Document of The World Bankdocuments.worldbank.org/curated/en/423381466999754735/... · 2016-07-15 · i document of the world bank report no: icr00003526 implementation completion

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Document of The World Bank

Report No: ICR00003526

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-79090)

ON A

LOAN

IN THE AMOUNT OF US$80.0 MILLION

TO THE

PEOPLE’S REPUBLIC OF CHINA

FOR A

HENAN ECOLOGICAL LIVESTOCK DEVELOPMENT PROJECT

June 30, 2016

Agriculture Global Practice East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 31, 2015)

Currency Unit = RMB

RMB1.00 = US$0.15

US$1.00 = RMB6.49

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AHB Animal Husbandry Bureau ISR Implementation Status and Results

CDM Bank Policy M&E Monitoring and Evaluation

CFAA Country Financial Accountability A

MIS Management Information System

COD Chemical Oxygen Demand MTR Mid-term Review

CPMO County Project Management Office NPV Net Present Value

DO Development Objective O&M Operation and Maintenance

EIA Environmental Impact Assessment OP Operational Policy

EMMP Environmental Management and Monitoring Plan

PAD Project Appraisal Document

EPB Environmental Protection Bureau PCN Project Concept Note

ERR Economic Rate of Return PDO Project Development Objective

FB Finance Bureau PIM Project Information Manual

FRR Financial Rate of Return PLG Project Leading Group

FM Financial Management PMO Project Management Office

GEF Global Environment Facility PTEG Project Technical Expert Group

GIS Geographic Information System RMB Ren Min Bi

GOC Government of China RPF Policy Framework for Resettlement and Land Acquisition

IBRD International Bank for Reconstruction and Development (part of World Bank Group)

SEPA State Environmental Protection Agency

ICR Implementation Completion Results Report SIA Social Impact Assessment

IP Implementation Progress SRRI Social and Resettlement Research Institute of North China University of Water Resources and Electric Power

ISDS Integrated Safeguards Data Sheet WB World Bank

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Regional Vice President: Victoria Kwakwa, EAPVP

Country Director: Bert Hofman, EACCF

Global Practice Director: Juergen Voegele, GFADR

Global Practice Manager: Nathan M. Belete, GFADR

Project Team Leader: Paavo Eliste, GFADR

ICR Team Leader: Hanane Ahmed, GFADR

ICR Primary Author: Weiguo Zhou, Consultant

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CHINA Henan Ecological Livestock Development Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs

H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ........................................................................... 1

2. Key Factors Affecting Implementation and Outcomes .......................................................................... 5

3. Assessment of Outcomes ...................................................................................................................... 14

4. Assessment of Risk to Development Outcome ..................................................................................... 21

5. Assessment of Bank and Borrower Performance ................................................................................. 22

6. Lessons Learned.................................................................................................................................... 24

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................................... 25

Annex 1. Project Costs and Financing ...................................................................................................... 26

Annex 2. Outputs by Component.............................................................................................................. 28

Annex 3. Economic and Financial Analysis ............................................................................................. 33

Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................................... 40

Annex 5. Beneficiary Survey Results ....................................................................................................... 42

Annex 6. Stakeholder Workshop Report and Results ............................................................................... 43

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................................. 44

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .................................................. 51

Annex 9. List of Supporting Documents .................................................................................................. 52

Annex 10. Conclusions of SIA and EIA Completion Reports.................................................................. 53

Map

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A. Basic Information

Country: China Project Name: Henan Ecological Livestock Development Project

Project ID: P100455 L/C/TF Number(s): IBRD-79090

ICR Date: 06/30/2016 ICR Type: Core ICR

Lending Instrument: SIL Borrower: MINISTRY OF FINANCE

Original Total Commitment:

USD 80.00M Disbursed Amount: USD 78.57M

Revised Amount: USD 80.00M

Environmental Category: B

Implementing Agencies: Henan Provincial Bureau of Animal Husbandry, Henan Province, China

Co-financiers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 12/12/2008 Effectiveness: 09/01/2010 09/01/2010

Appraisal: 11/03/2009 Restructuring: N/A N/A

Approval: 05/27/2010 Mid-term Review: 06/03/2013 11/25/2013

Closing: 12/31/2015 12/31/2015

C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies:

Moderately Satisfactory

Overall Bank Performance:

Satisfactory Overall Borrower Performance:

Satisfactory

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C.3 Quality at Entry and Implementation Performance IndicatorsImplementation

Performance Indicators

QAG Assessments (if any)

Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA): None

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes Original Actual

Sector Code (as % of total Bank financing)

Animal Production 100 100

Theme Code (as % of total Bank financing)

Pollution management and environmental health 67 66

Other rural development 33 34

E. Bank Staff Positions At ICR At Approval

Vice President: Victoria Kwakwa James W. Adams

Country Director: Bert Hofman Klaus Rohland

Practice Manager: Nathan M. Belete Ede Jorge Ijjasz-Vasquez, Magda Lovei

Project Team Leader: Paavo Eliste Gayane Minasyan

ICR Team Leader: Hanane Ahmed

ICR Primary Author: Weiguo Zhou

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)The Project Development Objective was to improve environmental health management practices on the targeted livestock farms in the Yellow River Belt in Henan Province of the Borrower.

Revised Project Development Objectives (as approved by original approving authority) None

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(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: Improved capacity of public institutions (county, municipality and provincial levels) to facilitate environmentally sound livestock industry development (Text).

Value (quantitative or Qualitative)

N/A N/A N/A

A survey was conducted to assess the current capacity and capacity building of public institutions at provincial, municipal, and county levels which resulted a B rating (satisfactory). See paragraph 3.2.3 for details.

Date achieved 09/30/2010 12/31/2015 11/25/2013 12/31/2015 Comments (incl. % achievement)

This was achieved.

Indicator 2: Nutrient output reduction on project farms (measured through animal park nutrient balance accounting) (percentage).


0.00 15.00 N/A 18.74


The original target value was exceeded by about 3.74 percentage points.

Indicator 3: Percentage of people in villages surrounding the livestock farms perceive that the quality of their living environment has improved due to the project (percentage).


0.00 60.00 N/A 95.61


The original target value was exceeded by about 35.6 percentage points.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: Number of training days for policy and decision makers at different government levels on environmental impacts of the livestock sector and related mitigation measures (Number of days).


0.00 2,800.00 N/A 3,576.00

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The original target value was exceeded by 776 days or about 27.7 percentage points.

Indicator 2: Number of training days for Animal Husbandry Bureau staff to undertake spatial planning of livestock sector development (Number of days).


0.00 1,100.00 N/A 1,304.00


The original target value was over achieved by 204 days or about 18.5 percentage points.

Indicator 3: Number of training days for Animal Husbandry and Environmental Protection Bureau staff to monitor and evaluate livestock sector impact on the environment (Number of days).


0.00 1,200.00 N/A 1,234.00


The original target value was exceeded by 34 days or about 3 percentage points.

Indicator 4: Number of farm technicians' training days in improved livestock production and waste management methods (Number of days).


0.00 60,000.00 N/A 76,105.00


The original target value was over achieved by 16,105 days or about 26.8 percentage points.

Indicator 5: Farms operating and maintaining improved livestock production and waste management infrastructure (percentage).


0.00 80.00 N/A 100.00


This was significant achievement made by 100 percent of project farms/parks.

Indicator 6: Farms that meet the required livestock waste management/environmental regulations (percentage). Value (quantitative or Qualitative)

0.00 60.00 N/A 98.00


This was significant achievement made by almost 100 percent of project farms/parks.

Indicator 7: Reduction of waste produced per unit of livestock product on the project farms (percentage). Value (quantitative or Qualitative)

0.00 5.00 N/A 28.98


Waste reduction achieved on project farms/parks was significant which was almost six times the original target value.

Indicator 8: Milk yield per dairy cow on project farms (kg/year). Value 4,000.00 5,400.00 N/A 5,574.00

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(quantitative or Qualitative) Date achieved 09/30/2010 12/31/2015 11/25/2013 12/31/2015

Comments (incl. % achievement)

The original target value was exceeded by 174 kg/year or about 3.2 percentage points.

Indicator 9: Fattening period for beef cattle (Number of days). Value (quantitative or Qualitative)

120.00 100.00 N/A 97.40


The original target value was exceeded by 2.6 days or about 2.6 percentage points.

Indicator 10: Fattening period for pigs (Number of days). Value (quantitative or Qualitative)

180.00 160.00 N/A 138.90


The original target value was exceeded by 21.1 days or about 13.2 percentage points.

Indicator 11: Livestock morbidity decrease on project farms (percentage). Value (quantitative or Qualitative)

N/A 15.00 N/A 31.80


The original target was exceeded by 16.8 percentage points.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual Disbursements

(USD millions) 1 06/27/2011 Satisfactory Satisfactory 8.00

2 03/01/2012 Satisfactory Satisfactory 8.00

3 03/01/2013 Moderately Satisfactory Moderately Satisfactory 11.91


5 12/19/2013 Moderately Satisfactory Moderately Unsatisfactory 20.86





H. Restructuring (if any) None.

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1.1.1 Country and Sector Background. Against the background of unprecedented economic growth, the social and environmental challenges faced by China were closely interconnected. Environmental pollution was degrading the resource base and reducing its productivity for people whose livelihoods depended on it. The Government of China (GOC) recognized this in the 11th Five-Year Plan (2006-2010) which had aimed to sustain the steady development of China’s “socialist market economy” while achieving five important balances 1 including the balance between people and the environment. Sustainable development and environmental management was a main theme in the 12th Five-Year Plan.

1.1.2 Over 600 million people in China, at the time of project preparation, still depended on agriculture for their livelihoods. Therefore, GOC strongly supported agricultural intensification and “industrialization” through various programs and policies as a means to increase farmers’ incomes. Expansion of livestock production was seen in this context as an important generator of rural income. On the other hand, its rapid expansion also posed a threat to the environment and public health when preventive and mitigating measures were not taken.

1.1.3 Henan Province, one of the most densely populated provinces in China with close to 100 million people also had one of the highest densities of livestock, ranking in third place in the country. Output of meat (pork, beef, mutton and poultry) and milk in 2010 reached 6.38 million ton and 3.08 million ton ranking in third and fourth place respectively in the country2. Livestock-sourced income contributed about half the local farmer’s total annual income. In parallel, the environmental pressure from livestock had increased significantly, contributing to increasing levels of agricultural non-point source pollution3 in form of nutrient loads in soil and water, particularly in the Yellow River Basin.

1.1.4 The GOC has been paying increasing attention to environmental issues, and was aware of the environmental and public health challenges of livestock production. National standards for nutrient discharge and manure handling and treatment were revised to provide a guiding framework for the project, promoting sustainability. At the same time, significant challenges existed at the local level in implementing standards and regulations already in place. Enforcement was lacking and the local authorities’ capacity to guide environmentally sustainable spatial planning of livestock activities and monitoring of impacts was weak.

1.1.5 Henan Province was attempting to address the above issues in the context of their broader objective to develop a sustainable livestock industry. One of Henan’s strategies to achieve economic and environmental sustainability of the sector was to restructure smallholder dairy and

1 Between rural and urban development, interior and coastal development, economic and social development, people and environment, and internal development and relations with the rest of the world. 2 Source: Henan Provincial 12th Five-Year Development Plan for Livestock Development. 3 The First Henan Pollution Source Survey Bulletin issued by Henan Provincial People’s Government in October 2010 reported that in 2007 agricultural sources contributed 54.5%, 72.4% and 77.8% of Henan’s gross COD, TN, and TP discharges, respectively. From amongst the three agricultural sources (crop, livestock and aquaculture), the Bulletin further estimated that livestock production alone contributed 99.3%, 48.3% and 71.4% of COD, TN and TP releases, respectively.

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cattle raising which was largely concentrated in the Yellow River Basin. Such production was traditionally and still largely carried out in backyard farm type of operations with low productivity, making environmental monitoring and enforcement difficult. Henan now encourages cattle production in “ecologically standardized” livestock farms and parks4 that would allow economies of scale in production, environmental management, and animal health.

1.1.6 Rationale for Bank Involvement. The World Bank has been a significant financier of livestock related projects globally. Bank financing of livestock projects started in the 1970s covering the entire supply chain including investments in on-farm nutrient management of intensive production units. The Bank also has extensive experience in upgrading eco-systems through improved pollution control and waste management. The project was built on the experience gained from recent Bank managed projects completed or under implementation in the East Asia and Pacific region with similar objectives. These included the Global Environment Facility (GEF) funded Regional Livestock Waste Management Project carried out in China, Vietnam and Thailand, as well as Carbon Development Mechanism carbon finance projects for treatment of manure and reduction of green-house gases.

1.1.7 The main objectives of the Bank’s involvement in the project were to: (a) provide expertise and share experiences on how to address the institutional challenges for local governments to guide environmentally sustainable planning of livestock activities and manage livestock waste; and (b) facilitate transfer of national and international best practices and technological alternatives and innovations in livestock waste management, cattle waste in particular.

1.1.8 The project was consistent with the Bank’s Country Partnership Strategy (2006-2010) for China. It aimed to manage resource scarcity and environmental challenges by contributing to improved land management and protection of global environmental goods. Overall, the project would contribute to the development of social infrastructure and enhancement of rural livelihoods - in line with the objectives of the Government’s 11th Five-Year Plan. Finally, the project would contribute to Henan’s overall goal of increasing farmers’ incomes through sustainable development of animal husbandry, which included reducing the environmental pollution from livestock production in the Yellow River Belt in Henan Province.

1.2 Original Project Development Objectives (PDO) and Key Indicators

1.2.1 Project Development Objective. The project development objective was to: improve environmental health management practices5 on the targeted livestock farms in the Yellow River Belt in Henan Province of the Borrower.

1.2.2 Key Indicators of Project Performance. The project had three main PDO indicators:

(a) Improved capacity of public institutions (county, municipality and provincial levels) to facilitate environmentally sound livestock industry development;

4 Livestock parks are farms that receive animals from individual small livestock households into the same concentrated area under a variety of ownership and management structures e.g. (a) government provides land, farmers build the sheds; (b) one owner rents the sheds to farmers; (c) farmers form a cooperative; etc. 5 Livestock production management practices that generate: (a) reduction of environmental pollution from the livestock production systems in the Yellow River Basin; and (b) cleaner village environment with improved livestock waste management.

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(b) Nutrient output reduction on project farms (measured through animal park nutrient balance accounting); and

(c) People in villages surrounding the livestock farms perceive that the quality of their living environment has improved due to the project.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 1.3.1 Neither the PDO nor its indicators were revised during project implementation. 1.4 Main Beneficiaries 1.4.1 Project’s main beneficiaries comprised the following target groups:

(a) Local governments and their agencies. The participating local governments and their agencies, Animal Husbandry Bureaus (AHB), Environmental Protection Bureaus (EPB), Finance Bureaus (FB) and Project Management Offices (PMO) in particular, at county (31 counties/cities), municipal (8 municipalities) and provincial levels improved their technical understanding and institutional management capacity of on-farm management of livestock waste processes. They also benefited from enhanced capacities and skills in introducing both technically sound and economically viable project designing; in supporting efficient project implementation; and in regulating and monitoring a large scale demonstration project.

(b) Project farms/parks. A total of 468 small scale and medium sized livestock farms/parks benefited from waste minimization, animal health, waste management and waste treatment, and from demonstration of ecologically standardized livestock farming through provision of civil works, equipment and technical assistance for construction design and supervision.

(c) Various other beneficiaries. These beneficiaries included incremental number of employees of the project farms/parks, people in villages surrounding the project farms/parks; professional associations in project area; farmers benefited from land leasing and provision of livestock fodder to project farms/parks; users of project produced organic fertilizers; contractors, equipment and service providers for construction and operation of the project farms/parks; etc.

1.5 Original Components (as approved) 1.5.1 The project comprised three components and was implemented in 31 counties of 8 municipalities in Henan province over a period of five and a half years:

(a) Component 1: Institutional Strengthening, Training and Technical Support (Base Cost: US$3.4 million). The objective of this component was to improve the technical understanding and institutional management capacity at the Province, municipal and county levels of on-farm management of livestock waste processes through, inter alia, strengthening of public institutions, provision of training, technical assistance and

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management support to livestock farms in the areas of animal health and waste management, carrying out awareness raising activities and establishment of a Geographic Information System (GIS). Activities were financed through two subcomponents: (a) Strengthening of Public Institutions; and (b) Farmer Training, Technical and Farm Management Support. The two sub-components included technical assistance, technical training, awareness raising, establishment of a GIS, and investment in technical support systems for animal health management.

(b) Component 2: Environmental Management in Existing and New Farms and Livestock Parks (Base Cost: US$145.1 million). This component focused on constructing and equipping facilities in small scale and medium sized beneficiary farms/parks for waste minimization, animal health, waste management and waste treatment, and for demonstrating ecologically standardized livestock farming in select livestock farms/parks, including provision of civil works, equipment and technical assistance for construction design and supervision. The component comprised the following five subcomponents: (a) Waste Minimization and Animal Health Infrastructure; (b) Waste Management Infrastructure; (c) Waste Treatment Infrastructure; (d) Production Infrastructure Support to New Livestock Parks; and (e) Construction Design and Supervision. Financing was provided for civil works and equipment to improve waste management and farm productivity.

(c) Component 3: Project Management, and Monitoring and Evaluation (Base Cost: US$3.8 million). This component supported strengthening of institutional capacity at the Province, municipal and county levels to implement the project and to establish and implement an effective monitoring and evaluation system through, inter alia, provision of equipment, materials, vehicles, training and technical assistance, including establishment of a computerized Management Information System (MIS). This component consisted of the following five subcomponents: (a) Equipment and Materials; (b) Training; (c) Technical Assistance; (d) Monitoring and Evaluation; and (e) PMO Management.

1.6 Revised Components

1.6.1 The project components were not revised.

1.7 Other significant changes

1.7.1 Two significant changes were made as a result of the Mid-term Review (MTR) mission carried out in November 2013 i.e. (a) unit cost of each farm model package was revised upwards by 14.9 percent for reimbursement purposes effective December 1, 2013; and (b) target estimated number of project farms/parks was reduced from 5906 as in the PAD to 456. These changes were deemed necessary because of a sharp cost increase in farm model package (inflation-adjusted leading to increased labor cost and higher material/goods prices) and the significant devaluation

6According to the PAD, the number of project farms/parks to be targeted by the project was estimated at “about 500-600” and the MTR/6th Supervision Mission Aide Memoire states: “The original PAD estimated the number of farms to be supported by the project to be 590”.

