Ex-ante Evaluation
1. Name of the ProjectCountry: The People’s Republic of China
Project: Hunan Municipal Solid Waste Treatment Project(Loan Agreement: December 21, 2007; Loan Amount: 10,500 million yen; Borrower: TheGovernment of the People’s Republic of China)
2. Necessity and Relevance of JBIC’s AssistanceAccompanying economic growth and urbanization in China, municipal solid waste has increased.
However, since the rate of harmless treatment of municipal solid waste1 is low at 51.7% (2005),
there is concern over the deterioration of water resources and public health. Given this situation, thegovernment of China is promoting reduction of solid waste in its 11th Five-Year Plan and has
decided to boost the rate of harmless treatment of municipal solid waste to more than 60% by 2010.
In the local cities of Hunan Province (population: 67 million), development of infrastructure forharmless treatment of municipal solid waste is lagging far behind (in 2005, Hunan Province’s rate ofharmless treatment was 39.7%), and meanwhile the population is expected to increase asurbanization progresses henceforth. There are currently 8 sanitary landfills, but in the majority ofHunan Province, solid waste is placed in simple landfills that do not meet national standards or ispiled and burned in fields. The amount of municipal solid waste is increasing concurrent with rapid
economic development, and there is concern about the impact of seepage of polluted water on thesoil and the impact of pollution in rivers and groundwater as well as air pollution on health and thenatural environment. Thus, the building of sanitary landfills is an urgent issue.
Given this situation, the Three-Year Plan for Environmental Protection in Hunan Province(2005–2007) places emphasis on construction of solid waste treatment facilities, boosting of thecollection rate of solid waste, and reduction of the volume of solid waste through appropriate
treatment and usage of waste as a resource. The plan aims to raise the rate of harmless treatment inurban areas by increasing the treatment capacity from the current 5,790 tons/day by adding an
additional capacity of 8,800 tons/day through constructing municipal solid waste harmless treatment
facilities and development of collection networks. Moreover, the 11th Five-Year Program for Socialand Economic Development in Hunan Province mandates that the rate of harmless treatment ofmunicipal solid waste be 60% or more by 2010.
This project addresses environmental conservation, one of the priority areas designated in theEconomic Cooperation Program for China prepared by the government of Japan and JBIC’s
Medium-Term Strategy for Overseas Economic Cooperation Operations. Thus, JBIC’s support forthis project is highly necessary and relevant.
3. Project Objectives
The project aims to promote appropriate treatment of solid waste in local cities of Hunan Province bydeveloping solid waste treatment systems and thereby aims to contribute to improvement ofresidents’ living environment and sanitation environment and to environmental conservation in that1

The percentage of solid waste that undergoes harmless treatment out of the total amount of solid waste collected. In China, “harmlesstreatment” refers to sanitary landfill, composting, and incineration.

