PROJECT INFORMATION DOCUMENT (PID)APPRAISAL STAGE

Report No.: AB2002Project Name Demonstration of alternatives to Chlordane and Mirex in Termite

Control ProjectRegion EAST ASIA AND PACIFICSector Other industry (100%)Project ID P082992GEF Focal Area Persistent Organic PollutantsBorrower(s) PEOPLE'S REPUBLIC OF CHINAImplementing Agency

State Environmental Protection Administration115 Xizhimennei NanxiaojieChina100035Tel: +86 10 6615 3366 Fax: +86 10 6615 1768luo.gaolai@sepafeco.org.cnThe People's Republic of ChinaChina

Government of ChinaChina

Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)Date PID Prepared November 29, 2005Date of Appraisal Authorization

February 15, 2006

Date of Board Approval June 22, 2006

1. Country and Sector Background

Background. Termiticides chlordane and mirex are among the twelve persistent organic pollutants (POPs) identified for elimination by the Stockholm Convention due to increasing evidence of their toxicity to people and the environment, their tendency to accumulate in the food chain, and their ability to travel long distances through the global ecosystems and persist in the environment. Both chlordane and mirex are produced and consumed in China as termiticides. As a country strongly committed to the Stockholm Convention, China participated in all preparatory meetings and was one of the original signatories of the Stockholm Convention (signed on May 23, 2001). On August 13, 2004, China ratified the Stockholm Convention and became a Party to the Convention. China has also made substantial progress in meeting the Convention requirement that Parties to the Convention submit a National Implementation Plan (NIP) to the Conference of Parties within two years after the Convention enters into force for that country. In fact, China started preparing its NIP in mid-2004 and is expected to complete it timely by November 2006.

Country Situation. China is one of the countries with the greatest diversity of termites and most severe termite damage in the world (see Map 1 for details). About 482 species of termites are found in all but six Northern provinces (Heilongjiang, Jilin, Inner Mongolia, Ningxia, Qinghai, and Xinjiang) in China, concentrated mostly south of the Yangtze River. Affecting more than 40% of the total land area in China, termite has caused damages to between 30 and 90% of buildings south of the Yangtze River. In addition, termites have caused damage to historic architecture, dams, bridges and other constructions in China. It is estimated that the direct economic loss caused by termites in China is about 2 to 2.5 billion yuan annually. China’s explosive growth in new residential construction and general infrastructure development has substantially increased the demand for termite control.

Chlordane and Mirex. Since their introduction to China in 1964 and 1979, respectively, chlordane and mirex have become the principal instruments for termite prevention and control, although their use declined in recent years due to regulatory restrictions. Their effectiveness, persistence, low cost and ease of application have lead to their widespread use and contributed to the fact that termite management in China heavily relies on chemical methods. As of December 2004, there were nine chlordane and five mirex manufacturers in China, all located in Jiangsu Province. From 2000 to 2003, they produced 450 – 820 tons of chlordane and 9 -31 tons of mirex annually. In practice, chlordane and mirex are mainly used in termite control in residential and other buildings. The use of both termiticides poses significant local and global risks to human health and the environment.

Sector Issues Addressed by the Project. China has recognized the risks associated with the use of chlordane and mirex, and attempted to eliminate them since the late 1990s. Even though China has issued several regulations (such as canceling the registration of both chlordane and mirex as pesticides) and promoted the research and use of chemical alternatives, success in elimination of the production and use of chlordane and mirex in termite control has been limited. As of 2004, both termiticides were still produced and widely used in China. This project is designed to address the five issues that have hindered the phaseout of chlordane and mirex in China as follows.