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of the US$ against RMB (depreciated by over 10 percent from 6.8 to 6.1) resulting in much reduced total Bank loan amount in RMB terms.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

2.1.1 Soundness of background analysis: Project preparation was carried out in a full participatory process and relied on extensive experience and lessons learned from other projects. Based on a comprehensive review of existing animal waste management technologies both in China and internationally, the most cost effective models in terms of reaching the project objective were adopted. Other experiences which have been well considered during project preparation included aspects in technical design, institutional arrangement, capacity building and training, project interventions to achieve public goods benefits while yielding tangible private benefits for key stakeholders, tackling counterpart funding issue and establishment of a well-developed monitoring and evaluation (M&E) system.

2.1.2 Assessment of project design: This project was the first livestock project at such a massive scale focusing on ecological livestock development ever designed and implemented in Henan and China. Project candidate farms/parks were selected in accordance with detailed and well-developed selection criteria which included financial, technical, EPB certification and ownership criteria. Various awareness raising campaigns were organized in all project counties. The selection criteria and application procedures were widely distributed and publicized in hard copies, through awareness raising campaigns and local media. Together with lists of candidate farms/parks (including proposed Bank loan amount) were published on Livestock Information Website at provincial, municipal and county levels. These dealings effectively ensured openness, transparency and fairness in selection of project farms/parks.

2.1.3 The project design included measures to improve the capacity of local government agencies at various levels e.g. AHBs and EPBs were to manage the sustainable development of the livestock sector and in monitoring its impact on the environment, and include an Institutional Strengthening, Training and Technical Support component (not in the government’s original project proposal). This component facilitated the local government agencies to play a critical role in the overall planning of the livestock industry and regulating its environment management practices. An institutional assessment was carried out as part of project preparation, and the project’s capacity building activities were designed on the basis of this assessment.

2.1.4 The design of both Outcome Indicators and Intermediate Outcome Indicators could have been improved as achievement of some of such indicators, Outcome Indicators 1 and 2, Intermediate Outcome Indicators 7 and 11 in particular, were difficult to assess. See paragraphs 3.2.3 (d), 3.2.4, and 3.2.6 for more discussion.

2.1.5 Implementing arrangements: The project management structure included the Project Leading Group (PLG), Project Management Office (PMO) and Project Technical Expert Group (PTEG). The PLGs were established at the provincial, municipality, and county levels, with the responsibility of providing guidance on project implementation, organize provincial level counterpart funds, and enlist support of other relevant agencies. The PMO was established in the Henan Animal Husbandry Bureau and was responsible for the overall management of the project.

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Municipality and County Project Management offices were established within the Animal Husbandry Bureaus and they were responsible for project implementation in their respective municipalities/counties. The PTEG was established at the provincial level and its main function was to provide technical advisory services and training, review applied research proposals, and participate in project monitoring, supervision and evaluation.

2.1.6 Government Commitment: Government’s strong commitment ensured a satisfactory project design of good quality in particular (a) government’s full support to a public-goods oriented ecological livestock project and (b) government’s decision to undertake full joint obligation by provincial, municipal and county governments for Bank loan repayment and financial charges. In particular, 70% of loan repayments are borne by the provincial and municipal governments. These commitments provided a solid foundation for preparation of an ambitious yet feasible project of such nature.

2.1.7 Risk assessment. The PAD rated the overall risk as “Moderate”. The only major risk which was not fully anticipated was the sharp depreciation of US$ against RMB during the project implementation. The risks and corresponding mitigation measures are summarized below.

Table 1: Risk Mitigation Matrix

Risk to Outcomes Risk Mitigation Measure

Risk Rating at Project

Preparation

Risk Rating at Project Closing

Inadequate high level support at the provincial level to establish sustainable institutional processes for coordinated management of livestock related environmental pollution.

Component 1 activities mitigated this. The PLG’s coordination, involvement of key line agencies (PDRC, PDOF, PDOA etc.) and systematic reporting by the Bank and PPMO ensured high level support at the provincial level.

Moderate Low

Training quality provided is low and the impact of the training is weak.

Project provided funding to develop training curriculum and training of trainers. The training program was offered in various forms and adjusted based on feedbacks of trainees.

Substantial Moderate

The participating farmers’ organizations are top down organized groups as opposed to “autonomous” farmer –established cooperatives with limited capacity for smooth operation.

Technical assistance and training were provided to support the formation and smooth operation of farmers’ organizations. During project implementation, all new livestock farms under the project support were agreed to be cooperatives and over 41% of the total project supported farms/parks were cooperatives.

Substantial Moderate

Not enough subsidy (=grant) provided to each participating farm to enable them to achieve the minimum level of investment required to meet the project’s environmental objectives.

Bank funding (subsidy=grant) was disbursed based on agreed farm concept design and actual contract amount for each participating farm which ensured project funding in adequate amount.

Moderate Low

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Risk to Outcomes Risk Mitigation Measure

Risk Rating at Project

Preparation

Risk Rating at Project Closing

Participating farms cannot come up with the required amounts of counterpart funding in a timely manner.

Having adequate amount of counterpart funds is one of beneficiary selection criteria. In addition, the project provided a 30% advance payment of the Bank loan to each participating farm and the PPMO coordinated domestic loans to ease counterpart funding constraint of participating farms.

Moderate Low

2.2 Implementation 2.2.1. Implementation progress was Satisfactory from 2011 to 2012, Moderately Satisfactory on the third and fourth supervision missions, Moderately Unsatisfactory on the fifth supervision mission, and Moderately Satisfactory from the sixth supervision mission to project closure as reflected in the final ISR. Consequently, this project was classified as a “problem project”7. As this project was implemented in 31 counties, and was the first of its kind focusing on ecological livestock development in the Henan Province and China, project implementation encountered enormous challenges especially in earlier years of implementation. Overall these were: lack of experience of some PMOs working on Bank-financed projects (close to 40% of the total project counties were new to the World Bank), complex and high environmental assessment costs for farms (which were excessive as the project farms were mostly small businesses but were treated and charged for such assessment as other large companies), financial constraints of certain candidate farms/parks (limited incomes due largely to at-or-below-cost market prices of livestock products during these years), slow provision of counterpart funds from some counties and municipalities (with zero amount of counterpart funds released from 8 counties as of May 2013). The learning curve of both the local governments and project farms/parks to implement a successful project lasted much longer than expected. Both physical project implementation progress and Bank loan disbursement were slow and most key ratings8 had been at “moderately satisfactory” status as by November 2014.

2.2.2. Despite the implementation issues regarding the number of farms being supported by the project and number of people trained, the MTR mission and PMO concluded that, with the adoption of the corrective measures the current PDO can be achieved in the lifetime of the project. The recommended waste management methods generating the expected results, and the current design of the project components adequately supported the PDO. Despite the challenges, all component activities as designed have been implemented. All target values specified in the Results Framework and Monitoring matrix in the PAD were either achieved or exceeded. The overall implementation quality of construction works of farm parks has been generally satisfactory throughout project implementation despite some deficiencies identified during supervision

7 Such projects are those that show whether the operation was rated less than satisfactory for PDO/GEO or Implementation Performance (IP) ratings in the ISR at any time during implementation”. 8 Both physical project implementation progress and Bank loan disbursement were at less than 50% after more than four years of project implementation by November 27, 2014. Ratings for PDO, implementation progress, components, financial management, project management, counterpart funding, procurement and M&E have been mostly “moderately satisfactory” with safeguard compliance as an exception which has been consistently rated “satisfactory” since May 2012.

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missions which were remedied by timely actions taken as documented in various mission Aide Memoires. The project implementation was completed at the original closing date.

2.2.3. Several factors positively impacted implementation:

(a) Provincial AHB leaders exerted effort to draw the attention of local leaders, e.g., organized meetings for PMOs leaders, and circulated documents to remind the counties who lagged behind to speed up implementation. Each Bank supervision mission visited the counties which achieved relatively slow project progress to provide necessary support to the project.

(b) During the fifth supervision mission in May 2013, the Bank mission approved the PPMO’s proposal to drop the 5,000-head pig bio-fermentation bed farm model developed during project preparation, and to add a new farm model i.e. 10,000-head pig waste collection and treatment model.

(c) A project Mid-term Review (MTR)/sixth supervision mission was conducted in November 2013 and two specific changes were agreed between the Bank team and the PPMO i.e. (i) unit cost of each farm model package was revised upwards by 14.9 percent 9 for disbursement purposes effective on December 1, 2013; and (ii) target estimated number of project farms/parks was reduced from 590 as in the PAD to 456. These adjustments were deemed necessary because of a sharp cost increase in farm model package (inflation-adjusted leading to increased labor cost and higher material/goods prices) and the significant devaluation of the US$ against RMB (depreciated by over 10 percent from 6.8 to 6.1) resulting in much reduced total Bank loan amount in RMB terms while the total project base costs were increased by over 4 percent in RMB term. However, the PDO, project components, targets at the outcome level, the intended demonstration effect of the project, Bank loan proceeds allocation by expenditure categories, the project’s legal agreements and the participating counties and municipalities remained unchanged.

(d) To further strengthen the PMO management capability, a number of important steps were taken e.g. appointing a new project director for the PPMO in January 2014; recruiting engineers by the CPMOs to assist project farms/parks in technical designing; hiring four procurement agents to facilitate procurement process; and selecting an independent firm to follow up on project implementation issues who played a leading role in bringing the overall project implementation on track.

2.2.4 These actions played a key role in accelerating project implementation and disbursement and in bringing the overall project implementation on track. During the last twelve months period of the project implementation, significant achievements were made relative to the previous years10.

2.2.5 By the project closing, a total of US$159.4 million has been invested accounting for 93.3 percent of the total project cost estimated at project appraisal. In RMB terms, the total amount invested (RMB992.2 million) accounted for 95.7 percent of the appraisal estimate. The reduction was due mainly to depreciation of US$ against RMB during project implementation.

9 This adjustment was made based on China’s National Bureau of Statistics data to assist the project in coping with overall inflation in material, goods and labor costs since project costing (which was based on 2008 costs). 10 This implied an increase of over 67 percent points of investment progress and over 45 percent points of disbursement against the achievements made by November 27, 2014.

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(a) Component 1: Institutional Strengthening, Training and Technical Support (96.3 percent of base cost in US$ term was completed). Investment was made for all designed activities and the physical appraisal targets were reached or exceeded for all such project activities. A GIS was established, eight applied research have been completed and various manuals, training materials and relevant equipment were purchased. Training and technical support programs contributed significantly to improved capacity of public institutions. In earlier years of project implementation, the technical capacity of some PMOs was weak, overall farm-level training was slower than planned and effectiveness of such training was limited. However, these were significantly strengthened and improved along project implementation.

(b) Component 2: Environmental Management in Existing and New Farms and Livestock Parks (103.5 percent of base cost in US$ term completed). All livestock farm production models agreed at project appraisal and adjusted during project implementation were implemented. The reduced target number of project farms/parks projected at project MTR was exceeded by project closing. See Table 2 below for details. Project farms made their selections of farm models to meet their interest and conditions the most. In order to motivate the farms/parks to invest in waste management facilities and set samples for replication, a limited number of new dairy farms/parks were supported by the project under the situation that the livestock production (dairy in particular) was in rapid expansion in terms of quantity while no stringent enforcement of environmental and waste management standards/regulations was in place in the province. It was reported that after a few years of project implementation, the government realized the adverse environmental impacts brought by livestock production better and issued stricter zoning policies and environmental assessment requirements. Meanwhile, other new dairy farms followed the project practices to construct waste management infrastructures on their own expenses.

Table 2: Project Farms/Parks (no.)

Farms/Parks by Model At PAD At MTR At ICR

New 500-head dairy park 65 59

New 500-head dairy park + Dairy cattle organic fertilizer 1 2

Dairy expansion by 200 head 155 90

Dairy expansion by 100 head 2 -

Dairy expansion by 200 head + Dairy expansion by 200 head 3 2

Dairy expansion by 200 head + Dairy expansion by 100 head 5 5 Dairy expansion by 200 head + Dairy expansion by 200 head + Dairy cattle organic fertilizer

1 1

Dairy expansion by 200 head + Dairy cattle organic fertilizer 16 5

Dairy cattle organic fertilizer + Dairy cattle organic fertilizer 1 1

New 500-head beef cattle farm 51 82

Beef farm expansion by 200 head 272 178

5,000-head pig bio-fermentation treatment 18 -

10,000-head pig waste collection and treatment - 43

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Total 590 45611 468

(c) Component 3: Project Management, Monitoring and Evaluation (151.2 percent of base cost in US$ term completed). Investment was made for all designed activities and the physical appraisal targets were all reached or exceeded except international study tours. The slippage of international study tours (only about 17 percent of the appraisal target reached) was affected by the government’s restrictions on international study tour activities and also by a mutual understanding between the Bank team and the PPMO that not well-prepared international study tours were considered neither productive nor cost-effective.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

2.3.1 The project M&E system was developed based on overall project design and lessons learned from other similar projects which focused on project progress monitoring and project environmental monitoring. The project developed M&E framework has featured: (a) simple procedures; (b) a small number of carefully-selected variables that are easy to measure or readily-derived from simple measurements; and (c) a coverage of both project progress monitoring and project environmental monitoring. The project M&E system was developed as the main instrument to track project outcomes and outputs and to assess project impact and identifying best practices for dissemination.

2.3.2 Project M&E activities were carried out under the responsibility of the various levels of AHBs and through (a) the MIS; (b) surveys; and (c) samplings. The MIS was developed and used by all PMOs as an efficient tool for reporting requirements e.g. physical progress monitoring, contract-based procurement management, and financial management. The PPMO used the MIS to have real-time control of the progress made in investments at county level, monitoring the project counties and project farms/parks which missed the key milestones and/or lagged behind the schedule to facilitate timely interventions to correct problems and accelerate implementation.

2.3.3 M&E rating during the fourth supervision mission as reflected in the ISR was downgraded from “Satisfactory” to “Moderately Unsatisfactory” (prior to the fourth supervision mission, the MIS system was running adequately, and progress reports were produced timely). Progress reports were not prepared on time. The MIS was in place, but the counties did not update the information regularly. In addition, midterm impact evaluation was not being carried out. The fifth supervision mission continued to rate the M&E performance as “Moderately Unsatisfactory” as the MIS was not running adequately (no midterm impact evaluation surveys have been carried out, neither Mid Term Review report has been prepared, project progress reporting was frequently not up-to-date and conflicting data was provided i.e. discrepancies in data provided in both the Chinese and English versions of the progress reports). During the sixth supervision mission, the M&E rating was upgraded to Moderately Satisfactory due to improvements in the operation of the MIS. Nevertheless, the ISR noted that the progress reports were still not frequently updated and often

11 This number, agreed between the Bank team and the PPMO during the MTR/sixth supervision mission in November 2013, was estimated taking into consideration the following factors: the adjusted exchange rate, inflation adjusted farm model costs, total Bank loan proceeds allocated for financing the farm/park package in the Loan Agreement, expenditure for this category to date, and remaining funds availability. No breakdown of estimated numbers by production model was considered because farms/parks’ participation in project activities was voluntary and the project had been following a bottom-up approach to accommodate.

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conflicting data was provided (the discrepancies among the data provided in the Chinese and English versions continued). From the seventh to the final ISR, the M&E ratings have maintained “Moderately Satisfactory” rating mainly reflecting the delayed submission of reports.

2.3.4 The PPMO’s efforts have been supported by a consulting firm12 since 2012. The firm conducted semi-annual comprehensive monitoring and inspection of the physical progress of project implementation; construction quality; use of Bank loan proceeds; identification of issues and following up on the findings and recommendations of Bank supervision missions. An Implementation Inspection report was prepared and submitted to the PPMO and the Bank after each inspection with six such reports in total (including a last report submitted in June 201613). Monitoring and Evaluation was carried out by an experienced independent institute14 to provide credible monitoring services. A total of 10 surveys15 were carried out to monitor the achievements of project key outcome indicators and assess other project impacts. The environmental monitoring was carried out through surveys following EMMP requirements. 62 project farms/parks, 10 households in each select villages and other key stakeholders were surveyed with questionnaires relevant to the targeted monitoring. Samples were collected from a total of 62 representative project farms/parks16. The monitoring results were reported to the Bank in semi-annual progress reports and in the form of monitoring report at MTR and end-project.

2.3.5 As part of the project completion process, a Social Impact Assessment (SIA) Completion Report and an Environmental Impact Assessment Completion Report were prepared by the experienced independent institution. These reports summarized the final conclusions about the project impacts which echoed the routine monitoring results. See Annex 10 for the conclusions. The M&E system and positive conclusions enabled understanding of project impacts and promoted further implementation of environmental investments in livestock farms/parks in Henan and China. It was encouraging that Henan province decided to (a) keep the county Environmental Protection Office established during project construction to be responsible for environmental protection and monitoring of the project financed infrastructures, and (b) disseminate the project M&E experience province-wide.

2.4 Safeguard and Fiduciary Compliance

2.4.1 Safeguard Compliance

(a) Environmental safeguard. The project was classified as an Environmental Category B project and triggered safeguard policy on Environmental Assessment (OP/BP 4.01). An Environmental Impact Assessment (EIA) report was prepared following China’s national environmental guidelines and the Bank’s safeguard policies. Included in the EIA report, a detailed EMMP was developed which clearly specified responsibilities of the PMOs and other relevant institutions, environmental management training and capacity-building

12 Henan Bosi Agricultural Technology Consulting Co. Ltd., hired by the PPMO in 2012. 13 This is considered a late submission since submission of such report reporting on final project outcomes affects the timely preparation of the Bank ICR. 14 Social and Resettlement Research Institute of North China University of Water Resources and Electric Power (SRRI) was selected through competitive bidding. 15 Including one baseline, seven semi-annual, one mid-term and one end-project surveys. 16 Two for each project county.

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needs of the project and environmental monitoring plan and their respective costs. An environmental screening checklist was developed and used for the selection of candidate farms/parks, and all candidate farms/parks prepared an EIA following domestic approval procedures. An independent institution was selected to monitor the EMMP implementation. Monitoring results confirmed that project environmental assessment procedures were closely followed for selection of candidate farms/parks and construction of project funded infrastructures on project farms/parks; the EMMP was well complied throughout the project implementation; and the project was beneficial to environmental improvement with positive impact. The conclusion was that project implementation was in full compliance with the Bank’s environmental safeguard policies.

(b) Social safeguards. It was decided at project appraisal that the Bank’s safeguard policy on Involuntary Resettlement (OP/BP 4.12) was triggered under the consideration that although land acquisition was not anticipated, construction activities other than farms/parks might take place. To guide any event during project implementation in which involuntary taking of land would occur, a RPF was then prepared, disclosed and included in the Project Implementation Manual (PIM). The RPF was closely followed throughout the project implementation and neither land acquisition nor resettlement was found necessary since all constructions on project farms/parks were taken place on the basis of voluntary land lease. The Social Impact Assessment Completion report prepared by an independent institution confirmed the project’s significant positive social impacts in the aspects of land use, infrastructure construction, cooperative mechanism, income and benefit sharing, women and vulnerable, training, environmental improvement, participation and grievance redress. It was concluded that project implementation was in compliance with the Bank’s social safeguard policies.

