Report No. PID11164
Project Name             CHINA-Second Tianjin Urban Development...
and Environment Project
Region                   East Asia and Pacific Region
Sector                   Sewerage (45%); Sub-national government
administration (25%);
General transportation sector (20%); Flood protection (109)
Project ID               P040599
Borrower(s)              PEOPLE'S REPUBLIC OF CHINA
Implementing Agency
TIANJIN MUNICIPAL GOVERNMENT
Project Management Office, Construction Commission
Address: 56 Changsha Rd., Heping District, Tianjin 300051, China
Contact Person: Mr. Qi Wenjie or Mr. Wang Yifang
Tel: 86-22-2330-3630
Fax: 86-22-2330-6419
Email: tjpmo@public.tpt.tj.cn
Environment Category     A
Date PID Prepared        February 4, 2003
Auth Appr/Negs Date      December 23, 2002
Bank Approval Date       May 20, 2003
1. Country and Sector Background
1. Cities of China have undergone breathtaking growth and transformation
over the last two decades, economically and physically. Radical
decentralization of fiscal and administrative authority in the early 1980s
unleashed sustained heavy investments going into infrastructure and
housing, which had deteriorated badly during the preceding two decades but
now can be considered at least adequate for most cities of China. As
rapid urban economic growth is expected to continue well into the future,
the pressure for further expansion of infrastructure would continue. On
the other hand, the singular focus on expansion is yielding to broader and
more qualitative issues of sustainability, efficiency, and equity.
2. The rapid industrial and urban growths are also increasing the concern
for environmental sustainability. The government has taken a more
forceful position for environmental protection since the late 1980s,
compared with most other matters largely delegated to local governments.
This policy attention and industrial renovation have slowed the
environmental deterioration and, in many large cities, reversed it.
Nevertheless, water pollution remains serious and growing, due mainly to
increasing wastewater from domestic and semi-urban sources. The pollution
is especially grave in three river (Huai, Hai, and Huang) basins and the
Bohai Bay in Northern China, where water scarcity constrains economic
growth yet most water courses are rated unfit for any productive use. The
government has made the clean-up of the Three Rivers, Three Lakes (Tai,
Dianchi, and Chao), and Bohai Bay as a high priority national program;
embarked on a program to increase water conservation and reuse in the
region; and mandated all municipalities in the country to treat 50% of



wastewater, and the larger ones to treat 70w, by 2010.
3. While much remains to be done, especially for environmental protection,
the extensive urban reconstruction over the last two decades has reduced
most glaring infrastructure deficiencies while increasing the resource
requirements to operate and maintain the enlarged stock of
infrastructure. At the same time, the on-going downsizing of the
government and the state-owned enterprise sectors is constraining the
fiscal and quasi-fiscal resources. These increase the importance of
ensuring efficiency and sustainability in infrastructure investment and
utilization. Examples of common inefficiencies found in China include
idling of wastewater treatment plants due to overdesign or lack of
operating funds, and low utilization of road capacity due to weak traffic
management and public transportation. To increase the efficiency and
sustainability of infrastructure, the government has been promoting the
full-cost recovery and commercialization of infrastructure services.
Regulatory and planning capacities need to be strengthened for healthy
market-based infrastructure provision.
4. Expansion of infrastructure and services remains a dominant issue,
however, for new or small urban areas of China. As a group, smaller
cities, towns, and semi-urban areas have been experiencing much faster
economic and demographic growth than larger cities but their
infrastructure and services have not kept pace, partly as the current
fiscal system of China allows little borrowing or redistribution of fiscal
and technical resources. As a result, small urban areas face a serious
and growing deficit in infrastructure, services, and the environment.
This imbalance between growth needs and supporting services and between
small and large urban areas represents an inefficient allocation of
resources and a growing threat to the environment. It also presents a
major equity issue as most of the jobs to absorb rural surplus labor have
been created in the small urban areas.
Urban Development and Environment in Tianjin
5. Tianjin Municipality is a provincial-level jurisdiction located between
Beijing to the west and Bohai Bay to the east. It consists of six urban
districts that make up the Tianjin "city proper" as well as nine suburban
districts and counties, with a total population of about 10 million.
