) emissions. Hong Lake has a surface area of less than 400 km2 with an average water depth of 1.35m and classified as a macrophyte-dominated shallow lake. The catchment arearage of Lake Honghu is approximately 3314 km 2, about 70% of which is covered by dry farmlands and paddy fields. In the past decades the lake has experienced many intensive anthropogenic disturbances. Aquaculture was the major anthropogenic disturbance in the lake and peaked in 2004 with a total area of 240 km2. Over the past decade, the majority of aquacultural enclosures was removed and ecological restoration measures were taken to improve the water quality and rehabilitate the submerged vegetation. It has been reported the diversity and biomass of submerged vegetation have increased significantly after ecological restoration. Estimates of CH4 diffusopn flux of Hong Lake were conducted through modelling analysis, with data collected from field measurements from 2017 to 2021 with sampling sites distributed evenly in the lake. Major parameters included pH, water temperature, and dissolved oxygen cconcentration. The CH4 emission flux of Lake Hong was also higher than that at Lake Taihu and Lake Chaohu, two eutrophic lakes with abundant phytoplankton. The macrophyte-dominated shallow lake with an average depth 1.35m bears resemblance to a wetland, likely leading to large CH4 emission. Meanwhile, the nutrient loadings were significantly higher at the lake, which may be an alternative explanation for the high flux. The agriculture framing may contribute to the high nutrient loading of the lake and then largely increase the aquatic CH4 production and emission. 57. Soil and Water Conservation: Soil and water conservation is a priority area for ecological protection and pollution reduction in Hubei province, as reflected in several provincial plans for the 14th FYP period (e.g. the provincial ecological environment protection plan and provincial water security plan), with a total target of increasing 8,000km2 of land area with soil and water conservation measures and ‘soil and water conservation rate’ increased from 82.97% in 2020 to 84.46% in 2025. Following the rollout of the national soil and water conservation plan (2015-2030) in 2015, Hubei province and different municipalities developed the corresponding provincial and municipal soil and conservation plans (2016-2030). Investments in soil and water conservation focus on the hilly areas with significant land erosion and key ecological function zones such as Enshi prefecture. The typical soil and water conservation investment projects include slope farmland protection and treatment, ecological protection/rehabilitation of small catchments, and comprehensive rehabilitation/restoration of land degradation (rocky desertification), following an integrated catchment/basin approach which involves engineering, tree and grass planting and management measures. In plain areas such as Honghu city, soil and water conservation interventions are usually along river and lake shores or connected 30 with agricultural land cultivation. Each county has set a soil and water conservation target for the 14th FYP period (2021-2025). The soil and water conservation investment project design and results monitoring follow the national design standards and monitoring standards for soil and water conservation issued by the Ministry of Water Resources. Completion acceptance for investment projects large and remote areas involves use of remote sensing and drone technologies, in addition to field inspection and measurement. The beneficiary communities are involved in investment planning and project implementation and are engaged in operation and maintenance of completed projects with technical support from the local water sector staff. 58. Domestic wastewater management at county-seat towns: As of end 2021, 23,490 km of sewer collection pipelines had been built in the urban areas, i.e. urban areas/properties of all cities and county seat towns, among which sewer pipes (separated system) took about 16,600 km or 4,285 km increased comparing with that of 2018; and drainage pipes (combined system) about 6,890 km or 424 km decreased comparing with that of 2018. At the same time, 147 wastewater treatment plants, with a total designed treatment capacity of 1.016 million m3/d, had been built, which meets basic demands for economic and social development as the discharged water quality meets the requirements of Class 1A effluent according to GB18918-2002. The wastewater treatment ratio25 in the urban areas, i.e. cities and county seat towns, had reached to 97%. The centralized treated urban wastewater collection ratio26 achieved to 60%, 14% increase comparing with that by end of 2018. Since 2018, the province had issued action plans and guidance to promote the enhance the wastewater management that helped the improvement of wastewater collection and treatment, including: (i) diagnosis and inspection of 12,555 km of sewer pipes in 38 cities, among which 24 cities completed and 9 substantially completed; and (ii) construction of new sewer pipes, as described above. The province had set up a clear target to increase the wastewater collection ratio27 to over70% in prefecture level cities and over 40% in county level cities prior to 2025. To achieve such a goal, the province will focus on: (i) inspecting or diagnosing the sewer networks to identify the issues, such as aging pipes, misconnection, and infiltration; (ii) accelerating the construction and/or rehabilitation of sewer networks, which would help in increasing the wastewater collection ratio; (iii) enhancing the quality control though the entire construction; and (iv) promoting the integrated management by professional operation and maintenance entities. 59. Wastewater Management in Rural Towns: Since 2017, the province included the wastewater management into “Four “Three Key Ecological Projects��. By the end of 2020, all the rural towns in Hubei Province had built up their wastewater collection and treatment systems largely through concessionary (PPP) contracts. During those three years, the township towns had invested in a total of 996 projects that: (i) built their wastewater facilities, with the total investment of RMB31.7 billion and the total built up treatment capacity of 1.147 million ton/day; and (ii) laid down trunk and secondary main sewers of 11,368 km, as well as connected 2.18 million users. Among those 996 projects, 83.7% were built in the form of Private-Public- Partnership (PPP). To date, over 90% of the rural towns have been covered by wastewater collection and treatment, where the wastewater collection ratio is over 80% and wastewater treatment ratio over 75%. The province had set up its plan to promote quality operation and maintenance through: (i) further expanding the sewer collection, total planned investment of RMB2.77 billion in 2022; (ii) introducing the smart operation through digitalizing the networks and treatment facilities; and (iii) standardizing the operation management through performance-based contract. The Proposed Program is expected to contribute to the implementation of the provincial plan, particularly on performance-based service contract. 