LOAN: NEP 33209-01 | Community-Managed Irrigated Agriculture Sector Project

Nepal

LOAN: NEP 33209-01

Community-Managed Irrigated Agriculture Sector Project

•	Missions
•	Loan Approval Date
•	Estimated Completion Date
•	Cost and Financing Plan
•	Description
•	Development Objectives
•	Thematic Classification
•	Target Classification
•	Rationale
•	Objectives and Scope
•	Policy Dialogue
•	Environment Category
•	Env't Impact and Mitigation
•	Social Aspects and Remedies
•	Benefits and Beneficiaries
•	Public Consultation
•	Beneficiary Participation in Formulation
•	Beneficiary Participation in Implementation
•	Consulting Services
•	Procurement
•	Contacts
•	Remarks

Location
Rural areas of Central and Eastern Development regions (Bagmati, Narayani, Janakpur, Sagarmatha, Koshi and Mechi)

Sector
Agriculture & Natural Resources /Irrigation & Drainage

Initial Listing
11 June 2001

Most Recent Update
29 November 2006

Executing Agency(ies)

Department of Irrigation, Jawalakhel

Missions

Loan Approval Date

17 November 2004

Estimated Completion Date

September 2012

Cost and Financing Plan (in US$ million)

Source	Foreign Cost	Local Cost	Total
Bank	8.40	11.60	20.00
Cofinancing	4.10	2.90	7.00
Borrower	0.30	9.10	9.40
Beneficiaries	0.00	2.20	2.20
Others	0.00	0.00	0.00
Project/Program Cost	12.80	25.80	38.60

OCR ADF Total

Loan Amount 0.00 20.00 20.00

Description

[The Project] The Project will enhance the livelihood of rural smallholders by improving the performance of the existing farmer-managed irrigation systems (FMIS) suffering low productivity and poverty in the Central and Eastern Development regions of Nepal, while establishing sound service delivery mechanisms and community institutions to support this end. The improved FMIS will intensify agricultural production in 25,500 hectares (ha) of existing irrigated area, bring an additional 8,500 ha under irrigation through improved water distribution, and thus benefit over 270,000 poor men and women. Implementation will take a participatory and process approach, following the initiatives of local water user associations (WUAs) with a proven track record of having constructed FMIS and doing self-sustained operation and maintenance (O&M). The process will be managed based on the performance of the concerned organizations in achieving the specified development targets. Institutional development support will aim at the effective operation of the improved participatory irrigation service delivery mechanisms to support inclusive development with due empowerment and livelihood enhancement of the poor including ethnic minorities and occupational castes (dalit), and sufficient integration with agriculture marketing opportunities and support services, while promoting sector-wide policy and institutional reforms toward sound governance. [Rationale] In Nepal, irrigation is an essential input to improve agriculture productivity, which remains the lowest among the neighboring countries. The 20-year Agriculture Perspective Plan (APP) that was launched in 1995 with Asian Development Bank (ADB) assistance has prioritized irrigation as the foundation of a modern production system, with emphasis on improving the performance of traditional surface water FMIS, which account for 55% of the total irrigated area and 23% of net cultivated area of 2.6 million ha. Many FMIS suffer from low productivity that is barely above subsistence level, due to unreliable diversion and high distribution loss and maintenance costs caused by fragile and rudimentary intake and distribution structures. FMIS offer good scope for enhancing productivity, expanding the command area at relatively low cost, and short lead time, and building on the existing WUA capacities through a participatory approach. ADB has assisted in improving FMIS since 1987 including the recently completed Second Irrigation Sector Project. While project performance has been positive, with many FMIS yielding reasonable economic benefits to smallholders, there is still scope for improvement in delivering maximum benefits particularly to the poor in the community, and enhancing WUA capacity to become more active agents that can drive dynamic agriculture development within the locality. There is need to further improve the project design by ensuring sufficient attention, time, and resources for nonstructural activities such as empowering WUAs and supporting agriculture and livelihood enhancement, and sound governance of public sector institutions for monitoring and quality control. Essential changes in the management system and behavior of public institutions to become genuine service-oriented facilitators are also called for. Improving FMIS productivity is still a priority in the agriculture sector, with 0.3 million ha currently requiring urgent rehabilitation. However, a new approach is needed following the Government's 2002 Poverty Reduction Strategy Paper (PRSP) that committed itself to (i) reorientation of APP to strengthen its integrated and coordinated market-oriented approach, its pro-poor focus with targeting, and support for decentralization; and (ii) reforms of sector institutions for sound governance. There is a pressing need to operate the improved service delivery mechanisms for FMIS renovation that fully address these new sector needs and the lessons of previous assistance, while pursuing policy and institutional reforms that provide a sound basis for their operation. The Project is designed to address these challenges and is needed to renovate the remaining subsistence FMIS to attain their maximum sustainable benefits, particularly those for the poor and the disadvantaged, with sound sector governance. The sector loan modality is adopted in view of the Government's sound policy and plan framework in the sector such as APP, PRSP, and the 2003 Irrigation Policy; and its progressively improving capacity to support FMIS renovation, building on the existing WUAs.

