China - Irrigated Agriculture Intensification Loan II Project

 ICRR 12340 Report Number : ICRR12340 IEG ICR Review Independent Evaluation Group 1. Project Data: Date Posted : 03/21/2006 PROJ ID :P049700 Appraisal Actual Project Name :Irrigated Agriculture Project Costs 849.3 867.3 Intensification Loan II US$M ) (US$M) Project Country :China Loan/ Loan US$M ) /Credit (US$M) 300.0 300.0 Sector (s):Irrigation ): and drainage; US$M ) Cofinancing (US$M) - - General agriculture fishing and forestry sector; Law and justice; Power; Roads and highways L/C Number :L4354 FY ) Board Approval (FY) 98 Partners involved : - Closing Date 12/31/2003 06/30/2005 Evaluator : Panel Reviewer : Division Manager : Division : Keith Robert A. Kris Hallberg Alain A. Barbu IEGSG Oblitas 2. Project Objectives and Components a. Objectives Huai -Hai plain : in the Huan -Huai- (i)increase agricultural production ii) increase farmers' incomes (ii) iii ) establish institutional mechanisms for the sustainable use, development and management of water and land (iii) resources . b. Components (or Key Conditions in the case of Adjustment Loans ): (i) Irrigation and drainage (Planned project costs (at appraisal) US$554.4 million, Actual project costs US$593.1 million). Construction or rehabilitation of irrigation distribution systems (mostly tertiary), rehabilitation and improvement of pumping stations, promotion of water saving technologies and investment in related rural roads and electricity. The project covered about 1.5 million hectares of already irrigated land and involved 5 provinces. ii) Agriculture intensification and supporting services : (Planned costs US$163.9 million, Actual costs US$157.7 (ii) million). Improving agricultural support services including extension and dissemination of optimal farming technologies, making farm inputs readily available, land levelling, support for increased use of organic and compound fertilizers, improved seed and varieties, integrated pest management and scientific agricultural technologies. iii ) Afforestation, environmental protection and monitoring : (Planned costs US$46.9 million,Actual costs US$52.0 (iii) million). Establishing protective forestry, mainly with tree belts along roads and canals, and developing a network for monitoring groundwater, water quality and soil fertility iv ) Institutional development and support : Planned costs US$54.2 million, Actual costs US$46.8 million) (iv) Strengthening institutions at each level of the project, from the state office down to water users associations, and development of management information systems for the project and for national level MIS . (v) Survey design and management : (Planned costs US$29.9 million, Actual costs US$17.8 million). Investigation, engineering, design and supervision costs . At mid-term review, most of the numerical outcome indicators were not changed . Where changes were made the revisions increased the targets. c. Comments on Project Cost, Financing, Borrower Contribution, and Dates The loan was fully disbursed. The one and a half year extension was primarily to finance one lagging component; construction of the national training center, which was delayed because of unforseen works for associated bank protection. Use of ICB was an issue; both the Bank team and government comment that ICB does not attract international firms in the China context, and use of ICB (US$71 million) slowed down implementation. They recommend using the less onerous NCB instead . The ICR notes that competitive bidding reduced costs of works by 10-15 percent and by 15-20 percent for goods. 3. Relevance of Objectives & Design : High relevance. Supported the CAS and also China's Ninth Five Year Plan through promoting : enhanced agricultural productivity; food grain security; sustainable management of marginal land; and, poverty alleviation . In terms of project design, all three objectives were relevant in that they complemented each other, supporting the general objectives in the CAS and Ninth Five Year Plan . Income improvement would stem from enhancing productivity, and institutional development was needed to implement and sustain these improvements . Project components were well chosen to achieve the three objectives . 4. Achievement of Objectives (Efficacy) : Overall efficacy was High as all three objectives were achieved, and exceeded targets for the first two objectives : ( Increase agricultural production ): Fully achieved (High efficacy). There was a slight Development Objective (i) ) (Increase shortfall from appraisal targets in total grain production, primarily due to a much larger transfer by farmers than anticipated from grain to cash crops, which increased from 3.8 million tons to 11.2 million tons. Thus, the total tonnage of crop production (grains plus cash crops) increased to 37 percent above appraisal targets; from a total of 16.3 million tons targeted at appraisal to a total of 22.4 million tons. (Data for DOs (i) and (ii) are from a sample survey comparing with project to without project achievements .) Development Objective (ii): ii): Increase farmers' incomes : Fully achieved (High efficacy). Average farm incomes increased by between 40-65 percent (some higher), and the increases exceeded appraisal targets . In three of the five provinces, the incomes of poorer households increased in percentage terms by more than the increases of the incomes of wealthier families. Social indicators also indicate improved welfare : more expenditure on meat rather than grain, and increased expenditure on children's education . Development Objective (iii): est ablish institutional mechanisms for sustainable