China - Tarim Basin II

 ICRR 12241 Report Number : ICRR12241 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 09/21/2005 PROJ ID :P046563 Appraisal Actual Project Name :Cn - Tarim Basin II Project Costs US$272.6 US$287.8 US$M ) (US$M) Country :China Loan/ US$M ) Loan /Credit (US$M) US$150.0 US$146.7 Sector (s):Agricultural ): extension and US$M ) Cofinancing (US$M) research; Irrigation and drainage; Sub-national government administration L/C Number :C3093; L4341 FY ) Board Approval (FY) 98 Partners involved : AUSAID; US$2 million Closing Date 12/31/2004 12/31/2004 technical assistance Evaluator : Panel Reviewer : Group Manager : Group : Keith Robert A. Ridley Nelson Alain A. Barbu OEDSG Oblitas 2. Project Objectives and Components a. Objectives (i) Increase the incomes of poor farmers through irrigated agriculture development . (ii) Establish mechanisms for the sustainable development, management and use of the water resources and land in the Tarim basin. (iii) partially restore and preserve the "green corridor" in the lower reaches of the Tarim river . b. Components (or Key Conditions in the case of Adjustment Loans ): (i) Water conservancy : (Cost at appraisal: US$119.6 million; actual cost: US$116.8 million) Rehabilitation of irrigation and drainage systems including lining of part of the canal system with geo -membrane. ii) Land reclamation : (Cost at appraisal: US$60.1 million; actual cost: US$35.8 million) Construction of canals (ii) and other infrastructure to bring non -productive land into the irrigation system . iii ) Low yield land improvement : (Cost at appraisal: US$28.4 million; actual cost: US$64.0 million) Rehabilitation (iii) of irrigation systems and improving soil fertility through drainage and crop systems to increase organic matter . iv ) Agricultural support services : (US$16.9 million; actual cost US$21.1 million) Farmer training, agricultural (iv) research, improved seed and extension . (v) Environmental protection and monitoring : (Cost at appraisal: US$10.9 million; actual cost: US$16.9 million) Monitoring quality and quantity of surface and groundwater . vi ) Institutional development and support : (Cost at appraisal: US$16.5 million; actual cost: US$17.5 million) (vi) Strengthening implementing agencies, in particular, farmer organizations from water user associations to higher level federations. vii ) Tarim Basin Water Resources Commission (TBWRC ): (Cost at appraisal: US$12.9 million; actual cost: (vii) US$12.7 million) Institutional and technical support for the TBWRC . viii ) Regional management : (Cost at appraisal: US$7.3million; actual cost: US$3.0 million) Development of (viii) management information and monitoring and evaluation systems . c. Comments on Project Cost, Financing, Borrower Contribution, and Dates Overall project costs were close to the appraisal estimate, though costs by component were variable, generally reflecting decisions made at mid-term review to adjust the sizes of some components . US$2.7 million was cancelled from the Loan/Credit at the borrower's request. Final disbursement at US$146.7 was close to the revised Loan/Credit of US$147.3 million. 3. Relevance of Objectives & Design : Relevance was high. The project's development objectives were consistent with the CAS objectives which included sustainable upgrading of irrigation productivity, major water infrastructure investments, and targeting of investments to the absolute poor. Government objectives, supported by the Bank, also included water resources management on a river basin basis, decentralization of management, greater user participation, and self -financing, by users, of operations and maintenance. These objectives were fully reflected in the project's design . The project promoted the institutional and policy features commonly aimed for by Bank water sector staff, particularly in the areas of river basin management and user involvement in management, with full responsibility of users at lower levels in distribution systems . AUSAID's US$ 2 million contribution in the form of technical assistance from successful water sector agencies was valuable in providing the experience enabling the project's institutional and policy reforms . 4. Achievement of Objectives (Efficacy) : (i) Increase the incomes of poor farmers through irrigated agriculture development . Substantial The project specifically chose the poorest prefectures for investment and impact was good . Over 200,000 farmers directly benefitted from the project . Farmers' average annual incomes increased by 29 percent, with higher income increases (40 to 48 percent) reported in the ICR for poorer prefectures . ii) Establish mechanisms for the sustainable development, management and use of the water resources and (ii) land in the Tarim basin . High. Institutional development at the basin level was strong . A Tarim Basin Water Resources Commission was established and for the last three years of the project successfully managed water use quotas by sub-basin. Institutional development at grass roots (which was to be piloted on selected areas under the project) varied in success. Water user associations (WUAs) are reported in the ICR to be running well . Attention will be needed at the water management stations . These are well managed by Government, but farmer organizations will need technical assistance if they take over (as Water Supply Corporations) at this level Physical achievements were good. Some main indicators are: 1009 kms of main canals were constructed (37% above the appraisal target); 433 kms of canals were lined with geo -membrane and 123,000 ha of low yield land was improved (17% above the appraisal estimate). iii) partially restore and preserve the "green corridor " in the lower reaches of the Tarim river . High. Water was (iii) successfully allocated to this area, which had become dry due to lack of water delivery . The ICR reports a dramatic improvement including regeneration of vegetative cover and variety, return of 25 species of birds and re-population of other animals. Introducing Major Sector Reform : The most important achievement of the project was the largely successful transfer to China of international best practices in river basin management and farmer participation (primarily from Australia's Murray Darling Basin Commission and water agencies). A national precedent was achieved in such areas as establishing a river basin authority, introducing water rights, introducing watercharge collection by WUAs, volumetric pricing and full coverage of operations, maintenance and depreciation costs, and commencing to create water corporations at higher levels in the system. A number of technical features in the project were also new to China . The project's impact is likely to go further than the Tarim basin . The national government is interested in replicating the experience and is disseminating discussion of the project's achievements . Also, the project is likely to attract interest from other countries, as successful experience in the project's reform areas is limited . 