First developed as a gateway to Beijing, the city has grown into a premier
industrial and transportation center of North China. It now anchors a
diversified metropolitan area, with fast industrial developments in
suburban Districts. The city itself remains compact, and most of its 5.5
million residents live within about 225 km2.
6. The municipality provides vivid exhibits of many key urban development
and environmental issues facing cities of China today. Traversed by the
Hai River, bounded by the Bohai Bay, and heavily industrial, it is a focal
point of the national campaign to improve water quality and maximize the
use of water resources. Physical compactness of the central city and its
limited fiscal resources, still largely based on struggling old
industries, heighten the need for efficiency in infrastructure investments
and utilization. Continued rapid development of suburban areas holds the
key to the municipality's economic future as well as equity and
environment.
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7. Tianjin has been a prominent national model of quality and innovations
in urban development and environmental protection. Following its
impressive recovery from the devastating 1976 earthquake, in the 1980s it
became the first city in the nation to successfully build and operate a
large scale (200,000 m3/day) wastewater treatment plant, intercept most of
the industrial wastewater from the natural river, develop low-cost housing
and housing exchanges, and complete a three-ring road system. It was also
one of the first to develop competitive construction and development
industries, and experiment with automated area traffic control systems and
subways. The Bank assisted Tianjin's continuing innovations through the
Tianjin Urban Development and Environment Project (TUDEP1, 1993-2000),
which helped introduce a market-based resettlement system, high (at the
time) sewerage tariffs, competitive public bus services, an industrial
pollution control fund, a large-scale sanitary landfill, all of which
became national models. More recently, Tianjin became the first among
large Chinese cities to raise water tariff to over Y 3/m3, to
commercialize wastewater treatment plants, to commercialize heating
services and tariffs, and to pilot a large-scale urban use of reclaimed
water.
2. Objectives
1. The project will support measures to enhance the efficiency and equity
of urban wastewater management and transportation systems, and thus
facilitate the sustainable development of Tianjin and serve as models for
other cities in China.
2. Growth of cities and towns is key to the country's continued economic
growth and restructuring as well as improved equity in the future. Large
infrastructure investments in the past two decades have made the
availability of basic infrastructure and resources less of a concern at
least in large cities of China, than their efficiency and sustainability,
and their distribution among different income groups and different areas.
Examples illustrating these issues include: the pollution of waterways
that not only damages the ecology but also deprives cities and farms of
the necessary water resources; lack of environmental management in newer
urban areas on the one hand but underutilization of the capacity in the
cities on the other; institutional and financial frameworks for
infrastructure lagging the growth of the assets and expenditures; and the
low utilization of the limited urban road capacity due to low levels of
bus services and traffic management. The proposed project will support
measures to address these issues for wastewater management and
transportation, for which largest shares public investment are planned for
the next decade in Tianjin, typical of most cities of China.
3. Many of these programs -- wastewater utility commercialization,
suburban wastewater management, sewage canal rehabilitation, water reuse,
and bus priority measures -- represent significant innovations that are
financed for the first time in China by the Bank and will serve as
important experiments and demonstration for advances in urban management
in China.
3. Rationale for Bank's Involvement
1. The proposed project would put the Bank's financial, technical, and
institutional resources all to good use. Although TMG has large overall
fiscal resources (about $2.3 billion a year), it has a very broad mandate
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and cannot easily finance lumpy capital investments in an efficient
sequence. For example, Dagu canal has been periodically dredged and
repaired in small sections, but these piecemeal efforts are not efficient
as the sections become contaminated again with materials from other parts
of the system. With such piecemeal works, it has also been difficult to
afford the necessary analysis and safe remediation measures including the
landfill. The Bank's mobilization of international experts and the
financing bring the necessary resources together to achieve fundamental
and efficient remediation. Similarly, due to interdependence of road
sections, piecemeal improvements of sections are wasted until connected
sections are fully improved.
2. The Bank's role as a knowledgable third party is put in good use for
the refinement of the commercialization framework that TMG established but
wishes to improve, and for promotion of necessary but institutionally
difficult interventions such as the establishment of the proposed
transportation coordination mechanism and the small town sewerage
systems. The latter is another good example of the strategic use of the
Bank's financial and technical resources on areas where these resources
are critically lacking due to the current institutional and economic
framework.