25 Wastewater Treatment Ratio = (urban domestic wastewater treated, in ton or 10,000 ton)/(urban domestic wastewater discharged, in ton or 10,000 ton)x100%. 26 Centralized Treated Urban Wastewater Collection Ratio = (amount of wastewater delivered to and treated in centralized wastewater treatment plant)/(urban domestic wastewater generated)x100%. 27 Wastewater collection Ratio = (wastewater collected and delivered to the wastewater treatment plant)/(total wastewater generated within the urban property)x100% 31 60. Technical assessment found that improvement is needed in domestic wastewater management of some demonstration counties. The key findings and recommendations are: (a) The mission noted that the wastewater treatment capacity in the county seats as well as those in rural townships, satisfies the demand to treat all the domestic wastewater generated. The coverage rate of wastewater collection or interception is generally high, over 95%. Therefore, no major increase in reducing the pollutant (COD) is expected during the program period as population growth is not expected during such a short period, except recovery of seasonal tourism which might increase the wastewater generation; and (b) Through the discussion and data analysis, the mission identified the following issues: (i) high infiltration rates, ranging from 40% to 60%, as a result of earlier construction of sewer interceptors in or near the rivers; and (ii) inaccurate data recording and lack of timely calibration of monitoring devices in some of the counties. To tackle the issues, it is recommended that the counties concerned should focus on: (a) repairing the interceptors that run along the river to reduce the infiltrations, especially to seal the joints between the sewer pipes and concrete manholes as studies shown that about 70% infiltration occurs around those joints; (b) separating sewers and stormwater drainage pipes. Although these measures might have limited effects on increasing removal of pollutants but they would substantially improve the efficiency of wastewater treatment plants; and (c) The monitoring devices installed should be calibrated regularly to ensure their proper performance. Further, the data collected should be timely analyzed the performance of the system. 61. Domestic Solid Waste Management: Dedicated efforts were made throughout Hubei province during the 13th FYP period (2016-2020) to improve integrated urban-rural domestic solid waste management. The overall management service model is “collection at village level, transfer at township level and treatment at county level�. In different counties there is a mix of direct management by government entities (environmental sanitation bureau or alike) (e.g. in Jianshi, Xuanen and Badong) and outsourcing to private or SOE providers (e.g. in Honghu, Lichuan and Enshi) for collection and transportation services. Some counties have built/are investing to build incineration plants (e.g. Honghu, Ehshi and Lichuan) through various forms of PPP while others continue to use landfills. There has been a substantial increase in coverage and treatment rates of domestic solid wastes in both urban (county seats) and rural areas over the past few years. The 14th FYP requires that the service coverage rate reaches 100% throughout the province. Furthermore, the government is also devoting much effort in promoting classification and reuse of solid wastes including plastic wastes. The province has issued “Hubei Provincial Domestic Solid Waste Sorting and Reuse Plan (2021 -2025), “Hubei Provincial Implementation Plan for Promoting Urban-Rural Domestic Solid Waste Classification and Reuse� and “Hubei Provincial Technical guidelines for Urban-Rural Domestic Solid Waste Classification�, which require that by 2025, the reuse rate (also called resource utilization rate) in the urban areas of different counties should be not lower than 50%, with reduction at source, demonstration areas and construction of reuse/recycling centers and markets. In the six demonstration counties, it is expected to reach 100% treatment of domestic solid waste by incineration plants which generate power and utilize the remains for different purposes, before 2025. 62. Agricultural Non-point-source (NPS) Pollution: According to the Second National Pollution Source Census of China jointly issued by the Ministry of Ecology and Environment, National Statistical Bureau and Ministry of Agriculture and Rural Affairs28, in 2017, agricultural non-point sources (i.e. farming, livestock and aquaculture) contribute 49.77 percent of national COD, 46.52 percent of TN and 67.22 percent of TP. In March 2020, the Ministry of Ecology and Environment issued an ‘Implementation Plan for Agricultural Non-Point Source Pollution Treatment and Supervision (Trial)’, 29 which outlined overall tasks for comprehensively controlling agricultural non-point source pollutions in important regions, especially the YREB, by 2025 through chemical fertilizer reduction, animal manure resource utilization, agricultural mulch recycling and so on. 28 http://www.mee.gov.cn/xxgk2018/xxgk/xxgk01/202006/W020200610353985963290.pdf 29 http://www.gov.cn/zhengce/zhengceku/2021-03/26/content_5595893.htm 32 63. Animal Manure Resource Utilization: Animal manure is rich in nutrients, including trace elements necessary for crop growth. Approximately 70-80% of nitrogen (N), 60-85% of phosphorus (P), and 80-90% of potassium (K) found in feeds is excreted in the manure30. These nutrients can replace fertilizer needed for pasture or crop growth, eliminating the need to purchase fertilizers. Furthermore, compared to commercial fertilizer, manure contains organic carbon which is the key to maintaining soil health, including the characteristics of cation exchange capacity, soil tilth, and water holding capacity. 64. According to the Second National Pollution Source Consensus (2020), COD discharge from the Livestock and Poultry Breeding Industry amounted to 10.01 million tons, contributing 93.76 percent of the agricultural pollution; Total Nitrogen and Total Phosphorous discharges amounted to respectively 0.60 million and 0.12 million tons, contributing 42.14 and 56.46 percent of agricultural pollutions. In 2017, State Council issued the ‘Opinions on accelerating resource utilization of Livestock and Poultry Breeding waste’ and required the national rate of resource utilization of animal manure from Livestock and Poultry Breeding reach 75 percent by 2020, and waste treatment facility coverage of large-scale farms reach 95 percent. 31 The Ministry of Agriculture then subsequently issued the ‘Resource Utilization of Livestock and Poultry Manure Action Plan (2017-2020)’32. 