Ex-ante Evaluation
1. Name of the ProjectCountry: The People’s Republic of China
Project: Jilin Afforestation Project(Loan Agreement: March 30, 2007; Loan Amount: 9,500 million yen; Borrower: The Government ofthe People’s Republic of China)
2. Necessity and Relevance of JBIC’s AssistanceEver since the founding of the nation in 1949, China has set land afforestation as one of its basic
policies. As a result, forest coverage ratio has increased from 8.6% immediately after the founding ofthe nation to 16.6% in 1998. However, because of the vastness of the land area, the severity of naturalconditions, and deforestation to meet the rising timber demand, forest coverage ratio in China
remains below the international average of 29.6% as of the year 2000 (as compared to Japan’s64.0%).
Against this background, a major flood broke out in 1998, in which more than 4,000 people lost theirlives. In 1999, after concluding that forest degradation was one of the factors that led to such a
serious damage, the Government of China announced its “National Ecological Environment
Construction Plan” and adopted a national framework for the next 50 years covering four areas ofactivity: afforestation, water utilization, agriculture and environmental protection. In the area ofafforestation, the government divided the country into eight regions and set a number of goals,including prevention of desertification in the Three North area (north, northwest and northeast China)
and prevention of soil erosion in the black soil region of northeast China. Additionally, in the 11th
Five-Year Plan (2006–2010), the government continues to focus on implementing projects related tothe protection and restoration of the natural ecosystem with the aim of raising the rate of forest coverto 20% by 2010.
Jilin Province (population: 27.16 million [equivalent to the population of Canada]; land area: 187,400
km2 [equivalent to half the land area of Japan]) in northeast China is located in the upper and middle
stream of the Songhua River that flows into the Japan Sea. In Jilin Province, excessive logging offorestland and cultivation of grassland have taken place since the founding of the nation to meettimber demand and expand cropland. In the hilly and mountainous area of the central and easternparts of the province, the area of forestland that has been neglected since the logging now accounts
for 70% of all forestland. This has led to forest degradation and seriously undermines the capacity toretain water and prevent soil erosion, with the ratio of the volume of trees to forestland decreasing to
0.918 m3/km2 from 1.585 m3/km2 at the time of the founding of the nation. As a result, soil erosion
amounts to 130 million tons per year and flood disasters are becoming increasingly serious (annual
flood damage: 1,320 million RMB; those affected by floods: 818,000 people) in Jilin Province. Thus,
there is an urgent need for afforestation in degraded barren land and for improvement of desolate
forests. In the plain area of the western part of the province, livestock overgrazing and other factors
have caused desertification in 14,600 km2 of land (accounting for about 7.5% of the total area of theprovince). Today deserts are spreading by 420 km2 and advancing eastward at the rate of 1.1 km peryear. As a result, as many as 93 sand storms are recorded every year in Jilin Province. There is
therefore an urgent need for afforestation and vegetation cover to reverse desertification.
-1-The project addresses environmental conservation, one of the priority areas designated in theEconomic Cooperation Program for China prepared by the Government of Japan and theMedium-Term Strategy for Overseas Economic Cooperation Operations of JBIC (FY2005–FY2007).
Thus, JBIC’s support for this project is highly necessary and relevant.
3. Project Objectives
The project aims to increase forest coverage ratio and restore grasslands through afforestation andvegetation cover in Jilin Province. It will thereby help recover multiple functions of forests andreverse desertification.
4. Project Description(1) Target Area
23 counties and 5 cities in Jilin Province and the wards under its jurisdiction(2) Project Outline
The project involves afforestation and vegetation cover, the development of related facilities,procurement of materials and equipment, and implementation of a training program in the aforesaid
target area as follows:- Afforestation (red pine, poplar): 171,000 ha(Forests for water resource recharge and soil/water conservation: 130,000 ha; forests forwind/sand protection: 41,000 ha)- Vegetation cover (sheep grass): 22,000 ha (desertification prevention)- Renovation of seed collection facility: 1 location (seed storage capacity: 620 t)- Renovation of model nursery gardens: 4 locations (annual seedling production volume: 1million)- Renovation of model forest ecology parks: 4 locations (lot area: 583 ha)- Training in Japan: Implementation of training in general afforestation techniques for 80people- Training in China: Implementation of theoretical and practical training in afforestation andvegetation cover for a total of 30,000 people(3) Total Project Cost/Loan Amount
14,596 million yen (Yen Loan Amount: 9,500 million yen)
(4) ScheduleJuly 2007–December 2012 (66 months). The definition of project completion is “when inspection ofthe project is finally completed and accepted.”(5) Implementation Structure(a) Borrower: The Government of the People’s Republic of China(b) Executing Agency: Jilin Provincial People’s Government(c) Operation and Maintenance System: Same as (b)-2-(6) Environmental and Social Consideration(a) Environmental Effects/Land Acquisition and Resident Relocation(i) Category: B(ii) Reason for Categorization
This project is not likely to have significant adverse impact on the environment due to the factthat the project sector and project characteristics are not likely to exert impact and the project
is not located in a sensitive area under the “Japan Bank for International Cooperation
Guidelines for Confirmation of Environmental and Social Considerations” (established inApril, 2002). Thus, this project is classified as Category B.
(iii) Environmental Permit
The preparation of the Environmental Impact Assessment (EIA) report related to the project isnot required under the domestic laws of China.
(iv) Anti-Pollution Measures
The poject plans to use organic fertilizer and agricultural chemicals that are not harmful tothe environment. Thus, no significant adverse impact on the environment is forseen.
(v) Natural Environment
The project site is not located in or around sensitive areas, such as national parks, and soadverse impact on the natural enivronment is assumed to be minimal.
(vi) Social Environment
The project involves planting trees in land the particpants themselves have the right to use.
Thus, the project involves neither land acquisition nor resident relocation.
(vii) Other/Monitoring
In the project, the Forestry Observation Design Research Institute attached to the Jilin
Forestry Department will monitor afforestation and the like.
(b) Promotion of Poverty Reduction
The poverty rate in the target area of the project(the average of the 23 counties and 5 cities) is5.7%, which is higher than the national average of 2.8%. Implementing the afforestation projectin this area is expected to have a direct benefit of creating job opportunities and an indirect
benefit of reducing damage from floods and sand storms as well as improving living conditions.
(c) Promotion of Social Development (e.g. Gender Perspective, Measure for Infectious Diseases
including AIDS, Participatory Development, Consideration for the Handicapped, etc.)
In implementing afforestation and vegetation cover programs in national forest sites, local
residents living in the vicinity of the area concerned will be hired as a contingent work force, andin such a case, poor residents and women who want to render their services will be hired on apreferential basis. At other forest sites, the land the participating residents themselves have theright to use will be afforested with the funds they will raise by taking out ODA loans at low
interest rates, while payment will be made with the profit they will make from the sale of forestry
products.
(7) Other Important Issues
Coordination with Miyagi Prefecture, a friendship city of Jilin Province, and the Japan-China
Friendship Association of Miyagi Prefecture.
-3-5. Outcome Targets(1) Evaluation Indicators (Operation and Effect Indicator)
Baseline(2005 actualperformance)

