PROJECT Development Facility

Request for Pipeline Entry and PDF Block B Approval

Agency’s Project ID: 38660-01

GEFSEC Project ID: 2788

Country: People’s Republic of China

Project Title: Ningxia/Yinchuan Integrated Ecosystem Management Project

GEF Agency: Asian Development Bank (ADB)

Other Executing Agency(ies): Foreign Debt Management Office Ningxia Hui Autonomous Region

Duration: 5 years; PDFB 12 Months

GEF Focal Area: Multiple Focal Area/OP12

GEF Operational Program: OP12 under the PRC-GEF Partnership on Land Degradation in Dryland Ecosystems (in GEF4 proposed under OP15, OP3, OP4 & OP1)

GEF Strategic Priority: EM-1, SLM-1, SLM-2, BD-1, BD-2, BD-4, CB-1, CB-2,

Estimated Starting Date: August 2005

Estimated WP Entry Date: September 2006

Financing Plan (US$)
GEF Allocation
Project (estimated) / 10,000,000
Project Co-financing (estimated) / 200,000,000
PDF A*
PDF B** (estimated) / 350,000
PDF C

Sub-Total GEF PDF

/ 350,000
PDF Co-financing (estimated)
ADB / 500,000
National Contribution / 350,000
Others
Sub-Total PDF Co-financing: / 850,000
Total PDF Project Financing: / 1,200,000

* Indicate approval date of PDFA

** If supplemental, indicate amount and date of originally approved PDF

Record of endorsement on behalf of the Government:

Mr Wang Bing GEF Operational Focal Point / Date:
Ministry of Finance
This proposal has been prepared in accordance with GEF policies and procedures and meets the standards of the GEF Project Review Criteria for approval.

Daniele Ponzi
IA/ExA Coordinator /
Bruce Carrad
Project Contact Person
Date: 17 May 2005 / Tel. and email: (86 10) 66426601 ext 245


PART I - Project Concept

A – Summary

Ningxia Hui Autonomous Region (NHAR) contains some of the most internationally important assemblages of mountainous and arid and semi-arid dryland plants, animals and cultural sites, anywhere in the People’s Republic of China (PRC). These are presently under threat from increasing ecosystem degradation resulting from a combination of poverty, non-sustainable resource use and increasing human and animal populations. NHAR’s rural producers have to cope with low and erratic rainfall, water scarcity, fragile soils, and natural vegetation with low resilience to disturbance. Over 75% of the land area has been adversely affected by land degradation processes: (i) wind and water erosion: (ii) soil nutrient losses; (iii) water logging and salinization; (iv) river sedimentation; (v) surface and groundwater pollution; (vi) deforestation and grassland degradation; (vii) natural habitat and biodiversity loss; and (viii) indiscriminate excavation of building materials (sand and rock). People in Ningxia use on average 273 cubic meters of water per person per year, about a quarter of the "survival level" often used as an international standard. Declining and polluted water resources, large areas of marginal and low productivity land, natural ecosystems with a high susceptibility to degradation, and inadequate technical and market-oriented knowledge are all major constraints that limit the options for NHAR’s rural population to develop sustainable livelihoods. See Attachment 1.

In NHAR’s agriculture sector, the greatest economic and ecological returns will come from combating soil degradation, and raising productivity within the areas of high value agricultural lands. Modern scientific conservation agriculture practices are needed based on: (i) reduced or zero tillage; (ii) permanent soil cover (plant residues and/or cover crops); (iii) crop rotation; (iv) minimal in-field traffic; (v) integrated pest and plant nutrient management; and (vi) improved water utilization efficiency (irrigation and rainwater). NHAR has basic infrastructure to cater for tourism such as hotels, biodiversity conservation areas, and tourist sites with an excellent road system. If properly managed and based on the protection and restoration of the natural vegetation in an integrated ecosystem approach, this will bring in far more benefits and revenues to Ningxia than the promotion of high cost, low output, agricultural enterprises in the desert margins. The vision for ecotourism in Ningxia Province is the generation of revenue using a market- based approach for the management and conservation of the Ningxia ecosystems.

The goal of the full Project is to contribute to restoring the productive and protective functions of the ecosystem resources of the Helan Mountains/Yinchuan area.[1] The project purpose is to introduce an integrated ecosystem management (IEM) approach for the sustainable and commercial utilization of natural resources (soils, water, vegetation and biodiversity) for agriculture, livestock production and eco-tourism purposes. The expected outputs will include: (i) improved watershed protection and integrated water resources management; (ii) increased groundwater recharge; (iii) improved wildlife habitats; (iv) increased wildlife numbers; (v) international and domestic tourists to visit key wildlife habitats and cultural sites; (vi) profitable commercial farming using conservation agriculture principles and practices; (vii) improved livestock production in balance with the available feed resources; and (viii) improved institutional capacity to design and implement IEM projects.

