Document of The World Bank

Report No: 26442

IMPLEMENTATION COMPLETION REPORT(IDA-25220)

ON A

CREDIT

IN THE AMOUNT OF US$50 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR AN

ENVIRONMENTAL TECHNICAL ASSISTANCE PROJECT

APRIL 2003

ENVIRONMENT AND SOCIAL DEVELOPMENT UNITEAST ASIA AND PACIFIC REGION

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 15, 2003)

Currency Unit = Chinese Yuan Y8.30 = US$ 1.00

US$ 1.00 = Y0.12

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

BRIM - Biodiversity Research and Information ManagementCAS - Chinese Academy of SciencesCBIS - Chinese Biodiversity Information SystemCERN - Chinese Ecosystem Research NetworkCIDA - Canadian International Development AssociationCP - Cleaner ProductionEA - Environmental AssessmentEIC - Environmental Information CenterEPB - Environmental Protection Bureau (provincial or local)EU - European UnionFECO - Foreign Economic Cooperation Office, SEPAGEMS - Global Environmental Monitoring SystemIGBP - International Geosphere – Biosphere ProgramLTER - Long Term Ecological ResearchMOF - Ministry of FinanceNEMCBP - National Environmental Monitoring Capacity Building ProjectOED - Operations Evaluation Department, World BankOEF - Office of External Finance, CASPRCEE - Policy Research Center for Environment and EconomicsSEPA - State Environmental Protection AdministrationSPDC - State Planning and Development CommissionT/TA - Training & Technical AssistanceUNEP - United Nations Environment ProgramUNIDO - United Nations Industrial Development Organization

Vice President: Jemal-ud-din Kassum, EAPCountry Manager/Director: Yukon Huang, EACCF

Sector Manager/Director: Maria Teresa Serra, EASES Task Team Leader/Task Manager: Robert Crooks, EASES

CHINACN-ENVIRONMENT TECHICAL ASSISTANCE

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 125. Major Factors Affecting Implementation and Outcome 216. Sustainability 247. Bank and Borrower Performance 268. Lessons Learned 299. Partner Comments 3810. Additional Information 49Annex 1. Key Performance Indicators/Log Frame Matrix 51Annex 2. Project Costs and Financing 52Annex 3. Economic Costs and Benefits 54Annex 4. Bank Inputs 55Annex 5. Ratings for Achievement of Objectives/Outputs of Components 57Annex 6. Ratings of Bank and Borrower Performance 58Annex 7. List of Supporting Documents 59Annex 8. Beneficiary Survey Results 62Annex 9. Stakeholder Workshop Results 63Annex 10. Comments of the Chinese Academy of Sciences 66Annex 11. Comments of the State Environmental Protection Administration 79

Project ID: P003632 Project Name: CN-ENVIRONMENT TECH ASSTeam Leader: Robert D. Crooks TL Unit: EASESICR Type: Intensive Learning Model (ILM) of ICR Report Date: July 28, 2003

1. Project Data

Name: CN-ENVIRONMENT TECH ASS L/C/TF Number: IDA-25220Country/Department: CHINA Region: East Asia and Pacific

Region

Sector/subsector: Central government administration (100%)Theme: Environmental policies and institutions (P); Pollution management

and environmental health (P); Administrative and civil service reform (S); Municipal governance and institution building (S)

KEY DATESOriginal Revised/Actual

PCD: 10/22/1992 Effective: 11/11/1993 11/11/1993Appraisal: 02/10/1993 MTR: 11/03/1996Approval: 06/22/1993 Closing: 12/31/1998 12/30/2002

Borrower/Implementing Agency: PRC/NEPA & CASOther Partners:

STAFF Current At AppraisalVice President: Jemal-ud-din Kassum Gautam KajiCountry Director: Yukon Huang Shahid Javed BurkiSector Manager: Maria Teresa Serra Zafer EcevitTeam Leader at ICR: Robert Crooks Nick AndersonICR Primary Author: Nick Anderson

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: HS

Sustainability: HL

Institutional Development Impact: SU

Bank Performance: HS

Borrower Performance: HS

QAG (if available) ICRQuality at Entry: HS

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

Overall Objective. The project was intended to strengthen the policies, programs, and institutional capacity of two of China's most important national level organizations in the environment sector: the National Environmental Protection Agency, upgraded in administrative status in 1998 to the State Environmental Protection Agency (SEPA), which had regulatory responsibility for environmental and ecological matters in China, and the Chinese Academy of Sciences (CAS) which conducts most of the country's ecological research. Emphasis was on environmental policy-making and ecological research during a period of rapid economic change in China.

CAS Component (Part A). The objective of the CAS component was to improve the knowledge and understanding of China's biological resources and ecological environment by upgrading long-term research, improving data collection and management systems for monitoring environmental changes, and linking research results to the policy-making process. These objectives would be achieved through investments in two programs being implemented by the Academy; the Chinese Ecosystem Research Network (CERN) and Biodiversity Research and Information Management (BRIM) program.

The objective of the investment in CERN was to strengthen CAS's long-term ecological research capability by integrating and upgrading a large number of research stations and/or institutes into a connected national research network intended to produce long term data on human impacts on the environment, contribute to the development of sustainable systems of natural resource management and agriculture development, and generally provide useful information for policy-makers. CERN is a long-term (i.e., 25 years) research and development project of the CAS and the IDA investment was intended to support the first five years of development.

The objective of the BRIM component was to enhance CAS’s ability to generate, manage, and disseminate information for biodiversity conservation and sustainable management of biological resources including management of endangered flora and fauna, conservation of genetic diversity, and sustainable management of natural ecosystems.

SEPA Component (Parts B and C). The SEPA component comprised a large number of sub-projects within five main categories of work: (i) Institutional Management and Capacity Building; (ii) Environmental Monitoring and Information Systems; (iii) Cleaner Industrial Production and Pollution Prevention; (iv) Environment and Ecological Studies; and, (v) Environmental Impact Assessment Systems.

Institutional Management Capacity Building. This consisted of three subprojects whose principal objectives were to: (i) strengthen the management capabilities of SEPA and the provincial network of environmental protection bureaus (EPBs) and associated research institutes; (ii) strengthen the recently created Policy Research Center for Environment and Economics (PRCEE); and, (iii) strengthen China's university level environmental education system.

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Environmental Monitoring and Information Systems. This consisted of three subprojects whose objectives were to: (i) establish environmental information systems at the provincial level nationwide (27 provinces) to provide standardized environmental information to the national level and provide provincial governments with technical support for environmental management and decision making; (ii) improve the administrative capability and monitoring system within the Global Environmental Monitoring System (GEMS) Air and Surface Water monitoring programs in China; and, (iii) strengthen the reliability of environmental monitoring and measurement standards through development and testing of standardized reference materials for environmental research and monitoring centers.

Cleaner Industrial Production and Pollution Prevention. This was intended to expand Chinese cleaner production expertise by: (i) training a sufficient number of individuals to provide a firm basis for future CP training; (ii) provide applied experience in clean production audits and technology through demonstration projects; and, (iii) create a sustainable local institution to provide a basis for future implementation of CP programs.

Environment and Ecological Studies. This was intended to provide an assured and flexible source of financing for certain key environmental studies to be undertaken by SEPA and other ministries and agencies. The objective was not only to underwrite the studies but also to help improve inter agency and inter-ministerial coordination in the setting of environmental priorities and implementation of policies and programs and integration of environmental objectives into economic development policies and programs (e.g. pollution levy and motor vehicle pollution control studies).

Environmental Impact Assessment System. This had three objectives: (i) assist the preparation of environmental assessments (EAs) of selected Bank-financed projects; (ii) strengthen the Chinese EA system through further development of EA technical guidelines and methodologies for conventional investment projects and develop new guidelines for conducting regional and sector EAs; and, (iii) strengthen EA training programs aimed at the Chinese institutions responsible for carrying out or administering EAs.

3.2 Revised Objective:

A. Expansion of Project Objectives in 1998In 1998, the Government announced its intention to embark on a very large scale and long term regional development program which it referred to as the “Great Opening Up of the West”. The program was designed to redirect government investment away from the eastern parts of the country, which had been the prime beneficiaries of government development investments for the preceding 20 years, towards the 10 Provinces which comprise Central and Western China. Key objectives of the development plan include “ecological construction” and strengthening administrative capacity, including environmental monitoring and management capacity. Implementation of the Environmental Technical Assistance Project was drawing to a close but the Government requested and the Bank agreed that the Project should be restructured to respond to this new initiative. Both CAS and SEPA developed new proposals for funding under the

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environmental technical assistance project which would be consistent with these overall objectives. The project was restructured accordingly in 1998 and the closing date of the IDA Credit was extended to September 2002 (later extended further to December, 2002 due to delay in delivery of an item of equipment).

CAS Component. CAS developed a priority action plan which had the main objective of strengthening the research capacity of 14 of its Research Institutes which are either geographically located in the Central and Western Regions or were already engaged in applied research relevant to biological and ecological issues in those regions. The new activities included provision of training and technical assistance and scientific information systems equipment to the Research Institutes.

SEPA Component. SEPA proposed that residual funds within its component of the project be used to underwrite those components of its on-going “National Environmental Monitoring Capacity Building Project” (NEMCBP) which would be located in the provinces subject of the Great Opening Up of the West Program. The NEMCBP is a national, automated, real-time air and water quality monitoring system which is intended to overcome two of the main deficiencies of the existing national monitoring system: (i) the poor quality of the data transmission system; and, (ii) the inability of the current water quality monitoring network to monitor trans-boundary (primarily trans-provincial but also international border) pollutant flows, which is an essential requirement for furtherance of SEPA’s total pollutant load management objectives.

The system will be fully automated and will provide continuous, “real-time” data through satellite up-links to the national environmental monitoring center in Beijing and to the participating Provinces and Municipalities through data sharing protocols already developed under the Environmental Information Systems program under the environmental technical assistance project.

B. Reallocation of Funds for SARS Emergency Project in 2003

In June, 2003, the IDA Board agreed to reallocation of approximately O.8 million SDR of undisbursed funds from the project to permit an emergency response to a public health emergency in China. Further details are provided in Chapter 10. This activity is still under implementation and not part of this ICR.

3.3 Original Components:

The project sought to achieve its development objectives through the following components and activities to be implemented by the two main counterparts, CAS and SEPA.

CAS component (39 percent of total project costs). The CAS component was divided into two investment subprojects: the Chinese Ecosystem Research Network (CERN); and, the Biodiversity Research and Information Management (BRIM) program, plus associated training/technical assistance.

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CERN Program (81 percent of total CAS component costs). CERN is a long-term (i.e., 25 year) CAS research program. During the implementation period of the project, CERN would focus on: (i) the establishment and development of a nation-wide research network comprising 29 field research stations, 4 sub centers, and 1 synthesis center; and, (ii) development of a data management system for systematic collection of information related to natural resource development and management. The subproject would finance construction or upgrading of research facilities; purchases of equipment and scientific instruments, particularly for data storage and processing; and provision of technical and research management training and technical assistance.

BRIM Program (19 percent of total CAS component costs). BRIM consisted of six subcomponents:

establishment of a national network for management and exchange of biodiversity data; a.strengthening of national and regional institutes to conduct field surveys of flora and fauna and b.to maintain relevant museum and herbarium reference/research collections; improvement of national and regional institutes to conserve rare and endangered plant and c.animal species through ex-situ propagation and maintenance of germ plasm (e.g., seed banks);

identification and establishment of pilot studies in restoration of degraded natural landscapes d.and long-term studies of natural and managed succession; enhancement of genetics research centers to store and maintain valuable genetic material; and e.analysis and dissemination of research results to decision-makers and scientists. The f.subproject would finance some infrastructure development, particularly at research stations, purchases of equipment and scientific instruments in support of field research and surveys, and training and technical assistance.

CAS Training/Technical Assistance. Some 19 percent of the CAS component funds were set aside for training and technical assistance (T/TA). The vast majority of staff (approximately 1,700) in both CERN and BRIM were expected to participate in some form of training activity throughout the life of the project; some for repeated training, particularly in the area of data management. Approximately 85 percent of the training was to be done in-country; the rest being overseas training of up to one year duration. T/TA Working Groups for BRIM and CERN were established to continuously review, monitor, evaluate and modify T/TA schedules as the project progressed.

SEPA Component (61 percent of total project costs). The part of the project implemented by SEPA comprised a large number of sub-projects under five main categories of work: Institutional Management Capacity Building; Environmental Monitoring and Information Systems; Cleaner Industrial Production and Pollution Prevention; Environment and Ecological Studies; and, Environmental Impact Assessment Systems.

Institutional Management Capacity Building (10 percent of SEPA component costs). This category comprised three sub-projects:

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training and capacity building for environmental protection staff at central, provincial and a.municipal levels including strengthening of 10 regional training centers, training of trainers in these centers, and implementation of training as determined by training needs assessments carried out as part of the project; provision of an expanded training program for staff of Policy Research Center for b.Environment and Economics (PRCEE), focusing on environmental economics and policy analysis. This institute carried out several of the studies financed under the project, such as the studies on environmentally sound agriculture and pollution control of rural industries, terms of reference for which were developed and agreed upon during project preparation; and, implementation of a program of teacher training, curriculum development, and provision of c.teaching equipment for environmental degree programs at eight Chinese universities. A central part of this work was a study on environmental education at the university and college level in China.

Overall, it was expected that, over the life of the project, about 1,000 SEPA and EPB staff would be trained under sub-project (a), 30 staff of the PRCEE would be trained under sub-project (b), and 400 teachers would be trained under sub-project (c).

Environmental Monitoring and Information Systems (34 percent of SEPA component costs). The three subprojects were:

Establishment of environmental information systems at the provincial level nationwide (27 a.provinces), with provision for later expansion to an undetermined number of municipalities depending on the outcome of the first phase. The scope of work included: (i) establishment of Environmental Information Centers (EICs) in the Environmental Protection Bureaus (EPBs) in 27 provinces; (ii) procurement of computer equipment and installation of Local Area Networks in each of the 27 EPBs; (iii) carrying out of studies on standardization of data collection, coding, storage processing etc., to develop normalized environmental information application software and to install these in each of the 27 EICs; (iv) training of environmental information management personnel from the 27 provincial EPBs and computer application technicians from the 27 EICs; (v) establishment of an Environmental Information Resources Management Strategic Plan for the SEPA system and carrying out studies on how to optimize the use of environmental data as support for decision making; and (vi) provision of technical assistance to assist SEPA in planning the equipment procurement, software development and the studies on the Environmental Information Resources Management Plan. This sub-project represented the major single investment in the SEPA component of the project. Improvement of the Global Environmental Monitoring System (GEMS) Air and Surface b.Water monitoring programs in China. This activity consisted of four parts: (i) strengthening and optimizing sampling sites, quality assurance and control procedures, data processing and reporting procedures; (ii) procurement and installation of equipment to meet the international requirements of GEMS; (iii) expanding or rebuilding of monitoring site stations; and (iv) training. Strengthen the reliability of environmental monitoring and measurement standards. This c.activity was intended to upgrade national environmental analysis and measurement standards. Activities financed included: (i) procurement of new and improved laboratory equipment; (ii)

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research, development and testing of reference materials; (iii) establishment of a national data base facility; and (iv) training. The main focus was to be on research, development and testing of organic reference materials which constituted the major gap in the national inventory of reference materials.

Cleaner Industrial Production and Pollution Prevention (31 percent of SEPA component costs). This activity was designed in collaboration with UNEP's Industry and Environment Program Activity Center, to support the then-nascent cleaner production program in China. The activity comprised two inter-related activities:

a policy review to identify what kinds of new policies China could introduce as incentives to a.the adoption of cleaner production and to identify existing policies that constitute barriers to the adoption of cleaner production. The study would have five parts: (i) an inventory analysis of existing environmental policy and industrial policy relating to cleaner production by pollution prevention; (ii) an inventory analysis of the existing permit system and the way it is used in relationship to cleaner production by pollution prevention; (iii) an overview and analysis of the most effective policies to promote cleaner production in countries outside China; (iv) an inventory and analysis of the obstacles and solutions found in the pilot demonstration projects; and (v) development of policy options in collaboration with an international advisory board set up with the assistance of UNEP’s Industry and Environment Program Activity Center. Cleaner Production training and implementation of demonstration projects at the factory level. b.The project provided a line of credit to underwrite installation of CP technology at selected enterprises. This line of credit would not only underwrite the installation of hardware but would also be combined with training and education programs in the clean production concept. The four main outcomes expected from the demonstration projects were: (i) a number of successful demonstrations of the systematic pollution prevention audit approach to implementing cleaner production principles, management practices, and technologies in various industrial sectors; (ii) development of a core of systematic pollution prevention audit procedure experts among Chinese academia, government, and industry; (iii) an analysis of the demonstration projects and plan for extension of the model to other industrial sectors and provinces in China; and (iv) publication of technologies employed and developed in the course of the demonstrations. Eight projects had been pre-identified for possible follow-up investments under the project. Agreement was reached on the procedures and criteria for the appraisal of the industrial pilot demonstrations under the subproject and the terms and conditions of on-lending IDA proceeds to them including identification of a Chinese investment bank to be the financial agency for the economic and financial appraisal of the enterprises and to manage the disbursements and repayments. The associated training program would include: (i) awareness training for selected groups; (ii) specialized training for staff of a newly formed cleaner production network to enable them to lead the project, and to specific industrial and governmental institutions in three demonstration cities; (iii) training materials developed especially for Chinese seminars and workshops and to allow easy replicability of both awareness and specialized training workshops throughout China following the end of the project; and (iv) a set of publications as resource information for trainers and implementers of cleaner production.

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Environmental and Ecological Studies (14 percent of SEPA component costs). Seven policy studies were pre-identified: (i) motor vehicle pollution control; (ii) hazardous and toxic waste management; (iii) pollution control in chemical industries; (iv) management and coordination of ecological monitoring; (v) policy and implementation of China's pollution effluent levy system; (vi) development policy for environmentally sound agriculture; and, (vii) pollution control policies for town and village enterprises. Training programs were included in most of the studies to assist the respective implementing agencies, ministries and research centers to manage activities associated with the studies and to ensure that provision was made for the transfer of knowledge relating to methodological approaches and carrying-out recommendations of the studies. It was agreed that other additional studies could be financed out of unallocated funds subject to mutual agreement between IDA and SEPA.

Environmental Impact Assessment System (11 percent of SEPA component costs). The activity had three components:

a line of credit to underwrite preparation of EAs for Bank financed projects by relevant a.Chinese research institutes and/or universities. It was anticipated that between eight and 10 EAs might be financed through this facility; a line of credit to strengthen the EA process in China by, for example, preparation of technical 2.guidelines and pilot preparation of new kinds of EA on issues such as regional development and sectoral developments. Six such proposals were pre-identified involving two urban industrial zones in Shanghai and Beijing, a bay (Jiaozhou Bay), two basins (Yerqiang Basin and Taihu Basin), and agricultural development in the Yellow River delta; and,training including direct training of operational staff and the training of trainers. The training c.would take place at five regional training centers and would involve about 900 people, both EA practitioners from environmental research institutions, universities, and technical design institutes, as well as managers and regulators of the EA system from SEPA, the provincial and municipal EPBs and sector ministries.

3.4 Revised Components:

In October, 2000, the Board of IDA agreed to a request from the government to restructure the project and provide for the redirection of approximately US$10 million of project cost savings and undisbursed funds to finance additional project activities. CAS Component (US$1.5 million). The CAS component focused on strengthening the capacity of 14 of its Research Institutes which were either geographically located in the Central and Western Regions or already engaged in applied research relevant to biological and ecological issues in those regions. The new activities included provision of training and technical assistance (T/TA) and scientific information systems equipment to the Research Institutes. The T/TA program comprised 31 separate activities within three categories: overseas training; conferences and workshops; and, research projects. Ecological research capacity was to be strengthened through the provision of laboratory equipment for biological and biodiversity research, field

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research equipment and information systems equipment.

SEPA Component (US$9.7 million). SEPA’s component was designed to strengthen environmental monitoring capacity in the central and western regions as part of a larger, national, automated, real-time air and water quality monitoring system which it had designed as part of the environmental information systems sub-project implemented under the original project design and had already started implementation with government financing (the estimated investment cost of the national project was approximately US$192 million). The undisbursed credit proceeds of the Project were used to underwrite those components of the national system located within the central and western regions, namely installation of automatic, trans-boundary water quality monitoring stations in 20 cities in 12 Provinces/regions and a satellite communications system to link all the monitoring stations to the National Environmental Monitoring Center in Beijing plus strengthening of the lake water quality monitoring system relating to nine major lakes in Yunnan Province.

3.5 Quality at Entry:

In general, the designs for the CAS component and most of the SEPA components were highly satisfactory, with the exception of several SEPA subprojects noted below. A considerable amount of time and effort by CAS, SEPA and the Bank was expended on the preparation of most of the subprojects. CAS worked closely during project preparation with an international group of research scientists (funded by a Bank bilateral trust fund) for 18 months prior to project approval. SEPA had worked with the Bank during the preceding three years on the China Environment Strategy Paper and on several Bank bilateral trust fund financed activities, all of which made agreement on the project objectives, components, and design a collaborative process.

CAS Component

CERN. The design, overall, was highly satisfactory, with exceptions being the information system and procurement approach. The overall design provided a useful framework for implementation. Having a detailed design document helped implementation. The project objectives and activities were not necessarily well understood nor agreed at all levels of the network at the start of the project but the design document provided a basis for understanding to spread more widely throughout the CERN network as the project progressed. Key to the successful design was the extent to which it was based on research programs and existing commitments to develop CERN, which had been founded 4 years prior to project design. The problems associated with the design of the CERN information system (CERNIS) and the way procurement was handled (by both the Bank and CAS) are addressed further in Section 5.3 and Section 8. Finally, given that this was actually a capacity building project and with the benefit of hindsight, the time frame for implementation should have been longer from the start (e.g. 10 years – which, at the end of the day, was the time frame that eventuated).

BRIM. Highly satisfactory. The design was based upon proposed research programs of CAS at the time of project preparation. There is general consensus among the participants that the project was timely and catalytic in launching these research programs within CAS. In particular

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with respect to BRIM, it helped to promote the concept of biodiversity and biodiversity research at a time when funding for biodiversity research in China was scarce, and biodiversity conservation was only just beginning to be a subject of global concern. Without the project, biodiversity research within CAS would have been done in a much more ad hoc and less efficient basis. The project built the foundations from the beginning for an effective biodiversity research, information management and public awareness program through provision of needed equipment and training of researchers which changed the way that research is done today.

