The World Bank's Board of Executive Directors approved on Tuesday a
US$200 million adaptable program loan (APL) to the People's
Republic of China to help finance a Shanghai Urban Environment
Project which will support the first phase of a Shanghai Urban
Environment Program aimed at improving the environment and
enhancing the quality of citizens' lives.
As
the first in a series of up to three loans to China over the next
eight years, this project will support Shanghai's efforts to reform
the way urban services are managed and financed and to implement a
long-term program of urban environmental improvements. It is
supporting Shanghai's strategy to: develop innovative measures for
long-term infrastructure finance; extend opportunities for
public/private partnerships; improve regional environmental
management thereby also supporting the local and regional business
environment; and demonstrate the imperatives of market pricing and
cost recovery for environmental services.
"This kind of programmatic loan allows for a more integrated and
flexible approach to development and metropolitan management than a
solely project-focused strategy and offers more scope for
innovation," said Mr. Geoffrey Read, Task Manager for the project.
"It will assist the Shanghai government's efforts to become an
international economic and trade center with the highest standards
of urban environmental quality which will both enhance the quality
of life of its citizens and help Shanghai to continue to attract
high-quality foreign investment."
While Shanghai China's most important industrial base, and the
major center of commerce, trade, finance and science has made
substantial progress during the last decade in restructuring its
economy and in upgrading its environmental infrastructure,
persistent problems remain. Some 3 million of the urban residents
live in very crowded conditions, with inadequate access to drinking
water and sanitation. Less than 60 percent of wastewater and storm
water in the city is hygienically intercepted and disposed of. Only
40 percent of sewage flows are treated and safely disposed of; the
existing sanitary landfill for municipal solid waste disposal has
only two years' capacity remaining; and the water quality in the
Shanghai's main source of water supply, the Huangpu River, has
become increasingly polluted over the past five years, rendering it
only marginally acceptable as a source of drinking water. Air
quality has also deteriorated to unsafe levels.
The project plans to assist the Government's efforts to address
these environmental challenges in a three-phased approach. Phase
one will lay the groundwork for metropolitan-wide policies for
financial and institutional reform measures for the urban
environmental infrastructure sector. This objective will be pursued
through, among other things, supporting the development of new
financing mechanisms in particular innovative arrangements towards
issuance of long-term infrastructure bonds by Shanghai that can
serve as a precedent for future bond issues in China and
facilitating private sector participation.
Along with these innovations in financing and private sector
participation, additional investments will be made in: providing
facilities for the collection, treatment and disposal of domestic
wastewater in the urban area of Shanghai and for environmentally
secure solid waste disposal for the urban area; supporting urban
environmental infrastructure services upgrading in under-served
areas of the city; protecting water resources in the Upper Huangpu
River Catchment; and strengthening institutions with responsibility
for environmental and municipal management. Protecting the urban
environment and public health will be major benefits of the
project.
Phase two of the project will focus on consolidating the innovative
approaches for financing environmental infrastructure,
strengthening government management capacity, addressing pollution
and fuel efficiency issues, and developing regulations for
agricultural pollution control. Phase three will focus on expanding
urban services infrastructure and development policy, and
strengthening air and agricultural pollution management.
"By the conclusion of the three-part program, Shanghai will expect
to have enhanced economic, financial, trade and manufacturing
stature through achieving environmental and institutional and
financial improvements and services. It will expect to have become
more of a service facilitator than a service provider, and to have
a cleaner environment leading to improved health for its citizens,"
said Mr. Keshav Varma, Urban Sector Director for East Asia.
The operation, which builds on the main points of the Bank's urban
strategy livability, good governance, bankability, and
competitiveness extends the idea of sustainable development into
the setting of a broad city region. It is addressing sustainable
urban development on a large metropolitan scale, and by focusing on
the Chinese concerns for environmental improvements, the project
addresses two interlocking issues environmental quality and
competitiveness both seen as central to quality of life and the
generation of livelihood in the region. "In the end, however, this
challenging program is about people and communities, protecting
public health and drinking water resources, and improving people's
daily lives," concluded Mr. Varma.
(China.org.cn June 20, 2003)