65. There are over 25,000 livestock farms in Hubei, generating a total amount of 99 million tons of manure a year in 2021. The second Hubei provincial pollution source consensus indicated that, in 2017, Livestock industry contributed 47, 20 and 38 percent of COD, TN and TP, of which large-scale livestock farms contributed over 80 percent. 66. In accordance with Hubei Department of Agricultural and Rural Affairs (DARA), Hubei Province has promoted manure resource utilization during the 13th Five-year period. In 2018, provincial government has issued ‘Hubei Provincial Livestock Manure Resource Utilization Coordination Mechanism’ headed by vice governor and including DARA, Department of Environment and Ecology (DEE), PDRC, Department of Finance (DOF) and Department of Natural Resource (DNR). DARA is the leading sector department responsible for promoting manure resource utilization. In the same year, DARA issued a three-year working plan for promoting manure resource utilization. From 2017 to 2020, over 2 billion RMB from both central and provincial financing has been invested in manure resource utilization in 78 counties. By 2022, almost 100 percent of large-scale livestock farms in Hubei have been equipped with manure treatment facilities. Provincial average manure resource utilization rate has reached 92 percent in Hubei. 67. Except Xuan’en and Honghu whose manure utilization rates are higher than the provincial average, amounting to 97 and 93 percent respectively, the other four counties’ l ivestock manure resource utilization rates are below the provincial average by different margins, ranging from 70 percent in Enshi to 80 percent in Lichuan. The mission visited manure resource utilization plants in Honghu, Enshi and Lichuan counties and found that livestock manure can be utilized as organic fertilizer (including returning to farms or composting), producing animal feed or energy. The main areas requiring attention include: (a) long-term sustainability: due to the difficulties in long-distance transportation, manure resource utilization rate of livestock farms often depends on whether there are large fertilizer consumers, i.e. plant growers, or energy users nearby; (b) Financing: the mission found that especially in mountainous areas such as the five demonstration counties in Enshi, manure collection, treatment and resource utilization requires large amount of initial capital investment and substantive O&M financing is required; (c) Verification system: the mission found that although the 30 https://ag.umass.edu/crops-dairy-livestock-equine/fact-sheets/manure-nutrient-resource 31 http://www.gov.cn/zhengce/content/2017-06/12/content_5201790.htm 32 http://www.moa.gov.cn/nybgb/2017/dbq/201801/t20180103_6134011.htm 33 Ministry of Agricultural and Rural Affairs (MARA) has established a direct reporting system which is being utilized by provincial and local governments. However, there is a need to strengthen the verification mechanism on the data and information reported by farmers. 68. Agricultural Mulch Collection and Recycling: Being the world’s largest plastic producer, producing nearly 60 million tons of plastics per year, and reported a major contributor to marine plastic pollutions, China has embarked upon a series of policy initiatives to combat its emerging plastic pollution issues. It started to ban the import of various types of waste recycling materials, including plastic wastes, since July 2017. In 2018, State Council issued the ‘Waste-free City Piloting Method’ and the Ministry of Ecology and Environment announced 11 pilot cities in 2019 to pilot comprehensive programs for improving the management of all types of solid wastes. In 2020, NDRC and MEE issued the ‘Opinions on further strengthening plastic pollution control’ that envisages measures to ban the use of certain single-use plastic items, substitute many other single- use plastics with biodegradable materials, regulate the use of agricultural plastic mulch, improve monitoring, reporting and supervision, and promote eco-design and material recycling. 69. Among the different plastic plastics, agricultural mulch is a major contributor to riverine and marine plastic pollution due to the lack of management system, i.e. collection, recycling and so on, in rural areas. China has the world’s largest agricultural mulch consumption as well as land coverage. In 2015, agricultural mulch use in China amounted to over 2.6 million tons, among which mulch film amounted to 1.45 million tons, making up 75 percent of the global total, covering nearly 0.3 billion Mu of land33. However, the recycling rate of agricultural mulch is lower than two thirds.34 While agricultural mulch has important impacts on improving water efficiency and land productivity, un-collected mulch waste in the field is causing increasing problem in terms of reducing land productivity. In 2017, Ministry of Agriculture issued ‘Action Plan for Recycling Agricultural Mulch’ setting target of recycling 80 percent of agricultural mulch by 2020. 70. Based on discussions with DARA and field visits, it was learnt that agricultural mulch use in Hubei has been decreasing steadily from peaking at 71,321 tons in 2015 to 58,801 tons in 2019. In 2019, DARA and DEE jointly issued ‘Hubei Provincial Rural Pollution Treatment Implementation Plan’ and stipulated that provincial recycling rate should exceed 80 percent through reduction in mulch use, increase in used mulch recycling, promote mulch recycling awareness raising and improve recycling system, including establishing recycling centres and providing financial incentives, etc. 71. Agricultural mulch use varies significantly among the demonstration counties. Counties under Enshi prefecture use 300 to 500 tons of agricultural mulch due to their relative cold temperatures while Honghu uses less than 200 tons of agricultural mulch per year. Furthermore, mulch recycling rate varies significantly between counties from merely 15 percent in Xuan’en to 85 percent in Badong due to several reasons, including technical and financial capacity, topography and corresponding difficulties in mulch collection and so forth. Two main challenges found at the county-level include the lack of integrated management system, as mulch use is often very scattered and difficult to management, and lack of sufficient funding to motivate farmers. Although un-collected mulch waste in the field can reduce the land productivity in the long run, it requires both financial incentive and educational activities to motivate farmers. Hubei province is tackling these issues through different programs including Bank-financed operations. 