SEPA Component

Overall the SEPA component design was highly satisfactory. Priority was given to designing subprojects that would assist SEPA to acquire a wide range of expertise and to develop policies for environmental management in the broader context of a period of time during which China’s leadership decided to shift from an inward- looking economic system based on a central planning to a more outward-looking, market oriented system. Lesser priority was placed in the project on “blueprint” institutional development issues, leaving this to be sorted out by SEPA on the basis of its internal administrative culture within the context of the government’s long term and evolving public administrative reforms. SEPA’s part of the project provided timely input for environmental research, policies and management. Of the two broad groups of instruments applied by this part of the project — (i) investments in scientific instruments, computers, and cleaner production equipment; and (ii) human capacity building including foreign and domestic training, policy studies, cleaner production techniques, and access to foreign expertise — the second type was more successful than the first.

Institutional Management Component. The three subprojects under this part of the project were designed satisfactorily at inception but more effort by SEPA could have been placed on further elaboration of the subprojects as implementation proceeded. In regard to the university-level environmental education subproject, more emphasis might have been given on the nature and quality of the supply and demand for environmental graduates, including degree level, geographical distribution, and gender balance. The subproject that focused on SEPA’s training programs, could have placed more emphasis on ensuring that the capacity to design and manage training programs was strengthened in SEPA and the participating EPBs, and that benefits to and impacts on participating EPBs transferred to other, non-participating EPBs. Participation in this subproject was limited to 11 provincial and municipal EPBs that were willing and able to repay the respective subloans. Thus, the subproject tended to benefit the “richer” EPBs, rather than those where the need might be the greatest.

The subproject that assisted the PRCEE could have given more emphasis on the development of a strategic plan for the Center (including a research program, a business plan, a budget etc.), including establishment of an advisory board and publication of an annual report.

Environmental Monitoring and Information Systems. As with the CAS part of the project, the SEPA subproject focusing on environmental information systems was designed at a time (1992-93) when the “revolution “ in information technology embodied in personal computers and the World Wide Web was only just beginning. The initial subproject design was very centralized

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in the design of the standard databases and application programs, using advanced hardware and software that left little room for user flexibility. However, there were a few people in SEPA and in some of the provincial EPBs, as well as some of the Chinese experts and international consultants who argued for a different approach from the beginning. As a result, the subproject provided for several pilot demonstrations of the more advanced components before going forward during implementation. In addition, provision was made for a mid-term review by international and Chinese experts. The mid-term review resulted in a substantially redesigned subproject reflecting lessons learned as well as fundamental changes in design concepts (decentralization of design and development, an emphasis on compatibility rather than standardization, more attention to user needs, more emphasis on training and integration with the Internet). Therefore, and with the benefit of hindsight, the subproject design is rated unsatisfactory (too centralized, too inflexible, and too complicated), but the redesign, even though it was not financed through the project (a bilateral donor financed it on a grant basis) is rated satisfactory.

The design of the other two subprojects under this part of SEPA’s component, upgrading the GEMS monitoring stations and reference material testing and standards, both of which included periodic assessments and assistance from international experts, are rated highly satisfactory. The GEMs subproject was designed with the assistance of GEMs experts and consisted primarily of upgrading four air and water monitoring stations to international standards. Several visits by international experts introduced SEPA to approaches used in North America and Europe in water quality monitoring, data management and quality control/quality assurance procedures focusing on issues related to China's transition to a market economy and more decentralized control of monitoring. The reference material testing and standards subproject was designed to provide a training program based on a detailed training needs assessment to upgrade SEPA's expertise on the research, development and testing of organic reference materials.

Cleaner Industrial Production and Pollution Prevention. The designs of the policy studies and training programs under this subproject are rated highly satisfactory. The experience and expertise of several EU experts provided by UNEP were very important during the preparation and design phase. The UNEP team provided intensive training to the SEPA team during project preparation and together they prepared a detailed work program for project preparation, implementation and post project activities. The subproject focused on an emerging area of environmental management at the time; "cleaner production", and the focus coincided with a shift in philosophy about environmental management in China from exclusive command–and-control regulations and end-of-pipe control approaches to a more comprehensive approach which included market-based incentives and upstream pollution prevention. On the other hand, and with the benefit of hindsight, the design of the other part of this subproject, which involved the provision of a line of credit for cleaner production demonstration investments, was only marginally satisfactory. On the basis of the systematic unsatisfactory financial need/risk lessons from similar components in a variety of other Bank projects worldwide and in China during the 1990s, this component would not be recommended today.

Environmental and Ecological Studies. The quality of the designs for the studies were variable, with two of them being highly satisfactory (pollution levy and motor vehicle pollution control), three satisfactory, and one unsatisfactory (ecological agriculture). The two best-designed policy

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studies had the highest development impacts in terms of major nationwide policies. Both of studies shared from the beginning especially dedicated staff within SEPA’s functional departments, early and extensive involvement of international experts, detailed terms of reference and work plans and, most importantly, highly capable Chinese research institutes, selected through competitive procedures, to undertake the work.

Environmental Impact Assessment System. This component consisted of three subprojects: the designs of two were satisfactory, and one was unsatisfactory. The subproject that provided funds to assist in preparation of large-scale or especially complex environmental assessments (EA) for other Bank-financed projects, was substantially unutilized (only two out of an estimated 8 to 10 EAs were financed). This was due to a combination of overly-complex internal bureaucratic procedures within SEPA coupled with the unattractive terms under which the funds were to be provided in comparison to alternative (mainly bilateral) sources that were available. The subproject to develop new guidelines for conducting regional and sectoral EAs would have benefited from more emphasis during project design on generalization from the case studies to national guidelines and methodologies and more emphasis on supervision by the relevant SEPA functional department. The quality at entry of the third subproject (to strengthen EA training programs of the Chinese institutions responsible for carrying out or administering EAs) was only marginally satisfactory, mainly because of a long delay in selection of the training institute. The institute originally selected balked at being required to borrow the implementation funds rather than being paid on a commercial basis and had to be replaced with alternative instituten. This diminished the impact of the prior preparation work on training methods and materials, training of trainers, etc. in which this second institute did not participate.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:

Overall Objective. The development impact of the project was substantial, with both the CAS and SEPA components having achieved most of their objectives in strengthening existing environmental and ecological policies and programs and promulgating new ones, as well as assisting many institutions in the sector to increase the quality of their staff’s analytical abilities and responsiveness to the rapidly changing economic developments and environmental situation in China during the 1990s. This was accomplished with the completion of most agreed project outputs on time and within budget.

CAS Component

CERN. Highly satisfactory, in particular the training programme that combined extensive overseas opportunities with a substantial domestic training commitment that contributed greatly to improving research quality and capacity. The project greatly enhanced CERN’s research capacity, ability to attract funding, influence on government policy and participation in regional and international scientific activities.

BRIM. Highly satisfactory. The project achieved the following: (a) built the capacity of 12

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participating research institutes and their researchers to address biodiversity issues; (b) linked biodiversity information kept at various CAS institutes into a Chinese Biodiversity Information System; (c) popularized biodiversity concepts through production and wide dissemination of popular book series, symposiums, TV programs; and (d) provided relevant information to government policy makers.

SEPA Component

Of the original objectives of the SEPA component, two (promotion of cleaner industrial production and enhancement of economic policy instruments for pollution control) were achieved in a highly satisfactory manner, three (improvements in environmental monitoring and information systems, strengthening environmental institutions, and enhancement of the EA system) were achieved satisfactorily, and one (improvement in interagency and interministerial coordination on environmental matters) was achieved only in a limited way.

The human development aspects of SEPA’s part of the project have been particularly successful in introducing new environmental management approaches, facilitating learning from international experience and adapting them to Chinese conditions. Considering the size and dynamism of China’s economy and society in the 1990s and that many other relatede activites funded by other donors and the government itself were being undertaken at the same time, project-specific impacts are not always easy to separate. Nevertheless, the project appears to have played a catalytic role in improving environmental management capacity, and its impacts are believed to have been significant. These impacts appear to be particularly significant in the areas of environmental research, capacity and policy development.

At the ICR workshop, SEPA said that the four most important “actual” outcomes or development impacts of the project are: (a) the legislation, guidelines and policies that resulted from several of the policy study recommendations and subsequent national level discussions; (b) improved project management ability in SEPA (which made possible subsequent cooperation with the Bank and other donors on other projects); (c) designing pilot demonstration projects as a part of some of the subprojects to ensure “practicality” of the recommendations and increase the likelihood of subsequent “spread effects” (e.g. the environmental information system, the cleaner production pilot audits, the pollution levy experiment in one city, and vehicle pollution control demonstration components); and (d) human resource development resulting from the participation of more than 5,000 people in training provided under the project.

Of the individual subprojects and their subsidiary objectives, SEPA ranks the following as especially notable and highly satisfactory in terms of the national laws and regulations that were either a direct result of the subprojects or whose reports and recommendations were important in the deliberations and discussions that lead to them: (a) the cleaner production subproject (State Clean Production Act and the national/local cleaner production centers); (b) the pollution levy study (revision of the national pollution levy structure and system — Regulations on the Pollution Effluent Levy System); (c) study on pollution from town and village enterprises (national regulations on strengthening environmental protection measures for town and village enterprises); (d) motor vehicle pollution study (national decision that phased out lead in gasoline by 2000 and

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began fuel quality improvement system based on EU standards); and (e) two of the subprojects to improve the EA system (revised Environmental Assessment Law).

4.2 Outputs by components:

CAS Component

BRIM.Of the six BRIM institutes which participated in the project completion ICR workshop, all indicated that by far the greatest impact has been on enhancing the research capacity of the institutes. The equipment upgrades and training, especially overseas training, strengthened their capacity to carry out important biodiversity-related research and over time attracted more domestic and international funding for research. For instance, the equipment and scientific instruments provided by the project to the Wuhan Institute of Botany enabled the Institute’s Plant Genetics Laboratory to be considered as a ‘key laboratory’ under CAS. A Liquid Nitrogen Generator procured under the project enabled the Kunming Institute of Zoology to carry out genetic diversity research which led to important scientific findings such as the origin of the domestic dog, a paper on which was recently published in Science.

In general, participating institutes felt strongly that the early support from the project in the early 1990s helped them to position themselves for the influx of funds from the international community that strted flowing in the late 1990s.

With improved capacity all institutes have published over 1,800 scientific papers and received a number of national awards in recognition of their contribution to science. In addition, the overseas training broadened the experiences of the researchers and participation in international conferences strengthened networking with overseas institutions.

The Chinese Biodiversity Information System (CBIS) was successfully established as a network linking existing databases and making them available to broader audiences. CBIS now has 18 websites operating year round and 95 linked databases with almost 1 million records collected by participating institutes. It also promoted the linking of data files of individual scientists to a web server, thus providing easy access to such information through the Internet. This activity has greatly enhanced sharing of information, which was a key constraint to scientific research in the early 1990s. The sustainability of this system, however, will depend on the continuing commitment of individual institutes and researchers as well as basic funding from CAS to maintain the network. At present, this is not an issue with funding provided by CAS through the Biodiversity Committee.

Another key activity of BRIM is dissemination of information about biodiversity and raising public awareness. This activity too, appears to have been successful. Scientific organizations like CAS seldom deal with public awareness. In this case, the project has enabled BRIM to make its research more user-friendly and to target non-scientific audiences.

The last and most challenging activity is linking scientific research information with the decision

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and policy- making processes. The results have been mixed, since findings of scientific research are often not directly useful for policy making. Moreover, there is no direct link between CAS and decision-making bodies such as the State Council unless the latter requests such information. However, at the individual institute-level, there are several examples where the information provided did impact on decisions. For instance, research on rice genetics produced by the Institute of Botany led to a high level government circular on the urgency of preserving rice genetic resources. The Kunming Institute of Zoology provided key information for a proposal to establish the Three-River Area of Yunnan as a World Heritage Site. CERN Given the dearth of funding for ecological research at the time of project inception, CERN is unlikely to have developed nor have been able to make the improvements to ecological research that it has accomplished without having participated in this project. The timing of the project was extremely fortuitous, as it enhanced CERN’s ability to exploit new government interest in and funding for ecological research, as well as to participate in international scientific programs. CAS is now moving from descriptive monitoring and disciplinary compartmentalization to systems research and question-driven research design. More attention is being paid to the importance of scale and landscape.

CERN has been able to move into new research areas such as modeling, landscape ecology, molecular ecology, acid deposition, carbon cycling and restoration ecology. The number of articles being published in international journals has increased significantly. This can be seen as a marker for improved quality of CERN’s science. CERN is participating more fully in international research programs in the International Geosphere- Biosphere Program (IGBP) and it is more closely linked with Long Term Ecological Research (LTER) programs in other countries. CERN will host the International LTER conference in 2003.

The supplemental or redesigned phase of the project instituted funding for five international symposia that were held in China. Key benefits depend on the stage of the local research. In one case, cyanobacterial algae research was not well developed in China, and bringing international experts to a meeting helped frame up the research plan. In others, the key value was as a means to make links and form relationships with foreign scientists, and share sampling analysis.

SEPA Component

Institutional Management Component. The subproject on university-level environmental education system was intended primarily to provide a strategy for environmental education based on an analysis of the supply and demand, and to initiate a process for implementing it. Although a report was produced, it is not clear what direct impact it had beyond changes in the curricula (e.g. expanded faculty and courses in environmental economics and ethics) of the five main participating universities. SEPA said the report was widely circulated within China and was reviewed by the State Education Development Commission and some of the follow-up studies recommended in the report were subsequently initiated. A major reform of university-level education in general occurred in 1999 and among other things it resulted in a merger of the Educational Guidelines Commissions for Environmental Sciences and for Environmental

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Engineering in a single Commission. In the lead university for the study, Nanjing University, a Chinese environmental economist who had spent several years doing environmental economic research with the Bank, returned to the university’s Department of Environmental Sciences and Engineering to head up the environmental economics program and has founded an environmental economics consulting firm.

The subproject on the management capabilities of SEPA, some of its provincial EPBs and associated research institutes appears to have met its main objective of strengthening the institutions’ effective use of human resources. SEPA stated that: (a) it now has a regular, annual budget for training, which it did not have prior to the project; and (b) its annual training program is now based on training needs assessments and training course evaluation questionnaires first developed as a part of the subproject. However, the impact of this may have been attenuated significantly by the fact that the SEPA personnel department has had its staff reduced to only 3 peeople as a result of the on-going central government administrative reforms that have involved substantial cut- backs across most national level agencies and ministries. With regard to the provincial and municipal EPBs, it is difficult to assess the impact beyond the quantitative outputs (all of which exceeded the original targets): trainers trained - 20 core trainers trained abroad and domestically; training textbooks - 12 prepared, published and distributed; workshops - 34; overseas study tours - 80 senior environmental officials participated in 8 groups; and, number of people trained - 1300 senior EPB officials and local government leaders. Assessing the quality of training, under the best of circumstances, is a difficult exercise but it is made more difficult in China because of difficulty of evaluating the quality of training materials and course content due to the language problem.

The subproject that provided assistance to the PRCEE contributed to making it into a financially self-sustaining organization with about 20 staff members and an active program of contract research. It is less clear how far the subproject was able to create real institutional capacity; PRCEE operates more as a loose organizational framework within which individual staff pursue independently their own work programs rather than as an integrated institution in which staff combine their efforts to support the interests of the institution as a whole. However, this problem is note unique to PRCEE; is common throughout the country.

Environmental Monitoring and Information Systems. SEPA achieved its objective to establish environmental information systems at the provincial level nationwide (27 provinces); however, the route to achieving this was not the one envisaged in the original subproject design (see also Section 3.5). All provincial EPBs now have environmental information centers (EIC) that provide regular, if not yet fully integrated, reports to the national level. Moreover, some provincial EICs are linked to similar units at the municipal and county levels in their respective provinces. Many of the EICs provide daily environmental information to the local TV, radio and newspaper outlets, and have opened environmental information reading rooms to the public. Most staff who received training will have learned to make better use of information resources (hardware and software). Much of the training was provided by software suppliers and was oriented more at users than programmers. As a result, EPBs that wanted to make significant use of Sybase, SAS, and Arc-Info had to provide additional training to their staff. Other EPBs just used alternative, less

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sophisticated software (e.g. Access, Excel and MapInfo).

In a perverse sort of way, the subproject succeeded in building the capacity of the participating organizations due to its failure to achieve three of its four original four objectives (standard databases and application programs in use in each province, a decision-support system in operation in each province, and a strategic plan for an integrated national environmental information system). The lessons learned from the failure of these activities strengthened SEPA's capacity to more effectively manage its information and communication resources. SEPA has seen how many of the provincial and municipal EPBs created their own more operationally useful information systems and has become more flexible about standards (different cities and provinces have different needs), more responsive to user needs, more willing to rely on off-the-shelf rather than custom-made solutions, more interested in increasing access to information resources than in providing the most advanced hardware and software, more skeptical about advanced but unproven applications, and more willing to make use of browser and internet technology. Several of the EICs visited during the ICR mission demonstrated extremely innovative and well-developed environmental monitoring and information systems of world class quality. In the end, only about 50 percent of the funds originally allocated to this subproject for were utilized. The cost of phase equipment procurement was much less than estimated at appraisal. Phase two was designed on the basis of the phase one experience but the cost was covered on a grant basis by a bilateral donor. Most of the computer equipment procured under phase one is now out of service, having been replaced by updated systems. This is a good sign of sustainability; it would have been worrying if the equipment had not been replaced.

Another important outcome was the attention given to the national plan for the creation of provincial and municipal EICs. All of the EICs visited during the ICR workshop stated that participation in a Bank-financed project increased their “visibility” and made it easier to get local government funding for operations and maintenance, and subsequent expansion.

The subproject that upgraded the Chinese monitoring stations in the GEMS system met all of its objectives and the Chinese GEMS stations were rated among the best in the global GEMS worldwide system by the mid 1990s. Subsequently, the international GEMS program was discontinued and the Chinese stations were integrated into the national system and are still operating; a clear measure of sustainability. The subproject to strengthen the reliability of environmental monitoring and measurement standards achieved its objective of developing and testing standardized reference materials to provide a basis for testing the accuracy and reliability of the work of environmental laboratories throughout China. Overseas training and the assistance of a senior official responsible for similar matters in the EU who worked with the team under this subproject made valuable contributions to achievement of the objectives. There were difficulties with a damaged piece of important testing equipment purchased under the project (subsequently the purchase price was refunded by the supplier).

Cleaner Industrial Production and Pollution Prevention. The policy studies and training programs under this subproject significantly exceeded expectations. They were particularly successful in raising awareness, building capacity for research (the Chinese Research Academy of Environmental Sciences) and regulation (SEPA), and introducing new approaches to industrial

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pollution management. Manuals prepared as part of the subproject have been widely used and updated; more than 1600 companies are using them. More than 10,000 copies of the cleaner production guidelines (for specific industrial sectors) prepared as part of the subproject have been sold. Almost 1000 people were trained under the subproject (100 was original target) and a group of 20 Chinese CP auditors who were initially trained now constitute the core expertise in the National Cleaner Production Center. In addition to the National Center, there are now 54 other CP centers nationwide. Several follow-up activities in cleaner production have been undertaken with the support of UNEP, UNIDO, CIDA, the EU and others. At the request of UNIDO, the national Center has provided training to groups from Morocco, Nepal and Vietnam.

A new CP law has been introduced building on the groundwork laid by the project and follow-up activities. SEPA is now focusing on establishing sector specific cleaner production standards, introducing certification schemes and other incentive mechanisms to encourage cleaner production, and identifying companies for mandatory audits under the new law. The Chinese Research Academy of Environmental Sciences has built up a strong capacity in CP approaches and is now undertaking work in a range of related areas.

A follow-up evaluation showed that 17 of the 29 firms that undertook the pilot cleaner production audits under the subproject are still realizing economic and environmental benefits from changes they had made in their production processes. Almost all of the 29 firms have set-up cleaner production offices in their own factories to sustain the efforts. While the investments in CP technology in five firms under the line of credit component showed net positive environmental benefits, their overall financial condition is very weak. Their financial prospects and repayment is poor. Because SEPA wanted to reduce its risk and exposure, it delayed selecting firms to participate in the subloan program for more than one year as it sought financial guarantees from the municipalities in which the firms were located. Thus, the selection of firms was biased towards those that were owned completely or in large part by local governments which were not the most dynamic part of the Chinese industrial economy. Conventional economic and financial investment analyses were undertaken for each firm by a well regarded Chinese financial consulting firm as part of the agreed procedures under the project, but subsequent largely unforeseeable market changes occurred, including the Asia wide economic downturn in the late 1990s, that severely impacted the firms. As a result, and after SEPA hired consultants to examine the situation, it was agreed in 1999 to not proceed with additional investments with the remaining funds allocated to this component.

Environmental and Ecological Studies. The same two studies that were the best designed, were carried out by excellent consultants, supervised by dedicated SEPA functional department and, as a result, had the greatest impact; namely, the pollution levy study and the motor vehicle pollution control study.

The pollution levy study was undertaken by the Chinese Research Academy of Environmental Sciences which organized an ambitious program of international workshops, visits abroad and periodic participation by foreign consultants to examine a range of economic approaches to environmental management supplementary to the pollution levy system. SEPA also worked hard to ensure that a working interagency group, involving most importantly the Ministry of Finance,

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was set up to review the results of the study. This resulted in recommendations that were consistent with the government’s overall financial and fiscal reform program of the late 1990s and paved the way for the subsequent national law and regulations. SEPA took the lead in drafting new legislation relating to the charge structure, while the Ministry of Finance lead the effort drafting regulations about the management of the funds collected. The levy will be based on the total pollution load, not just the excess above the standard, and it will be collected by the Bureaus of Finance rather than the local EPBs. Three pilot cities were selected to undertake some of the measures in 1998 based on the recommendations of the report and the interagency working group has also been evaluating them as a prelude to the development of the follow-up regulations that will be promulgated following the recent approval of the enabling law.

