Ratings for the Second Beijing Environment Project for China were as follows: outcomes were satisfactory, risk to development outcome was low, Bank performance was satisfactory, and borrower performance was also satisfactory. Some lessons learned included: the Bank should adopt a flexible approach to the institutional model for the sector, and in particular consider the country conditions, instead of advocating the traditional utility model as the default option.
The arrangements in place in Beijing assure sustainable service provision, which rely on a combination of politically feasible tariffs and regular confirmed resource transfers from the municipal government. However, such an arrangement is only feasible where the city can: (i) ensure service provision at low cost; (ii) take on responsibility for servicing debt; and (iii) provide timely cash transfers to meet shortfalls, especially in relation to new investments. Water re-use in water scarce areas is sound policy. Beijing has performed well to achieve a 50 percent rate of water reuse, by addressing the key issues relating to water re-use: (i) reclaimed water quality and reliability; (ii) price of reclaimed water; and (iii) cost and benefit of using water supplied through the system and reclaimed water. This should serve as an example for other Chinese cities.
The boiler conversion program faced not only major technical, environmental and economic issues, but also significant coordination and political issues. The ambitious targets set for conversion to natural gas-fired boilers were only achieved (albeit mostly outside the project) because of strong leadership, both at central and municipal government levels. In areas involving significant commercial operations (such as boiler conversions), newly established municipal entities with no commercial expertise are not likely to succeed. It might have been more appropriate for the government to have partnered with a truly commercial company, or the boiler conversions might have been left entirely to market forces with some incentives to end-users.
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