Thematic Classification: Economic Growth / Good Governance

Target Classification: General Intervention

Rationale

In Nepal, irrigation is an essential input to improve agriculture productivity, which remains the lowest among the neighboring countries. The 20-year Agriculture Perspective Plan (APP) that was launched in 1995 with Asian Development Bank (ADB) assistance has prioritized irrigation as the foundation of a modern production system, with emphasis on improving the performance of traditional surface water FMIS, which account for 55% of the total irrigated area and 23% of net cultivated area of 2.6 million ha. Many FMIS suffer from low productivity that is barely above subsistence level, due to unreliable diversion and high distribution loss and maintenance costs caused by fragile and rudimentary intake and distribution structures. FMIS offer good scope for enhancing productivity, expanding the command area at relatively low cost, and short lead time, and building on the existing WUA capacities through a participatory approach. ADB has assisted in improving FMIS since 1987 including the recently completed Second Irrigation Sector Project. While project performance has been positive, with many FMIS yielding reasonable economic benefits to smallholders, there is still scope for improvement in delivering maximum benefits particularly to the poor in the community, and enhancing WUA capacity to become more active agents that can drive dynamic agriculture development within the locality. There is need to further improve the project design by ensuring sufficient attention, time, and resources for nonstructural activities such as empowering WUAs and supporting agriculture and livelihood enhancement, and sound governance of public sector institutions for monitoring and quality control. Essential changes in the management system and behavior of public institutions to become genuine service-oriented facilitators are also called for. Improving FMIS productivity is still a priority in the agriculture sector, with 0.3 million ha currently requiring urgent rehabilitation. However, a new approach is needed following the Government's 2002 Poverty Reduction Strategy Paper (PRSP) that committed itself to (i) reorientation of APP to strengthen its integrated and coordinated market-oriented approach, its pro-poor focus with targeting, and support for decentralization; and (ii) reforms of sector institutions for sound governance. There is a pressing need to operate the improved service delivery mechanisms for FMIS renovation that fully address these new sector needs and the lessons of previous assistance, while pursuing policy and institutional reforms that provide a sound basis for their operation. The Project is designed to address these challenges and is needed to renovate the remaining subsistence FMIS to attain their maximum sustainable benefits, particularly those for the poor and the disadvantaged, with sound sector governance. The sector loan modality is adopted in view of the Government's sound policy and plan framework in the sector such as APP, PRSP, and the 2003 Irrigation Policy; and its progressively improving capacity to support FMIS renovation, building on the existing WUAs.

Objectives and Scope

The Project aims to improve the agriculture productivity and sustainability of existing small and medium farmer-managed irrigation systems suffering from low productivity and poverty in Central and Eastern Development Regions thereby enhancing the livelihoods of the poor. This is achieved through (i) providing improved means for WUA empowerment, irrigation infrastructure, agriculture extension, and targeted livelihood enhancement to build the human capital of the poor; and (ii) strengthening policies, plans institutions and their operations for more responsive service delivery and sustainable impacts.

