Morocco - Souss Groundwater Project

Report No. 720-MOR 7 - t Morocco-Souss Groundwater Project April 18, 1975 EMENA Projects Department Not for Public Use U Document of the International Bank for Reconstruction and Development This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS Currency Unit Moroccan Dirham (Dli) IH 1 = US$0.238 DH 1,000 US$238 hI 1,000,000 US$238,000 WEIGHTS AND MEASURES 1 Millimeter (mm) 0.039 inches (in.) 1 hectare ha 2.47 acres 1 kilometer km 0.62 mile 1 square meter (m2) = 10.76 square feet 1 cubic meter (m3) = 35.31 cubic feet 1 kilogram kg 2.205 pounds 1 metric ton (m ton) = 2,205.00 pounds 1 bar. = 14.666 pounds/square inch 1 hectoliter hl 26.5 US gallons ABBREVIATIONS CLCA - Local Agricultural Credit Bank (Caisse Locale de Credit Agricole) CMV - Development Center (Centre de Mise en Valeur) CNCA - National Agricultural Credit Bank CRAFA- Regional Center for Agricultural Development and Training (Centre Regional d'Animation et de Formation Agricole CRCA - Regional Agricultural Credit Bank (Caisse Regionale de Credit Agricole) ER - Hydraulic Directorate of MTPC (Direction de l1Hydraulique) DMVA - Directorate for Agricultural Development of MARA (Direction de la Mise en Valeur Agricole) IEE - Water Resources Division of MTPC (Division des Ressources en Eau) WAD - World Bank Economic Analysis and Projections Department FAO - Food and Agriculture Organization of the United Nations GERSAR-Groupement d'Etude des Societes d'Amenagement R6gional INRA - National Institute for Agricultural Research (Institut National de la Recherche Agricole) MARA - Ministry of Agriculture and Agrarian Reform MT i (Ministgz de l'Agriculture et de la Reforme Agraire) MTPC - Ministry of Public Works and Communications (Ministere des Travaux Publics et des Communications) OCE - Export Office (Office de Commercialisation Ext6rieure OCICL- Trade Office for Cereals and Vegetables (Office Ch6rifien Interprofessionnml des C&r6ales et des Legumes ONE - National Electricity Office (Office National de l'Electricit6) ORMASK-Regional Agricultural Development Office for the Souss and Massa Areas (Office RAgional de Mise en Valeur Agricole de Souss Massa) SCET - Socidte Centrale pour l'Equipement du Territoire (International) UNJP - United Nations Development Program GOVERNMENT OF THE KINGDOM OF MOROCCO Fiscal Year January 1 - December 31  KINGDOM OF MOROCCO SOUSS GROUNDWATER PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ..... ..................... i - ii I. INTRODUCTION ..................... .............. .1 II. BACKGROUND ......................................... o.......... A. The Agricultural Sector .............. 1 B. Institutions Responsible for Agricultural Development ............................... 2 C. Previous Bank Projects in the Agricultural Sector .................................... 3 D. The Souss Valley Master Plan .... ............ 4 III. THE PROJECT AREA ................... 4 A. Area .. ...................................... 4 B. Natural Resources ..... .............. 5 C. Land Tenure .......... .. . ..................... 6 D. Land Use, Agrict.ltural Production and Yields 6 E. Marketing and Cooperatives ................. . 6 F. Development Institutions and Credit Resources 7 C7, Water Rights ................................ 8 IV. THE PROJECT .... ..................................... 8 A. General ....... ............... ........ . 8 B. Description ...... ........................... 9 C. Detailed Features .... o ..................... 9 D. Water Demand, Supply, Quality and Rights .... 12 E. Construction Schedule and Status of Engineering ...... ......................... 13 F. Cost Estimates ...... ........................ 13 G. Financing ....... ............................ 14 H. Procurement ...... ........................... 15 I. Disbursement ................................ 15 J. Environmental Impact ..... ................... 16 V. PROJECT IMPLEMENTATION ........................... 16 A. Organization and Management .... ............. 16 B. Operation and Maintenance .... ............... 18 C. Services and Training ....................... 19 D. Land Consolidation and Distribution ......... 20  TABLE OF CONTENTS (Cont'd) Page No. E. Recovery of Project Costs .... ............... 21 F. Monitoring and Conservation of Water Resources ................................. 22 G. Accounts and Audit .......................... 23 VI. BENEFITS AND JUSTIFICATION ....................... 23 A. Production ............... 23 B. Markets ............... 25 C. Prices ...................................... 26 D. Farmers' Income ............................. 26 E. Main Benefits and Beneficiaries .... ......... 