China, People's Republic of : Study on Green Transformation Guide for Resource-Based Regions of Shanxi Province

Agriculture, natural resources and rural development / Land-based natural resources management - Rural water policy, institutional and capacity development

The impact will be achievement of (i) green and circular economic development in Shanxi Province, and (ii) transformation from narrow-based industrial structure to a balanced and diversified one in Shanxi Province. The outcome will be improved strategic planning for the regionally balanced green transformation of resource-based regions in Shanxi Province. The TA will have the following four outputs: (i) identification of international and national best practices of the regionally balanced green transformation of resource-based regions; (ii) analysis of socioeconomic status of the typical resource-based regions in Shanxi Province; (iii) development of methodologies and indicators for planning the regionally balanced green transformation of resource-based regions; and (iv) formulation of two green transformation pilot studies for Liulin County' and Xiaoyi City.

Output 1 will include (i) review and analysis of international and national experiences, and draw lessons from the resource-based region's green transformation; (ii) review and analysis of key issues and constraints; (iii) documentation of successful cases summarizing good practices of green transformation; and (iv) dissemination of the findings at the workshops.

Output 2 will support the (i) collection and analysis of key issues and constraints of the social and economic development, environmental protection, and natural resource utilization in Shanxi Province, taking into consideration the provincial role as one of the national strategic energy bases; (ii) conduct of surveys and assessments of the cases of industrial transformation, ecological rehabilitation, integrated urban and rural development, and livelihood improvement in several selected typical regions in Shanxi Province; (iii) assessment of key constraints and features in industrial transformation, ecological and environmental protection, and institutional and policy mechanism for resource-based regions in Shanxi Province; (iv) economic analysis for environmental loss; and (v) preparation of an evaluation report based on the above reviews and analyses.

Output 3 will support the (i) definition of the regionally balanced green transformation of resource-based regions, and development of a strategic direction and priorities; (ii) development of a set of performance targets and indicators for evaluating the performance and impact of the regionally balanced green transformation of resource-based regions; and (iii) development of technical methodologies and guidelines for planning the regionally balanced green transformation of resource-based regions.

Output 4 will include (i) conduct of detailed studies on social and economic conditions, natural resources development, environmental carrying capacity, and industrial structure in Liulin County and Xiaoyi City of Shanxi Province; (ii) an assessment or evaluation of the environmental carrying capacity and industrial structure improvement each for Liulin County and Xiaoyi City; (iii) preparation of a policy note for regionally balanced green transformation of resource-based Liulin County and Xiaoyi City; and (iv) development of regionally balanced green transformation zoning and a pilot plan each for resource-based Liulin County and Xiaoyi City by applying the indicators and guide developed under output 3.

The TA will take into account the relevant findings of previous ADB-funded studies and relevant work from other donors. It will attach importance to case studies to learn best practices worldwide. The TA will assume that (i) relevant officials from Shanxi Provincial Government will actively participate in the discussions on the development of the technical guidelines and indicators, (ii) inter-sector cooperation and data sharing among key sectors are adequate, and (iii) Liulin County and Xiaoyi City governments fully support the pilot studies.

The TA will be implemented from 15 January 2016 to 30 June 2017. SPEPD will be the executing agency. A TA management office will be established in SPEPD and will be responsible for day-to-day operations with ADB, consultants, and related government agencies. An expert panel will be set up to obtain experts' opinions, as required, on the work of the TA consultants and counterpart team. The panel will consist of national experts from various agencies. The panel will collaborate with the counterpart team to organize at least two panel meetings during the TA implementation.

During the 2014 country programming mission, the Government of the People's Republic of China (PRC) requested policy and advisory technical assistance (TA) from the Asian Development Bank (ADB) to prepare a green transformation guide for resource-based regions of Shanxi Province. The TA was included in ADB's country operations business plan, 2015 2017.

As the PRC has industrialized, some resource-oriented regions have emerged as fast-growing economies. However, though industrialization can promote rapid economic growth in the short term, it brings problems such as overreliance on their resources and associated heavy industrial structure. Narrow-based and resource-intensive economic growth has also caused problems such as tight restrictions on resources, serious pollution, and a degraded ecological system. With the resource depletion, these regions are facing serious challenges to sustainable and inclusive development.