2.4.2 Fiduciary Compliance

(a) Procurement. The overall procurement was carried out in a satisfactory manner. The Bank’s procurement policies and procedures have been properly followed with the intensive supervision of PPMO and the active support of procurement agents. All procurement documents have been filed completely and orderly in CPMO offices. The procurement and implementation capacities of the PPMO and the CPMOs have been substantially and effectively improved. No substantial procurement issues were identified and some general and minor issues caused mainly by lack of experience of county PMOs and the procurement agents especially in earlier years of project implementation were addressed and resolved through Bank supervision missions and timely communications.

(b) Financial Management (FM). A sound internal control system was put in place to ensure that project funds were used for intended purposes. The FM covenants in the Loan Agreement were complied with. All project activities were properly recorded in project ledgers and in MIS system. The FM related documents were well maintained by relevant municipal or county PMOs. Payments to contractors were made on a timely basis and disbursement progress was basically following the construction progress and payment terms specified in the implementation agreement. Counterpart funds were provided in a timely manner despite shortfalls in a few project counties and municipalities in early years of project implementation. The project’s Bank loan disbursement was lagging behind the PAD schedule throughout project implementation with a final disbursement of US$78.57

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million17 or 98.2 percent of the total Bank loan amount. All audit reports were timely and unqualified.

2.5 Post-completion Operation/Next Phase

2.5.1 It is very likely that project financed infrastructures as a whole will continue to be operated in a sustainable manner after project completion. This was ensured basically by (a) the project farms/parks’ full ownership of project financed infrastructures; (b) appropriate transition arrangements to post-completion operations by local governments; and (c) adequate operation and maintenance (O&M) arrangements for project financed investments; (d) the provincial government continue to promote the livestock industry as one of the pillar industry of local economy.

2.5.2 Full Ownership. All project farms/parks have participated in the project on a voluntary basis and were fully involved in the decision making process during the project from designing, contracting, construction, inspection to operation. All project financed infrastructures have been constructed on the project farms/parks leased land with their own financial contribution (49 percent of the total costs). Also among the selection criteria to ensure ownership of project activities was their willingness to participate and commit to carry out project activities and maintain post-completion operations of project financed infrastructures.

2.5.3 Appropriate Transition Arrangements. Government’s strong commitment to providing full and continued support to the project farms/parks was critical to ensure an appropriate transition arrangement to post-completion operations. A provincial conference to present project experience and a provincial seminar for ecological livestock development have already been placed on the provincial AHB’s agenda for 2016. Similar activities are expected at lower levels. Impressively, Shangqiu municipality where over one third of the project livestock farms/parks are located has determined to take all measures possible to develop ecological livestock sector as one of the municipality’s pillar industries. As part of the transition arrangements, the Project Leading Groups and PMOs at all levels would remain operational until June 30, 2016 as a minimum to ensure a seamless transition (a) of all project files to relevant government agencies to keep until at least December 31, 2040; (b) of project management function to AHBs and EPBs who were afforded regular monitoring, supervision and services mandates for livestock production and environmental protection on livestock farms; and (c) in finalizing post-completion arrangement e.g. preparation for the last project auditing, guidance on operation of project financed infrastructures, trouble shooting and maintenance.

2.5.4 Adequate O&M Arrangements for Infrastructure Including Waste Management Facilities. The project O&M arrangements for such facilities were carefully made. The O&M responsibilities for project financed infrastructures rest primarily with the project farms/parks with support from the AHBs and their service stations. Specific trainings and focused study tours were organized during project implementation for all project farms/parks to improve their knowledge

17 The disbursement gap of US$1.43 million was caused by the PPMO’s concern of over commitment of project funds during the last year of project implementation and drop-out of several candidate farms from the project participation at the last few months of project implementation mainly due to too tight time available for them to complete application procedures, design, construction, checking and acceptance (yanshou) and payments before project closing.

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and skills in O&M of project financed infrastructures and facilities. Prior to project closing, an O&M manual had already been prepared and distributed by the PPMO to all project farms/parks and relevant training for PMO staff and technicians of project farms/parks has been organized.

2.5.5 Livestock industry is being prioritized as local pillar industry. The local governments regard the livestock industry as a driving force for local economic development as it creates more jobs for local farmers and generates more added-values for communities which have large grain production, especially maize and wheat. The project promoted ecological and sustainable development of livestock industry has become the local governments’ consensus and has been reflected in the local governments’ development programs including the provincial 13th Five-year Development Plan for Livestock Development (2016-2020) where the provincial government targets a 75 percent of sized livestock farms to construct waste treatment facilities.

2.5.6 Next phase. Highly inspired by the project achievements and as part of its next phase actions, Henan province has decided to launch preparation of a new Bank financed livestock development project. Though still at its initial stage, the new project would focus on development of ecological livestock, livestock sectoral value chain and product safety in northern Henan. This initiative was supported by national government agencies and backed up by lead universities, science and research institutes in the province.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

3.1.1 The project development objective, the project design and implementation, addressing key development priorities in the livestock sector, remain highly relevant to the Bank’s Country Partnership Strategy for China (2006-2010), the Bank’s County Partnership Strategy for China (2013-2016)18, the objectives of the Government’s 11th and 12th Five-Year Plans19 and the Henan province’s strategy for livestock development. Henan is experiencing agricultural industrialization, especially the livestock industry, as well as to China today, notably, (a) reduced environmental pollution from more intensive livestock production systems resulting in environmental and public health benefits; (b) cleaner village environment with improved livestock waste management resulting in improved human and animal health in the villages; (c) private benefits of project farms/parks resulting from improved feed management and better animal health; and (d) strengthened cooperatives improved their small-holder members’ capacity and competiveness. The project, in a massive scale, is the pioneer in livestock sector in China focusing on ecological development rather than traditional production on medium-sized livestock farms. The proactive designing and various project-developed livestock production models provided experience on best practice methodologies and technologies for other parts of China to follow in addressing similar issues.

18 Report No. 67566-CN dated October 11, 2012, the Strategic Theme One: Supporting Greener Growth. 19 One of objectives of the 11th Five-Year Plan (2006-2010) was social infrastructure and enhancement of rural livelihoods while the 12th Five-Year Plan (2011-2015) focused on environmental sustainability, sustainable growth, and improving the quality of life.

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3.2 Achievement of Project Development Objectives

3.2.1 The project development objective has been substantially achieved. Achievement of specific indicators was assessed based on data collection instruments agreed at the project appraisal i.e. surveys20 and progress reporting as appropriate, and confirmed the significant impacts of the project on (a) improved capacity of public institutions to facilitate environmentally sound livestock industry development; (b) nutrient output reduction on project farms; and (c) increase in percentage of people in villages surrounding the livestock farms perceiving that the quality of their living environment has improved due to the project. Achievement of Intermediate Outcome Indicators contributed to the PDO level Outcomes.

3.2.2 While the last ISR acknowledged the full or over-achievement of all Outcome Indicators at the project end, a Moderately Satisfactory rating for DO was given with justification as: “The reduction in project scope should have some adverse impacts on PDO achievement assessment.” This was in reference to the reduction of project farms/parks from the PAD target to 468 at project end. In fact, the project scope (number of participating farms/parks) was not set as a designed outcome indicator as the final number of participating farms/parks depended on various factors outside of the project’s control which made the project scope hardly a predictable and meaningful target. Main such factors included (a) reduced amount of project funds in local currency (due to appreciation of US$ against RMB); (b) sharp cost increase in farm model package (increased labor cost and higher material/goods prices); (c) uncertainties in farmer’s willingness (local regulatory enforcement, market price of livestock product, types of farms/parks) to participate.

The following is a description of the PDO achievement:

3.2.3 Outcome Indicator 1: “Improved capacity of public institutions to facilitate environmentally sound livestock industry development”21 was achieved through well-developed training and technical support programs while its achievement was assessed through surveys.

(a) Trainings. Trainings aiming at improving capacity of public institutions were organized throughout project implementation which covered: (i) relevant policy and decision makers at all levels with training subjects focusing on environmental impacts of the livestock sector and related mitigation measures including feed quality control and optimized feed proportion formulation, nutrition calculation system, environmental monitoring, sample evaluation, data analysis, description of M&E programs, environmental laws and regulations enforcement etc. (ii) AHB staff with training subjects focusing on spatial planning for livestock sector development including GIS data acquisition, analysis and utilization, and on-farm nutrient balance accounting etc. (iii) AHB and EPB staff with training subjects focusing on M&E of livestock sector impact on the environment including environmental monitoring, sample evaluation, data analysis, description of M&E programs, impact on environment, environmental laws and regulations enforcement etc. A total of

20 A total of 62 villages were selected for survey participation (two villages from each of the 31 project counties) which were the closest villages to the 62 project farms/parks (one village for one project farm/park) randomly selected for project monitoring. Surveys for assessment of Outcome Indicator 1 “Improving capacity of public institutions” involved also all PMOs at provincial, municipal and county levels. 21The “public institutions” were defined as AHBs and EPBs at county, municipal and provincial levels as agreed among the Bank task team, the PPMO and the SRRI (the selected M&E team).

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6,114 person/days of training were provided against the appraisal target of 5,100 person/days exceeding by 1,014 person/days or about 19.9 percent.

(b) Technical support. The project also provided funds to (i) develop and distribute “Guidance Manual for Waste Management on Project Farms/Parks” and (ii) carry out eight applied research studies on introduction of relevant technologies for ecological livestock production. These, coupled with GIS development and application, effectively improved and strengthened the capacity of relevant public institutions to serve the project and beyond.

(c) Surveys. Surveys were conducted to assess the capacity improvement of public institutions at provincial, municipal, county and household levels in accordance with the questionnaires and assessment methods reviewed by the Bank task team in 2013. A total of three surveys were conducted all by the SRRI in August 2013, January 2015 and January 2016. The end-project survey was conducted with a total of 687 copies22 of questionnaires received from PMOs and sampling households. An overall “satisfactory” rating was concluded based on survey results on nine subjects23 and fulfillment of training programs.

(d) The fact that this outcome indicator did not set either a baseline value or an MTR or end project target value at project preparation and that the questionnaires and methods to assess the capacity improvement of public institutions were not agreed until 2013 caused uncertainty among the Bank task team, PPMO and the SRRI about how and what to monitor.

3.2.4 Outcome Indicator 2: “Nutrient output reduction on project farms” was over achieved. Based on measures through animal park nutrient balance accounting at the project end, a weighted average rate of 18.74 percent of nutrient output reduction was achieved in comparison to 15 percent set at project appraisal. The use of weighted average rate was calculated based on controversial weights for three different types of livestock and the setting of this indicator could have been improved to better reflect project facts and structure. See Table 3 below for details:

Table 3: Results of Survey for Nutrient Output Reduction*

Stage Nutrient Type Dairy Beef Cattle Pig

(a)Baseline (release rate in %) N 48.16 40.39 43.64

P 48.36 41.92 34.59

(b)End-project (release rate in %) N 38.46 32.16 31.98

P 41.13 33.34 29.02

Reduced (((a)–(b))/(a) in %) N 20.14 20.38 26.72

P 14.95 20.47 16.10

*Based on samplings from baseline survey (November 2010) and end-project survey (January 2016) available in file.

22 117 copies of the total survey questionnaires were distributed to and received from all 39 PMOs (PPMO, 8 municipal PMOs and 30 county PMOs) i.e. three copies for each PMO which were filled independently by a PMO director, a project manager and a livestock technician. The other 570 copies of the total survey questionnaires were distributed to and received from 570 sampling households. 23 Including survey subjects as overall assessment, project implementation progress, project implementation quality, satisfactory level of improved livestock raising techniques for AHB management and technical staff, mastering capacity of environmental monitoring and data collection and analysis for AHB staff, mastering level of relevant environmental laws and regulations for AHB staff, GIS data collection, analysis and application, mastering level of relevant environmental laws and regulations for EPB management and technical staff, and mastering capacity of environmental monitoring and data collection and analysis for EPB management and technical staff.

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3.2.5 Outcome Indicator 3 i.e. “Percentage of the people in villages surrounding the livestock farms perceive that the quality of their living environment has improved due to the project”, was fully achieved. Based on a comprehensive survey24 conducted by an independent institution at end-project, between 87 and 100 percent of the surveyed households perceived that the quality of living environment has improved due to the project which was far higher than the target value of 60 percent set at project appraisal. The survey was conducted using a list of questionnaires defined to serve as “living environment improvement”. These questionnaires included (a) discharged waste amount from project farms/parks than before; (b) change in number of fly, mosquito, bed-bug and flea than before; (c) change of the surrounding environment as a result of the project; (d) noise and dust pollution caused by project implementation; (e) odor impact before and after the project construction and (f) impact on water source before and after the project construction. See Table 4 for details.

Table 4: Results of Survey for Living Environment Improvement (1)

Parameter

Discharged Waste Amount than Before

Change in # of 4-pests* than Before

Change of the Surrounding Environment as a Result of the Project Implementation

Less Same More Less Same More Satisfied Unsatisfied Improved Worsen No Change

hh 524 46 0 519 51 0 564 6 545 0 25

% 91.9 8.1 0 91.0 9.0 0 99.0 1.0 95.6 0 4.4

*Indicating fly, mosquito, bed-bug and flea used commonly in rural Henan as indicators for general household environment.

Table 4: Results of Survey for Living Environment Improvement (2)

Parameter

Noise and Dust Pollution Odor Impact Impact on Water Source

During Construction

After Construction

Before Construction

After Construction

Before Construction

After Construction

Yes No Yes No Yes No Yes No Yes No Yes No

hh 256 314 74 496 146 424 22 548 28 542 0 570

% 44.9 55.1 13.0 87.0 25.6 74.4 3.9 96.1 4.9 95.1 0 100.0

3.2.6 Intermediate outcome indicators 1 - 4 were over achieved as documented in the PPMOs semi-annual progress reports as well as in the PPMO’s ICR (see annex 2 for details). Intermediate outcome indicators 5 - 11 were also over achieved based on results of the end-project survey which provided a quantitative assessment of achieving all intermediate outcome indicators except 7 and 11. The over achievement of both indicators 5 and 625 provided added evidence for successful achievement of the PDO. The assessment for indicator 11 adopted an interpolation method to convert mortality value to morbidity value to be used as the baseline as it was missing due to a mis-translation of morbidity for mortality when the baseline survey was conducted. Therefore, the

24 See Annex 4 for details. 25 Intermediate Outcome Indicator 5 (farms operating and maintaining improved livestock production and waste management infrastructure) was achieved by 100% of project farms/parks, exceeding the PAD target (80%) by 20 percentage points. Intermediate Outcome Indicator 6 (farms that meet the required livestock waste management/ environmental regulations) was achieved by 98% of project farms/parks, exceeding the PAD target (60) by 38 percentage points.

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setting of both indicators 7 and 11 could have been improved to better reflect project facts and structure.

Table 5: Results of Survey for Reduction of Waste Produced Per Unit of Livestock Product

Stage Waste Type Milk (per kg) Beef (per kg) Pig (per kg)

(a)Baseline (waste produced in kg) Solid waste 1.78 13.14 1.78

Urine 1.48 13.48 3.39

(b)End-project (waste produced in %) Solid waste 1.30 9.47 1.57

Urine 1.22 8.77 2.15

Reduced ((((a)-(b))/(a) in %) Solid waste 26.97 27.93 11.80

Urine 17.57 34.94 36.58

3.3 Efficiency

3.3.1 Financial and economic rates of return (FRRs and ERRs) were recalculated at ICR, using updated prices, actual project costs and latest projections of future benefits. The methodology used follows, by and large, that at appraisal. The accuracy of estimation has been improved by using actual data and better projections of benefits compared to those at appraisal.

3.3.2 The project has generated multiple benefits at the farm/park, local and regional levels. The benefits originate from improved (a) external environment in the target farms, villages and Yellow River Belt by reducing emission of pollutants; (b) animal productivity (increased milk yields, reduced morbidity and mortality, and reduced fattening period); and (c) revenue from waste by production and sale of improved organic fertilizer from the target farms. Public benefits accrue from the improved environment resulting from reduced emission of livestock waste pollutants, while private benefits accrue from improved animal productivity and sales from improved organic fertilizers. The ERR calculation includes analysis of the improved external environment resulting from reduced pollutant emission in addition to the private benefits from improved productivity and manure/organic fertilizer sales.

3.3.3 Cleaner farm and village environments accruing through improved management and disposal of livestock waste will also have a public benefit in terms of improved human health, but this is difficult to quantify and is not included in the economic analysis. Similarly, partial substitution of chemical fertilizers by treated manures and organic fertilizer on neighboring farms will have positive environmental benefits, such as improved soil organic matter, moisture retention, and reduced nutrient leaching to groundwater. However, these benefits are difficult to quantify in economic terms and are not included in the economic analysis.

3.3.4 Financial Analysis. Financial analysis was conducted based on seven representative livestock farm models. The models represent dairy farms, beef farms, organic fertilizer production from dairy cow manure, and pig production. The dairy and beef models are based on development of new 500 head dairy and beef farms, and expansion of existing dairy and beef farms to 500 heads. The 500-head size is indicative only and the actual farm size may vary. Calculations indicated that with government repayment of the Bank loan proceeds as an investment subsidy to the famers, all the models are financially profitable with FRR ranging from 13.9% to 31.6%.

3.3.5 Economic Analysis. ERRs for each model and the overall project were calculated based on the incremental production benefits, incremental treated manure or organic fertilizer sales, plus

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the economic value of reduced pollution, against the incremental costs incurred for each model and total project costs. The calculation period was over 20 years. The overall project ERR is 16.3%, indicating the project is economically viable.

3.3.6 The results of financial and economic analysis are comparable with those in the PAD. Detailed analysis is contained in Annex 3.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory

3.4.1 The project was highly relevant to Henan and GOC priorities and to the Bank’s Country Partnership Strategy for China. All component activities as designed have been implemented. All targets as measured by outcome indicators were either achieved or exceeded meeting the project development objective. Largely as a public goods operation, the project still yielded a robust ERR of 16.3 percent at ICR well in excess of appraisal expectations of 13.9 percent.