26 VII. AGREEMENTS REACHED AND RECOMMENDATIONS .... ....... 27 ANNEXES 1. Monthly Average Climatic Data 2. Water Demand, Supply and Quality 3. Crop Production 4. Land Tenure in the Project Area 5. Livestock Subsector 6. Marketing 7. Agricultural Credit 8. Project Description 9. Construction and Activity Schedule 9525 (R) 10. Cost Estimates 11. Schedule of Expenditure 12. Estimated Value of Contracts 13. Schedule of Disbursements 14. Organization and Consultants 9524 (R) 15. Recovery of Project Costs 16. Economic Analysis 17. Farm Income and Budgets MAP IBRD 11381  KINGDOM OF MOROCCO SOUSS GROUNDWATER PROJECT SUMMARY AND CONCLUSIONS i. Morocco has an area of 506,000 sq km and a population of 16 million which is increasing at a rate of 2.6% per year. Its agriculture accounts for about one fourth of GDP and is the largest production sector in the economy, providing about one-half of the exports and employment to one-half of the labor force. Agricultural commodities, mainly sugar, cereals, tea, dairy products, coffee and tobacco, valued at US$340 million, are imported an- nually to meet the nation's needs. ii. Irrigation is important to increase agricultural production. Irri- gated land is classified in a traditional sector with temporary and deficient water supply and a crude distribution system, and a modern sector with ade- quate water supply and an efficient distribution network. Out of 7.7 million ha of arable land about 840,000 ha are irrigated with 550,000 ha belonging to the modern and 290,000 ha to the traditional sector. The Third Develop- ment Plan (1973-77) emphasizes improvement of the trade balance of agricul- tural products, increased farm output and farm income through irrigation and improvement in the distribution of growth benefits. The proposed Souss Ground- water Project would contribute to the realization of these objectives by pro- ducing import substitute products, implementing land consolidation and dis- tribution, improving supporting services and providing basic village infra- structure. The Government of the Kingdom of Morocco has requested a Bank loan to help finance the project. iii. Bank Group lending to Morocco for agriculture started in 1965 and consisted of five loans and one credit totalling US$140 million. Except for the latest Sebou II Project, on which it is too early to report, upcoming problems in the implementation of projects and disbursements have been re- solved satisfactorily. Working relations with the borrower have been cordial. iv. The project would develop irrigation on 7,300 ha of which about 1,000 ha belong to the traditional sector. The currently unirrigated area of 6,300 ha would be provided with sprinkler irrigation. Water would be pumped from wells. To facilitate access of farmers and create,an improved rural environment the project would also provide village infrastructure for 11 new and 9 existing villages in form of streets, street lighting, domestic water supply, schools and health and community centers tb benefit the project population of about 13,000 persons. v. The Ministry of Agriculture and Agrarian Reform (MARA), the National Electricity Office (ONE) and the Ministry of Urbanization, Environment, Housing and Tourism with the assistance of other Government agencies would be responsible for project implementation. The "Regional Agricultural Develop- ment Office for the Souss-Massa Area" (ORMVASM) would be the agency of MARA charged with planning, design, construction, operation and maintenance of all agricultural and irrigation works. General consultants would assist ORMVASM  - ii - in design preparation of contract documents and start up of the project. The Ministry of Housing would be responsible for the construction of village in- frastructure. vi. The total project cost is estimated at US$39.0 million, with a foreign exchange component of US$18.5 million. The Bank loan would finance the foreign exchange requirements and the Government would finance the local costs (US$20.5 million) with its own resources, apart from a minor contribu- tion by the project farmers (US$0.6 million). Construction would start in 1975 and be completed in 1978. The total value of the works and equipment, including taxes, duties and contingencies, that would be tendered would be about US$34.3 million. The value of works, and equipment that would be procured under international competitive bidding would be about US$25.4 million. vii. At full development, the project would increase annual production of the main crops: cereals 8,600 tons; maize 10,600 tons; pulses 900 tons; citrus 3,700 tons; olives 1,800 tons; almonds 900 tons; plus 70,000 tons, alfalfa and berseem (green). Increased annual animal production would amount to 2,800 