a. Lack of integrated pest management (IPM) expertise for termite control. Integrated pest management (IPM) is a comprehensive approach to pest control that uses combined means to reduce the status of pests to tolerable levels, while maintaining a quality environment by minimizing adverse side effects. IPM emphasizes prevention and management of pests to keep them below levels that cause unacceptable economic or aesthetic damage. Those levels are referred to as economic thresholds (the term aesthetic threshold is often used in urban pest management to reflect the importance of quality and appearance of flowers, turf grass, shrubs, wood, etc.). Scouting and monitoring the pest activity, hence, is a key to any IPM strategy, and pest monitoring systems are ideally based on known economical or aesthetic threshold levels. IPM is ecologically-based and relies, to the extent possible, on non-chemical control methods. However, when needed, pesticides can be selected and applied in a way that minimizes their adverse effects on non-target species, humans and the environment. In the specific case of termites, the IPM strategy emphasizes (i) building design incorporating termite resistant construction materials, (ii) site management and improved sanitation to make the habitat less attractive to termites, (iii) inspection and monitoring, (iv) physical and chemical barriers, and (v)

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chemicals when necessary. Delivery of chemicals in bait systems drastically reduces the amounts of liquid pesticides used in a traditional chemical treatment. The lack of IPM expertise in termite control in China is one of the factors driving the proliferation of chlordane and mirex use.

b. Lack of effective alternatives. China’s unsuccessful attempt to phase out chlordane and mirex reflects the fact that there are few alternatives available in the market. Although a number of chemical termiticides (such as chlorpyrifos, fenvalerate and permethrin) have been registered and applied in China, these chemicals have serious disadvantages in comparison with chlordane. They have a short effectiveness period, high cost, unfavorable odor, and complicated application requirements. Similarly, few alternatives to mirex can compare with the high toxicity, favorable action speed, and non-repellent properties of mirex. Moreover, these alternative chemicals also present health and environmental risks of increasing concern. For example, chlorpyrifos has been banned in the US, fenvalerate registration has been withdrawn by the manufacturer, and some permethrin uses have been banned in some European countries because of their adverse impacts on human health. In addition to the lack of effective chemical alternatives, China has little practices on alternative termite control techniques based on the concepts of integrated pest management (IPM), even though IPM techniques are considered as sustainable termite control options.

c. Ineffective termite control policies and regulations. China’s current policies and regulations for termite control have a number of shortcomings in supporting the reduction and phaseout of chlordane and mirex. First, these policies and regulations are in favor of chemical approaches to termite prevention, and thus provide limited support to the use of alternative approaches such as IPM techniques. By default, a mandate that requires a fifteen-year guarantee term for preventive treatment promotes the use of persistent pesticides such as chlordane. Second, the regulations restricting the production or use of chlordane and mirex are yet to be seriously enforced. As often the case for the implementation of environmental policies in China, the enforcement of these regulations is weak and has achieved only limited results in reducing the use of chlordane and mirex. Third, the centrally controlled pricing system for termiticides set chemical treatments at lower prices without considering the high costs of environmental and health damages associated with the use of these chemicals. Consequently, consumers are less interested in IPM techniques, which are often more costly than chemical treatments under the current pricing system. Fourth, while these policies and regulations contain language of promoting IPM techniques, they fail to provide favorable conditions conducive to the introduction of IPM in China’s termite control efforts.

d. Weak institutional capacity for IPM. The elimination of chlordane and mirex requires substantive coordination and cooperation among different sectors and at different governmental levels, and its strategy needs to be integrated into local government programs. However, the current institutional arrangements for termite control, although very well developed in most aspects, lack the capacity to achieve such coordination and cooperation. In addition, termite control stations in China have limited knowledge on IPM concepts and are yet to master modern termite prevention and control techniques. In addition, these termite control stations have no responsibility of monitoring pollution from termite control activities.

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e. Insufficient public awareness and education. Most workers at small termiticide producers and operators at termite control stations have little knowledge about the adverse impacts of chlordane and mirex on human health and the environment. In addition, few Chinese people know IPM strategy and IPM practices in termite control. Without a clear understanding of the rationale behind the phaseout of chlordane and mirex, the public may not support the Chinese government’s efforts to eliminate chlordane and mirex, or accept IPM techniques in termite control.

Selection of Demonstration Area. The project’s demonstration area encompasses Jiangsu and Zhejinag Provinces which (1) are severely affected by typical termite species in China, (2) contain all chlordane and mirex producers (in Jiangsu), and (3) consume most chlordane and mirex among the provinces in China. As two of the most developed provinces in China, Jiangsu and Zhejiang have suffered significant economic and social impacts caused by termite damages, and are strongly motivated and experienced in termite control. Organizationally, both provinces have well-established institutions for the management and implementation of termite control activities, and these institutions are supported by qualified research organizations and technical service providers. Finally, both provinces have relatively well-developed termite control regulations for the introduction of alternative termite control techniques.

