Over the past two decades, Hunan province has experienced rapid economic growth and urban expansion. Home to more than 66M people, its cities are centers of government, finance, business, education, transportation, and manufacturing and provide markets for agriculture and the province’s rural people.

Floods in the Dongting Lake, to the north of the province, and from the province’s four mountain rivers, however, are a recurrent natural hazard. Because of growth in cities along the mountain rivers and their proximity to riverbanks many people – especially the poor – are at risk from floods.

‘Improved management and control of floods in Hunan is urgently needed to secure economic growth and development,’ said Richard Bolt, an ADB Senior Sector Economist.

Despite major public investments in flood protection, damage from floods has increased. Since 2000, the Ministry of Water Resources has responded by changing its strategy from flood control to river basin-based integrated flood management.

The project will support this strategy and by helping Hunan Provincial Government to implement its plan to improve flood control, forecasting and management in the mountainous river basins – the Lishui, Xianjiang, Yuanjiang, and Zishui – home to about 56.4M people or 84% of the provincial population.

Flood protection works will be conducted in 35 high priority areas out of 94 flood-prone cities. Nonstructural measures are included to strengthen flood forecasting, enhance flood warning and emergency response systems.

A US$500,000 technical assistance grant from the Government of Spain accompanies the loan to help strengthen the Provincial Water Resources Department in flood management including nonstructural aspects.

ADB’s loan, which covers about 40% of the project’s total estimated cost of US$497.4M, comes from ADB’s ordinary capital resources. It carries a 26-year term, including a grace period of six years, and an interest rate to be determined according to ADB’s LIBOR-based loan facility.

The municipal and county governments will shoulder US$295.2M of the balance, while the provincial government, the project’s executing agency, will contribute US$2.2M. The project is due for completion around September 2012.