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1. Project Summary and Relationship to China's Agenda 21 The project is intended to improve the water quality of Taihu Lake and mitigate its eutrophication in order to make full use of the multi-functional nature of the environment. In addition, the project will stimulate sustainable development in the Taihu Basin through comprehensive planning for water quality recovery of the lake, decision-making support systems, and demonstration projects such as water diversion through water conservancy projects, regulation of typical pollution sources and through ecological agriculture. This project is based on programme area 14C of China's Agenda 21, and is related to programme areas 17B and 17C.

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2. Background Taihu Basin is located in the Yangtze Delta, covering two provinces and one municipality (Jiangsu province, Zhejiang province and Shanghai municipality), seven cities (Shanghai, Wuxi, Suzhou, Changzhou, Jiaxing, Hangzhou and Huzhou), and thirty-eight counties (and cities at the county level), with a catchment area of 36,500 km2 and a population of 40 million. The area is one of the fastest developing areas in China, where 0.4% of China's land create 14% of the GDP of the country. Taihu Lake, as the largest lake at the centre of the basin, plays a critical roll in the region with its vast river-network. Its area totals 2,338 km2, and is the third largest fresh water lake in China, and is a source of drinking water. The lake is the lifeline for the development of the social economy of the region. Tourism, navigational transportation, and agriculture are based in the lake. But in recent years, due to the rapid development of industry and agriculture in the Taihu Basin and the severe lack of remedial measures, the water body of the basin has been seriously polluted. The greatest problem is the organic pollution of the river -network and the eutrophication of Taihu Lake itself. Blue alga with its explosive reproduction rates brings difficulty in supplying water for cities and towns around Taihu Lake. Even factories can't operate normally. Therefore, the regulation of Taihu Lake has become a major task effecting sustainable economic development of this area which needs to be urgently implemented. The causes of Taihu Lake's eutrophication are: (1) Taihu Lake is a typical shallow lake, and the inflow to the lake in the dry season is very small. So water exchange in the lake is slow; (2) The Taihu Basin is an important agricultural base in China, and the agricultural output value accounts for 1/7 of that in the whole country. The annual fertiliser consumption is as much as 3 million tons and nearly 100 thousand tons of pesticides are used, so agricultural pollution has been the major source of nitrogen and phosphorus in the lake; (3) Taihu Basin includes Shanghai, Wuxi and many other large- and medium-sized cities. With its food industry, the over development of livestock and poultry raising, a great amount of sewage is produced which is discharged into the rivers without treatment; (4) The density of the population in Taihu Basin has reached 1,000 person/km2, and the floating population is up to millions. Large amount of domestic sewage is directly drained into the water without any treatment. Nitrogen and phosphorus from the domestic sewage approximately account for 30% of the total quantity of nitrogen and phosphorus in Taihu Lake; (5) With township enterprises booming in the Taihu Basin, the industrial output in the last decade has doubled or even tripled. About 1 billion tons of untreated industrial sewage is discharged annually into the river channels and lakes. The restoration of Taihu Lake will take a long time. To mitigate eutrophication in the dry season, the most effective measure that can be taken at present is to divert water from the Yangtze River in order to raise the water level in Taihu Lake, thus stimulating water body exchange. Wangyu River, about 60.8 km in total length, is the most important diverting and discharging river channel between the lake and the Yangtze River. It is estimated that after the Wangyu River Channelliaison is completed at the end of 1997, 2.8 billion m3 of clear water will be diverted from the Yangtze River in the dry season of every year, accounting for 69% of the flow from the upper reaches of Taihu Lake and 64% of the total capacity of the lake. But the diverted water distribution must be optimised and water pollution in the Wangyu River should be strictly controlled. Only in this way will the project of the restoration of the lake really function. The most pro-active solution to eutrophication is to regulate pollution sources, such as using livestock and poultry wastes as agricultural fertiliser. This measure may reduce the consumption of fertilisers in the region and solve the livestock and poultry sewage problem. The medium- and small-sized cities and towns spread in the Taihu Basin often lack a town level sewage treatment plant. Therefore it is necessary to build some plants accordingly, which should adopt sewage and sludge treatment techniques that require low investment, low energy consumption and limited use of land. All the sewage will be treated before discharge by the year 2000. The improvement of the Taihu Lake water environment is of strategic importance to the development of the social economy of Jiangsu province, Zhejiang province and Shanghai. The regulation of Taihu River water pollution has been listed on the local Ninth Five-Year Plan, and is also a key point of the national Ninth Five-Year Plan and the Year 2010 Water Pollution Regulation Plan. At the 4th Environmental Protection Conference the State Council pointed out that pollution control of Taihu Lake is of most importance. The major participants in the project include the Taihu Basin Water Source Protection Bureau and the environmental protection bureaux of Jiangsu province, Zhejiang province and Shanghai. They have been engaged in management and research work on Taihu Lake water resources utilisation and water quality protection for long, and, with relevant institutions, in the study of the Taihu Lake water environment and water pollution during the periods of the Sixth Five-Year Plan, Seventh Five-Year Plan and Eighth Five-Year Plan. Their researches include: studies on the eutrophication mechanism and the eutrophication water quality model for Taihu Lake, water quality evaluation for the Taihu Basin during 1987-1995, pre-feasibility studies on the regulation programme for twenty severely polluted rivers that flow into Taihu Lake, decision-making support system for the water quality administration of Taihu Basin, the water resources protection plan for Taihu Basin, studies on large-sized water, soil and vegetation recovery for Taihu Basin, studies on a physics-ecology project for the protection of Taihu drinking water source area, and pre-feasibility study on Wangyu River water resources protection. All of these studies will provide certain foundations for comprehensive regulation of the Taihu Lake water environment.