3.4.2 The satisfactory rating is also justified by the demonstration effect of the project. The project implementation has greatly enhanced environmental awareness of livestock farms in the province. Many farms expressed their strong desire to participate in the project and nine farms followed the project practices and have already constructed infrastructures on their own expense. The project experience and achievements have already been: (a) incorporated in the draft provincial 13th Five Year Plan (2016-2020) for Livestock Development and various other government funded projects and programs for agricultural modernization, livestock husbandry pollution control, ecological and circular agricultural demonstration in Henan; (b) followed in the Asian Development Bank financed Henan Sustainable Livestock Farming and Product Safety Demonstration Project; (c) referenced in modification of detailed implementation measures of relevant domestic regulations for environmental protection and in development of guidance for animal husbandry in Henan; and (c) transferred to World Bank financed Guangdong Agricultural Pollution Control Project.

3.4.3 The final ISR report continued to reflect a “Moderately Satisfactory” rating of the DO. This ISR noted that even though component activities as designed have been implemented and almost all physical targets set at project appraisal were either achieved or exceeded by the original project closing date, the reduction in project scope could have some adverse impacts on PDO achievement assessment. Therefore, the DO was rated as “Moderately Satisfactory”. However, give the evidence from various reports (M&E report, progress reports, implementation inspection report, EIA report, and SIA report), all PDO and intermediate outcome indicators have been achieved and in some cases over-achieved. Therefore, the Bank ICR rates the overall outcome achievement as “Satisfactory”.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

3.5.1 Though not poverty alleviation orientated, the project paid special attention to the engagement of the poor, women and ethnic minorities for the purposes of alleviating poverty, promoting social inclusion and gender equality for sustainable development.

3.5.2 Poverty Impacts. Of the total employees on project farms/parks, 190 or about 4 percent were poor. Their income was increased through employment in project farms/parks, increased

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agricultural products using organic fertilizers produced by project farms/parks and reduced health costs. Poor employees earned the same amount as the other employees in the project farms/parks. With an average annual income between RMB22,000-RMB24,000 from employment in project farms/parks, the 190 poor employees were successfully lifted out of poverty status.

3.5.3 Gender Aspects. Project training strengthened women’s knowledge and awareness of environmental protection and improved their technical skills for ecological livestock production which facilitated the rise of their income and social status. Women and men had the same opportunities in project participation. Women’s participation in the project was significant. Project statistics showed that (a) about 34 percent of the trainees were women; (b) over 28 percent of the total owners of project farms/parks were women; and (c) over 22 percent of the total project employees were women.

3.5.4 Social Development. Some social development aspects are noted: (a) Two project cattle farms were located in the villages where local residents were mostly from the Hui ethnic group who were skilled at feeding, slaughtering cattle and sheep, and in meat processing through religious and traditional norms. The project posed no threat or disturbance to their cultural norms, and was embraced by the Hui villagers as it improved their environment for cattle raising and improved quality of living environment; (b) The project farms/parks brought social benefits to the local residents and contributed to improvement of rural social development in project areas where local farmers benefitted significantly from (i) land lease to project farms/parks; (ii) provision of feed and fodder to project farms/parks; (iii) employment in project farms/parks; and (iv) regular training; (c) The grievance redress was operated in an orderly manner and all complaints were monitored and addressed. According to the Social Impact Assessment Completion Report prepared by an independent institution, 96 percent of the surveyed households were satisfied with the improvement of the farm-related environment, and 77 percent of the surveyed households confirmed major contribution of the project farms/parks to their income increase;(d) 100 percent of employees on project farms/parks signed a contract with their respective employer, and (e) taking in account that the roles played by the farmers cooperatives in community development increases social cohesion.

(b) Institutional Change/Strengthening

3.5.5 The project brought substantial institutional changes and strengthening. Closer institutional cooperation among government line agencies, universities and consulting institutions were established and functioned well. Capacity of public institutions and PMO staff skills were significantly improved through intensive capacity development programs, provision of essential equipment and facilities, and participation in project preparation and implementation. For a total of 102 PMO staff, 28 trainings were conducted to provide 7,949 persons-days of training aiming at improving staff professional competence and management skills. 19 and 47 PMO staff were promoted respectively in managerial positions and technical grades during the five-and-a-half year implementation period.

(c) Other Unintended Outcomes and Impacts (positive or negative)

3.5.6 Wide spread demonstration effect of the project was unintended. The project implementation has greatly enhanced environmental awareness of livestock farms in the province: (a) A number of project farms/parks made an extra effort during project implementation: (i) Changming Dairy Farm in Xingyang city of Zhengzhou municipality expended the size of

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wastewater disposal pond from 450 m3 to 800 m3 on its own expenses to meet the farm’s increased demand; (ii) Fuheng Pig Farm in Xinzheng city of Zhengzhou municipality constructed a 30,000 m3 pond on its own expenses for storage of liquid pig wastes during crop off-season period for up to six months when no or less liquid wastes were in need; (iii) several project farms/parks introduced anaerobic treatment of livestock wastes to generate biogas; and (iv) a number of project farms/parks innovatively used the treated solid and liquid wastes for mushroom production, lotus roots farming and earth worm raising, in addition to traditional application for crops and fruit trees. (b) Project demonstrated technology packages coupled with appealing financial supplement attracted large number of livestock farms. However due to limited availability of project funds and constraint of project implementation timeframe, many of them were unable to participate in the project despite their strong desire. While many farms have still been struggling in finding similar opportunities, nine farms 26 followed the project practices and have already constructed infrastructures on their own expense.

3.5.7 Another unintended project outcome was that two project farms passed strict assessment by relevant agents to have (a) been certified for Hazard-free27 Fresh Dairy Product, become one of the First Batch of Standardized Demonstration Dairy Farm awarded by the Ministry of Agriculture, and one of Henan provincial Key Dragon-head Enterprise for Yukang Agricultural Development Company in Puyang county of Puyang municipality and (b) been certified for Hazard-free Agricultural Product Production Base for Niuwangpeng Breeding Cooperative in Mengzhou city of Jiaozuo municipality.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

N/A

4. Assessment of Risk to Development Outcome

Rating: Moderate

4.1 Sustainability of the project supported livestock waste treatment facilities and infrastructures beyond project completion was basically ensured as discussed in section 2.5. However, there is potential risk to the sustainability if (a) relevant environmental laws and regulations are inconsistently enforced by local authorities; (b) government committed services to the project farms/parks are provided inadequately or unsatisfactorily; and (c) O&M costs (e.g. when major maintenance is required) are beyond the farm owners’ willingness to pay; and (d) declining even dropping out of business by some farms due to lower comparative benefit of livestock production caused by increased production costs and decreased product price resulting from market fluctuation, strong competition of imported products, food safety scandals, reduced labor availability etc. Though moderate, this risk is real and may become substantial if it is not dealt with properly.

26 Including Longxin Dairy Farm in Gaolong town, Pengcheng Dairy Farm, Bohong Animal Husbandry Co. Ltd., Jixiang Dairy Co. Ltd., Huafeng Dairy Farm in Gaolong town, Xinda Animal Husbandry Co. Ltd., Boda Pig Farm, Youyi Dairy Farm, Changxianchao Pig Farm, all located in Yanshi city of Luoyang municipality. 27 Applicable to all non- or primarily-processed agricultural, livestock and fishery products based on assessment on compliance of production environment, production process and product quality with relevant GOC standards and regulations, certified by China’s Ministry of Agriculture and valid for a three-year period.

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4.2 There is another potential risk associated with the demonstration function of the project farms/parks. The farms/parks under the project’s support were designed to function as demonstration farms/parks from which the introduced waste management methods and technologies could be spread for adoption by other farms. While the demonstration function of many farms/parks is expected, a number of issues as identified by the Bank supervision missions may jeopardize the demonstration function of some project farms/parks if such issues persist. These issues, include (a) improperly constructed infrastructures; (b) no or irregular operation of the self-propelled manure turning machine; (c) damaged or non-operational waste treatment facilities; and (d) transport of fresh manure out of farms without compositing, were addressed during project implementation and mitigation actions were taken prior to formal check and acceptance process.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately Satisfactory

5.1.1 The Bank ensured that the project design was consistent with the Bank’s Country Partnership Strategy (2006-2010) for China and in line with the objectives in the Government’s 11th Five-Year Plan. The project also contributed to Henan’s overall goal of increasing farmers’ incomes through sustainable development of animal husbandry28. The Bank ensured the project to be designed as technically sound, environmentally sustainable, socially acceptable, economically and financially viable. The Bank also built key mechanisms 29 into the design to ensure an ambitious yet manageable project. In close cooperation with the government team, the Bank completed the project preparation in a merely six-month period. The Bank’s role in ensuring quality at entry was much appreciated by the government at all levels. However, the development of Outcome Indicators 1 and 2 and Intermediate Outcome Indicators 7 and 11 could have been improved as these indicators were difficult to assess during project implementation as discussed in paragraphs 3.2.3 (d), 3.2.4, and 3.2.6.

(b) Quality of Supervision


5.1.2 During project implementation, the Bank conducted a total of 10 effective supervision missions to provide timely support for successful completion of all project activities to achieve project objectives and development outcomes. The Bank has been working closely with the government throughout the project implementation and was responsive to the Government’s

28. This was the very first livestock project at such a massive scale focusing on ecological and sustainable livestock development ever designed and implemented in Henan and China. The farmers’ income was increased through improved environmental health management practices on livestock farms rather than the expansion of livestock production. 29 Including mechanisms such as private benefits, initial advance payment, Government’s obligation for Bank loan repayment and financial charges etc.

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requests. The Bank task team was fully engaged to provide advice, support and maintain regular dialogue with the government to facilitate project implementation. The Bank team also provided various trainings for PMO staff in the areas of Bank safeguard policies, procurement, FM, preparation of MTR report and ICR report.

5.1.3 To tackle challenges in project implementation, the Bank team took a number of decisive actions during supervision missions including repeated recommendations on strengthening project implementation capacity, quality control for construction of livestock waste management facilities, actions for training, applied research, MIS development, project management, etc. The project success could not have been achieved without timely adjustments of project targets to resolve the funding issues caused by significant depreciation of the US$ and sharp increase of project cost due mainly to higher labor cost and increased construction material prices during project implementation.

(c) Justification of Rating for Overall Bank Performance


The Bank played a key role in ensuring quality at entry, in resolving key issues during project implementation and in providing timely support to the successful project completion. Despite shortfalls in the development of four indicators at project design, all these indicators were achieved or over-achieved by project end. The World Bank’s performance was rated Moderately Satisfactory for ensuring Quality at Entry and Satisfactory for the general task of supervision. Given that the Outcome/Achievement of the PDO is rated Satisfactory, overall Bank performance rating is Satisfactory.

5.2 Borrower Performance

(a) Government Performance


5.2.1 The government at all levels demonstrated strong commitment and made significant contributions to the project throughout project preparation, implementation and completion. These were demonstrated remarkably by the government’s exceptional commitment to fully support the public-goods oriented ecological livestock project and to take full obligation for Bank loan repayment and financial charges. In absence of such commitment, such a highly challenging project would not have been developed. The government also provided policy guidance, organized counterpart funds, and enlisted support of other relevant agencies.

(b) Implementing Agency or Agencies Performance

Rating: Moderately Satisfactory

5.2.2 From the third ISR, the IP rating was once “Moderately Unsatisfactory” and the rest of the ratings were “Moderately Satisfactory” until project closure. These were due to numerous challenges, including: (a) the project was implemented across many counties; (b) PMOs’ lack of experience in managing Bank financed ecological livestock project and staffed with inadequate number and less competent members in early years of project implementation; (c) difficulties in convincing livestock farms/parks to participate without successful demonstration since some

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county PMOs’ capacity was relatively low and not able to deliver such service; (d) difficulties in providing counterpart funding in adequate amounts and on a timely basis by some counties; (e) difficulties in identifying experienced procurement agents to provide services. Supported by the Bank team, the PMOs made significant efforts during the last 12-month period of project implementation to expedite project implementation and disbursement of Bank loan proceeds. The project implementation was successfully completed by the original closing date with 98.2 percent final disbursement of the total Bank loan proceeds.

5.2.3 Despite the positive efforts exerted during the final year of project implementation, the lag in disbursement and implementation in most of the earlier years of the project (as indicated in the DO and IP ratings in the ISRs) reflects a lag in the PMO’s implementation performance during most of the project’s implementation history. In addition, the end-project M&E report which provided data and information for assessing the achievement of outcome indicators was submitted to the Bank only in early June 2016 when the Bank team made a final round of urgent request (the Bank team made repeated requests for evidence prior to the final round). Lack of timely submission of reports continued to persist.

(c) Justification of Rating for Overall Borrower Performance


5.2.4 The Government’s performance is rated Satisfactory, and the overall performance of the implementing agency is Moderately Satisfactory. Given the Satisfactory rating for achievement of PDO, the Borrower performance is rated “Satisfactory”.

6. Lessons Learned

6.1 Favorable national regulatory frameworks and policy instruments for livestock waste management 30 provided legal ground and financial incentives for a successful project implementation. The “Decree of Control and Management of Pollution by Livestock Production” (SEPA May 9, 2001), “Discharge Standards of Pollutants for Livestock and Poultry Breeding” (GB18596-2001), “Provisions on Pollution Control in Animal Husbandry Industry” (State Council Directive #643, 2013) and “Law of Environmental Protection”(PRC, amended 2014) were particularly relevant. In absence of such instruments, the project would not have been developed and project success would not have been achieved at the project completion.

6.2 Stakeholders’ commitment, dedication and capabilities are critical to ensure project success, sustainability and ownership. These were demonstrated through exceptional commitment and strong leadership by the government at provincial, municipal and county levels in making key decisions and providing policy guidance. Both the Bank team and the Borrower agreed that without Henan government’s full support to the public-goods oriented ecological livestock project and Henan government’s decision to take full obligation for Bank loan repayment and financial charges, launch and implementation of such an ambitious project in Henan would not have been feasible.. These stakeholders’ commitment, dedication and capabilities were demonstrated also by (a) great

30 Large number of such regulatory instruments include “Technical Standards for Preventing Pollution from Livestock and Poultry Breeding” (HJ/T 81-2001), “Law on Prevention of Solid waste Pollution” (PRC, April 2005); “Law of Animal Husbandry” (PRC. July 2006); “Law on Animal Disease Control” (PRC, January 2008); “Law of Water Pollution Prevention” (PRC, June 2008);“Water Pollution Prevention Action Plan” (State Council, April 2015); etc.,

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efforts and tireless work by dedicated and capable PMO staff/professionals with well-developed project operational procedures, MIS, M&E system and the PIM in particular to lead the project to a successful completion; and (b) effective and efficient cooperation and coordination within and among government line agencies at all levels to ensure a satisfactory project design, a successful project implementation and completion.

6.3 To achieve public good benefits from a project, a financial subsidy31 to participating farms/parks is essential and the project intervention must also yield tangible private benefits for key stakeholders. Project financial analysis at ICR concluded that the production models without subsidy showed a marginal or low FIRR ranging between 8.5% and 19.7% (see Table 8 for details) which would have made (a) the investment unattractive financially to the project farms/parks and (b) the project farms/parks unwilling to participate in the project based on surveys during project preparation. The final cost sharing contribution of the project farms/parks (49 percent) provided a proximity of farmer’s willingness to pay. Under this specific project, investment was also provided to improve feed quality, animal health and nutrition, and selected production infrastructure for generating financial returns to the owners of project farms/parks along with support to infrastructures for livestock waste management and treatment on project farms/parks. This investment structure, with attractive financial returns (see Table 8 for details), ensured project adoption, sustainability and replicability.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners(a) Borrower/implementing agencies

The Bank shared its ICR draft with the borrower. In response, the PPMO suggested a “Satisfactory” rating for "Quality at Entry” (instead of “Moderately Satisfactory” rating) as the main difficulty the project faced during implementation was the changing of the situation of the local livestock production, and not the project design itself. The Bank task team appreciated the PPMO’s suggestion and commented that the Bank will maintain the “Moderately Satisfactory” rating for Quality at entry due to the reasons pointed out in the ICR i.e. shortfalls in the development of four outcome indicators at project design as discussed in paragraphs 3.2.3 (d), 3.2.4, and 3.2.6.

(b) Co-financiers

N/A

(c) Other partners and stakeholders

N/A

31 Under this project, Government repayment of the World Bank loan for investment of all production models was regarded as financial subsidy to participating farms/parks.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(US$ million)

Actual /Latest Estimate

(US$ million)

Percentage of Appraisal

(%)

1. Institutional Strengthening, Training and TechnicalSupport

3.37 3.25 96.3

1.1 Strengthening of Public Institutions 1.15 0.94 81.7

1.2 Farmer Training, Technical and Farm Management Support 2.22 2.31 103.9

2. Environmental Management in Existing and New Farmsand Livestock Parks

145.10 150.12 103.5

2.1 Waste Minimization and Animal Health Infrastructure 33.80 32.45 96.0

2.2 Waste Management Infrastructure 67.00 75.49 112.7

2.3 Waste Treatment Infrastructure 27.83 24.61 88.4

2.4 Production Infrastructure Support to New Livestock Parks 16.20 17.39 107.3

2.5 Construction Design and Supervision 0.27 0.18 66.8

3. Project Management, Monitoring and Evaluation 3.83 5.79 151.2

3.1 Equipment and Materials 1.70 1.86 109.6

3.2 Training 0.79 0.85 107.2

3.3 Technical Assistance * 0.12 - 0.0

3.4 Monitoring and Evaluation 0.21 0.27 130.0

3.5 PMO Management 1.01 2.81 278.1

Total Baseline Cost 152.30 159.15 104.5

Physical Contingencies 7.62 -

Price Contingencies 10.66 -

Total Project Costs 170.58 159.15 93.3

Front-end fee IBRD 0.20 0.20 100.0

Total Financing Required 170.78 159.35 93.3

*The reason why the Technical Assistance subcomponent showed no investment at Actual was that neither formalcontract was signed nor any payment made for consultancy services despite the fact that consultants were actually hired to provide technical assistance service to the PMOs at various levels during project implementation. Number of person.days of technical assistance service was reflected in Annex 2, Table 6: Outputs by Component.

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(b) Financing

Source of Funds Type of Co-

financing Appraisal Estimate

(US$ million) Actual /Latest Estimate

(US$ million) Percentage of Appraisal (%)

Government 1.37 3.28 239.4

Beneficiaries 89.41 77.50 86.7

IBRD 80.00 78.57 98.2

Total 170.78 159.35 93.3

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Annex 2. Outputs by Component The project’s main outputs are summarized in the table below.

