The broad objective of the project is to provide a safe environmental setting for the long-term development and improved livability for residents in the Pearl River Delta (PRD) region. The project would assist Guangdong Province in implementing its previously announced PRD Clean Up Campaign calling for the investment of RMB45 billion (US$5.5 billion) over the next eight years in waste water treatment and other environmental facilities. This project is expected to be the first in a series of World Bank backed environmental initiatives in the PRD region.

Although Guangdong Province, and especially the PRD region, has witnessed high economic growth for more than a decade, it has come at a heavy cost to the environment. Water quality in many stretches of the Pearl River and its tributaries, particularly around Guangzhou, Shenzhen, Foshan and Dongguan, is worse than Class V standard, which makes the river system unsuitable for irrigation, aquaculture, and potential recreational uses. It also contributes to serious pollution of the South China Sea and the waters around Hong Kong and Macao.

The approved loan would finance improvements in the waste water treatment and collection systems in Guangzhou City and the construction and operation of a hazardous waste treatment and disposal facility for the Guangzhou metropolitan area. It would also support project implementation, technical assistance and capacity building for new autonomous municipal companies created in Guangzhou to operate and maintain the environmental facilities funded by the project. The GEF grant would strengthen the water quality monitoring program in the PRD, and would develop a framework and pilot the implementation of better cooperation among local governments in the planning, constructing, and operating of shared environmental facilities. It would also help introduce the private sector into new areas of urban environmental services like hazardous waste management.

"This project has been prepared under the strong leadership of Guangdong Province and Guangzhou City, with support from the World Bank and the GEF as well as from countries like Canada, France, Singapore and Denmark," said the World Bank task manager, Tom Zearley. "This type of collaboration underscores the broad interest that exists in helping to maintain strong economic growth in the PRD while addressing some of the most serious environmental issues. The World Bank is proud to be a partner with Guangdong Province and with the city of Guangzhou in taking concert actions under the project to reduce water pollution, to better treat and dispose of hazardous wastes, and to strengthen the capacities and institutional arrangements for the delivery of urban services."

The project would also reinforce Guangdong Province's programs to reduce other sources of water pollution such as industrial waste water discharge and animal waste and agricultural run-off into the PRD rivers. Moreover, the water quality monitoring component is designed to foster a stronger exchange of information and technical know-how with Hong Kong and other neighboring jurisdictions for improved regional environmental management.

"At the city level, Guangzhou has taken many steps in recent years to improve the urban environment and living conditions for its residents", comments World Bank sector director, Mr. Keshav Varma. "It is very impressive, and through the project Guangzhou can continue to serve as a model for other cities in China and elsewhere in the world."

One such innovation being supported will help to demonstrate to other Chinese cities how to develop and implement institutional arrangements to enable environmental service delivery to cross the traditional administrative boundaries between and within municipalities, thus allowing the cost savings associated with economies of scale to be achieved. The project will also achieve greater sustainability of urban services by reinforcing the principle of "polluter pays" and the attainment of full cost recovery for the provision of urban services, through gradual tariff increases.

The operation build on the main points of the Bank's urban strategy--livability, good governance, strong finances, and urban productivity--and gives impetus to the process of openness and reform in Guangdong Province. It also backs the themes and specific goals of the Bank's assistance strategy for China, by helping to facilitate an environmentally sustainable development process, and by improving the competitiveness and livability of major urban centers in the PRD region, where many of China's poorest migrants are seeking job opportunities and better living conditions.

(China.org.cn June 9, 2004)