The project is an integral part of the PRC-GEF Partnership on Land Degradation in Dryland Ecosystems, and was referred to in the Framework Brief that was approved by the GEF Council in October 2002 (see page 27, Framework Brief, for a description of the Ningxia Helan Mountain Yellow River IEM Project). The Partnership is governed by a Country Programming Framework (CPF) which covers a 10 year period (2003-2012).[2] The CPF supports a sequenced set of priority activities that: (i) strengthen the enabling environment and build institutional capacity for integrated approaches to combat land degradation; and (ii) demonstrate viable integrated ecosystem management models for widespread replication. To help finance GEF-eligible incremental costs of the $1.5 billion CPF, the GEF Council endorsed grants of up to $150 million for a series of demonstration projects over 10 years (2003-2012). The CPF is consistent with the GEF Operational Strategy, with Operational Program #12: Integrated Ecosystem Management (OP12), and with emerging GEF guidance on the programmatic approach as contained in relevant GEF documents.[3] The project is also consistent with OP15, OP3, OP4 and OP2. GEF’s publication “A Conceptual Design Tool for Exploiting Interlinkages between the Focal Areas of the GEF” is relevant in this regard. The Project meets the eligibility criteria set by the CPF. Attachment 2 shows the linkage between the Project and the CPF.

B - Country ownership

1.  Country Eligibility

The PRC is a party to (i) the Convention on Biological Diversity (CBD) (ratified 5 January 1993). Within the framework of the CBD, the PRC completed its Biodiversity Action Plan (BAP) in June 1994 that outlines a strategy and a set of strategic actions designed to conserve the country’s rich biodiversity. (ii) The Convention on Combating Desertification (CCD) (ratified 18 February 1997), the United Nations Framework Convention on Climate Change (UNFCCC) (ratified 5 January 1993), and the Kyoto Protocol (ratified 30 August 2002).

2.  Country Drivenness

The project concept is consistent with the priorities and national and regional plans of the Government of the PRC. Since ratification of the CCD the PRC has progressively increased its conservation efforts, and recognised the need to combat land degradation as a national development priority. The Ninth (1996 -2000) and Tenth Five-Year Plans (2001–2005) show the Government’s commitment to sustainable natural resource management, calling for (i) sustainable use of water resources; (ii) protection of land, forest, grassland, marine, and mineral resources; and (iii) improved environmental quality in rural and urban areas. In June 1999, the Government officially launched the Western Development Strategy (WDS) with the objectives of: (i) reducing economic disparities between the western and other regions and (ii) ensuring sustainable natural resource management. Also, the proposal to GEF is complementary and consistent with the PRC national priorities as identified in national and regional policies and legislation. The proposal also follows CBD guidance to GEF as stipulated in CBD Decisions I/2 and VII/20 refering to CBD Programme Priorities. (See Attachment 5 for full reference to proposal conformity to CBD decisions.)

Key government plans and programs showing commitment to tackling the problems of ecosystem degradation include (i) National Plan for Ecological Environment Construction (1998-2050); (ii) National Guidelines for Ecological Environment Protection (2000-2030); (iii) Desertification Prevention and Control Program; (iv) Program to Protect State Natural Forest Resources (includes the Helan Shan National Nature Reserve straddling the border between Ningxia and Inner Mongolia); (v) National Action Plan to Combat Desertification; (vi) Soil and Water Conservation Program; (vii) Biodiversity Conservation Action Plan; (viii) Grain for Green Program; etc.

NHAR has been identified as a national priority area for poverty reduction and ecological environment restoration due to its high levels of rural poverty and severe land degradation. Under the auspices of the WDS, NHAR has been included in several critical national programs, covering desertification control, small watershed management, natural forests protection, and grain for green. The NHAR government has also prioritized ecological restoration and environment protection in its Tenth Five Year Plan. The proposed project area is designated as one of the key areas for a regional comprehensive development strategy by the local government. In October 2004, the project was endorsed by the Ministry of Finance and National Development and Reform Commission as eligible for ADB lending.

The Government is implementing the PRC-GEF Partnership on Land Degradation in Dryland Ecosystems[4] (the Partnership) that was approved by the GEF Council in October 2002. The Capacity Building to Combat Land Degradation Project[5], supported by GEF and ADB, is currently being implemented, and NHAR is one of the six participating provinces/autonomous regions in the first phase (2003-2005). Through this capacity building project, NHAR is being assisted to develop its own provincial IEM strategy for land degradation control, as well as building its institutional capacity to design and implement investment projects for land degradation control. The proposed Project will be implemented as one of the demonstration projects under the Partnership, and is specifically sequenced after the Capacity Building to Combat Land Degradation Project, to utilise the multifocal benefits derived from the alignment of policy and institutional frameworks under an integrated ecosystem management approach.