Table 6: Outputs by Component

Output Indicator Unit Original Target

Value (PAD)

Actual Achieved

Value (ICR)

% of PAD

1 Institutional Strengthening, Training and Technical Support 1.1 Strengthening of Public Institutions 1.1.1 Training 29,160.00 29,667.50 101.7

Feed quality control and preparation of optimal feed rations

p/d 6,800.00 7,092.50 104.3

Mineral/nutrient accounting system p/d 6,800.00 6,844.50 100.7

Environmental M&E sampling, data analysis, interpretation procedures

p/d 7,200.00 7,215.25 100.2

Environmental impacts awareness raising p/d 7,200.00 7,211.25 100.2 GIS data collection, analysis and application p/d 960.00 978.50 101.9

Spatial planning for livestock development using GIS

p/d 200.00 325.50 162.8

1.1.2 Technical Assistance 2.00 2.00 100.0

Implementation procedures manual for pollutant management on livestock farms(related to project farms)

no. 1.00 1.00 100.0

Studies of relevant technologies for ecological farms

no. 1.00 1.00 100.0

1.1.3 Equipment 1.00 1.00 100.0 GIS software and hardware set 1.00 1.00 100.0 1.2 Farmer Training, Technical and Farm Management Support 1.2.1 Technical Training, Research and Extension Farm technician training p/d 14,750.00 19,077.00 129.3 Domestic study tours for farm technicians p/d 8,850.00 12,527.00 141.5 Applied research no. 4.00 4.00 100.0 Applied research on chicken waste treatment no. 1.00 1.00 100.0 Multi-media extension materials no. 4.00 4.00 100.0 Training materials32 no. 4.00 0.00 0.0 1.2.2 Technical Support System 117.00 134.00 114.5 Design review and construction supervision set 117.00 134.00 114.5 1.2.3 Farm Management Support 20,650.00 22,440.50 108.7 Farm management training p/d 8,850.00 10,609.75 119.9 Crop farmer training p/d 2,950.00 2,964.75 100.5 Farmer organization management training p/d 8,850.00 8,866.00 100.2

2 Environmental Management in Existing and New Farms and Livestock Parks

2.1 Waste Minimization and Animal Health Infrastructure 2.1.1 Feed Improvement Silage pit 000 m3 1,114.46 935.26 83.9 Hay barns 000 m2 63.17 72.19 114.3 Concentrate storage sheds 000 m2 43.46 47.28 108.8

32 According to the PPMO, “training material” was prepared, distributed but relevant data was not separately collected which however was reflected in various training programs.

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Value (PAD)

Actual Achieved

Value (ICR)

% of PAD

Feed grinder - concentrates no. 580.00 417.00 71.9 Hay straw cutter maize, wheat no. 1,387.00 1,129.00 81.4

TMR mixer no. 257.00 156.00 60.7 2.1.2 Water Supply Infrastructure

Well no. 580.00 414.00 71.4 Pumps room 000 m2 6,264.00 4,462.14 71.3 water supply pipes 000 m 150.40 128.15 85.2

Pump no. 580.00 408.00 70.3 2.1.3 Animal Health Infrastructure

Disinfection chamber 000 m2 13.39 12.19 91.0 Disinfection pool 000 m3 7.13 6.44 90.3

Quarantine shed 000 m2 25.14 16.02 63.7 Vet. room 000 m2 7.02 8.69 123.8

2.2 Waste Management Infrastructure 2.2.1 Livestock Sheds and Yards

Dairy cow shed with waste drainage and solid/liquid separation systems

000 m2 346.86 264.90 76.4

Dairy cow birthing sheds 000 m2 45.68 32.79 71.8 calf sheds no. 5,640.00 3,912.00 69.4

Cattle yards 000 m2 973.87 785.59 80.7 Cattle fences 000 m 92.74 63.65 68.6 Floor cementing and drainage-existing sheds 000 m2 611.76 371.12 60.7

Cow beds no. 66,426.00 45,928.00 69.1 Fattening sheds 000 m2 319.60 305.39 95.6 Bio-fermentation bed-pigs 000 m2 185.94 0.0

Feeding system-pigs sheds pc 4,500.00 0.0 Cooling fans-pig sheds pc 1,152.00 0.0

2.2.2 Waste Management Systems Covered sewage drains of the farm area 000 m 402.58 309.52 76.9 Bedding materials-pigs 000 m3 105.21 0.00 0.0 Solid manure processing workshop 000 m2 31.02 n/aurine ditch inside pig sheds 000 m 14.10 n/aurine drain pipeline outside pig shed 000 m 23.50 n/aLiquid fertilizer pipe 000 m 174.0 n/a

Detention pool 000 m3 0.54 n/aHorizontal sedimentation pool 000 m3 29.26 n/a

Storage pool 000 m3 116.40 n/aSludge concentration pool 000 m3 0.54 n/aGrilles pool 000 m3 0.06 n/aHydrolysis acidification pool 000 m3 0.30 n/a

Backflow pool 000 m3 0.06 n/a Anaerobic pool 000 m3 0.20 n/a

Anoxic pool 000 m3 0.20 n/aAerobic pool 000 m3 0.11 n/a

Sedimentation pool 000 m3 0.09 n/a Storage pool 000 m3 0.06 n/a

2.2.3 Equipment Mechanical manure scraper no. 580.00 469.00 n/a

Hand cart no. 6,016.00 4,808.00 n/a

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Value (PAD)

Actual Achieved

Value (ICR)

% of PAD

Dump truck unit 47.00 n/a Trough type turning machine no. 47.00 n/a Lift pump no. 12.00 n/a Fan no. 4.00 n/a UF system set 2.00 n/a No-tower water supply tanker set 2.00 n/a Wet biogas holder set 2.00 n/a Desulfurization tower set 2.00 n/a Flame arrestor set 2.00 n/a Water seal set 2.00 n/a Alarm device of combustible gas set 2.00 n/a 2.3 Waste Treatment Infrastructure 2.3.1 Manure Treatment Concrete manure pads 000 m2 251.10 180.27 71.8 Manure mixing no. 580.00 420.00 72.4 2.3.2 Liquid Waste Treatment Liquid waste collection tank 000 m3 261.00 202.02 77.4 Tanker truck unit 1,160.00 850.00 73.3 2.3.3 Organic Fertilizer Production from Manure Pre-treatment tank 000 m3 9.00 0.45 5.0 Shed and bins 000 m2 14.40 7.44 51.7 Fertilizer production equipment-manure set 20.00 231.00 1155.0 conical screen no. 2.00 n/a conical screen no. 1.00 n/a Belt conveyor no. 6.00 n/a Rotary dryer no. 1.00 n/a Rotary cooling machine no. 1.00 n/a 2.4 Production Infrastructure Support to New Livestock Parks 2.4.1 Milk Production Milking station 000 m2 30.41 27.72 91.1 Milking machine set 66.00 58.00 87.9 Milking tank no. 66.00 57.00 86.4 Sampling equipment no. 2,112.00 1,824.00 86.4 Movable milking machine no. 132.00 115.00 87.1 Water heater for flushing milk equipment no. 66.00 58.00 87.9 2.4.2 General Farm Infrastructure landscaping/afforestation 000 m2 1,927.26 1,258.74 65.3 Enclosure walls 000 m 169.94 165.63 97.5 Road 000 m2 461.42 363.65 78.8 2.5 Construction Design and Supervision 1,236.00 3,700.00 29.9 2.5.1 Detailed Construction Design 6,180.00 2,040.00 33.0 Detailed design 000RMB 6,180.00 2,040.00 33.0 2.5.2 Construction Supervision 6,180.00 1,660.00 26.9 Construction supervision 000RMB 6,180.00 1,660.00 26.9 2.6 Implemented Livestock Farms by Model 618.00 486.00 78.6 500-head new dairy farm no. 66.00 61.00 92.4 Dairy expansion by 100 head no. 7.00 5.00 71.4 Dairy expansion by 200 head no. 184.00 106.00 57.6 New 500-head beef cattle farm no. 51.00 82.00 160.8

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Value (PAD)

Actual Achieved

Value (ICR)

% of PAD

Beef farm expansion by 200 head no. 272.00 178.00 65.4 Dairy cattle organic fertilizer (in dairy farms) no. 20.00 10.00 50.0 5000-head pig bio-fermentation treatment no. 18.00 - 0.0 10000-head pig waste collection and treatment no. 44.00 n/a 3 Project Management, Monitoring and Evaluation 3.1 Equipment and Materials 3.1.1 Province Desktop computer no. 6.00 8.00 133.3 Laptop computer no. 6.00 9.00 150.0 Printer no. 2.00 2.00 100.0 Photocopy machine no. 1.00 2.00 200.0 Training equipment set 1.00 7.00 700.0 Office equipment and furniture set 1.00 46.00 4600.0 4WD Vehicle unit 3.00 3.00 100.0 Minibus unit 1.00 0.0 3.1.2 Municipality desktop computer no. 8.00 24.00 300.0 Laptop computer no. 8.00 32.00 400.0 Photocopy machine no. 8.00 16.00 200.0 Video camera no. 8.00 16.00 200.0 Digital camera no. 8.00 16.00 200.0 4WD vehicle unit 8.00 n/a 3.1.3 County desktop computer no. 30.00 90.00 300.0 Photocopy machine no. 30.00 60.00 200.0 Video camera no. 30.00 60.00 200.0 Digital camera no. 30.00 60.00 200.0 4WD vehicle unit 30.00 30.00 100.0 Laptop computer no. 90.00 3.2 Training 6,380.00 7,949.00 124.6 3.2.1 Province 1,200.00 1,829.00 152.4 Domestic training p/d 250.00 507.00 202.8 Domestic study tour p/d 250.00 1,020.00 408.0 International study tour p/d 420.00 50.00 11.9 International training p/d 280.00 252.00 90.0 3.2.2 Municipality 2,960.00 2,747.00 92.8 Domestic training p/d 1,200.00 1,230.00 102.5 Domestic study tour p/d 1,200.00 890.00 74.2 International study tour p/d 560.00 627.00 112.0 3.2.3 County 2,220.00 3,373.00 151.9 Domestic training p/d 900.00 2,478.00 275.3 Domestic study tour p/d 900.00 541.00 60.1 International study tour p/d 420.00 354.00 84.3 3.3 Technical Assistance 3.3.1 Provincial PMO 200.00 200.00 100.0 National consultant p/d 50.00 50.00 100.0 Provincial consultant p/d 150.00 150.00 100.0 3.3.2 Consultant-MPMO 800.00 800.00 0.0 National consultant p/d 80.00 80.00 100.0

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Value (PAD)

Actual Achieved

Value (ICR)

% of PAD

Provincial consultant p/d 720.00 720.00 100.0 3.4 Monitoring and Evaluation 5.00 5.00 100.0 Monitoring and evaluation surveys year 5.00 5.00 100.0 MIS development and maintenance 000RMB 309.00 n/a 3.5 PMO Management 195.00 195.00 100.0 3.5.1 Management Fee Provincial PMO year 5.00 5.00 100.0 Municipality PMO year 40.00 40.00 100.0 County PMO year 150.00 150.00 100.0 3.5.2 Project Implementation and Management Reports prepared no. 32.00 36.00 112.5 Pamphlets, manuals etc. distributed copy 2.00 13.00 650.0 Publications in local media no. - 20.00 n/a 3.5.3 Project Institutional Arrangement Establishment of PLGs no. 39.00 39.00 100.0 Establishment of PMOs no. 39.00 39.00 100.0 Establishment of Project TEG no. 1.00 1.00 100.0

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Annex 3. Economic and Financial Analysis

Introduction

Financial and economic rates of return (FRRs and ERRs) were recalculated at ICR, using updated prices, actual project costs and latest projections of future benefits. The methodology used follows, by and large, that at appraisal. The accuracy of estimation has been improved by using actual data and better projections of benefits compared to those at appraisal.

Project Benefits

The project objective is to improve environmental health management practices on targeted livestock farms in the Yellow River Belt in Henan Province.

The project has generated multiple benefits at the farm/park, local and regional levels. The benefits derived from improved (a) external environment in the target farms, villages and Yellow River Belt by reducing emission of pollutants; (b) animal productivity (increased milk yields, reduced morbidity and mortality, and reduced fattening period); and (c) revenue from waste by production and sale of improved organic fertilizer from the target farms. Public benefits accrue from the improved environment resulting from reduced emission of livestock waste pollutants, while private benefits accrue from improved animal productivity and sales from improved organic fertilizers. The ERR calculation includes analysis of the improved external environment resulting from reduced pollutant emission in addition to the private benefits from improved productivity and manure/organic fertilizer sales.

Cleaner farm and village environments accruing through improved management and disposal of livestock waste will also have a public benefit in terms of improved human health, but this is difficult to quantify and is not included in the economic analysis. Similarly, partial substitution of chemical fertilizers by treated manures and organic fertilizer on neighboring farms will have positive environmental benefits, such as improved soil organic matter, moisture retention, and reduced nutrient leaching to groundwater. However, these benefits are difficult to quantify in economic terms and are not included in the economic analysis.

Financial Analysis

Financial analysis was conducted based on seven representative livestock farm models, which have been adopted during implementation. Project benefits by model are listed in the table below, including reduced pollution and productivity increases. The incremental benefits from improved animal productivity were based on field surveys and data collected by the PMOs and consulting firm which helped to draft government ICR.

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Table 7: Summary of Benefits from the Farm Models

No Model Pollution Reduced Increased Livestock Productivity Improved Organic

fertilizer Data Source

1. New 500 dairy farms (parks)

• Compared with 67.4 % given without project programs, the collection and process of manure reaches 100%.

• Compared with nil process given without project programs, the collection and process of urine reaches 100%.

• The milk yield increases from 5.84 ton/head to 7.27 tons/head, the milk price rises from 2.99 yuan/kg to 3.82 yuan/kg, the feedstuff cost increases by 2% due to the rising price

• The calf death rate falls from 3% to 2% • The incidence rate of cow mastitis is predicted to

reduce from 10% of “Without project” to 1% of “With project” and the mastitis treatment reduces the loss of 20-day milk loss per year, and the vaccine cost shall be 120 yuan/cow/year

• All manure will be processed into compost with improved organic fertilizer

• Pollution reduction: Project Completion Survey

• Livestock production increase：Project Completion Survey: Livestock Price Survey and Statistics in Henan released by Henan Livestock Bureau

2 Expansion 300 cow parks( 300

to 500)

• Compared with 77.4% given without project programs, the collection and process of urine reaches 100%

• Compared with nil process given without project programs, the collection and process of urine reaches 40%

• Cow in stock increases from 200 to 500 • The milk yield increases from 5.63 ton/head to 6.20

tons/head, and the milk price rises from 3.23 yuan/kg to 3.89 yuan/kg, and the feedstuff increases by 32% due to the rising price

• The incidence rate of cow mastitis is predicted to reduce from 5% of “without project” to 1% of “with project” and the mastitis treatment reduces the loss of 20-day milk loss per year, and the vaccine cost shall be 120 yuan/cow/year



• Increase livestock productivity: Project Completion Survey

• Feedstuff price: Livestock Price Survey and Statistics in Henan released by Henan Livestock Bureau

3

Expansion 200 cow farms

(parks)(200 to 500)

• Compared with 77.4% given without project programs, the collection and process of urine reaches 100%.


• Cow in stock increases from 300 to 500 • The milk yield increases from 5.63 ton/head to 6.20

tons/head, and the milk price rises from 3.23 yuan/kg to 3.89 yuan/kg, and the feedstuff increases by 32% due to the rising price

• The incidence rate of cow mastitis is predicted to reduce from 5% of “without project” to 1% of “with project” and the mastitis treatment reduces the loss of 20-day milk loss per year, and the vaccine cost shall be 120 yuan/cow/year



• Livestock production increase: Project Completion Survey

• Feedstuff price: Livestock Price Survey and Statistics in Henan released by Henan Livestock Bureau

4 Newly build 500

beef cattle feeding areas

• Compared with the collection but with nil process given without project programs, the collection and process of manure reaches 100%.


• Annual sales of 1000 beef cattle




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No Model Pollution Reduced Increased Livestock Productivity Improved Organic

fertilizer Data Source

5

Expansion 200 beef cattle farms (parks) (Increase from 200 to 500)

• Compared with 81.6 % given without project programs, the collection and process of urine reaches 100%.


• Annual increased sales of 400 beef cattle




6 500 cow organic

fertilizer

• Compared with the without project program, increase no collection or process of manure

• All manure are processed into granule organic fertilizer


7 10000 Pig farms bio-fermentation

bed

• Compared with the without project program, the collection of manure reaches 100%.

• Compared with the nil process without project program, the collection of urine reaches 100%.

•



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Financial analysis is carried out at target farm level. The project will generate direct financial benefits to the farms through increased animal productivity and treated manure sales. The FNPV and FIRR for each model are based on the incremental financial benefits (such as extra milk production, sales of calves and old cows, treated manure sales). The results of the financial analysis are given in Table 8.

Investment in the waste minimization, waste management and waste treatment activities of the various models only partly benefited the participating project farms through incremental revenues from improvement in production and treated fertilizer sales. These investments also have strong “externality” environmental effects (such as reduced pollution of groundwater and surface water, reduced odor, and improved village living conditions). These externalities and public good benefits provided the rationale for the Chinese government to repay the World Bank loan for the project farms. Because the government is repaying the World Bank loan, the loan is a form of “subsidy” provided by the government to the participating farms. The FIRR calculation for participating farms assumes that the World Bank loan (repaid by the government) effectively provided subsidy for all of the activities it supports.

The financial analysis was carried out in two parts: (a) for total investment (without the “subsidy”); and (b) for participating farm’s investment (with “subsidy”). FIRR for the former refers to the financial return for the whole investment without subsidy, while FIRR for the latter refers to the financial return for the participating farms with subsidy. This comparison illustrates the rationale of the “subsidy” for the farms.

Financial Internal Returns (FIRR) with and without “subsidy” for the participating farms are given in Table 8. It shows that all models will have low or marginal financial return (range 8.5 to 19.7%) without the subsidy making them unattractive financially. With the subsidy, all models can achieve adequate financial return (13.9 to 31.6%).

Table 8: FIRRs for Farm Models

No. Model FIRR for the

whole investment (w/o subsidy)

FIRR for project farms (with

subsidy) 1 500-head dairy cow farm (new) 18.5% 31.6%

2 300-head dairy cow farm expansion (from 200 to 500 head)

14.1% 17.6%

3 200-head dairy cow farm expansion (from 300 to 500 head)

19.7% 23.7%

4 500-head beef cattle fattening farm (new) 15.7% 17.3%

5 200-head beef cattle fattening farm expansion (from 300 to 500 head)

12.6% 13.9%

6 500-head dairy cow organic fertilizer 8.5% 19.5% 7 10000-head pig bio-fermentation bed 14.2% 29.6%

Note: Government repayment of the World Bank loan as subsidy for the investment of all of the models.