2. Objectives

Project development objective is to (a) demonstrate elimination of chlordane and mirex use for termite control in the demonstration provinces through introduction of integrated termite management; and (b) prepare a national replication program for complete phase-out of chlordane and mirex in China by 2014.

Consistent with this objective, the key project outputs will include (a) elimination of chlordane and mirex consumption in the demonstration area’s building construction sector; (b) comprehensive policy, regulatory and institutional reforms at the national and provincial level to replace termiticide-based termite management with integrated termite management; (c) closure and clean-up of the Liyiang Guanghua Chemical Co, Ltd., and corresponding permanent reduction in the national chlordane and mirex production; and (d ) development of a national replication program and production quota system for phaseout of chlordane and mirex in the rest of China.

3. Rationale for Bank Involvement

The Bank – as an implementing agency of the Global Environmental Facility (GEF) – has a responsibility to assist its client countries in achieving the global environmental objectives supported by the GEF. The GEF is the interim financial mechanism of the Stockholm Convention and supports this Demonstration Project under the GEF Operational Program for Reducing and Eliminating Releases of Persistent Organic Pollutants (GEF Operational Program 14). The proposed project is consistent with the Bank’s Environment Strategy and its 2003-2005 Country Assistance Strategy (CAS) for China. The Bank’s technical knowledge on POPs management and its experience in the design and implementation of GEF investment projects make it well suited to extend its assistance to China’s POPs program, and specifically to the elimination of two POPs, chlordane and mirex in China.

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4. Description

The project is the first step in meeting China’s commitment to total elimination in the production and use of chlordane and mirex for termite control in the country. It is a stand alone full size GEF project which follows the standard Bank and GEF project processing procedures. The project has six components: (i)Institutional Capacity Strengthening; (ii)Policy Framework for Elimination of Chlordane and Mirex; (iii)IPM Implementation; (iv)Closure of Chlordane and Mirex Manufacturer; (v)Monitoring and Evaluation; and vi)National Replication Program for Elimination of Chlordane and Mirex in China. Component 1: Institutional Capacity Strengthening (US$1,822,000). The objective of this component is to mobilize institutional capacity for project management, technical and advisory capacity for project implementation, and capacity of the key stakeholders to support the shift from pesticide-based termite control to IPM-based termite prevention and control. The component will achieve this objective through activities focused on mobilizing the lead termite institutions and individuals at national and provincial levels, training of the Convention Implementation Office (CIO) in the State Environmental Protection Administration (SEPA) and two provincial level Project Implementation Units (PIUs) in project management and evaluation, and providing programmatic support to key organizations involved in project implementation. It has three subcomponents: a. Project Management and Technical Capacity. This sub-component will support the institutional capacity for project management through establishing a Termite Project Team in CIO and two provincial level PIUs in the demonstration area; training the project staff; and establishing two Provincial Steering Groups in Zhejiang and Jiangsu to provide political guidance and support to the project. b. Technical and Advisory Capacity for Project Implementation. This sub-component will support recruitment of an international Chief Technical Advisor (CTA) and a national technical advisor (NTA) to provide guidance on technical matters; and hiring of individual technical experts to assist in project implementation and evaluation. c. Inception Activities and Mobilization of Key Stakeholders. This sub-component will support a broadly attended National Inception Workshop as well as two provincial Launch Workshops in the demonstration area to mobilize stakeholders at the outset of project implementation. The workshops will provide general information on POP elimination; risks associated with the use of chlordane and mirex for termite control; and approach to their elimination. They will also present detailed implementation arrangements and provide introduction to integrated termite management. Component 2: Policy Framework for Elimination of Chlordane and Mirex (US$840,000). The objective of this component is to improve the policies, regulations and standards so they facilitate elimination of chlordane and mirex and promote IPM for termite control. Since the