tons of milk, 3,300 tons of mutton and 630 tons of beef. Most of the incremental production would be import substitute products. At full development the net annual production value would be increased from the present level of US$0.4 million to US$5.8 million and the per capita income of the farming population would increase from the present subsistence level of about US8100 to US$280 and US$580 in the traditional and modern sector, respectively. The project would thus assist the very poor section of Morocco's rural population, but even at full development their income would still be below the average national per capita income, estimated to reach about US$700 by b')2. The net annual foreign exchange savings from the project would be about US$5.8 million. The estimated economic rate of return excluding the village infrastructure would be about 10%. Including the village infra- structure the rate of return would be about 9%. viii. Subject to agreement on the issues set forth in this report, the project would be suitable for a Bank loan to the Kingdom of Morocco. The loan would be repaid over a period of 20 years including 5 years of grace.  KINGDOM OF MOROCCO SOUSS GROUNDWATER PROJECT I. INTRODUCTION 1.01 The Government of the Kingdom of Morocco has requested a Bank loan of US$18.5 million to finance the foreign exchange cost of the US$39.0 mil- lion Souss Groundwater Project. The proposed project would provide for in- tensive irrigation of 7,300 ha in the Upper Souss Valley and for the provi- sion of village infrastructure in the project area. 1.02 Development of the land and water resources of the Souss Valley has been investigated by two UNDP/FAO projects, Souss I (1968-1971) and Souss II (1971-1974). The Souss II Project finalized a Master Plan for development of the water resources of the river basin and the feasibility studies of two major development projects including the proposed Souss Groundwater Project. Preparation of both the Master Plan and the project has been carried out by the UNDP/FAO consultants, SCET International/ cGERSAR, and government agencies, with the assistance of the FAO/IBRD Co- operative Program. 1.03 The project was appraised in October 1974 by a mission comprising of Messrs. M. Raczynski, H. Laeyendecker, M. Sulieman (Bank), and Messrs. P. Ruby and G. Saab (Consultants). Based partly on contributions of the consultants in their respective fields of specialty, the report was prepared by Bank staff members of the mission. II. BACKGROUND A. The Agricultural Sector 2.01 Morocco has a land area of 506,000 km and a population of about 16 million with an average annual growth of 2.6%. Nearly 10 million people, or 65%, live in rural communities. About 35% of the land area is used for agriculture, roughly equally divided between crop production and grazing. In 1972, agriculture accounted for about 27% of GDP and employed about 55% of the labor force. About 30% of agricultural output was exported, mainly to Europe, with France accounting for more than half the value of exports. The agricultural trade surplus, averaged over the years 1968-72, was some DH 700 million a year. 2.02 The long-term historic growth trend of agriculture in Morocco was estimated by the Bank's Economic Mission (1973) to be about 3% per annum. However, growth of the value of agricultural production averaged nearly 6% during the period of the Second Development Plan (1968-72), mainly due to a rapid growth of irrigation, increased use of fertilizer and other inputs and increased production of high value crops. The main objectives of the Second Plan were the extension of large-scale irrigation, expansion of credit to large and medium farmers and export promotion. Although growth in the sector was stimulated during the Plan period, there appears to have been a  - 2 - widening of income differentiation within the rural areas as well as between rural and urban areas. The latest Bank Economic Mission estimated that in real terms average consumption declined slowly for about one-third of the rural population, implying that benefits accrued mainly to medium and large farmers. 