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3. Objectives

3.1 Long-term Objective To gradually improve Taihu Lake from medium eutrophication to oligotrophication through comprehensive regulation, which will ensure sustainable development of the social economy in Taihu Basin.

3.2 Immediate Objectives * To produce programme for the mitigating of Taihu Lake's eutrophication, establish decision-making support systems, provide operable strategies which will help the stateís efforts to turn Taihu Lake clear during 2000 - 2020; * To mitigate eutrophication of Taihu Lake through water-diverting project, regulation of major pollution sources and ecological agriculture, provide comprehensive technologies for water pollution control; * To construct demonstration projects for treating slightly polluted water by eutrophication into drinking water, provide the technologies which would improve the water quality of the area.

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4. Outputs and Activities

4.1 Comprehensive planning and decision support systems for Taihu Lake water recovery * To set up automatic water monitoring systems at typical cross-sections of Taihu and its 20 major in-flowing rivers and establish central data processing systems for the water quality; * To establish a data base of pollution sources of the whole basin, including information about 600 key industrial pollution sources, water quality and quantity of domestic sewage in 38 cities and counties, and farming area pollution sources, to investigate sewage treatment capacity; * To combine the central data processing system with the eutrophication model of Taihu Lake and existing water quality model of the river-network to form a relatively complete data collection, analysis, predication and support system; * To produce a comprehensive plan for Taihu Lake water quality recovery and formulate laws and regulations for the prevention of basin water pollution. Monitoring Indicators: a comprehensive planning report on Taihu Lake water quality recovery, a decision support system which can forecast the water quality of major rivers and lakes and make decision. Implementing Agencies: the Taihu Basin Water Resources Protection Bureau (in charge) and the Environmental Protection Bureaus of Jiangsu province, Zhejiang province and Shanghai.

Time Schedule: October 1996 - June 1999

4.2 Optimum control scheme for the diversion of water from the Yangtze River to Taihu Lake through the Wangyu River and a plan for Wangyu River Pollution regulation * To compile a plan for Wangyu River pollution control; * To establish a model for the quality of the diverted water through the Wangyu River and link it to the Taihu Lake eutrophication model; * To establish an automatic monitoring system for Wangyu River water quality; Monitoring Indicators: an optimised programme for diverting water from the Yangtze River to Taihu Lake through the Wangyu River, a cost-benefit analysis report, and a plan for Wangyu River pollution regulation. Impementing Agencies: the Taihu Basin Water Resources Protection Bureau and the Environmental Protection Bureau of Jiangsu province.

