ADB to Help PRC Combat Water Shortages in the Western Region

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is helping the People’s Republic of China (PRC) enact wide-ranging, integrated measures in Guiyang, the capital of Guizhou province, one of the poor western provinces in PRC, to tackle growing water shortages caused by rapid growth and urbanization.

The ADB Board of Directors approved a $150 million loan for the Guiyang Integrated Water Resources Management (Sector) Project. The project will finance a portion of Guiyang Municipality’s water sector development plan through to 2020.

Guiyang lies in a mountainous region separating the Yangtze and Pearl River Basins. It has the lowest level of urban income of any province, and the second lowest rural income in the country, and while it gets ample rainfall it lacks the means to capture, store and distribute that water efficiently. There is a shortage of water for irrigation in rural areas, and the rapidly growing urban population has strained existing city infrastructure, resulting in water pressure problems and rationing in the dry season.

"The project will provide extensive water resource benefits to about 1.6 million residents, or 45% of the total population of Guiyang Municipality, with about 240,000 poor rural dwellers getting access to safe drinking water," said Zhang Qingfeng, Senior Water Resources Engineer in ADB’s East Asia Department.

To improve urban water supply, reservoirs, dams, transmission pipelines, and a treatment plant will be built. In rural areas, over 40 small reservoirs will be established, dilapidated irrigation systems will be restored, and tree planting will be carried out on sloping land. At the farm level, over 100,000 small water storage tanks will be built to collect spring and rainwater.

To lay the groundwork for the project, ADB is providing technical assistance to boost the capacity and effectiveness of the many government agencies that oversee the water sector. It also aims to promote greater community involvement in water resource management.

"The results and lessons learned from this Project will be a good model for other city governments in the western PRC," said Mr. Zhang.

An innovative feature of the project is the introduction of a payment for environmental services scheme which will provide a financial incentive to reduce pollution and make environmental improvements in areas where water supply reservoir work is being undertaken.

Along with ADB, Guiyang Municipal Government is providing $258 million equivalent, Guiyang Municipal Commercial Bank $20 million, and project beneficiaries $11.2 million in the form of labor contributions, for a total investment cost of $439.2 million.

ADB’s loan, from its ordinary capital resources, has a 26-year term, including a grace period of six years. Interest will be determined in accordance with its LIBOR-based lending facility.The technical assistance, totaling $600,000, is due for completion in February, 2010. The Guiyang Municipal Government is the executing agency for the project, which is due for completion around April, 2016.