Mr. L. Good -3- July 23, 2003

THE WORLD BANK/IFC/M.I.G.A.

OFFICE MEMORANDUM

DATE: July 23, 2003

TO: Mr. Leonard Good, CEO/Chairman, GEF

FROM: J. Warren Evans, GEF Executive Coordinator, for

EXTENSION: 82685

SUBJECT: PEOPLE’S REPUBLIC OF CHINA: Gansu and Xinjiang Pastoral Development Project

Submission for Final CEO Endorsement

  1. Please find attached the electronic file of the GEF Project Document for the above-mentioned project for your final review and endorsement. This project was approved for Work Program entry at the May 2003 Council meeting, under streamlined CEO endorsement procedures. The project is scheduled for Board presentation in early September 2003. We would appreciate receiving your response, so that we may finalize the Bank Board submission as soon as possible.
  2. The GEF Project Document is fully consistent with the objectives, scope, and overall cost of the proposal approved at the May 2003 Council meeting. GEFSEC, STAP, and Council comments have been addressed in the Project Document. How comments have been addressed is detailed in Annex 1 of this memo.
  3. Please let me know if you require any additional information to complete your review of the project document. We look forward to receiving your endorsement of the project for Bank Board approval.

Many thanks.

Attachments

GEF Project Document

Addendum to the Minutes of Negotiation (confirming project financing package)

cc: Messrs./Mmes. King, GEF PROGRAM COORDINATION (GEFSEC); Broadfield, Kaber (EASES); Goodland, Söderström, Reyes (EASRD); Aryal, Khanna, Wedderburn (ENV); ENVGC ISC, Regional Files

Mr. L. Good -3- July 23, 2003

Annex 1

GEF Council Comments and Task Team Responses

Comments from GEF Council / Response / Comment
Comments from Germany
Possible cooperation with the German Chinese Forestry programme might be checked out during further planning. / Cooperation in general is pursued with GTZ and the possibility of specific cooperation with the German forestry program will be taken into account during project implementation.
Comments from Sweden
In respect of climate change the objective carbon sequestration may be of limited relevance in this project. Rather, in order to understand the project’s potential contribution to reversing current global climate trends, it may be necessary to study and understand links between (projected positive) ecosystem changes and local, regional and global climate. In this context, changed hydrological regimes (with potentially improved infiltration rates, changes in evapotranspiration etc.) and changes in albedo (i.e., soil surface reflectance) with subsequent changes in heat absorption may be more important. Therefore, we suggest that carbon sequestration as a key performance indicator be replaced by a research effort to follow current international knowledge development in this area and define relevant indicators in relation to this. / Indicators on vegetation have been enhanced to address albedo as well as biomass and surface water behavior (linking measured vegetation cover with existing experimental data on infiltration, runoff, sediment loads under different pasture conditions). The GEF Monitoring Plan is included in Annex 16 of the GEF Project Document.
The comment on carbon sequestration is well taken, but the Task Team feel that carbon sequestration is an important objective of the project (and was endorsed in the STAP review), and it is therefore necessary to retain this as project indicator. The grasslands and pastures of the projects areas are capable of fixing significant amounts of carbon in the soil and vegetation cover, and improved grassland management will have local and global environmental benefits. The Task Team and Borrower (through the project’s applied research activities) will follow the international research and knowledge in this area and will apply any applicable results accordingly to this project).
It is desirable that clear mechanisms for the dissemination of lessons learnt be developed during the implementation phase of the project. / International knowledge dissemination is built in through the project’s partnerships with a number of organizations including ACIAR, ADB, CIDA, WBI, and USDA-ARS. A regional knowledge dissemination strategy is built in through WBI support of the project. In addition, the project will regularly report to PRC/ADB GEF Partnership on Land Degradation in Dryland Ecosystems. At a local and regional level, the project’s Communication Strategy will promote exchange ideas and knowledge sharing among the various relevant actors..
Comments from the United States
The sector and outcome indicators are measurable and good but not quantified. Some of the output indicators are quantified but most are not. / A revision of the indicators has been made (Annex 16). The Monitoring Plan uses a mix of quantitative and qualitative indicators, as is appropriate for a participatory project with social, environmental and economic objectives A baseline against which monitoring will take place will be established at the onset of the project.