Policy Dialogue

The Project was prepared to address the challenges with necessary policy dialogues. Specifically, the project preparatory technical assistance contributed to the drafting of the new irrigation policy, which effectively incorporated the emerging principles and lessons including river basin-based planning, WUA empowerment with pro-poor and gender focus, and DDC capacity development to support devolution, to be institutionalized under the Project. Second, with an overall vision to become a genuine service-oriented facilitator to support beneficiaries, DOI agreed to proceed with due institutional reforms, with specific agendas including (i) setting out an institutional development strategy, (ii) preparing and carrying out action plans for improving human and financial resources management, (iii) strengthening internal quality control, and (iv) defining and taking steps to devolve FMIS operations following the LSGA. Third, as a concrete step to improve quality control and governance, the Government decided to establish a technical audit division in the National Vigilance Center (NVC) under the Office of the Prime Minister and Council of Ministers, and to start operating technical auditing in the irrigation and rural infrastructure sectors, with ADB assistance. Fourth, the Government agreed to consult with ADB on continued reforms in the agriculture and water resources sector, including the preparation of the IWRM policy, its institutional framework, and the NWP. The Project has also strengthened mechanisms for more effective FMIS renovation by incorporating the preceding lessons for enhancing agriculture growth and poverty reduction impacts and WUA empowerment, through strategic site selection that prioritizes poverty pockets and confirms marketing outlets, sufficient resources for nonengineering activities with clear output targets,outsourcing to private providers, and improved internal and external quality control.

Environment Category: B

Environment Impact and Mitigation

Social Aspects and Remedies

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Benefits and Beneficiaries

At full development, the Project will improve the livelihood of over 270,000 poor men and women by renovating about 210 FMIS covering 34,000 ha. The main benefits are increased agriculture production brought about by more reliable irrigation, increased labor opportunities, improved nutritional status particularly among smallholders suffering from chronic food deficit, and increased incomes and reduced poverty in subproject areas. The 210 WUAs will have enhanced capacity to sustain improved irrigation water management and better cropping practices. The economic internal rate of return of three sample subprojects is 23-25%, due largely to incremental production of food grains followed by commercial crops to tap the available marketing opportunities and build on the existing cropping pattern. At the national and local levels, the Project will improve service delivery systems to attain maximum benefits and sustainability through irrigation interventions with sound quality control, along with improved sector governance through sector-wide policy and institutional reforms. Surveys conducted during project preparation estimated that 54-62% of beneficiary households in the three core subproject areas fall below the poverty line, which is higher than the national average of 39%. The estimated poverty impact ratio for these subprojects is 39%-51%. The social development strategy will focus on prioritizing subproject selection in areas of high poverty incidence with an ethnic minority population, enhancing WUA capacity to support a socially inclusive approach of participatory development, empowering the poor and the disadvantaged such as dalit through targeted support, enhancing the role of women in project institutions and programs, and policy and institutional reforms to improve governance while equalizing opportunities and access to irrigation among the poor men and women, and disadvantaged people in the tail end.

Public Consultation

Arranged by

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Groups Consulted : tbd

Beneficiary Participation in Formulation

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Beneficiary Participation in Implementation

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Consulting Services

A total of 58 person-months of international and 530 person-months of domestic consultants are anticipated through an international consulting firm in association with domestic consultants following ADB's Guidelines on the Use of Consultants. The consultants will assist (i) substantial improvement of subproject development cycle to ensure demand-driven inclusive approach involving disadvantaged groups; (ii) capacity building of Project institutions including line departments, local governance institutions, water use associations, NGOs, and the private sector; (iii) project management through stringent monitoring and quality control of institutional processes and technical works of irrigation infrastructure, agriculture, and livelihood improvement of the poor; and (iv) improvement of sector-wide policy and institutional framework. The consultants should have sufficient experience in promoting policy and institutional reforms while improving the irrigation sector operations through effective project management demonstrated with proven results in similar circumstances. Fluency in local language and country experience are also essential for team leader and key international consultants including participatory development advisor.

Procurement

All ADB-financed procurement will follow ADB's Guidelines for Procurement. Civil works (estimated at $25 million in total) will be undertaken following LCB in each of some 200 subprojects. An estimated $1 million of vehicles, equipment, and supply is also anticipated.

Contacts

Bank

Kenichi Yokoyama
Principal Water Resources Management Specialist
SANS
Tel. No.: (632) 632-6937
E-mail: kyokoyama@adb.org

Executing Agency
Department of Irrigation, Jawalakhel

Contact Person : Mr. J. Ghimire, Director General
Tel. No. : 977-1-553-7169
Fax. No. : 977-1-553-7169
E-mail : sisp@ntc.net.nep

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Remarks

Projects