India - Himalayan Watershed Management (Uttar Pradesh) Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. A317-IN STAFF APPRAISAL REPORT INDIA HIMALAYAN WATERSHED MANAGEMENT PROJECT UTTAR PRADESH May 10, 1983 General Agriculture Division South Asia Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents rmay not otherwise Ibe disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$ 1 Rupees (Rs) 9.5 FISCAL YEAR Indian Fiscal Year = April 1 to March 31 WEIGHTS AND MEASURES Metric System PRINCIPAL ABBREVIATIONS AND ACRONYMS IJSED ADO - Agricultura:L Development Officer AEO - Agricultural Extension Officer BDO - Block Development Officer DDPO - District Development and Panchayal Officer DOA - Department of Agriculture GBPUAT - Govind Ballab Pant University of Agriculture and Technology GOI - Government of India GOUP - Government of Uttar Pradesh IBRD - International Bank for Reconstruction and Development MOA - Ministry of Agriculture NARP - National Agricultural Research Project NLRCDC - National Larnd Resources Conservation and Development Commission NWDPC - National Watershed Development Policy Committee PC - Project Coordinator SC - State Level Steering Committee SDM - Sub Divisional Magistrate SW - Subwatershed SWMC - State Watershed Management Cell T&V - Training and Visit UP - Uttar Pradesh VDO - Village Development Officer VEW - Village Extension Worker VLW - Village Level Worker WDC - Watershed Development Council Watershed implies a drainage area containing a few thousand or a few hundred thousand hectares from which water drains towards a single chan- nel. It is a social and economic unit for development and conservation of water, soil, forests and related resouces.  FOR OFFICIAL USE ONLY INDIA HIMALAYAN WATERSHED MANAGEMENT PROJECT Table of Contents Page No. I. BACKGROUND ................................ 1 A. Introduction ..................... ................... 1 B. Erosion and Flood Damage in India .....1.............. C. Project Objectives ....... .............. 6 Project Rationale and Strategy for Development ...... 6 II. THE PROJECT AREA.. 8 General. 8 Topography. 8 Climate .............................................. 9 Geology and Soil. 9 Socio Economic Aspects .10 Administration .............. . . ........ 10 Hill Development Organizations .11 Livestock .11 Pasture Land .12 Agriculture ......................................... 13 Forestry .14 Land and Soil Conservation Programs .15 Agricultural Support Services .16 Minor Irrigation .17 III. THE PROJECT ..18 A. General Description .18 B. Criteria for Preparation of Subwatershed Projects 19 C. Detailed Features .22 Forest and Pasture Developulent .22 Soil Conservation Measures .23 Livestock Development .24 Agricultural Development ............................. 25 Horticultural Development .28 Minor Irrigation ..................................... 28 Research .29 IV. COST ESTIMATES AND FINANCING .. 30 A. Cost Estimates .30 B. Proposed Financing ................................... 32 C. Procurement .34 D. Disbursement and Audit ... ........................... 34 V. ORGANIZATION AND MANAGEMENT .............................. 36 Central Organization ................................. 36 State Level Organization .39 Project Implementation ... , .......................... 40 Monitoring and Evaluation ., 42 This document has a restricted distribution and nmay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -ii- VI. PRODUCTION, MARKETING, FINANCIAL RESULTS AND COST RECOVERY ............................................ 44 Yield and Production ................................ 44 Marketing of Produce ................................ 45 Farm Incomes ........................................ 46 VII. BENEFITS, JUSTIFICATION AND RISKS ................. ...... 47 A. Benefits ............................................ 47 B. Economic Analysis ................................... 48 C. Risks ............ ................................... 50 VIII. AGREEMENTS TO BE SOUGHT AND RECOMMENDATIONS ............ 51 ANNEXES 1. Cost Tables Table 1 - Subwatershed project Costs: Uttar Pradesh Table 2 - GOI Watershed Development Cell 2. Project Area Table 1 - Watersheds, Subwatersheds and Microwatersheds Table 2 - Phasing of Subwatersheds and Microwatersheds 3. Table 1 - Cropping Pattern for 1 ha Farm : UP Table 2 - Farm Budget for 1 ha Farm (Irrigated) : UP Table 2(a) - Farm Budget for 1 ha Farm (Unirrigated) : UP Table 3 - Yield per Hectare (Kgs) and Cost per MT Table 4 - Per Hectare Labor Requirements Table 5 - Horticultural Budget : I ha Table 6 - Horticultural Budget : 0.4 ha Table 7 - Price Build-up for Economic Analysis Table 8 - Financial and Economic Price Assumptions Table 9 - Yield Projections Table 10 - Incremental Project Production Table 11 - Economic Costs and Benefits Streams Table 12(a)&(b) Graphs 4. Table 1 - Physical Implementation Schedule Table 2 - Estimated IDA Disbursements 5. Project Cycle and Responsibilities 6. Related Documents Available in Project File Chart - 24839 - Project Organization : GOI 24584 - Project Organization : State Map - IBRD 16811R - IBRD 16813  INDIA HIMALAYAN WATERSHED MANAGEMENT PROJECT UTTAR PRADESH STAFF APPRAISAL REPORT I. BACKGROUND A. Introduction 1.01 Immediately after the worst ever floods hit northern India in August 1978, the Government of India (GOI) appointed a Working Group to formulate an action plan for flood control in the Indo-Gangetic Basin. The working group presented its action plan to GOI in December 1978. Resulting from the plan, GOI in June 1979 decided to select the Upper Ganga catchment for treatment, and from which a number of important rivers in Uttar Pradesh (UP) originate. GOI also decided that a first phase five-year project would focus on measures to rehabilitate a number of subwatersheds/microwatersheds in each of the two major watersheds. 1.02 Responsibility for project preparation rested with GOI and UP government and to assist in this, GOI appointed a part time expert team to provide assistance to the states. A team of officials from the UP Forest Department prepared an overall development plan for the Nayar Watershed (266,000 ha) in the Upper Ganga catchment and a detailed plan for the Machiad subwatershed (16,700 ha) which is a part of the Nayar Watershed. 1.03 These reports were ready by November 1981 and in November/December 1981 a Bank/GOI preappraisal mission 1/ visited UP and prepared detailed subwatershed/microwatershed plans for the Machiad subwatershed. This plan, which would be used as a model for subwatershed plans to be prepared subsequently, has been revised in consultation with UP government and GOI during follow-up missions from January-May 1982. B. Erosion and Flood Damage in India 1.04 On average, floods annually affect an area of about 8.0 million ha of the Gangetic plains, including some 3.5 million ha of cropped land. The value alone of crops lost is over US$250 million a year. Damage is 1/ Messrs. L. Ljungman, R.V. Ramakrishna (Bank), R. Noronha, H.L. Teller, K.G. Tejwani and S.N. Bakshi (Consultants). Mr. H. Stier (Bank) completed the project analysis.  caused by the combined effect of excess run-off of rain failing both in the plains and in the Himalayan range 1/ but no attempts have, so far, been made to differentiate the damage caused by rain falling on the plain or that falling in the Himalayan range. This project seeks only to deal with measures designed to ameliorate the deterioration of the Hill areas of the Himalayan ecosystem, leading to reductions in rapid and excessive runoff of rainfall and in silt loads of rivers descending from the range. 1.05 Given below are statistics, from 1953 to 1981, showing the value and area affected by floods, the population involved, loss of crops and houses, deaths of both cattle and humans, and damage to public utilities. Total Maximum in Average/ Unit 1953-81 one year year Total area affected M ha 235.6 19 (1978) 8.1 Population involved M 795.0 70 (1978) 27.4 Damage to crops M ha 104.0 10 (1978) 3.6 .US$ M 7,200.0 1,030 (1978) 248.3 Cattle lost thousand 2,826.0 618 (1979) 97.4 Human lives lost thousand 40.0 11 (1977) 1.4 Damage to public utilities US$ M 3,200.0 582 (1981) 110.3 Total damage to crops, houses and public utilities US$ M 11,800.0 1,700 (1978) 406.9 a/ a/ These figures do not include the indirect damage caused by disruption of communications, loss of subsequent production or expenditure on relief and rehabilitation. 1/ For descriptive purposes within this report, the Himalayan range has been classified into the Shiwalik Range--low foothills adjacent to the Gangetic Plain and with altitudes of up to 1,000 m.a.s.1.; the Hills--with altitudes ranging to 2,500 m.a.s.1. and in which agricul- ture is generally practiced and the Himalayan range proper including the alpine region.  -3-- 1.06 It can be seen that during the past five years, damage appears to have been at its greatest. Some of this increase can be attributed to price escalations but, nevertheless, increasing ecological degradation coupled with larger human and cattle populations make each new flood more devastating than its predecessor. The fact remains, however, that the severity of flooding is increasing although the trend of total annual rainfall remains substantially the same. According to the Central Water Commission, the area prone to floods in India is about 34 million ha of which 24 million ha (70%) fall within the Indo-Gangetic basin states of Punjab, Haryana, Rajasthan, Uttar Pradesh, Bihar, West Bengal and the Union Territory of Delhi. Rivers rising in the Himalayan range in the states of Jammur and Kashmir, Himachal Pradesh, Uttar Pradesh, and the Kingdom of Nepal, all affect flooding in these states. 1.07 The average value of damage to crops, houses and public utilities over the period 1974-1979 comes to about US$1,020 million annually whereas the outlay on flood control works during the same period amounted to less than US$90 million yearly. These control works have been confined mostly to embankments and engineering structures alongside rivers in the plains; however, some but limited preventive measures have been carried out in the upper watersheds of selected rivers. 1.08 Many recommendations have been made by various committees since 1954 concerning measures that should be taken to control floods, but neither the Central nor State Governments gave the matter the attention it deserved until 1978, when GOI appointed a Working Group to formulate an action plan for flood control in the Indo-Gangetic basin. It was envisaged that the program should integrate engineering works downstream with soil conservation, reforestation and other watershed treatment measures upstream of the flood-prone rivers and their tributaries. 1.09 The action plan presented by the Working Group identified 18 major catchments in the Ganga basin covering some 50 million ha as requiring action. In the short term, the report proposed two separate but coor- dinated five-year programs: (a) construction of downstream flood control engineering works, costing some US$1,230 million and protecting an estimated 5.5 million ha; and (b) upstream watershed treatment covering some 2.8 million ha and costing an estimated US$870 million. 1/ 1/ The 20-year upstream program was estimated to cost some US$3,400 million and treat about 14 million ha.  -4- With the inclusion of a flood forecasting/warning system and development of a program of flood plan zoning, total program costs for the five years were estimated at US$2,160 million. GOI earmarked over US$112 million (50% Central and 50% State budget) for upper watershed treatment and some US$1,000 million (70% Central, 30% State budget) for downstream engineer- ing works in the draft Sixth Plan. 1.10 Deforestation caused by the need for domestic fuel and timber supplies and livestock fodder, overgrazing of natural grasslands, indis- criminate cultivation on steep slopes combined with poor agricultural practices and badly designed roads all contribute to the general ecologi- cal decline observed in many parts of the Himalayas. The outcome of these activities is increasing soil erosion which threatens the productive capacity of the habitable areas of the Himalayan range (the Hills). At the same time, it (erosion) increases flash flooding and sedimentation levels in rivers and which contribute to generalized flooding and early reservoir siltation, a reduction in the life of downstream dams, diminished quantities of irrigation water and finally a smaller command area. 1.11 The technical solutions to improved land use in the Hills are fairly well known and have been developed through research carried out at the Forest Research Institute and the Central Soil Conservation and Train- ing Institute (both located in Dehra Dun) and at leading agricultural universities in each of the Himalayan States. The overall approach to solving these problems is therefore! known, but, so far, little experience has been gained in large scale implementation of the detaLiled technical recommendations, particularly when involving local populations in these development efforts. 1.12 As has been clearly demonstrated in the Sukhna catchment (in Punjab State), reforestation, reduction in livestock numbers and other rehabilitation measures, such as construction of check dams and careful design of access roads, have already reduced the sediment loads in streams by half and, when 100% vegetational cover is achieved, siltation will be reduced even further. 1.13 Under the centrally sponsored scheme for conservation in catchment areas under the River Valley Project, which was started during the Third Plan Period, some 300 small watersheds have so far been treated in about 30 river valleys of India. The scheme-s main objective has been to prevent premature siltation of multi-purpose dams located on these rivers and to ensure sustained amounts of irrigation water for command areas. Unfortunately results have been less than satisfactory largely because a multi-disciplinary and integrated approach to the planning and implementa- tion of watershed rehabilitation and development has not been taken. Line departments of State Governments have operated more or less independently of one another, frequently with different subsidy levels for the same  -5- operation (e.g. horticultural development) and with limited involvement of the local people. This has resulted in scattered patches of project works in non-contiguous watersheds and which have not achieved the scheme's overall objectives. 