Ecuador - Lower Guayas Flood Control Project

Documnt of The World Bank FOR OFFICIAL ISE ONLY Z,Al 32-7(,=-c .=< Repot No. 8792-EC STAFF APPRAISAL REPORT ECUADOR LOWER GUAYAS FLOOD CONTROL PROJECT NOVEMBER 13, 1990 Agricultural Operations Division IV Latin America and the Caribbean Regional Office This document has a restricted distibution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authoriztafon.  CURREC 2l' - SQR iS/.I (as of June 20, 1990) US$1.00 - S/. 805.50 SI. 1.00 - US$.00124 Ela M January 1 - December 31 WEIGETS AND MEASURES The metric system has been used throughout the report. ABBREVIATIONS ASA Lgricultural Service Agency (Agencia de Servicios Agropecuarios) BNF National Development Bank (Banco Nacional de Fomento) CEDEGE Commission for the Development of the Guayas River Basin (Comision de Estudioa para el Desarrollo de la Cuenca del Rio Guayas) CONADE National Development Conmission (comision Nacional de Desarrollo) DZNAMA National Office of Environmental Affairs (Direccion Nacional def Medio Ambiente) DINAC National Office of Land Assessment (Direccion Nacional de Avaluo y Catastro) D1NAF National Office of Borestry (Direccion Nacional de Asuntos Forestales) DTDR Technical Directorate for Rural Development (Direccion Tecnica de Desarrollo Rural) ZIA Environmental Impact Assessment ENAC State Enterprise for Agricultural Marketing (Empresa Nacional de Almacenamiento y Comercializacion de Productos Agropecuarios) GOE Government of Ecuador GON Government of the Netherlands HASKONING Royal Dutch Consulting Engineers and Architects iCe International Competitive Bidding ZDA International Development Association IDS Inter-American Development Bank ZERAC Ecuadorian Institute for Land Reform and Settlement (Instituto Ecuatoriano de la Reforma Agraria y Colonizacion) IICA Inter-American Institute of Cooperation for Agriculture (Instituto Interamericano de Cooperacion para la Agricultura) INOCA National Institute for Peasant Training (Instituto Nacional de Capacitacion Campesina) INERSI Ecuadorian Institute for Water Resources (Instituto Ecuatoriano de Recursos Ridraulitos) INIAP National Institute for Agricultural and Livestock Research (Instituto Nacional de Investigaciones Agropecuarias) LCB Local Competitive Bidding hAG Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganader a) NBS Ministry for Social Welfare (M.inisterio de Bienestar Social) M&E Monitoring and Evaluation MOP Ministry for Public Works (Ministerio de Obras Publicas) NGO Non-Governmental organization OaR Operation and Maintenance PDA Agricultural Development Plan (Plan de Desarrollo Agropecuario) PSIDC Project Supported Institutional Development Component PROTSCA National Program for Agricultural Technology Transfer (Programa de Desarrollo Tecnologico Agropecuario) TOR Terms of Reference UCB Project Executing Unit (Unidad Cuenca Baial  ECUADOR FOR OMCIAL USE ONLY LONER 9UAAS FPLOOD CONTROL PROJECT STnFF APPRAISAL REPORT Table of Contents Paoce No. I. LOAN AND PROJECT SUARY . . . . . . . . . . . . 1 II. THE AGRICULTURAL SECTOR . . . . . . . . . . . . 4 Agriculture in the National Economy . . . . 4 Major Public Institutions in the Sector . S Previous Bank Lending in the Agricultural Sector . . . . . . . . . . . 5 Dank Lending Strategy for the Sector . . . . 6 The Lower Guayas River Basin . . . . . . . . 7 III. THE PROJECT . . . . . . . 9 A. GENERAL . . . . . . . . . . . . . . . . . . 9 Project Origin and Rationale for Dank Involvement . . . . . . . . . . . . . . 9 Project Objectives and Beneficiaries . . . 10 B. PROJECT DESCRIPTION . . . . . . . . . . . . 10 Infrastructural Features . . . . . . . . . 10 Agricultural Development . . . . . . . . 11 Environmental Component . . . . . . . . . 13 Master Plan for the Lower Guayas Basin . . 14 Institutional Development . . . . . . . 14 C. PROJECT ORGANIZATION . . . . . . . . . . . . 15 Project Management . . . . . . . . . . . . . 15 operation and Maintenance (O&M) . . . . . 16 Monitoring and Evaluation (M&E) . . . . . 17 Accounts and Audits . . . . . . . . . . . 17 D. PROJECT COST AND FINANCING . . . . . . . . . 18 Cost . . . . . . . . . . . . . . . . . . . is Financing . . . . . . . . . . . . . . . . 18 Special Account . . . . . . . . . . . . . 19 Procurement . . . . . . . . . . . . . . 19 E. PROJECT BENEFITS . . . . . . . . . . . . . . 23 Flood Protection . . . . . . . . . . . . . 23 Drainage . . . . . . . . . . . . . . . . 23 Agricultural Development . . . . . . . . 24 Socioeconomic Impact . . . . . . . . . . 24 Environmental Impact . . . . . . . . . . . 24 Economic Analysis . . . . . . . . . . . . 24 Project Risks . . . . . . . . . . . . . . 25 IV. SUMMARY OF AGRZEDENTS AND RECOIAEDASION . . . . 26 This report is based on the findings of an appraisal mission that visited Ecuador in March 1990. The mission comprised Messrs. P. Wittenberg (Mission Leader), M. Hagerstrom (Economist), C. Plaza (Environmental Officer), A. Tobelem (Institutional Specialist), J. Carvalho (Lawyer), and M. Carroll (Agronomist Consultant). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ANNEXES: Annex 1 - Infrastructure Works . . . . . . . . . 28 Annex 2 - Operation and Maintenance . . . . . . . . 30 Annex 3 - Agricultural Development Pl.. . . . . . . . 32 Annex 4 - Institutional Development Component . . . . 49 Annex 5 - Environmental Component . . . . . . . . . . 55 Annex 6 - Implementation Schedule . . . . . . . . . . 62 Annex 7 - Estimated Schedule of Bank Disbursements . 