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4. Project Description(1) Target Area
16 local cities in Hunan Province(2) Project Outline
The project involves procurement of materials and equipment, civil works, and training related toconstruction of municipal solid waste treatment facilities in 16 local cities in Hunan Province.
(a) Municipal solid waste treatment facilities: Sanitary landfill, garbage separation andintegrative utilization, transfer station, transfer trucks and street bins, etc.
(b) Training: Training in Japan and China concerning solid waste treatment (basic policy,sanitary landfill, garbage collection and transfer, information management, environmental
monitoring, etc.)(3) Total Project Cost / Loan Amount
22,169 million yen (Yen Loan Amount: 10,500 million yen)
(4) ScheduleApril 2008–December 2010 (33 months). Project completion is defined as the end of warranty
period.
(5) Implementation Structure(a) Borrower: The Government of the People’s Republic of China(b) Executing Agency: Hunan Provincial People’s Government(c) Operation and Maintenance System: Municipal Bureau of City Comprehensive
Administration, Environment Protection Bureau, state-owned companies, etc.
(6) Environmental and Social Consideration(a) Environmental Effects / Land Acquisition and Resident Relocation(i) Category: B(ii) Reason for Categorization
This project is classified as Category B according to the “Japan Bank for InternationalCooperation Guidelines for Confirmation of Environmental and Spcial Considerations”(dated April 2002), as this project does not correspond to sector or regions described in thesaid guidelines as being sensitive to negative impact, and as it is not deemed to have asignificant harmful impact on the environment.
(iii) Environmental Permit
The Environmental Impact Assessment (EIA) report related to the project will be approvedby the Environmental Protection Bureau of Hunan Province in January 2008.
(iv) Anti-Pollution Measures
At the sanitary landfills, no particular negative impact is anticipated because offensive odors
will be prevented by covering the site with earth and seeping water will be properly collected-2-and treated.
(v) Natural Environment
The project site is not located in or around sensitive areas, such as national parks, and soadverse impact on the natural environment is assumed to be minimal.
(vi) Social Environment
The project involves land acquisition of about 239 ha, and acquisition will be carried out inaccordance with the domestic procedures of China. The project does not involve resident
relocation.
(vii) Other/Monitoring
The Environmental Protection Bureau of each local city will monitor the quality of thegroundwater and the air, etc., surrounding the final disposal sites.
(b) Promotion of Poverty Reduction
There are measures for reducing payment of solid waste treatment fees for the poor. Thesemeasures will be applied to the project as well.
(c) Promotion of Social Development (e.g. Gender Perspective, Measure for Infectious Diseases
including AIDS, Participatory Development, Consideration for the Handicapped, etc.)
It is expected that safety and sanitation education, etc., will be provided for area residents whocollect garbage at the final disposal sites.
(7) Other Important Issues
With the completion of the project, reduction in CO2 emission equivalent to approximately 920,000
tons/year can be expected.2
5. Outcome Targets(1) Evaluation Indicators (Operation and Effect Indicator)
TargetBaselineIndicator(2012, 2 years after(2005 actual)completion)
Amount of waste disposed at sanitary landfills (tons/year)
1,126,000
2,684,800
BOD concentration of seeping water after treatment (mg/l)–30–600
COD concentration of seeping water after treatment (mg/l)–
100–1,000Amount of garbage reduction due to sorting facilities–470,000(m3/year)(2) Number of Beneficiaries
Approximately 6.1 million(3) Internal Rate of Return (Financial Internal Rate of Return)
In solid waste treatment projects, assistance from the government budget is necessary, and thereby
the financial internal rate of return (FIRR) is not calculated. Each year, the necessary amount, as2

The amount of annual reduction in gas emission (reduction of greenhouse gases) varies depending on the number of years elapsed
since the waste was buried in the landfill. Here, for the sake of expedience, the simple average of the annual reduction was calculated by
dividing the total reduction amount at the landfills concerned by the number of years of emission.

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determined by the budget office of each local city, is financed.
6. External Risk Factors
・ Delays in construction due to site changes caused by changes in road maintenance areas,development areas, etc. in urban planning.
・ Impact on operation and maintenance due to limitation of domestic funds or shortages incollected fees due to changes in the policies relating to the fee sharing principle.
7. Lessons Learned from Findings of Similar Projects Undertaken in the Past
From the ex-post evaluation of the Beijing Sewage Treatment Plant Construction Project, it has beenlearned that it is important to set an appropriate fee system that considers operation and maintenancecosts, investment cost, payment ability of beneficiary residents, and financial ability of local
governments in order to ensure the sustainability of the project’s effects. Based on this lesson,
establishment of appropriate fee system and technical standards will be confirmed in the projectthrough interim monitoring and supervision, etc.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Amount of waste disposed at sanitary landfills (tons/year)(b) BOD concentration of seeping water after treatment (mg/l)(c) COD concentration of seeping water after treatment (mg/l)(d) Amount of garbage reduction due to sorting facilities (m3/year)(2) Timing of Future Evaluation
2 years after project completion-4-