1.14 The most recent and relevant soil conservation and watershed management experiences in the Himalayan range include the IDA supported Kandi Watershed Project (Loan 1897-IN) in Punjab State, and a West German Technical Assistance Project at Dhauladhar in Himachal Pradesh State. The Kandi Project, although its main emphasis is on engineering solutions to watershed development, has contributed substantially to knowledge of the effects of controlled grazing and redluction of numbers of free grazing cattle through cattle exchange programs and introduction of stall-feeding. Initially, it was thought that it would be necessary for the rehabilita- tion of upper catchments to construct numbers of small and medium sized anti-erosion structures to reduce run-off and erosion from the Shiwalik Hills. Furthermore, it was anticipated that it would be necessary to canalise water leaving the Shiwalik Hiills to prevent damage to arable land lying below the Hills. In practice, these assumptions have proved to be wrong. Land closure, afforestation ,and removal of free-grazing cattle and other domestic livestock have proved to be the single greatest factors in restoration of ground cover and reduction in run-off of rainwater. Since project inception, and with the introduction of the livestock exchange program, the distribution of livestock is as follows: 1981 as % of Type of Livestock 1977 1981 1977 Goats 7,450 2,000 27% Camels 90 not recorded - Cattle 5,990 3,500 58% Buffaloes 2,290 3,200 140% Sheep 180 not recorded - In addition, incomes of those farmers stall-feeding buffaloes has increased substantially. The afforestation program is on target, with an overall survival rate in the 1980/81 planting season of 90% (60% in pre- vious season) brought about by improved establishment practices and better control of livestock. The Dhauladhar Project, which has just completed its final exploratory phase with substantial foreign technical assistance, has developed techniques, farm systems and support services for watershed management projects in areas similar to the proposed project area. In addition to these specialized efforts, line departments in the Himalayan States, have planted considerable areas of forest and orchards, as well as covering substantial areas with various types of soil conservation works. However, few efforts have been made so far to integrate these actions into a coordinated program for watershed rehabilitation.  -6- C. Project Objectives 1.15 The primary objective of the project would be to attempt to mini- mize in selected areas the further deterioration of the Himalayan ecosys- tem caused by depletion of forest cover, overgrazing, bad land use and careless road construction, all of which has resulted in increasing ero- sion in these areas. 1.16 Project concept is such that the components selected for develop- ment would be acceptable to local populations and are so designed that the great majority of persons living within areas selected for rehabilita- tion would perceive themselves as direct beneficiaries of project actions. Furthermore, some of the benefits would be immediate in effect (i.e., cattle exchange program), whilst others (forest plantations) would require long gestation periods. Besides addressing the problems of erosion and in view of the low standard of living generally prevailing throughout the Himalayan region, efforts would be made to improve agricultural produc- tivity and enhance incomes. 1.17 Since cost is a significant factor in determining the replicability of project proposals, and learning from the experience gained in the Kandi Watershed Project, greater emphasis would be given to low cost agricultural/silvicultural solutions rather than to expensive engineering works for conserving soil and reducing excess run-off from rainfall. Project Rationale and Strategy for Development 1.18 Degradation of the Himalayan ecosystem is essentially caused by increasing pressures on the vegetative cover by ever increasing human and livestock numbers. Besides poor agricultural practices, one of the main obstacles to solution of the problem is the present livestock management system. In the Hills, livestock are kept mainly for draught purposes and manure. As a result of declining aimounts of fodder from crop residues, natural pasture, and trees, cattle are kept in stalls only during the night for collection of manure and allowed to wander freely by day. Fur- thermore, natural forest areas are being systematically over-exploited as sources of household fuel and timber. 1.19 To help overcome the fodder shortage, project strategy would be to close areas to grazing in the upper (particularly on ridges) catchment for reforestation, thereby increasing the production of fodder, both from grass and from planted fodder tree species, for stall-feeding of cattle. Such a practice, would also improve the opportunities for milk production and help increase self-sufficiency of farmers. In addition, and as a demonstration, a cattle exchange program would be introduced on a limited scale as experience from the Kandi W;atershed Project in Punjab shows that  -7- where two local cattle of indifferent genetic potential for milk produc- tion are exchanged for one buffalo, a positive impact on reduction of overall cattle numbers and closure of grazing has resulted. In recogni- tion of the fact that all farmers would not accept the stall-feeding of cattle simultaneously, it has been estimated by forestry and other offi- cials that about one third to one half of the presently degraded forest and pasture lands could be closed for treatment without causing undue hardship to cattle keepers. Whilst the afforestation efforts would be primarily designed to meet the needs for fodder, the future requirements for fuelwood and construction timber would also be accommodated. In addition, with a longer term perspective in view, planting of suitable timber species would take place and which would provide a basis for estab- lishment of commercial forestry. The returns to farmers from forestry would eventually be considerably more rewarding than from subsistence level agriculture; the returns from which are largely dictated by the small amounts of arable land available for cultivation. 1.20 Strategy for soil conservationl would be directed towards reducing soil loss and erosion by low cost methods principally by land closure and by introducing better cultivation practices. Construction of permanent and generally expensive soil conservation structures would be confined to the protection of blocks of good arable farm land, and infrastructure such as villages and towns or where ill conceived past road construction has created substantial erosion. 1.21 Land closure, in the first instance, could bring hardship to residents and in order to gain acceptance and support for these land use changes, it would be necessary to include components that assist in rais- ing food and income levels. Such components would be directed to increas- ing crop yields (through improved extension, better seeds), improvements to minor irrigation and upgrading of livestock breeding and health serv- ices. In addition, horticultural development (especially fruit trees) would play an important role in increasing incomes. 1.22 Previous experience elsewhere has shown that the approach to development of special problem areas should be comprehensive rather than piecemeal. Whatever the magnitude of the comprehensive approach may be, it will only be possible to fully achieve its objectives by considering all lands, their potential capabilities for development and reclamation, their possible contribution to food, fuel and timber production, their hydrology, irrigation, water supply, susceptibility to floods, droughts and other natural hazards such as erosion and siltation. 1.23 Most of these factors are related to the nature of the drainage basin and the extent to which improvement activities are coordinated within its boundaries. Planning of physical improvements, infrastructure or the mobilization of human resources will suffer serious restrictions unless carried out within natural boundaries - a large watershed or its  -8- independent tributaries (sub-watersheds) and the minor streams serving those tributaries (micro-watersheds). It is also important to note that area development plans can be executed gradually, micro-watershed by micro-watershed, dependent on the availability of finance and trained manpower. 1.24 Wherever comprehensive watershed development activities are planned, it is essential to establish full knowledge of the existing conditions and the potential for development in the given location. This kind of development requires a multi-disciplinary approach and only by close cooperation between specialists in the various disciplines can it be successfully planned and implemented. The vertical administrative organization prevailing in India makes this cooperation difficult. The project, however, seeks solutions to these difficulties. 1.25 Under the project, the above planning principles would be incor- porated into watershed development procedures. The disciplines involved would include forestry, agriculture, soil conservation, animal husbandry, minor irrigation and sociology. Thiese would be provided from existing line departments of state governments, from agricultural universities and other research institutions. TI. THE PROJECT AREA General 2.01 The proposed project would be located in the state of Uttar Pradesh (UP). The State is bounded by the Vindhyan Hills and plateau to the south, with the Gangetic Plain, lying between the Himalayan range and the Vindhyan Hills, and covering the major portion of the State (see Maps 16811 and 16813). The project area covers 2 watersheds, including 9 subwatersheds and 83 microwatersheds involving an area of 312,000 ha. Details are given in Annex 2, Table 1. Topography 2.02 The Himalayan and Shiwalik region of UP extends over 58,000 km2. Elevations vary from about 300 m.a.s.l. on the plains to above 7,000 m.a.s.l. on the higher peaks. About 60% of the land area lies in the altitude range 2,200 to 2,600 m.a.s.l. 2.03 The state gives rise to many rivers which drain onto the Indo-Gangetic Plain with the Tons, Yamuna, Bhagirathi, Mandakani, and Pundar being the most important.  -9.- Climate 2.04 There is wide variation of climate which is further accentuated by microclimatic changes due to complicated relief and land form. The main climatic zones are: (a) Alpine Zone. Lies above 3,350 m.a.s.l. Annual precipitation is less than 250 mm and falls mostly during winter as snow. (b) Montane Temperate Zone. Lies between 1,000 and 2,000 m.a.s.l. Precipitation varies from 250 to 1,000 mm. about 30% of which falls as snow during winter and the rest as rain during the monsoon (June-September). The winters are long and rather pronounced and summers are generally mild. (c) Sub-tropical zone - The low level valleys extending into the interior lie in this zone. Annual precipitation varies con- siderably with local topography, 15% being received as snow and 75% during the monsoon. The southern spurs of the main ranges receive the heaviest precipitation (2,000 mm or more) whereas in the inner sheltered valleys rainfall is about 1,000 mm. Summer temperatures are high. (d) Moist tropical zone - The Sub-Himalayan part has annual rainfall of 1,000 mm or more and all falling during the monsoon. Summer temperatures are very high and, in parts, hot dessicating winds prevail. 2.05 Generally, all slopes with northern aspects receive higher rain- fall than southern facing slopes. Consequently, the former are densely forested at higher elevation and receive heavy snowfalls during the winter months, while the southern exposures have various amounts of deciduous growth and grassy cover. Geology and Soil. 2.06 The Himalayan-Siwalik tract originated in Eocene orogeny. In the inner ranges of the Himalayan massif, granites and quarzites predominate. Gneiss, biotites, schists and phyllites are found in the outer Himalayas and from which have derived red loams, brown forest soils, podsols and meadow soils and their numerous variations. Except for valleys, the soil depth is generally shallow and rocky outcrops are common. The soils are generally poor but respond well to farm yard manure and artificial fer- tilizers.  -10- Socio-Economic Aspects 2.07 With a population of 111 M in 1981 and a per capilta annual income of about Rs 994 or US$123 in 1979-80, UP is the most populous and one of the poorest States in India. The statewide population density is extremely high at 377/km2, with an average annual growth rate of 2.3%. The population of UP hill districts was estimated in 1981 to be 4.1 mil- lion with women outnumbering men in Chamoli, Tehri, and Garhwal Districts. Population density in valleys may be as high as 250 persons/sq.km. There are nearly 1,500 villages wherein 93% of the hill people live. Over 85% of rural people are cultivators but holdings are small and fragmented and returns from agriculture are diminishing. Most able bodied men migrate to the plains in search of a living and women are left behind to carry out all farming operations except ploughing. Women also care for the live- stock, collect fuelwood and water, gather grass, cook meals and raise the children. 2.08 People in the hills are well aware of the consequences of human population growth and excessive livestock numbers. Furthermore, there is considerable recognition of the need for closure of grazing lands lying within village boundaries and there are a few examples of such closures (both under supervision of the Forest Department and through private arrangements). Administration 2.09 Panchayat Administration. The three tier Panchayati Raj System operates in the State. At the lower level is the gram panchayat, a com- mittee of 7-11 members elected by the gram sabha (village assembly), a body corporate comprising the adult members of a group of villages. At the next level is the panchayat samiti which covers a Development Block and comprises 20 members elected by constituent gram panchayats. At the district level there is a zilla parishad comprising one elected member from each panchayat samiti, chairmen of constituent panchayat samitis, local members of the Lok and Rajya Sabhas, local members of the State Legislature and the Deputy Commissioner of the district. 2.10 The responsibilities of a gram panchayat cover hea:Lth, water, agriculture, forestry and communications. In addition, government can transfer to it the management and maintenance of a forest and government waste lands within and near the boundaries of its jurisdiction; the protection of any irrigation works and the extension and regulation of the distribution of water from these works. The income of a gram panchayat derives from grants, donations, income from common lands arid 20% of the total amount of the land revenue collected in its jurisdiction. In addi- tion, gram panchayats can raise funds through levying of fees and taxes.  -11*- 2.11 The functions of a panchayat samiti are somewhat wider and cover agriculture (including forestry, animal husbandry, and fisheries), health and rural sanitation, communications, social education and cooperation. In addition, samitis are entrusted with the supervision and control of constituent gram panchayats to whom they can also delegate any matter which is under the direct administrative control of the samiti. Sources of operating funds are the same as those of a gram panchayat. 2.12 The zilla parishad (district committee) functions mainly as an examining, advisory and coordinating body. Its sources of funds are similar to those of a gram panchayat, but it can also levy contributions from constituent samitis with prior government approval. 2.13 Government assists and supervises panchayats through the provision of staff, funds and audits. The staffing pattern is the same for every Block and does not take into account variations in population or differen- ces in topography or distances between villages. At the district level, the Deputy Commissioner supervises all panchayats, and is also an appel- late authority. He is assisted by the District Development and Panchayat Officer (DDPO) who is the ex-officio secretary of the Zilla Parishad. At a lower level is the Subdivisional Magistrate (SDM) who usually supervises the Block Development Officer (BDO) who is in charge of a Block, the lowest administration unit and covering a number of villages. BDO is also the Executive Officer and ex-officio secretary of the panchayat samiti and is assisted by a number of lower level functionaries who act as sub- ject matter specialists--some of these are from the same government department as the BDO (the Rural Integrated Development Department); others (Panchayats, Cooperatives, Agriculture, Horticulture, and Rural Industries) are from a pool of officers provided at the Block level by their respective line department. Hill Development Organizations 2.14 The Hill Area Development Department is responsible for coordina- tion of all development work carried out by different line departments operating in Hill areas. As a consequence, all budgetary allocations and staff appointments are coordinated and approved by the Secretary, Hill Area Development. Livestock 2.15 Every household maintains livestock mainly for draught purposes and production of manure. Cattle, buffalo, goat, and sheep are common throughout the project area. Cattle are small with an average body weight of 220 kg for males and 180 kg for females. The small size of bullocks is well suited to plowing of the narrow terraced fields. Milk yield of cows is low (150-300 litres per lactation). Buffaloes are mostly nondescript and are kept essentially for milk production. Because of the difficult  -12- terrain, the males are not used for agricultural purposes. Goats are kept for home-consumption whilst sheep are maintained to produce wool for home use. 2.16 Husbandry Practices. Only those cattle in milk are fully stall-fed and all others allowed to wander freely by day. Buffaloes, on the other hand, are stall-fed as they cannot free graze because of the hilly terrain. Village women now spend upto 8-10 hours daily collecting fodder for stall-feeding of household animals. This entails making a number of trips to areas often 2-5 km away from the homestead as fodder supplies near at hand are exhausted. 2.17 Animal Health and Veterinary Facilities. Rinderpest, Foot and Mouth Disease, Anthrax, Black Quarter and Haemorrhagic septicaemia are all endemic throughout project areas and a major cause of cattle losses. The Animal Husbandry Department keeps a check on contagious diseases and mounts vaccination programs when outbreaks occur. To improve animal health services, state governments presently have a program to set up a veterinary hospital at the headquarters of each Development Block and 3-5 smaller dispensaries in interior areas. While all hospitals have been established, there is a shortfall in the number of dispensaries. Pasture land 2.18 In UP there are three broad categories of pasture lands; (a) areas under the control of the government; (b) unclassed forest; and (c) private forests (para 2.30). 2.19 Grassland. The predominant perennial species in natural pastures are Chrysopogan sps and which are desirable and nutritious as grazing species. Under conditions of heavy grazing, however, and when accompanied by annual burning, the natural grasslands deteriorate and the more desirable species are replaced by Heteropogan contortus (a perennial species of low nutritive and productive value). Growth of grass commences with the onset of the monsoon (June) and under ideal conditions reaches peak production and flowering in September. By the end of October,the grass matures and, if left ungrazed, becomes the equivalent of standing hay. Presently about 45% of all grassland is subjected to communal grazing by numbers of animals in excess of its carrying capacity. Hence these grasslands are under constant stress and result in low productivity (about 2-3 MT of dry matter per hectare). Furthermore, present grazing practices permit little chance for species to flower and set seed. lUltimately these pastures deteriorate further to the level of containing only pioneer species (normally annuals) and at this stage, due to the slparsity of cover, run-off increases and erosion sets in.  -13- 2.20 In a number of places within the project area in UP, unclassed forest lands have been enclosed by villagers with stonewall fencing. A village guard is engaged by the people to keep grazing animals out of the area. In such areas regeneration is rapid and results in a good growth of grass. The villagers have evolved a system for equitable distribution of grass. Areas distant from the homestead and only marginally suitable to agriculture are often closed by individuals for hay making. 2.21 Scattered throughout the grazing lands are fodder trees, usually located around the edges of crop lands and along water courses. Loppings from these trees (mainly leaves) help to supplement the poor quality of grass and crop residues. The main fodder trees found are Grevia opositifolia, Bauhinia sps., Albizzia sps. and Morus alba. Unlike the grasses, the foliage of fodder trees maintains its nutrient value at a fairly uniform level throughout the year. 2.22 Fodder Balance. It has been estimated that the annual requirement for maintenance and production is about 2.35 T of dry matter per animal unit. Under present conditions, however, there is a deficit of about 15-25% of total requirement. This situation in large part accounts for the overgrazed condition of communal grasslands and over exploitation of fodder tree areas. 2.23 Farmers are generally reluctant to do away with unproductive and aged animals due to religious beliefs concerning slaughter and continuing dependence on these animals for production of manure. The State Govern- ment has established a Gosadan (Cattle Sanctuary) in the Hills where unproductive cattle collected from villagers are being housed and which is more frequently being used by farmers for disposal of unproductive animals. Agriculture 2.24 Holding Size. About 70% of holdings are less than one hectare in extent, about 16% range from one to two hectares with the remaining 14% more than two hectares in size. Farms normally comprise more than one parcel of land, often separated by considerable distances. 2.25 Cropping Pattern. The main cereal crops are rice grown in kharif followed by wheat in rabi. Ragi (finger millet) grown where irrigation is lacking is also an important kharif crop. In every period of two years (four seasons) farmers usually take three crops, leaving land to lie fallow in one crop season. Poor land with bad or degenerated terraces, which is usually at a distance from the household, is cultivated once in 3 or 4 years, and then for only one season. The main reasons for this are that the land is of inherently poor quality and farm women do not have the  -14- time to visit these usually distant fields regularly as they are preoc- cupied in cultivating better land near their homes, and in fetching fod- der, fuel and drinking water for their day to day needs. 2.26 Crop Yields. Crop yields are generally low. Present average yields are given below: Crop Average Yield per Ha. MT Paddy 1.0 Millet 1.0 Wheat 0.9 2.27 Manures and Fertilizers. Most farmers use only organic manures, but little attempt is made to prepare good, well rotted manure and all material is generally left in uncovered heaps, stacked in the open. 2.28 Seed. Little seed of improved varieties has been planted in the project area. No efforts have been made to organize a widespread seed multiplication program. Poor on-farrm storage arrangements and constant use of the same seed lead to the quality of farmers' seed being low. 2.29 Horticultural Crops. A range of subtropical and temperate fruits and vegetables are cultivated in the project area. Citrus, guava and mango are typical subtropical fruits and are grown in valleys. Temperate fruits grown at higher altitudes are apple, pear, apricots and the stone fruits (peaches, plums, etc.). Pear, fig and peach grow wild in compact areas and in woodlands. Wild pear comprises some 10-20% of the fruit trees grown in the area. There is considerable scope for improving yields of these trees by "top working" (grafting) with improved varieties. This work has been initiated in a small way by the Horticultural Department and the produce will be marketed by the panchayats. In addition, the Hor- ticultural Department has programs to develop community and private orchards. One demonstration orchard is in operation at Chamauli (Pauri district) but, however, needs improvement. Forestry 2.30 Forests, according to their legal status and ownership, are class- ified into four important categories: reserved forests, protected forests, unclassed forests and private forests. In reserved forests villagers are only allowed to graze cattle and cut and carry grass on payment of a small fee. In demarcated protected forests, the villagers have a right to graze cattle, cut and carry grass, lop tree branches, gather dead wood and fallen timber and cut wood for domestic purposes and for implements (at a nominal fee). Unclassed forests are those remaining forest areas (other than private forests) and wastelands which have been classified under the  -15- Indian Forest Act and are under the control of the Revenue Department. Private forests are areas which belong to individuals and considered unfit for cultivation by them and which, in the course of time, have acquired some vegetative growth. Generally speaking, private forests have deteriorated and are now largely unproductive as a result of failure to replant after exploitation. Protected forests and unclassed forests have also deteriorated on account of continuous felling and uncontrolled graz- ing and vegetation in such areas is now sparse and covered in bush growth. 2.31 Supply of Wood Material. People living in the project area require tree products for firewood, livestock fodder, farming implements and house construction. These demands have led to degradation of much of the nearby forests and are now largely met from areas remote from the villages and from burning of agricultural waste. In some areas, and in recognition of the need to conserve resources, villagers have voluntarily agreed to protect nearby reserved forests. The result has been a number of good demonstration plantations of pine and regenerated oak forests. 2.32 The essential problems facing any afforestation program are: (a) non-agricultural land is subject to heavy grazing pressure and successful afforestation efforts are dependent upon effective grazing control; (b) non-agricultural land is normally steep with shallow soils and only por- tions of this land are suitable for afforestation; (c) the daily needs of fuelwood during the development period would have to be met outside those areas being afforested so as to ensure successful establisment and growth; (d) present techniques of establishing forest plantations have not given satisfactory survival rates partly because efforts and funds have been spread over large areas and with little attention to good silvicultural practices; and (e) few efforts have been made to plant the best species for fuelwood and fodder. Land and Soil Conservation Programs 2.33 Soil conservation in the Hills has traditionally been carried out by both the Forest Department and the Agriculture Department. Works by the former are mainly concentrated in forest reserves and community owned forests and those of the Agriculture Department generally limited to privately owned agricultural land. 2.34 Programs implemented by the Forest Department largely comprise afforestation with construction of physical structures to control gully erosion and protect downstream structures. Afforestation, however, has been carried out unsystematically and in a dispersed manner giving rise to small patches of trees wherever land could be made available. Physical structures are often constructed without due consideration to final objec- tives and cost.  -16- 2.35 Soil conservation on agricultural land consists of bunding, land levelling and terracing of private lands. Such works are normally carried out by the Soil Conservation Department and are subsidized at levels between 30 and 50% of cost. 2.36 The effectiveness of present activities are limited because of (a) a tendency to direct remedial measures towards the effect rather than the cause of erosion; (b) a lack of appreciation of factors which determine rate of soil erosion, such as interaction between erosivity, erodibility, topography and management; (c) inadequate appreciation of the role of sound land husbandry in leading to good ground cover; and (d) introduction of expensive remedial measures instead of low cost methods which would have wider application. Agricultural Support Services 2.37 Agriculture Research. The G.B. Pant University of Agriculture and Technology (GBPUAT), Pantnagar is responsible for agricultural research in the Hill districts of UP. GBPUAT maintains a hill campus at Ranichauri (Tehri Garhwal district) where research facilities are being developed. A private research institution Vivekananda Anusandhanshala is located at Almora and is supported by the Indian Council of Agricultural Research. 