The motor vehicle pollution control study was undertaken by a joint venture consulting group of Chinese and Japanese specialists, with an international panel of three experts from the US, Japan and the EU providing advice during the subproject implementation period. Local research institutes and universities participating in the subproject have established capacity to advise SEPA and local EPBs on vehicle pollution-related issues. The study was initiated at a time when vehicular emission control was not considered to be an important issue in China. It raised awareness and built capacity for research and policymaking in this area. In the absence of evaluation reports, it was hard for the Bank ICR team to assess the impacts of the vehicle testing and data collection part of this subproject. There were indications that there were problems with the quality of the motorcycle testing equipment and international supplier responsiveness which may have substantially reduced the amount of data to the main study. Some of the recommendations of the study have been followed up and a national phase-out of leaded gasoline and introduction of Euro 1 vehicle emissions standards took place in 1999. Beijing introduced Euro 2 vehicle emission standards more recently and is seeking government approval to move to Euro 3 standards. Several of the recommendations for further studies were included in an EU- supported follow-up project (regulation of new vehicles and fuels, in-use vehicle regulations, quality assurance for vehicle emission controls, database development for vehicles and fuel, and economic instruments for regulation). Institutional coordination objectives of this subproject were not achieved and institutional responsibility remains unsettled. If this subproject were being done today, more emphasis would be placed on an integrated approach to air quality management. Specifically; cost-effectiveness considerations and institutional coordination could have had more emphasis on the linkages between vehicle emission reduction, fuel quality improvements and other, non-technical emission reduction measures.

The study on reducing pollution from town and village enterprises was aimed at exploring and evaluating economic policy instruments for environmental management through training and case studies in selected Chinese towns. Difficult methodological problems were confronted by the Chinese research center undertaking the work, as well as administrative problems with obtaining accurate financial data from many of the firms in the case study localities and a reluctance of the localities to share in the subloan arrangements with SEPA on which the study financing was based. In the end, the report did not break much new ground in its recommendations, although SEPA has stated that some of its recommendations assisted them in revising the national regulations on environmental protection measures for town and village enterprises. The study on setting up a national ecological monitoring network produced four main sub-reports that were

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prepared by research institutes affiliated with the Ministry of Forestry, Ministry of Agriculture, State Oceanographic Administration and the Chinese Academy of Sciences. However, the main output that pulled together the sub-report recommendations into a report for establishing a national system did not produce any visible momentum for establishing such a national system. There are too many institutional rivalries standing in the way of such an integrated approach even today.

The Environmental Protection Research Institute affiliated with the Ministry of Chemical Industry produced a well-organized and comprehensive report, including an action plan for cleaner production in the chemical industry. However, as part of a government-wide administrative reorganization in 1998, the Ministry of Chemical Industry was abolished and none of the associated expertise was absorbed by SEPA. Much of the potential benefit of the report and its recommendations was lost. The study focusing on development policy for ecological agriculture was plagued from the beginning by organizational, contractual and administrative problems, as well as methodological issues. In addition, the input from some of the foreign experts was of marginal utility. The subproject also suffered from the lack of active involvement of the relevant functional department in SEPA. As a result, the final report was of marginal value.

Environmental Impact Assessment System. Problems in design and quality at entry (see Section 3.5) plagued this part of the project and the results have been mixed. The part that focused on case studies of sector and regional environmental assessments produced a few excellent reports, but it has remained for follow-up Bank trust fund assistance to focus on putting the results into operationally useful guidelines for national promulgation and even the follow-up activities are encountering difficulties. The administrative complications resulting from the on-lending system for financing the various Chinese institutions who undertook these studies, combined with the sporadic involvement of the responsible functional department in SEPA and an unwillingness to engage more than a minimal amount of international consultant assistance, were the main obstacles to achieving the ultimate objective of establishing national guidelines for these types of environmental assessments. The portion of this component that focused on training Chinese staff who undertake environmental assessments appears to have been partially successful in terms of numbers trained (about 900) and the local institute that ultimately was selected to carry out the training was evaluated by foreign consultants as being excellent (although it did not participate in the initial training of trainers workshop because of contracting delays that resulted in a switch from the initially selected institute). The costs per trainee seem to have been high compared with other training programs under the project.

4.3 Net Present Value/Economic rate of return:

N/A

4.4 Financial rate of return:

N/A

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4.5 Institutional development impact:

CAS Component (see Section 6.1)

SEPA Component (see also Section 6.1)The project achieved a substantial impact in strengthening environmental research and management in many local environmental institutions and several national level research centers that participated in one or more of the subprojects. The biggest opportunity missed regarding institution capacity building was probably the lack of direct impact on SEPA itself (except for the project implementing unit FECO (see Section 7.6). The national level administrative environment of the late 1990s was better attuned to more direct discussions of management systems and administrative structures than at the time of the preparation of the project in the early 1990s. Therefore, if the project were to be formulated today, it is likely that more emphasis would be placed on SEPA taking a more comprehensive and in-depth look at its management structure and systems and staff development programs, especially in the context of the recent government public sector reforms in China.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

Positive:

The quality of the international experts and consultants, as well as the local consultants and experts, selected to assist the various implementing institutions, with few exceptions, was excellent. There was also a high degree of continuity in Bank project management, consultant support and foreign expert advisory input.

Negative:

Appropriate technology. The fast paced changes in office technology and scientific research equipment during the 1990s frequently meant that shortly after CAS and SEPA acquired equipment, it was superceded by better and lower cost alternatives that were better suited to the needs of the various beneficiaries. Although this was exacerbated by the cumbersome and time-consuming procurement procedures for this type of equipment in accordance with the then prevailing procurement regulations of the government and the Bank, there will always be an element of uncertainty or unpredictability in the selection of the appropriate level of technology for this type of equipment.

5.2 Factors generally subject to government control:

Positive:

There was strong economic development and political commitment to address environmental issues throughout the 1990s. The government’s political support to environmental protection has been demonstrated by official statements at the highest level, introduction of new environmental legislation and willingness to enforce, as well as budget allocations to SEPA and CAS. Increased

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public awareness on the nature of environmental issues was also crucial to building widespread support for biodiversity issues. Public sector administrative reforms have increased professionalization of the civil service in general which, in the environment sector, has been coupled with the increased availability of well-trained environmental science and engineering graduates for recruitment into the environmental bureaus and research centers at all levels. Somewhat paradoxically, these same public sector reforms have involved a considerable down-sizing of national level agencies that has placed a severe strain on SEPA’s human resources and limited its ability to carry out some of its functions. However, SEPA is not alone in this regard. All central gvoernment agencies have been suffering from the same developments in recent years.

There is a relatively strong culture of fiduciary responsibilty within public agencies, backed by a professional national audit administration. Together, these have resulted in a high level of fiduciary integrity on the project.

Negative:

The Ministry of Finance’s policy to pass Bank and IDA funds on as loans rather than grants for most technical assistance projects including this one (with the exception of the CAS component), caused a number of problems. For wider discussion of the on-lending issue, see Section 8 which also summarizes the conclusions of OED from a review of three earlier technical assistance projects in China. Suffice to say that this project suffered from many of the same on-lending problems. While many of the best research institutes and environmental centers participated in the project and were an important reason for its success, most now have far more attractive commercial opportunities open to them including access to financing on more attractive terms than those offered by on-lending from SEPA. In several cases, SEPA simply could not find leading-edge scientific institutes that were willing to participate in the project under the financial terms on offer. Either they were too busy doing work on a more remunerative basis, or they did not need to borrow money badly enough to be willing to trade free labor for a low interest loan. This policy of on-lending makes it very difficult to exercise quality control, because there can be little or no penalty for poor performance and little incentive for superior performance. In short, the policy of on-lending has the effect of converting what should be a commercial relationship (between buyers and sellers of services) into what is in reality a financial relationship (between a borrower and a lender) which is inimical to the idea of technical assistance and had a negative impact on the quality of the results under some subprojects.

5.3 Factors generally subject to implementing agency control:

CAS

Positive:

Project ownership was high from the beginning and the project was based on existing programs and plans rather than creating its own agenda. CERN and BRIM invested significant time and expertise in designing a sound project framework so that implementation was organized to

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achieve clear objectives and activities. They took a comprehensive approach, covering all key components needed for sound research: facilities, equipment, training, information systems and management. CAS learned the value of promoting public awareness and linking research to local and national policy-making and the value of devoting significant resources to training, which also increased CAS’ attractiveness to qualified young scientists.

Negative:

A two year delay in the first equipment procurement package meant that most basic scientific equipment and computers arrived late and many were no longer suitable for use, as the project was implemented during a time of rapid technological innovation and advances in scientific knowledge. In CERN, the top-down planning and implementation created delays and the extractive, centralized data system design in CERN is unlikely to support data information needs in the network at the institute level. With the benefit of hindsight, it might have been better to carry out overseas T/TA and equipment in sequence rather than simultaneously. Many beneficiaries of the overseas T/TA said that they came back with new ideas on experimental design and methods and equipment availability which could usefully have fed into the first equipment procurement.

SEPA

Positive:

Project ownership was high from the beginning. Management oversight during project implementation helped to ensure that when problems developed they were generally resolved expeditiously. This was especially important when, during the first year of project implementation. there were major personnel changes within SEPA that disrupted management of the project. However, agreement was reached towards the end of the first year on an action plan that rapidly put the project back on track.

Negative:

Delays in procurement of equipment for the environmental information system subproject had a significant (although not determining) impact on the achievement of the development objective. The direct effect was to delay the start of operation of the environmental information centers in each of the provinces. The indirect effect was to delay the installation of the databases and database applications in each of the provinces. This meant that data entry was delayed, and that in turn delayed full-scale testing of the software. Thus, it did not become obvious until midway through the subproject that the original IT concept had been superceded by new technologies and new knowledge management concepts.

5.4 Costs and financing:

Final disbursements from the IDA Credit totaled $48.2 million (in comparison to a current US$ value of the original credit of $49.3 million) which was $1.1 million (0.8 million SDR) less than estimated at appraisal. The main causes of the under-expenditure were fluctuations in the

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exchange rate throughout the life of the project combined with continual and very substantial declines in the procurement prices for both computers and scientific equipment; even the most fastidious attempts to estimate procurement prices were confounded by persistant prices declines so that final disbursements on all procurement contracts were always less than estimated. The original estimate of total project cost (that is the total of the IDA Credit plus counterpart funds) was $76 million but this represented only a very narrow definition of the project. For example, the nominal $26 million of counterpart funds only included investments direclty related to the IDA investments, such as construction or rehabilitation of buildings to house instruments procured with the IDA funds. In reality, both institutions invested far more in the programs being supported under the project then was ever anticipated at appraisal. The total level of government support is almost impossible to estimate but some of the data contained in Annexes 10 and 11 provide some insight into the scope of the government's support to both CAS and SEPA over the life of the project.

This is arguably the main reason for the success of the project. IDA's investment was not supporting a stand alone program; it was integrated into the core operations of both institutions and was but one part of far larger and more substantive development programs that the government was committed to and determined to carry out.

6. Sustainability

6.1 Rationale for sustainability rating:

CAS Components

CERN. Sustainability is highly likely for CERN research. CAS is providing significant funding through the Knowledge Innovation Project, a comprehensive institutional reform process in CAS that includes substantial increases in basic funding from 1998 to 2010. Just as importantly, CERN institutes have been able to diversify and greatly expand access to CAS and non-CAS research funding. Many institutes noted that equipment procured through the project permitted them to bid on research contracts that were not previously open to them. They are also involved in large multi-agency projects that will provide further expertise, experience and exposure to attract further funding. Sustainability of the CERN information system is less likely unless current problems in design and implementation are addressed. Equipment and software need to be updated. Information systems and data management need to be strengthened at the field station/institute level. The centralized, hierarchical, disciplinary-based data collection and analysis system based in the Synthesis Center is not really consistent with current directions in IT. Data management should be strengthened at the field station/ institute level, with data being more readily available directly from an institute/researcher, rather than through the synthesis center. The center ought to focus on defining minimum data standards, monitoring new IT developments and facilitating data accessibility. Finally, CERN will need to strengthen its management arrangements. Currently, staffing and responsibilities are not clear. There appears to be a cumbersome parallel system of regular bureaucracy centered on financing and operations and another advisory system for scientific and technical inputs.

BRIM. Sustainability is highly likely. CAS and the participating institutes provided more than half

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of the counterpart financing during nine years of implementation indicating a long-term commitment to these programs. Now that the project is completed, CAS has committed to continue funding for BRIM for the next 10 years as part of the CAS Knowledge Innovation Program. Further, the individual institutes have demonstrated their ability to obtain additional research funds — both domestic and international. CAS has guaranteed at least two more years of funding of CBIS. Participants felt that future funding should not be a problem if CBIS remains relevant to its users.

SEPA Component

Sustainability of most of the SEPA activities supported by the project is highly likely. Some of the subprojects were especially good at identifying future areas for follow-up work, most involving the same institutions, and as a result a substantial amount of the institutions’ own resources, as well as additional government and international funding has been obtained (e.g. subprojects on the environmental information system, pollution levy system, vehicle pollution control, and regional and sectoral environmental assessments). Major pieces of environmental legislation have also resulted from the reports and recommendations of several subprojects.

Institutional sustainability is harder to access, but some examples are as follows. Under the cleaner production subproject, the National Cleaner Production Center of the Chinese Research Academy of Environmental Sciences was established and has expanded its activities into new programs and is now completely independent of Bank, UNEP and UNIDO funding. More than 50 local cleaner production centers have been established with a core group of approximately 1000 staff trained by the national center.

The 28 provincial EICs established with assistance from the project are continuing to operate and expand their activities with local funding. Many local environmental research centers and institutes have been strengthened as a result of work they carried out under the Project. In particular, the Chinese Research Academy of Environmental Sciences has expanded its capabilities as a consulting organization using generally accepted international management and contracting procedures, some of which were acquired under the local competitive bidding experience and contract implementation under several of the subprojects in which it participated.

In the end, the three most important factors for the likely sustainability of the project activities are the same “background enabling” factors for the overall success of the project in meeting its objectives: the continuing strength of the Chinese economy, the government’s commitment to environmental protection in terms of policies, programs and budgets, and the extensive institutional system of environmental organizations at all levels of government. All of which have also greatly increased public awareness of environmental issues which in turn is feeding back into the government's awareness of the need to act on environmental issues. SEPA, for its part at the national level, has made considerable strides in strengthening its capabilities over the past decade (most of which occurred outside the project itself), has an increasingly professional, although still numerically inadequate, staff and has seen its administrative status raised over the same period to the equivalent of a ministry.

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The one activity that will not have been sustained is the investment component of the cleaner production subproject. The five pilot industrial investments failed in terms of the overall financial viability of the state enterprises in which they were made due to competitive pressures, although they did achieve modest success in demonstrating lowered, less severe pollutant discharges and reduced operating costs. These type of investments, even if they are made in a technically sound way and include financial /market assessments, pose significant market and financial risks on public institutions like SEPA, risks better left to the commercial and financial sectors of the economy.

6.2 Transition arrangement to regular operations:

CAS and SEPA were established long before the Bank assisted project and continue to receive priority government support, both in terms of institutional or administrative status and budget support. Virtually all the other organizations who participated in the project are continuing to operate with reasonably assured local financing.

7. Bank and Borrower Performance

Bank7.1 Lending:

The Bank’s performance in facilitating the project’s identification and preparation was fully satisfactory. The principal members of the original Bank team had been previously involved with preparing the China Environmental Strategy Paper and had established an early relationship and dialogue with SEPA and CAS. They also were able to arrange, mainly through bilateral trust funds, participation of a wide range of international consultants. Detailed terms of reference, work and budget plans for almost all the subprojects were in place by the time of project approval. Workshops on Bank procurement and disbursement procedures were also organized early on.

The project would not have been possible without the substantial amount of bilateral trust fund resources that were obtained for its preparation. This was especially true in the early 1990s when the Bank had not yet adequately staffed up its environmental units to meet the demands for the specialized areas of expertise that this project often required, but which international consultants could provide.

The Bank had been aware that the Ministry of Finance would on-lend to SEPA its portion of the IDA credit in the form of a low interest loan, but it did not become aware until after project approval that most of the funds would, in turn, be on-lent from SEPA to most of the participating institutions. If this had been known earlier, the Bank would have had the opportunity to discuss the merits of this arrangement with both SEPA and the Ministry of Finance, since it had become increasingly evident from the experiences under earlier technical assistance projects that this approach to technical assistance was having multiple distorting effects on the selection of project participants and the mix of training versus equipment components. It should be noted that this issue was not unique to this project; it was and remains generic to the China program. It has been the subject of discussion with the Ministry of Finance for many years. The Ministry is well aware of the problem but continues to feel that the high level of financial accountability offsets the

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negative effects of the policy.

7.2 Supervision:

The Bank’s supervision performance was highly satisfactory, and explicitly confirmed by SEPA and CAS during discussions of the ICR workshop. The Bank helped SEPA and CAS establish rigorous progress reporting procedures and fielded regular supervision teams at approximately six month intervals with an appropriate mix of technical and administrative skills. There was good continuity of supervision staff; there were only two task managers over the whole 9 year life of the project and two consultants maintained their engagement from preparation right through to closure. Additional workshops were held during implementation on procurement and disbursement and the Bank’s resident office in China was increasingly providing assistance in these two matters as it got staffed up. Several workshops were held during the first two years on project management (including logical framework and computer project management techniques, as well as a workshop on training needs assessments). An international consultant was seconded for one year to SEPA during the first year of project implementation to provide advise on project management methods, training programs and information systems. Missions enjoyed an extremely close and effective working relationship with both SEPA and CAS, with excellent cooperation from the project implementation units and almost all of the participating institutions. This close working relationship was instrumental in resolving problems that arose from time to time, in a frank and constructive manner.

One of the biggest problems encountered during project supervision related to the application of the Bank’s Procurement Guidelines for procurement of information systems and scientific equipment for which they were ill-suited. An international consultant on information system procurement was commissioned to provide a training workshop for CAS and SEPA staff, but the Bank team (including the consultant), CAS and SEPA staff all found themselves having to work in somewhat uncharted waters constrained by the prevailing Bank procedures. Both counterparts were particularly critical of Bank procedures (see Chapter 9 and Annexes 10 and 11).

By the mid 1990s the Bank’s environmental units had been expanded and could be tapped more often for advice and assistance, but timely provision of feedback to CAS and SEPA when they submitted terms of reference and subsequent draft and final reports for comment frequently was a problem since the staff with the requisite expertise were either unavailable or considered such a review a lesser priority in their respective division work programs. The amount of supervision time expended on this project by the first task manager was far beyond the norm, made possible only by the special responsibility the task manager had within the China Country Department at the time as environmental coordinator (hence less competing or simultaneous work on the preparation and supervision of other projects). Subsequent project supervision after the mid-term review of the project (end 1996) was handled by an environmental professional in the Asia Region’s environment division which improved the responsiveness time of the Bank, but still involved a very staff-intensive supervision effort.

7.3 Overall Bank performance:

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The Bank’s overall performance in project identification, design and supervision was highly satisfactory.

Borrower7.4 Preparation:

From top management to the working level, both CAS and SEPA exhibited strong commitment and considerable capacity to learn. Part A of the project was the most innovative and technically rigorous in view of the scientific research involved in most of the components, and its project preparation team initially struggled with many of the aspects of the process but, in the end, their project preparation performance became highly satisfactory. SEPA struggled in the beginning with problems in trying to prepare so many subprojects and in working with a large number of implementing institutions, but its project preparation performance became fully satisfactory.

7.5 Government implementation performance:

The Government’s implementation performance is rated highly satisfactory. While the Ministry of Finance’s on-lending policy for the proceeds of the IDA Credit passed on to SEPA caused multiple administrative problems, the broader support SEPA and CAS enjoyed from MOF and other parts of the Government, including budget allocations and environmental policy, were key determinants in providing the necessary conditions for the project activities to be successful, their objectives to be achieved and the results ultimately sustainable.

7.6 Implementing Agency:

CAS. CAS implementation performance was highly satisfactory. Both CERN and BRIM teams had high level support from CAS and access to the upper levels of CAS management which greatly enhanced their ability to resolve problems when they arose. They implemented successfully a large program of training and overseas study. They showed considerable innovation in the substance of the research itself as well as its dissemination to both the government and public. In the beginning, CERN management may have suffered from not having been formally institutionalized sooner with staff expanded and made more stable in terms of staff turnover. Equipment and information system decisions and design could have been more decentralized, with better needs assessments done at the site/research institute level during the design phase. The linkage between CERN and BRIM, especially in the information system design, should have been closer. The Office of External Finance (OEF) within CAS had the overall responsibility for coordinating procurement, disbursements and financial/accounting matters. While it did not have the same level of administrative authority that FECO in SEPA had, it performed at a very superior level, especially given the large number of research institutions and centers with which it had to work.

SEPA. SEPA’s implementation performance was highly satisfactory. Because of the high level of commitment in SEPA for this project, access to high level management within SEPA was available to both the Bank and the counterpart staff when difficulties arose during project implementation (especially during the first two years) that required decisions beyond the “working” level. The project implementation unit within SEPA (Foreign Economic Cooperation

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Office — FECO) was set-up in 1991 as a rather unique unit by Chinese administrative standards. It had a considerable degree of autonomy from the regular line structure within SEPA, both in terms of staff and budget. SEPA's original objective was to create a unit that would provide it more direct access to Bank environmental programs and projects, starting with a large program of Japan Trust Fund grants, most of which provided preparation assistance to this project. Eventually FECO became a very capable and professional supervisory and management unit for this project (and subsequent internationally assisted projects). FECO was responsible for overseeing the preparation of all the subproject work plans, implementation schedules, detailed terms of reference, contracts, and semi-annual progress reports. In addition, it handled most of the procurement, all of the disbursements and financial accounts of the project. The staff of FECO participated in several training workshops on project management. SEPA also infused the staff of FECO with newly recruited university graduate students. Without the detailed project management arrangements (including the financial accounts) worked out with FECO in the beginning of the Project and the progressive improvement in its capabilities, it is hard to imagine that a project of this scope could have been so satisfactorily implemented in terms of implementation schedules, subproject costs, quality outputs and avoidance of financial irregularities given the large number of small to medium sized contracts.

The main weakness in project implementation was the uneven quality of supervision by the functional departments and divisions in SEPA. This was especially true when it came to reviewing the progress and quality of interim outputs and the quality of final outputs. As pointed out before, there seems to be a strong correlation between the level of involvement of the responsible functional department and the degree of success and impact of the subproject .

7.7 Overall Borrower performance:

The overall performance is rated highly satisfactory.