2.03 During the period of the Second Plan, DH 2.5 billion equivalent to 45% of totalinvestments was invested by the Public Sector in agriculture, of which 64% was for irrigation, 6% for rainfed agriculture and 4% for livestock production, with the remainder in a miscellaneous category. Under the Third Plan (1973-1977) agriculture continues to receive the highest priority with a nearly half of the planned investments (47%) in the economic sector with emphasis towards more productive investment in irrigated agriculture, rainfed cropping and livestock improvement. The main objectives of the Third Plan are to: (a) improve trade balance of agricultural products; (b) increase the contribution of the agricultural sector to economic growth through an increase in farm output; (c) raise farm income through irrigation; and (d) improve distribution of the growth of wealth in the rural areas through land reform and a better balance of Government support to farmers. The proposed project would contribute to these objectives in the Souss Valley by producing import substituting products, implementing land consolidation and distribu- tion, and providing village infrastructure. B. Institutions Responsible for Agricultural Development 2.04 Development of Moroccan agriculture is the responsibility of the Ministry of Agriculture and Agrarian Reform (MARA) primarily through its five major Directorates: Agriculture Development, Engineering and Construc- tion, Animal Production, Agricultural Research and Forestry, In designated development zones the Ministry carries out its task through eight Regional Agricultural Development Offices which are also responsible for assisting small-scale irrigation and rainfed farming in their regions. Elsewhere the Ministry operates 22 provincial offices and about 100 district extension centers. Land Reform 2.05 Morocco has experience and the necessary technical, legal and administrative machinery to carry out land consolidation and distribution programs in irrigated areas. The Government has recognized that small size and fragmentation of holdings have been a major obstacle fo;r improving agri- cultural productivity and has taken the following steps to overcome these problems. (a) Under the legislation introduced in 1963 the Government has successfully started a land consolidation program. During the second Five Year Plan (1968-72) 19,000() ha benefited.  (b) Under the Law of 1966 (amended in 1972) Government is distributing stateland, including land formerly held by foreigners to the rural poor, both small farmers and landless farmers. About 180,000 ha were distributed in 1972 and the third Five Year Plans target is to distribute almost 400,000 ha by 1977. (c) The Agricultural Investment Code (1969) provides for trans- formation of collective land into individually held free- hold plots. Although only a small proportion of the farm- ing population benefited from the Land reform program, the impact is mainly concentrated in the irrigated sector. C. Previous Bank Projects in the Agricultural Sector 2.06 Bank Group lending for agriculture in Morocco began in 1965 and to date five projects representing US$10 million in IDA Credits and US$129.5 million in Bank Loans have been financed. The first loan, made in 1965, was US$17.5 million for the Sidi Slimane Irrigation Project. The project in- creased the storage capacity of El Kansara reservoir and provided for ex- tension of an existing irrigated area served from the dam. Though perfor- mance under the project was satisfactory as far as civil works and agricul- tural development were concerned, delays arose due to a series of reorganiza- tions within the agricultural and irrigation services. By mid-1967 these problems had been overcome and the project was completed in 1970. In 1966 a loan of US$10 million for an Agricultural Credit Project (Loan 433-MOR) was made to the National Agricultural Credit Bank (CNCA). The loan helped finance a three year lending program for on farm development and purchase of agricul- tural equipment. Initial progress was disappointing until a mutually satis- factory agreement was reached between the Bank and the Government on a re- organization of the local credit agencies involved in the project. The loan was fully disbursed by September 1969. 2.07 A Second Agricultural Credit Project under which CNCA will borrow US$10 million from IDA (Credit 338-MOR) over a three year period and a further US$24 million from IBRD (Loan 861-MOR) commenced in 1972. The project will help finance farm equipment for rainfed grain production, on-farm improvements for citrus and winter vegetable production, livestock developient and market- ing facilities for export produce. Although disbursements are behind the expected schedule, the project is progressing satisfactorily. 