2.38 Present work carried out at these research stations has little relevance to problems of the area and there is little contact between research workers, farmers and staff of the Agricultural Department. GBPUAT is now eligible for assistance under the Bank supported National Agricultural Research Project (NARP) and is being strengthened to meet the future needs of the project areas. 2.39 Agricultural Extension. Each district in the project area is divided into a number of Development Blocks, and headed by a BDO. In each Development Block, there are 15-18 Village Development Officers (VDO) l/ and three Agricultural Development Officers (ADO) 2/ one each acting as Subject Matter Specialist for annual crops, crop protection and horticul- ture. The VDO are multipurpose extension workers, working directly under BDO. Their agricultural activity is largely confined to collecting demands for seed and fertilizer and most farmers have had little or no contact with them. The ADO are generally not available for extension work in view of other responsibilities. As a result little or no agricultural advice reaches farmers. 1/ Same as Village Extension Worker (VEW). 2/ Same as Agricultural Extension Officer (AEO).  -17- 2.40 Agricultual Credit. Credit is provided by cooperatives and com- mercial banks. Short term credit is made available for purchase of agricultural inputs and medium term loans for bunding and purchase of bullocks. Long term loans are available for horticultural development. The overdue position of short term credit varies between 50-60%, largely due to holding size and absence of a marketable surplus. Marginal farmers, small farmers, farmers belonging to Scheduled Castes and Tribes and others identified under the Integrated Rural Development Program are entitled to subsidies, ranging from 33-50%, for different activities. 2.41 Agricultural Marketing. Due to small holding size and low yields, there is little marketable surplus of food crops and consequently market- ing does not present a problem as any surplus is bought by traders located throughout the project area. 2.42 Constraints to Increased Agricultural Production. The main con- straints to increasing agricultural production are: (a) the lack of an organized extension system with the present extension staff performing varied tasks which are target oriented and having relevance to a small number of farmers only; (b) absence of a systematic program for seed multiplication and distribution resu:Lting in farmers using their own seed which is low yielding and of poor quality; and (c) research activities are not planned to meet local needs. Minor Irrigation 2.43 Present irrigation practices consist of construction of small storage tanks designed to collect spring water from small perennial flows and the distribution of this water to fields by gravity flow through small open channels. Storage tanks are usually constructed with government assistance whereas irrigation channels are built by farmers and are unlined. The present irrigation efficiency is about 20% in the unlined channels as there is considerable wastage of water. 2.44 On average, one tank irrigates about 0.8 to 1.0 ha. Given the volumes of water available and low efficiency, the present system provides for protective irrigation only during lean periods of rainfall in kharif and one to three irrigations for wheat in winter. The latter is dependent on available water as there is a gradual reduction in perennial flows after mid-February. No irrigation charges are levied as farmers are fully responsible for maintaining the irrigation system. 2.45 There is considerable scope for increasing the area under irriga- tion by (a) improving the existing system through lining of irrigation channels; and (b) constructing new storage tanks and irrigation channels.  -18- III. THE PROJECT A. General Description 3.01 The project would focus on development of watersheds in the outer Himalayas and in the Siwalik Range. It is in these areas where the most serious denudation and soil erosion is taking place. The less seriously affected middle and inner Himalayas, and which are more prone to geological erosion, would not be included in this first phase project. 3.02 The proposed seven-year project would develop nine subwatersheds covering 312,000 ha in the state of Uttar Pradesh. Detailed plans for the development of one subwatershed (comprising four microwatersheds), has been prepared by the State Government and reviewed by the IDA appraisal mission and would be implemented in the first project year. Development plans for the remaining eight subwatersheds would be prepared and imple- mented throughout the course of project life. As the start-up of develop- ment activities in subwatersheds would be phased over the first five project years and in order to ensure that these activities would be sub- stantially completed under the project, it would be necessary that the project be of seven years duration. Details of phasing are shown in Annex 2, Table 2. 3.03 The development of the proposed subwatersheds would include: (a) establishment of some 59,000 ha of mixed species plantations (for fuel and timber), 27,800 ha of fodder tree plantations on government and panchayat-owned land and fuel and.fodder trees on some 81,000 ha of privately owned wastelands which are not regularly cultivated and on field boundaries; (b) construction of soil conservation structures (by the Forest Department) designed to protect existing infrastructure such as roads and villages and including some 1,650 brushwood/stone check dams, 1,300 crate wire dams and 700 simple drop struc- tures. Terraces would be constructed (by the Agriculture Department) on 6,000 ha of arable farming land; (c) livestock development, including a cattle exchange program in which 10,500 buffaloes would be exchanged for local cattle and provision of better livestock services through improvements to 40 existing livestock dispensaries; (d) improvement of agricultural extension services through provision of staff, equipment, housing, and staff training;  -19- (e) horticultural development, including top working with improved material of some 3,900 ha of existing, but wild, orchards and establishment of some 1,500 ha of new fruit orchards; (f) irrigation development (by soil conservation staff), including improvement, construction and lining of some 250 km of small channels and construction of 650 small water tanks; (g) development of research and training activities connected with watershed development; (h) project administration at State, Watershed and Subwatershed level; and (i) establishment of a National Watershed Developmert Policy Commit- tee at national level, assisted by a Watershed Development Council for appraisal of subprojects and monitoring and evalua- tion of project progress. B. Criteria for Preparation of Subwatershed Projects 3.04 Prior to the preparation of detailed plans for development, a baseline survey would be carried out in each microwatershed. This survey would provide details of present land use, land ownership, population, livestock numbers, present and potential for forestry, irrigation, agricultural and horticultural production and extent and nature of soil erosion. Once baseline data is available and acting through Microwatershed Management Committees (para 5.15), staff of the State Watershed Management Cell (para 5.10) would decide on the amounts and phasing of land to be closed to grazing and the type of afforestation that these areas would receive. In addition, details of requirements for soil conservation, cattle exchange, minor irrigation and horticultural and agricultural development would also be considered. Based on the detailed appraisal of Machiad subwatershed development plan and from discussions with state officials certain technical and financial criteria have been established for the subsequent preparation and appraisal of subwatershed projects. These are given below (paras 3.05-3.12). Additional project details are given in paras 3.13-3.48. 3.05 Forest and Pasture Development Technical Criteria (a) Following a baseline survey, an assessment of supply and demand of fuelwood and fodder would be made (3.6 T of dry wood per family and 2.37 T of dry matter per animal per unit year);  -20- (b) Establishment of temporary nurseries rather than permanent ones to ensure a least-cost approach; (c) Plantations established in degraded forests would contain about 1,600 trees per ha and those planted in civil soyum forests would contain about 2,500 trees per ha; and where grass and tree leaf fodder is required this would be produced under a regime of about 200 fodder trees per ha; (d) Fodder and fuelwood development would include (i) phased closure of only 50% of panchayat and government owned land to allow natural grasses to regenerate and to permit planting of fodder trees and leguminous pasture plants, (ii) over sowing grazing lands with self generating annual legumes, and (iii) planting fodder trees, pasture grasses and legumes on bunds, raisers of terraced farm lands and privately owned waste land. Financial Criteria Per hectare average costs would be as shown below: Activity Cost per Hectare (in Rs) Fuelwood Plantation (government) 2,600 Fuelwood Plantation (civil soyam) 3,600 Fodder Plantation (civil soyam) 1,500 Fodder Plantation (private) 110 Soil Conservation 3.06 Engineering works for soil conservation in upper catchment areas would be limited to protection of b:Locks of arable land, forest land and existing infrastructure (e.g. roads, villages, etc.). Technical Criteria (a) In areas where vegetative cover can be established, control measures would consist of planting suitable plant species together with small check-dams constructed from local material; and (b) Engineering structures would be constructed only where (i) gully formation is threatening productive agricultural land, forest land, villages, small towns, and roads, and (ii) larger structures would be constructed only after a detailed survey.  -21- Financial Criteria The average unit cost for structures would be (i) Rs 100 for brushwood and stone check-dams, (ii) Rs 3,000 per Crate Wire Dam, and (iii) Rs 10,000 per stone/cement Drop Structure. Cattle Exchange Program 3.07 One buffalo would be exchanged for two unproductive cattle. The principles involved would be: (a) Exchange program would take place in compact geographic areas; (b) Buffaloes purchased would be test milked according to exist- ing practices; (c) Imposing restrictions on free grazing of remaining animals of beneficiaries through stall-feeding; and (d) Branding of exchanged and remaining animals of beneficiaries. 3.08 The average cost of a buffalo would be about Rs 3,500. Minor Irrigation 3.09 Activities would be confined to improvement and construction of small scale irrigation structures, i.e. channels and water storage tanks. A pre-condition to construction/improvement would be the setting up of water users groups to ensure suitable distribution procedures, and main- tainance of works. 3.10 The average unit cost for irrigation works would be as follows: Construction and Lining of Channels Rs 50,000 per km Storage Tank Rs 7,600 each Overall Cost 3.11 The overall cost (excluding the costs of project staff and their operation) of proposed treatments would be about Rs 1,340 per ha (US$141). 3.12 Assurances were obtained during negotiations that the agreed criteria would form the basis of the preparation, appraisal and sanction of subwatershed projects (para 4.06).  -22- C. Detailed Features Forest and Pasture Development 3.13 As a general rule, about 50% of the panchayat and government owned land now open for unrestricted grazing would be closed over a five-year period. In deciding future treatment of closed areas, first priority would be given to satisfying local needs for fodder and fuel. Adequate amounts of the former are essential to ensure that cattle debarred from existing grazing areas are adequately fed and therefore would not encroach on recently closed and planted areas. When calculating the area required for fodder production, it has been assumed that the annual consumption requirement of an adult animal unit is 2.35 T of dry matter. In addition the calculations assume that during the six dry months of the year, live- stock would obtain 50% of their feed requirements from grass and 50% in the form of leaf fodder. 3.14 Calculation of areas required for fuelwood would be based on the estimated deficit between present wood production and consumption needs 10 years hence. Requirements would assume a need of 3.6 T of dry wood per family per year. In many cases the land available for fuelwood planta- tions would more than satisfy future demands. In such cases, the residual land would be planted as commercial plantations. The area required to satisfy the needs of timber would be based on an annual consumption of 0.1 m3 of sawn timber per family. In most of the microwatersheds concerned this amount of timber is already available from standing plantations. 3.15 Multi-purpose plantations would not be established and fuelwood and fodder plantations would contain different species and spacing between trees depending on intended end use. Those plantations established for fuelwood alone would contain some 2,500 trees per ha. This would ensure high volume production and at the same time early closure of the tree canopy. Grass production in such plantations would, after some five years, decrease due to competition f-rom the trees. Grass and tree-leaf fodder would be produced under a regime of about 200 fodder trees per ha. This spacing would ensure sufficient light for good grass production. 3.16 In steep areas with little vegetative cover, the land would be protected from grazing a year or two before planting Lo ensure better ground cover and thus higher survival rates of tree seedlings as a result of decreased erosion. 3.17 Species to be used for fuelwood and fodder plantation are avail- able and would be selected according to ecological conditions and in consultation with the local population so as to meet their needs. Suitable species are Robinia pseudoacacia, Eucalyptus spp, Alnus nepalen- sis, Acacia spp, Pinus roxburghii, etc. Fodder species include Bauhinia variagata, Robinia pseudoacacia, Grewia oppositifolia, and Leucaena leucocephala. Further details are available in Project File.  -23- 3.18 To reduce transportation costs, temporary tree nurseries would be established in each microwatershed and operated by the Forest Department (FD). Planting material from these nurseries and technical advice would be made available at no cost to farmers for planting on privately owned waste land and on field boundaries. These would be maintained by owners. Such private plantations would, to the extent possible, be planned so that neighboring farmers cooperate in the protection of saplings either through fencing or by a local arrangement to guard them. This practice is already prevalent in the project area. Planting and maintenance of government Forest Reserves and panchayat plantations would be done by FD who would also provide for protection, either by construction of stone or post and wire fencing. Soil Conservation Measures 3.19 Upper Catchment Areas. Work in these areas would iargely be confined to afforestation and improvement of grazing through land closure. Where gully formation is threatening productive agricultural land, vil- lages, small towns, buildings and roads, construction of the appropriate anti-erosion structures would be undertaken. In areas where an effective vegetative cover can be established, minor erosion would be controlled by the planting of suitable plant species together with construction of small check-dams constructed from sticks and other local but readily available material. 3.20 In areas requiring larger protective works detailed surveys would be undertaken to determine the location, size and type of each structure. Such structures would take the form of check dams--both using vegetative material or loose stones; crate wire dams; stone and concrete drop structures; and constructed drainage structures. The purpose, design criteria, average unit cost, and an estimate of numbers required are contained in the Project File. 3.21 Agricultural Land. Data on water run-off and soil loss as a result of outward sloping bench terraces are not available. No attempts have been made to quantify the extent and effects of such erosion and its control under heavy intensity rainfall conditions prevailing in the Himalayas. In the absence of conclusive data, the project would include a research component to assess (a) run-off and soil loss from cultivated terraces; (b) the cost of controlling erosion on terraces by various measures; (c) a study to determine if farmers using their own labor and equipment and adopting new tillage practices could bring about the reshap- ing of their land over a two to three year period so that the terraces become inward sloping; and (d) studies to assess expected increases in farm production as a result of the land shaping proposed in (c) above.  -24- 3.22 Assuming that the research work proposed above would be completed by the end of the third project year, a lump sum provision of Rs 30.00 M (US$3.16 M) for land shaping of about 6,000 ha of terraced land has been included in project costs. This component would be implemented by the Agricultural Department and assurances were obtained at negotiations that land reshaping would not be undertaken until the outcome of the proposed research had been discussed with the Bank and approval of the Bank given to implement the program. Livestock Development. 3.23 Under the project, progressive closure of grazing areas would occur. This would have the two fold effect of forcing livestock owners to pay greater attention to stall-feeding of animals and, due to a general- ized shortage of fodder in the early years following closure, lead to disposal of old and unproductive animals. To encourage stall-feeding, help the overall reduction in stock numbers and demonstrate the economic benefits of keeping productive animials, the project would provide for a limited cattle exchange program--two unproductive cattle for one improved buffalo and would involve a total of 10,500 buffaloes. The buffalo would be test milked before purchase to ensure satisfactory performance. During the first two years the owner would be provided with concentrate feed for the buffalo. The cattle exchanged would be sent to an existing cattle sanctuary located in UP Hills. During negotiation assurances were obtained that only buffaloes would be used for cattle exchange and that as a condition of disbursement against the component the Government of UP would prepare detailed rules governing the cattle exchange program and which would include selection of compact areas for exchange, arrangements for stall-feeding and control of grazing, and identification of exchanged animals. 3.24 Other livestock development activities would include improvements to some 40 existing dispensaries, and provision for natural breeding of buffaloes (Murrah Buffalo Bulls). 3.25 Extension support would be provided by the Veterinary Department to assist farmers in the feeding and management of productive animals, calf rearing and disease control. In addition, extension staff would help introduce rotational and deferred grazing systems on newly closed grazing areas. 3.26 Training. The project would provide funds for training of farmers and staff. Farmer training would cover the benefits of reforestation, soil conservation, grass production and improved animal husbandry methods. Staff training would include in-service training of Forest Rangers, Foresters, and Forest Guards, and provision of special courses for Forest Officers, Rangers, and soil conservation staff on soil and water conserva- tion practices to be adopted in project areas. These special courses  -25- would be held at the Central Soil Conservation Institute, Dehra Dun and in-service training would be arranged in the project area by the Forest and Veterinary Departments. Agricultural Development 3.27 The project area is presently not covered by an effective agricul- tural extension service capable of assisting farmers to adopt better farming practices. Present income levels of farmers are such that they are not in a position to invest in purchased agricultural inputs. Fur- thermore, most farmers do not have access to improved seed. To help remedy this position, the project would: (a) provide for an effective agricultural extension service in watersheds with a single line of command between the Village Extension Worker (VEW) 1/ and the District Agricultural Officer; (b) Engage women "motivators" to reenforce the activities of VEW; (c) reorganize the present activities of VEW in such a manner that they are able to devote more time to agricultural extension work; (d) incorporate regular in-service training and fixed schedules for visits by VEW to farmers fields as an integral part of exten- sion activities; (e) develop a seed improvement program to overcome the problems presently constraining the wider use of improved varieties; and (f) provide additional staff, equipment, operating expenses, train- ing facilities and rural housing for staff. The main emphasis of extension activities would be directed towards increasing productivity of the better arable lands and encouraging farmers to put marginal, poor and steep land to other productive uses such as horticulture or fodder production (tree fodder). 3.28 Extension Methodology. As most agricultural operations, except plowing of land, are carried out by women, the project would direct exten- sion activity mainly towards village women. In each village a woman, who is engaged full time in farming, would be selected as Motivator and would work with the VEW as a part-time extension agent. Each Motivator would be identified and selected for her potential influence in the village and willingness to collaborate in following the agricultural practices recom- mended. 1/ VDO is the term used UP.  -26- 3.29 Motivators would be encouraged to adopt improved practices recom- mended to them, introduce some of them on at least part of their land and let other farmers visit their fields to observe the practices and results. Motivators would also explain to farmers the operations involved in carry- ing out the recommended practice and play an active role in promoting them further. Each Motivator would be paid an amount of Rs 50 per month. 3.30 Each VEW would cover about 270 farm families (about 10 villages) in his area of operation. He would visit each village on a fixed day, once every month in a four week cycle. During the visit he would spend the whole day in the village and with the Motivator, visit farmers- fields, and explain the specific recommendations and practices that would be followed during the next four week pe'riod. In addition, VEW would have informal discussions with groups of farmers. One day in each month would be devoted to in-service training where the VEW would learn the recom- mended practices to be given to farmers during the next four week period and would bring farmers' problems to the attention of trainers. Thus, the VEW would be occupied with extension activities for about 12 days. During the remaining days of the month, VE'W would undertake other development activities, but in the course of carrying out these and should the oppor- tunity arise would, if the VEW happens to visit any of his villages, make a point of contacting the Motivator for a short review of progress and problems. 3.31 VEW would concentrate on the most important crops, focusing on practices which bring the best and quickest economic resuLts. Initially concentration would be on improving cultural practices and which would include better land and seed bed preparation, making of better farm yard manure, use of good seed and seed treatment. In adopting such recommenda- tions, farmers face few risks, litt:Le financial outlay buit would be required to provide more of their own labor. Since most farmers have little cash, this fits their financ:ial status well. 3.32 VEW would be guided and supervised by the three Agricultural Extension Officers (AEO) 1/ at the Block level--one each f-or Agriculture, Plant Protection, and Horticulture. AEOs would arrange their tour programs in such a manner that they are able to spend as mnuch time as possible with VEW during their scheduled field visits. For regular train- ing of extension staff (both VEW and AEO) and for providing overall tech- nical guidance, two Subject Matter Specialists (SMS), one each in Agronomy and Plant Protection, would be provided at Project Headquarters. SMS would spend about one-third of their time in field visits providing tech- nical support and guidance to extension workers, and the remainder in building up their own stock of knowledge through a regular dialogue with 1/ ADO is the term used in UP.  -27- research workers, and in carrying out simple field trials on farmers' fields 3.33 The District Agricultural Officer would have overall respon- sibility for coordinating extension operations. 3.34 Civil Works. The project would provide funds for construction of small input godowns. 3.35 Equipment. The project would provide simple audio-visual equip- ment to support training and field extension operations. Emphasis would be on low cost aids such as flipcharts which extension staff could design themselves and modify to fit local conditions. 3.36 Linkages Between Extension and Research. As neither research nor extension can function without close cooperation it would be necessary to formalize the responsibilities of both organizations. A clear definition of these responsibilities is emerging as part of the National Agricultural Research Project wherein GBPUAT would be made fully responsible for development of suitable new technology while the Department of Agriculture would assume responsibility for transfer of this technology to farmers, including widespread testing of research recommendations on farmers' fields. The commodity research programs of GBPUAT and of ICAR would continue to identify and select improved varieties of important crops and to identify economically appropriate practices. Selected crop varieties and production practices would then be tested at the Zonal Research Sta- tion, Ranichauri. Extension staff would work with research workers to decide on the field trial program and would have responsibility for carry- ing out this program on farmers' fields. The project would provide for the cost of inputs needed for field trials. 3.37 Crop Seed Improvement. Substantial improvements in production are possible through wider use of improved crop varieties. Present seed production and distribution programs are inadequate and farmers plant old seed which has low viability, is full of impurities and of poor genetic potential. Under the project, emphasis would be given to replacing exist- ing seed. A seed exchange and multiplication program would be introduced so that at the end of the project period most of the cultivated area would be planted to improved varieties. 3.38 Each season small packets of certified seed of paddy and wheat, sufficient to plant two nali (1 ha = 50 nali in JJP) of land, would be distributed to selected farmers in each village in exchange for an equiv- alent amount of their own seed. Suitable varieties of paddy are available with the Department of Agriculture (I)OA) and would be a most suitable replacement for local varieties presently cultivated over a large area. Similarly late sown wheat varieties are available. Farmers would then bulk these improved varieties to supply their own needs and those of neighbouring cultivators.  -28- Horticultural Development 3.39 Horticultural development programs would include: (a) improvement of wild fruit groves; (b) development of private and community orchards; and (c) increase in the number of nurseries to supply fruit tree seedlings to the project area. 3.40 Development of Wild Fruit Groves. There are substantial numbers of fruit trees (mainly pear) growing wild on Civil Soyam land and in Reserved Forest areas. In many places such groves are to be found growing in compact blocks. In such areas, which are often located near villages, "top working" would be done through grafting with improved varieties by staff of the Horticultural Department. Wherever necessary gap filling would be carried out to ensure economic stands. Wild fruit species need little care and maintenance as they are well adapted to the ecological conditions, very hardy and drought resistant. About 3,900 ha of compact groves would be treated throughout the project area by the Horticultural Department. According to the prevailing practice, the panchayats would collect and market the produce from such orchards. 3.41 Development of Private Orchards. Privately owned land near vil- lages and which is normally marginally or not suitable for growing cereal crops would be converted into fruit orchards. Such a program is already in operation in the project area and is popular with farmers. About 1,500 ha of marginal land has already been identified for development under the project. 