It should be noted that the financial analysis does not adjust for any risks or the fact that Government wants to make sure that public goods, such as improved animal health and a reduction in non-point source pollution are achieved. In this project, the Government wanted to demonstrate such technologies and systems, requiring straight incentive payment for private entities to make it worth their while to carry out these public good investments.

Economic Analysis

In addition to the direct benefits to participating livestock farms/parks, positive environmental impacts accrued from reduced emission of livestock pollutants. These environmental impacts include reduced discharge to surface and ground water, reduced odor in villages, and improved

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conditions for human health in project villages. These public benefits are difficult to quantify in economic terms. The approach used to assign an economic value to these benefits is based on the reduction of Chemical Oxygen Demand (COD) of the livestock waste, and assigning an economic value to this reduction.

Quantity and Economic Value of Pollutant Reduction: According to the pollutant emission standard publicized by Chinese Ministry of Environmental Protection (Chinese Ministry of Environmental Protection, File on Environment Development, No.2004 (43)), COD content in fresh cow manure, cow urine, pig manure and pig urine is 31 kg/ton, 6kg/ton, 52kg/ton and 9kg/ton respectively. It is estimated that approximately 70% of the COD in animal manure and urine on the target farms can be reduced through the waste minimization, management and treatment investments of the project.

Most of the target farms have some treatment for manure at present, which usually involves composting. Fresh manure buyers also usually adopt composting as the preferred treatment of purchased fresh manure prior to its application on farm fields. Composting can also reduce the alkalinity and levels of soluble nitrogen and sulfur pollutants as a result of aeration during the composting process. The volume of pollutant reduction is based on improved collection of waste as a result of the project investments (Table 7).

According to the baseline survey on all of the target farms, about 22.6% (for larger farms) or 32.6% (for small household) dairy cow manure and 100% dairy cow urine cannot be collected or treated at present, while the rate will be 100% and 40% for manure and urine respectively in the with project scenario. As a result, only the COD reduction of 22.6% (for expansion farms) or 32.6% (for new farms) manure and 40% urine respectively is the incremental benefit of the dairy cow farm models.

The baseline survey of target farms indicates that most of the manure on existing 500-head beef cattle farms is collected, but is not composted, aerated, or treated with bacterial additives. The survey also indicates that approximately 18.4% manure on expansion beef farms, and 100% urine for all beef fattening farms is not collected or treated at present. In contrast, the collection or treatment rate is assumed to be 100% for both manure and urine, respectively, in the with project scenario. As a result, COD reduction of 18.4% manure on expansion beef farms and 100% urine on all beef farms, respectively, is the incremental benefit of the beef cattle farm models. Based on the same principles, the 500-head dairy cow organic fertilizer model (model 6, Table 7) will have no incremental manure or urine reduction. The 10,000-head pig bio-fermentation bed model will have 10% incremental reduction of manure and 100% urine discharged compared to the without project scenario.

Economic Value of Pollutant Reduction. The economic prices of the reduced pollutants were determined by the transaction price of the emission rights of pollutants. The economic price of COD in China has been subject to the transaction price of COD during trading of emission rights in recent years. Other pollutants, whose economic prices are hard to determine where there is no transaction at present, are not included in this analysis.

There are currently large differences in the transaction prices of COD in China depending on the type and location of the transaction. Prices were higher in the more developed coastal regions than in inland areas; the public transaction price was also higher than the government’s initial price; and the price in heavily polluting industries and heavily polluted regions was higher than in relatively less polluting industries and less polluted regions. The analysis used here adopted a low, relatively cautious COD economic price of RMB3,000/ton.

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Economic Rate of Return. ERRs for each model (Table 9) and the overall project were calculated based on the incremental production benefits, incremental treated manure or organic fertilizer sales, plus the economic value of reduced pollution based on the assumptions made in the previous two sections. The calculation period was over 20 years. The overall project ERR of 16.3%, indicating the project is economically viable.

Table 9: ERRs for Farm Models

No. Model ERR1 500-head dairy cow farm (new) 22.1% 2 300-head dairy cow farm expansion (from 200 to 500 head) 12.9% 3 200-head dairy cow farm expansion (from 300 to 500 head) 20.9% 4 500-head beef cattle fattening farm (new) 16.7% 5 200-head beef cattle fattening farm expansion (from 300 to 500 head) 13.3% 6 500-head dairy cow organic fertilizer 9.1% 7 10,000-head pig bio-fermentation bed 14.5% 8 The overall project 1/ 16.3%

1/ Investment in public activities (technical training, monitoring and project management) is included.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty

Lending Gayane Minasyan TTL/Environmental Economist EASER TTL Sari K. Soderstrom Previous TTL/Lead Operations Officer ECSS1 Lead Operations Officer Syed I. Ahmed Lead Counsel LEGES Lead CounselLourdes Anducta Program Assistant EASER Program AssistantFarzad Dadgari Consultant (Environmental Specialist) EASCS Consultant Cornelis De Haan Consultant (Livestock Advisor) ARD Consultant

Kari Homanen Environmental Engineer (Nordic Environment Finance Corporation)

Environmental Engineer

Houqi Hong Consultant (Institutional Specialist) FAO/CP Consultant Wanlong Lin Consultant (Agri. Economist) EASCS Consultant Zong-Cheng Lin Sr. Social Development Specialist EASCS Sr. Social Development Specialist Jinan Shi Sr. Procurement Specialist EAPCO Sr. Procurement SpecialistDavid Stewart Consultant (Agri. Engineer) FAO/CP Consultant Bruce Trangmar Consultant (Agri. Specialist) FAO/CP Consultant Anis Wan Rural Development Specialist EASSD Rural Development Specialist Jimin Wang Consultant (Animal Husbandry) EASCS Consultant Jinmu Yuan Consultant (Project Management) EASCS Consultant Chunxiang Zhang Program Assistant EACCF Program Assistant Fang Zhang Financial Management Specialist EAPCO Financial Management

Supervision/ICR Jun Zhao TTL/Rural Development Specialist GFADR TTL/Rural Development Specialist

Garo J. Batmanian Previous TTL/Lead Environmental Specialist

GENDR Lead Environmental Specialist

Yunlong Liu Procurement Specialist GGODR Fang Zhang Financial Management Specialist GGODR Financial Management Songling Yao Sr. Social Development Specialist GSURR Sr. Social Development Specialist

Gayane Minasyan Previous TTL/Sr. Environmental Economist

GENDR Sr. Environmental Economist

Sari K. Soderstrom Previous TTL/Lead Operations Officer ECSS1 Lead Operations Officer Syed I. Ahmed Lead Counsel LEGES Lead CounselBruce Trangmar Consultant (Agri. Specialist) GFADR Consultant Farzad Dadgari Consultant (Environmental Specialist) GFADR Consultant Yongli Wang Consultant (Environmental Specialist) GENDR Consultant Per Justesen Consultant (Livestock Specialist) FAO/CP Consultant Lourdes Anducta Program Assistant EASER Program AssistantMinhnguyet Le Khorami

Program Assistant EASER Program Assistant

Yunqing Tian Program Assistant EACCF Program AssistantXieli Bai Program Assistant EACCF Program AssistantHanane Ahmed TTL for ICR/Economist GFADR TTL for ICR

Weiguo Zhou Consultant (Sr. Institutional Development Specialist)

FAO/CP Draft ICR Preparation

Xueming Liu Consultant (Sr. Economist) FAO/CP Financial/Economic Analysis

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(b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY09 6.75 123.79 FY10 29.54 229.30 FY11 0.00 0.00 FY12 0.00 0.00 FY13 0.00 0.00 FY14 0.00 0.00 FY15 0.00 0.00 FY16 0.00 0.00

Total

Supervision/ICR FY09 0.00 0.00 FY10 0.00 0.00 FY11 13.27 62.45 FY12 20.65 69.30 FY13 24.03 106.44 FY14 12.12 55.18 FY15 14.70 54.32 FY16 14.60 47.60

Total

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Annex 5. Beneficiary Survey Results

This is a core ICR and no beneficiary survey was performed specifically for the purpose of ICR preparation. As an agreed instrument for data collection, a total of 18 surveys were conducted during project implementation including 10 for M&E, 6 for implementation inspection, and 1 each for SIA and EIA. For consistency purposes, the same group of 62 villages (two villages from each of the 31 project counties) were selected to serve as the base for all relevant surveys. These villages are the closest villages to the 62 project farms/parks (one village for one project farm/park). 10 households from each village were selected randomly for survey participation. Survey results were reflected in relevant reports, submitted to the World Bank and available in file.

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Annex 6. Stakeholder Workshop Report and Results No stakeholder workshop was organized.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

A. Summary of Borrower’s ICR33:

Chapter 1 Project Background, Development Objectives and Design (Omitted)

Chapter 2 Critical Factors of Impacting on the Project Implementation and Results

2.1 There are two significant characteristics during the preparation:

(1) Openness, equality and justice during the period of choosing the farms (parks).

(2) Minor preparation period, quick progress plan. There are only six months from the event which WB sent preparation team in May 2009 to the event which PAD was finished in Nov, 2009. There are only four months for the event which PPMO organized and prepared the document of Project Social Appraisal Document from April 2009 when it confirmed consulting agency to September 2009 when it was examined. Compared with the long period of two years of preparation of other projects, the period of preparation of this project could be the shortest and quickest one.

2.2 Critical Factors Impacting Project Preparation and the Measures. The project was designed by the principle of the feasibility of economy and technology. It fully taught other project lessons, such as WB loan projects in China, Vietnam and Thailand; GFE local livestock waste management Project; supported by CDM, dealing with waste and decreasing the carbon in greenhouse fund project; and domestic projects which supported the livestock development, standard farming, dealing with waste. The project imported the advanced management technology to deal with the livestock waste in order to implement the aim with the help of WB. The added value of this project mainly reflected the persistence of finance and the applicability of technology.

2.3 Project Implementation. Due to the poor recognition to the project at the beginning of construction, and because of the impact and restriction of land, PAD and funds, the speed of the project construction was slow. It has basically finished each item in PAD, achieved the expected task under the government and other corresponding people’s hard-work. Some adjustments were made including (1) adjustment of the number of the farm/park; (2) adjustment of the model style; and (3) adjustment of the model price.

2.4 Main Factors of Impacting on the Project Implementation

(1) Good factor. This project lied in Henan rich resources, and it fits for the need of society development as well as national industry policy. Because of scientific design, it has its foresight. The project managed well and arranged legally. During the project, the nation of PRC further advocates to strengthen ecological civilization construction, at the same time the demand of environment protection had to strengthen again, these helps the farm/park construct environmental fatalities.

(2) Problems arising in the project implementation and measures taken - (a) slow progress; (b) procurement problems and financing management Problems; (c) problem of not constructing according to detailed design; (d) EIA and land problems; and (e) counterpart funds.

33Numbers in the Borrower’s ICR (the latest estimates made in January 2015) and those in the Bank’s ICR (the actual provided by the PPMO in June 2016) may not be consistent.

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2.5 Monitoring Assessment Design, Implementation and Application

(1) Monitoring assessment design. The project designed a series of system of monitoring and assessment and formulated a complete monitoring assessment scheme in order to assess the project’s environmental, social and economic influence.

(2) Monitoring assessment implementation and application. PPMO confirmed the third party agencies of work unit of MIS, wok unit of project monitor assessment and work unit of inspecting the process of construction through bidding. The MPMO and the county PMO provided convenience to these third parties as well as supervision and inspection.

2.6 Operating after the Completion of the Project / Next Stage

(1) Sustainability of the project - sustainability of policies and sustainability of the project itself.

(2) Measures taken to ensure the sustainable operation of the project.

(3) Following actions suggested for WB – (a) continuously support popularization and utilization of the project experience and achievements and broaden positive influence of the project; (b) continuously support the new WB loan project applied by Henan in 2016, which is related to livestock husbandry ecology, whole industrial chain and safety in northern Henan; and (c) continuously support the ecological environmental protection of livestock husbandry.

Chapter 3 Evaluation on Project Results

3.1 Relevance with Project Objectives, Design and Implementation

(1) Relevance with project objectives when the project was designed. When the project was designed, its background analysis was thorough and positioning was accurate. The project objectives are brought into correspondence with national policies, industry development plan and World Bank’s development strategies for countries.

(2) Relevance with project objectives when the project was implemented. In the process of the project implementation, with the increasing clear concept of national eco-development and more and more emphasis laid on ecological construction and environmental protection, the project objectives strictly fit national policies. The project components are not modified and no formal medium-term adjustments are made to the project as well. Under the guidance of the World Bank, the PMO at all levels have solved problems including slow progress in the implementation, procurement and non-standard financial management with various measures taken such as strengthened coordination, training, publicity, carrying forward demonstration project, and so on. The project has achieved the desired development objectives.

(3) Relevance with project objectives after the project implementation. In November 2015, the 13th Five-Year Plan reviewed and approved by the central government referred to “ecological” for 33 times and ecological civilization construction will become an important theme in China’s future development. It is foreseeable that the concept of national ecological development will be strengthened, laws and regulations related to environmental protection will be improved, and that law enforcement will be intensified. The government will support and fund more waste treatment projects of livestock and poultry, and offer legal protection and policy support to guarantee the sustainable project development. The high quality design of this project ensures its sustainability. With the subsequent activities of the provincial government and PMO at all levels, the project design concept, schemes and successful experience in ecological raising model will be popularized in Henan, even around China. The project objectives further fit national policies.

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3.2 Realization of Project Development Objectives

(1) Project physical and financial performance. The total investment of this project reached 159.25 million USD, which is 103.11% of PAD, including base cost 159.05 million USD, which is 104.43% of PAD. Component 1 Institutional Strengthening, Training and Technical Support accomplished 3.3 million USD, which is 97.91% of PAD, component 2 Environmental Management in Existing and New Farms and Livestock Parks accomplished 150.15 million USD, which is 103.48% of PAD, component 3 Project Management, Monitoring and Evaluation accomplished 5.60million USD, which is 146.34% of PAD, and the front- end fee of the project is 0.2 million USD. The WB fund supported 468 farms and parks under the project. Trainings accomplished in the project is 91661 person days, which is 114.9% of PAD, including 83712 person days under component 1, Institutional Strengthening, Training and Technical Support, which is 114% of PAD, 7949 person days under component 3, Project Management, Monitoring and Evaluation, which is 124.6% of PAD.

(2) Implementation of project output indicators. On the basis of monitoring indexes determined in the project monitoring framework and sample numbers, monitoring methods and time nodes confirmed in PAD and Environmental Management and Monitoring Plan, the Provincial Project Management Office hired the third-party consulting agencies to make baseline surveys and monitoring and evaluation surveys over the years (including project medium-term monitoring and implementation monitoring) on the 62 sample livestock farms’ /parks’ environmental impact, production levels and project training, etc. The results indicate that all the project output indexes are up to, even above the requirements defined in PAD (details see Implementation Report of Project Environmental Impact).

(3) Evaluation on environmental impact. Strictly following Environmental Impact Assessment and Environmental Management and Monitoring Plan, the project implementation is fully in line with relevant national laws and regulations and WB environmental safeguard guarantee policies. The results of environmental impact monitoring and evaluation made by the third-party consulting agencies show that siting of project livestock farms/ parks conforms to environmental requirements. Production areas and living areas are strictly separated, which meets scientific standards. All the project livestock farms/ parks have been approved by the related environmental protection departments. There are no serious environmental pollution problems during the whole construction. Noise and dust of construction machinery were controlled effectively. Fermentation time of waste from livestock farms was strictly limited to 21 days. Collecting pools and waste pipes were monitored at a regular time to prevent soil, surface water and groundwater from being polluted. Epidemic prevention and sanitation were attached great importance to as well. The concentration of odor, H2 and NH3 in all the project farms have met and are even above the required indexes in Project Agreement, with the result that the ambient air quality is good. According to the survey on the villages where the project farms are located, 91% respondents are satisfied with the environmental protection work done in the project construction. They believe that an environmental management system has been established, which can reduce waste and effectively manage and utilize such waste; the farm construction does not cause any unfavorable influence on water resource; the land around the project farms can accept all the manure and urine from such farms, which does not cause overload; good results have been achieved in the implementation of environmental protection and waste treatment.

3.3 Efficiency (NPV, EIRR, Cost-benefit and FIRR). The financial and economic evaluation results indicate that the EIRR for all the project investment reaches 15.8%, above the 12% social discount rate; and the ENPV for all the project investment is CNY 738,510,000, which shows that,

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from the perspective of national economy, the project has achieved good economic benefits. The operation late in the project has reached the desired objectives.

3.4 Evaluation on Project Overall Results. Overall Evaluation on the Project: Satisfactory. All constructive tasks stipulated in the project have been completed. The monitoring and evaluation on the project, survey on the implementation and implementation of the project done by Institute of Society and Immigration of North China University Of Water Resources And Electric Power, and BoSi Agricultural Technology Consultant Co. Ltd., Henan province show that this project has achieved the desired environmental benefits, economic and benefits.

3.5 Central Theme, Other Results and Impact

(1) Ethnic minorities. The project implementation does not disturb their national religion and customs; instead, it can enhance the environmental protection level of raising cattle, increase their income and improve their living environment.

(2) Poverty reduction. The project training contributes to the strengthened livestock farming ability of the poor, and the project implementation provides jobs for the poor and increases their income. The project implementation does not have any negative effect on women’s participation in livestock farming.

(3) Women in the project. Through the project training, women’s environmental awareness has been strengthened, and their livestock farming techniques have been improved, which facilitate the rise in both their income and social status. During the project execution, World Bank and the PMO at all levels conducted various management personnel training for 28 times, totaling 7495 persons-days to improve their professional competence and management skills. In 5 years, among them, 19 persons were promoted. The strengthened project management institution has ensured the smooth project implementation.

(4) Impact on Farmers Cooperative Organizations. The project supports the development of farmers’ cooperative organizations. The item “Farmers cooperative organizations” was given relatively high points in the Selection Criteria Table used for scoring of applicants, which supported such organizations’ priority in participating in the project. Besides, the PIM specially developed guidelines to direct standardized operation for these organizations.

3.6 Other Unexpected Results and Impact

(1) The concept of ecological livestock husbandry, animal production and manure and urine treatment technology are used for reference by some projects at home including Asian Development Bank livestock farming and quality safe project, modern agriculture project, livestock husbandry pollutant treatment project, ecological recycling agricultural demonstrative project, etc., and also used for reference to modify domestic rules for the implementation of environmental protection and to develop livestock husbandry.

(2) The project design concept and execution experience have gained recognition from the authorities including the National Development and Reform Commission. In 2014, Guangdong Provincial Development and Reform Commission, and Department of Agriculture, inspected the project and exchanged experience in the project design and execution with the provincial PMO.