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reliance of Chinese termite control industry on pesticides is embedded in the existing policies and regulations, the support of this component in adopting improved policies is critical in ensuring substantial and permanent shift from chlordane and mirex to IPM in termite control. The component will support revision of key national and provincial policies and regulations that govern termite control. The revisions and issue of these policies will follow the implementation progress of IPM technology in the demonstration provinces so the experiences and lessons generated by the demonstration project can be reflected in the revised policies. The component will have two sub-components. a. National Policy and Regulatory Study. The sub-component will support review and revisions of the following national level policies and regulations. b. Provincial Policy and Regulatory Reform. This sub-component will support review and revisions of the following provincial level policies and regulations. Component 3: IPM Implementation (US$19,252,000). The objective of this component is to replace the existing chlordane and mirex-based termite control in the building construction sector of the demonstration area with an IPM-based bait system and complementary IPM measures. The component represents the principal ground-level intervention funded by the project. It will take place in the two demonstration provinces. It will target the building construction sector which accounts for the highest concentration of termite damage and chlordane and mirex use. It will have the following five sub-components. a. IPM Operating and Training Manual. This sub-component will fund preparation and dissemination of a detailed operating and training manual for bait system and complementary IPM measures for termite control. b. IPM Training Program. This sub-component will support design and delivery of training programs specific to different groups of people in termite control, including termite station managers, researchers, and operators. In all cases it will include general introduction to risks associated with the use of chlordane and mirex, concept of IPM and applied training in skills necessary for introduction of the bait system. Notably, the sub-component will adopt a training of trainers approach to ensure sustainability of the IPM training. c. Public Awareness and Information Dissemination. This sub-component will fund public awareness activities on the risks associated with chlordane and mirex and benefits of IPM. It will also fund development of an information website to serve the information needs of general public as well as those with research or professional interest in termite control. d. IPM Implementation. This sub-component will fund application of commercial bait systems and complementary measures in the building construction sector of the demonstration provinces. The bait system technology for termite prevention in-ground termite stations relies on (i) inserting bait stations with harmless wood or cellulose bait in the ground at regular intervals of about 10 feet at the perimeter of the building, (ii) monitoring the stations for signs of termite activity every one month (or 3 months for some brands), and (iii) if an activity is detected,

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replacing the harmless bait with a slow-acting termiticide which spreads from foraging worker termites to other members of the colony through the normal feeding and grooming behavior, and eventually destroys or suppresses the colony through disturbing termite growth or metabolism. For active termite infestations, above-ground bait stations are placed directly at the site of infestation. The sub-component will fund procurement, installation and monitoring of about 433,000 in-ground bait stations and about 617,000 above-ground bait stations. The use of bait stations will reduce the national consumption of chlordane and mirex by 150 metric tons annually. The chlordane and mirex production will be controlled through a production quota system accordingly. e. Research and Development. This sub-component will fund applied research aiming at improving the effectiveness of bait systems, complementary use of biopesticides, physical barriers, anti-termite building designs, and other IPM measures. Component 4: Closure of Chlordane and Mirex Manufacturer (US$ 2,641,000). The objective of this component is to demonstrate (a) permanent physical closure and dismantling of the Liyang Guanghua Chemical Company which manufactures chlordane and mirex; and (b) clean up the facility’s chlordane and mirex contaminated site and disposal of chlordane and mirex wastes. The plant closure is a critical activity for phaseout of chlordane and mirex, and an important complement of IPM implementation. The IPM technology – bait systems – offers the termite industry a viable alternative to chlordane and mirex in termite control while the chlordane and mirex plant closure delivers both a tangible phase out measure and a strong signal to chlordane and mirex producers and termite industry that the government is firmly determined to phase out chlordane and mirex. The component will have two sub-components as follows:

a. Closure and dismantling of Liyang Guanghua Chemical Company. This sub-component will fund complete dismantling and removal of all equipment and facilities at Liyang Guanghua Chemical Company, as well as compensation for lost profits directly associated with the closure and workers compensation. b. Clean-up and disposal of chlordane and mirex wastes. This sub-component will fund clean up of the contaminated site, excavation of contaminated soils and disposal of contaminated soil and demolition materials at a hazardous waste landfill. Component 5: Monitoring and Evaluation (US$137,000). The objective of this component is to evaluate the overall performance of the project, facilitate IPM learning, and capture the knowledge necessary for the preparation of the national replication program. The component will fund monitoring and evaluation workshops, annual review meetings, and computerized management information system necessary to track and evaluate project implementation progress. Component 6: National Replication Program for Elimination of Chlordane and Mirex in China (US$801,000). The objective of this component is to develop a national program for elimination of chlordane and mirex in termite control based on the experiences gleaned from this demonstration project The component is essential in ensuring that the learning supported by the

