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1. Project Summary and Relationship to China's Agenda 21

The project seeks to protect the peat resources in Heilongjiang province, establish a peat gross reserve, spread advanced peat utilisation techniques, produce alternatives to fertilisers, and create an industry which produces compound fertiliser based on organic matter.

This project is based on programme areas 11A, 14D and 15A of China's Agenda 21, and is related to programme areas 11B, 11E, 14D and 14G.

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2. Background

Currently, chemical fertiliser is used all over the world to increase grain production. As a result, soil quality deteriorates, land productivity decreases, and environment is polluted. To solve these problems, a substitute for chemical fertiliser is necessary. Peat gross, a natural component of the wetland ecosystem, is attracting domestic and foreign attention as an available alternative to fertilisers. The peat of Heilongjiang contains 50% organic substances, 40% humic acid, 1-3% nitrogen, 0.2-0.3% potassium and 0.1-0.3% phosphate. It has been shown that organic compound fertilisers, which uses peat as a carrier, can improve grain productivity and soil quality. Heilongjiang province is rich in peat resources: there are 1.3 billion cubic meters available in the province and it is ranked 3rd among all the provinces of China. In addition, the province has the best development and protection potential. However, the current protection and management of peat resources in the province are chaotic. In recent years, the situation has deteriorated due to the large scale of agricultural development. For example, as developers remove water and peat in wetlands for agricultural purposes, they do not recycle these resources. In addition, because advanced techniques have not been used, the rich peat resources in the province have not been converted to economic advantage.

This project has a direct relation to the grain production target as defined by the Chinese governmentís Ninth Five-Year Plan and the Long-term Targets of the Year 2010. The development of peat resources is critically linked to the national grain supply assurance.

Since the 1980s, the provincial government has paid great attention to protecting and developing peat resources. The relevant departments have done much work in the survey, protection and development of peat resources. To date, the departments have finished a basic evaluation of peat resources in the province. Many researches have been done in using the peat in agriculture, medicine, chemical industry and construction materials. The peat has been used in agriculture as a component of organic compound fertiliser.

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3. Objectives

3.1 Long-term Objective

In accordance with the Chinese governmentís laws regarding the protection and rational development of natural resources, the project seeks to meet the demand for economic and social development of peat, resources and simultaneously seeks to protect peat resources which play an important role in the ecosystem. The project also seeks to provide a model for other regions of China for the protection and sustainable use of peat resources.

3.2 Immediate Objectives

* To establish and implement effective measures to protect and develop various typical peat bogs and to establish models of the peat protection areas;

* To create an industry which produces organic compound fertiliser and to provide enough fertiliser for Heilongjiang province to reach the agricultural target set by the central government: to produce additional 7.5 billion kg and 25 billion kg of grains by the end of 2000 and by 2010;

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4. Outputs and Activities

4.1 Establishment of a peat protection demonstration area

* To choose a protection area for typical peat bog, such as the Yichun - Jiayin moss--herbaceous peat area, the Mehe - Tahe herbaceous--moss peat area and the Mishan - Hulin woody peat area. The implementing agencies will effectively manage and protect peat resources within the zone;

* To propose a protection plan and implementation scheme macroscopically, according to the situation of the province;

* To put forward an effective method and approach for the management, development and establishment of the protected area. This will enable those demonstration areas be the provincial and national peat protection base.

Monitoring Indicator: the protection of various types of the peat bogs which covers 10,000 km2.

Implementing Agencies: Heilongjiang Environment Protection Bureau and Heilongjiang Land Bureau

Time Schedule: January 1997 - December 1998

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4.2 Organic Compound Fertiliser

* The construction of two liquid bacterial agent plants with an annual production of 10,000 tonnes.

- To decide on the plant sites after a comprehensive study of raw material, energy, water, electricity and some external conditions;

- To implement the construction and ordering of equipment, including 25 sets of hi-pressure autoclave, fermentation batch, etc.;

- At the final phase of construction, training of analysts, fermentation controllers and other operators will begin. This will ensure the smooth assembly and commission of the equipment;

* The construction of twelve organic compound fertiliser plants with an annual production of 50,000 tonnes.

- To decide on the plant sites, located in peat rich areas, after a comprehensive study of transportation;

- To implement the construction and ordering of the equipment, including 3 sets of dryers, cutters, mixers and pellet makers, etc.

Monitoring Indicators: annual production of liquid bacterial agent 20,000 ton, annual production of the compound fertiliser of organic matter 600,000 ton which will substitute 1/6 of fertiliser used per year.

Implementing Agencies: Heilongjiang Provincial Scientific Academy, 12 municipal (county) governments.

Time Schedule: January 1997 - December 1998

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5. Inputs

5.1 Chinese Inputs

The Chinese inputs will be used for project management, feasibility discussions, the purchase of equipment, project construction, running fund and initialising the model area.

5.2 International Inputs

International inputs will be used for the purchase of equipment, initialising the model area, running fund and project construction.

5.3 Budget

The total capital needed for this project is US$ 35.50 million. The Chinese side will raise US$ 14.30 million from domestic sources, while foreign aid and investment will cover the other US$ 21.20 million.

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Table 1. Budget by Item (in million US dollars)

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Table 2. Budget by Output (in million US dollars)

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6. Benefits

The implementation of the project will encourage and direct the protection and development of peat resources of the province and the country. It is estimated that a liquid bacterial agent factory with an annual output 10,000 tons has a value RMB 80 million. The profits will be RMB 21.6 million or RMB 6.9 million after tax. Within 2 years the investment can be repaid. In addition, the utilisation of organic compound fertiliser will reduce the cost by RMB 225 - 300 yuan per ha. as compared to chemical fertilisers. This will not only reduce the cost to farmers, but will improve the soil structure and the productivity of the land. Therefore, this project is critical to the development of the society, economy and ecology of the region.

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7. Risks

The excavated area will impact the surrounding environment. Fish and aquatic plant life will need to be replenished in order to remediate the problem. These steps will help to restore the environment and increase the peat recurrence rate. Page: 8 [J1]

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