5. Efficiency : High. The project was implemented as scheduled in 6.5 years. This was a good performance considering the significant institutional reforms and investments under the project . The ICR comments that one of the factors enabling expeditious implementation was the timely provision by Government of counterpart funds . The ICR's reestimated economic rate of return of 18.6 percent exceeded the appraisal estimate ((14.3 percent). The higher ERR is reported due to higher yields and a greater degree of diversification to higher value crops than had been estimated at appraisal. 6. M&E Design, Implementation, & Utilization: Design : The appraisal report makes only passing reference to M&E in the text, but the project design summary indicates significant data collection and evaluation, though performance indicators were generally not expressed quantitatively. Management implementation systems were designed for Project Management Offices at various project management levels: regional, prefecture and county . M&E activities were fully resourced by Government in staff and funding. As part of the M&E, 1,100 households were tracked over five years . Implementation : Data collection, both baseline and during project implementation, is reported in the ICR to have been excellent and continuously updated . An independent third party (a local university) did annual measurement of key performance data, and also did the end -of-project survey. Utilization : M&E and MIS data were used on a continuing basis both for Government progress reports and during Bank supervision. Data was also used at mid term review to make decisons on adjusting project components . 7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): The environment of the "green corridor" has improved faster than was expected (section 4). The willing provision by basin stakeholders, through a basin agency, of an environmental allocation of water is a very positive precedent in China . At appraisal, creation of Water User Associations was modestly targeted to 8 demonstrations (15 WUAs were in fact established). However, the project achievement had significant further impact . The XUAR government decided to implement the WUA concept throughout the Region . As a result, an additional 208 WUAs were established within the project area, a further 1325 in the Tarim River Basin and 5255 throughout the region." This is an impressive impact, but the WUAs are new and will require continued access to technical assistance . 8. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Highly Satisfactory Highly Satisfactory The assessed highly satisfactory outcome also takes account of the project's strong reform achievements and the likely demonstration effect that the project will have; domestically and abroad . Institutional Dev .: High High The most significant institutional achievement was the establishment and first several years of successful water allocation of the TBWRC, the primary focus of the second project objective . Sustainability : Highly Likely Highly Likely A strong start was made with the basin commission, and the WUAs piloted are financially viable. The TBWRC has performed well, Continued access for WUAs to technical assistance is planned . Bank Performance : Highly Satisfactory Highly Satisfactory Strong overall and particularly commendable in the successful transfer of best practice principles to China, which required significant expertise and experience, both in design and implementation. Borrower Perf .: Highly Satisfactory Highly Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. - ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness . 9. Lessons: In most respects the project is a best practice example of irrigation sector reform in a developing country . As there are, to date, few such successes, the project could be useful as a demonstration for other Bank countries . Lessons include: Strong government commitment was essential : The project would not have been successful without strong political support, which enabled the project's changes . Highly competent government staff, and full attention to providing the needed project support, such as counterpart funds, were also instrumental . A strong coordinating agency was important to success : The multi-sectoral approach of the project and the basin defined project area crossed technical, administrative and political boundaries . The project implementation agency was highly competent and had sufficient political weight to achieve the combined and synchronized efforts required from the different entities . Establishing water rights created further incentives for change : Linked with improved water monitoring, water rights encouraged water savings, conjunctive use of surface and groundwater, water quality improvements and and investment in drainage. Volumetric water tariffs significantly enhanced water savings : After introduction of volumetric water charges, farmer water use fell by 17% and crop production increased by 18%. Due to lower water use by farmers, farmer's overall water bills were lower, even after an increase in the water tariff . Investment early in data and modelling had significant advantages : A modern and effective data collection system and computer models are fundamental for informed, knowledge based decisions . up " and "top- A combined "bottom -up" down " approach to sector reform proved a key necessary feature : Working top -down" simultaneously on establishing the basin apex institution and the grass -roots farmer organizations was important in demonstrating and implementing the reform process . Broad based stake -holder "ownership " was key : Basin management arrangements should be based on consultation and representation of all stakeholder groups . Consultations when developing basin plans improved quality and consensus : During preparation of the basin plan, a consultation process involving communities helped overall acceptance of water allocation decisions . 10. Assessment Recommended? Yes No Why? The project is emerging as a "best practice" example of river basin management, and the grass roots side of establishing WUAs and water corporations has had a good start . A PPAR would enable further assessment of features enabling success, and problems that may have arisen . This is highly relevant for the Bank as river basin management and grass -roots participation are frequently sought objectives in water sector projects, but with mixed implementation results. 11. Comments on Quality of ICR: Satisfactory. The ICR is informative and provides achievement and outcome data in the main text to back up its assessment. - It would have been desirable to have had the log frame considerably more developed in outcome and impact, especially for the development objectives . From the main text, the data is available . - Information on the apparently successful experience with water charges in covering O&M and depreciation costs would have been usefully spelled out more (the ICR has only a brief reference ). - The ICR team included an annex of illustrative photographs in the ICR . This was effective in drawing attention to key features and achievements of the project .