5.3 Implementation Arrangements for the PforR 33 According to Prof. Yan Rongchang from Academy of Agricultural Sciences https://baijiahao.baidu.com/s?id=1701875197497830220&wfr=spider&for=pc 34 http://www.moa.gov.cn/nybgb/2017/dlq/201712/t20171231_6133712.htm 34 72. The Program Steering Committee (PSC) established under YRPERP will continue to provide coordination and guidance for the YRPERP (Hubei) activities. The PSC led by the Office of the Leading Group for the Development of the YREB under NDRC (YREB Coordination Office) has been established under the YRPERP. The YREB Coordination Office works in coordination with other NDRC departments including Rural Economy, Environment and Natural Resources, and Regional Revitalization, to promote implementation of the national YREB strategy through policy formulation and high-level planning.35 The PSC will be headed by a senior official of the YREB Coordination Office and comprise representatives from the Ministry of Finance (MOF), MWR, MEE, Ministry of Housing and Urban-Rural Development (MHURD), and MARA along with representatives from the participating province. The PSC will be responsible for providing overall coordination and guidance for the Program. It will be supported by the central program management office (CPMO) hosted in the Changjiang Water Resources Commission (CWRC), established under the YRPERP. Figure 3. YRPERP and YRPERP (Hubei) Implementation Arrangements Overview 73. A provincial Program management office (PPMO) will be hosted by the Provincial DRC. The PPMO is responsible for coordinating activities among sector departments in the province. The PDRC has established a Provincial YREB Office, corresponding with the national YREB Coordination Office at NDRC that is responsible for realizing the objectives of the national YREB strategy at the provincial level. The PPMO is responsible for preparation of provincial-level Program documents and Program implementation management. They will report to the Provincial PSC, which will comprise senior representatives from relevant departments, with similar structure and mandate as the national PSC. Similar implementation arrangements will be set up at each demonstration county and Enshi prefecture level. 35While the NDRC YREB Coordination Office is responsible for the national YREB strategy, a separate policy division of NDRC is responsible for the Yangtze Law specifically (with implementation of the law the responsibility of various implementing agencies and provinces). 35 74. Program Monitoring and Evaluation Capacity: The PforR results targets will be monitored internally by the PMOs at different levels and the DLIs verified by an independent verification agency (IVA) to be engaged by the implementation entity with TORs cleared by the Bank. The government program entities (PPMO/PDRC, Enshi Prefecture and six demonstration counties) all have prior experienc of working with Bank financed IPF operations and are therefore familiar with the general results monitoring and evaluation requirements. M&E focal points at provincial, prefecture and county levels will be designated as part of the PMOs, to be responsible for internal results M&E, with the assistant of a project management consultant team. Hands-on M&E training for the Hubei program team will be provided by the Bank team during the preparation phase. A detailed M&E plan will be prepared and a tailored expenditure and financial reporting arrangements agreed upon, which will be included in the program implementation plan (PIP). Further technical assistance on M&E will be provided during the implementation stage to the Hubei program team as part of the Bank’s implementation support plan. 75. An M&E plan will be prepared, specifying the unit of measurement, baseline value, target, and data sources for each indicator, along with the methodology and responsibility for data collection and reporting. Existing government systems based on the relevant technical guidelines applied by authorities at all levels will be used for results measurement. These systems have proven effective at documenting the achievements and impacts of a wide range of ecological protection and water pollution control measures under other (World Bank and non-World Bank) projects. The PPMO will prepare and submit semiannual progress reports (including M&E reports), a mid-term review report (expected no later than October 31, 2025), and a Program Implementation Completion and Results Report (ICR) by Program closure. 5.4 Disbursement Arrangements 76. Hubei authorities have indicated that the province would like to apply for a 25 percent advance payment (US$50 million) under the PforR. The amount of the advance will be deducted from the total amount due to be disbursed when the DLIs are achieved, and the World Bank will record an amount of the advance as disbursed for an achieved Disbursement Linked Result (‘recovered’) after it has notified the borrower of its acceptance of the evidence of achievement of the result for which the advance was provided. The reclassified amount will become available for further advances. The cumulative disbursement in the first two years after Board approval is not reasonably expected to exceed 60 percent of the IBRD loan. Accordingly, the IBRD loan for this operation is not deemed as fast disbursing. The World Bank requires that the borrower refund any advances (or portion of advances) if the DLIs have not been met (or have been only partially met) by the Program closing date. If, by the end of the Program, the PforR financing amount disbursed exceeds the total amount of Program expenditures, the borrower refunds the difference to the World Bank. 77. The PPMO will be responsible for consolidating reports from different agencies participating in the PforR and submitting to the DoF. Disbursements will be made annually upon verification of the results of the DLIs (see section II on DLIs and verification). The PPMO will submit a verification letter with the results to the World Bank and, upon acceptance of the verification results by the World Bank, the DoF will prepare disbursement applications and submit them to the World Bank. The applied disbursed amount will depend on the verified results. Some annual allocations are scalable and non-fixed, meaning that the World Bank will disburse for over-performance up to the DLIs’ total allocation (see annex 2). Over- performance will enable the DoF to bring forward disbursements from Year 4 and 5 to Years 2 and 3. The 36 DoF can apply for disbursements as soon as the province meets targets, provides the necessary evidence to the World Bank, and the World Bank accepts that evidence in a formal notice to the borrower with the disbursement amounts. The DoF can also ask to be reimbursed for any results achieved beyond the indicative annual target up to and not exceeding the total PforR target and amount allocated for those DLIs that are scalable and confirmed by the World Bank. A Designated Account (DA) for the Hubei DoF will be set up in US dollars. 