China, People's Republic of: Shandong Groundwater Protection Project

Sovereign Project | 47047-002 Status: Proposed

Summary

The proposed loan for the Shandong Groundwater Protection Project will contribute to ensuring sustained groundwater supply for the agricultural sector in the Weifang-Zibo area. The project will serve as a demonstration of an integrated approach for environmental restoration of overexploited groundwater aquifers through improving allocation of water resources, retention of storm water, and rehabilitating the water environment. The project will protect groundwater quantity and quality in the area, safeguard a sustainable groundwater source for the agricultural sector, and contribute to improving food security in the PRC.

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Project Name Shandong Groundwater Protection Project
Project Number 47047-002
Country China, People's Republic of
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Shandong Groundwater Allocation and Protection
Ordinary capital resources US$ 150.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Knowledge solutions
Sector / Subsector

Agriculture, natural resources and rural development - Rural flood protection - Rural water policy, institutional and capacity development - Water-based natural resources management

Gender Equity and Mainstreaming Some gender elements
Description The proposed loan for the Shandong Groundwater Protection Project will contribute to ensuring sustained groundwater supply for the agricultural sector in the Weifang-Zibo area. The project will serve as a demonstration of an integrated approach for environmental restoration of overexploited groundwater aquifers through improving allocation of water resources, retention of storm water, and rehabilitating the water environment. The project will protect groundwater quantity and quality in the area, safeguard a sustainable groundwater source for the agricultural sector, and contribute to improving food security in the PRC.
Project Rationale and Linkage to Country/Regional Strategy

Falling groundwater tables as a result of over-extraction of groundwater is a major concern in the PRC, particularly in the northern parts of the country. The PRC heavily depends on extraction of groundwater. An estimated 20% of water supplies in the PRC come from groundwater, ranging from 110 billion cubic meters (m3) to 150 billion m3 per year. The largest groundwater user is the agricultural sector (60%), with domestic and industrial usage sharing the remaining 40%. There are more than 100 large cones of groundwater depression with an estimated total area of 150,000 square kilometers (km2) in the PRC. In the Northern China Plain (NCP), the total area of the cone of groundwater depression already extends to 70,000 km2.

The Weifang-Zibo area in Shandong Province depends heavily on groundwater, especially for its intensive and high value agricultural production. Domestic and industrial water demands, although still less than agricultural water use, are also on the rise as a result of the rapid economic development in the area. The project area, covering five cities and counties of the NCP, is the main vegetable producer for Beijing and has a high concentration of greenhouses. The greenhouses using drip irrigation require fresh and sediment free water, which is in most cases provided through shallow groundwater sources. As a result of extensive groundwater abstraction, the project area has become the largest over-exploited aquifer in Shandong Province, and the second largest in the PRC. In some downstream areas, agricultural production already stopped due to lack of suitable water sources. Some of the industrial or domestic water users that are still using groundwater are encouraged by the government to switch to surface water.

Groundwater recharge of both shallow and deep groundwater resources is insufficient to recover from the excessive pumping during the dry periods. Seasonal rainfall fluctuates widely, with an average of 70% of the rainfall occurring from June to September, followed by drought over the rest of the year. Flooding occurs during the summer months, but storm waters flow to the sea unutilized. The pattern of irregular rainfall is expected to worsen as a result of climate change and rainfall is predicted to be reduced. Excessive groundwater usage also occurs because of lack of pricing of the resource, weak licensing and permitting system, and insufficient abstraction metering and groundwater level monitoring.

The consequences of the current unsustainable groundwater utilization are serious: (i) pumping costs have increased, (ii) groundwater quality is deteriorating due to seawater intrusion and environmental pollution, (iii) domestic water supplies and agricultural (particularly, vegetable) production are at risk, and (iv) the area is suffering from significant financial and economic damages caused by land subsidence. Seawater intrusion and upconing' in the north has extended 35 kilometers inland from the coast, and some areas have already experienced subsidence of more than two meters. The process of land subsidence is irreversible, and urgent action is needed to avoid worsening.

Acknowledging the serious concerns, the central government selected the Shandong Province as a demonstration province for modernized water administration. The Shandong Provincial Government (SPG) has already taken multiple initiatives to address water scarcity in the NCP, including promoting water productivity and re-use, and introducing regulations on groundwater pumping. Several water saving technologies, such as drip irrigation, are already widely used in the project area. The results are successful, but more efforts are needed to fully address the risk of further decline of groundwater levels in the Weifang-Zibo area. The national government is constructing the south-north water transfer scheme, which is expected to provide additional water for Shandong Province in 2014. The diverted water, which is mainly intended for municipal and industrial use, will not be sufficient to mitigate the current over-exploitations of the groundwater resources in the NCP.