(3) Some livestock farms (parks), have increased facilities for waste collecting and treatment, explored models of waste ecological utilization, like lotus growing with organic fertilizer, earthworm breeding with fermented cow dung and agaricus bisporus growing with cow dung.

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(4) Some non-project livestock farms, aiming at reaching environmental criteria, have learned the project concept of and experience in waste collecting and treatment, and have conducted environmental management with self-raised funds according to the WB project contents and technology.

Chapter 4 Evaluation on Risks of Development Results

4.1 Risk Rating. Based on the comprehensive weighing of the risks in the execution of this project and the concrete measures taken to mitigate such risks, the overall risk level of the project is evaluated as moderate.

4.2 Major Factors Affecting Risk Rating include (1) risks in the execution of the project - management risk, policy risk, beneficiary farm’s/ park’s risk, technical risk, investment risk; (2) predicted risks after the implementation of the project - risks from sustainable operation of project facilities; market risks; and risks from higher labor costs.

Chapter 5 Assessment on the Performance of World Bank and Borrowers

5.1 Performance of World Bank

Assessment result: satisfactory

Being professional, dedicated, responsible and practical, the World Bank project management and expert group guided and supervised the whole development of the project consisting of various work such as preparation, implementation and account closing, which brought about good effect.

5.2 Performance of Borrower

Assessment result: satisfactory

The governments at all levels attached great importance on this project and solved major issues arising from the progress of the construction. All the Project Management Offices followed the World Bank’s provisions and requirements as well to promote the project. Furthermore, the project implementation units, acting on the project general principles, arranged and completed construction according to detailed designs to accomplish the objectives.

Chapter 6 Experiences Achieved and Lessons Learned in the Project

6.1 The Successful Experiences Achieved in the Project

(1) Supported by the government and leaders concerned much are the fundamental assurance to the success.

(2) Setting up sound systems, delegating responsibilities.

(3) Training and propaganda, improving understanding.

(4) Setting up examples, demonstration promoting.

(5) Strengthening supervision, assuring executing.

6.2 The Innovations of ideals and mechanism in the project

(1) The innovations of ideals in the project. This project is the first one which introduced the ideal of 'ecological livestock' into Chinese livestock project. The project learnt the experiences and lessons from the practice on both domestic and foreign livestock farms, considering the investment benefits and local ability of operating related techniques, tightly following the facts of

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Henan animal husbandry, introduced livestock spatial planning and animal nutrient balance calculating techniques, actively explored the models of developing ecological livestock. The persistence of 'scientific and practical' ideal.

(2) The innovations of mechanisms in the project – (a) investing and supporting ecological environmental friendly mechanism by the government; (b) mechanism of strengthening the public institutions' ability; (c) public selecting mechanism of farms; (d) promoting mechanism of project ideals, techniques, and qualities; (e) the project farms implementation agreement mechanism; (f) the advance payment for the project farms from the WB; (g) the third-party periodical supervision mechanism; (h) training quality ensuring mechanism; and (i) the project results demonstration and promotion mechanism.

6.3 The Disadvantages of the Project

(1) The uncertainty and difficulty of the project implementation has been added, because the farms applied for the project on March, 2009, and at that time, they could not make clear the differences, the requirements and the implementation procedure between WB projects and local fund projects, especially the bidding and procurement, disbursement and reimbursement, leading to the ideas of leaving things to luck, speculating to win, going through the motions, and lack of confidence, waiting and watching or even quit the project during the implementation step.

(2) There are surplus implementation units， the basic implementation conditions of project farms were of great different, the managers of project farms were of different qualities, understandings on the concept designs of the project participants were of great different, leading to the situation of the detailed design, hard to finalize, much reworking, long preparation term.

(3) The understanding on the project implementing procedure and requirements of part of the management staffs of CPMOs, MPMOs, and project farms were not in place, and their attention was insufficient, wildly optimistic，Blind pessimism，leading to the low construction standard, stand still, project implementation had been delayed.

(4) There occurred over embarrassed and excessive caution in project implementation.

B. Borrower’s Comments on Draft ICR:

“We agree with the ICR's rating at the borrower and the WB' performances, except for the rating of the project "Quality at Entry: Moderately Satisfactory”. We suggest the rating of the project "Quality at Entry: Satisfactory". Since even the project had not been implemented smoothly after initialized, the main difficulties the project faced at that time is the changing of the situation of local livestock production, not because of the project design itself. We think the project design had provided solid base of project implementation, and devote great to the demonstration for livestock ecological production and other livestock projects”. Below is a copy of the PPMO’s e-mail response to the Bank on the draft ICR.

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Annex 8. Comments of Co-financiers and Other Partners/Stakeholders Not applicable.

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Annex 9. List of Supporting Documents 1. Semi-annual Progress Reports 2. Project Implementation Inspection Reports (six in total) 3. M&E Reports (Baseline, 7 Semi-annual, MTR, End-project) 4. ICR Report in Chinese January 31, 2016 5. ICR Report in English January 31, 2016 6. Environmental Impact Assessment Completion Report January 2016 7. Social Impact Assessment Completion Report January 2016 8. Financial and Economic Impact Assessment Completion Report

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Annex 10. Conclusions of SIA and EIA Completion Reports

A. Introduction

1. Both Social Impact Assessment Completion Report and Environmental Impact Assessment Completion Report were prepared by Social and Resettlement Research Institute, North China University of Water Resource and Electric Power through surveys. For consistency purposes, the same group of 62 villages (two villages from each of the 31 project counties) were selected to serve as the base for all relevant surveys (SIA completion, EIA completion, M&E, Project Implementation Inspection) which were the closest villages to the 62 project farms/parks (one village for one project farm/park). 10 households from each village were selected randomly for survey participation. For preparation of the SIA and EIA completion reports, copies of survey questionnaires were distributed to a total of 620 village households in the 62 participating villages. 570 surveyed households (representing a total of 2,548 household members including 1,390 of males and 1,158 of females in 57 villages) completed and returned their questionnaires from which the survey conclusions were drawn. The reason why 50 survey participation households in five selected villages failed to return their questionnaires was that all households in these villages did not experience any impact by the construction of the target farms/parks as they were all newly constructed and located not within close proximity.

B. Conclusions of the Social Impact Survey

2. Project area-social and economic development

2.1 Sample household annual per capita net income. For 2548 people in the 570 sample households, the annual per capita net income is 10879.51yuan including 2464.67yuan from farming and 8414.83yuan from industry and sidelines. It is basically the same as the figure of farmer’s annual per capita net income in 2015 published by the Government of Henan Province in 2016.

Table 10: Annual per capita net income of sample households (2015) in Yuan

Municipality Total Population Per capita Agri.

Net Income Per capita Industrial and sidelines income

Total Per capita net income

Shangqiu Municipality 343 2637.54 11272.07 13909.61

Jiaozuo Municipality 448 3054.15 8750.32 11804.46

Luoyang Municipality 184 854.58 10795.65 11650.23

Xinxiang Municipality 351 2979.36 6758.18 9737.53

Puyang Municipality 405 1683.59 7230.9 8914.51

Kaifeng Municipality 365 3097.05 7067.67 10164.72

Shangqiu Municipality 375 2303.31 8254.4 10557.71

Jiyuan City 77 1662.73 8992.21 10654.94

Total 2548 2464.67 8414.83 10879.51

2.2 Assessment of living conditions of sample households. The survey shows that the general living condition of the sample households has been improved continuously in the past few years with the reduced “Engel Coefficient” from 0.386 (SA report of 2009) to 0.384 in 2015 (by 0.002). According to FAO classification of living conditions based on the Engel Coefficient (Poor:> 59%, merely sufficiently fed and clothed: 50-59%; Well-to-do: 40-50%; Rich :30-40%; Very rich: 30%), in general, the living condition of the sample households has reached the Rich level. See Table 11 for detail.

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Table 11: Engel Co-efficiency of sample households (2015)

Municipality Engel Co-efficiency

Shangqiu Municipality 0.334

Jiaozuo Municipality 0.418

Luoyang Municipality 0.432

Xinxiang Municipality 0.392

Puyang Municipality 0.49

Kaifeng Municipality 0.295

Shangqiu Municipality 0.319

Jiyuan City 0.255

Total 0.384

2.3 Distribution of living conditions of sample households. As shown in Table 12, among the sample households, 180 households are evaluated as “very rich” (31.58%), 133 households are “rich” (23.33%), 131 households are “well-to-do” (22.99%), 111 households are “merely sufficiently fed and clothed” (19.47%), 15 households are “poor” (2.36%). It is necessary to stress that the farmers pay great attention to the education of children, the cost of education has been increased in certain amount with the increase of tuitions. This is one of the reasons for the decrease of Engel Coefficient. Hence the overall evaluation of the social impact survey on the sample households should be “well-to-do and close to rich”.

Table 12: Distribution of Engel Co-efficiency

Engel Co-efficiency Households Living Standard Assessed Ratio

0.066-0.103 8 very rich 1.40%

0.105-0.2 33 very rich 5.79%

0.201-0.3 139 very rich 24.39%

0.301-0.399 133 rich 23.33%

0.4-0.449 62 well-to-do 10.88%

0.5-496 69 well-to-do 12.11%

0.5-549 65 merely sufficiently fed and clothed 11.40%

0.55-0.59 46 merely sufficiently fed and clothed 8.07%

>0.59 15 poor 2.63%

3. Development of livestock farms

3.1 Livestock farms (parks). Up to the date of December 31, 2015 for the closing of loan, the disbursement of loan covered 468 livestock farm (parks) including 165 milk cow farms, 260 beef cow farms and 43 pig farms. See Table 13 for detail.

Table 13: Loan disbursement of livestock farms (parks)

Municipality Milk Cow Beef Cow Pig Total

Shangqiu Municipality 23 1 5 29

Kaifeng Municipality 24 86 10 120

Luoyang Municipality 12 2 4 18

Jiaozuo Municipality 17 14 4 35

Xinxiang Municipality 22 20 8 50

Puyang Municipality 20 34 2 56

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Shangqiu Municipality 41 103 10 154

Jiyuan City 6 0 0 6

Total 165 260 43 468

3.2 Land use of the livestock farms

(a) Milk cow farms. Among the 165 milk cow farms with renovation and expansion the total land use is 13668.39mu (13305.39mu of rental and 363mu of self-owned), 5 farms are with self-owned land including 2 totally with self-owned. The increase of land for milk cow farms is 3903.43mu (from 9764.96mu to 13668.39mu). The land rented for forage grass is 3829.8mu.

(b) Beef cow farms. Among the 260 beef cow farms with renovation and expansion the total land use is 8977.5mu (8079.4mu of rental and 898.1mu of self-owned), 53 farms are with self-owned land including 46 totally with self-owned. The increase of land for beef cow farms is 3330.2mu (from 5647.3mu to 8977.5mu). The land rented for forage grass is 1225mu.

(c) Pig farms. Among the 43 pig farms with renovation and expansion the total land use is 3655.8mu (3479.8mu of rental and 176.0mu of self-owned), 4 farms are with self-owned land including 3 totally with self-owned. The increase of land for pig farms is 1110.0mu (from 2545.8mu to 3655.8mu). The land rented for forage grass is 40mu.

(d) Consultation and discussion on land use. All of the livestock farms have reached agreements on the land use through amicable discussion and negotiation with the land owners and local governments to pursuit a win-win situation.

(e) Consultation and monitoring in project implementation. Hotlines for complaints/claims on Environment Pollution were set up in PMOs at all level for public monitoring and collection of comments and recommendations

(f) Conclusion: Full consultation with the farmers in the on the project construction and implementation has been conducted and the project enjoyed the understanding and support from the farmers.

3.3 Livestock farm-living quarter and production area. In the planning and designing of the livestock farms, the production area and the living quarter was strictly separated and defined with the models for building, renovation and expansion. All of the livestock farms were assessed as in conformity with the environment requirements and passed the environment evaluation. The following is the data for milk cow farms, beef cow farms, and pig farms:

(a) The 165 milk cow farms take land of 13668.39mu with living quarter of 1435.18mu (10.50%) and production area of 12233.21mu (89.50%).

(b) The 260 beef cow farms take land of 8977.50mu with living quarter of 657.15mu (7.32%) and production area of 8320.35mu (92.68%).

(c) The 43 pig farms take land of 3655.80mu with living quarter of 358.27mu (9.80%) and production area of 3297.53mu (90.20%).livestock farm.

3.4 Livestock farms-igning of labour contracts and work safety. In order to safeguard the legal rights of the employees, all of the livestock farms signed the labor contracts with their workers. Among the 468 livestock farms, 2792 labor contracts from milk cow farms, 1207 labor contracts from beef cow farms, and 859 labor contracts from pig farms.

4. Livestock farms-livestock farms-Land rental for farm site and planting of forage

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grass

4.1 Livestock farm-land use

(a) The survey shows that total land rental for the 165 milk cow farms(parks) is 13,305.39mu with weighted average term of 24 years and 963yuan/mu/year (weighted average), the annual land rental is 12,042,571.3yuan.

(b) The survey shows that total land rental for the 260 beef cow farms(parks) is 8079.4mu with weighted average term of 22 years and 912yuan/mu/year (weighted average), the annual land rental is 7,078,514.0yuan.

(c) The survey shows that total land rental for the 43 pig farms(parks) is 3479.8mu with weighted average term of 30 years and 859yuan/mu/year (weighted average), the annual land rental is 2,742,477.0yuan.

4.2 Land use for planting of forage grass

(a) Milk cow farms: The land rental for forage grass planting is 3,829.8mu with weighted average term of 20 years and 963yuan/mu/year (weighted average), the annual land rental is 2,409,740.0yuan.

(b) Beef cow farms: The land rental for forage grass planting is 8079.4mu with weighted average term of 22 years and 912yuan/mu/year (weighted average), the annual land rental is 7078514.0yuan.

(c) Pig farms: The land rental for forage grass planting is 40mu with weighted average term of 30 years and 632.5yuan/mu/year (weighted average), the annual land rental is 25,300yuan.

4.3 Livestock farms-Payment of land rental

(a) The 165 milk cow farms: annually (148), lump-sum (7), self-owned land or others (10);

(b) The 260 beef cow farms: annually (209), lump-sum (4), self-owned land or others (47);

(c) The 43 pig farms: annually (38), lump-sum (1), self-owned land or others (4);

4.4 Livestock farms-land use and price regulation

The survey shows that the main concern of the farmers rent out their land to the livestock farms is the price which is calculated based on the wheat yield of the year (Normally for annually payment: land rental price / mu= wheat yield /mu per year; for lump sum payment: applicable to non-farmland as waste lands and hilly areas; some lump sum payment are for 5 years or 10 years with payment based on the projection of wheat yield. This settlement is popular in Henan Province in the past few years and is generally accepted by the farmers.

4.5 Livestock farms--Signing of land rental contracts

The survey shows that all of the 468 livestock farms in the project signed the land use contracts.

All of the milk cow farms signed the land use contracts with the land right owners including farmers (78), villager’s committee/group (69), township/county government (17), SOE (2).

All of the beef cow farms signed the land use contracts with the land right owners including farmers (107), villager’s committee/group (102), township/county government (12).

All of the pig farms signed the land use contracts with the land right owners including farmers (18), villager’s committee/group (20), township/county government (2), SOE(1).

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5. Livestock farms--forms of corporation

5.1 Livestock farm--forms of establishment

The survey shows that the 468 livestock farms in the project are with different forms including: 194 farmer’s cooperatives (41.45%), 101 joint-stock companies (21.58%), 173 sole proprietorship companies (36.97%).

5.2 Livestock farm-establishment mechanism

The cooperatives and joint-stock companies are generally established with the shareholders contribution of “Money”, “Land”, “in kind”, and or “Others-any combination of the above” while the farms of the sole proprietorship are with legal person as the sole investor.

5.3 Farmers cooperatives-formalities for establishment

The cooperatives are established, in accordance with the “Law on Specialized Farmers Cooperatives”, with the necessary procedures.

6. Project benefit to the farmers

6.1 Livestock farms-output

In the five years project implementation period, 468 livestock farms have been developed including 165 milk cow farms (41 farms not in operation in 2015, the 124 milk cow farms in operation in 2015 are with inventory of milk cow 63,326 heads and milk production 216,759tons), 260 beef cow farms (134 farms not in operation in 2015, the 126 beef cow farms in operation in 2015 are with output of beef cow of 33,050 heads) and 43 pig farms (2 farms not in operation in 2015, the 41 pig farms in operation in 2015 are with output of pig of 350,612 heads.

6.2 Livestock farms-treatment of waste

The survey shows that in 2015 the 468 livestock farms output of fertilizer includes: milk cow dung 361,472ton, beef cow dung 92,958ton, pig dung 102,390ton, milk cow urine 328,325ton, beef cow urine 99,432ton, pig urine 115,527ton.

6.3 Livestock farms-payment for the land rental

The annual total payment for the land rental is 25,561,452.3yuan including milk cow farms of 12,042,571.3yuan (farm site) and 2,409,740yuan (feed grassland), beef cow farms of 7,078,514yuan (farm site) and 1,262,850yuan (feed grassland), pig farms 2,742,477yuan (farm site) and 25,300yuan (feed grassland).

6.4 Income of local farmers from land use transfer

These farmers turned to industry and sidelines from farming and their industry and sideline income in 2015 is 159,398,104yuan in total (transportation: 15,701,294yuan, Catering: 28,287,270yuan, Construction: 45,578,691yuan, Labor in livestock farms: 13,505,412yuan, Business: 34,326,238yuan, Others: 21,999,199yuan).

The average annual income from industry and sidelines for those farmers is 6,944.24yuan (Transportation: 684.03yuan (9.85%), Catering: 1,232.35yuan (17.75%), Construction: 1,985.65yuan (28.59%), Labor in livestock farms: 588.37yuan (8.47%), Business: 1,495.44yuan (21.53%), Others: 958.40yuan (13.8%)).

7. Project benefit to women and vulnerable groups

7.1 Livestock farms--female owners

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In the 468 livestock farms, there are 173 farms with sole proprietorship and 33 are female (7.05%), 101 joint stock companies with female shareholder of 47 (10.04%), and 52 female members in the cooperatives (11.11%). There are 132 female farm owners in the 468 livestock farms (28.21%).

7.2 Livestock farms- employment of female and vulnerable groups

The livestock farms in the project provide employment for women and vulnerable groups (1,075 women (22.16%) and 190 poor (3.92%)).

7.3 Livestock farms-income of women and vulnerable groups

(a) Milk cow farms. Women working in milk cow farms are usually in the management and financial with average annual income of 23,240yuan in 2015(1700-1800yuan/month). The vulnerable groups enjoy equal payment with annual average salary of 20,950yuan in 2015 (1700yuan/month), the poor are with annual average salary of 22,090yuan and some of them are in management and technical.