5.5 Capacity Building 78. Technical capacity is generally strong but will benefit from capacity building in select areas. The technical assessment has identified areas requiring strengthening which are reflected in actions captured by the Results Framework. These include increased coordination and monitoring capacity on water environment related issues, development of a public engagement guidance notes for river and lake protection with details on the roles and responsibilities of all parties, capacity building, technical support, and provisions for citizen feedback and increasing gender inclusion. The development of strategic plans for sustainable wastewater services by counties is intended to improve their operational efficiency, with training on agricultural waste management for farmers aimed at improving water pollution control. 79. Hubei province and the demonstration counties are experienced with IPF projects but have less experience with results-based financing in the water and environment sector. Fiduciary and E&S assessments have identified needs including strengthened occupational health and safety (OHS) procedures and management for temporary workers in relation to construction and facilities operation, strengthened monitoring mechanisms on livelihood restoration for those affected by land acquisition, strengthened community engagement and public consultation, and strengthened grievance redress recording systems. 5.6 Program Economic Evaluation 80. Public sector financing is justified by expected positive externalities in line with the Program's focus on public goods. The Program will generate environmental benefits from reducing water pollution through improved municipal waste management, land and water conservation measures, livestock mature treatment, providing habitat for plant and animal species, and generating global benefits through reduced GHG emissions. Specific private sector actors do not capture the economic benefits of most Program outcomes, limiting the possibility for private financing for many activities (that is, benefits are diffuse and public). The Program will develop institutional systems, which will sustain and scale the activities delivering these benefits beyond the Program’s life, with a focus on increasing transparency and efficiency in achieving these outcomes relative to a ‘no Program’ scenario. 81. The PforR will provide value addition by focusing on a subset of activities where the Government wants to enhance efficiency, effectiveness, and impact of expenditure. The design of the World Bank Program, in the form of a nested hierarchy of activities, helps align actions of governments across levels (that is, vertically) and across jurisdictional borders (horizontally) in support of basin-wide and sub-basin wide outcomes, in ways that do not always occur under traditional programming and governance arrangements. The World Bank's involvement will increase central and provincial governments’ exposure to international experience and best practices in integrated basin management, water pollution control, and ecological flows and ensure lessons from recent World Bank-supported 37 ecological restoration and water pollution control projects are incorporated into the broader Government program for the Yangtze River Basin. 82. Assessment Methodology: This economic assessment uses a Cost Benefits Analysis (CBA) based on benefit transfer, applied at the sub-basin level for Qing River and Hong Lake Basins. The assessment implicitly combines activities under Results Area 1, Results Area 2, and Results Area 3 to value outcomes as a combined water environment quality improvement. Results Area 1 is seen as facilitating outcomes achieved under Results Area 2 and Results Area 3. The assessment compares a scenario of no Government program to a scenario of a government program including World Bank support. This approach isused because under a PforR, Government and World Bank funds are combined to achieve results, with limited distinction at the activity level between World Bank-financed and Government-financed achievements. This approach can determine whether the overall program – of which Bank financing part-supports – is net socially beneficial. 83. The benefits of the proposed Program include both global and local benefits including substantive climate co-benefits. At the local level, benefits will accrue from reducing water pollution from non-point sources, reducing plastic pollution in water bodies, improving habitat for plant and animal species. These will increase the productivity of water resources, improve the amenity value of rivers and lakes, real estate values, fishery productivity, shipping services and reduce the costs of water treatment. Global benefits will be generated through reduced GHG emissions (e.g. through animal water treatment, improved wastewater management and soil and water conservation) and the conservation of biodiversity. Climate benefits (primarily GHG mitigation) will be derived from improved watershed management and from treated livestock/poultry wastes, as well as from more efficient and sustainable wastewater collection and treatment systems. Moreover, the sharing of information within the county/municipal/provincial chief river system will allow efficiency gains in water resources management throughout the basin. Therefore, from the economic assessment perspective, public sector financing is justified by the expected positive externalities of improved information systems and management practices. Costs are based on total Program financing over 2023–2027, which is expected to be US$1,074.00 million, of which an expected US$ 874.00 million (81 percent) will be financed by the Government and US$200.00 million (19 percent) by the proposed IBRD loan. 84. To estimate the Program’s economic benefits, benefit transfer from YRPERP valuation research was used. The economic values of water quality and ecological improvement are challenging to quantify due to the dispersed spatial extent of benefits across the basin, the wide range (and indirect nature) of benefit types, and data limitations. However, a number of studies provide benefit estimations that can be adapted to the parameters of this program to indicate likely economic values. These studies utilize the contingent valuation method 36 (CVM) to capture the broad range of benefits (both use and non-use economic values) that are expected. Economic assessment at the river/lake basin level considers the benefits from the program as a whole (that is, as a package of activities) within its basin areas, thus capturing the bulk of the Program activities. The Program’s physical investment activities will cover Qingjiang River and Hobnghu Lake Basins with soft investment on institutional and capacity building benefiting the whole province. 85. Under the YRPERP, a survey of relevant literature found some studies well-suited to 36 Contingent valuation method uses questionnaires targeted to impacted populations to elicit their WTP for non-market environmental goods, such as avoidance or reduction of pollution impacts. It has been applied extensively to water pollution issues. 