4. Description
The project consists of the following environmental, transportation, and
institutional development components.
Environmental Components:
(a) City Drainage and Sewerage: Construction of storm water drains,
sanitary sewers, and pumping stations in Nanbeicang and Fukangnanlu areas,
complementing the wastewater treatment plant (WWTP) being financed by JBIC
and ADB; drains and sewers in the south suburb district of Tianjin. These
facilities will complete the drainage system envisioned by Tianjin
drainage master plan. The Nanbeicang and south suburb district are
recently annexed areas with many small industries and lower-income
residents.
(b) Shuanglin Wastewater Treatment Plant. Construction of a WWTP of a
200,000 m3/day capacity, in Shuanglin, serving the South Suburb Area.
(c) Urban Wastewater Reuse: Construction of water reclamation (tertiary
treatment) plants attached to the Dongjiao and Shuanglin WWTPs; and
reclaimed water distribution systems mainly for industrial and landscape
uses.
(d) Dagu Canal Rehabilitation: Dredging of sediment and rehabilitation of
cross-sections, bridges and culverts, and three pump stations of Dagu
Canal (70 km) and its associated tributaries of Xinfeng (20 km) and
Jizhuangzi canals. These are main wastewater canals for the southern part
of Tianjin City, draining directly into the Bohai Sea since 1960. The
project will remove, treat, and dispose of about 2 million cubic meters of
sediment, up to half of which is estimated to be contaminated with heavy
metals, in an environmentally sound manner. This will prevent
recontamination of treated wastewater (three of the new Tianjin wastewater
treatment plants will discharge into the Dagu canal), and also restore its
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storm water conveyance capacity.
(e) Suburban Sewerage: Creation of municipal wastewater collection and
treatment systems in about two suburban towns of Tianjin municipality on a
programmatic basis, to initiate and set models for the wastewater
management in the suburban areas, which are growing rapidly but without
proper urban environmental management systems. A proposed GEF-financed
project for an improvement of Bohai water quality will include a direct
support for this and the Dagu rehabilitation as well as complementary
measures of groundwater management and water conservation.
Transportation Components:
(f) Urban Roads: Construction of interchanges at two major intersections
of the Middle Ring Road (MRR), and low cost traffic engineering
improvements on selected locations along the Inner Ring Road (IRR) and the
Eastern and Southwestern parts of the MRR.
(g) Traffic Management: Extension of the existing Area Traffic Control
System to 300 new intersections -- 89 on or within IRR and the rest within
the MRR, with channelization and often in connection with bus priority
measures.
(h) Public Transportation: Preparation and implementation of bus priority
measures on selected corridors, including bus ways and traffic engineering
measures, to increase the efficiency of bus operations and to contribute
to increasing the modal share of the bus system.
Institutional Development
(i) Technical Assistance and Training for:
(1) Development of infrastructure information systems;
(2) Reform and development of sewerage institutions and finance;
(3) Establishment of a mechanism or organization to coordinate urban
transportation planning and management;
(4) Improvement in the traffic forecast model; and
(5) Bus routes restructuring and design of bus priority measures.
5. Financing
Total ( US$m)
BORROWER $185.50
IBRD $150.00
IDA
Total Project Cost $335.50
6. Implementation
1. The overall project will be coordinated by the Urban and Rural
Construction Commission (URCC), supported by its Project Management Office
(PMO). They will report to and be guided by the Project Leading Group
consisting of a TMG vice mayor and heads of related commissions and
bureaus. URCC will also directly manage technical assistance components
in cooperation with line agencies directly in charge, such as MEB, Urban
Planning and Real Estate Bureau, and Traffic Management Department.
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2. Preparation and implementation of other components are the
responsibility of the following line agencies traditionally in charge of
the respective subsectors:
Municipal Engineering Bureau: urban sewerage and drainage, wastewater
reuse, Dagu canal rehabilitation, urban roads, bus priority measures;
Traffic Management Department (TMD) of the Public Security Bureau: traffic
signal control system;
Suburban Districts and the TEDA Water: suburban sewerage.
3. MEB is responsible for preparation and implementation of the major part
of physical investments under the project. However, it will work with
other agencies in construction and management of the assets, as follows:
The Tianjin Drainage Company will manage the stormwater and sewage
collection systems on completion.