STAP Reviewer Comments and Task Team Responses

Comments from STAP Reviewer / Response / Comments
A.  REVIEW OF THE DRAFT PROJECT APPRAISAL DOCUMENT
A1. How the proposed GEF activities blend in with other project activities:
The reviewer believes that the proposed GEF activities match the other project activities well. However, he suggests that, in view of the global impact of sand and dust storms originating from the project areas, the project should also consider air quality related activities. / The Task Team agrees with the reviewer's comments that the project will have positive impacts on sand/dust storms and air quality. The Task Team is aware of on-going international research on these issues (a collaborative program between China, Japan and the USA), and will take this into account during the implementation phase. Monitoring of air quality is currently conducted within both Gansu and Xinjiang provinces, and the project will not duplicate these efforts.
A2. The environmental sustainability of the project:
The sustainability of the project depends on whether all necessary conditions are met. The biggest necessary conditions might be the project beneficiaries demand and institutional arrangements for an integrated management approach. Necessary Government programs are in place to assist sustaining the project. There is also the risk of political stability in Western China. / Increased government awareness to address the national environmental challenges underlines the demand and commitment for these kind of projects. Governments of six western provinces/regions including Gansu and Xinjiang have been involved in preparing a Country Programming Framework (CPF) which addresses the changes needed in the institutional instruments to strengthen the enabling environment. The political risk will always be there, but it should not seriously hinder the implementation of the project.
A3. Innovativeness and replicability of the project:
The greatest innovative aspect of the project is its integrated nature. This project could help the relevant departments of provinces, central government ministries and international bodies to work together for promoting the land degradation program further. / The project is among seven demonstration projects proposed in the PRC/GEF partnership. It is a pilot project that can serve as a platform for different interested local, regional, provincial , national and international bodies to work together on controlling land degradation. It will provide experience that could be replicated and would be beneficial in other regions of similar ecosystem.
A4. The implementability of the proposed GEF activities:
Key for successful implementation of the grassland management component is proper institutional design and arrangements. / The umbrella for proper institutional design in environmental projects has been set by the government commitment to address environmental problems. The Task Team fully agrees with the reviewer and has paid great attention to the institutional arrangements of the project during its preparation. The Task Team would like to point out that continued emphasis on the institutions involved is indeed a key for success of this project. The governments of Gansu and Xinjiang are committed to provide all proper institutional flexibility to ensure success of the various activities.
Comments from STAP Reviewer / Response / Comments
A5. The level of stakeholder participation/ consultation in the project preparation:
Many stakeholders are involved in the project to different degrees. It is critical that all of the existing powerful stakeholders (e.g. MOF, SDPC, MOST), play a key role in the institutional arrangements. Also, it is important to keep the interest of the final beneficiaries, the herders and farmers. Appropriate market-based mechanisms need to be put in place to facilitate their participation during implementation. / The project will serve as a platform for a number of activities such as workshops, and conferences that would involve key stakeholders (e.g. MOA, MOF, SDPC, MOST), in addition to the International community. This strengthens the engagement and commitment of the different bodies. The project is community driven in design and implementation. Its development objective is to introduce sustainable grassland-based livestock production system that would improve rural income while preserving the natural resource base. Beneficiaries are aware of the tradeoff, and would be provided continuous technical assistance to increase their sense of ownership and keep them actively involved in all phases of the project.
A6. The level of technical assistance, training and capacity building:
The capacity building contribution of the project is even more important than the financing support. Institutional coordination and support is always weak in China and will need a lot of strengthening / Two of the project components seek to address this point. The Applied research, training and extension and the Project Management, monitoring and evaluation. In the former, herders and county staff will be trained in Integrated Ecosystem management. Environmental workshops will be held to strengthen local capacity . Moreover PMO s at the local, regional, and provincial level will receive training in project management and monitoring techniques.
A7. The monitoring and evaluation indicators for the GEF activities:
Project supervision should be facilitated by hiring qualified interpreters to directly communicate with herders and farmers, in order to understand their real situation. / The Task Team agrees. The Task Team has during preparation included specialists and interpreters able to communicate directly in local languages/dialects. This practice will continue during implementation.
B.  THE COMPATIBILITY OF THE STATED GLOBAL ENVIRONMENTAL OBJECTIVE WITH THE FOCAL AREA GOALS SET BY THE GEF
B1. Whether the project adheres to the operational strategies and focal areas set by GEF:
The project focuses on OP12, Integrated Ecosystem Management and relates to CBD, CCD and UNFCCC. It also links to other operational programs. / The project also contributes to OP4, Mountain Ecosystems, and OP13, Agro-biodiversity. OP13 is especially relevant to the project because the project area includes complex and unique trans-human livestock systems and practices that rely on plant genetic resources of forage legume and grass species that are widely used in temperate agriculture globally. Management of these resources will not only reduce herder poverty in project areas, but also contribute to the objective of the CBD to conserve agricultural biological diversity, in accordance with GOP guidance, as well as the objectives of the Convention to Combat Desertification (CCD).
Comments from STAP Reviewer / Response / Comments
B2. The linkages to GEF focal areas:
The project focuses on climate change and biodiversity. However, one should pay attention to the project's links to international waters in Xinjiang. / The project is not directly linked to international waters as it doesn't affect the share of water use from rivers crossing international borders (Ertix river in Xinjiang). Nevertheless, one could consider that there exists a potential link because of the integrated nature of the project with multiple focal areas.
C. THE ANTICIPATED GLOBAL ENVIRONMENTAL BENEFITS IN THE AREA OF INTERVENTION OF THE PROJECT
C1. The role of the different proposed GEF activities in achieving the global environmental objective of the project:
The obvious global environmental benefits of the project are biodiversity conservation and carbon sequestration. One should also mention the project's potential impact on sand and dust storms. / The Task Team agrees. Reducing sand and dust storms will be incorporated in the Incremental Cost Analysis matrix, as a global environmental benefit of the project.
C2. Whether the project complements other initiatives undertaken by the local government, the central government and/or other international implementing agencies:
The project complements and links to other existing projects, programs and plans at national, regional, and sub-regional levels. The reviewer mentions additional national and regional programs. / The project forms an integrate part of the various regional and local development programs. Resources will be coordinated and combined to obtain maximum effect. All relevant programs have been mentioned in the GEF Project document.
C3. The incremental cost analysis to determine how additional costs have been allocated to supplement actions beyond the national project objective to achieve the global objective:
The benefits (or foregone costs) of sand-and dust storm control and the cost of should be mentioned. / The Task Team agrees that controlling land degradation, reducing soil and wind erosion, and improving vegetation will help control the serious problem of sand and dust storm, which has regional and global environmental repercussions. Activities under project components (Grassland Management and Improvement, and Applied Research) will feed into this objective.