8. Lessons Learned

Project Overall

Intensive learning ICRs (Bank Procedures BP13.55, World Bank Operational Manual) are intended to go beyond core accountability ICRs primarily in their focus on lessons learned and their applicability to a wider Bank institutional perspective. As a result, several reports assessing the Bank’s experience with the design and implementation of technical assistance and capacity building projects in general, as well as in the environment sector more specifically, were reviewed and compared with the assessment of this project [See list of documents in Annex 7, item #54]. Five factors were most often cited in these reports as the reasons for success in TA and capacity building projects: (i) overall country policy and institutional capability (or CPIA rating for IDA countries); (2) country income level; (3) strong borrower ownership and implementing agencies managing their respective subprojects well; (4) use of local consultants; and (5) intensive Bank supervision. All five factors were also important to the success of the China Environmental Technical Assistance Project. Additional factors cited and which were also characteristic of this project were: continuity of staff on both sides; adequate counterpart funding; and project design based on good knowledge base of country and sector.

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In addition, an OED Performance Audit Report on three other China technical assistance projects was reviewed [Performance Audit Report# 16803, Operations Evaluation Department, World Bank, June 25, 1997]. The main lessons derived from those three projects are central to this project also: “the most important factors determining the success and sustainability of technical assistance projects are client motivation to obtain know-how and discipline to minimize rent-seeking.”

The strong fiduciary and accountability rules, regulations, norms and monitoring set-up under the project by both the implementing agencies and the Bank, but especially by the implementing agencies, sometimes delayed timely disbursement of funds but, more importantly and positively, they ensured that project funds were disbursed on intended investments with an absolute minimum of "leakage".

The OED report also examined the positive and negative aspects of MOF’s policy of on-lending most IDA credits on terms substantially less favorable than IDA, and concluded that the policy reduced the effectiveness and frequently distorted the objectives of such projects. The SEPA component suffered from some of the same problems (funds to CAS were passed on as a grant), especially in regard to the balance between equipment and training/TA. In addition, the complex system of negotiating, contracting, and ensuring repayment from over 90 participating subproject entities was enormously time consuming and diverting from SEPA’s project monitoring responsibilities. Repayment problems with some of the subproject entities remain with SEPA reporting as of end 2002, that about 20% of repayments were still outstanding.

Methodologies for project design, performance monitoring and evaluation. Various “process” mechanisms are used today in the Bank and in some bilateral and multilateral assistance agencies, to a greater or lesser degree, to assist in the conceptualization and formulation of project objectives and the inputs and outputs needed to accomplish them. These are usually referred to as logical framework analysis (LogFrame) and were popularized nearly 30 years ago by the US Agency for International Development as a methodology for planning and evaluating non-capital investment projects. Key indicators of performance and development impact are also increasingly being used to monitor project implementation progress and eventual project development outcomes. At the time this project was prepared, these tools were not being used in the Bank. Nevertheless, during the first year of the project implementation, performance indicators were developed for every component and subproject and training workshops (conducted by a specialist from the Bank and a consultant) were held for participating project management units on logical framework analysis and computerized project management techniques. Most of the participants were mid-level, younger staff who possessed excellent conceptual skills, as well as computer skills for handling the complex matrixes. However, these proved to be of limited practical operational use, either to the Bank task managers or the counterparts.

There were several reasons for this. First, the fact that most of the SEPA subprojects involved subloan agreements meant that the focus of FECO's attention was on negotiating more than 90 separate agreements, ensuring that robust repayment schedules were developed, and supervising performance, leaving notime for monitoring subproject “deliverables” - leaving that responsibility

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up to the relevant functional departments of SEPA. However, few of these departments had sufficient staff to do their regular jobs, let alone take on the additional task of monitoring the work of consultants and research institutes. Second, the vast amount of other “competing” project implementation processes mandated by both the Bank and the government left little time to FECO for anything else: procurement (especially the procurement and utilization of computer equipment); disbursement; audits/accounts; progress reporting; recruitment of consultants; monitoring the performance of consultants; supervising training course contents and schedules; selecting trainees and handling the logistics of training and domestic and foreign study tours provided more than enough for FECO to do.

Third, these newer mechanisms for project management are of limited and variable operational utility unless a very careful and selective approach is taken in designing and using them, especially if they are not consistent or compatible with the Bank’s other project implementation processes or an implementing agency’s broader management system. A 1997 study of the subject commissioned by the Canadian International Development Agency (CIDA) pointed out that logical framework analysis, capacity development indicators and performance indicators have both advantages and disadvantages: “They can, for example, push participants to think through cause and effect relationships and their own perspectives on what constitutes capacity and performance. They can also play a key role in monitoring, evaluation, and organizational learning. But, if designed and managed inappropriately, they can drain energy and commitment out of a project and introduce performance distortions". [The design and Use of Capacity Development Indicators, CIDA, 1997, p. vi (cited in Toward Measuring Environmental Management Capacity, Commissioned by the World Bank, ECON-Report No. 2/02 Project No. 36160, ECON Center for Economic Analysis, Oslo, Norway, March, 2003, pp. 44-45] The CIDA report further notes that “...the widespread use of performance indicators to measure capacity development is not the panacea that it is currently made out to be, particularly in the donor community. Used with common sense and as a part of a shared effort at performance improvement over the long term, indicators can make an important contribution to project effectiveness and capacity development. But they can be quickly disconnected from the underlying dynamics of the project and degenerate into a form of conditionality and control designed to serve the reporting and accountability needs of donors and funding agencies [Ibid, p.3].”

Procurement. The government's and the Bank’s procurement procedures at the time of project implementation were ill-suited for the procurement of information technology systems. They were too ponderous and time- consuming and many participants felt that the equipment supplied as a result of the process was frequently of poor quality and the back-up service was unsatisfactory. Rather than focusing on large packages procured through international competitive bidding, it might have been better to focus instead on smaller packages that could have been procured by local or international shopping in a less cumbersome and more flexible manner. Centralized procurement of scientific equipment also seems to have been a problem although the time taken by CAS to prepare and process their three large scientific equipment packages declined progressively, showing that as experience was gained, efficiency increased. Nevertheless, a decentralized approach might have been better, particularly given the large number of institutions involved, and a larger allowance provided for procurement on the basis of shopping. In the case of CAS, it might have been better to start the procurement after the initial training, particularly the

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international training, was completed so that there would have been a better match between equipment procured and the latest thinking on research and analytical methods. All things considered, the most successful parts of the project were in the training and technical assistance components, but the overwhelming focus of almost everybody's attention during project implementation was on the hardware because the procurement procedures are so complex, frustrating and time consuming.

CAS Component

The experience on design and implementation of both parts of the CAS component provided many useful lessons, many of which would be relevant to similar institutional development projects in almost any country while others might be more partiuclar to projects in China. These lessons can be grouped into various topics.

General Project Design and Implementation Schedule. The success of the CAS components emphasizes the value of designing such projects in an integrated way to address all elements of the research agenda: upgrading facilities, procuring scientific equipment, computers and software and training personnel, with an emphasis on overseas training and increasing international cooperative research. There were certain benefits in having a fully designed an conceptualized project by appraisal but the downside, which was exacerbated by some of the rigidities of the Bank's administrative procedures, was that an enormous amount of time and effort was required to make changes to project scope and content. There were similar rigidities in equipment procurement due to the consolidation of large numbers of diverse scientific equipment into packages suitable for ICB procurement. A more programmatic approach would have been far better, permitting project design to adapt in light of on-going experience.

The implementation period was also problematic. For projects of this scope and size, much longer implementation periods should be provided. In the end, the nine years required for completion closely approximates the 10 years that experienced exerpts argue should be allowed for projects of this kind. This would also allow a more logical relationship between T/TA and procurement. With the five year implementation period, there was little option but to schedule these activities contemporaneously. With a 10 year time frame, it would have been possible to put these activites in their correct sequence: T/TA first, review of institute research programs second, identification of equipment needs third, and procurement of equipment last. Most counterparts felt this would have been the optimal sequence of events.

Training and Technical Assistance. As mentioned above, the temporal relationship between T/TA and subsequent parts of the institutional development process needs to be carefully considered. Apart from the timing aspect, the success of the project showed the benefits of integrating the T/TA into the overall project concept; all TA needs to be viewed within the capacity building context of the project and attention should be paid to implementing the TA over time, with inputs being provided consistently and not just through short visits.

Overseas training was crucial to the success of the project. Trainees were exposed to different learning and research systems, e.g., question-based research and more interdisciplinary

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approaches. The most important benefit was in changing ideas and mindsets about research issues and design. The six-month time rule caused problems. For training on new techniques, three to six months can be enough, depending on the techniques to be learned (e.g. embryo manipulation and transfer). However, if theoretical and research methodologies skills are needed, six months often was not sufficient. In fact, some institutes decided to provide supplementary funds from their own resources to allow some trainees to extend their stays overseas. This is a measure of the high level of commitment of the institutes to the project objectives and they could do it because supplementary funds were available to permit it. However, in other countries where additional funds may not be so available, consideration should be given to underwriting longer foreign stays for certain types of T/TA.

Key factors in determining training time include: (i) 3-month minimum for adjustment; (ii) 3 to 6 months adequate for training on techniques; (iii) if theoretical concepts and or research program development are involved, more than 6 months may be needed. Training time and financing should be determined by these needs, not by administrative fiats applied rigidly across the board. Finally, training only one person in a given area had high risks. Experience showed that trainees tended to stay abroad longer than planned, returned and left the institute or were promoted to a position where they did not directly implement their training results.

A clear relationship existed between training (both overseas and domestic, but especially after overseas training) and promotion. However, promotion soon after return had a negative impact on the integration of the new skills into the institute’s work. One suggestion was that trainees should sign an agreement not to leave the institute before a minimum amount of time after their return. There should also be some type of time period before someone can be promoted.

The project highlighted the potential utility, given a serious and committed implementing agency, of foreign study tours and visits. These have been progressviely discredited over the years as being nothing more than travel junkets for senior officials. However, that was not the case in this instance, particularly in the case of CAS which had by far the larger foreign training component. CAS's experience was successful and valuable for several reasons:

CAS is a sophisticated and worldly counterpart which is focused on developing itself as a key linstitution in China. It had clear objectives with its T/TA program and, to a very large degree, could be relied upon to apply its own QA/QC processes to the program. There were occasional differences between CAS and the Bank team regarding participation and topics, but they were at the margin.Senior people such as institute or research station directors needed to see first hand advances lin science elsewhere in order to understand better where their own institutions should be heading;Study tours allowed younger scientists to make important initial face-to-face contacts that llater turned into training opportunities. Visits were to relevant institutions, and tended to minimize the tourism aspect of the travel. l

Regarding domestic training, the original plan was to have overseas trainees train others in short courses upon return home. Initially this worked satisfactorily, in part because initial trainees were

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very high caliber and commitment to the approach was strong. In later phases of implementation, this training of trainers approach broke down. One reason was that the caliber of trainees changed, and those returning were less able to do the training, due in part to their being younger and less experienced. Another was that people ended up returning from training and getting promoted, leaving their position for another or returning abroad quickly to continue training in longer programs.

In general, it was important to have an extensive domestic training program. In CERN, more than 2000 people received training at least once, and quite a number received multiple training opportunities. Training was most effective when linked to research topics.

Procurement. Bank procurement procedures were too rigid, too slow and too complex for the needs of scientific research institutions. The supposed cost benefits of ICB procurement (which, for the types of scientific equipment which was procured under this project - much of which is of a proprietary nature - tend to be illusory anyway) are far outweighed by the time required, the poor quality and unsatisfactory equipment that often resulted, and the frequent re-bidding that was required to procure all required equipment (some ICB equipment procurement packages tendered under the project had as many as 300 separate items of which as many as 50 or more might not be bid on during the first round). The problems were even more acute in connection with procurement of computers and other information technology; by the time computers were delivered, they had been superceded by one and sometimes two generations.

Much more use should have been made of international local and international shopping combined with a decentralized approach under which research institutes were given a budget and some general equipment selection guidelines and left to do their procurement independently. This was not the sort of approach likely to have been approved in the early 1990s but it is much more feasible 10 years later. The experience of this project is that decentralized procurement is the best approach for scientific and IT equipment. SEPA Component

Quality of Inputs and Outputs. The quality of the inputs and outputs among the subprojects was variable: most were satisfactory, many were highly satisfactory and a few were unsatisfactory. According to SEPA, selection of institutions to implement the various subprojects sometimes depended more on whether they were willing to accept a sub-loan rather than on SEPA’s judgment of their suitability for doing the job. This also meant that it was difficult at times for SEPA to hold implementing institutions to agreed timetables. Nevertheless, SEPA was able to overcome this handicap in most instances because it was able to put pressure on some of its key national research centers and provincial/municipal environmental protection bureaus and local research centers to undertake the work given the nature of the public sector administrative system and less market oriented economic system at the time of project preparation and implementation. It is very doubtful that this system of on-lending for subprojects would work today given the recent public sector reforms and increasingly market driven nature of the Chinese economy. Also due to the subproject on-lending arrangements it was frequently difficult to arrange satisfactory inter-agency cooperation or coordination in the steering or “leading” groups set up under several

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of the subprojects. The one notable exception was the SEPA/MOF/SPDC group set up under the pollution levy study that has continued to exist after the subproject completion.

In the end, the quality of the equipment inputs had far less development impact than the human resource inputs, in large measure due to the rapid obsolescence of the computer equipment and other IT equipment. World Bank loans and credits may not be the most cost effective method to obtain this type of equipment in a country like China, which today enjoys ready access to the World Wide Web and has local availability of a wide range of computer hardware and software at low cost. In a field as relatively new as environmental management, technical assistance for human resource development and policy formulation such as professional training and exposure to international experiences and practices is especially important.

The subprojects with the highest quality outputs (and which generally also had the highest development impacts) were most often in which the functional or line departments of SEPA were actively involved and in which the training components were the most effectively implemented; for example, the subprojects on GEMS monitoring, environmental measurement standards, cleaner industrial production (except for the investment portion), EPB training programs, pollution levy system and motor vehicle pollution control. The absence of active involvement in several of the other subprojects by the responsible functional departments in SEPA had a particularly limiting effect on the sustainability of the training and capacity building; for example, the subprojects on establishment of a national environmental information system (partially corrected during project implementation after the mid-term project review), review of environmental education, environmentally sound agriculture, pollution control policies for town and village enterprises, pollution control in the chemical industry, and regional and sectoral environmental impact assessments.

Inter-agency Coordinating Committees, International Advisory Panels, International Workshops. Under several subprojects , an inter-agency or inter-ministerial coordinating committee was set up, but only one of these seemed to take an active role in the subproject and continue to function afterwards namely, the SEPA/MOF/ SDPC Leading Group under the pollution levy system subproject. The Leading Group under the vehicle pollution subproject did not continue after the subproject was completed, reflecting the still unsettled nature of institutional jurisdiction in China over important aspects of vehicle pollution management (e.g. responsibility for fuel quality regulation ). The subprojects on the pollution levy system and motor vehicle pollution organized international workshops to have the initial drafts of their reports reviewed by both foreign and domestic experts. The pollution levy system group also held an earlier international workshop at the beginning of their work and published the results of both workshops in English and Chinese.

The motor vehicle pollution control subproject had an international advisory panel at its disposal for about five years (co-financed through a bilateral grant) consisting of 3 experts (from the US, EU and Japan) that visited several times a year to advise the teams working under the subproject. The representatives from this subproject said that this was especially valuable to them in the final year during which the panel made four visits to assist in finalization of the report. This type of long-term and intensive international exchange focusing on a specific output, was assessed by the Chinese participants as more effective than short-term, more generalized methodological training.

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In addition, the advisory panel was instrumental in finding funding from the EU for six follow-up projects on topics that the original subproject report identified as priorities.

Human Resource Development and Training. Primarily because of the on-lending requirements, there was a bias to include more equipment than training or traditional technical assistance under the project (about 70% of the IDA credit disbursements for SEPA’s part of the project were for equipment). In discussions with SEPA representatives as well as with some of the provincial and local participating institutions, it was clear that more quality training and opportunities for professional international exchanges, as well as more robust programs for on-job training over a longer period of time, would now be preferred. While this preference today reflects in part their experience of the rapid obsolescence of most of the computer equipment purchased under the project, it appears to primarily reflect a recognition that with the rapid increase in the number of highly qualified university graduates and other young professionals coming into the environment professions in China, greater benefits would now accrue to longer term professional training programs and international exchanges. Much of the technical assistance and training for the CAS component came in the form of inter-institutional personnel exchange. CAS's reliance on training through established channels of scientific exchange could provide a useful lesson for SEPA and the Bank; namely, the value of institutional "twinning" arrangements. There is no guarantee that a twinning arrangement would produce better results than the use of selected high quality consultants, but it should be considered as an additional option.

Flexibility in Project Design and Mid-Term Reviews. Some funds were left unallocated in the original design for priority work that SEPA might identify during later stages of the project. This feature of the project was not used until the last two years of the project implementation period, by which time SEPA combined the unallocated funds with unutilized funds due to cost savings from various subprojects, for a restructured project component focusing on the government's new Western Development initiative. Experience gained from the first period of project implementation resulted in more efficient design, procurement, and disbursement for that component.

The two biggest subprojects; environmental information systems and cleaner industrial production, were modified during implementation as a result of evaluations of lessons learned during the initial stages. The mid-term review was the occasion for a major redesign of the environmental information systems subproject. It had become evident by that time that the computer hardware and software systems (UNIX based) purchased during the first phase were not user friendly and, in any event, the entire design had been too heavily driven from the center. With the assistance of a foreign expert and the growing recognition of many of the participating provincial EPBs, SEPA took the opportunity of the mid-term review to turn the design of this subproject around. After undertaking a user needs survey and visiting several provincial EPBs, SEPA realized the validity of that dictum that is often lost sight of (in the Bank and elsewhere) in this “information age”; namely the value of information is directly proportional to the uses to which it is actually put. After reviewing the innovative initiatives of several local EPBs that had redesigned their monitoring information systems based on PC/locally designed software, more emphasis was placed on bottom-up design, consistent with top-down standards; more focus on user needs, user training, and user friendly access; more use of off-the-shelf hardware and

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software solutions. The redesigned second phase of the environmental information systems component was eventually underwritten by a bilateral donor, but the redesign of the netwrok concept that was done as part of this project began a transformation into a more flexible and operationally useful system. In the future, much would be gained if SEPA began a program of disseminating best practices from a number of the local environmental information monitoring centers and networks, primarily within China, but internationally as well. In at least two of the provincial and municipal EPBs (Jiangsu and Guangdong), the environmental information centers were also serving as information technology advisors for the other departments in the EPBs. Thus, the “spread effect” of this subproject may have exceeded the original objective.

When it became apparent that the line of credit component of the cleaner production subproject was not satisfying basic financial objectives, even though the technical results were satisfactory, SEPA, with the agreement of the Bank, cancelled further implementation.

These experiences support the view that a programmatic approach to this type of project is the best design option. The project was not intended to last 10 years so there was a logic at the time in almost fully designing it by appraisal (in any event that was the Bank and Government practise at the time), but the lesson for the future is that projects have a way of stretching out, conditions change and technologies change, all of which can change development priorities and needs. Under such conditions, consideration should be given to the possibilities for taking a programmatic approach (although it is unlikely that this approach would work with the on-lending arrangements used for SEPA's part of the project). There would be a general agreement on the overall objectives and a first year work plan. Subsequent stages of the project would be developed iteratively based on experience and changing circumstances.

Project Implementation Unit. SEPA’s project implementation unit FECO (Foreign Economic Cooperation Office) progressively developed its project management capabilities over a ten year period and now has a staff of over 100 (from the original 7) overseeing a large portfolio of international and bilateral assistance programs, the largest of which is been the Montreal Protocol Program involving approximately US$300 million in grants to Chinese industries to phase-out ozone depleting substances. FECO attributes much of this success to the initial training and experience it gained under the Environmental Technical Assistance Project.

BANK

Many of the studies on the experience of technical assistance under Bank-financed projects emphasize the importance of intensive Bank supervision and staff continuity. Both were important factors to the success of this project. There were only two task managers during the entire 12 year period from project identification to completion and there was a one year overlap to smooth the transition when the second task manager took over mid way through the project. This allowed the Bank to respond more quickly and substantively to the implementing agencies when problems arose, when advise was sought or when feedback on reports, documents and contracts were required. In addition, there was frequent use of consultants, most funded from bilateral trust funds, to provide substantive inputs to the task manager and in turn to CAS and SEPA, especially in the first several years of project implementation. Two consultants in particular stayed with the

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project from the identification stage, through implementation to the completion mission. Responding to supervision-related requests is not a high priority in most non-project departments in the Bank, either because of time constraints or competing institutional priorities; therefore, continuity of the task managers and core team members was important in providing the necessary support. Finally, it is worth noting that the original project preparation team was substantially reconstructed to undertake the project completion mission - providing a level of continuity that is quite unusual in Bank projects.

Assistance from other U.N. agencies and bilateral institutions was a vital part of this project. The cleaner production subproject was designed with substantial assistance from UNEP’s Industry and Environment Program Activity Center which continued to provide technical assistance during the initial years of implementation. The Danish EPA provided valuable input to the original design of the SEPA part of the project and invaluable assistance was provided by the US National Academy of Sciences team of experts in the design of the CAS part.

9. Partner Comments

(a) Borrower/implementing agency:

Both counterparts have prepared detailed evaluations of the project and these are contained in full in Annexes 10 (CAS) and 11 (SEPA) from which the following material has been abstracted.

A. Comments of the Chinese Academy of Sciences (Part A)

A.1 Background

The CAS portion consisted of two parts: the Chinese Ecosystem Research Network (CERN) and the Biodiversity Research Information Management (BRIM). In addition, there was a third part, called the Environment Protection and Management in Mid-West China, which was implemented during the period of extension of the implementation of the Project, the implementation period of which was twice extended. Thus, the actual implementation period of the Program was from July 16, 1993 to April 30, 2003.

The CERN network was first established in 1988. Its purpose was to monitor and analyze eco-parameters on a long-term basis and to realize data transmission and data sharing through an eco-network for scientific study and environmental control. More than one thousand experts were organized to work on the project. Twenty nine stations were selected to participate in the project and another six sub- and synthetic centers were set up. As a counterparts program, “the Ecological Networking System Engineering Project” was approved by the Chinese government and implemented from 1993 with a fund of 47.41 million RMB. The total credit loan from the Bank was 15.50 million US dollars.

BRIM was sponsored on the basis of three CAS major projects in fields of biodiversity: the Ecological Basis for Biodiversity Conservation and Its Sustainable utilization (1991-1995, funding: 5 million RMB); the Basic Ecological Study of Biodiversity Conservation in China (1992-1996, funding: 2.5 million RMB), and the Biological Study of Conservation for Principal

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Endangered Plants (1993-1997, funding 5 million RMB) by the Biodiversity Committee of CAS that was set up in 1990. The total credit loan from the Bank for BRIM was 4.5 million US dollars.