3.42 Development of Nurseries. The project would provide for develop- ment of some 8 additional nurseries throughout the project area to supply free material for top working of wild groves and to provide farmers with fruit tree seedlings. Minor Irrigation 3.43 The area presently under irrigation would be increased by more effectively utilizing existing perennial flows of water from small streams. This would be accomplished by: (a) lining of existing irrigation channels; and (b) construction of irrigation channels and water storage tanks. According to the present po:Licy in UP, minor irrigation works would be executed by soil conservatiLon staff. 3.44 Lining of Existing Channels. Some 100 small irrigation channels (measuring about 250 km overall) would be constructed or lined over the project period. Additional structures at the intake and for safe disposal of excess water would also be provicled.  -29- 3.45 Water Storage Tanks. Where possible, small storage tanks (650) would be constructed to collect overnight water from existing perennial flows to further extend the area irrigated or provide additional water to existing irrigated lands. The structures proposed would include the tanks, water distribution system and a small investment in land develop- ment, usually land levelling. 3.46 Water Management and Maintenance. Water management for equitable and timely distribution would be the responsibility of water user groups consisting of the beneficiaries. These groups would also be made respon- sible for all maintenance of works. Soil Conservation staff would devote part of their time to forming these groups and training farmers in simple maintenance techniques and effective water utilization. Research 3.47 A key issue in a pilot scale lproject of this type is that of clearly identifying which particular components of a watershed improvement program (e.g. soil conservation, restoration of vegetative cover in the hills, construction of check dams, careful road alignment and appropriate culvert design or reduction in livestock numbers and closure of certain areas to cultivation or grazing) have the most effective impact at the lowest possible costs. Secondly, the extent to which improved upland catchment area land use could make a significant impact on downstream flooding and sedimentation when compared with the alternative of dam construction and improved irrigation and drainage in the foothills and plains. This issue is central to all watershed rehabilitation work in the Himalayas and the project would include research and ongoing evaluation components for technical, sociological and economic studies which would examine the evidence already collected on this issue, not only from the project area, but also from other experimental catchment improvement programs in the Himalayas and overseas. 3.48 Project research would support the following activities related to forestry including soil conservation and fodder development, and include: (a) runoff and soil loss studies from different types of ter- races used for cultivation, cost of rehabilitation and benefits as a result of such improvements; (b) monitoring of runoff and sediment yields in paired miniwater- sheds; measurements would be made through automatic recording of rainfall and streamflow; (c) measurements of damage, land depreciation and volume of sediment produced by gu:Lly erosion under varying conditions; (d) species and provenance trials of both trees and grasses;  -30- (e) fertilizer and spacing, trials for various tree species; (f) growth rate studies and yield data of different species of trees and grasses; (g) biological studies to determine changes in the overall Himalayan ecosystem; and (h) remote sensing application to determine changes in land use. Funds would be provided for incremental research staff, a small laboratory, staff quarters, equipment, transport and operational costs to carry out the program. Research trials would cover no more than 30 ha scattered in various project microwatersheds. Assurances were obtained during negotiations that: (a) research work would be carried out in cooperation with institutions acceptable to the Bank; and (b) the outline and work plan for project research actions would be ready by September 30, 1983. IV. COST ESTInATES AND FINANCING A. Cost Estimates 4.01 The costs of the seven-year project would comprise (a) full cost of development of subwatershed projects initiated in the first three project years, (b) partial costs of subwatersheds taken up for development in the fourth and fifth project yea,rs, and (c) cost of the Watershed Development Council (para 5.03). 4.02 Total Project costs are estimated at Rs 656.39 M (US$69.12 M) of which US$0.8 M would involve foreign exchange expenditures. Duties and taxes included in total cost are estimated at US$3.12 M. Details of costs, summarized below, are given in Annex 1, Tables 1 and 2.  -31-- Summary of Project Cost by Components % of Component Local Foreign Total Local Foreign Total Base Cost -- Rs M USS M -- Uttar Pradesh Forestry 220.80 2.00 222.80 23.20 0.20 23.40 52 Soil Conservation 35.50 0.50 36.00 3.70 0.10 3.80 8 Livestock 58.60 - 58.60 6.20 - 6.20 14 Agriculture 7.40 - 7.40 0.80 - 0.80 2 Horticulture 16.70 - 16.70 1.80 - 1.80 4 Minor Irrigation 18.20 - 18.20 1.90 - 1.90 4 Administration 63.00 1.00 64.00 6.60 0.10 6.70 15 Research 1.60 - 1.60 0.20 - 0.20 1 Total Base Cost 421.80 3.50 425.30 44.40 0.40 44.80 100 Physical Contingencies 7.70 0.80 8.50 0.80 0.10 0.90 Price Contingencies 200.00 1.91 201.91 21.06 0.18 21.24 Sub Total 629.50 6.21 635.71 66.26 0.68 66.94 Central Administration 11.93 - 11.93 1.25 - 1.25 Physical Contingencies 1.60 - 1.60 0.17 - 0.17 Price Contingencies 6.06 - 6.06 0.64 - 0.64 Sub Total 19.59 - 19.59 2.06 - 2.06 Total Base Cost 433.73 3.50 437.23 45.65 0.40 46.05 Physical Contingencies 9.30 0.80 10.10 0.97 0.10 1.07 Price Contingencies 206.06 1.91 207.97 21.70 0.18 21.88 FRONT END FEE - 1.09 1.09 - 0.12 0.12 TOTAL PROJECT COSTS 649.09 7.30 656.39 68.32 0.80 69.12  -32- Summary of Project Cost by Expenditure % of Local Foreign Total Local Foreign Total Base Cost ------- Rs M -------- ------- US$ M ------- Staff Costs 42.24 - 42.24 4.45 - 4.45 10 Operating Costs 35.92 1.00 36.92 3.79 0.10 3.89 8 Vehicles and Equipment 6.10 - 6.10 0.64 - 0.64 1 Civil Works 18.20 - 18.20 1.92 - 1.92 4 Forest Plantation 216.35 2.00 218.35 22.79 0.20 22.99 50 Horticulture Plantation 4.23 - 4.23 0.45 - 0.45 1 Cattle Exchange Program 52.12 - 52.12 5.49 - 5.49 12 Soil Conservation 35.57 0.50 36.07 3.70 0.10 3.80 8 Minor Irrigation Works 17.88 - 17.88 1.88 - 1.88 4 Research 1.60 - 1.60 0.17 - 0.17 1 Monitoring and Evaluation 3.52 - 3.52 0.37 - 0.37 1 Total Base Cost 433.73 3.50 437.23 45.65 0.40 46.05 100 Physical Contingencies 9.30 0.80 10.10 0.97 0.1.0 1.07 Price Contingencies 206.06 1.91 207.97 21.70 0.1.8 21.88 FRONT END FEE - 1.09 1.09 - 0.1.2 0.12 TOTAL PROJECT COSTS 649.09 7.30 656.39 68.32 0.80 69.12 4.03 Cost estimates are based on actual costs for similar work carried out in the last few years in the prcject area. Physical contingencies have been added at 10% of costs on soil conservation, mincr irrigation and project administration. Price contingencies (local and foreign) have been calculated in accordance with Bank estimates of future price movements (1983: 8.5%; 1984.: 8%; 1985: 7.5%; 1986: 7% and 1987-89: 6%). B. Proposed Financing 4.04 Finance to cover total project cost of US$66.00 M, including contingencies, but net of duties and taxes, would be provided as follows: IBRD GOUP/GOI GOI TOTAL ------------- US$ M ------------- 46.20 18.80 1.00 66.00 The proposed IBRD loan of US$46.2 M would finance about 70% of total project costs, including all foreign exchange costs (US$0.8 M). The Bank  -33- loan would be made to GOI at standard IBRD interest terms over 20 years including a five-year grace period and with a front end fee of 0.25%. Bank funds would be channeled by GOI through the Ministry of Agriculture (MOA) to the Government of Uttar Pradesh (GOUP) on GOI standard terms and arrangements for financing of state development projects. The balance of financing would come from GOI/GOUP. GOUP has confirmed that the project has been included in its already approved State Development Plan with sufficient funds to cover the cost of the Project. In order to ensure an early start to project actions and speedy and effective implementation thereafter, retroactive financing not exceeding US$300,000 would be provided from April 1, 1983 to the date of credit signing for estab- lishment of forest nurseries and advance work on land preparation and plantation protection necessary for the 1983 planting season. Retroactive financing would also cover additional staff who need to be in position by the start of the planting season and for purchase of a limited amount of equipment and vehicles. 4.05 Since the National Watershed Development Policy Committee (NWDPC, para 5.04) would be required to approve subwatershed projects over the first five project years, the completion of those approved in the fourth and fifth project years would extend beyond the seven-year project period. Consequently, an understanding was reached at negotiations that GOUP would complete the development of all nine subwatershed projects approved and started under the project. Preparation and Approval of Subwatershed Plans 4.06 Prior to project appraisal, one detailed subwatershed plar, was prepared. This was found satisfactory. Subwatersheds to be taken up progressively over the project period would be identified by GOUP and project preparation initiated by the State Watershed Management Cell (para 5.10) following the general criteria set out in paras 3.05-3.12. These plans would be reviewed and approved by the State Level Steering Committee (para 5.09) and would then be submitted to NWDPC. The Watershed Develop- ment Council (IWDC-para 5.04), acting on behalf of NWDPC, would appraise these sub-projects and on the basis of which NWDPC would release funds to the State Government for implementation of development proposals. Sub- watershed projects have been phased (para 3.02) and advance action is necessary to ensure appraisal well ahead of budget preparation in order to ensure satisfactory implementation. In the event that subwatershed projects do not meet both technical and financial criteria, these would be returned by NWDPC to the States for revision. Assurances were obtained during negotiations that all subwatershed projects appraised by WDC prior to the Mid-term Review (para 5.30) would be sent to the Bank for comment and approval before sanction by NWDPC and release of funds. Thereafter copies of appraisal reports would be retained by NWDPC for review by the Bank in the course of project supervision.  -34- C. Procurement 4.07 Direct plantation works (US$23.44 M) including nursery expendi- ture, pre-planting preparation, tree establishment and subsequent main- tenance and top working of orchards would be scattered over a wide area and would be carried out over different periods of time. Most of these activities, including land preparation and planting and maintenance of village woodlots would be done by the implementing departments (as per existing practice) with participation from village panchayats. Similarly soil conservation (US$3.80 M) and minor irrigation (US$1.88 M) works would also be scattered and would be carried out by force account of implement- ing agencies and with local participation. Therefore, contracts following competitive bidding would not be practical. Purchase of buffaloes (US$5.49 M) for the cattle exchange program would be carried out by State Animal Husbandry Department following State Government procedures which are satisfactory. Contracts for civil works (US$1.92 M) would be small and widely dispersed in time and location and, therefore, would not be suitable for international competitive bidding (ICB) and would be let following local bidding procedures (LCB), advertised locally, or by force account and in accordance with established GOUP procedures that are satis- factory to the Bank. Vehicles and equipment (US$0.64 M) would be pur- chased over the first few project years and as adequate maintenance and availability of spare parts would be of paramount importarnce, this would necessitate purchase of locally made vehicles and equipment already in use by government departments. Thus, procurement would be by LCB under exist- ing government procedures which are acceptable to the Bank. 4.08 Assurances were obtained during negotiations that procurement procedures set out above would be followed. D. Disbursements and Audit 4.09 Disbursements under the loan for approved subwatershed projects would be made as follows: (a) Civil works - 70% of expenditures; (b) Vehicles and Equipment - 100% of local expenditures (ex-factory) and 75% of other local expenditure; (c) Direct cost of forestry and horticulture plantations - 80% of expenditure; (d) Soil Conservation - 70% of expenditure; (e) Cattle Exchange Program - 70% of expenditure;  -35- (f) Minor Irrigation Works - 70% of expenditure; (g) Incremental Operating Costs (excluding salaries) - 70% of expenditure; and (h) Research - 100% of expenditure. 4.10 Disbursements to MOA for the Watershed Development Council would be made as follows: (a) Vehicles and Equipment - 100% of local expenditure (ex-factory) and 75% of other local expenditure; (b) Incremental Staff and Operating Costs - 30% of expenditure; and (c) Project Evaluation Costs - 100% of expenditure. Bank disbursements would be made against MOA certified statements of expenditure incurred by participating states and by WDC. Such certified statements would include a statement to the effect that all expenditures incurred were in accordance with the technical and financial criteria for watershed development agreed with the Bank and were in conformity with the agreed amounts specified in the subwatershed plan. Disbursements for all force account work, salaries, local training, and civil works contracts costing less than Rs 300,000 and other procurement involving expenditure of less than Rs 150,000 for vehicles and equipment, for which it would not be practical to submit documents would be retained by MOA and participat- ing States and would be made available for inspection by Bank project review missions. Disbursement againslt all other items would be fully documented. Certificates of expenditures would be audited at least once every year and a report submitted to tLhe Bank promptly thereafter. All disbursement applications would be forwarded and processed through the Department of Economic Affairs (DEA). The project is of seven years dura- tion and estimated disbursements in the first five years would be low (32%) compared to the Bank wide disbursement profile for the same period (66.5%) for Bank assisted agriculturaL projects. Disbursements would, however, pick up in the sixth and seventh project years. Reasons for lower disbursement rates in the first five years are (a) phased coverage of subwatersheds and the need to prepare, appraise and sanction sub- watershed projects in the first five years, and (b) that soil conservation (land levelling) on agricultural lands would be taken up only in the fourth project year. GOUP would be able to substantially speed up project expenditure from the fourth year onward and achieve the proposed disburse- ment targets. Schedules for project implementation and disbursements are presented in Annex 4, Tables 1 and 2.  -36- 4.11 GOT, through MOA, would cause GOUP to maintain separate accounts for each subwatershed project. Separate accounts would also be maintained by WDC. These would be audited annually for each fiscal year, in accord- ance with sound auditing principles consistently applied and audit reports submitted to the Bank as soon as available. In addition GOI would cause, through MOA, GOUP and WDC to submit certified copies of project accounts to the Bank within nine months of the end of the fiscal year, and such reports would show, inter alia, that the funds withdrawn were used for the purpose intended, that goods have been received or work performed, and that payments have been made. All reports would be submitted by MOA to DEA (GOI) for onward transmission to the Bank. 4.12 Assurances were obtained during negotiations that the disbursement and audit procedures set out above (paras 4.09 - 4.11) would be followed. V. ORGANIZATION AND MANAGEMENT Central Organization 5.01 By recent Gazette Notification, GOI has established a National Land Board to approve the national policy for management, conservation and development of land resources. Headed by the Union Minister of Agricul- ture, the Board would comprise the lJnion Ministers for Irrigation, Works and Housing, and Environment, one Minister from each of the States and Union Territories, and the Member Agriculture of the National Planning Commission. An officer of the statuas of Joint Secretary/Watershed Development Commissioner (GOI) (para 5.03) would be the member-secretary of the Board. 5.02 As part of the same Gazette Notification, GOI has also established a National Land Resources Conservation and Development Commission (NLRCDC) to formulate national policy and perspective plans for conservation, management and development of land resources in the country taking into account appropriate land use, soil capability and other relevant factors. NLRCDC is also expected to review the progress of implementation of programs concerned with conservation of soils, integrated land management in catchments of river valleys, ravine reclamation, flood control, social forestry, etc. NLRCDC would be headed by the Member Agriculture in the National Planning Commission and would comprise Secretaries from the Ministries of Agriculture, Irrigation, Rural Development, Works and Hous- ing, and Environment, other Central Government agencies, and experts and representatives from five states. The member-secretary oE the National Land Board (para 5.01) would also be the member-secretary of NLRCDC.  -37- 5.03 NLRCDC would be provided a Secretariat, located within MOA and with responsibility for coordinating the planning and implementation of programs related to land resource management, conservation and develop- ment. The Secretariat would be headed by the member-secretary of NLRCDC and of the status of Joint Secretary/Watershed Development Commissioner GOI (paras 5.01 and 5.02) and who, for administrative purposes would be responsible to the Secretary for Agriculture. The Secretariat would contain a Watershed Development Council (WDC) which would have overall responsibility for execution of the proposed Project and the proposed Rainfed Farming Project (currently under appraisal). 5.04 Overall responsibility for coordination and execution of the project would thus be with MOA. WDC (para 5.03), acting under the direc- tion of the Joint Secretary/Watershed Development Commissioner (para 5.03), would appraise subwatershed projects submitted by the participating States and in accordance with the general criteria set out in paras 3.04-3.12. Appraisal reports would then be submitted to a National Watershed Development Policy Committee (NWDPC), chaired by the Secretary, Ministry of Agriculture (GOI) and comprising the Agricultural Commissioner (GOI), Animal Husbandry Commissioner (GOI), Inspector General of Forests (GOI), a representative of the Mlinistry of Finance (GOI), Chief of the Agriculture Division, Planning Commission, concerned Secretaries from the participating States and the Director., Soil and Water Conservation Institute, Dehra Dun. The Joint Secretary/Watershed Development Commis- sioner would act as member-secretary of NWDPC. NWDPC would have the powers to approve or reject subwatershed projects and would have overall supervisory responsibility for execution of the Project. These latter functions, on a day to day basis, would be carried out by WDC (para 5.06). The proposed national level organization is illustrated in a chart (World Bank 24839). 5.05 While the National Land Board and NLRCDC will have a wide range of responsibilities relating to land resources management, conservation and development and will be concerned with various ministries of GOI, NWDPC, chaired by the Secretary, Ministry of Agriculture (GOI) and WDC will have specific responsibility for Watershed Management in the Himalayas and rainfed farming development which might be located throughout India. Initially, both NWDPC and WDC will only be responsible for the proposed project in UP, but this responsibility will shortly be augmented with the addition of the Rainfed Farming Project (covering four states) and cur- rently under appraisal. Furthermore, it is expected that additional projects would be added as and when the outcome of the presently proposed pilot projects is known. 5.06 WDC would comprise specialists in Forestry, Soil Conservation, Agriculture, Economics and Sociology, and include research staff to coor- dinate the increased needs for applied and adaptive research. The regular staff would be supplemented by hiring of local consultants for appraisal  -38- and supervision of subprojects. WDC would be provided with administrative support staff and a monitoring unit. Details of staffing and cost of WDC are given at Annex 1, page 2. WDC would have the following functions: (a) Appraisal of the technical and economic feasibility of sub- watershed plans that would be progressively prepared by GOUP and submission of these plans for approval of NWDPC; (b) Release of funds to GOUP for project implementation; (c) Assist with and monitor implementation of subwatershed projects by: (i) reviewing periodic progress reports on project achieve- ment and, subsequently, project completion reports; (ii) reviewing six monthly State reports on physical implementation in order to prepare a summary report for the Bank; (iii) reviewing statements of expenditure to ensure authen- ticity, keeping project accounts, claiming reimbursement from the Bank, processing budget requests and reviewing annual statements of audited accounts; (iv) visiting subwatershed projects on a regular basis, reporting on progress and problems in implementation and providing advice on suitable remedial measures; and (v) organizing training programs for State staff at National Institutes; and (e) Arranging for the interim evaluation of project actions so as to enable appropriate feedback to project management at all levels. 5.07 As a condition of invitation to negotiations, GOI had issued orders setting up National Watershed Development Policy Committee and Watershed Development Council. Assurances were obtained during nego- tiations that: (a) GOI would create the required staff positions for WDC; (b) Appoint the Joint Secretary/Watershed Development Commis- sioner by September 30, 1983; and  -39- (c) GOI would ensure that a Project Completion Report, would be prepared and submitted to the Bank within six months of the Project Closing Date. 5.08 An understanding was reached during negotiations that: (a) Representatives of WDC would make on-site supervision visits, at least twice na each fiscal year, to each subwatershed project under implementation and communicate to the Bank, in a form to be agreed, the results of such visits; and (b) The Joint Secretary/Watetshed Development Conmissioner, heading the Secretariat of NLRCDC, would by 31st of March each year furnish the Bank with the annual wo^k program of WDC. State Level Organization 5.09 State Level Steering Committee (SC). In Uttar Pradesh, a SC would be established and chaired by the Chief Secretary or delegated by him to the Secretary of the Ministry substantially responsible for project implementation (Secretary, Hill Area Development Department). The SC would comprise Secretaries of Finance and other relevant ministries, heads of participating Departments, Deputy Commissioners from concerned dis- tricts and Vice Chancellor of GBPUAT. SC would be responsible for formal approval of subwatershed projects before presentation to GOI, ensuring a coordinated approach to project implementation and adequate staff deployment, reviewing progress of implementation and resolving problems of execution. A Project Coordinator (PC), of appropriate status (Addl. Chief Conservator of Forests) and working under the concerned ministry the State, would be responsible for coord:inating and implementing all project actions and also act as Member/Secretary of SC. 5.10 The PC would be assisted by a State Watershed Management Cell (SWMC) and which would comprise specialists in forestry, soil conserva- tion, agriculture, livestock development, forest economics, sociology and include relevant support staff. The Cell would have the following respon- sibilities: (a) Preparation of subwatershed/microwatershed development proposals with assistance from field staff; (b) Release of funds for project implementation; (c) Assist and monitor project implementation by:  --40- (i) visiting project areas on a regular basis, reporting on progress and problems in implementation and suggesting remedial measures; (ii) processing annual development plans and work plans for microwatersheds for approval of SC; (iii) reviewing seasonal technical reports on progress of different project components; (iv) reviewing and comp:iling six monthly progress reports on physical implementation for presentation to SC and GOI; and (v) reviewing statements of expenditure, keeping accounts, forwarding reimbursement proposals to GOI, processing budget requests and reviewing annual statements of audited accounts. (d) Assessing training requirements for staff locally and at National Institutions; and (e) Coordinating Project research (studies) activities. 5.11 Prior to negotiations, the Government of Uttar Pradesh had (a) issued formal orders setting up SC, (b) created the necessary staff posi- tions for SWMC, and (c) made adequate budget provision for the above. As a condition of invitation to negotiations, the Government of Uttar Pradesh had appointed a Project Coordinator. Project Implementation 5.12 A new W4atershed Development Department under the Secretary, Hill Area Development Department has been formed and is responsible for activities of all Departments working in Hill districts of UP. 5.13 District Level. A district would cover a number of subwatershed areas. The heads of line departments located at the district level would coordinate subwatershed development activities concerning their depart- ments. In addition, it would be necessary to ensure concerted efforts to identify and resolve problems of implementation in each subwatershed. Inter-departmental coordination at the district level would be ensured through a District Coordination Committee chaired by the District Commis- sioner and consisting of district heads of concerned departments and elected representatives of the District Panchayat. The Committee would coordinate project work with other ongoing development activities in the district.  -41-- 5.14 Subwatershed Level (SW). Each SW would consists of 3-20 microwatersheds (10,000-60,000 ha). A Subwatershed Management Unit would be set up in each SW and would comprise a Project Manager with technical staff from concerned departments, and assisted by clerical and accounting staff. This Unit would be responsible for project implementation - preparation of annual plans of action and detailed work plans, executing these plans and assisting in preparation of new projects for further subwatershed development. 5.15 Microwatershed Level. Success of the project would depend on the extent of involvement of local people in planning and implementation of various project activities. To ensure this, a Management Committee would be set up in each microwatershed chaired by the Project Manager (SW) and comprising Panchayat Chairmen, the Block Development Officer, local revenue staff and concerned project staff. The Committee would agree on the annual plan of action and detailed work plan for each microwatershed, help project staff obtain people's participation in different activities especially closure of common grazing areas, establishment of plantations through communal effort and support for farm forestry programs, and execu- tion of minor irrigation schemes. The Committee would also organize action groups at the village level to assist in project execution. The annual work plan would include (a) identification of areas of project action, (b) a calendar of operations, and (c) nature and extent of local people's participation. 5.16 The proposed state level organization is illustrated in a chart (World Bank 24584). 