The Capacity Building to Combat Land Degradation, is currently ongoing in both Shaanxi Province and Ningxia Hui Autonomous Region, as well as in Gansu Province, Xinjiang Uygur Autonomous Region, Inner Mongolia Autonomous Region and Qinghai Province, with a combined population of approximately 120 million people.[6] Implementation commenced in late 2004, and is proceeding well in creating the necessary pre-conditions for demonstration investments of the type proposed. Its initial focus is for each province to (i) prepare its own strategic plan for land degradation control, using an IEM approach; (ii) review the policy and legislative/regulatory conditions for land degradation control; (iii) strengthen national and provincial coordination and improve operational arrangements at provincial and county levels; (iv) support capacity for future IEM investment projects;[7] (v) examining ways of improving and coordinating existing monitoring and evaluation systems for land degradation; and (vi) supporting project implementation. An International Workshop on Integrated Ecosystem Management was held in Beijing, on 1-2 November 2004. Over 200 people participated in the workshop, including international and domestic key note speakers, as well as senior officials and other representatives from: (i) Central Government (including National Development and Reform Commission (NDRC), Ministry of Finance (MOF), State Environment Protection Agency (SEPA), Ministry of Water Resources (MWR), State Forestry Administration (SFA), Ministry of Agriculture (MOA), Ministry of Poverty Alleviation (MPA) Ministry of Science and Technology (MOST), Ministry of Land and Resources (MLR), Working Committee for Legislation of National People’s Congress, Legislative Office of State Council) and Provincial Government Agencies; (ii) international development and donor agencies (including GEF, ADB, World Bank, EU, UNDP, FAO, DFID, JICA, AusAID, CIDA etc); (iii) international and domestic NGOs; and (iv) a number of private sector domestic and international companies with offices in the PRC. The aim of the workshop was to introduce to PRC’s line government agencies, and selected provincial governments, the concepts and principles of IEM and to promote a mutual understanding as to how the approach could contribute to addressing the key problems, and root causes of land degradation within the drylands. Editing of the workshop proceedings is currently underway and should be completed by the end of June 2005. See Attachment 3.

C – Program and Policy Conformity

3.  Program Designation and Conformity

The project is consistent with the GEF Operational Strategy and specifically Operational Program 12 – Integrated Ecosystem Management, OP15- Sustainable Land Degradation, OP3 – Forest Ecosystems, OP4 – Mountain Ecosystems and OP2 - Coastal, Marine, and Freshwater Ecosystems. The project is consistent with the GEF programmatic approach that seeks to secure a larger and sustained impact on the global environment, through integrating and mainstreaming global environmental objectives into local government development strategies and plans, through partnership with local government stakeholder institutions.

Restoring the productive and protective functions of the ecosystems within the project area will yield multiple benefits at local, NHAR, national and global levels. In conformity with OP12 these benefits will cover multiple focal areas, notably biodiversity preservation, carbon sequestration, land degradation control, sustainable land management, and the promotion of an integrated approach to ecosystem management. Trade-offs between global environmental benefits and local sustainable livelihoods will only occur in the short term. Long-term benefits from a restored ecosystem, will benefit local inhabitants, as they act as custodians to restored ecosystems able to generate sustainable incomes through eco-tourism. A long-term perspective will generate win/win situations for both global environmental objectives and local livelihoods. Global environmental benefits will be derived from the project through the complementary restoration of the productive and protective functions of degraded dryland ecosystems. This will be achived through;

(i)  Conservation and sustainable use of biological diversity, as well as equitable sharing of benefits arising from biodiversity use. Activities will be directed at restoring and protecting areas of natural habitat so as to enhance biodiversity within the three ecosystem zones of the project area. Commercialisation of this biodiversity through the development of environmentally sensitive tourism will add value to the wildlife and plant resources of the project area and provide sustainable job opportunities for many of the project beneficiaries.

(ii)  Reduction of net emissions and increased storage of greenhouse gasses in terrestrial and aquatic ecosystems. Protection and restoration of areas of natural vegetation within the Helan Mountains and the Helan Mountain footslopes zones will make a positive contribution to the problem of greenhouse gasses through increased carbon sequestration in the increased vegetative cover. Similarly, a positive contribution can be expected from the reed beds, and other vegetation, to be planted as part of the rehabilitation of the wetlands areas. The promotion of conservation agriculture practices within the central alluvial plain can be expected to reduce carbon emissions through a reduction in the amount of fuel required for cultivation, as well as increasing carbon sequestration in the soil through the build up of organic matter above and below the soil surface.[8]