The Environment Protection and Management in the Mid-West China project was implemented from October 2000 to April 30, 2003 as the third part of the Project, using funds reallocated from CERN and BRIM. The amount of fund was 1.45 million US dollars. This project, as small as it is, but standing on shoulders of the two giants of CERN and BRIM, has made outstanding achievements with limited funds and provided important environmental and ecological basis and information for China’s great development in the Mid-West areas.

A.2 Fulfillment of the Development Objectives of the Program

It is clear that the Program not only fulfilled the strategic developmental objectives set forth ten years ago in the feasibility report, but as along with the progress of the Program and adjustment of the objectives at different phases, some new objectives also have been realized. Ten years is a long time, not only in China, but in the world. Ecology and environmental science and relevant emphasis of government policy and public awareness have progressed dramatically, so the development objectives of the program were adjusted several times to keep pace with times and progress.

The goals of both CERN and BRIM were fully achieved; the achievements and relevant statistics of the Program in other parts of this ICR clearly convince that the success of the Chinese Environmental Program has laid a milestone for China’s future eco-environment and biodiversity activities.

The capacity of the relevant stations, institutes and labs has been much strengthened, the number of scientific papers published in national first-class and well known international magazines have increased by more than one third; the participating research institutions are now more energetic and competent to apply more national key projects. In the last few years, the CERN stations alone have obtained more than 150 million RMB project funds from other national competitive projects.

A.3 Achievements of the Program

Most of the equipment and instrument were procured as written in the feasibility study report and strictly implemented during the period of the implementation of the program, with only minor changes that were all done through formal procedure and with approval from the Bank. The procurement was done in three rounds. The first round took more time, as the program had only just started and people still had to finalize all the details. In the meantime, some adjustments of the infrastructure, which were necessary but time consuming, were also conducted. Moreover, the Bank’s sophisticated procedure and bureaucratic reviewing and approving system also affected the actual procurement.

A total of 1,500 items of equipment were procured of which, more than 90% have been installed and put into normal operation by now. A small portion of the equipment of the third procurement

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has only just arrived and is in the process of being installed. Among the 1,372 sets of the equipment, 155 were scrapped - mainly outdated computers and some related peripheral equipment.

At the time that the project commenced, some CAS institutes were facing shortage of advanced equipment, computers and some key parameters of CERN and BRIM research projects could not be observed and analyzed, and the data transmittion and analysis were still a big problem, the competent work with foreign counterparts could not be easily carried out. The procurement through the Bank credit loan played a critical role at this historical moment: the advanced equipment helped the field stations and relevant institutes start to work on a new stage, which is more or less compatable with the world level.

In the meantime, through the T/TA program, hundreds of young scientists and technicians were trained in developed countries and are now able to use such equipment to do their work similar to conditions where they used to work. Statistics presented in Annex 10 show that about 80% of the overseas trainees were promoted during the project period and about one third of them promoted to leaders of field stations, labs and institutes. In some of the institutes, more than half of the leaders are beneficiaries of the program. The recruitment of such equipment and the experts who are able to use them narrowed the gap between China and the advanced level of the world.

There is a strong sign that a national network of environment and ecology will be built soon on the basis of CERN network and BRIM achievements. This is not only a fundamental contribution to China, but to the world as a whole in future world scale monitoring and research work.

A.4 Experiences

The Project was sponsored at the right time (beginning stage of eco-networking and biodiversity conservation), got an adequate level of funding from both the Bank's credit and the Chinese government) and was implemented by the right institutions.

CAS appreciates the World Bank’s overall effective reviewing, assessment, evaluation, managing system, which governed the whole project from the very beginning to the end. The strict summary/reporting and supervision system proved to be very effective, not only in the formality, but good for forcing people to consider what was right and wrong in the past half or full year, and how to adjust the plan and relevant activities in time, and thus it would make the program fit the changing conditions, so as to make the program more successful and fruitful.

Role of international consultants of the World Bank is well recognized by CAS and its implementing organs of the program. Senior officials and experts of CAS appreciate the way the international consultants behave and their working style. When we recall the past activities, one may find many helpful and interesting but sometimes serious quarrels and discussions. From such activities, both sides acquired more understanding with each other. More often, both sides shared the same view in the end, and this benefited and upgraded the managing level of the program.

With agreement, the World Bank and the Ministry of Finance (MOF) the State Auditing Agency

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(SAA) was entrusted to audit the special account for the program at half year’s interval, which was a guarantee for the strict implementation of financial regulations and for the operation of the program with the right direction as set forth by the feasibility report.

Relevant regulations and policy of the Bank for procurement, including some specific instructions provided by Bank officials and their flexibility in discussing and arranging sophisticated ICB and other forms of procurement showed to be quite effective and fruitful. Aware of the bureaucratic and hierarchical procurement system of the Bank and the reform in the system is not an easy matter, both sides tried their best to shorten the time duration for procurement. In the third procurement, OEF/CAS changed its approach to ICB in light of previous experience and this proved to be very successful.

CAS has a long history of personnel exchange with foreign countries, particularly with developed countries in the last 20 years or so, ever since China’s opening up to the world. This certainly helped the program’s T/TA projects a great deal, which made the T/TA a shining point of the program. In CAS, every institute and almost every lab has its own well-established channels with their counterparts in other countries. Personnel exchanges, as one of the important measures to improve overall level of scientific research and management of CAS have been given priority. The powerful combination of field survey and lab analysis built up during the program has formed a basic force for ecological monitoring, survey and analysis on national scale, based on which some new large national eco-projects become possible.

Sufficient financial support from CAS Knowledge Innovation Program for the follow-up projects of CERN and BRIM is a strong factor contributing to the sustainability of the Program. The building up of the National Innovation System is an important strategic decision made by the Chinese Government in an effort to fully implement the measures of rejuvenating China through science, education, and speeding up economic and social development. In 1998, CAS was approved to initiate Pilot Project of Knowledge Innovation Program which extends in three phases through to 2010. Natural resources, environment and eco-energy is one of the three principal focus areas of the Program. CERN, as one of the supporting system for national eco-monitoring and study has been given the strongest emphasis, and 140 million RMB has been provided for a five year facilities enhancement and work program starting in 2000. BRIM as a consistent program will continue to behave as one of the strongest national teams in this field.

The capacity of both CERN and BRIM has been significantly strengthened and their ability to compete for research funding has been significantly improved. Not only are they able to implement CAS projects, but they have successfully competed for many other national, regional, and even some international projects. So, there is no doubt that the World Bank loan, which was very necessary at the infancy of CERN and BRIM has laid a solid base for their future growth.

CAS and the Chinese government (MOF and SDPC) organized a one month review and evaluation tour for the “National Checking and Acceptance for CERN and BRIM” in October/November 2000. The general evaluation of the achievements is excellent or in the Bank’s evaluation system “high satisfactory”. It is confirmed that through implementation of CERN and BRIM, a strong national team with experts working for CERN and BRIM as its backup has

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established; a national information and data exchange network on different eco-systems and biodiversity has been put into operation; basic facility and equipment for eco-environmental monitoring and research has been provided and conditions are close to normal level of developed countries; the capacity of the field stations and relevant institutes has been built up that are able to implement major national and international projects in relevant fields; in the meantime, compare to situation ten years ago, concepts of eco-environment and biodiversity are accepted more and more by the government officials and people of all circles and greater concern has been paid to this field than ever before.

A.6 Suggestions

When we review the history of the ten years in implementing the program, there are still some points to discuss and study for even better future projects:

The Bank should improve its procurement policies and regulations. Procurement generally a.took much longer than expected, particularly for IT products such as computers and peripherals. Normally through Bank’s ICB procedure, it would take at least 18 months to finish one round of procurement; sometimes even longer. As a result, when the end users get the goods they applied for, they would find that the computers were already out of date and newer, more powerful machines at even cheaper prices were widely available in the local market. The policy of procurement should consider specific conditions and be flexible to provide guarantee for loan beneficiaries to enjoy the best services and to obtain the best equipment through simple and practical measures. In the meantime, a fast reaction mechanism in the Bank should be established to solve some time sensitive procurement problems. A program as large and as sophisticated as the Chinese Environmental Program should be b.considered to have a longer implementation period from the very beginning at the designing stage for several reasons: (i) basic procurement and infrastructure construction for stations or labs take at least 2-3 years, experts or young scientists working in these places need time to get themselves familiar with the conditions and the new challenges, and will find exactly what they really need for T/TA projects; (ii) results of environmental projects can be seen only in a comparative longer time, unlike projects in other fields. In the meantime, new concepts emerge and conditions change all the time, the Bank should consider to adopt a programmatic approach to organize such programs, and divide a big program into several (e.g. three) phases, a specific and detailed plan should be only given to the first stage, and along with the progress of the program, targets and measures of the program might be adjusted at the end of first phase but before the next one. The success of the Part A of the Project shows that ten years implementation period actually is reasonable and the several adjustments (at about 3 to 4 years interval) taken place between CAS and the Bank actually occurred proved to be necessary and substantial. The success of the Environmental Protection and Management in Mid-West China is a footnote for this. This project was discussed and designed on the basis of the achievements and experiences of the 7 years’ solid work of CERN and BRIM, while purposes and directions of the Program was adjusted in accordance with the new situation and new policy, which was the right time to add fresh driving force and new concepts to upgrade the substantial quality of the Program. For a project like the Chinese Environmental Program, which is large in scale and penetrates c.

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into many different environmental fields, actually has far reaching influence not only in China, but also in the world as whole. For example, the CERN is part of the world eco-network. So, it might be possible for both the Bank and CAS to consider that finance for more projects closely related to the Program could be organized from different domestic and international sources to best use the Bank’s loan. For the CAS side, guarantee for stable and consistent management personnel for d.implementation of programs, particularly for such big programs is necessary and should be considered seriously for future projects. Mechanism for operation of such programs has to be carefully considered and designed with a long-term view. An overall arrangement from the very beginning for a program should be made, which is a base for sustainable development of the programs. The Scientific Committee of the Program (Part A) and relevant expert advisory group should e.play more sufficient role throughout the entire implementation period.

A.7 Appreciation

CAS feels grateful to the World Bank that decided to provide the credit loan to CAS at a critical historic moment, which enhanced CAS to lay a solid base to keep pace with progress in fields of environment and ecology with other parts of the world. CAS and the World Bank have jointly created the outstanding work, which is a great contribution to the wealth of the world in environmental conservation and protection.

B. Comments of the State Environmental Protection Administration (Parts B and C)

B.1 Original Objective

When the project was designed, environmental management in China confronted great pressures arising from the rapid economic development and environmental deterioration. The design objective of the project was to strengthen the efforts in the construction of the facilities for environmental management to ensure the national economic development and to explore new ways of management. Five main areas were pre-identified:

To improve China environmental monitoring and information system and to enhance a.environmental monitoring quality and information management capacity.To provide useful information and materials for the Chinese government in its environment b.policies through conducting policy research on the environmentally sound economy. To explore new ways of controlling pollution in the process of industrial production through c.the implementation of the demonstration projects of cleaner production technology. To conduct economic policy research for pollution control, especially in relation to the d.pollution levy system.To strengthen the environmental impact assessment management and to enhance the capacity e.building of the assessment team and methodology research.

The Project objectives were consistent with China’s priorities and the World Bank Country Assistance Strategy at the time of project preparation, appraisal and grant approval (1992-1993).

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B.2 Revised Objective and Components

In 1998, in order to cooperate the Great Opening Up of the West Strategy of the Central Government, SEPA discussed with the Bank and proposed that the residual funds of its component be used to support the on-going “National Environmental Monitoring Capacity Building Project” in the provinces subject of the Strategy, in which automated, real-time air and water quality monitoring system were to be constructed and enhanced. In October, 2000, with the approval of the Bank, the additional revised component was implemented smoothly. Most of the residual funds (US$7.36 million) were used to purchase advanced equipment for automated, real-time air and water quality monitoring stations in 20 cities of 12 provinces located in western part, and to strengthen the lake water quality monitoring system relating to nine major lakes in Yunnan Province.

B.3 Quality at Entry

In 1991, the Bank and SEPA jointly completed Report On China Environmental Strategy, specifying the financing emphases in the strategic plan for the upcoming years: (a) the four sectors with serious environmental problems (energy, industrial production, urbanization and agriculture); and, (b) strengthening cooperation in two respects - Policies and plans for long-term environmental protection, and natural resources protection. The project activities were designed according to these priorities. Most of the components designed at entry were “highly satisfactory” and several subprojects were not. The subprojects were designed to address difficult and weak points of environmental management as it existed at the time. From the perspective of current progress in these fields, the decisions of establishing the subprojects were farsighted and played an important role in guiding and promoting the development process. However, some parts such as Clean Production investment have not fulfilled the designed objectives because the situations have not been considered thoroughly in the designing period.

B.4 Achievement of Objective(s) and Outputs

Overall the project produced satisfactory results and achieved most of its objectives. Of the original objectives, only one was accomplished in a limited way (improvement in interagency and interministerial coordination on environmental matters). The other objectives were achieved in a satisfactory or highly satisfactory manner. There are five notable outputs from the project in terms of national laws and regulations that were either a direct or indirect result of the reports and recommendations of the sub-projects: (i) the clean production subproject (State Clean Production Act and the national/local cleaner production centers); (ii) the pollution levy study (revision of the national pollution levy structure and system – Regulations on the Pollution Effluent Levy System); (iii) study on pollution from town and village enterprises (national regulations on strengthening environmental protection measures for town and village enterprises); (iv) motor vehicle pollution study (national decision to phase out lead in gasoline by 2000 and begin fuel quality improvement system based on EU standards); and, (v) two of the subprojects to improve the EA system (revised Environmental Assessment Law).

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However, some abnormal factors had not been considered when the project was designed. The change of the tariff policy in the end of 1994 altered the 20 commodities exempt from tariff into tariff non-exempted commodities, which generated a tariff debt of 4.65 million Yuan. Things could be better if such factors were taken into consideration in loan agreements and some risk-avoiding measures and protective articles were stipulated.

Part B This part can be rated as “satisfactory”. In the component, 27 environmental information systems at provincial level were established. Programs were also carried out for the capacity building within Global Environmental Monitoring System (GEMS). Programs were also carried out for the development of environmental standardized references and the testing technology research with emphases being laid on the toxic and high-molecular pollutant. Efforts were made for the promotion of cleaner production in China and CP audit research. Programs were carried out for the environmental faculty training in the institutions of higher learning, development strategy and curriculum development. Technical training programs were held to improve the professional quality of the management personnel in the environmental protection system. Programs were also carried out for the environmental policy research on a wide range of topics.

Environmental Information and Monitoring (Sub-projects B-1, B-3, B-9-1): The environmental information system project was the largest systematic research and capacity building project in the Environmental Technical Assistance Project. Its main outputs were: (i) establishment of SEPA Information Center and the establishment of 27 provincial level and 24 city level information centers; (ii) completion of research on the framework and operation of the information system and promotion of information sharing and dissemination of information into more industries; (iii) created the basis for the follow-up unified planning and development of a unified, nationwide environmental information system.

In the respect of monitoring tools and management: (i) it supported monitoring and analytical work on the development of standardized references for toxic, difficult to analyze organic pollutants and industrial solid wastes; (ii) the technical strategy and plans for China’s ecological monitoring network were formulated; (iii) a research foundation was created for the monitoring framework and operational mechanism in the upcoming 15 years in terms of laying out centers, monitoring techniques, and information system structure and investment scale.

Promotion of Cleaner Production (CP) in China (B-4): The main achievements were: (i) the technical theory and audit procedures for CP were established and CP audits were initiated in 10 industries and 219 enterprises. The project marked the beginning of the nationawide CP system; (ii) the State Cleaner Production Center was established; (iii) China Cleaner Production Policy Research was concluded successfully covering policies on management, technical, environmental and economics; (iv) on the abovementioned foundation, Suggestions On Promotion of Cleaner Production was worked out, which led to the promulgation of the State Clean Production Act.

Environmental Education and the Development of Human Resources for Environmental Management (B-5 and B-6): The main outcomes were: (i) in environmental education, four textbooks, including A Course Book For Environmental Science and A practical Course Book for Environmental Management, were published; and, (ii) in the development of human resources,

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1,170 environmental management personnel and 135 local leaders were trained and systemic training materials were formulated which promoted the implementation of training plan for 1,000 bureau heads from local environmental protection bureaus and 30,000 environmental management officials and professional staff.

Policies of Environmentally Sound Economy (B-7, B-8-1, B-8-2 and B-8-3): Research on the pollution effluent levy system program is the largest policy research program in the Project. The research combined the effluent quantity and sum quantity, and adapted the fee-charging system to state taxation reform. The direct result of the research is the promulgation of Municipal Waste Water Levy System, Pollution Effluent Levy System. In addition, the three taxation reforms concerning pollution effluent levy articles will also be effectuated. The research program also addressed that problem of pollution from town and village enterprises and environmentally sound economy and made us re-examine the weight of national economy to environment, the relationships between life and ecology. As a result, National Regulations on Strengthening Environmental Protection Measures For Town and Village Enterprises (1997), and Suggestions on Strengthening Ecological Environment Protection Measures For Town and Village Enterprises (1999) were publicized. Efforts were made to “promote the development of environmentally sound agriculture and water-saved agriculture and to explore the harmonious development mode between China’s rural economy and ecological environment” (Report on Sustained Development In China, 2002).

Environmental Impact Assessment Training and Methodology Research: The outcomes of these components were: (i) the publicizing of Methods of Environmental Impact Assessment; (ii) establishment of Institutional Appraisal System of National Environmental Impact Assessment; (iii) the promulgation of Environmental Impact Assessment Protection Law.

Part C: This part can be rated as “satisfactory”. Research has been conducted on the technique methodology of environmental impact assessment; six studies were carried out, including economic development zone, dried wilderness, marine areas, river basins and nuclear power stations. Training programs for environmental assessment personnel have been implemented. All together 12 terms of training courses have been run with 879 trainees from 200 assessment units and management institutions all over china.

The follow-up part: This part can be rated as “highly satisfactory”. It was basically the purchase of monitoring equipments.

B.5 Institutional Development Impact(s)

Through the implementation of the project, environmental research and management in many local environmental institutions and several national level research centers that participated in the subproject had been strengthened. For local institutions development, the project directly or indirectly promoted the establishment of the provincial level environmental information centers in 27 provinces and the centers now provide regular reports to the national level. Within SEPA, the Foreign Economic Cooperation Office (FECO) was set-up in 1990 to manage the project. FECO was responsible for overseeing all the subproject work plans, implementation schedules, detailed

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terms of reference, contracts and semi-annual progress report, and handled most of the procurement, all of the disbursements and financial accounts of the project. Now FECO becomes a very capable and professional supervisory and management unit and is now the window for international cooperation in SEPA.

B.6 Sustainability

The sustainability of the most of the activities supported by project is considered as “highly likely”, and some of than such as the institutional sustainability is especially good. For example, the Environmental Information Center established in 27 provinces with the assistance of the project are continuing to operate and expand their activities with local funding. However, the investment component of the cleaner production subproject will not have been sustained under the increasingly market competitive pressure and some of the lessons could be learned from it.

B.7 Bank and Borrower Performance

Bank: The Bank’s preparation was considered “fully satisfactory”. The World Bank developed project framework, project documents, work and financial plans as well as detailed terms of reference. The Bank also successfully arranged the participant of a wide of international consultant which was very crucial to the smooth and successful implementation of the project.

The Bank’s supervision was considered “highly satisfactory”. The supervision missions established a very close and effective working relationship with SEPA, which was instrumental in resolving problems whenever they arose. The good supervision and effort had ensured the highly quality implementation of the project.

Overall, the Bank’s performance was rated as “highly satisfactory” throughout the preparation and implementation. In the course of the implementation, in particular in the early part, the Bank has provided the urgently needed assistance, guidance and trainings with procurement contract and terms of reference preparation as well as several other technical issues.

Borrower: The Preparation of the project was rated as “highly satisfactory”. During preparation, Chinese Government paid great attention to the project and provided necessary support for project preparation. Struggling with problems in the beginning, SEPA set up the mechanism for project preparation and experts group to prepare a series of subproject and deal with a large number of implementation institutes. The targets of the preparation work has been reached very well.

The Government's implementation performance was rated as “highly satisfactory”. With the support of the State Planning Committee, Ministry of Finance and provincial governments, SEPA successfully got the guarantees of the on-lending budgets for different subprojects, received continuing supports in terms of both financier and policies during the implementation of the project. Without those support, the objectives of the project would not have achieved.

The performance of the implementation agency was rated as “highly satisfactory”. Project Offices

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were established at both national and local levels. High quality management staff has been allocated and technical expert team had also been established. FECO/SEPA cooperated closely with the Bank, the functional departments as well subproject units organized, managed and supervised the activities during the project implementation.

The overall performance of the borrower has been rated as “highly satisfactory”.

B.8 Lessons Learnt

This kind of project is the first one to be implemented in China, the outputs and experiences will be valuable for future’s biodiversity conservation in China. Key positive lssons learned were:

The project design is rational with remarkable achievements. The project achieved good a.results in implementation and the successful implementation has played an even important role in promoting the development of environmental protection. The important role that SEPA should play finds full expression in the design and implementation of project, including: (i) the project should be combined with legislative work and timely formulation of guidelines and policies; (ii) attention should be paid to improve management systematically so that management level of the whole system can be pushed to a new height; (iii) the application of research results into practice was emphasized, almost all the subprojects covered pilot stage and extension;(iv) importance was also attached to the factor of human resources exemplifying in the personnel training and drawing upon the foreign advanced experiences and management technology. The design of project management system is rational with timely coordination. The project b.and its subprojects are all subjected to the management of the sole management institute (FECO), and the mode of implementing under the guidance of functional departments of SEPA was adopted in response to the economic character and the obvious social results of the project policy. This significantly facilitated project progress and coordination even though numerous difficulties were encountered due tof actors outside the borerowers control (e.g. constant adjustment of tariff policy, significant declines in interest rates and the rapid obsolescence of some equipment purchased). The project management core became stronger and accumulated many experiences and techniques in implementing loan project after organizing and implementing the Project. Non-profit institutes and institutions are not suitable for undertaking credit project. The fact c.that the funds from the Bank are loans rather than grants has caused some problems. Loan repayment was taken into consideration in project design, and on-leading to units was demanded to be guaranteed by local government. From today’s perspective, this measure proves to effective in terms of repayment. Many project units lacked financial support and their caution in investment affected the quality of project implementation. It was obvious that the non-revenue-earning institutes were not suitable for undertaking loan project The rapid obsolescence of equipment arising from the fast paced changes in technology was d.underestimated, especially the rapid advancing IT equipment. The effects were especially grave when the approving procedures were complex. The better approaches would be non-bidding, independent purchasing or permission to revise the designed or planned equipment list.

