Independent Evaluation

Evaluation Presentations

Full Evaluation Report

In 1996, ADB launched a bid to save Chao Lake. At 760 km², it is the largest lake in Anhui province and one of the five largest freshwater lakes in the People's Republic of China. About 5 million people lived near the lake and depended on it for irrigation, transportation, and fishing. Its watershed was home to 8 million people.

At the time, Anhui province had been growing at 20% annually for a decade, a frantic pace of economic growth fueled by heavy industries. These used outdated processes and equipment, and produced contaminated air, wastewater, and solid waste. Two rapidly expanding cities (viz., Hefei, the provincial capital, and Chaohu, which embraces the lake) were also discharging pollutants.

Altogether, each year, 220,000 tons of wastewater were poisoning the lake. Algal bloom was affecting water supply intake and posed health hazards to city dwellers. It was killing fish stocks and threatened the livelihoods of fishermen.

ADB extended two loans worth $28 million and $112 million from its ordinary capital resources to reduce air, wastewater, and solid waste pollution in Hefei and Chaohu. It provided or administered technical assistance worth $800,000 and $460,000 to help local agencies formulate a least-cost, long-term integrated environmental management plan for the lake's basin, and to build capacity for wastewater treatment operations.

The Project strengthened the Anhui Provincial Planning Commission and Anhui Environmental Protection Bureau; and financed construction of central wastewater collection and treatment facilities in Hefei and Chaohu and technological restructuring of four major industrial polluters.

In 2005, operations evaluation rated the Project successful. It found it relevant, efficacious, and efficient. But it deemed it less likely to be sustainable without better maintenance of equipment in a highly corrosive environment.

Project implementation was smooth, with moderate delays in some of the six subprojects. Capabilities for environmental management and operation and maintenance of wastewater treatment facilities were strengthened significantly and in line with international best practices, to the great satisfaction of the executing agency.

The six subprojects generated financial and economic benefits of 8.4% and 16.4%, and achieved intended-as well as unintended-environmental improvements. Industrial wastewater discharged was reduced and municipal wastewater treatment was increased. Consequently, water quality in Chao Lake was upgraded from Class V in 1996 to between Class IV and V in 2001.

Positive socioeconomic impacts came from improved quality of life and health for and preservation of employment for thousands of workers in the four industrial polluters, most of which would probably have gone bankrupt without the Project.

The main issue facing the Project, which continues to have relevance for ADB's current operations in the PRC, is whether and how ADB should support state-owned enterprises to achieve environmental improvement and, at the same time, sound financial and economic returns. Public sector lending has shown its limitations due to the high technological and market risks associated with industrial projects.

In recent years, pollution in Chaohu Lake has once again caught national attention because of increased industrial activities. Clearly, pollution abatement is a long-term task. Can it be fully addressed through one project?