Various options are being considered for the Shuanglin wastewater
treatment plant, including TDC management, management contract, and
privatization. An institutional analysis will be undertaken under the
Sewerage Sector Study to help the TMG decide on the most appropriate
arrangements (refer to the preceding Section.)
For Dagu Canal rehabilitation, MEB will work under the direction of a
Steering Committee consisting of representatives from URCC, the municipal
environmental protection bureau (EPB), the municipal water resources
bureau (WRB), and the three suburban districts which the Dagu Canal runs
through. WRB will be closely involved in the rehabilitation of the three
Dagu pump stations and dredging works, and in the operations including the
distribution of reclaimed wastewater. EPB will play a key role in the
treatment and disposal of contaminated sediment.
The two wastewater reuse facilities will be managed by a subsidiary of
CYE, or another institutional alternative to be considered during the
project.
For bus priority measures, MEB will work under the technical guidance of
the Public Transportation Management Department of URCC and the TMD.
7. Sustainability
The proposed project will contribute to the sustainability of Tianjin's
overall development by helping to protect water resources in the
metropolitan area and by helping to relieve the congested urban streets.
This will depend, however, upon the sustainability of the services and
facilities, which in turn depends critically upon adequate financing, as
discussed in Section E2. In short, the large and rapid build up of urban
wastewater management, especially the treatment facilities financed in
parallel to the project, will greatly increase the financing needs, far
above the current levels of funding available to the sector, and therefore
poses a large risk to the sustainability of the system. TMG took a major
step to put the wastewater treatment operations on a commercial footing in
an attempt to ease the constraint, but it is not clear whether it would
achieve that objective. Therefore the project will include major
institutional and financial improvement actions to ensure efficient and
sustainable pricing, financing, and regulation of the wastewater
services.
In the case of the urban transportation system, the sustainability will
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depend mainly on continued development of measures similar to those
included in this project under an integrated, updated plan. The project
will help ensure such development with the initiation of bus priority
measures, coordinated planning of the components, and a support for the
development of an institution for comprehensive management and planning of
urban transportation.
8. Lessons learned from past operations in the country/sector
1. Experience from a full range of projects financed by the Bank points to
the importance of borrower ownership, quality and efficiency of design of
capital investments, and financial and institutional arrangements for
proper operation and maintenance. The project incorporates these lessons
as it makes efficiency and sustainability as a main project objective, and
its components are based on TMG's long-standing official plans and project
proposal.
2. The Bank's latest comprehensive review of experiences in water and
sanitation sector operations is old (1992) and focuses on water supply.
Therefore the project design relied mainly on lessons from the recent
similar Bank operations in China and a few recent Bank studies, mainly on
water quality and WWTP performance in China. They found a widespread
tendency to over-design WWTPs beyond the sewage flow that can be delivered
through the collection system or beyond the financial capacity for
operation. This issue existed to a small extent with the existing WWTPs
in Tianjin, but would have increased drastically with new plants being
built with ADB and JBIC financing, without the additional collection
system proposed under the current project. Another key finding was that
water pollution is serious and growing faster in suburban areas
surrounding large cities than in the central cities themselves. Thus
addressing suburban wastewater issues is a necessary complement to
sewerage investments in the city of Tianjin.
3. The latest (1997) comprehensive review of the Bank-financed urban
transportation projects around the world identified five key inadequacies
which the Bank should help to address: road infrastructure; traffic
management; public transportation; institutions; and policy and regulatory
framework. The design of this project addresses all these issues to
varying degrees necessary in Tianjin and feasible under the project, with
the focus on promoting public transportation. In the case of public bus
system, the Review noted that giving buses exclusive rights to curbs and
other road infrastructure is effective where the rules are enforced
strongly and the demand is thin. Difficulties of bus priority measures in
Chinese cities may be attributed to the weakness of these conditions. It
would therefore be a challenge, and interdepartmental coordination would
be essential, to design and implement bus priority measures that would be
effective.