63 Annex 8 - Project Cost Summary Analysis . . . . . . . 64 Annex 9 - Financial and Economic Analysis . . . . . . 68 Annex 10 - Selected Documents Available in the Project File .... . . . . . ... . . . . . . 83 MAPs IBRD No. 22256  STAFF APRAISAL REPORT LOW=R GUAAS FLOOD CONTROL PROJEC1P T. I OAN AnD PROJECT SUNNA8Y Borrowe-rs The Republic of Ecuador axocutina agn:t The Commission for the Development of the Guayas River Basin (CEDEGE) Lo-as Aouats i US$S9.0 million equivalent Repayable in 17 years on a fixed amortization schedule, including S years of grace, at the Bank's standard variable interest rate. ft9j,nt Obiectivest The project would aim to: (a) reduce the risk of rural and urban flooding and resultant losses to life, property and output in the Lower Guayas Basin; (b) improve health and living conditions in the area; (c) support agricultural and livestock development; and (d) protect and conserve the natural environment in the Lower Basin and parts of the upper catchment area. Proif Dnscriptiona The project was conceived as the first phase of a broader plan for development of water, soil and human resources in the Lower Guayas Basin. It would provide flood control and drair.age for a priority area of about 170,000 ha. Principal investments would consist of dikes, bypass (flood-relief) channels, main and secondary drainage systems (new construction and rehabilitation), rural roads, bridges and various control and conveyance structures. To ensure long-term sustainability, the project would include an Agricultural Development Plan (PDA) aimed at supporting and improving smallholder (<10 ha) production systems. The PDA would be coordinated by cEDEGE and would includes (a) adaptive research programs in rice, cacao, and small-scale mechanization; (b) seed production; (c) extension; and (d) strengthening smallholder farmer organizations. The PDA, combined with the added security afforded by flood protection, would result in substantial on-farm investment, which would be financed by farmars using their own resources or resources from the credit system. The project would provide for environmental protection and conservation within the project area and in its close vicinity, both in the lower zone (the El Churute Nature Reserve and the Guayas Estuary) and in the surrounding upper catchment areas. The main objectives would be to: (a) prepare a comprehensive environmental management plan; (b) monitor environmental impacts; (c) develop integrated pest management practices; (d) prepare studies on selected priority subjects (such as mangrove management, reforestation, etc.); and (e) strengthen the institutional capacity of CEDEGE and other agencies that would be involved in the environmental component. The project would include  an institutional strengthening component (technical assistance, training and provision of vehicles and equipment) for CEDEGE and for agencies participating in agricultural development and environmental initiatives. A monitoring and evaluation (M&E) process would enable early identification of implementation problems and appropriate actions to solve them. A mid-term review would analyze the impact of flood control works, the delivery of the agricultural support services, the effectiveness of the environrental measures taken, and the results of the Master Plan and the Environmental Studies, and would recommend necessary measures to be taken to reach project targets, including reallocation of funds, institutional changes, additional studies and pcsoible follow-up projects. The project would also finance a Master Plan for the entire Lower Guayas Basin and for selected upper catchment areas that would delineate a sound development strategy for the area's n&tural and human resources. Beneflg iajAgst The flood control system would directly benefit the 188,800 urban and rural inhabitants of the 170,000 ha project area. In any given year an estimated 36,400 people in this area are directly affected by flood waters. ln addition, some 2,400 farmers would benefit from improved drainage and some 3,300 small farmers would benefit directly from the agricultural development component. Proiect Risks: (a) A change in government investment priorities could cause inadequate counterpart funding. The present government has given high priority to socially-oriented projects in the sector, and its proposed contribution (US$20.0 million) still represents a strong commitment. (b) Environmental agencies and NGOs may withdraw commitment to the project if environmental monitoring and corrective actions fail to match hIA goals. The project's design, organization and financing have been geared to fulfill ZIA expectations, and EGOs would be actively involved in reviewing the implementation of VIA recommendations. (c) CEDEGE lacks experience in multiagency coordination and agricultural development. Substantial technical assistance and training would be financed by the project. (d) Benefits could be reduced by institutional weakness and inadequate commitment of support agencies. Considerable resources are proposed in the project to strengthen all entities involved. Commitment would be strengthened through subsidiary agreements between CEDEGE and each participating agency. (e) Deterioration of the macroeconomic environment may undermine incentives for agricultural production. The GOESs improved economic management and its recent agreement with the IMF mitigate this risk.  Bstimated Costs: Local 9EkOW Total ------ (USS Million)---