Lessons learnt from past and ongoing support for the water sector, including the preparation of policy recommendations for PRC's Thirteenth Five-Year Plan, show that there is still lack of innovation towards the implementation of integrated water management approaches and increasing water productivity. Most counties in the project area lack (i) integration of good international practices to provide new alternatives for groundwater conservation, (ii) adequate implementation of water-saving strategies and regulatory stipulations, and (iii) introduction of up-to-date water environmental monitoring technologies. Existing programs also lack support to link efficient and reduced groundwater usage with the retention of surface and storm water to increase groundwater recharge and water availability for water scarce areas.

The project is consistent with the PRC's Twelfth Five-Year Plan (2011 2015), which pursues the long-term goal of building a harmonious and moderately prosperous society through regionally balanced and environmentally sustainable growth, and these agendas will continue into the Thirteenth Five-Year Plan, and with the PRC's first National Plan to Protect the Safety of Ground Water Resources (2011 2020). It is also in line with the Asian Development Bank's (ADB) country partnership strategy, 2011 2015 for the PRC in supporting the government's overarching strategic goal by focusing on inclusive and environmentally sustainable growth. The project will contribute to ADB's Water Operational Plan 2011 2020 to (i) increase water productivity across the range of users; (ii) embed integrated water resources management, including improved risk management to mitigate floods, droughts, and other water-related disasters; and (iii) expand knowledge and capacity development that uses technology and innovation more directly.

Impact Groundwater supply for the agricultural sector in the Weifang-Zibo area sustained
Outcome Conservation and sustainable use of groundwater resources in Weifang-Zibo area improved
Outputs

Groundwater recharged and conserved

Surface water allocation improved and monitored

Capacity development for water resources management enhanced

Geographical Location
Safeguard Categories
Environment A
Involuntary Resettlement A
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Based on the preliminary assessments, the project is classified as category A for environment. Safeguard documents, including an environmental impact assessment, will be prepared following ADB's Safeguard Policy Statement (2009).
Involuntary Resettlement Based on the preliminary assessments, the project is classified as category A for involuntary resettlement. Safeguard documents, including resettlement plan, will be prepared following ADB's Safeguard Policy Statement (2009).
Indigenous Peoples Based on the preliminary assessments, the project is classified as category C for indigenous peoples. Safeguard documents will be prepared following ADB's Safeguard Policy Statement (2009).
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services

Consulting services will be required for (i) project management support, (ii) capacity development for water policy and conservation demonstration activities, and (iii) software development for the MIS in Huantai County. The outline terms of reference (TOR) for each of the three consulting services packages are described in section D.

The PMO will be responsible for engaging consultants. All consultants financed by ADB will be recruited according to ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).

Procurement

All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2015, as amended from time to time). Except as ADB may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Civil works contracts estimated to cost $25 million and above, and contracts for goods estimated to cost $3 million and above will be procured using international competitive bidding (ICB) procedures. Contracts for works and goods estimated to cost less than the ICB values but equal to $100,001 and above will be procured through national competitive bidding (NCB). NCB will be conducted in accordance with the PRC Tendering and Bidding Law (2000), subject to modifications agreed with ADB. Contracts for goods and works estimated to cost less than the above NCB values will be procured using shopping procedures. The relevant sections of ADB's Anticorruption Policy (1998, as amended from time to time) will be included in all procurement documents and contracts.

For NCB, the first draft English language of the procurement documents (prequalification, bidding documents, and draft contract) should be submitted for ADB's approval regardless of the estimated contract amount. Subsequent procurements are subject to post review. All ICB contracts are subject to prior review and ADB's approval of the procurement documents (bidding and contract) is required.

A procurement plan over the life of the project including the first 18-month procurement contract packages starting from July 2015 has been prepared and agreed with the PMO and the implementing agencies, which indicates procurement method, estimated costs of contracts, threshold and review procedures, goods, works, and consulting service contract packages, and NCB guidelines.

Responsible ADB Officer Frank Radstake
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Shandong Provincial Government
People's Republic of China
Timetable
Concept Clearance 09 Aug 2013
Fact Finding 05 Feb 2015 to 13 Feb 2015
MRM 28 Jul 2015
Approval 31 Mar 2016
Last Review Mission -
Last PDS Update 18 Sep 2015

Evaluation Documents

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