38 comprehensively valuing water environment improvements in river basins 37. A lower bound of 0.55 percent and an upper bound of 2.9 percent for willingness to pay (WTP) as a percentage of gross household income was found across studies for comprehensive impacts of water pollution, including water treatment and health values, amenity values, recreational values, and ecological values (existence value to people). While they are broad, these attributes are similar to those expected from the program and thus provide rough indications of the population’s comprehensive valuation (that is, including both use and non-use values) of the outcomes of the program. As with the YRPERP, the lower identified estimate was used for a conservative approximation (0.55 percent of household income) of the values of Qingjiang River and Honghu Lake residents place on improving water quality in these two basins. Adjustment for these population and per capita income levels were made and estimates compared to the total program cost (Table 12). Table 12. Estimation of Annual WTP Value and Program Cost38 WTP (0.55% of Annual Per Government Population income) Capita Gross program Cost (Million) (US$, millions, Income (US$) (US$, millions, total) annual) Qing River Basin 4.63 3,646 92.85 1,074.00 Hong Lake Basin 6.28 4,435 153.21 86. Assessment Conclusions: The project Economic Rate of Return (ERR) is well above the social discount rate under the scenarios with or without GHG benefits, indicating the Program is economically viable. Program net benefit cash flows have been projected with the assumptions that: (a) investment will be completed within the Program life (5 years); (b) benefits will accrue starting from year 4 for a total of 15 years, with full benefits being reached from year 6 onward; (c) operating and maintenance costs of infrastructure and other recurrent costs will be 10 percent of the total program investment cost; and (d) social discount rate is 6 percent39. 87. Based on the World Bank’s guidance note on the shadow price of carbon in economic analysis issued on November 12, 2017, projects’ economic analysis should use a low and high estimate of the carbon price, starting at US$40 and US$80, respectively, in 2020 and increasing to US$50 and US$100 by 2030; the low and high values on carbon prices are extrapolated from 2030 to 2050 using the same growth rate of 2.25 percent per year that is implicit between 2020 and 2030, leading to values of US$78 and US$156 by 2050. 88. The results of the analysis are summarized in Table 13 below. The substantial higher ERRs with the GHG benefits reflect the Program’s significant contributions to the global public goods as elaborated in the Section below. 37 See YRPERP PAD Annex 3 ( Para 43). 38 World Bank team’s preliminary calculations to be refined during the Pre-appraisal mission. 39 See: World Bank. 2015. Technical Note on Discounting Costs and Benefits in Economic Analysis of World Bank Projects . The discount rate is also recommended to be 6 percent for investments with long-term unquantified social and environmental benefits. See: NDRC. 2006. Economic Analysis of Construction Projects: Methods and Parameters. China Planning Press, Beijing. 39 Table 13. Program level ERRs under Various Scenarios Without GHG Benefits With GHG Benefits With GHG Benefits (Carbon shadow price at low level) (Carbon shadow price at high level) ERR NPV (US$ million) ERR NPV (US$ million) ERR NPV (US$ million) 13 % 411.35 21% 951.66 27% 1,491.98 89. Sensitivity test was not warranted due to: (i) WTP was estimated at the very low end; and (ii) no downstream benefits were included in the analysis. The results therefore only reflect the limited the economic benefits the Program will have generated. 5.7 GHG Emission Mitigation 90. GHG emissions reductions of 25.62 million tons CO2-e are expected due to PforR Program activities (Table 14) for the Program life. Quantification of GHG emissions focuses on DLIs 2, 3 and 4. Mitigation is assessed over 15 years and is compared to a no-Program scenario (baseline). Upgrade to the wastewater network and treatment operations is expected to reduce emissions due to leakage of wastewater to groundwater. The treatment and utilization of animal manure (through on-farm treatment facilities and organic fertilizer displacement of synthetic fertilizer) is also expected to substantially mitigate emissions. Soil and water conservation measures are expected to increase carbon sink. This assessment does not include the expected emissions reductions through institutional, policy, and planning measures. The quantitative estimates presented here should thus be considered a lower bound on the Program’s GHG mitigation. Table 14. GHG mitigation from quantifiable program activities over 15 Years (tons CO2-e) Net Emission Net Average Annual DLI Activity Reduction Emission Reduction 2 Soil and Water Conservation 25,081,000 1,672,000 3 Wastewater 100,000 6,600 4 Animal Manure 444,000 29,600 Total 25,625,000 1,708,200 5.8 Gender Assessment 91. Women are substantially underrepresented across difference roles in local river resource management system. According to the data from the six counties, women account for only on average 12.2 % in the role of river chiefs, and in Honghu City this number can be low as 8.5%. Albeit women’s limited presentation as river chiefs in Hubei, which manifests a gendered imbalance of decision-making power in water governance, women are supposed to be key drivers of behavioral change in environmental protection and they are assumed to be better communicators and advocates for public participation 40 based on the Gender Study of the River Chief System in the Yangtze River Basin 40, which explored the status and reasons of gender gaps existing in the River Chief System in the Yangtze River Basin. Less share of women is found also in the role of volunteers and river keepers based on the data collected, which shows a general gendered gap in the participation of water sector in Hubei Province. The status of disproportionate representation in the county level River Chief System limits women’s voice and agency in water governance and their influence on raising public awareness of ecological protection. Figure 4. Proportion of Women in River Chief Position and others Proportion of Women in River Chief Position and others 9.2% 9.2% Honghu 2.5% 8.5% 14.0% 29.4% Jianshi 16.8% 18.1% 20.0% Enshi 12.0% 13.4% 47.2% Xuanen 42.7% 13.0% 10.1% 11.9% Badong 35.0% 10.2% 12.4% 21.5% Lichuan 8.0% 13.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Cleaner River Keeper Volunteer River Chief Figure 5. Women working in relevant sectors Women working in relevant sectors Honghu 18.3% 76.0% 29.7% Jianshi 34.6% 24.7% 31.3% Enshi 36.2% 44.1% 22.0% Xuanen 26.8% 18.2% 23.8% Badong 25.9% 44.8% 13.9% Lichuan 34.5% 50.0% 21.