Time Schedule: December 1996 - December 1998

4.3 Rational fertilising technology for farming of Taihu area and demonstration project of ecological agriculture * Two kinds of typical fertilising technology for paddy fields; * Comprehensive ecological demonstration project of Tiaoxi water, soil, forest and farmland; * ecological demonstration project in Wu county, integrating farming, breeding and biogas; * A demonstration project in Xishan to reduce outflow pollution with economical aquatic plants. Monitoring Indicators: reduction of chemical fertiliser consumption for farming by 30-50%, utilisation of 80% livestock and poultry wastes, tropic salt concentration of draining water from farming reaching class III by national surface water classification. Implementing Agencies: the Taihu Basin Water Resources Protection Bureau and the Environmental Potection Breaus of Jiangsu province and Zhejiang province.

Time Schedule: January 1997 - December 1999

4.4 Small-sized, high efficiency sewage treatment technology and demonstration project in Taihu Basin * To implement in Yangjian town a domestic sewage and sludge treatment demonstration project with the capacity of 5000 t/d; * To implement a demonstration project to treat the wastes and sewage from livestock and poultry with the capacity of 100 t/d; * To import key equipment for sewage treatment; * To import automatic or semi-automatic control systems for sewage treatment; Monitoring Indicators: removal of organic substance up to the standard for sewage drainage, i.e. BOD5(30 mg/L, CODcr(100 mg/L, NH4[a1]+-N(15 mg/L, P(1 mg/L. Impementing Agencies: Taihu Basin Water Resources Protection Bureau and the Environment Protection Bureau of Jiangsu province. Time Schedule: December 1996-December 1998 4.5 Wuxi Meiyuan drinking water treatment demonstration project for slightly polluted water by eutrophication (treatment capacity: 50,000 t/d) * Selection and design of processes; * Importation of equipment for algae removal and sludge treatment; * Importation of automatic treatment system; * Construction of civil works, equipment erection and trial operation. Monitoring Indicators: effective removal of algae, decreasing the bad odour of drinking water and the concentration of toxic and harmful organic substances to reach the standard of class I by the National Tap Water Classification for the Year 2000. Implementing Agencies: the Taihu Basin Water Resources Protection Bureau and Jiangsu Environmental Protection Bureau and Construction Department. Time Schedule: March 1997 - March 1999

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5. Inputs

5.1 Chinese Inputs The Chinese inputs will be mainly used for the project management, invitation of experts, purchasing of transportation, communication and office equipment, expenses for water quality monitoring and analysis, partial expense for Taihu Basin water quality recovery plan and establishment of decision support systems, partial expense for tests for diverting water through the Wangyu River, expenses for ecological agriculture demonstration project, sewage treatment demonstration project and eutrophic water source - drinking water treatment demonstration project.

5.2 International Inputs The international inputs will be used for purchasing water quality automatic monitoring systems, central processing and analysis systems of water quality data including both hardware and software, and for the development of necessary software, partial expense of Wangyu River water diversion test, purchasing of key equipment and instruments for domestic sewage treatment and automatic control systems, co-operative research for comprehensive application of wastes from medium- and small-sized livestock and poultry farms and ecological demonstration project, automatic control systems of slight eutrophication polluted water sources - drinking water treatment and equipment for sludge treatment.

5.3 Budget The total capital needed for this project is US$ 7.3 million, the Chinese side will raise US$ 2.9 million from domestic sources, while foreign resources will cover the other US$ 4.4 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 project will ensure the water quality of Taihu. Through optimum distribution of water diverted from the Yangtze River, 2.8 billion m3 of water will be diverted, in dry season, to Taihu Lake, which will substantially improve the water quality, provide plentiful, high quality water for Wuxi, Suzhou and Shanghai and play an important roll in the economic development of this area and the health of more than 40 million inhabitants. Meanwhile, the utilisation of new models and new technologies for high efficiency sewage treatment and reasonable fertilising can accumulate experiences for the future. In addition, the decision system for basin water quality will forecast water pollution accidents and provide corresponding measures.

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7. Risks The main factor that will influence this project is the funding and the co-ordination among various organisations and departments. However, since the leaders of the State Council recently emphasised again to speed up regulations for Taihu Lake pollution, the governments at different levels have paid close attention to environmental protection. Moreover, the Taihu Area will has a better economic foundation. So it is expected that the above issues may be solved and efforts for regulation gradually strengthened.

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