(b) Beef cow farms. Women working in beef cow farms are usually in the management and financial with average annual income of 24,440yuan in 2015(about 1800yuan/month). The vulnerable groups enjoy equal payment with annual average salary of 20,093yuan in 2015, the poor are with annual average salary of 22,540yuan and some of them are in management and technical.

(c) Pig farms. Women working in pig farms are usually in the management and financial with average annual income of 28,260yuan in 2015(2100yuan/month). The vulnerable groups enjoy equal payment with annual average salary of 24,740yuan in 2015 (1700yuan/month), the poor are with annual average salary of 24,200yuan.

8. Conclusion on project training. The project training was conducted in accordance with the requirements of the ”Project Environment management and Monitoring Plan” and ”PAD” to the project management staff, technical staff, livestock farm management staff and farmer including capacity building and environment protection, and etc.

8.1 Public service-capacity building. From the start of the project to the end of 2015, the training has covered 1,197person-time including 807 men and 390 women with 3,576person-day. It is more than the requirement in the PAD (2,800person-day) by 776 person-day (28%).

8.2 Training of farmers. To date, the project has undertaken various training of farmers, technical assistance and livestock farm management which covered 41,885 person-time including 27,912 men and 13,971 women. The total number of participants in the training is 76,105 person-day.

8.3 The training in the project until end of 2015 is in total 85,151 person-day.

9. Farmers - Comments on the project impact on the local Environment. The public consultation on the environment upon the completion of the project shows that: (a) about 90% of the farmers from the sample households expressed satisfactory and think that the environment has been improved by the implementation of the project; (b) less than 10% of the sample farmers expressed non-satisfactory to the environment especially noise, dust and bad odor; (c) the implementation of the project is with no negative impact to the local water resource.

C. Summary on Environment Impact - Project Implementation

10. Environment Protection-Domestic Laws and World Bank Policy/Procedures

10.1 The legal provisions of domestic environmental protection are unified and coordinated with the safety policy of the World Bank about environmental protection. In

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the Project implementation process, no conflicting issues occur. The Project’s main security guarantee and legal provision issues are fully in line with World Bank policy / procedure requirements.

10.2 The Chinese laws, regulations and policies have stipulated and regulated systemically the arguments, submission and approval procedures as well as procedure for examination and approval for the early stage of environmental protection Project; meanwhile, they have stipulated and regulated the contents and procedures of supervision, monitoring and examination during the implementation of the Project, as well as the acceptance procedures and approval procedures of environmental protection upon Project completion acceptance; during the period of Project operation, Chinese laws, regulations and policies have also stipulated and regulated clearly and systemically the contents and procedures of monitoring and examination; during the post-evaluation period of the Project, Chinese laws and regulations have systemically stipulated and regulated the contents and methods of post-evaluation of environmental protection. Therefore, Chinese laws and regulations about environmental protection are sound, systemic and comprehensive. As for livestock industry, the representative laws, regulations and policies are: Law of Environmental Protection of the People's Republic of China, Law of the People's Republic of China on Prevention and Control of Water Pollution, Regulations of the People's Republic of China on the Implementation of Water Pollution Prevention and Control Law, Law of the People's Republic of China on Prevention and Control of Atmospheric Pollution, Law of the People 's Republic of China on Prevention and Control of Environmental Pollution by Solid Wastes, Law of People's Republic of China on Prevention and Control of Environmental Noise Pollution, Soil and Water Conservation Law of People's Republic of China, Animal Husbandry Law of the people's Republic of China, Animal Epidemic Prevention Law of People's Republic of China, Regulations of People's Republic of China Management of Livestock and Poultry, Regulations of the People's Republic of China on Administration of Feed and Feed Additives, Regulations on Environmental Protection Management of Construction Projects, Notice on Further Strengthening the Management and Prevention of Environmental Impact Assessment, Notice on Strengthening the Management of Strict Environmental Impact Assessment of Risk Prevention, Notice on Relevant Issues Concerning the Monitoring and Management of the Environmental Protection of Construction Projects, Measures for the Administration of Environmental Protection Acceptance of Construction Projects, Regulation on Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry, Measures for Public Participation in Environmental Protection and so on. Chinese environmental protection laws, regulations and policies are complete, systemic, serious and operable, extending to every small segment of environmental protection. Therefore, it is a set of environmental protection law and regulation which is systemic, sound, serious, feasible and targeted.

10.3 And the Operational Manual OP 4.01 of World Bank is a policy for any loan project in the world. Through many years’ modification, this policy can provide guidance for Project’s argument at early phase, Project implementation management completion acceptance as well as environmental protection policies, contents, measures and procedures during operation strategically and systemically; what is more important is that it can be integrated with the laws, regulations and policies of the lending country organically to guide the lending country to perform environmental protection, thus to infuse the advanced environmental protection law into the whole Project.

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11. Livestock farms-Environment Sustainability in operation

11.1 Environment protection-Sustainable management and monitoring

The Animal Husbandry Bureau and Environmental Protection Bureau at all levels are the government’s permanent institutions exercising the government’s management function. The staff holding a concurrent post in Animal Husbandry Bureau to manage, coordinate and examine together with Environmental Protection Bureau are permanent. Yet it is the responsibility of Environmental Protection Bureau to perform management, monitoring and examination of the environment. Therefore, sustainability of environmental protection is guaranteed by law and executive agency; moreover, it is the legal liability of the livestock farm owners, and environmental inspectors are established in their farms to maintain environmental sanitation.

11.2 Environment protection-Sustainable fund

As the aforementioned, the funds of government’s Environmental Protection Agency is allocated from the government’s administrative appropriation, and environmental inspection station is also a public undertaking unit with its funds to be allocated by the government, thus the sustainability of environmental protection is guaranteed from funds; furthermore, the environmental personnel of the livestock are part-time workers, it is part of their duty to inspect environment, with their wages to be paid by the livestock farm owner. As a result, the sustainability of each livestock farm’s environmental protection is guaranteed.

12. Environment protection-Implementation

The Animal Husbandry Bureau and Environmental Protection Bureau at all levels have always attached importance on environmental protection. Various environmental protection measures as proposed in the Report on Environmental Evaluation of this Project and the approval have all been implemented.

13. Environment Impact Survey-Conclusions

13.1 The sheds are selected to be located at downwind direction of residential area. The shortest distance between shed and residential area is 500m (the actual shortest distance has exceeded 1000m). The sheds are far away from water source, tourist spots and cultural heritage sites, without occupying basic farmland.

13.2 Ecological Environment: The Project has implemented various environmental protection measures as proposed in the Report on Environmental Evaluation and the approval comprehensively and carefully in the phases of designing, construction and commissioning of this Project. The ecological damage as generated in the Project construction process has been recovered, and the ecological environment has been recovered. It is believed that through comprehensive analysis that no major ecological environmental impact will be generated from the Project construction.

13.3 Environmental Quality of Surface Water: In the Report on Environmental Evaluation, the site selection of livestock farm has been discussed and screened in detail according to Chinese laws, regulations, policies and standards. 28 livestock farms in total are screened in the Yellow River Wetland Reserve, Yellow River Channel and water source conservation zone. These livestock farms are ordered to move away. At the time of Baseline Survey in 2010, these livestock farms have moved away from their original site. Therefore, after these livestock farms have been moved away, all the livestock farms within Project Zone are far away from Yellow River Wetland Reserve, Yellow River Channel and water

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source conservation zone. As a result, all the livestock farms within Project Zone are far away from the location of surface water. According to the survey on sites of all the livestock farms, currently, all the livestock farms are located outside the two banks of Yellow River and are far away from the source of surface water. The shortest distance between their sidelines and surface water is more than 10km, and the waste water from livestock farms can no longer influence the source of surface water, and unable to flow into the channel of Yellow River.

13.4 The excrement of livestock farms observes the regulation of shortest fermentation time of 21 days strictly. In the relative cold months (October to March), fermentation time shall be extended to at least 30 days. The fermentation treatment of pre-fermentation and fermentation in two phases shall be at least 10 days. Moreover, the time of solidification and storage shall be added to fermentation period.

13.5 Environment Air Quality: During the construction period of Project, dust has appeared in a few livestock farms, with the interference of county Environmental Protection Bureau, these livestock farms have paid attention to watering during construction. And the dust and noise of livestock farms during Project operation has been controlled, the environmental air quality within the area is good. Survey results of environmental impact: the environment of all the livestock farms has reached standard, the odor concentration, H2S and NH3 in the air has reached standard, and they have reached and exceeded the required target of Project Agreement.

13.6 All the construction waste as generated during construction shall be carried to the correct dumping site, except backfilling materials. The construction materials shall be recycled as much as possible. Dustbins shall be established in the building zone and living area, and spray sanitizer to prevent the breeding of mosquitoes and flies as well as other infectious vectors. A worker shall be dispatched as the person in charge of sanitation, and the local department of health shall be delegated to collect and carry domestic garbage to landfill site at regular intervals. During the operation period after completion of the Project, the system to mix cement, the transit zone of construction machinery and other construction sites shall be cleaned in a timely manner. The unused construction material shall be carried away, and the domestic garbage, toilet and sewerage shall be cleaned and disinfected.

13.7 Collect waste water and place it in the collection pool. Apply the waste water into farmland as liquid fertilizer after treatment. They monitored the collection pool and waste water pipes strictly to prevent pollution and penetration to soil, surface water and underground water. During the design and construction period, anti-seepage treatment shall be conducted for sewage disposal facilities. Playground shall be covered by lime soil, and the solid excrement shall be cleaned at regular intervals. Fluid excrement is discharged into collection pool. After treatment, the waste water of livestock farms is applied to the farmland as organic fertilizer.

13.8 Ensiling and other feed shall be separated with animal waste. The environment friendly feed shall be used, and the solid and fluid excrement separation technology shall be adopted. According to project design, excrement of animals shall be stacked on the concrete floor. Stack the excrement after the solid and fluid excrement has been separated, the solid excrement shall be applied to the farmland as organic fertilizer.

13.9 Social Environment: The livestock farms shall formulate regulations and rules, a specially-assigned person shall be dispatched to be in charge of sanitation, disease control as well as health and quarantine of the Project Zone. Waste water and domestic garbage shall be disposed at regular intervals, and periodic disinfection shall be conducted. Strengthen the sanitation consciousness of livestock farm workers and construction workers with vaccinate to be infused periodically.

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Disinfect the sheds at regular intervals to prevent medical emergency, pathogen spreading and disease infection. Inspect drinking water equipment periodically. And there shall be special drinking system for human and livestock respectively. The training about prevention of sexually transmitted disease shall be provided.

14. Environment protection-Risk control and emergency action plan

Every livestock farm has paid attention to construction safety during construction period, pathogen spreading, accident discharge risk of production waste water as well as corresponding risk in operation period and so on. The emergency plan for sudden environmental accident has been formulated, and various emergency measures have been implemented seriously, preventing the occurrence of sudden environmental accident effectively.

15. Environment management and monitoring-Implementation status

15.1 The animal husbandry bureaus and environmental protection bureaus at all levels have established environmental protection office during Project construction period and trial operation period, with the part-time and full-time environmental personnel being employed, to perform environmental protection duties seriously and put various protective measures into practice comprehensively, as well as to relieve the adverse effects on regional environment by Project construction, making sure the regional environment quality are well-maintained, with various environmental protection works are completed very well.

15.2 Animal Husbandry Bureau of Henan Province has engaged the Social and Immigration Institute of North China University of Water Resources and Electric Power through open tendering to conduct monitoring on the environment within Project Zone, with the monitoring time starting from 2010 till now. The environment monitoring plan as proposed in the Project’s Report on Environmental Evaluation and Appraisal Document has been implemented comprehensively.

16. Project Training

Starting from the Project commencement till now, the PMOs at provincial, municipal and county level have completed the Project’s training tasks, achieving the expected target as stipulated in Appraisal Document.

17. Public consultation

The survey is conducted by the Project County in the villages where livestock farms are located through giving out Questionnaires. 91% of the surveyed publics are satisfied with environmental protection works as done for the Project construction, thinking that the livestock farms have obtained favorable effect in implementing ecological environmental protection and the treatment of waste, and the surrounding environment of the livestock farms has been improved.

18. Risk Assessment and preventive measures

18.1 Project implementation period

(a) Non-transparency and unfair play in the selection process of livestock farms or most of the livestock farms that have participated in are privately owned rather than the farmer’s cooperatives. The preventive measures that have been adopted:

The agreed selective procedures and standards have been included in ProjectImplementation Manual. The selected livestock farm and the final amount of WorldBank loan will be published.

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The governments at all levels have implemented the construction of a clean government. The opening procedures and standards for livestock farms shall accept the public ’ supervision.

(b) Misconducts of applicants in the process of qualification review and approval such as rebating the to the decision makers. The preventive measures that have been adopted:

The Project accepts the World Bank’s supervision in the whole implementation process.

The governments at all levels have implemented the construction of a clean government. The discipline inspection commissions at all level accept the public complaints from time to time, with the whole process accepting the public supervision.

(c) The amount of grant is insufficient for every livestock farm (park) involved to obtain adequate funds to realize the target of Project’s environmental protection. The preventive measures that have been adopted:

The selection of livestock farms are agreed through both parties’ consultation. Each activity of the typically designed Project livestock farm (park) that has been agreed has detailed budget, and each livestock farm will determine their final investment accordingly rather than making estimation.

(d) The Project livestock farm (park) cannot provide sufficient supporting funds in a timely manner, making the environmental target of the Project difficult to be realized. The preventive measures that have been adopted:

Sufficient supporting fund is one of the standards for livestock farm selection.

This Project will employ an advance payment system of World Bank loan.

(e) The typical design and construction standards of the livestock farm (park) are not followed, resulting in the expected environmental benefits unable to be realized. The preventive measures that have been adopted:

The typical design shall be approved by World Bank. The detailed construction design shall be prepared by the engineer with qualifications. Before the inspection and acceptance procedure, it shall be supervised by qualified engineer and the technical standards shall be achieved.

Those haven’t reached typical design and environmental target shall not be accepted, and cannot be applied for reimbursement.

(f) The increase of livestock breeding density leads to the risk growth of disease outbreak. The preventive measures that have been adopted:

Disease outbreak hasn’t occurred through Project cultivation technique, environmental epidemic prevention training and the effective management of epidemic prevention and supervision departments at all levels.

18.2 Project operation period

(a) Policy Risk

Risks brought by confirmation of rural land rights to this Project’s operation. Land rights confirmation has solidified the peasants’ right to use land, which will increase the peasants’ awareness about land use rights. The price fluctuation of land transfer will also bring risks to land use for part of the livestock farms. Risk prevention: The

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governments at all levels and livestock farms shall make the preparation plan in advance for possible risks in price fluctuation of land transaction after land rights confirmation.

Risks in Project operation brought by “grain direct subsidy and comprehensiveagricultural subsidies” as carried out seriously in Henan province. Henan province haspaid attention to the granting of agricultural grain direct subsidy and comprehensiveagricultural subsidies. The subsidy policy is abide by strictly from this year, and graindirect subsidy and comprehensive agricultural subsidies are all eliminated for thefarmlands changed for other purpose. And that of peasants who have leased their landmay be eliminated since this year, thus the actual income of these peasants will bedecreased, so part of the peasants will request to increase rent. Risk prevention: TheLand Leasing Contract between owners of the livestock farms and villagers will bechanged along with the market changes, and owners of the livestock farms and villagerswill resolve through consultation.

(b) Market Risk

Project operation risk brought by price fluctuation in meat and dairy market. Riskprevention: The livestock farm will determine their production scale in accordance withthe market prices. The completion survey on social impact of this Project indicates thatamong 453 livestock farms of this Project, 24.20% of dairy farms, 46.43% of beef cattlefarms and 4.55% of pig farms didn’t conduct breeding in 2015. One of the reasons isto prevent market risks.

19. Summary Conclusions

19.1 Each livestock farm has implemented the system of environmental protection seriously with the complete formalities of environmental protection review and approval, as well as the technical data and environmental protection archives. 19.2 The environmental protection measures as proposed in the Project’s Report on Environmental Evaluation and its reply have been carried out seriously, the tasks as required by Environmental Management and Monitoring Plan have been implemented, and the environmental protection facilities of the livestock farms have played a role in pollution prevention. 19.3 The installation quality of environmental protection facilities are in line with national and relevant departments’ requirements and standards. 19.4 Each livestock farm is equipped with qualified personnel of environmental protection facilities operation through training, and operation specification and corresponding rules and regulations have been formulated, with raw material, motive power and energy supply being implemented, possessing the condition for normal operation of environmental protection facilities. 19.5 Main pollutant discharge is in line with corresponding standards and requirements. 19.6 Various ecological protective measures have been implemented comprehensively, and the ecological environmental damage occurred in the Project construction process has been recovered gradually. 19.7 The environmental monitoring during construction period and environmental monitoring plan during operation period is in line with the Project’s Environmental Impact Report and relevant regulation’s requirements. 19.8 The adverse impact by Project’s construction and operation to environmental protection sensitive points is small, and the environmental quality within this area is maintained very well. 19.9 The environmental protection measures for “three wastes” of the livestock farms have been implemented, solid excrement, liquid urine and domestic wastewater are applied to farmland after treatment. When applying to the farmland, the farmland’s absorptive ability has been taken into

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full consideration, without excessive application. 19.10 In conclusion, this survey indicates that this Project’s livestock farms are in line with the acceptance conditions of environmental protection. 20. Project findings-Lessons learned. This project has obtained some achievements andaccumulated some experiences, but there are still some deficiencies as below:

20.1 Some farmers maintain their conservative thoughts without sufficient understanding about management procedures and advanced concepts of World Bank loan. In addition, the time of Project’s preparation at early stage is quite long, and the approval formalities are strict, resulting in small part of the farmers’ withdrawal from this Project thereby.

20.2 The Owners are facing big pressure for the funds to be self-raised as the World Bank follows reimbursement system. It is difficult to make the funds fully funded, which has influenced the Project’s construction progress.

20.3 Some farmers have quite low educational level, and they have different understanding about training contents, with weak mastering and operation ability of the trained basic knowledge of cultivation technology and livestock farm management technology.

20.4 The Project has been prepared for a long time at early stage, which is difficult to adapt to the market changes, and has certain impact on the livestock farm’s development.

20.5 At the early stage of the Project’s implementation, no standard demonstration site can be referred to by the domestic livestock farm construction with World Bank loan, especially in the aspects of Project management procedures, reimbursement procedures and corresponding data.

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MAP (IBRD37005)