5.17 Prior to negotiations, GOUP had (a) issued formal orders setting up District Coordination Committees, (b) created the necessary staff posi- tions for the Subwatershed Management Unit, and (c) made adequate budget provision for the above to cover the first project year. Assurances were obtained during negotiations that Microwatershed Management Committees (one for each microwatershed) would be set up. Peoples Particpation 5.18 Each microwatershed usually covers more than one village panchayat. As the project affects all the residents within the microwatershed, agreement to resolve common issues would have to be arrived at by more than one panchayat. This would be ensured through the Microwatershed Management Committee (para 5.15). To incorporate peoples' participation in planning, determining priorities, implementation of different activities and in protection/maintenance of structures, the Management Committee would maintain constant contact with the residents of the microwatershed. The sequence of actions involved would be:  -42- (a) discussion of proposed project activities with the residents in each village, explaining reasons for different components and the purpose of each. The formation of village action groups would then follow; (b) explaining the role of people in making a success of each project component and deciding on priorities; (c) preparation of an action plan based on agreed priorities; (d) discussion of the action plan in each village and obtaining agreement on (i) locations where project actions are to be carried out, (ii) extent of peoples participation required in execution, and (iii) people&s responsibility for protection of project works; and (e) provide guidance to establish water users groups for equi- table distribution of water and maintenance of irrigation structures. 5.19 The main stages of the Project Cycle and responsibilities of different institutions are given in Annex 5. Monitoring and Evaluation 5.20 An essential feature of the project would be the monitoring and evaluation of project progress and its impact. The system would generate data with which to measure output, effects and impact of project actions thus providing management guidance to those responsible for project implementation and permit in-depth studies enabling a realistic assessment of longer term effects brought about by the project. 5.21 Project Monitoring. Monitoring would ensure continuous gathering of information on project inputs and activities, and on conditions and complementary activities that are critical to the success of the project. It would utilize basic information prepared during project design/ preparation phase and data generated by the baseline survey (para 3.04) and continue throughout the project-s lifetime comparing the data col- lected against the original objectives and standards. Monitoring would thus help in alerting project management and policy makers to implementa- tion problems requiring corrective action and also provide information for project evaluation. 5.22 The project would be monitored at three levels. Firstly at the subwatershed, then at State and GOI levels. Prior to preparation of an action plan for development of individual microwatersheds, a baseline survey would be prepared by the State Watershed Management Cell (para 3.04). Details of survey design, questionnaires to be used, sample  -43- methodology and reporting format would be mutually agreed upon between GOI/GOUP. Equally, it would be necessary for the Project Manager to continue to collect data on a continuous basis on various project inputs and activities, and physical and financial achievements. 5.23 Monitoring at the State level would be the responsibility of the Watershed Management Cell and would include: (a) a comparative examination of watershed performance withiin the State; (b) recommendation on areas that should be intensively monitored and proposed changes in the monitor- ing system; (c) provide assistance to Project Managers in identifying and improving weak areas; and (d) collation of monitoring reports and forward- ing the collated report with comments to the State Steering Committee and Watershed Development Council (GOI). 5.24 At GOI level, project monitoring would be the function of the Watershed Development Council, especially the Economist. This Council would perform, with appropriate modification, the same functions as those of the State Cell except, that it would be responsible for coordination of reports from all project States and forwarding of these to the Bank at prescribed intervals. An understanding was reached at negotiations that GOI would submit to the Bank six monthly progress reports, each June and December, giving details of staff position, a summary of activities under- taken in the past six months, and physical and financial targets achieved and problems encountered during project implementation. 5.25 Project Evaluation. Evaluation would ensure a continual analysis, during project implementation, of project outputs, effects and overall developmental impact. This would provide project management and policy makers with analytical support that may be necessary to enable them to assess and, if required, adjust policies, objectives and institutional arrangements and resources affecting project implementation. Evaluation studies would also provide feed-back for preparation of new projects. 5.26 Two categories of evaluation would be undertaken during the project period; (a) ongoing evaluation, and (b) a mid-term review. 5.27 Ongoing evaluation would cover two main aspects: technical and behavioral evaluation. Technical evaluation would involve an examination of the success, or failure and of the modifications necessary to the technical packages applied in project implementation. Behavioral evalua- tion would be primarily concerned with people's response to and percep- tions of project input delivery systems and institutions. The data so collected would provide an additional dimension to the information gathered under the monitoring system. The areas covered by such evalua- tion would include: success of peoples participation efforts in planning and implementation, reasons for adoption or non adoption of forestry and pasture management practices, cattle exchange program and stall-feeding, and access to various inputs.  -44- 5.28 Both technical and behavioral evaluation would lead to the need for special studies which would be short term in nature (covering a period of not more than three months) on subjects directly related to project design and performance. 5.29 An approved agency would, under a long term contract, be respon- sible for project evaluation under the overall direction of WDC (GOI), especially the Sociologist. The project would provide separate funds for this purpose. All proposed ongoing evaluation and special studies would require the approval of WDC. Assurances were obtained during negotiations that GOI and GOUP would (a) identif'y, by September 30, 1983, and to the Bank's satisfaction, institutions competent to undertake ongoing evalua- tion and special studies, and (b) forward to the Bank, for review, relevant evaluation reports and special studies. 5.30 Mid-Term Review. Given the innovative nature of the project, it was agreed during negotiations, that a mid-term review of the project would be undertaken by a joint teamL from GOI/GOUP/Bank and within the first quarter after the completion of the third project year. This exer- cise would be in the nature of a re-appraisal wherein the project con- cepts, design, allocation of funds, staffing patterns, and components would be re-assessed in the light of performance. This could result in substantial modifications to the project and approach originally approved. VI. PRODUCTION, MARKETING, FINANCIAL RESULTS AND COST RECOVERY Yields and Production 6.01 The project would, in addition to benefits derived from erosion and flood control, increase production of fuelwood, timber, fodder, fruit and agricultural products from the watersheds developed. Fuelwood has been assumed to be harvested in years 10 and 20 after planting, yielding 23, 48, 18, 5 tons per ha in Forest Reserves, Private Forests, Fodder Plantations and Farm Forestry respectively. Timber would only be har- vested after the end of the 20-year period assumed in the calculations and is therefore not included in the benefits. Grass production for cattle feed is based on yields gradually increasing from 0.5 to 3 tons per ha in fuelwood plantations years 1-8 after plantation establishment and in fodder plantations yields will reach 4 tons per ha in the third year after planting. Leaf fodder yields have 'been assumed gradually to increase from 0.1 to 0.5 tons/ha years 3 to 10 after planting in fuelwood plantations and from 1 to 5 tons per ha over the same period in fodder plantations (Annex 3, Table 9). In agriculture, in addition to yield increases due to irrigation and extension services provided under the project, additional production would also result from an increased cropping intensity and a shift from local to improved varieties. Yield assumptions are given in Annex 3, Table 3 and summarized below:  -45- TABLE 6.1: AGRICULTURE YIELD ASSUMPTIONS (quintals per ha) Increment W due Project P W Irrig Unirrig Irrig Unirrig Paddy Local 9 9 10 10 1 1 HYV 12 12 20 14 8 2 Wheat Local 8 8 10 10 2 2 HYV Unirrigated 11 11 - 12 - 1 Irrigated 12 13 20 - 7 Barley 12 12 12 12 - - Millet (Ragi) Local 9 9 9 9 - Improved - 12 12 12 - - Pulses 8 8 10 8 2 - Soyabean - - 5 5 5 - Oilseed 6 6 9 6 3 - Fruit - - 70 - 70 - P = present W = future without project W = future with project 6.02 On the assumptions given in para 6.01 above, during the 20-year lifetime of the project, an additional 3.2 million tons of fuelwood, 3.2 million tons of grass, 1.5 million tons of tree fodder, 0.3 million tons of mixed fruit, and cash and food crops of a net incremental value of some US$ 360 million would be produced. Marketing of Produce 6.03 Most of the incremental agricultural production resulting from the project would be consumed by the local population and would, therefore, not create any marketing problem. Fuelwood balance studies, in the sub- watershed where detailed planning is completed, show that the fuelwood produced would satisfy local demand. Marginal amounts available for sale  -46- to neighboring areas would be sold through local traders. The estimated 5% increase in milk production would be consumed in the project area. Increased horticultural production would be marketed through existing fruit marketing organizations. Farm Incomes 6.04 The impact of the proposed project on farm incomes was analyzed on the basis of one ha farm models (Annex 3, Tables 1-4), The results, summarized in Table 6.2 below, indicate that farmers' net cash incomes would increase by almost 60% when provided with irrigation and by about 30% without irrigation. From this analysis, it appears that the returns to farmers are substantial enough to ensure adequate participation. TABLE 6.2: PROJECT IMPACT ON FARM INCOMES (-0C0 Rs/ha) Incremental With Project due to Project P W Irrig Unirrig Irrig Unirrig Uttar Pradesh Gross Value of Production 1.9 2.0 3.2 2.6 1.2 0.6 Cash Costs 0.2 0.3 0.5 0.4 0.2 0.1 Net Cash Income 1.7 1.7 2.7 2.2 1.0 0.5 P = Present W Future without project 6.05 Cost Recovery. In UP, marginal farmers, small farmers, farmers belonging to Scheduled Castes and Tribes and others identified under the Integrated Rural Development Program are entitled to subsidies, ranging from 33-50%, for different development activities. The project would not introduce any new subsidy except for the provision of buffaloes in exchange for unproductive local cows. This component is seen as an essen- tial part in the process of changing the livestock husban,dry pattern from free grazing to stall-feeding. Suclh an exchange program would not be possible without the subsidy. 6.06 Given that hill areas are generally food deficient it has been State policy to fully subsidize minor irrigation development. As such, no cost recovery is proposed. Maintenance of irrigation works would, however, be done by beneficiaries. Horticulture loans are provided by credit institutions as government Taccavi loan (from budgetary sources) and would be recovered according to existing procedures. Loans for soil conservation (land levelling) are provided by government budgetary sources and would also be recovered under existing procedures.  -47- VII. BENEFITS, JUSTIFICATION AND RISKS A. Benefits 7.01 Incremental Production. The direct quantifiable benefits from the project would be increases in production of fuelwood, timber, fodder, fruit, and agricultural products amounting to Rs 1.4 B over the 20-year life of the project. These increases would directly benefit local popula- tions living in upper catchment areas. 7.02 Employment Creation. Project works would generate a total of 46 M mandays employment over its 20-year lifetime. On the basis of 225 work- days a year, this would be equivalent to providing 10,000 workers with full time jobs over the same period, each receiving an annual income of over Rs 1,800 (US$190). This employment would mainly benefit the poor and unemployed living in the project area. An estimated 16 M mandays would be saved in collecting fuelwood due to the project plantations. This labor would be more productively employed in agriculture which through the increased activities is estimated to require an additional I M mandays annually at full project developmenit or a total of about 16 M mandays over the 20-year project life. 7.03 Environmental Effect. The direct production effects generated by project actions provide sufficient economic justification for the project. The project is a pilot scheme leading to a long term program for control of erosion within upper watersheds of the Himalayas, aimed at reducing run-off and decreasing the silt load of rivers. Little data is, however, at present available to evaluate the economic effects of controlling erosion and flooding. The project would, nevertheless, contribute to improving the data base for the evaluation of such effects. 7.04 In support of the nature of benefits to be derived from erosion and flood control, experimental results elsewhere in India have shown that soil conservation measures similar to those proposed under the project reduce soil losses from 30-40 tons/ha/year to 1-3 tons/ha/year. A reduced soil loss of only 10 tons/ha/year would, over the project area, leads to annual reductions of 3.4 million tons of silt in rivers leaving the project area. Reductions in siltation would lead to better preservation of fertile top soils on both agricultural and forest lands, prolonged life of downstream dams, reduced flooding as a result of smaller flows of water and absence of siltation causing reductions in size of streams and river beds.  -48- B. Economic Analysis 7.05 Economic Rate of Return. The overall economic rate of return of the project is 23%, based on the direct measurable production benefits and total project costs. The rates of return of the project