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% General Technical Managerial 40Gender Study of the River Chief System in the Yangtze River Basin. Ongoing. Conducted under the Yangtze River Protection and Ecological Restoration Program. 41 92. Figure 5 41 shows the proportion of women working across managerial, technical and general positions in project related divisions including Water Conservancy Bureau, Urban Management Bureau, Environmental Protection Bureau, Agriculture and Rural Affairs Bureau, Housing and Urban-Rural Development Bureau of the six demonstration counties. These types of positions are formal and the personnel considered government staff, which constitute a crucial segment of the decision-making power on the county level. The systematic gendered employment gap is more intense on the level of managerial and technical positions. This adds a fact for argument that in Hubei Province women are underrepresented in public policy making and implementation, especially in water governance. 93. In general, less women (on average 30%) are professionally engaged in water treatment utilities. Less share of women in the technical and managerial positions can be explained by the structural skill gap and gender bias which assumes women to be unsuitable for this industry and unfit for the role of leaders. Considering the reverted pyramid structure of the managerial-technical-general types of positions, it is assumed that women can be put at an even severer disadvantaged position when the recruitment system does not fully apply the non-discrimination principle. The data of Xuan’en and Badong has however shown the potential of achieving a gender balance in managerial positions in water treatment utilities, and this can serve as reference for other counties. Figure 6. Women working in water treatment utilities Women working in water treatment utilities 57.1% 70 52.9% 60.0% 50.0% 50.0% 60 50.0% 50 18 36.4% 33.3% 40.0% 8 30.8% 31.0% 40 28.6% 8 25.9% 28.6% 25.0% 24.0% 30.0% 30 18.6% 17.0% 7 6 20.0% 20 39 35 40 6 10 4 9 4 20 4 19 10.0% 3 0.0% 0.0% 15 6 10 3 2 1 8 9 4 0 7 0 3 0 2 2 3 3 4 0 0.0% General General General General General General Managerial Managerial Managerial Managerial Managerial Managerial Technical Technical Technical Technical Technical Technical Linchuan Badong Xuanen Enshi Jianshi Honghu Men Women Proportion of Women 41Data from Water Conservancy Bureau, Urban Management Bureau, Environmental Protection Bureau, Agriculture and Rural Affairs Bureau, Housing and Urban-Rural Development Bureau of the six demonstration counties. 42 94. Proposed Gender Actions: Based on above analysis, following actions may be considered: (a) Design targeted professional skill enhancement trainings such as on natural resource management, data analysis, leadership skills, among others to the women working across different roles and sectors in the river chief system, with the aim to help them acquire necessary skills and keep updated with the most advanced knowledge in the sector so as to stay competitive for relevant positions, especially the leadership role in the river chief system. (b) The project aims to bring River Chief System Platform integrated across county-municipal and provincial levels, it is proposed that gender disaggregated data of river chiefs, volunteers and relevant staff should be collected and monitored regularly as part of this data and system integration effort. (c) Carry out gender awareness training for the water treatment utilities to improve the implementation of gender equal employment practices, mobilize technical support to review their HR policies, procedures and guidelines to identify areas for improvement. (d) Conduct public awareness campaigns, send out brochures on river resource management and environmental protection to the general public. Women river chiefs can be the featured people of the campaigns and brochures to enhance the public recognition of the female efforts in river resource management and encourage more women to join as a vital force in river resource management and governance. (e) Gender Indicator: Increased number of women as river chiefs in project counties. 6 PROGRAM ACTION PLAN 95. The technical, fiduciary, and environmental and social systems assessments have identified areas where capacity building is needed for strengthening the respective systems. The Program Action Plan (PAP) focuses on the critical fiduciary and environmental and social issues which were identified through the EFA and ESSA (Table 15). A range of technical issues and enhancement actions which were identified as detailed throughout the technical assessment, have been included in elements of program design rather than the PAP for a more targeted approach. These include the inclusion of gender considerations in DLI3.1, inclusion of strategic plans for township wastewater services in DLI3.1, and development of a public engagement guiding document for the river chief system. 43 Table 15. Program Action Plan Action Description Source DLI# Responsibility Timing Completion Measurement Include in the the TOR for annual Fiduciary PPMO Recurrent Yearly A copy of the TOR is sent to the external audit the task of randomly Systems World Bank selecting awarded contracts to check whether they have been awarded to firms or individuals debarred or suspended by the World Bank. Issue official letter/instruction to Fiduciary PPMO Recurrent Continuous Agencies report to the World implementation agencies to ensure Systems Bank each occurrence of F+C no contract will be awarded to within 1 month. debarred&temporarily suspended firms&individuals�. Timing “by effectiveness�, responsibility /PDRC&Completion Measurement copy of letter in the PIP. Issue procedures or a guidance Fiduciary PPMO Recurrent Semi- Provincial notification is issued note defining the contract Systems Annually and provided to the World Bank administration responsibilities in as part of the PIP line with the regulatory framework Ensure the design and Environme Hubei provincial Other Througho implementation of appropriate ntal and and county-level ut odor treatment facilities/measures Social Housing and Program in construction or upgrade of Systems Urban-Rural impleme livestock and poultry waste Development ntation management facilities and Bureaus stage domestic solid waste transfer (HURDBs) and stations to reduce odor impacts Agriculture and Rural Affairs Bureaus (ARABs) Put in place functioning Environmental PIAs Other Througho PPMO will submit semiannual mechanisms for social risks and and Social ut progress reports to the WB, impacts screening, information Systems Program including records of social disclosure, public consultation, impleme impacts and risks screening grievance redress, and monitoring ntation and mitigation, information and reporting and strengthen the stage disclosure, public