Piloting Community-Driven Development and Financing with Chinese Farmers

Challenge

China has achieved great success in reducing poverty. However, at the turn of the century, China still had the second-largest poor population in the world, after India. About 80% of the extreme poor, mostly rural residents, lived in the western and central provinces.

The Chinese government announced a plan to lift 148,000 villages out of poverty by 2010 and put in substantial funding for implementation. However, institutional constraints attached to the use of these funds limited the amount of funding that could actually reach villages and households. Only a limited share of the funding was available at the village level for essential rural infrastructure services such as roads and drinking water systems.

Many poor rural people also lived in remote and often environmentally fragile mountain regions. Conditions for agricultural production were lacking and alternative livelihood opportunities were very limited. Inadequate farming techniques and land and water resources management practices made the poor vulnerable to natural disasters and the effects of climate change. 

Approach

The project was designed to assist the government in overcoming the institutional and administrative barriers to the effective use of poverty reduction program funding, so that a larger share of the funds would reach the poorest communities, and villagers themselves could play a greater role in determining the poverty reduction measures and forms of assistance that they adopt.

As the first of its kind in China, the project introduced and piloted Community Driven Development (CDD) and Community Development Financing (CDF) in the poor rural areas of three Chinese provinces.  CDD provides control of the development process, resources and decision making authority directly to the communities. CDF provide small block grants to farmers’ mutual-help cooperatives in support of household-level productive activities, including improved and diversified crop production, animal husbandry and other income generating activities.

CDD and CDF empowered the rural communities and enabled them to select specific project activities that best met their needs. This would strengthen their sense of ownership and accountability, and promote village-level democratic management and capacity building.

The project also financed development of basic rural infrastructure and public services. It also piloted sustainable land management and climate adaption measures in selected project villages and counties. 

Results

Implemented over a period of five years from 2010 to 2015, the project involved 25 counties, 142 townships and 776 administrative villages in Henan Province, Shaanxi Province and Chongqing Municipality in central and western China, and benefited 951,100 people. Results highlights include:

• 5,628 kilometers of new or improved roads reduced travel time for villagers within or between villages. In addition, about 260 kilometers of field tracks and 432 bridges or culverts were built or improved and made it easier for farmers to transport production inputs and produce.
• 425 new drinking water supply schemes, 144 water wells, and 60,599 new water tanks provide clean drinking water for rural residents.
• New biogas digesters improved quality of life and reduced indoor air pollution for 115 rural households.
• Rural communities in the project areas generally benefited from new community libraries, cultural squares, village schools and clinics, public toilets, and village beautification activities.
• 411 rural community cooperatives were established with a total membership of 28,720 households. CDF met the cash needs of poor rural households and enabled them to undertake income-generating activities, such as livestock raising and cash-crop and tree crop farming, benefiting 92,355 people. The repayment rate reached 99 percent.
• The CDD approach was extensively adopted in the project areas. The participation rate of rural households was nearly 93 percent, with over 65 percent participation rate of women. A survey shows that 96 percent of the beneficiaries felt that the project reflected their needs, and the satisfaction rate with infrastructure improvement was about 94 percent.
• The survey found that 35 percent of the poverty households in the project villages worked their way out of poverty between 2010 and 2014, and the poverty rate declined by 23 percent during the period.
• Under the sustainable land management and adaptation pilot, vulnerability assessments and resource mapping exercises were conducted, and training was provided in 84 villages, raising farmers’ understanding of the impact of climate change on their livelihood and production. 

Bank Group Contribution

The World Bank provided a loan of US$100 million to this US$156.5 million project. Since the early 1980s, the Bank has helped introduce global knowledge, good practices and innovations into China’s poverty reduction programs. It assisted the Chinese Government in developing its national poverty reduction strategy through several major studies on rural poverty and a series of grassroots poverty reduction projects in collaboration with the State Council Leading Group Office of Poverty Alleviation and Development. This was the fifth project of that kind. 

Partners

The Global Environment Facility (GEF) provided a US$4.23 million grant for the Sustainable Land Management and Adaptation pilots aimed at managing climate-induced vulnerability of poor villages in the project areas. It supported sustainable land management, climate adaptation, poverty reduction and rural income improvement.

As in previous projects, the State Council Leading Group Office of Poverty Alleviation and Development continued to demonstrate strong leadership and support. Central and provincial government staff played the lead role in the design of the project’s CDD approach and were highly committed to its success.

Moving Forward

As project communities have directly benefited from the works and services and have a high sense of ownership, they have stayed committed to their operation and maintenance after project completion.

The CDD approach, particularly the community consultation process, has been integrated into the domestic poverty reduction programs, as well as other World Bank-supported poverty reduction projects in China.

The successful experience of the sustainable land management and adaptation pilots has been extended to China’s “precise poverty reduction” program as many of the remaining 70 million poor are located in environmentally fragile areas.