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demonstration project and the momentum in eliminating chlordane and mirex will be utilized throughout China. The component will fund workshops and consulting services for preparation and dissemination of the replication program, drafting of the national replication program document, stakeholder consultations and supporting activities. It will also fund preparation of baseline information feeding into preparation of environmental impact assessments (EIAs) for closure of the remaining eight chlordane and mirex manufacturers.

5. Financing

The project is financed by a grant from the Global Environmental Facility, and contribution from the national and provincial governments in China. The financing is as follows.

Source: ($m.)BORROWER/RECIPIENT 13.69GLOBAL ENVIRONMENT FACILITY 14.36

Total 28.05

6. Implementation

Implementation arrangements. The implementation arrangements are outlined in Figure 1. The lead national agency responsible for project implementation is SEPA. SEPA has been designated as the national lead implementing agency for all POPs activities and for implementation of the POPs Convention. All major national and local government, scientific institutions and professional termite control organizations will be involved in project implementation. The stakeholders and their roles are:

a. National Leading Group (NLG) for Implementation of the Stockholm Convention. China established the National NIP Development Leading Group in September 2003, with SEPA as the Lead Agency. The NLG provides overall guidance and coordination for the NIP development process at its Project Concept and Project Brief stages. This Group became the National Leading Group for Implementation of the POP Convention when China ratified the Convention on August 13, 2004. It will provide (i) overall guidance to development of the NIP, (ii) review of significant policies related to POPs, and (iii) guidance to implementation of all POP activities. It consists of the following 11 agencies:

i.State Environmental Protection Administration (SEPA)ii. National Development and Reform Commission (NDRC)iii. Ministry of Foreign Affairs (MOFA)iv. Ministry of Finance (MOF). MOF is the GEF Focal Point in China. v. Ministry of Commerce (MOCom)vi. Ministry of Science and Technology (MOST) vii. Ministry of Agriculture (MOA)viii. Ministry of Public Health (MOH) ix. Ministry of Construction (MOC)x. General Administration of Customs (GAC) xi. State Electricity Regulatory Commission (SERC)

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b. Convention Implementation Office (CIO). The CIO is part of SEPA and is responsible for day-to-day compliance with the Stockholm Convention. CIO’s responsibilities include (i) providing technical support to international negotiations and policy studies on the Stockholm Convention, (ii) providing support to the development and implementation of corresponding policy and regulations, as well as coordinating with key governmental stakeholders, (iii) screening, preparing and implementing Convention activities, (iv) raising co-financing (bilateral and domestic) for international collaborative programs, (v) supervising implementation of the project, (vi) preparing and submitting funding withdrawal applications to the Bank, and (vii) collecting data and information, preparing reports and organizing training, education, and information dissemination activities.

c. Termite Project Team in CIO. The Termite Project Team will be in charge of the day to day management and implementation of the proposed project under the guidance of the CIO, and oversee the provincial PIUs. Its responsibilities include (i) assignment and supervision of project activities; (ii) recruitment of international and national consultants; (iii) providing direction to the local PIUs; and (iv) coordination with stakeholders, including GEF, donors, IAs, and relevant domestic ministries and agencies, (v) preparing terms of references (TORs) for activities under the project, (vi) reviewing project progress reports submitted by the local PIUs, (vii) supervising project procurement and financial resources according to the Bank’s procedures, (viii) organizing and convening project coordination meetings among stakeholders, and (ix) reviewing project outputs.