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The demonstration projects of CP were in the category of industrial projects. They were e.concerned with adopting advanced manufacturing equipments or upgrading technology. Project loan usually was arranged in a long-term, from which two problems arose: (i) the interest rate (8 - 10%) was very high when the on-lending arrangements were made, the then fixed loan interest rate was correspondingly high (6-7%). But later on, the interest rate fell significantly, thus the pressure of loan repayment was considerably high; (ii) the evaluation on the operational capacity and the periodic market change of the demonstration enterprises was inadequate. When the operation of the demonstration projects did not go well, loan repayment became a problem. Although the above-mentioned risks cannot be totally circumvented, it still showed the lack of experiences in project design.The consideration of unusual risks in project design was lacking. The change of the tariff f.policy in the end of 1994 altered the 20 commodities exempt from tariff into tariff non-exempted commodities, which generated a tariff debt of 4.65 million Yuan. Things could be better if such factors were taken into consideration in loan agreements and some risk-avoiding measures and protective articles were stipulated.

(b) Cofinanciers:N/A

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

A. Reallocation of Funds to the SARS and Infectious Diseases Response Program

The amount of IDA financing used for the project was approximately SDR 0.8 million less than appraisal and these funds were left undisbursed when the project closed at the end of December, 2002. The reduction in costs was mainly due to continual exchange rate fluctuations combined with significant reductions in the costs of computers and other technical equipment during the life of the project.

With the agreement of the government and the IDA Board, and in response to emergency conditions that occurred in China at the beginning of calendar 2003, the project, along with seven others, was retroactively reopened and the undisbursed funds were reallocated to the Severe Acute Respiratory Syndrome (SARS) and Infectious Diseases Response Program in China which was designed to: (i) address emergency needs for SARS-related diagnosis, clinical management, and personal protection that are necessary to bring the current epidemic fully under control; and (ii) support the Government’s efforts to strengthen the capacity of the public health system more generally so that China’s health system is prepared to combat the possible re-emergence of SARS and, equally important, similar infectious disease threats that might occur in the future.

The reallocation for the SARS Program was approved by the Board on June 19, 2003. A separate ICR on the Program will be issued on its completion.

B. Gender

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Specific gender provisions were not included in the project design, but during the period of project implementation the CERN program in the CAS component explicitly committed itself to promote both young scientists and women in its training component. CERN tracked age and sex in managing training placements. In the early stages of the project, women accounted for 10-20 percent of the overseas placements. It lowered to approximately 10 percent over time. CERN’s Secretariat staff responsible for training were highly committed to promoting women. In 1998, with strong encouragement by one of the long-standing supervision team members, CAS held a workshop to analyze and discuss how gender roles affect women’s full participation in ecological science. It was the first workshop of its kind in CAS. On the part of the large majority of men who held management and leadership positions in the project, the workshop provided insights into how differences in women’s and men’s roles professionally and in the household affect their ability to participate equally at all levels of science. The workshop provided women with an opportunity to explore these issues as a group.

Overall, it was better that the sex of trainees was explicitly an issue to be monitored and that women should have more training opportunities than they have had in the past. Attention to such considerations enhanced the training aspects of the project, although consideration of gender never seems to have extended beyond training and no long-term systematic policies or mechanisms were put into place by the Academy.

The gender issue is of great and growing importance for Chinese science as it has been for the scientific establishment in OECD countries. It only became an issue in the project because of the interest and commitment of one member of the Bank's supervision team who stayed with the project throughout and consistently monitored the role of women in the T/TA program. There is little question that more could have been done on both the Bank's side and the borrower's side, particularly CAS, for whom the issue is most critical. A lesson for future projects of this nature is that the issue has to be actively pursued and acted upon.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Not applicable. These were not in widespread use in the Bank at the time this project was designed.

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionPart A - CERN 15.50 15.50 100Part A - BRIM 4.50 4.50 100Part B - Environmental Information Systems 6.10 11.31 185Part B - GEMS 1.80 1.46 81Part B - Environmental Reference Materials 0.80 0.31 39Part B - Cleaner Production 6.30 6.12 97Part B - Environmental Education 1.70 1.30 76Part B - Human Resources Development for NEPA 1.30 1.00 77Part B - Strengthening MPRCEE 0.50 0.15 30Part B - Policy Studies 1.60 1.30 81Part B - Other Studies 4.90 3.56 73Part C - EIA Fund 2.30 0.41 18Part C - EA Methods 2.00 1.26 63Part C - EIA Training 0.70 0.69 98

Total Baseline Cost 50.00 48.87 Physical Contingencies 98

Total Project Costs 50.00 48.87Total Financing Required 50.00 48.87

Note: The allocations to different activities were nominal and are for IDA credit only. The significant over-expenditure on Part B: Environmental Information Systems is because all SEPA's disbursements following restructuring of the project in 1998 using savings from all activities were assigned to that activity.

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

Other1/ N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 31.00 0.00 23.20 0.00 54.20(21.30) (0.00) (13.50) (0.00) (34.80)

3. Services 0.00 0.00 21.80 0.00 21.80Training and TA (0.00) (0.00) (15.20) (0.00) (15.20)

() () () ()0.00

(0.00) Total 31.00 0.00 45.00 0.00 76.00

(21.30) (0.00) (28.70) (0.00) (50.00)Note: Other procurement methods include Limited International Bidding (US$ 9 million IDA financed), international shopping (up to US$ 3.7 million IDA financed), local shopping (up to US$250,000 IDA financed) and direct procurement of proprietary items with prior association review (no specified limit).

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1/

Other2/ N.B.F. Total Cost

1. Works 0.00 0.00 0.39 0.00 0.39(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 25.15 0.00 5.36 0.00 30.51(17.35) (0.00) (5.19) (0.00) (22.53)

3. Services 0.00 0.00 0.58 0.00 0.58Training and TA (0.00) (0.00) (0.00) (0.00) (0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 25.15 0.00 6.34 0.00 31.49(17.35) (0.00) (5.19) (0.00) (22.53)

Note: Total project financing includes only those counterpart funds directly related to Bank-assisted subprojects. The total costs of SEPA and CAS programs of which this project was a part have not been included.

1/ Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.SEPA 30.00 16.60 28.90 5.20 96.3 31.3CAS 20.00 9.40 20.00 13.20 100.0 140.4Total 50.00 26.00 48.90 18.40 97.8 70.8

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Annex 3. Economic Costs and Benefits

Not applicable.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation a/9/91 4/92

10a/6

ERS (8); BS (2)ML (1); EcS (1); ERS (1); EE (2);ES (1)

12/92 14b/ ML (1); EcS (1); ERS (1); EDS (1); ES (4); IDC (3); IMS (1); EIS (2)

Appraisal/Negotiation3/93 16b/ ML (1); EcS (1); ERS (2);

EDS (1); ES (4); IDC (3); IMS (1); EIS (1); MIS (1); CPS (1)

5/93 5 ML (1); EcS (1); DO (1); LEG (1); EDS (1)

Supervision11/93 4 ML (1); ERC (1); CPS (1);

APS (1)S S

05/94 3 ML (1); ERC (1); IS (1) S U03/95 1 ML (1) S S09/95 2 ERS (1); ML/EcS (1) S S05/96 1 ML/ES (1) S S

3 S SS S

11/96 3 ML/ES (1); ES (1); MIS (1) S S04/97 3 ML/ES (1); ERS (1); MIS (1) S S11/97 1 ML/ES (1) S S03/98 3 ML/ES (1); ERS (1); MIS (1) S S09/98 1 ML/ES (1) S S11/98 3 ML/ES (1); ERS (1); MIS (1) S S04/99 2 ML/ES (1); ES (1) S S03/00 2 ML/ES (1); ES (1) S S07/00 5 ML/ES (1); ES (2); EE (1); APS

(1) S S

03/01 2 ML/ES (1); ES (1) S S12/01 3 ML/ES (1); EE (1); OA (1) S S04/02 1 ML/ES (1) S S

ICR12/02/2002 8 ML/ES (1); EcS (1); ERS

(1); ES (1); MIS (1); EE (1); IS (1); PS (1)

S HS

APS: Auto/Air Pollution Control Specialist; CPS: Computer Procurement Specialist; EcS: Ecology Specialist; EE: Environmental Economist; EIS: Environmental Institutions Specialist; ERS: Ecological

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Research Specialist; ES: Environmental Specialist; IS: Institutional Specialist; ML: Mission Leader; MIS: Management and Institutions Specialist; OA: Operations Analyst; PS: Procurement Specialist; TS: Training Specialist; LEG: Legal Counsel; EDS: Education Specialist; BS: Biodiversity Specialist; IMS: Information Management Specialist; IDC: Industrial Pollution Control Specialist.

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation a/ 147.0 294.7Appraisal/Negotiation 39.9 b/ 192.2Supervision 554.7 c/ 1,251.7

ICR 19.0 93.9Total 760.6 1,832.5 d/

a/ Identification team includes 8 ecological research scientists/consultant from the US National Academy of Sciences and two from Norway.b/ Preappraisal and Appraisal teams includes 4 staff/consultants from the Danish Environmental Protection Agency and 3 staff/consultants from the UNEP-Industry & Environment Program Activity Center.c/ Includes 200 SW ($110,000) of MIS consultant seconded to SEPA in 1993-94.d/ Staff costs per staffweek are lower than normal due to large number of staff/consultants who were seconded from Danish EPA, UNEP and U.S. National Academy of Sciences with Bank only providing part of their costs.

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

The following documents were consulted by or provided to the mission during the course of preparation of the ICR. The total volume of publications generated under the project - including books, monographs, conference proceedings, videos and DVDs - numbers in the hundreds, most of which are in Chinese. Their titles are not listed here.

1. A Report on the Chinese Ecological Research Network (CERN), Svein Batvik, et al, February, 1992

2. Initial Executive Project Summary (October, 1992)3. Minutes of Review Meeting on Initial Executive Project Summary (November 18, 1992)4. Final Executive Project Summary (February, 1993)5. Minutes of Review Meeting on the Final Executive Project Summary, (February 10, 1993)6. Chinese Ecosystem Research Network (CERN) - Component Proposal, 240 pages, CAS

(April, 1993)7. Chinese Ecosystem Research Network (CERN) - Training and Technical Assistance

Programs, 200 pages, CAS (January, 1994)8. Biodiversity Research and Information Management (BRIM), CAS, 229 pages (January,

1994)9. Report to CAS on Data Management and Related Activities, William Michner et al

(September, 1992)10. China: Proposed Environment Technical Assistance Project, Memorandum from Zafer Ecevit

with attached Aide Memoire (August, 1992)11. Preparation Aide Memoire, 65 pages (May, 1992)12. Pre-Appraisal Aide Memoire, 174 pages (November/December, 1992)13. Appraisal Aide Memoire, 154 pages (February/March, 1993)14. Minutes of Negotiation (May 14, 1993)15. President's Memorandum, China Environmental Technical Assistance Project, Report No.

P-6056-CHA, (May 26, 1993)16. Development Credit Agreement No. 2522-CHA (July 16, 1993)17. President’s Notification, China Environmental Technical Assistance Project, Proposed

Amendment to the Development Credit Agreement, IDA/R2000-169 (September 25, 2000)18. Back-to-Office Report and Implementation Summary (with Aide Memoire, April/May 1994),

July 29, 199419. Supervision Report and attached documents (May 16, 1995)20. Final Report of Consultant Seconded to SEPA, 2 volumes (June, 1994)21. Subproject documents (including subproject preparation documents, work plans, training

needs assessments, progress reports and correspondence), 32 volumes organized by subproject, (maintained by Task Managers from 1993-2002)

22. SEPA Mid-Term Review Aide-Memoire, 50 pages, (October, 1996) and CAS Mid-Term Review Aide Memoire (April, 1997)

23. Mid-Term Review, SEPA documents (October, 1996)24. Mission Documents (Terms of Reference, Back-to-Office Reports, Supervision Reports and

Aide-Memoire from 1993 to 2002)25. Project Audit Reports

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26. Project Correspondences27. ICR Mission Documents (November/December, 2002)28. SEPA and CAS ICR Documents (including individual subproject ICRs)29. Detailed Description of NEPA Training Textbooks, NEPA, April, 1996 (Summary

translations of 10 textbooks prepared under the project)30. Summary on First Round Foreign Expert Consultation for the Study on the Design and

Implementation of the Pollution Levy System in China, NEPA (October, 1994)31. Proceedings of International Workshop on Pollution Levy System Reform in China, NEPA

(December, 1997)32. China's Strategies for Controlling Motor Vehicle Emissions, Summary Report (December,

1997)33. Cartwright, T. Report on Evaluation of Environmental Information Systems In Two

Provincial and Two Municipal Environmental Protection Bureaux (EPBs) Beijing, China,April, 1997

34. Bidding Documents, and Evaluation Reports for various equipment procurement packages35. Terms of Reference, Bidding Documents and Contracts for various international and local

consultants and consulting firms36. Promotion of Cleaner Production in China: Overview and Outlook, UNEP, (1998)37. CAS, Terms of Reference for Additional CERN Overseas Training and Domestic Training

Programs for 1995-1997.38. CAS Experimental Studies on Water and Energy Balance in Agricultural Lands, Reports from

Yucheng Comprehensive Experimental Station, 199639. CAS Genetic Diversity of Animals and Plants in China, 1996 (text book)40. CAS Conservation Biology, 1996 (text book)41. CAS Second LUTEA Workshop, Beijing China, March 199842. CAS Report of Rapid Biodiversity Assessments at Nonggan Nature Reserve, Guangxi May

199843. CAS Workshop on the Roles of Women in the Environmental Technical Assistance Project,

Beijing, China November 199844. CAS Biological Diversity and the Future of Human Beings: Proceedings of the Second

National Symposium on the Conservation and Sustainable Use of Biodiversity, 199845. CAS Preserving the Health of the Land 1998 (video)46. CAS Echoes of Nature 1998 (3 hour video production on Chinese Nature and Conservation) 47. CAS Management Capacity Building of Eco-Systems and Biodiversity in Western China

Proposal for Application of Remaining Funds, June 200048. CAS International Symposium on Ecological Environment Rehabilitation and Sustainable

Development in Western China, April 200249. CAS Biodiversity Conservation and Regional Sustainable Development in China. Proceedings

of the Fourth National Symposium on the Conservation and Sustainable Use of Biodiversity in China, Kunming, 2002

50. CAS A Deep Journey through the Rainforest (DVD) Xishuangbanna Tropical Botanical Garden

51. CAS A Green Pearl: The Gourd-Shaped Peninsula (DVD) Xishuangbanna Tropical Botanical Garden

52. CAS Living Forests A Newsletter for Biodiversity Conservation in South China (various

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editions)53. CAS Heshan Forest Station, Guangdong:

- Vegetation Restoration Research of Degraded Ecosystems in Troipical and Sub-tropical China, Heshan Forest Station (in Chinese)- Forest Community Dynamics of the Lower Subtropics (in Chinese)- Water and Heat Principles of Ecosystems and Its Application (in Chinese)- Vegetation Ecology (in Chinese)- Plant Population Ecology (in chinese)- Guangdong Province Forest Resources and Their Ecological Functions (in Chinese)- Degraded Sloping Land and Its Green Food Potential (in Chinese)

54. Bank Documents on Technical Assistance and Capacity Buildinga. Technical Assistance in the PREM Portfolio: Stocktaking and Lessons Learned (2001)b. Toward Measuring Environmental Management Capacity (draft), ECON Centre for

Economic Analysis, (March, 2003)c. Capacity Enhancement -Focus on Implementation for Results, World Bank Institute,

(January, 2003)d. Environmental Capacity Building: A Review of the World Bank's Portfolio, Environment

Department Papers, Paper No. 68, (1999)e. Environmental Management and Institutions in OECD Countries - Lessons from

Experience. Technical Paper No. 391. World Bank. (1995)f. Civil Service Reform: A Review of World Bank Assistance, Operations Evaluation

Department, Sector Study No. 19599, (1999)g. Country Environmental Analysis, Environment Department, Concept Note (June 5, 2002)h. Country Level Environmental Diagnostic Tools in the World Bank - Summary of a

Review, Environment Department, (2002)i. World Bank Experience with Country Level Environmental Diagnostic Tools: Review and

Lessons Learnt (draft), Environment Department, (2002)j. Assessing Environmental Policy, Regulatory, and Institutional Frameworks, Magda Lovei

and Poonam Pillai, Environment Department, (2002)k. Capacity Building for Environmental Institutions, Latin America and Caribbean Region

Environment Family (February, 2000)l. Performance Indicators for Technical Assistance Operations, Sectoral Note - Technical

Assistance, (1996)m. Environmental Assessment Sourcebook, Chapter 5, Strengthening Local Capabilities and

Institutions, 1999

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Annex 8. Beneficiary Survey Results

Not applicable.

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Annex 9. Stakeholder Workshop Results

Major results of workshop discussions have been incorporated into text of this ICR.

World Bank Financed China Environmental Technical Assistance ProjectICR Workshop Agenda

December 2 - 6, 2002Beijing, China

December 2, 2002Registration

December 3, 20028:30 - 9:00 Registration of participants from Beijing9:00 - 10:00 Opening Remarks

Chaired by Mr. Zhang QingfengDeputy Director of Division I of FECO, SEPA

• Mr. Chen Yiyu, Deputy Director General of CAS• Mr. Luo Gaolai, Deputy Director General of FECO, SEPA• Mr. Austin Hu, Deputy Chief of World Bank Beijing Office

Reports from CASModerator: CAS

10:30 – 11:00 China Ecological Research Network (CERN)11:00 – 11:30 Biodiversity Research Information Management (BRIM)11:30 – 12:00 Environmental Protection and Management in Mid-West of China

Reports from SEPAModerator: Mr. Zhang QingfengDeputy Director of Division I of FECO, SEPA

14:00 – 14:15 TA Project Management ConclusionMr. Zhu Pei, Division Chief of FECO, SEPA

14:15 – 14:30 Discussion14:30 – 14:45 Staff Training and Person Resource Development

Mr. Tu Ruihe, Division Chief of SEPA14:45 – 15:00 Discussion15:20 – 15:35 Strategy on Motor Vehicles Emission Control in China

Ms. Li Pei, Division Chief of FECO, SEPA15:35 – 15:50 Discussion15:50 – 16:05 Designing and Implementing Research on Discharging Fee

Mr. Yang Jintian, China Environmental Planning Institute16:05 – 16:20 Discussion

December 4, 2002Sub-conference Chaired by SEPA9:00 – 10:00 Environmental Information System Building at Provincial Level

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Mr. Xu Fuchun, Deputy Director of Information Center of SEPA10:00 – 10:15 Discussion10:30 – 11:30 Global Environmental Monitoring Station Building in China

Mr. Jing Lixin, Deputy Division Chief of Environmental Monitoring Station11:30 – 12:00 Discussion14:00 – 14:40 Environmental and Economic Policy Research Center

Mr. Hu Tao, Professor of PRCEE14:40 – 15:00 Discussion15:30 – 16:00 Case Study of Eco-agriculture Development Policy

Mr. Hu Tao, Professor of PRCEE16:00 – 16:30 Environmental Impact Assessment

Mr. Zhu Pei, Division Chief of FECO, SEPA16:30 – 17:00 Discussion

Sub-conference Chaired by CAS9:00 - 12:00 Four presentation by participants in the BRIM components plus discussion14:00 - 17:00 Four presentations by participants in CERN components plus discussion

December 5, 2002Sub-conference Chaired by SEPAModerator: Mr. Wang Xin, WB Group Chief of Division I of FECO, SEPA

9:00 – 9:40 China’s University Level Environmental Education SystemMr. Lu Genfa, Professor of Nanjing University

9:40 – 10:10 Procurement Management of TA ProjectMr. Lu Bin, Division Chief of FECO, SEPA

10:30 – 11:00 Disbursement Management of TA ProjectMs. Ji Ming, Financial Officer of TA Project of FECO, SEPA

11:00 – 12:00 Discussion14:00 – 17:00 Promote Clean Production in China

Mr. Duan Ning, Deputy Director of CRAESField Visit in Beijing – CP Center/Environmental Information Center

Sub-conference Chaired by CASAll day Discussion of BRIM

December 6, 2002Sub-confernece Chaired by SEPA9:00 – 9:15 China Eco-network Monitoring Planning

Mr. Zhang Jianhui, Division Chief of Environmental Monitoring Station9:15 – 9:30 Discussion9:30 – 10:15 Follow-up Discussion10:30 – 11:15 Follow-up Discussion13:30 – 14:15 Follow-up Discussion14:30 – 15:15 Follow-up Discussion

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15:15 – 16:00 Wrap-up Meeting

Sub-conference Chaired by CASAll day Discussion of CERN

December 7 - 14 Field VisitsSEPA:a) Yunnan Provincial EPBb) Kunming Municipal EPBc) Guangdong Provincial EPBd) Guangzhou Municipal EPBe) Jiangsu Provincial EPBf) Nanjing University

CAS:a) Institute of Zoology, Kunmingb) South China Institute of Botany, Guangzhouc) South China Institute of Oceanography, Guangzhoud) Institute of Soil Science, Nanjinge) Institute of Geography and Limnology, Nanjing

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Additional Annex 10. Comments of the Chinese Academy of Sciences

The Implementation Completion Report (ICR)of the Chinese EnvironmentalTechnical Assistance Program

(Part A)

Office of External Financing, Chinese Academy of Sciences

Foreword

The ten years program of the Chinese Environmental Program was finally completed by April 30, 2003. Its experiences and lessons should be drawn and studied for other ongoing and future programs. Far from a comprehensive and detailed summary, this ICR report mainly concentrates on the developmental objectives and relevant key issues during the development of the program, and tries to review all the decisions at different phases and the important indexes and parameters that affect the development of the program, and thus to provide people at different levels some useful and referential experiences or lessons for their future work.

1. General description of the Program

The Chinese Environmental Technical Assistance Program was formally approved on July 16, 1993, and was put into implementation in October 1993. The total amount of the credit loan for the CAS portion is 14,12 million SDR (equals 20 million US dollars at that time).