Indicator

Target (2012, atproject completion)

Afforestation area (10,000 ha)–
17.1
Survival rate (%)
After the first growth period of afforestation*–
95
After the third growth period of afforestation*–
85
Forest coverage ratio (%)**
34.23
35.63
Vegetation area (10,000 ha)–
2.2
Number of residents participating in–***15,316
afforestation*** (households)(Reference Indicator)
Average annual income of residents (RMB)**
3,264
3,500
Average annual income of residents****** Set later****** Set laterparticipating in afforestation*** (RMB)* The growth periods are from spring to fall. In the project, trees are planted in spring, so “after thefirst period” refers to the fall of the same year. “After the third period” refers to the fall of the year
after next.
** The target area comprises 23 counties, 5 cities, and the wards that come under the direct
jurisdiction of Jilin Province.
*** Residents who implement afforestation in the land that they themselves have the right to use(residents who only provide their services not included).
**** Participants who take part in the project account for 0.3% of the total number of farmhouseholds (4.52 million) in the target area of the project (23 counties, 5 cities, and wards under thedirect jurisdiction of Jilin Province).
***** After the launch of the project, the Jilin Forestry Department will set the baseline and target
values when the residents participating in the afforestation project are confirmed (August, 2007).
(2) Number of Beneficiaries
Eighty thousand km2 of area (equivalent to the area of Hokkaido) will benefit from the project. The
number of beneficiaries is expected to reach around 16.02 million (equivalent to the population of theNetherlands). When the trees planted in the afforestation program matures, it is estimated that theannual amount of soil erosion will be reduced by 8.03 million tons per year (equivalent to the amountcarried by 40 large tankers) and that 610,000 tons of CO2 per year (equivalent to the amount of CO2
residents of Kobe emit per year) will be absorbed.
(2) Internal Rate of Return (Financial and Economic Internal Rate of Return)
Based on the conditions given below, the financial internal rate of return (FIRR) is 6.8%.
[FIRR]-4-

(a) Cost: Project cost, operation and maintenance expenses(b) Benefit: Income from the sale of forestry products (seeds, felled vegetation, etc.)(c) Project Life: 40 years
6. External Risk Factors
Decline in the survival rate of planted trees due to large-scale natural disasters such as droughts andfloods
7. Lessons Learned from Findings of Similar Projects Undertaken in the Past
The evaluation results of afforestation projects carried out in the Philippines demonstrate that thesuccess of programs designed to improve the livelihood of residents who participate in afforestation
projects tends to lead to an increase in the income of beneficiaries and capacity building of resident
organizations, and even to appropriate activities for forest operation and maintenance. The lesson
learned from these findings is that similar afforestation projects should clearly include livelihood
improvement programs. In this project, in addition to designing a project scheme that will improve
the livelihood of participating residents through the operation and maintenance of trees planted inafforestation programs with the view to ensuring the incentive of residents for operation andmaintenance after afforestation, if, by chance, a natural disaster or the like should inflict an
unexpected damage on the trees that have been planted, monetary compensation will be made bydrawing the necessary funds from the budgets of the Jilin Provincial People’s Government and theCounty Government.
Moreover, with regard to the implementation and operation of sub-projects, the evaluation results ofthe afforestation projects carried out in the Philippines demonstrate that there are cases that require
more detailed guidelines at the stage of project implementation. Thus, it has been learned that
implementation structures and methods ought to be provided in the form of guidelines at the stage ofproject planning. In this project, the guidelines in question are expected to be provided by theexecuting agency (the Forestry Department of the Jilin Provincial People’s Government) and thatthose involved in the training in China are expected to be thoroughly informed of this fact.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Afforestation area (10,000 ha)(b) Survival rate (%)(c) Forest coverage ratio (%)(d) Vegetation area (10,000 ha)(e) Number of residents participating in afforestation (households)(2) Timing of Next Evaluation
After project completion-5-