Tanzania - River Basin Management & Smallholder Irrigation

 ICRR 12026 Report Number : ICRR12026 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 03/22/2005 PROJ ID : P038570 Appraisal Actual Project Name : River Basin Management & Project Costs 30.77 26.57 Smallholder Irrigation US$M ) (US$M) Country : Tanzania Loan/ Loan US$M ) 28.31 /Credit (US$M) 23.88 Sector (s): Board: RDV - Irrigation and Cofinancing drainage (55%), Central US$M ) (US$M) government administration (45%) L/C Number : C2900 Board Approval 97 FY) (FY) Partners involved : Closing Date 12/31/2002 06/30/2004 Prepared by : Reviewed by : Group Manager : Group : George T. K. Pitman Peter Nigel Freeman Alain A. Barbu OEDSG 2. Project Objectives and Components a. Objectives There were two objectives aimed at improving stakeholder participation in basin management and irrigation scheme operation, and strengthening the institutional, regulatory and incentive framework for basin management : 1. Strengthening the government's capacity to manage water resources and address water related environmental concerns both at the national level, and in the Rufiji and the Pangani river basins 2. Improving irrigation efficiency of selected smallholder traditional irrigation schemes in these two basins . b. Components There were two: River basin management . The Ministry of Water aimed improve water management at a national level and in the two target basins ( Rufiji and Pangani) through two subcomponents: Strengthen national water resources management by improving the policy and legislative framework, restructuring and strengthening the Water Resources Department and Office of the Principal Water Officer, providing financing for special studies, improving water quality monitoring and analysis and providing equipment, vehicles, training and technical assistance . Planned US$4.97 million, actual US$4.68 million. Strengthen river basin management by improving operational capabilities through provision of training, vehicles and equipment to enable regulation and information and resource monitoring at the basin offices, and rehabilitating the hydrometric network in the basins . Planned US$5.95 million, actual US$5.6 million. Improvement of smallholder irrigation schemes . The Ministry of Agriculture would implement this following the priorities established in the National Irrigation Development Plan : Improve infrastructure on 25-30 irrigation schemes covering 7,000 ha (targeting low-income smallholder irrigation) with farmers paying 20 percent of the costs in case or kind . Planned US$15.03 million, actual US$11.73 million Build irrigation sector capacity through rationalization of the Irrigation Department to give an improved focus on beneficiary participation, formation of water use groups and working with the private sector . And finance research into irrigated rice cultivation under the direction of the National Rice Research Program. Planned US$1.03 million, actual US$1.8 million. Work with traditional smallholder irrigators in selected schemes to make use of improved infrastructure through strengthened community organizations and water user associations to improve water demand management and use water efficiency, and reduce reliance on government for scheme operations . Planned US$2.40, actual US$2.16 million. Create MOA capacity for environmental evaluation of irrigation schemes to mitigate any adverse environmental impacts. Planned US$1.76, actual US$1.80 million. c. Comments on Project Cost, Financing and Dates The project was scaled-down at mid-term review to cover only 15 irrigation schemes, the savings being transferred to the River Basin Management Component . The loan amount was smaller because of a decline in the value of SDRs. At closing US$0.7 million remained undisbursed. The project was extended by 18 months to make up for the time lost because of delays caused by the government's lengthy procurement processes . 3. Achievement of Relevant Objectives: Objective 1, strengthening the government's capacity to manage water resources and address water related environmental concerns at the national and river basin level, was substantially achieved with few shortcomings . Tanzania adopted a new Water Policy covering all sectors in July 2002. This policy takes an integrated approach to water planning and development, treats water as a social, economic and environmental good, promotes autonomy at the river basin level and recognizes that water users need to pay fees for resource use and operation and management services . The Water Act No. 10 of 1981 was amended to allow creation of 9 river basin administrative units of which 5 have been established. Financially and administratively autonomous Central Water Board and Basin water Board were set up under Act 8 of 1997. Revised function and organization of the Water Resources Department was approved in September 2004. Hydrometric monitoring equipment, offices, computer and data management facilities in the target river basins have been upgraded . Staff were trained and special studies aimed at improving water resources management were completed Two pilot subcatchment organization