2.08 The Sebou I (US$46 million) project was financed in 1969 (Loan 643-MOR) followed by the Sebou II (US$32 million) project in 1974 (Loan 1018-MOR). The Sebou I project provides for the construction of -a dam for irrigation in the Sebou River Basin, and for the equipment of some 38,000 ha for irrigation, while the Sebou II project provides for complementary infra- structure (sugar factory, roads, flood control) in the Sebou I project area. Numerous problems, including a lack of continuity in senior management and difficulties with land consolidation and reallocation programs, beset the Sebou I Project at the start, but these problems are now resolved and progress  - 4 - is satisfactory. The Sebou II project is progressing satisfactorily and its main component, a sugar cane factory, is expected to start operation in June 1975 as originally scheduled. D. The Souss Valley Master Plan 2.09 Water resource planning in Morocco is carried out on a river basin basis. The Master Plan for the Souss Valley prepared under the UNDP/FAO Souss II project (para 1.02) identified the present land use and the agri- cultural development potential of the valley. Permanent agriculture is essentially limited to areas under irrigation since the area planted to rainfed crops varies widely from year to year due to variatiot in rainfall. Of the total cultivable land in the valley of 180,000 ha some,55,000 ha are irrigated annually whereas the rainfed area varies from some 10,000 ha up to 80,000 ha. Irrigation consists of the "traditional" sector and the "modern" sector. In the traditional areas, water is derived from storm-water flows, from resurgence springs in the river bed or in some cases from government operated wells. In these areas water distribution systems are relatively crude. In the modern sector groundwater is pumped into relatively efficient distribution systems. Some 24,000 ha in the valley are in the modern sector. 2.10 Assessment of available land and water resources indicates that some 9,000 ha upstream of Taroudant could be irrigated by groundwater (see Map IBRD 11381). 2.11 Continuing development of irrigation by large farmers has in recent years caused the government concern that unless there is Public Sector inter- vention in development, the water resources in the valley would not be mDbilized to benefit the rural poor. The Souss Groundwater Project would be the vehicle for such intervention by the Government in the Upper Souss Valley. III. THE PROJECT AREA A. Area 3.01 General. The project area is situated in the vaLley of the Souss River, upstream the town of Taroudant, about 100 km east of Agadir in Southern Morocco (Map IBRD 11381). It consists of 12 separated areas ranging from 200 to 900 ha, and totalling 7,300 ha net (8,000 ha gross), located on both sides of the Souss River. 3.02 Population. The population of the project area comprises about 13,000 persons. About 47% of the population is below 15 years old, wThich is close to the rural average in Morocco. About 23% of The population is of school age (3,000 children). The average household has 6 persons rith a po- tential of about 60 man days of labor per month. About 72% of the active population is directly employed in agriculture, 5% in the industrial sector mostly in small agro-industries5 8%. in retail merchandizing and marketing of  -5- -agricultural products, and 12% in the service sector. Unemployment is re- corded at about 3% but most people are underemployed. The town of Taroudant which is located near the project area, has a population of about 22,000 inhabitants. 3.03 Electricity and Domestic Water Supply. High tension lines of 60 kv and 22 kv serve part of the Upper Souss Valley. Additional lines would be required to serve the project area (para 4.10). Apart from the domestic water supply system in Taroudant, there are no other water supply systems in the area. Water is presently obtained from local wells, springs emerging in the riverbed and by diversion of surface flows. 3.04 Transportation and Communications. The road network, which is the only means of transportation in the region, provides adequate access to the project area. The network consists of a primary paved road which extends'from Taroudant on the right bank of the Sousa River to the Upper Valley, connecting the project area with the port of Agadir in the west and Marrakech and Quarza- zate in the northeast. A secondary road network adequately serves the left bank of the Souss River. 3.05 Health. The Ministry of Health maintains a 110 bed hospital in Taroudant and some dispensaries in the upper valley but none in the project area. The main diseases are typhus, meningitis, and other infectious diseases. No bilharza has been observed in the project area. B. Natural Resources 3.06 Climate. The climate is mediterranean with hot dry summers and moderately cool wet winters. Rainfall averages 246 mm, 70% of which falls between November and February and most of the remainder during October, March and April. During 30 years of observation, ending in 1974, annual rainfall measured at Taroudant has varied between the extremes of 33 mm and 594 mm. Average monthly temperatures range from 13.4