4. The Bank's review of institutional development assistance (1995) found
high rates of unsuccessful or unclear outcomes, and attributed it mainly
to the weak ownership by the implementing agencies, which in turn is often
due to weak match between the institutional development needs and
technical assistance (TA) design, and the lack or frequent change of
champions. Experiences in China also indicates a similarly weak outcomes
of TA programs in general. In addition to the lack of ownership,
difficulties that international consultants face in understanding local
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situations and communicating with counterparts appear to be a major
additional risk factor, as well as the weak skills in managing consultant
contracts. TA components proposed under the project are limited to issues
for which there is a strong and well-defined TMG desire for resolution,
and are structured to utilize local expertise to the maximum extent
available, and with independent experts to help manage the TA components.
9. Environment Aspects (including any public consultation)
Issues        1. About 80- of the project investment is directed
to improving and protecting water quality in Tianjin municipality and the
Bohai Bay. The intended benefits, beneficiaries and responsible
institutions are identified and discussed in Chapter C. Even the
transportation components are shown to have positive environmental impacts
as they are designed to reduce idling times and overall traffic demand.
However, they may also increase air pollution in some localized areas.
These effects were analyzed with the use of an airshed model, various
modifications have been incorporated to minimize the adverse impacts.
Construction noise and dust would be another, temporary environmental
impacts. Measures to control these will be incorporated in construction
contracts.
2. Rehabilitation of Dagu Canal poses significant environmental challenges
in the characterization, removal, treatment, and disposal of the
contaminated sediment. Substantial physical, chemical, and toxicological
sampling of the sediment has been done under the direction of a top
international limnologist, and a conservative estimate is that not more
than half the sediment contains hazardous substances that require special
treatment. But its heterogeneous nature leaves considerable uncertainty.
A detailed Environmental Management Plan (EMP) will be followed during the
implementation, to ensure intensive sampling and analysis
section-by-section of the canal, and the use of proper dredging, treatment
and disposal techniques. During dredging, sections of the canal will be
closed off and the flow routed around the section. This will ensure that
toxic compounds released from the sediment during dredging will not escape
downstream. Water caps will also be used during dredging, as required, to
reduce odor. Various methods will be adopted for sediment disposal
depending on the degree of contamination including: disposal in two
hazardous waste landfills, use as earth construction material, and
disposal on agricultural land. Sites for the landfills have been secured,
and they have sufficient space to dispose of all of the sediment,
contaminated or not, in the event other disposal options are not possible.
3. Use of reclaimed water for municipal and industrial use is a new
activity and precautions will need to be observed to ensure that there are
minimal public health risks. To minimize the risks, microfiltration
system will be used and the reclaimed water will be provided only to
non-residential users. Reclaimed water distribution systems will also be
marked different colors to avoid accidental cross-contamination, and water
quality monitoring will be more intensive for reclaimed water than for the
normal water supply system.
4. Key stakeholders for Dagu rehabilitation are people living along the
canal, whose number is small because it runs through mainly rural areas;
people living near the proposed landfill sites; and farmers who may choose
to apply the non-contaminated, nutrient rich, sediment on their fields.
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The public consultation on EA involved these people. Coordination of Dagu
Canal work has been, and will continue to be, carried out by a Steering
Committee consisting of representatives from TMG, MEB, EPB, WRB, and the
three districts crossed by the Canal.
5. The second most important safeguard issue is resettlement. The project
design has been adjusted to minimize resettlement, and the components in
the city is currently estimated to require resettlement of 66 households
(156 persons), 60 shops and offices with 270 workers. No job loss is
expected. The project also would require acquisition of some 31 ha of
farmland affecting 433 farmers, and 17 ha of other land. Full
compensation has been committed to. Since the urban sewer component
supports WWTP investments financed with JBIC and ADB loans, resettlement
for the latter has been examined and found to be consistent with the RAP
for this project. Dagunan interchange, suburban sewerage, and bus
corridor component designs will be finalized during the project
implementation. When they are finalized, individual RAPs will be prepared
under the Resettlement Policy Framework (RPF) to be agreed upon.
10. Contact Point:
Task Manager
Songsu Choi
The World Bank
1818 H Street, NW
Washington D.C. 20433
Telephone: 202-458-2945
Fax: 202-522-1787
11. For information on other project related documents contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-5454
Fax:        (202) 522-1500
Web: http:// www.worldbank.org/infoshop
Note: This is information on an evolving project. Certain components may
not be necessarily included in the final project.
This PID was processed by the InfoShop during the week ending
February 14, 2003.
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