Shanxi Province is typical of such a resource-oriented economy. The province's economic development relies heavily on overexploitation of coal resources and preliminary processing. It is rich in coal and mineral resources, with 62,000 square kilometers of coal-bearing area accounting for 40% of its total land area. It has about 265.2 billion tons of identified coal resource reserves, representing 26% of coal resources nationwide. Of its 119 counties and cities, 94 have coal resources. Shanxi Province has made a great contribution to national economic construction and reform through its coal resources. As the pillar industry, coal production in Shanxi Province amounted to 960 million tons in 2013, with about 620 million tons sold to other parts of the PRC. The coal industry contributes to about 30% of the province's gross domestic product (GDP). More than 1 million people work in the coal mining industry in Shanxi Province. As one of the strategic national energy bases, Shanxi Province's development is heavily influenced by the overall energy policy and sector development strategy of the PRC.

However, overreliance on a resource-based economy has led to problems in the province such as an undeveloped economy and an industrial structure narrowly based on the coal industry. This region may suffer from the _resource curse,_ where abundant resources do not bring rapid and comprehensive development but generate a series of severe constraints. Coal mining in Shanxi Province has caused serious damage and deterioration to the ecological environment, excessive use of resources, and a decline in the sustainable development capacity.

The pollution from industries such as coal, coking, and thermal power and the long-term extensive growth mode have made Shanxi Province one of the provinces with the most serious environmental pollution and ecological destruction. According to various reports, the underground goaf caused by coal mining reaches 5,000 square kilometers, of which 3,000 square kilometers are mining subsistence areas. The cumulative coal gangue and/or waste have reached more than 1 billion tons and have formed more than 1,500 coal gangue mountains. Overdependence on the mining industry has caused serious pollution. In 2013, Shanxi Province's total emissions of smoke and powder dust amounted to 1.02 million tons and ranked second among the 31 PRC's provinces; sulfur dioxide, at 1.25 million tons, ranked fourth; and nitrogen oxide, at 1.16 million tons, ranked seventh. The emissions per unit area of sulfur dioxide were 3.77 times the national average and nitrogen oxide 3.19 times the national average. The air quality in 11 cities did not meet the Class II air quality requirements of the national environmental standard. About 32% of the monitored river sections suffered serious pollution, particularly the sections near cities and industry concentrated areas. It is estimated that among the resource-based small mining cities by 2020, one-third of state-owned coal mines and half of town-owned coal mines will have been shut down as a result of resource exhaustion.

Overall, the traditional economic growth pattern is a great challenge for Shanxi Province. Shanxi Province's economic growth was stagnant in recent years, and the GDP growth rates were declining since 2010. In 2014, its GDP growth stood at 4.9%, the lowest among the 31 provinces in the PRC. How to turn _Black GDP_ to _Green GDP_ becomes a key issue. Shanxi Province has been selected to pilot comprehensive reforms for economic transformation of resource-intensive economies. Green transformation and moving out from the _resource curse_ is necessary for the province's sustainable development for healthy economic development and better ecological environment. The Government of the PRC and the Shanxi Provincial Government are promoting green transformation in Shanxi Province; and international experience is needed in the transformation process, particularly for assistance in developing a guide, including methodologies and indicators for green transformation planning; and its application in selected cities and counties in Shanxi Province.

The studies in the selected pilot cities and counties will serve as models for demonstration to other regions in Shanxi Province and other resource-based provinces in the PRC. As a representative case of a resource-based region, Shanxi Province's green transformation will provide both experiences and lessons to other regions that are attempting to break the resource-advantage dilemma, and to realize green and circular development toward achieving the national government's goal of ecological civilization.