in collaboration with Basin Water Offices and District Councils and 51 demand-led local water user groups have been formed . And 64 participatory water resources assessments were conducted. Survey of 98% of water users in target river basins determined that 69% have water rights in the Rufiji basins, but only 38% in the Pangani basin - but the subset of schemes assisted by the project all have water rights. US$110,600 in water users' fees plus royalties from hydroelectric companies was collected - but this was far below the potential. Objective 2, improving irrigation efficiency of selected smallholder traditional irrigation schemes, was partially achieved with a few shortcomings . Benefited 5,317 farming families in 15 schemes covering a total area of 5,059 ha - or 72% of the appraisal target of 7,000 ha in 25-30 schemes. Farmers contributions ranged between 5 and 20% of total investment costs (compared with the 20% target - but in-kind contributions may account for lower actuals ). Over 1,600 farmers (>100 per scheme) were trained in scheme water management, crop production techniques, agribusiness and financial management . 60% of those trained were women. Overall irrigation efficiency was more than doubled in the 8 schemes monitored at an average cost of US$1,977 per ha (including design and management costs ). 19 Irrigation Organizations were formalized or upgraded by the project, provided with basic office facilities and appropriately trained. Agricultural productivity and incomes were increased . Crop yields of rice an maize almost tripled, while yields from tomatoes and onion increased 50-100%. Sampled farmers' household incomes increased in both river basins over 300% in current prices. Ten Catchment Facilitation Teams, one for each district, were formed to continue outreach to improve organization, agriculture and water management . 4. Significant Outcomes/Impacts: National and local capacity to organize and manage water resources has been improved . Water use planning now considers all water users and is on the path to maximize the value added to the economy through improved operations and efficiency of water use . Water user groups are reportedly being formed on a demand -led basis following promotion by the project . Improved agricultural incomes have increased access to children's education, better health care and material improvements to housing. 5. Significant Shortcomings (including non-compliance with safeguard policies): Significant delay in processing procurement by the Central Tender Board contributed to cost and time overruns in all schemes. The overall economic rate of return (ERR) was 16% (compared with appraisal's 34%) because of delayed agricultural benefits, reduced benefited area for the same cost and lower values assumed for hydropower water . The economic analysis also spotted and corrected errors in the SAR's ERR calculations . Current levels of funding (70% or needs) threaten the sustainability of river basin management and hamper the effectiveness of the Basin Water Organizations . Most users of water are not charged and even then payment of billings is low . In Rufiji basin, only 70% are billed and only 70% of those billed pay; the Pangani basin is worse - 38% are billed, and only 40% of billings are paid. The hydroelectric royalty paid by the Tanzania Electric Supply Company is unrelated to water use, yet studies show that demand for hydrowater is fairly inelastic to water cost . Water user fees for irrigators are too low to affect water allocation decisions or bring about higher water use efficiencies. Despite the national scope of the project, a key stakeholder (FAO) was independently developing a water sector program with the government, thus lowering the synergy of a coherent approach to the sector . Eventually FAO  withdrew due to duplication. This indicates the need for more transparent coordination at the ministerial level . Inadequate human capacity constrains the effectiveness and efficiency of government and private sector contractors. Water quality monitoring and evaluation is hampered by inadequate finances, transport and personnel . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: Addressing cross-sectoral water allocation issues through a river basin framework involving participation of all stakeholders enables trade -offs to be investigated and provides a uniform basis for determining appropriate water user fees. A comprehensive approach to improving agricultural productivity that includes water management and infrastructure improvements is better than dealing with water issues separately . A comprehensive approach to river basin management must be sensitive and incorporate significant local differences in water use practices and demand, local customs and preferences . 8. Assessment Recommended? Yes No Why? An innovative project in SSA that could have significant lessons for the region . 9. Comments on Quality of ICR: Very comprehensive and consistent . The discussion on sustainability is unusually thorough and thoughtful . The ICR could have been "exemplary" if it was shorter and more concise (in line with the ICR guidelines).