The CAS portion consists of two parts: the Chinese Ecosystem Research Network (CERN) and the Biodiversity Research Information Management (BRIM), and if it could be described as a third part, there is one called the Environment Protection and Management in Mid-West China, which was implemented during the period of extension of the implementation of the Chinese Environmental Technical Assistance Program, the implementation period of which was twice extended. Thus, the actual implementation period of the Program was from July 16, 1993 to April 30, 2003.

Ever since 1949, when CAS was established, some 50 or more field stations have been set up in different major ecological zones with purpose to promote local production in fields of agriculture, forestry, animal husbandry, fishery, and to observe and control some natural disasters, e.g. landslides, frozen soils, mud flow and etc. The CERN network was first established in 1988 on the basis of such field stations. Its purpose was to monitor and analyze eco-parameters on a long-term basis and to realize data transmission and data sharing and thus to lay a solid and reliable eco-network for further scientific study and environmental control. More than one thousand experts were organized to work on the project. The investment was totally organized by CAS itself. Finally, 29 stations were selected for the Bank program and other six sub and synthetic centers were set up, 21

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institutes in earth-science are involved in the program, which were the implementing units. As a counterparts program, “the Ecological Networking System Engineering Project” was approved by the Chinese government and implemented from 1993 with a fund of 47.41 million RMB. The total credit loan from the Bank was 15,50 million US dollars.

The BRIM was sponsored on the basis of three CAS major projects in fields of biodiversity: the Ecological Basis for Biodiversity Conservation and Its Sustainable utilization (1991-1995, funding: 5 million RMB); the Basic Ecological Study of Biodiversity Conservation in China (1992-1996, funding: 2.5 million RMB), and the Biological Study of Conservation for Principal Endangered Plants (1993-1997, funding 5 million RMB) by the Biodiversity Committee of CAS that was set up in 1990. The total credit loan from the Bank for BRIM was 4.5 million US dollars.

CAS and the Chinese government (Ministry of Finance and State Development Planning Commission) organized a one month review and evaluation tour for the “National Checking and Acceptance for CERN and BRIM” in October/November 2000. The general evaluation of the achievements is excellent or in the Bank’s evaluation system “highly satisfactory”. It is confirmed that through implementation of CERN and BRIM, a strong national team with experts working for CERN and BRIM as its backup has established; a national information and data exchange network on different eco-systems and biodiversity has been put into operation; basic facility and equipment for eco-environmental monitoring and research has been provided and conditions are close to normal level of developed countries; the capacity of the field stations and relevant institutes has been built up that are able to implement major national and international projects in relevant fields; in the meantime, compare to situation ten years ago, concepts of eco-environment and biodiversity are accepted more and more by the government officials and people of all circles and greater concern has been paid to this field than ever before.

The Environment Protection and Management in the Mid-West China project was implemented from October 2000 to April 30, 2003 as the third project of the Program, but used the remaining fund left over from CERN and BRIM, The amount of fund was 1.45 million US dollars. This project, as small as it is, but standing on shoulders of the two giants of CERN and BRIM, has made outstanding achievements with limited funds and has provided important environmental and ecological basis and information for China’s great development in the Mid-West areas.

2. Fulfillment of the Development Objectives of the Program

It is clear that the Program (Part A) not only fulfilled the strategic developmental objectives set forth ten years ago in the feasibility report, but as along with the progress of the Program and adjustment of the objectives at different phases, some new objectives also have been realized. Ten years are a long time series, not only in China, but in the world, ecology and environmental science and relevant emphasis of government policy and public awareness have made progress dramatically, so the development objectives of the program

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has been adjusted several times to keep pace with times and progress.

It was described in the feasibility report that “the major goals and objectives of the CERN component are to improve the quality of ecological research, ecological data, and ecological information provided to decision makers. In order to attain these goals, CAS will have to improve the quality of its ecological research stations, train its research and technical personnel, and manage its research data. To this end, CAS has designed the CERN.” As for BRIM, the project is “oriented to comprehensive study of the biodiversity in three different levels with the aim to understand the current situation of biodiversity and the mechanism of the endangered species, so as to determine priorities in conservation on sustainable basis and thus to propose practical and effective statistics and measures; to establish a national research and information management system and to strengthen decision-making capacity of government in field of biodiversity conservation on sustainable basis”. These goals have been fully achieved; the achievements and relevant statistics of the Program in other parts of this ICR clearly convince that the success of the Chinese Environmental Program (Part A) has laid a milestone for China’ s future eco-environment and biodiversity activities.

For example, regarding CERN, not only the quality of ecological data has been much increased, but the compilation of historic data and information of all the field stations scattered in different eco-zones has been completed, which is a valuable contribution to China and the world for regional and global eco-studies. In the meantime, a whole set of management policy and regulations have been designed and put into practice, which proved to be effective and practical. Such policy and regulations will undoubtedly influence implementation of future projects.

The achievements and research results during the course of program development have already been combined with agricultural eco-systems and production, which has contributed a great deal to the agro-zones in Shandong, Shaanxi, Hailongjiang and some other provinces. Quality of grains has been improved and production output increased. All such work has enjoyed high favourable comments and evaluation by local governments. This is a new objective combined into this Program from the principles set forth for the National Knowledge Innovation Program that science (including ecology and environmental science) should help and push economic development, and in the meantime, cooperation between CAS and local government in economic fields has been paid much more attention during the period. Thus, some achievements and research results were encouraged to combine with local requirements and production, and good results have been obtained. Many stations have established very good relations with local government, and some of these have been playing important role in local economic development, e.g. the Inner Mongolia Grassland Field Station was made a model for the Autonomous Region, and have been inspected by many government officials of all levels. As one can see from other parts of the report that the capacity of the relevant stations, institutes and labs has been much strengthened, the number of scientific papers published in national first-class and well known international magazines have increased by more than one third than ten years before; the research institutions are now more energetic and

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competent to apply more national key projects. In the last few years, only the CERN stations have obtained more than 150 million RMB project funds from other national competitive projects.

3. Achievements of the Program

The program was started when CAS just planned an ambitious plan to build a national ecological network to monitor different typical ecosystems and to collect all necessary relevant data for analysis and research. At that time, ecosystem was still a new concept in China. Prof. Sun Honglie, Academician and former Vice President of CAS, the pioneer in this field, foresaw the importance and urgency of such study in terms of scientific research and economic development, raised the issue as early as 1985. And the network was later established in 1988.

As the program is actually divided into two categories in terms of its nature: equipment procurement (EP) and training & technical assistance (T/TA), so the achievements are described in the same format.

3. A Equipment procurement

Most of the equipment and instrument were procured as written in the feasibility study report and strictly implemented during the period of the implementation of the program, with only minor changes that were all done through formal procedure and with approval from the Bank. The procurement of Portion A was done in three rounds. The first round took more time, as the program first started and people still had to finalize all the details. In the meantime, some adjustments of the infrastructure, which were certainly necessary and time consuming, were also conducted. Moreover, the Bank’s sophisticated procedure and bureaucratic reviewing and approving system also affected the actual procurement. The following table gives the specific time duration for the three rounds of procurement.

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Procurement through ICB

Start Finish No. of sets Amount(US$)

Remarks

First procurement 07/94 10/97 864 10,190,792 Longer time due to large size of procurement and the sophisticated procedure

Second procurement

05/98 08/01 (some goods arrived even later than this)

353 2,661,611Arrival of some equipment was delayed because of the Sep. 11th event

Third procurement 02/01 06/02(Some of the goods also arrived later, but all finished by early 2003)

155 1,021,701All items grouped into packages, and interactions and communications between CAS and Bank was improved, thus shortened the time for procurement

Sum 1,372 13,874,104

Procurement through IS

Sequence Number of sets Amount (US$)198 1,459,890

Procurement by self supplied fund

Method No. of sets Amount (RMB) RemarksProcurement through counterpart and self arranged funds

248 13,026,890(US$1.6 million)

Funds include those from the counterparts and some other sources

From the above tables, one can see that the number of sets totaled more than 1,500, of which, more than 90% have been installed and put into normal operation by now. A small portion of the equipment of the third procurement, as they just arrived, and are in the process of being installed. Among the 1,372 sets of the equipment, 155 were scrapped according to statistic figure of 2002, which were mainly outdated computers and some related peripheral equipment.

Considering the situation ten years ago, some of the CAS institutes were facing shortage of advanced equipment, computers, and thus even though the CERN project and the three projects in fields of biodiversity, based on which BRIM were later established, had been running for 3-4 years already, some key parameters of these projects could not be observed and analyzed, and the data transmittion and analysis were still a big problem, the

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competent work with foreign counterparts could not be easily carried out. The procurement through the Bank credit loan played a critical role at this historical moment: the advanced equipment at the time being facilitated helped the field stations and relevant institutes start to work on a new stage, which is more or less compatable with the world level. In the meantime, through the T/TA program, hundreds of young scientists and technicians, who were trained in the developed countries, are now able to use such equipment to do their work similar to conditions where they used to work. Statistic figure shows that about 80% of the overseas trainees were promoted during the implementation period of the program, and about one third of them promoted to leaders of field stations, labs and institutes. In some of the institutes, more than half of the leaders are beneficiaries of the program. The recruitment of such equipment and the experts who are able to use them narrowed the gap between China and the advanced level of the world, which helped obtain some achievements at the frontiers of relevant fields. By doing this and with such powerful technical support and solid experience accumulated in dozens of years, CAS maintains its leading position in organizing multi-disciplinary and integrated projects in environment and ecology research in China. There is a strong sign that a national network of environment and ecology will be built soon on the basis of CERN network and BRIM achievements. This is not only a fundamental contribution to China, but to the world as a whole in future world scale monitoring and research work, which will certainly help human’s understanding of the planet where they inhabit.

3. B Training/Technical Assistance

As mentioned above, the capacity of field stations and relevant institutions and the Academy as a whole has been much strengthened through the implementation of the procurement, while T/TA of the program is another important or more important factor for the success of the capacity building. It went through three stages, the first one was started from 1993 to 1997, the second from 1998 to 2000; while the third from 2000 to 2002. A detailed account is given in the table below.

Implementation period No.(Overseas/domestic)

Age range(overseas only)

Remarks

1993-1997 223/1684 43 over 35 Experts dispatched overseas in the first phase are older in age, but leadership shifting of the project units taken place in 1998, the situation was thus changed in the second and third phases

1998-2000 126/850 26 over 352000-2002 29/497 5 over 35Total 378/3031Note: The number of domestic trainees and training courses shows those who were funded by the Bank’s loan and by other channels and sources, while the number of overseas shows those who were funded only by the Bank loan.

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The first stage was arranged almost exactly in accordance with the feasibility report and consultancies provided by the Bank consultant, which laid a solid base for urgent needs of the construction of the program and for future program development. From the figure, one can see that domestic training (more supported by domestic funds) held a large portion, because when the stations and BRIM labs were first started and a lot of basic and technical work had to be done. In the second stage, CAS adjusted the training plan in accordance with progress of the program and the improvement of the conditions of the stations and labs. Thus a lot of changes were made at that time, luckily, the Bank showed a great concern and understanding about this change, and approved all the changes with no delay, which provided a solid guarantee for the success of the T/TA program. The characteristics of the second phase is that along with the arrival of advanced equipment, and with a dozen year's experience of foregoing projects, some young scientists had to be trained to best use such equipment and to do some collaborative research work in accordance with the actual needs with their colleagues in developed countries. The figure of unreturned (those who stayed in the training institutions longer than original plan, but includes a few who just stayed there with no further information) trainees, from another respect, reflects the interesting phenomenon that the percentage of the unreturned once reached 11.2% in the first stage, and dropped to about 7% in the second stage and 0% in the last stage. Finally the figure was balanced roughly about 7.8% when the program was over. This occurred because that experts found conditions at home became competent with the developed countries and thus more convenient and suitable for them to be able to do creative work, and more achievements were obtained in later stage in the second phase; with the biggest change and re-orientation of the program, the third phase, from the very beginning, combined the program activities closely with the national development needs in the western part of China.

The Environment Protection and Management in Mid-Western China was implemented in the third phase of the program, which was approved by the Bank in October of 2000 and finished by April 30, 2003. Even though the project (the third phase of the program) took only two and half years, it has far more influence on the whole program, because this project made full use of the previous achievements and contributions, the basic conditions have been much improved. So, all the 29 young experts, when they first dispatched to work in foreign labs and field stations, had very clear purpose, knowing what their weaknesses and where they could solve their problems. With the strict CAS identification and recommendation system, both candidates and foreign recipient institutions were carefully selected in accordance with requirements of the development in the West. In addition, five international workshops were organized in the third phase, because they were clearly oriented at the principal environmental issues in the west when the central government just started its strategy of Great Development in the West of China, based on achievements and experiences of CERN and BRIM and some other parallel projects in the same time, the workshops enjoyed unprecedented and unexpected success with far reaching influence. Many other projects were designed on the basis of such workshops, and many young experts applied successfully for regional, national and some international funding for their new subjects. The International Workshop on the Eco-environment

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Conservation in the Upper Reaches of the Lancang (Mekong) River attracted more than 60 experts from 16 countries, who had serious arguments about the regional hot spot problems, and quite a few workshops and projects have been arranged as follow-up activities, which further promoted the discussions on issues of common concern for the region. 4. Experiences

The Program (Part A) was sponsored at the right time (beginning stage of eco-networking and biodiversity conservation) and got the right level of funding (from the Bank's credit loan and good counterparts from the Chinese government) and implemented by the right institutions (CAS, with a strong, effective and strict management system and the World Bank, with a good and efficient international experiences in arranging projects in developing countries) and was fully supported by a internationally responsible and reliable government.

CAS appreciates the World Bank’s overall effective reviewing, assessment, evaluation, managing system, which governed the whole project from the very beginning to the end. This is a guarantee from the Bank side for the success of the project. The strict summary/reporting (half year and year end review) and supervision system proved to be very effective, not only in the formality, but good for forcing people to consider what was right and wrong in the past half or full year, and how to adjust the plan and relevant activities in time, and thus it would make the program fit the changing conditions, so as to make the program more successful and fruitful.

Role of international consultants of the World Bank is well recognized by CAS and its implementing organs of the program. Senior officials and experts of CAS appreciate the way the international consultants behave and their working style. When we recall the past activities, one may find many helpful and interesting but sometimes serious quarrels and discussions. From such activities, both sides acquired more understanding with each other. More often, both sides shared the same view at last, and this benefited and upgraded the managing level of the program.

With agreement, the World Bank and the Ministry of Finance (MOF) entrusted the State Auditing Agency (SAA) to audit the special account for the program at half year’s interval, which was a guarantee for the strict implementation of financial regulations and for the operation of the program with the right direction as set forth by the feasibility report. The auditing and supervision system is a governing tool for the smooth operation that made the program under effective control.

Relevant regulations and policy of the Bank for procurement, including some specific instructions provided by Bank officials and their flexibility in discussing and arranging sophisticated ICB and other forms of procurement showed to be quite effective and fruitful. Aware of the bureaucratic and hierarchical procurement system of the Bank and the reform in the system is not an easy matter, both sides tried their best to shorten the

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time duration for procurement. In the third procurement, OEF/CAS changed its way for ICB, divided the different items into 12 packages, combining some items, which used to be vacant and non-effective, with new items into one package. The new way of ICB for bidding proves to be very successful. All items were effective with good quotation. So, the last procurement solved the remaining problems of almost ten years. This is motion was raised by OEF, but firmly backed up by the Bank and relevant authorities in China.

CAS has a long history of personnel exchange with foreign countries, particularly with developed countries in the last 20 years or so, ever since China’s opening up to the world. This certainly helped the program’s T/TA projects a great deal, which made the T/TA a shinning point of the program. In CAS, every institute and almost every lab has its own well-established channels with their counterparts in other countries. Personnel exchanges, as one of the important measures to improve overall level of scientific research and management of CAS have been given priority, particularly in the Knowledge Innovation Program of CAS, that has formatted a whole set system and regulations, which prove to be effective and successful. The powerful team of field survey and lab analysis built up during the program has formed a basic force for ecological monitoring, survey and analysis on national scale, based on which some new large national eco-projects become possible. Prof. Zhang Yaping, who has been one of the beneficiaries of the T/TA project, won the international award “World Leaders Award of Biodiversity Conservation” in 2002, the only one from Asia ever.

Sufficient financial support from CAS Knowledge Innovation Program for the follow-up projects of CERN and BRIM is a strong factor and back up for the sustainable development of the Chinese Environmental Program (Portion A). The building up of the National Innovation System is an important strategic decision made by the Chinese Government in an effort to fully implement the measures of rejuvenating China through science, education, and speeding up the economic and social development in China. In 1998, CAS was approved to initiate Pilot Project of Knowledge Innovation Program, which is divided into three phases: the initial phase from 1998 to 2000; the implementing phase from 2001 to 2005; and the optimized phase from 2006 to 2010. In the program, the natural resources, environment and eco-energy is one of the three principal fields of projects. CERN, as one of the supporting system for national eco monitoring and study has been given the strongest emphasis, and 140 million RMB has been put in for a five years enhancement of its facilities and relevant work since 2000. BRIM as a consistent program will continue to behave as one of the strongest national teams in this field. Capacity of both CERN and BRIM have been much strengthened and their competing ability shows to be powerful, not only they are able to implement CAS projects, but they have successfully competed for many other national, regional, and even some international projects. So, there is no doubt that the World Bank credit loan, which was very necessary at the infancy of CERN and BRIM has laid a solid base for their future growth. In China now, no one can neglect the existence and function of CERN and BRIM in the fields of ecological and environmental studies.

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5. Suggestions

The Chinese Environmental Program has made outstanding achievements and has much strengthened China’s capability in organizing and implementing large-scale national and international projects. Statistics show, more and more foreign scientists and experts are now coming to visit and to work in the field stations and relevant labs since mid-term of the implementation of the Program, while many young scientists from these remote field stations, who have been trained overseas are now well-known outside China, which has certainly very much improved the understanding of the world bio-environment and enhanced the human endeavour for overcoming the global environmental problems. However, when we review the history of the ten years in implementing the program, there are still some points worthwhile to discuss and to study for even better future projects.

The Bank should keep pace with times to review its procurement policy and regulations. It was found at many times of the cases that procurement procedure took much longer time than expected, and particularly for IT products, e.g. computers and their peripheral equipment. Normally through Bank’s ICB procedure, it would take at least one and half years to finish one round of procurement, and sometimes even longer. So, more often, when the end users get the goods they bided for, they would find that the computers in their hand already outdated, some newer and more powerful generation of machines with even cheaper price are available everywhere. Situation in different countries may vary; policy of procurement should consider specific conditions and be flexible to provide guarantee for loan beneficiaries to enjoy the best services and to obtain the best equipment through a simple and practical measure. In the meantime, a fast reaction mechanism in the Bank should be established to solve some time sensible procurement problems.

A program as large and as sophisticated as the Chinese Environmental Program should be considered to have a longer implementation period from the very beginning at the designing stage for three reasons: basic procurement and infrastructure construction for stations or labs take at least 2-3 years, experts or young scientists working in these places need time to get themselves familiar with the conditions and the new challenges, and will find exactly what they really need for T/TA projects; results of environmental projects can be seen only in a comparative longer time, unlike projects in other fields. In the meantime, new concepts emerge and conditions change all the time, the Bank should consider to adopt a programmatic approach to organize such programs, and divide a big program into several (e.g. three) phases, a specific and detailed plan should be only given to the first stage, and along with the progress of the program, targets and measures of the program might be adjusted at the end of first phase but before the next one. The success of the Program (Part A) shows that ten years implementation period actually is reasonable and the several adjustments (at about 3 to 4 years interval) taken place between CAS and the Bank actually occurred proved to be necessary and substantial. The success of the Environmental Protection and Management in Mid-West China is a footnote for this. This project was discussed and designed on the basis of the achievements and experiences of the 7 years’ solid work of CERN and BRIM, while purposes and directions of the

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Program was adjusted in accordance with the new situation and new policy, which was the right time to add fresh driving force and new concepts to upgrade the substantial quality of the Program.

For a project like the Chinese Environmental Program, which is large in scale and penetrates into many different environmental fields, actually has far reaching influence not only in China, but also in the world as whole. For example, the CERN is part of the world eco-network. So, it might be possible for both the Bank and CAS to consider that finance for more projects closely related to the Program could be organized from different domestic and international sources to best use the Bank’s loan.

For the CAS side, guarantee for stable and consistent management personnel for implementation of programs, particularly for such big programs is necessary and should be considered seriously for future projects. Mechanism for operation of such programs has to be carefully considered and designed with a long-term view. An overall arrangement from the very beginning for a program should be made, which is a base for sustainable development of the programs.

The Scientific Committee of the Program (Portion A) and relevant expert advisory group should play more sufficient role throughout the entire implementation period.

6. Appreciation

CAS feels grateful to the World Bank that decided to provide the credit loan to CAS at a critical historic moment, which enhanced CAS to lay a solid base to keep pace with progress in fields of environment and ecology with other parts of the world. The appreciation specifically goes to Dr. Robert Crooks and the World Bank team and the consultants of the Program who worked very hard with their partners in CAS for the last ten years. CAS and the World Bank have jointly created the outstanding work, which is a great contribution to the wealth of the world in environmental conservation and protection.

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Attachment: General Key Performance Indicators for CERN and BRIM

PROJECT INPUT INDICATORS Unit Target-1(1993)

Target–2(2002)

Actual(6/30/02)

(1) Graduate Student Enrollments (MSc/PhD/(Post Doc):

No. 76/32/6 202/128/32 676/516/78

(2) Scientific Research:Total researchers funded of whom: No. 371 580 3667

Domestic No. 341 511 3424 Overseas No. 27 61 402

Availability of Counterpart Research funds ‘000 RMB 15,214 54,169 279,526(3) Domestic Training Workshop No. 18 54 625

Participants No. 198 479 3034Funds ‘000 RMB 6,326 12,646 56,736

(4) Scientific Equipment/Infrastructure:ICB Equipment in phase I procurement Set 93 91 864

Total value phase I ICB procurement US$ 1,471,824 428,627 10,180,792ICB Equipment in phase II Set 55 37 353

Total sum by phase II ICB procurement US$ 304,511 434,563 2,661,611ICB Equipment in phase III procurement Set 19 25 155Total sum by phase III ICB procurement US$ 161,189 142,180 1,021,701

Equipment through IS Set 5 21 198Total sum through IS US$ 19000 113581 1459890

Equipment accredited Set 123 44 1123Equipment in service Set 120 42 1245Equipment scrapped Set 20 2 155

% equipment purchased and installed % 77% 77% 89%Percentage of Books/software purchased % 70% 39% 61%

(5) Equipment purchased with counterpart funds:

No. of pieces Set 59 30 248 Value ‘000 RMB 965 3,598 13,026

(6) International scientific exchange: Overseas training & cooperative research No. 31 95 378

3 months (male / female) No. 6/2 5/2 55/116 months (male / female) No. 8/2 23/0 171/40

> 6 months (male / female) No. 4/1 30/11 65/16Attendance at international conferences No. 35 68 444

Overseas seminar Number 4 13 88Overseas seminar participants No. 37 85 3031

Total institute / station (male / female) No. 225/13 41/58 1051/308Total by project (male / female) No. 3/10 28/0 353/100

Foreign visiting scholars: No. 15 56 971Total visiting experts (domestic) No. 35 100 1646

Total visiting experts supported by project No. 5 20 608PROJECT OUTPUT INDICATORS:(7) Graduate Student Enrollments:

Ratio Master/Ph.D % 146% 213% 136%Proportion of females % 30% 36% 32%

Master degree % 42% 47% 38%Ph.D % 24% 23% 26%

Post Doc. % 25% 31% 14%

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(8) Scientific Research Progress:Research publications/papers: No. 551 1082 8411

Domestic publications No. 513 553 6955International publications No. 22 85 596

Accepted by international conferences No. 16 48 412Awards won during implementation period:- Level No.