Figure 1. Project Institutional Arrangements

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National Leading Group for Implementation of the POPs Convention

Convention Implementation Office (CIO) in SEPA

PROJECT TEAM IN CIO

Zhejiang PIU

Zheijiang Provincial Termite Institute

90 Provincial and Municipal Termite Stations

CTA, NTA and Experts

Jiangsu PIU

Jiangsu Termite Association

82 Provincial and Municipal Termite Stations

Jiangsu Provincial Steering Group

NTCC

Zhejiang Provincial Steering Group

d. Technical experts. The project will recruit a Chief Technical Advisor (CTA, an international consultant), a National Technical Advisor (NTA), and various technical experts to assist CIO in the following activities:

i. Introduction of successful experience gained from this demonstration project to other provinces of China;

ii. Assisting CIO in overall technical management and coordination of all project activities;

iii. Technical support to institutional strengthening, policy framework, IPM management for termite control, closure of a chlordane and mirex production facility, disposal of chlordane and mirex contaminated wastes, project monitoring and evaluation, and replication program development;

iv. Providing comments on project implementation progress at different stages;v. Revision and improvement of the training material developed during the

implementation of the demonstration project; andvi. Providing advice on termite control using IPM approaches.

e. The National Termite Control Center (NTCC): The NTCC will have the following tasks under the demonstration project: i. Taking lead under the auspices of SEPA and Ministry of Construction in the

development of national termite prevention and control policies and regulations. ii. Development and periodic updating of an operating and training manual for IPM

implementation in Zhejiang and Jiangsu provinces.iii. Reviewing and updating the certification system for operators in termite prevention

and control.

f. Provincial Steering Group. In each project province, key stakeholders will form a steering group to provide advice to provincial PIU on technical, policy, management and other aspects of project implementation. The Steering Group will meet quarterly or as needed to consider project progress, provide technical guidance, consult on political issues, and ensure that the project receives adequate and broad support from provincial authorities. The Steering Group in each province will include representatives of the Construction Bureau, Environmental Bureau, Pricing Bureau, Financial Bureau, Agricultural Bureau, Water Conservation Bureau and Forest Bureau. In Zhejiang, the group will be chaired by a representative of the Construction Bureau. In Jiangsu, the group will be chaired by a representative of the provincial environmental protection bureau (EPB). The project will provide logistical support to the meetings of the Steering Group.

g. Local Project Implementation Units in Zhejiang and Jiangsu (local PIUs). Zhejiang and Jiangsu provinces will establish project implementation units (PIUs) to conduct day-to-day project management and coordination of provincial level activities in their respective provinces. The PIU’s location, size and specific functions will be clearly

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defined in a TOR prepared by CIO in SEPA. The PIUs will include staff from the provincial institutions such as EPBs, Construction Bureaus, and termite institutions. Its responsibilities will include (i) coordinating/organizing local training and seminars; (ii) overseeing operation of termite management and IPM implementation for termite control in Zhejiang and Jiangsu; (iii) contributing to advocacy and policy dialogue; and (iv) collecting information and preparing progress reports. As the production of chlordane and mirex is located in Jiangsu province, the PIU in Jiangsu will have additional responsibility on (v) monitoring chlordane and mirex production, (vi) closure of the Liyang Quanghua production facility, and (vii) cleanup and disposal of chlordane and mirex contaminated wastes after the closure.

h. The Zhejiang Provincial Institute for Termite Prevention and Control (ZPITPC): The Institute is presently responsible for all training provided to termite stations and termite staff in Zhejiang province and for corporation between termite institutes/stations within the province. In order to maintain and utilize the present system, the Institute will be contracted to conduct IPM training in the province.

i. The Jiangsu Provincial Termite Association. The Association will maintain its present role in the Province. Under the project, it will be responsible for all IPM training to be provided to staff employed by the termite stations in the province. It will continue cooperation between termite institutes and stations within the province.

j. Termite stations in Jiangsu and Zhejiang Provinces. The professional termite stations will receive IPM training and implement integrated termite management using bait systems instead of chlordane and mirex. As of 2004, Zhejiang has 90 and Jiangsu has 82 provincial and municipal termite stations, all of which will be involved in this project.