The national government has introduced ecological civilization as a new concept for green, circular, and low-carbon development. Ecological civilization denotes a departure from the past emphasis on economic growth as the core of development to an approach that focuses on the quality and efficiency of development, and which is more balanced between humans and nature. Ecological civilization was incorporated into the overall plan for promoting economic, political, cultural, social, and ecological progress in 2012 at the Eighteenth Party Congress. The Congress stated that _promoting ecological progress is a long-term task of vital importance to the people's well-being and [the People's Republic of] China's future._ The Decision of the Communist Party of China Central Committee on Some Major Issues Concerning Comprehensively Deepening the Reform, adopted at the Third Plenary Session of the Eighteenth Party National Committee in November 2013, specified the priority areas for promoting ecological civilization in the near term by establishing systematic and integrated ecological civilization institutions and systems; implementing the strictest source protection system, damage compensation, and accountability system; and improving environmental protection and ecological restoration systems.

Environmentally sustainable growth is a strategic priority of ADB's country partnership strategy, 2011 2015 for the PRC, and it is expected that the next country partnership strategy will continue to support the national government's goal of environmental protection and green transformation

The TA has successfully achieved its intended outcome, with recommendations for improved strategic planning for regionally balanced green transformation of resource-based regions in Shanxi Province accepted and endorsed by SPEPD. Strong ownership of the TA was demonstrated by SPG, and SPEPD made efforts in ensuring that the relevance of the TA outputs and deliverables contributed to achieving the desired outcome. Overall, the TA was rated successful, with all required outputs and outcome as well as related tasks and targets were achieved. SPEPD was satisfied with the results of the TA, and the outputs from the TA were well received by SPG.

The TA showed that alternative opportunities and paths for economic development exist in resource-based regions in Shanxi Province. Active intervention, government support, and appropriate financing are required for such opportunities to be realized. However, there is an important opportunity for Shanxi Province to realize a more balanced industrial development, taking into account environmental principles, sustainable consumption, and low-carbon development. This includes adjusting and optimizing spatial arrangements, accelerating the upgrade of industrial transformation, promoting resource saving across the board, and strengthening the natural ecological system and environmental protection.

The research and recommendations of this TA can be applied in many other regions across the PRC> The issues identified and opportunities for alternate development paths are common across many resource-based regions. The pilot roadmaps prepared for Liulin County and Xiaoyi City provide the opportunity for further investment and reforms which would provide immediate and long-term benefits for the local communities. The TA has provided a solid base of research on which future projects could be tailored, and the continued support to domestic efforts in green transformation of resource-based regions is recommended.

1. International and national best practices of the regionally balanced green transformation of resource-based regions identified

2. Socioeconomic status of the typical resource-based regions in Shanxi Province analyzed

3. Methodologies and indicators for planning the regionally balanced greeen transformation of resource-based regions developed

4. Two green transformation pilot studies for Liulin County and Xiaoyi City formulated

TA inception mission was fielded during 23-24 May 2016 and the TA interim review mission on 28 April 2017 in Taiyuan, Shanxi Province, PRC. The mission participated in, and provided opening remarks at, the International Workshop on Green Transformation of Resource-Based Regions held on 28 April 2017 at the Yingze Hotel in Taiyuan, Shanxi Province. The workshop was co-hosted by ADB, SPEPD, and the Shanxi Academy of Environmental Planning; and co-organized by the TA consultant, Mott MacDonald; the China Environmental Science Institute Environmental Economics Subcommittee, the Shanxi Provincial Environmental Planning Institute, and the Shanxi Provincial Environmental Science Institute. The topics covered at the workshop included (i) international and national practices on green transformation of resource-based regions, (ii) green transformation route for resource-based industries, and (iii) resource-based economic development mode innovation. Interim results of the TA were presented, and experiences from Germany, India, and the United Kingdom. The workshop was well-organized, with around 200 attendees, including officials from provincial and national government agencies, experts and scholars from national universities and research institutes, and media. The TA final review mission was fielded during 28-29 September 2017 in Taiyuan, Shanxi Province, PRC.

The TA produced the expected outputs which were approved by ADB and SPEPD, including the inception, interim, and final reports. The comprehensive final report, prepared both in English and Chinese languages, included all the outputs.