Morocco - Water Resources Management Project (formerly listed as Water Sector Investment Project)

Report No. PIC1263 Project Name Morocco-Water Resources Management (@j Project Region Middle East and North Africa Sector Natural Resources Management Project ID MAPA5521 Borrower Kingdom of Morocco Implementing Agencies Ministries of Public Works, Agriculture, Interior and Health Contact: Mr. Mohamed Jellali Director-General Administration de l'Hydraulique Rue Hassan Benchekroun Rabat, Agdal, Morocco. Tel: 212.7.77.90.08 Fax: 212.7.77.86.96 Date this update February 1997 Date initial PID prepared November 1994 Project Appraisal Date April 1996 Project Board Date May 1997 1. Background and Water Sector Strategy. The water sector plays a central role in Morocco's economic development and has been strongly supported by the GOM. The urban water supply and irrigation subsectors are relatively well developed. By the year 2000, in spite of strong demographic growth and urban migration, 90 percent of the urban population will be connected to treated water supplies. By the same year, a 50 percent expansion of modern irrigation is expected to bring the total irrigated area to one million hectares. Irrigation and drinking water absorb 85 percent and 12 percent respectively of total mobilized water resources. Hydropower contributes about 15 percent of the country's total energy production. 2. A Water Sector Review (1995) shows that despite major achievements, Morocco faces an increasing challenge in water resource management. A growing disequilibrium is anticipated between rising demands, resulting from rapid expansion of irrigated areas and urban development, and a slowing of the growth in available supplies; this trend is compounded by the exploitation of more marginal supplies, the depletion of aquifers and the pollution of available resources. Sanitation infrastructure has not kept pace with drinking water supply and urban effluent is a major contributor to the pollution of surface, coastal and groundwater. In addition, industrial and agricultural pollution, together with erosion of the watersheds, has resulted in a degradation of water resources. Polluted water is the major contributor to disease in rural areas, as only 14 percent of rural water supplies are treated. The sector has certain weaknesses in resource planning and management, maintenance of the existing infrastructure, cost recovery. Institutional capability  needs strengthening. 3. Morocco is at a turning point which requires adoption of a national strategy and decisive policies to address the challenges of water resources management in the coming decades. The Government largely emphasizes the development of additional water resources ("supply management") but is facing technical and economic limits. Many of the proposed new dams are located on less favorable sites, increasing volumes of water have to be transferred over longer distances, several aquifers are overexploited, irrigation efficiency is low, and environmental degradation is increasing. Government is well aware of these issues and is committed to taking steps to address them. In particular, it aims to promote an integrated management of water resources, covering quantitative and qualitative aspects, with central coordination and decentralized management and ensuring participation of stakeholders and the private sector. 4. The passage of the new Water Law in 1995 is a major step in the implementation of an integrated water resources management. It was the result of a continuous policy dialogue conducted with the government by the Bank in the context of the preparation of the Water Sector Review. The law provides the necessary regulatory, legal and institutional framework to support sustainable water management and makes a number of fundamental policy reforms such as : (a) the creation of river basin agencies for decentralized water management and increased stakeholder participation; (b) the establishment of a long-term national and river basin water master plans; (c) introduction of water charges on bulk water resources and pollution taxes; and (d) establishment of the monitoring and control of water quality. 5. Project Objectives The principal objective of the project is to assist the Government by supporting the first steps in the implementation of an integrated water resources management strategy. The strategy combines supply, demand and quality management while also addressing economic efficiency and equity objectives. Specifically, the project would support measures to: (a) promote policy reforms which would establish the necessary facilitating environment for sustainable water resources management; (b) strengthen the institutional capacity in water planning and management, decentralization and increased stakeholder participation; and (c) improve supply management through the development of water resources, demand management through enhancing efficiency in allocation and on-farm water use, and quality improvement through pollution control measures. 6. Project Description The project would include the following four components: (a) Policy Reforms, to develop the framework for long- term planning and management, to set up the regulatory framework required, promote greater use of economic incentives through appropriate tariffs, and improve cost recovery; (b) Institutional Development, for decentralized water management through the creation and development of a River Basin Agency (RBA) and stakeholder participation; (c) Capacity Building, to strengthen the planning, policy-making, project analysis, monitoring and management capability of implementing agencies, introduction of best practices on dam maintenance and safety, and in real-time water management, and applied - 2-  research on water saving irrigation technologies; and (d) Priority Investment in water resource mobilization (infrastructure rehabilitation, groundwater development and flood control), and water quality improvement. 7. This project is expected to be the first in a series of river basin projects which would improve the integration of water resources management through policy and institutional reforms and support financing priority investments to achieve efficient, equitable and environmentally sound utilization of water resources. The policy component of the project would be defined in a policy letter outlining government policy and institutional reform objectives and dated actions. The project investments would mainly focus on the chronically stressed Oum-er-R'bia river (OER) basin. These pilot actions would demonstrate the beneficial effects of integrated river basin water resources management, for replication in the future in the other river basins. The principal criterion for the selection of investments would be their contribution to enhancing water resource management based on sound economic principles through applying best practices. 8. Project Costs and Financing Total Project cost is estimated at about US$105 million, of which about US$60 million would be financed by the Bank; and US$ million would be financed by the government and beneficiaries. Bank financing would include a portion of local costs. For the remaining US$20 million, co-financing on a grant basis would be sought. 