Other involved parties. The implementation of the proposed demonstration project will involve the following parties:

a. Consultants. Consultants will be selected through a competitive process to (i) prepare EIAs for the remaining chlordane and mirex manufacturers and (ii) provide consultant services as needed under the project.

b. Suppliers of bait systems. Contracts to supply bait systems will be awarded based on World Bank procurement procedures about six month after the start of the project to allow domestic and international suppliers to register their products with MOA. Bait system will be procured periodically during implementation period in order to ensure most cost effective supply of bait systems.

c. Hazardous waste management companies. Hazardous waste management companies will be selected competitively for the closure of the Liyang Guanghua Chemical Company, cleaning up the production site and disposal of chlordane and mirex contaminated wastes.

d. Other stakeholders. The public at large will be involved in the project through education and public awareness activities. Relevant international organizations and possible bilateral donors will be informed about project progress and invited to advise on its implementation.

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Monitoring and evaluation

Monitoring of project activities and evaluation of their results in the project will serve a dual function. It will facilitate (a) tracking of progress toward project objectives, and (b) learning and generation of knowledge necessary for the preparation of the national replication program.

The monitoring indicators, developed specifically for the project and described in Annex 3, reflect the project’s focus on the environmentally sound management and disposal of chlordane and mirex by using IPM approach for termite control.

The data for determining the value of the indicators will come from two main sources. First, they will come from termite prevention and control work using standardized project-wide technical guidelines and methodologies for data collection and quality assurance. The responsibility for data collection at this level will rest with local PIUs, with guidance and assistance from the Project Team in the CIO in SEPA. Second, data will come from standardized monitoring and reporting designed by the project team in the CIO in SEPA providing support services. The Zhejiang and Jiangsu PIUs will collect data from all contractors carrying out project activities (see Annex 4) and report to the project term in CIO/SEPA. The project managers including the project team in CIO/SEPA and the Zhejiang and Jiangsu PIUs, will regularly review the consolidated indicators to assess the effectiveness of the project.

Annual meetings will be held to review project implementation with representatives from all project stakeholders. Progress reports will be distributed beforehand for review at the meeting.

To enhance the capacity of the project team and provincial PIUs to track project implementation and manage the project based on adequate management information, the project will support detailed design and establishment of a project management information system (MIS). The MIS will be integrated into the existing POPs-MIS, which is running on two servers hosted by the Foreign Economic Cooperation Office (FECO) of SEPA, and maintained by three information technology staff. The MIS will track implementation information submitted by the termite control stations as well as financial management and other project information use by project team and the PIUs.

7. Sustainability

As a Party to the Stockholm Convention, China is obligated to stop production and use of chlordane and mirex. China had requested and was granted an exemption for a five-year period to initiate a phaseout program for which this project is a foundation. If necessary, China could apply for an additional five-year exemption by the Parties to the POP Convention. It would, however, be up to the Parties to grant an additional extension for complying with the POP Convention.

China is committed to begin the demonstration of environmentally sound IPM approach to termite control in the selected demonstration provinces as soon as the necessary technical and financial support from the international community is provided in accordance with Article 13 of the Convention.

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The institutional and legal framework and technical capacity developed in Zhejiang and Jiangsu through this demonstration will be used throughout the country. The sustainability will be ensured by (a) involving all key stakeholders, including local participation from the beginning and throughout its implementation; (b) demonstrating the effectiveness of environmentally sound IPM approach to termite prevention and control and used of sound and proven disposal technologies for chlordane and mirex waste disposal; (c) supporting provincial and national capacity building; and (d) putting in place and demonstrating the mechanisms for effective enforcement of IPM approach, control of and closure of chlordane and mirex production, and managing chlordane and mirex contaminated waste disposal.

The long term fiscal sustainability of the substitute technology – the bait systems – will be achieved through revising the pricing policies and achieving economies of scale associated with a broad commercial application. The bait systems will be imported in the beginning of the project. However, it is expected that the Chinese will start manufacturing these bait systems very soon. When the domestic manufactured chemicals and systems are produced and registered in China, Chinese systems will be used when they are competitive with imported systems in terms of price and quality. Sustainability can be ensured when Chinese bait systems becomes competitive in the market.