records-archiving during the participation, grievance process of social risks and impacts redress and supports to management. vulnerable groups. In coordination with respective Environmental PIAs Other Througho PPMOs will submit semiannual Health Commissions, tailor and and Social ut progress reports to the World enforce an outreach and training Systems Program Bank, including OHS training program and prioritize budget impleme and health checkup records. allocation and support (where ntation possible) for relevant facilities stage under the Program and downstream waste treatment 44 facilities to promote adequate worker health and safety consistent with regulatory requirements ToRs for technical assistance (TA) Environmental PPMO Other Througho PPMO will submit the ToRs to activities that may have potential and Social ut the Bank for review and downstream E&S risks and impacts Systems Program concurrence prior to include requirements for impleme commencement of TA assessment of such risks and ntation activities. impacts stage Enhance public participation Technical DLI 2 PPMO and PIAs Other Througho PPMO will submit semiannual related to soil and water ut progress reports to the WB, conservation Program including measures to impleme enhance public participation ntation and records related to DLI 2 stage Improve performance-based Technical DLI 3 PPMO and PIAs Other Througho DHURD will prepare and issue contracting for wastewater ut a sample performance-based management services Program contract to guide provice-wide impleme wastewater management ntation service provision related to stage DLI 3 Develop and establish an IT Technical PDWR Other 2025 (for Official acceptance report on: platform to: regularly exchange & developme (a) Development: IT share data with relevant gov nt) and parameters design and agencies of other provinces, incl. 2026 (for protocols; (b) Establishment: CWRC, related to Yangtze River establishm user manual; data sharing protection and WRM, and make ent) protocols for HB-ext. gov selected data publicly available; agencies; selected data public under TORs acceptable to Bank access; and functions for platform integration. 45 The World Bank 7 IMPLEMENTATION SUPPORT PLAN 96. Support for implementation of the PforR will require close attention and continuous support from the World Bank team. The PforR instrument is new to most of the government teams involved in the Program. This annex outlines the key activities to address risks identified by the risk assessment and provides the TA needed to improve the quality of Program implementation. Emphasis is placed on (a) supporting early-stage implementation and building institutional capacity; (b) reviewing implementation progress (including that of the PAP) and achievement of Program results and DLIs; (c) providing support to resolve emerging implementation issues; (d) monitoring the adequacy of systems performance, and monitoring compliance with Legal Agreements; and (e) supporting the Government in monitoring changes in risks. 97. The strategy and approach for implementation support includes an emphasis on the technical, fiduciary, and E&S support needed during implementation. The World Bank team provided technical expertise during preparation and will continue to provide technical support during implementation, as well as guidance to the agencies on Fiduciary and E&S aspects to ensure completion of the actions agreed in the PAP. Implementation support from the procurement and financial management team will focus on reviewing and monitoring compliance with the Government’s own systems and the actions defined in the PAP. 98. Given the multi-provincial, cross-sectoral characteristics of the Program, the support will be ensured through leadership and close contributions from team members in the China Country Office, located in Beijing, with additional support and leadership from international technical specialists. This combination will leverage the World Bank’s global knowledge and local expertise to enable timely and effective responses to the needs of the borrowers. Formal implementation support missions and field visits covering all aspects of implementation will be conducted periodically during implementation. The characteristics of the program necessitate that these implementation support missions will be longer than the standard single agency engagement. Tables 16 and 17 outline the estimated inputs from different specialists and resources required at different stages of Program implementation. Table 16. Main Focus of Implementation Support Resources Time Focus Skills Needed Estimate First twelve months ⚫ Implementation of program ⚫ Core team, particularly 50 management systems technical, FM, ⚫ Setting up cross sector-level procurement, E&S coordination mechanism experts ⚫ Staff capacity building, on-the-job ⚫ Integrated water and training on E&S and fiduciary environment ⚫ Procurement process and training management and solid ⚫ E&S training, support to waste management implementation of policy experts requirements ⚫ Technical support to activities and implementation ⚫ Financial management and 46 The World Bank disbursement training and capacity building 12-48 months ⚫ Technical support to ⚫ Core team, particularly 90 implementation technical, FM, ⚫ Continued improvements in project procurement, E&S management systems including expert fiduciary and safeguards ⚫ Integrated water and ⚫ Program Midterm Review environment management expert Other ⚫ Completion of activities ⚫ Core team, particularly 42 ⚫ Capacity building and facilitate technical, FM, knowledge exchange and events procurement, E&S ⚫ Support technical and financial experts analysis of program investments ⚫ Integrated water and ⚫ End-term evaluation and client environment ICR management expert Table 17. Task Team Skills Mix Requirements for Implementation Support Skills Needed Number of Number of Trips Comments Staff Weeks Three in the first year, two Task team leader/program management 10 annually County Office-based staff thereafter Three in the first year, two Task team leader(s)/program management 14 annually Country office-based staff thereafter Procurement specialist 3-6 annually Two per year Country office-based staff Financial management specialist 3-4 annually Two per year Country office-based staff Operations specialist 4-6 annually Two per year Country office-based staff Environmental specialist 3-4 annually Two per year Country office-based staff Social specialist 3-4 annually Two per year Country office-based staff Monitoring and evaluation specialist 4-6 annually Two per year Country office-based staff Integrated water environment 2 –4 Two per year Staff or Consultant (national) management expert (incl. solid waste mgt.) annually 2 –4 Solid waste management expert Two per year Consultant (national) annually Smart technology expert 2 annually One per year Consultant (national) 47