County 14Ministry 8Ministry/Province 12Ministry/Commission 2International 1Academy 3

Awardees No. 55 37 683Talents trained by the project:

Promoted to leader of discipline Lab/station No. 9 38 150Promoted leader of discipline or Institute No. 4 11 45

Promoted to higher grade No. 30 46 476(9) Proportion of Research Money awarded

through peer review% 47% 50% 67%

Check and acceptance of the project by national standard

Yes/no 22 units pass the check of national standard

Note: This table only includes the available data and information obtained from the field stations of CERN and BRIM institutes and labs. Some of the figures might not be accurate, however, they represent roughly the true picture of the implementation of the program and some of the achievements. The figure concerned with the number of overseas training is accurate, and the relevant trainees totally used the fund from the Program, but the trainees for domestic training used funds from both the Program and other foreign or domestic sources. The funds for work related to scientific papers were mainly from the Program, but there were still some funds from other sources.

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Additional Annex 11. Comments of the State Environmental Protection Administration

The Implementation Completion Report (ICR)of the Chinese EnvironmentalTechnical Assistance Program

(Parts B and C)

State Environmental Protection Administration

1. Assessment of Development Objective and Project Design

1.1 Original Objective

The main objective of SEPA component was to enhance and strengthen the policies, programs, and institutional capacity in environmental sector. The main focus was on environmental policy-making and ecological research during a period of rapid economic change in China.

When the project was designed, the environmental management in China confronted great pressures arising from the rapid economic development and environmental deterioration. The design objective of the project was to strengthen the efforts in the construction of the facilities for environmental management to ensure the national economic development and to explore new ways of management. The issues in the following 5 respects were pre-identified:

To strengthen the institutional capacity in environmental protection area both in national and province level, enhance their capacity of environmental policy-making and management.

To improve China environmental monitoring and information system and to enhance environmental monitoring quality and information management capacity. At that time, the means and speed of information collection, processing and transmission were behind the international standards. The information intra-agency coordination was lacking. The environment management suffered a shortage in terms of information management technology, equipments and professional staff.

To explore new ways of controlling pollution in the process of industrial production through the implementation of the demonstration projects of cleaner production technology. There was neither capital nor technology for the end -of- the-pipe management.

To provide useful information and materials for Chinese government in its environment policies through conducting policy research on the environmentally sound economy. In the sense of promoting environmental protection, there were not yet perfect economic policy instruments, such as the pollution levy system.

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The project was to strengthen the environmental impact assessment management and to enhance the capacity building of the assessment team and methodology research. The rapid economic development made the assessment task even heavier. The assessment technology standards, management system and assessment team all needed improving.

It is obviously that the TA project was reasonable and its targets were definitive. Also, the Project fits China’s situation, adopted means are advanced and technical assistance is in time. Five components of the Project have produced high quality and demonstrative outputs. The objective is very important for China’s environmental protection capacity building, which have influenced and motivated country’s related policies.

The Project objectives were consistent with China’s priorities and the World Bank Country Assistance Strategy at the time of project preparation, appraisal and grant approval (1992-1993).

1.2 Revised Objective

In addition to the original, in 1998, in order to cooperate the Great Opening Up of the West Strategy of the Central Government, SEPA discussed with the Bank and proposed that the residual funds of its component be used to support the on-going “National Environmental Monitoring Capacity Building Project” in the provinces subject of the Strategy, in which automated, real-time air and water quality monitoring system were to be constructed and enhanced.

1.3 Revised Components:

In October, 2000, upon the approval of the Bank, the additional revised component was implemented smoothly. Most of the residual funds (US$7.36 million) were used to purchase advanced equipment for automated, real-time air and water quality monitoring stations in 20 cities of 12 provinces located in western part, and to strengthen the lake water quality monitoring system relating to nine major lakes in Yunnan Province.

1.4 Quality at Entry

In 1991, the Bank and SEPA jointly completed Report On China Environmental Strategy, specifying the financing emphases in the strategic plan for the upcoming years:(a) The four industries with serious environmental problems: energies, industrial production, urbanization and agriculture; (b) Strengthening cooperation in two respects: Policies and plans for long-term environmental protection and natural resources protection.

Most of the components designed at entry were “satisfactory” and several subprojects were not. The project activities were designed according to the objective. The subprojects under the Environmental Technical Assistance Project were designed to aim at the difficult and weak points of pressing characters in the then environmental management. From the perspective of current progress in these fields, the decisions of establishing the subprojects

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were of farsighted and played an important role in guiding and promoting the process. However, some parts such as Clean Production have not fulfilled the designed objectives because the situations have not been considered thoroughly in the designing period.

2. Achievement of Objective(s) and Outputs

2.1 Outcome/Achievement of Objective

Overall the project produced satisfactory results and had achieved most of its objectives. The project played an important catalyst role in promoting the capacity building of environmental protection management in China, its impact is significant. The specified activities and tasks that was supposed to be accomplished by subprojects upon realizing their implementation plans. Of the six original objectives, only one was accomplished in a limited way (improvement in interagency and inter-ministerial coordination on environmental matters). The other five objectives have been achieved in a satisfactory or highly satisfactory manner. There are five notable satisfactory output from the project in term of the national laws and regulations that were either a direct result of the subprojects or whose reports and recommendations were important in the deliberations and discussions that lead to them: (i) the clean production subproject (State Clean Production Act and the national/local cleaner production centers); (ii) the pollution levy study (revision of the national pollution levy structure and system – Regulations on the Pollution Effluent Levy System); (iii) study on pollution from town and village enterprises (national regulations on strengthening environmental protection measures for town and village enterprises); (iv) motor vehicle pollution study (national decision that phased out lead in gasoline by 2000 and began fuel quality improvement system based on EU standards); and, (v) two of the subprojects to improve the EA system (revised Environmental Assessment Law). Specific outputs of some of the subprojects are as follows:

1. Specialized Research: 79 programs, among which:

Environmental Information System - 6 programsChina’s Pollution Effluent Levy System - 17 programsChina’s Promotion Of Cleaner Production - 7 programsEnvironmental Education - 8 programsDevelopment Policy For Environmentally Sound Agriculture - 7 programsPollution Control on Town and Village Enterprises - 4 programsPlans for China’s Ecological Monitoring Network - 4 programsMotor Vehicle Pollution Control - 4 programsTechniques of Environmental Impact Assessment - 15program

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2. Training and Investigation, among which (number of trainees):

Domestic Training

Foreign Training

Environmental Information Management Technology 172 158Environmental Monitoring System 205 27Standardized Environmental Reference Materials NA 11Policies and Technology of cleaner Production 360 13Environmental Education 40 11Human Resources for Environmental Management 1,305 68Policy Research on Environmentally Sound Economy 60 4Design of Pollution Levy System 1,600 29Pollution Control for Town and village Enterprises NA 2Development Policy for Environmentally Sound Agriculture

80 1

Environmental Monitoring Technology 70 5Cleaner Production in Chemical Industries 105 5Motor Vehicle Pollution Control NA 17Environmental Impact Assessment Technology NA 21Environmental Impact Assessment Training 879 18

TOTAL 4,976 385

2.2 Outputs by Components

Part B: This part can be rated as “satisfactory”. In the component, 27 environmental information systems at provincial level were established. Information centers that met certain standards and environmental information system of easy transmission were established. Programs were also carried out for the capacity building of 9 important cities within Global Environmental Monitoring System (GEMS). The quality assurance system that met the requirements of GEMS and the system of data transmission were established. Programs were also carried out for the development of environmental standardized references and the testing technology research. Efforts were made for the promotion of cleaner production in china and CP audit research. The demonstration industrial project of cleaner production were carried out(there were seven actual demonstration enterprises); Attention had also been given to the environmental education and human resources development. Programs were carried out for the environmental faculty training in the institutions of higher learning, development strategy and curriculum development. Technical training programs were held to improve the professional quality of the management personnel in the environmental protection system; Programs were also carried out for the policy research on the environmentally sound economy and capacity building, the design and implementation of China pollution effluent levy system, pollution control policies for town and village enterprises, development policy for environmentally sound agriculture, the control standards and legal systems for the motor vehicle pollution

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control.

Environmental Information and Monitoring (B-1, B-3, B-9-1): Environmental information and monitoring are very fundamental to environmental management and policy. Environmental information system project was the largest systematic research and capacity building project in the Environmental Technical Assistance Project. Its main outputs were as follows: (i) its direct result was the establishment of SEPA Information Center and the establishment of 28 provincial level and 24 city level information centers; (ii) in accordance with the requirements of modern information technology, research had been conducted on the framework and operation of the information system. Great transformation was promoted for information sharing and to disseminate information into more industries; (iii) the project laid a very solid foundation for the follow-up unified planned establishment of nationwide environmental information systems.

In the respects of monitoring tools and management: (i) It promoted the monitoring and analyzing work on the development of standardized references for toxic, hard-analyzing organic pollutants and the industrial solid waste; (ii) The technique strategy and plans for china ecological monitoring network were formulated after the investigation and studies on agriculture ecology, sea ecology, landscape ecology and freshwater ecology; (iii) It laid a research foundation for the monitoring framework and operational mechanism in the upcoming 15 years in terms of laying out centers, monitoring techniques, and information system structure and investment scale.

Promotion of Cleaner Production In China(B-4): (i) The technical theory and audit procedures of CP were established. The CP audit was effectuated (10 industries and 219 enterprises were involved in merely the project implementation period). It marked the CP has been carried our nationwide; (ii) the establishment of State Cleaner Production Center was its direct result. (iii) China Cleaner Production Policy Research has been concluded successfully revolving around the issues in its management policy, technical policy, environmental policy and economic policy, putting forward that the development trend would be gradual transformation from compelled enforced policy into social pressure enforced policy; (iv) on the abovementioned foundation, Suggestions On Promotion of Cleaner Production was worked out.

Environmental Education and the Development of Human Resources for Environmental Management (B-5, B-6): The inadequate social environmental awareness is directly linked to the outdated environmental courses and inadequate environment education. The project made great improvements in the environmental education, including the status of environment protection in environmental education, the sustained development oriented toward the 21st century, and humanistic and social influence. (i) In environmental education, four textbooks – including A Course Book For Environmental Science, A practical Course Book for Environmental Management were published; (ii) in the development of human resources, 1,170 environmental management personnel and 135 local leaders were trained and systemic training materials were formulated, which promoted the implementation of training plan for 1,000 bureau heads from local

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environmental protection bureaus and 30,000 environmental management officials and professional staff.

Policies of Environmentally Sound Economy (B-7, B-8-1, B-8-2, B-8-3): To strengthen the policy research on environmentally sound economy is the requirement of the system reform of the market economy. On the one hand, it allows the economic factors to play a vital role in environmental policy; on the other hand, the system reform provides space for the policy to assume an economic character. Firstly, the pollution effluent levy system subproject was the largest policy research subproject in the SEPA’s TA component. The research combined the effluent quantity and sum quantity, adapted the fee-charging system to state taxation reform. The direct result of the research was the promulgation of Regulations on the Pollution Effluent Levy System. Secondly, the subproject on the pollution engendered from town and village enterprises and environmentally sound economy made people re-exam the weight of national economy to environment, the relationships between life and ecology.

Environmental Impact Assessment Training and Methodology Research: The main outcomes were: (i) the publicizing of Methods of Environmental Impact Assessment; (ii) the establishment of Institutional Appraisal System of National Environmental Impact Assessment; (iii) the promulgation of Environmental Impact Assessment Law.

Part C: This part can be rated as “satisfactory”. Research has been conducted on the technique methodology of environmental impact assessment; six studies have been effectuated, including economic development zone, dried wilderness, marine areas, river basins and nuclear power stations. Training programs for environmental assessment personnel have been implemented. All together 12 terms of training courses have been run with 879 trainees from 200 assessment units and management institutions all over China.

The follow-up part: This part can be rated as “satisfactory”. It was basically the purchase of monitoring equipments.

2.3 Institutional Development Impact(s)

Through the implementation of the project, environmental research and management in many local environmental institutions and several national level research centers that participated in the subproject had been strengthened. For local institutions development, the project directly or in directly promote the establishment of the provincial level environmental information centers in 27 provinces and the centers are now provide regular reports to the national level. Within SEPA, the Foreign Economic Cooperation Office (FECO) was set-up in 1990. In the preparation and implementation of the TA, FECO was responsible for overseeing all the subproject work plans, implementation schedules, detailed terms of reference, contracts and semi-annual progress report. In addition to this, FECO also handled most of the procurement, all of the disbursements and financial accounts of the project. FECO played a significant role in successful implementation of the TA. Now FECO becomes a very capable and professional supervisory and management

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unit and are actively implementing multilateral and bilateral international cooperation projects in environmental protection area.

3. Major Factors Affecting Implementation and Outcome

3.1 Factors Outside the Control of the Government or Implementing Agency

Positive: The World Bank organized supervision missions consists of World Bank officials, international and local consultants to supervise the project regularly, and it guaranteed the smooth implementation of the project. The international experts and consultants as well as the local experts and consultants were well qualified and their performances in the implementation of project were excellent.

Negative: Comparing the fast paced changes in office technology and scientific research equipment during the 1990’s, the time-consuming procurement procedure of the Bank had to see the equipment was superceded shortly after SEPA acquired them. Furthermore, some of the abnormal factors had not been considered when the project was designed. The change of the tariff policy of China in the end of 1994 altered the 20 commodities exempt from tariff into tariff non-exempted commodities, which generated a tariff debt of 4.65 million Yuan. Things could be better if such factors were taken into consideration in loan agreements and some risk-avoiding measures and protective articles were stipulated.

3.2 Factors Generally Subject to Government Control

Government paid great attention to the project implementation and management. The management mechanism from central government to provincial and sub-project units had been established. Related guarantee of on-lending was made by local government and Agencies of Finance. Sets of regulations and guidelines for project implementation had been developed. A group of high quality staff were appointed to project implementation and thus guaranteed efficient and high quality project implementation.

3.3 Factors Generally Subject to Implementing Agency Control

The World Bank developed project framework, Project Document, project implementation requirement. Project objectives, contents have been clarified. Implementation of each project should be based on the work plan and this provided a base to ensure the smoothly implementation and well management of the project. In national level, The Foreign Economic Leading Group of SEPA was responsible for policy-making and coordination, while the functional departments of SEPA were responsible for extending technical guidance. FECO/SEPA was responsible for the overseeing management of the preparation and implementation of the all subproject. The project management divisions, procurement division and finance divisions were set up within FECO and the system for project implementation management was also established. The Task Management system was adopted in the project management of project implementation, and the system was proved to be effective. With respect to the

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regulations, a series of regulations were developed in terms of organizing system, project daily management, finance, fund and disbursement management, such as Management of Procurement of Foreign and Local Consultant and Companies, Management of Organizing Groups for Abroad Visits, Management of Equipments Procurement, Regulations On Fund Disbursement and Reimbursement and etc. All those work above was very crucial for the smooth implementation of the project

3.4 Costs and Financing

The Bank financed the TA Project for SEPA part with 21.18 million XDR totally, and the actual use of the loan was 20.385 million XDR. After the completion of the project there was still 794,057 XDR left in the account unused.

4. Sustainability

4.1 Rationale for Sustainability Rating

The sustainability of the most of the activities supported by project is considered as “likely”, and some of than such as the institutional sustainability is especially good. For example, the Environmental Information Center established in 28 provinces with the assistance of the project are continuing to operate and expand their activities with local funding. Moreover, the circumstance with the continuing strength of the Chinese economy, with the government’s commitment to environmental protection in terms of policies, programs and budgets, and with the increasing public awareness of the environment issues ensured the sustainability. However, the investment component of the cleaner production subproject will not have been sustained under the increasingly market competitive pressure and some of the lessons could be learned from it.

4.2 Transition Arrangement to Regular Operations

SEPA was established long before the TA project assisted by the Bank and continue to receive priority government support, both in terms of institutional or administrative status and budget support. Almost all the other organizations who participated in the project are continuing to operate with reasonable local financing.

5. Bank and Borrower Performance

5.1 Bank

Lending: The Bank’s preparation was considered “satisfactory”. The World Bank developed project framework, project documents, work and financial plans as well as detailed terms of reference. The Bank also successfully arranged the participant of a wide of international consultant which was very crucial to the smooth and successful implementation of the project. Supervision: The Bank’s supervision was considered “highly satisfactory”. The World

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Bank organized missions consisting of World Bank officials, international and local consultants to supervise the project regularly during the project implementation. The missions established a very close and effective working relationship with SEPA, which was instrumental in resolving problems whenever they arose. The good supervision and effort had ensured the highly quality implementation of the project.

Overall Bank performance: The Bank’s performance was rated as “highly satisfactory” throughout the preparation and implementation. In the course of the implementation, in particular in the early part, the Bank has provided the urgently needed assistance, guidance and trainings with procurement contract and terms of reference preparation as well as several other technical issues. The recipient highly appreciated this assistance.

5.2 Borrower

Preparation: The Preparation of the project was rated as “satisfactory”. During stage of preparation, Chinese Government paid great attention to the project and provided necessary support for project preparation. Struggling with problems in the beginning, SEPA set up the mechanism for project preparation and the experts group to prepare a series of subproject and deal with a large number of implementation institutes. The targets of the preparation work had been reached very well.

Government implementation performance: The Government of Implementation performance was rated as “highly satisfactory”. With the support of the State Planning Committee, Ministry of Finance and provincial governments, SEPA successfully got the guarantees of the on-lending budgets for different subprojects, received continuing supports in terms of both financier and policies during the implementation of the project. Without those support, the objectives of the project would not have achieved.

Implementing Agency: The performance of the implementation agency was rated as “satisfactory”. Project Office has been established both in national and local level. High quality management staff has been allocated and technical expert team had also been established. FECO/SEPA cooperated closely with the Bank, the functional departments as well as subproject units successfully organized, managed and supervised the activities during the project implementation. The planned project activities have been completed satisfactorily.

Overall borrower performance: The overall performance of the borrower has been rated as “highly satisfactory”.

6. Lessons Learnt

This project was the first environmental technical assistance project in China, the outputs and experiences will be valuable for future’s projects.

Experiences: The project design is rational with remarkable achievements The projects

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achieved good results in implementation and the successful implementation has played an even important role in promoting the development of environmental protection. The important role that SEPA-the national level environmental management institute-should play finds full expression in the design and implementation of project (Parts B and C), including: (a) The project should be combined with legislative work and timely formulation of guidelines and policies; (b) Attention should be paid to improve management systematically so that management level of the whole system can be pushed to a new height; (c) The application of research results into practice was emphasized, almost all the subprojects covered pilot stage and extension; (d) Importance was also being attached to the factor of human resources exemplifying in the personnel training and drawing upon the foreign advanced experiences and management technology.

The design of project management system is rational with timely coordination. The projects and its subprojects are all subjected to the management of the sole management institute (FECO), and the mode of implementing under the guidance of functional departments of SEPA was adopted in response to the economic character and the obvious social results of the project policy. The implementation mode significantly facilitated the project progress and coordination, which can be proved in the fact that all the tasks specified in the subprojects were accomplished despite the lack of experiences in crediting, the constant adjustment of tariff policy, the significant fall of the interest rate and the rapid obsolescence of equipments purchased.

The project management core became stronger and accumulated many experiences and techniques in implementing loan project after organizing and implementing the Project.

Lessons Learned: The institutes of non-profits-seeking are not suitable for undertaking credit project. Due to the fund from the Bank for the capacity building was loans rather than grants, it had caused some problems. Loan repayment was taken into consideration in project design, and on-leading to units was demanded to be guaranteed by local government. From today’s perspective, this measure proved to be effective in terms of repayment. But the loan caused some of the subprojects units running into debt in different degrees. Many project units lacked financial support and their caution in investment affected the quality of project implementation. There existed great difficulty for project units without financial guarantee to pay off, such as projects assured by certain industry sectors and projects of self-borrowing and self-repaying. It was oblivious that the institutes of non-profits-seeking were not suitable for undertaking loan project for capacity building.

The rapid obsolescence of equipment arising from the fast paced changes in technology was underestimated, especially the rapid advancing IT equipment. The effects were especially grave when the approving procedures of the Bank were complex. The better approaches for this kind of procurement would be non-bidding, independent purchasing or permission to revise the designed or planned equipment list.

The demonstration projects of CP were in the category of industrial projects. They were

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concerned with adopting advanced manufacturing equipments or upgrading technology. Project loan usually was arranged in a long-term, from which two problems arose: (a) the interest rate (8-10%) was very high when the loan was arranged, the then fixed loan interest rate was correspondingly high (6-7%). But later on, the interest rate fell significantly, thus the pressure of loan repayment was considerably high; (b) The evaluation on the operational capacity and the periodic market change of the demonstration enterprises was inadequate. When the operation of the demonstration projects did not go well (so far one demonstration enterprise has gone bankrupt), the loan repayment became a problem. Although the abovementioned risks cannot be totally circumvented, it still showed the lack of experiences in project design.

The consideration of unusual risks in project design was lacking. The change of the tariff policy in the end of 1994 altered the 20 commodities exempt from tariff into tariff non-exempted commodities, which generated a tariff debt of 4.65 million Yuan. Things could be better if such factors were taken into consideration in loan agreements and some risk-avoiding measures and protective articles were stipulated.

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