8. Lessons Learned from Past Operations in the Country/Sector

The project design draws upon the Bank’s considerable experience in working with China on environmental issues, including those related to elimination of broadly used industrial chemicals. In particular, the Bank has been working closely with China on implementation of the Montreal Protocol on ozone depleting substances and has used the experience gained and lessons learned in that program in designing this project. In addition, both China and the Bank have drawn valuable lessons from preparing and implementing ongoing POPs projects and these lessons have been taken into account in the preparation of this project. Finally, the Bank has drawn on the experience of termite experts from US, Canada, and Australia in designing the project.

Specifically, the project draws on the following lessons from experience:

a. Comprehensiveness. The project will address elimination of toxic chemicals comprehensively by tackling, in a coordinated manner, both their production and their use through a complex of physical interventions, introduction of new technology, policy and regulatory reform and institutional support at national and provincial levels. The importance of such comprehensive approach has emerged as one of the main lessons from the implementation of a highly successful program on the phaseout of ozone depleting substances in China.

b. Country ownership and capability. Implementation of the Montreal Protocol showed the importance of establishing a Project Management Office (PMO) to provide an anchoring point and a national advocate for each country’s ozone layer protection program. Having a capable PMO has proven crucial for the successful implementation of the Montreal Protocol. Consequently, the Bank continues to emphasize helping China improve the capacity of CIO at SEPA, the office charged with implementing the POPs Convention in China. This has included providing (through the Bank’s Beijing office) extensive and continuing training to the CIO staff on project management, procurement

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and disbursement procedures, and the Bank’s safeguard policies. CIO/SEPA currently has 12 professional and support staff working for 8 ongoing POPs-related projects. In addition, the project will provide support to provincial level PIUs in both demonstration provinces.

c. Coordination with related projects. SEPA has demonstrated a strong commitment to combining all relevant activities under the three POPs-related projects (the GEF funded NIP, the Italian funded pesticide study, and the Canadian funded termite study) which are currently being implemented. In addition, SEPA has built on its experience, both with ongoing POPs projects and with implementation of the Montreal Protocol, to determine the priorities of project components of this project. Relevant preparatory and base studies on institutional arrangements, policy and regulatory options, as well as training and workshops, will be combined during project implementation in a coordinated manner to ensure the effective use of resources and to avoid overlap or duplication.

Involvement of local stakeholders. China has chosen to conduct demonstration projects at the provincial level to gain practical experience on how elimination of POPs could be implemented in the field, and on securing the active participation and support of the provincial stakeholders. Consequently, the project design places the crux of project implementation at the provincial level, with considerable involvement of provincial institutions in project execution, and significant level of institutional and technical capacity building at provincial level. To ensure adequate political oversight and support, a Provincial Steering Group in each of the demonstration provinces will be established for implementing the project.

9. Safeguard Policies (including public consultation)

Safeguard Policies Triggered by the Project Yes NoEnvironmental Assessment (OP/BP/GP 4.01) [x] [ ]Natural Habitats (OP/BP 4.04) [ ] [x]Pest Management (OP 4.09) [x] [ ]Cultural Property (OPN 11.03, being revised as OP 4.11) [ ] [x]Involuntary Resettlement (OP/BP 4.12) [ ] [x]Indigenous Peoples (OD 4.20, being revised as OP 4.10) [ ] [x]Forests (OP/BP 4.36) [ ] [x]Safety of Dams (OP/BP 4.37) [ ] [x]Projects in Disputed Areas (OP/BP/GP 7.60)* [ ] [x]Projects on International Waterways (OP/BP/GP 7.50) [ ] [x]

10. List of Factual Technical Documents

Environmental Assessment for the Closure of Liyang Guanghua Chemical CompanySocial Assessment for the Closure of Liyang Guanghua Chemical CompanyPest Management Plan

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

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11. Contact pointContact: Helen ChanTitle: Sr Operations Off.Tel: (202) 458-2457Fax: Email: Hchan@worldbank.org

12. For more information contact:The InfoShopThe World Bank1818 H Street, NWWashington, D.C. 20433Telephone: (202) 458-5454Fax: (202) 522-1500Web: http://www.worldbank.org/infoshop

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