use, development and iii ): establish management of water and land resources : Achieved (Substantial efficacy). In terms of targets such as numbers trained, study tours, etc., all targets were achieved. Concerning the more important development of an overall institutional system for water and land management, the ICR text indicates that all levels in the management structure have been strengthened, including at national level . The project also served as a pilot for China's "Comprehensive Agricultural Development " approach to strengthening irrigated agriculture, which is important to national goals. At the grass-roots level, the number of water supply companies (WSCs), self-financing irrigation and drainage districts (SIDDS) and water user associations (WUAs) (especially) all exceeded targets, though the robustness of these institutions is not made clear in the ICR . For this reason, the DO efficacy is rated as Substantial rather than High. 5. Efficiency : High. The project was completed at about the same costs as estimated at appraisal, and the reestimated ERR at project completion was 30 percent, exceeding the appraisal estimate of 24 percent (primarily due to the higher than expected crop production and greater diversification to cash crops - a three-fold increase - than envisaged). Output and farm income objectives were exceeded . 6. M&E Design, Implementation, & Utilization: Design : The ICR has minimal information on the M&E system . However, from the substantial and detailed data in the ICR, and discussion with the task team, an effective process was present . A strong project-wide MIS was established as part of the project (component iv). Implementation : Data for the MIS was collected and used at each of the different levels in the project's institutional structure. Utilization : Data was used as an ongoing monitoring tool, and the new MIS can be expected to enhance management capability in this area . 7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): - 8. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Highly Satisfactory Full implementation, with quantifiable results exceeding targets . A demanding, multi-layer institutional structure was  rapidly put in place and functioned well . Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Highly Satisfactory A demanding project was prepared in only 10 months from identification to Board. The appraisal report was strong and backed by a detailed implementation plan . Supervision teams covered the specializations needed and missions were regular (about every 6 months). Task management from Beijing was highly proactive in response to government communications and needs, including flexibility to make adjustments to project arrangements. Teamwork with government was good. Between them, government and the Bank achieved a strongly performing project. Borrower Perf .: Satisfactory Highly Satisfactory High government "ownership" at all levels, and strong coordination, enabled the project's institutional and operational arrangements to be established quickly, and to function. A high capability level was established, enabling full implementation of the project, exceeding targets. Good teamwork within government and with the Bank. 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: Two features, also experienced in some other Bank projects, were confirmed as enablers of success : 1. Combined agriculture -irrigation approaches pay off : While some degree of agricultural activities or an agriculture component is a common feature in irrigation projects, the agriculture part is often seen as an "add-on" to what is still considered an irrigation project . This project placed as much attention on agricultural innovation and improvement as it did on rehabilitation of the irrigation networks . The combination of agricultural and irrigation improvements provided good incremental production and value added . Farm incomes increased by between 40 to 65 percent and higher in two provinces. 2. Involvement and active participation of the existing local government institutional structure was a large contributor to project success : The project's institutional framework was mostly integrated into the existing government structure. At all levels - central, provincial and local governments - there was firm commitment, leadership and participation. The ICR sees this as "one of the most positive factors in project success ." Institutional roles were clear, thoroughly communicated and supported by training . 10. Assessment Recommended? Yes No Why? The project is part of China's decentralized program approach to development of irrigated agriculture for replication elsewhere in China with possible Bank support . Lessons from the project would have relevance to government's and the Bank's future investment program in China (eg IAIL-3 ). 11. Comments on Quality of ICR: Very strong in providing a good, concise and factual account of the project and its impact . Data can readily be found and linked with the text . The economic analysis is also strong . The report could have had more discussion of cost recovery and the institutional aspects of the project and some of the features related to this . A more amplified discussion and qualitative evaluation of the various institutions - from the top to the grass roots farmer organizations - and the linkages between them, would have been helpful, as this was the key to the project's success . Further analysis would also have contributed to better understanding of the sustainability of the institutions and any measures useful to enhance the long -term effectiveness of the institutions .