9. Project Implementation The project would be implemented by several Government bodies: the Direction Generale de l'Hydraulique (DGH) as the lead implementing agency, and the newly created River Basin Authority - both under the Ministry of Public Works for water resource planning, mobilization and allocation; the Ministry of Agriculture for water conservation in irrigation; the Office National d'Eau Potable (ONEP) and the Direction Generale des Collectivites Locales (DGCL) in the Ministry of Interior for sewage treatment works, and the Ministry of Health for the prevention of waterborne diseases. Consultancy and training provisions under the project are significant in order to meet project implementation needs and the capacity building objectives of the project. 10. Lessons from Previous Bank Involvement. The project draws on the relevant experience in the water sector as articulated in the Water Sector Review. In particular, it reflects the perceived need for greater attention to institution-building for overall resource planning and management, improved efficiency and cost recovery in water use, and users' participation. These considerations are particularly acute in irrigation development. The project complements ongoing and future operations, which are primarily focused on sub- sectoral improvements in urban sanitation, irrigation, pollution control, environmental protection, erosion control and poverty alleviation. The project aims to articulate the policies endorsed in the Bank's Water Resource Management paper and MENA Water Resource Strategy. 11. Rationale for Bank Involvement. The proposed project is -3 -  consistent with the Bank's strategy for Morocco and the Bank's Water Resource Management and MENA water resources strategies. It also reflects the priorities defined in the Bank's Morocco Water Sector Review. The water sector will continue to play an increasingly crucial role in the Moroccan economy. Assisting the Government in its efforts to improve water resources management would be an important contribution to achieving an efficient, equitable and environmentally sound utilization of water resources. The Government's projections suggest that considerable investments will be required to meet the rising demand for water, given decreasing supply and diminishing water quality. Future water resource management will have to integrate supply and demand management, address simultaneously the quantity and quality aspects, and promote decentralization and stakeholder participation. In implementing this new approach, Government has requested Bank support. Bank participation is anticipated to enhance policy reforms, institutional development, assist in the evaluation and financing of sustainable priority investments, and assist the Government in securing cofinancing. 12. The project is the cuination of a series of actions the Bank has undertaken to assist the Government. For over three decades, the Bank has provided extensive support for the development of irrigation and urban water supply. Recently, the need to widen its focus to include water resource management and environmental protection projects in its lending program has become pressing. Investment operations in the long-neglected sanitation and rural water supply sub-sectors are also being initiated. In expanding the scope of its portfolio in the water sector, the Bank is implementing its new approach to water resource management which aims to meet the challenge of sustainable development, and environmental protection. By promoting an integrated strategy for long-term water resource management, this project is expected to lay down the policy and institutional framework and finance selective investments in the water sector. In particular, it will complement the Second Environmental Protection Project, the National Watershed Management Project and Second Sewerage and Water Reuse Project. Through successful implementation of this project, it is expected to develop as a model into which other donors can fit in and support the financing of follow-up projects. 13. Environmental Aspects. The project has been rated Category B. Please see attached Annex. 14. Project Benefits. Benefits would mainly accrue from the long-term economic sustainability of water resources management as supported by the project. In the short term, the Moroccan economy would benefit from improved efficiency in water allocation and water use. The project would also have an important positive impact on public expenditures by rationalizing public investments in water resource development and by raising users' contributions to capital and recurrent costs through appropriate cost recovery policies. Project components would have positive environmental impacts and environmental issues associated with their implementation will be effectively addressed by preparation and implementation of monitoring and mitigation plans. The project is expected to demonstrate actions for the integrated water management practices which will be widely -4 -  replicated. 15. In addition to the economic and environmental benefits noted above, the project would serve to reinforce stakeholder participation, and management decentralization. It would also benefit the rural poor through the improvement of water resources for rural communities. The environmental impact of the project by reducing waterborne diseases would significantly improve public health, particularly for poorer people who consume and bathe in untreated water. In the long-term, by providing the basis for sustainable water management and rationalizing investment, it would contribute towards the provision of adequate rural and urban water supplies and reduce the impact of droughts on incomes and output. 16. Project Sustainability. The proposed project is expected to provide an excellent foundation and framework for integrated water management. The focus of the project on specific investment in a river basin will ensure synergy and a replicable pilot demonstration of integrated water resource management covering quantitative and qualitative aspects of surface and groundwater, and decentralized management at river basin level. This project is the first phase in a series of follow-up projects aimed at addressing long-term issues of water efficiency in water allocation and water use and its sustainability. 17. Project Risks. The principal risk relates to delays in the establishment of the RBA and the level of tariff. This risk would be significantly reduced with the passage of the key decrees necessary for implementing the Water Law. Contact Point: Mr. A. Bichara, Task Manager The World Bank 1818 H Street N.W. Washington D.C. 20433 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending February 21, 1997. - 5 -  Annex Environmental Annex All project components have been reviewed in the light of the environmental requirements of Morocco and the provisions of the Bank's Operational Directives and the project has been placed in environmental Category B. The project is expected to improve the long-term management of water resources through policy reforms and institutional strengthening, support actions to conserve water use, control the pollution of surface and groundwater resources, and demonstrate actions for the integrated water management practices which could be replicated elsewhere in Morocco. -6-