Final Report - Asian Development Bank

ADB TA 4271 Shaanxi Qinling Biodiversity Conservation and Demonstration Project
Final Report Appendix 19
A. Background
INSTITUTIONAL STRENGTHENING PROPOSAL
1. The Shaanxi Qinling Biodiversity Conservation and Demonstration Project will develop three
commercial tourism enterprises adjacent to Louguantai Township on the lower Northern slopes of the
Qinling Mountains approximately one hours drive from Xian. These enterprises will generate revenues
to support a wider conservation and rural livelihood program within the Project Area of approximately
45,000 ha most of which includes the existing Louguantai Forest Farm.
2. The three tourism enterprises will include (i) the establishment of a new botanical garden
and surrounding park landscape including visitor attractions such as cable car, Daoist religious
temples, exhibitions and conservation education centers, (ii) the enhancement of the Shaanxi Animal
Rescue Center for the exposition, research and captive breeding of endangered species including four
major iconic species being the Giant Panda, Crested Ibis, Golden Snub-Nosed Monkey and Takin,
and (iii) the existing Louguantai Fudi Tourism Development Group that will extend its geothermal Hot
Spring Development to include high end accommodation and spa facilities.
3. These enterprises will transfer a share of profit to the conservation program to be
implemented by the Louguantai Forest Farm which holds a 49% shareholding in the Hot spring
development. To achieve this will require a consolidation of the above enterprises into a unified
management structure as the investment are long term and need to have clear unambiguous
mandates, authority and jurisdictions over the Project Area. A further requirement for the consolidation
is that it provides a legal basis for the sustainable financing of the conservation program as to collect
and then transfer funds is not currently legal in PRC.
4. The SPG has agreed to complete the consolidation of the Qinling Botanic Garden, Shaanxi
Animal Rescue Center, and Louguantai Forest Farm into one Government Unit the Shaanxi Qinling
National Botanical Garden (SQNBG). The transfer of financing to conservation will therefore be an
internal accounting transfer which is expected to be set at 8% of forecast post tax net cash flow and in
the case of the Hotsprings enterprise 49% of the rate. The total forecast revenue transferred at this
rate would be $400,000 in 2012 and increases thereafter.
5. Until profit streams are created the Project will finance the initial investment into the
conservation demonstration area program through support for conservation planning, landscape
planning, habitat restoration planning and implementation, endangered species recovery, and
conservation monitoring systems. Livelihood improvement for the 4,593 local residents will b e
supported through the development of social capital in a village level development planning exercise
that will identify opportunities and interest in the establishment of collective level forestry associations,
the creation of formal and secure use rights to collective forest land, forest planting and development
programs, small enterprise development, homestay tourism enterprises, and social infrastructure
programs.
6. The proposed project was developed by each individual enterprise which prepared an
investment program for their own enterprise priorities and interests and as such the wider
development issues relating to poverty reduction and conservation of biodiversity in the interior
mountainous region of the Project Area were not adequately addressed. Another shortfall was the lack
of commercial orientation to the structure of the enterprises with most being expanded and technically
focused despite requiring commercial success before being a viable investment. Technical capacity
strengthening was included in the enterprise investment proposal however there was no institutional
strengthening for the commercial management and the consolidated QNBG which was finally agreed
at the completion of the PPTA.
7. The following paper presents a summary of the current institutional setting and the need for
an institutional strengthening investment into QNBG for the development of commercial management
capability and organizational systems. Without this investment the PPTA concludes that the QNBG will
most likely fail both commercially and financially.
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