MANILA, PHILIPPINES (31 October 2023) — The Asian Development Bank (ADB) has approved a $224 million equivalent loan to improve climate resilience, support rural livelihoods, and protect the ecosystem in Chao Lake basin in Anhui province, the People’s Republic of China (PRC).
“The Anhui Chao Lake Environmental Rehabilitation Project (Phase 2) will adopt an integrated lake management approach in the Chao Lake basin, which will help protect overall environmental health in the Yangtze River,” said ADB Water Resources Specialist Silvia Cardascia. “It will strengthen Chao Lake ecosystems and benefit 2.85 million people living in the basin area.”
Located in the lower reaches of the Yangtze River basin, Chao Lake is the fifth largest freshwater lake in the PRC and is important to the Yangtze River Economic Belt (YREB). The lake provides drinking water, as well as freshwater for agriculture, fishing, industry, transport, recreation, and tourism. However, population growth, land use changes, agricultural intensification, and rapid urbanization have caused environmental degradation in the lake basin which constrains sustainable economic and social development.
The Phase 1 project significantly improved the water quality of the eight upstream rivers flowing into the lake, and an additional 1.42 million people in the basin area gained access to expanded wastewater collection in developed urban areas. The project also improved the institutional capacity of the Chao Lake Management Authority (CLMA).
The Phase 2 project will continue to enhance institutional capacity and pilot ecological compensation incentive mechanisms in the lake basin with the objective of protecting water sources from agricultural runoff and rural wastewater. An innovative Climate-Resilient Investment Fund (CRIF) will be established, marking the first private equity investment fund in Chao Lake basin. The CRIF’s primary aim is to foster private sector involvement, stimulating the local rural economy. The fund’s investments will primarily target eligible subprojects that support low-carbon and climate-smart agriculture, technologies for waste pollution control, ecotourism, and renewable energy in the basin area. Funding priority will be given to small and medium-sized enterprises led by women.
The project will facilitate the development of wetlands and ponds, strategically positioned to intercept and contain agricultural runoff, stormwater, and flooding. Simultaneously, the creation of walking trails, alongside the incorporation of native plants and trees, will serve to green the riverbanks of the Makou River. An advanced digital decision support system will also be established to enhance environmental and climate risk monitoring within the basin.
The total project cost is $453 million, with $229 million counterpart financing from the government and other sources. It is expected to be completed in 2031. Activities from the project can be replicated in other provinces of the PRC and ADB developing member countries.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
