Nepal : Mechanized Irrigation Innovation Project

Project Name

Mechanized Irrigation Innovation Project

Project Number

52130-001

Country / Economy

• Nepal

Project Status

Proposed

Project Type / Modality of Assistance

• Grant
• Loan
• Technical Assistance

Source of Funding / Amount

Grant: Mechanized Irrigation Innovation Project

Source	Amount
Asian Development Fund	US$ 15.00 million

Loan: Mechanized Irrigation Innovation Project

Source	Amount
Concessional ordinary capital resources lending	US$ 110.00 million

TA: Mechanized Irrigation Innovation Project

Source	Amount
Technical Assistance Special Fund	US$ 750,000.00

Operational Priorities

• OP1: Addressing remaining poverty and reducing inequalities
• OP2: Accelerating progress in gender equality
• OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• OP5: Promoting rural development and food security
• OP6: Strengthening governance and institutional capacity

Sector / Subsector

• Agriculture, natural resources and rural development / Agricultural production - Irrigation

• Energy / Electricity transmission and distribution

Gender

Effective gender mainstreaming

Description

The project will provide long-term sustainable solutions to increase year-round access to irrigation water in two districts of Madhesh Province in the Terai by constructing a large-scale network of DTWs with dedicated electricity distribution networks. The MOM of the tube well irrigation schemes will be contracted to a third-party operator, using a DBO modality. On-demand irrigation services will be provided to the farmers by the MOM operator against prepaid volumetric payment systems. The project will also provide specific institutional and capacity development support for the water users to develop self-sustained and long-term crop intensification and diversification, and market support services. The project area was selected to serve farmers who do not currently receive surface irrigation water.

The project is aligned with the following impact: a self-reliant, sustainable, competitive, and inclusive agricultural sector attained; and livelihoods, food and nutrition security improved (footnote 10). The project will have the following outcome: agricultural productivity in the project area increased. Improved climate resilience is expected to be achieved by developing high performance irrigation systems in terms of reliability, efficiency, equity, and sustainability. This will contribute to increased food security and mitigate climate shocks on seasonal harvests and food prices. The development of groundwater piped field distribution systems will minimize water conveyance and field application losses. It will contribute to mitigate future climate change impact on irrigation water demand and supply.

Project Rationale and Linkage to Country/Regional Strategy

Relevance of agriculture to Nepal's economy. Agriculture accounted for about 26.2% of Nepal's gross domestic product (GDP) and 62% of households were engaged in agriculture in 2022. Nepal's agriculture sector growth has stagnated at an average annual rate of 3% since the 2010s. This is mainly due to limited access to reliable irrigation water. Climate change is a high risk to Nepal's water and food security. It is projected to reduce the GDP by up to 4%, unless about $2.4 billion in climate adaptation are invested by 2030. Low agricultural productivity, exacerbated by climate change, directly contributes to consistent poverty incidence throughout rural Nepal. In 2022, a quarter of the poor resided in Madhesh Province. Rural Madhesh Province had the lowest average annual nominal per capita expenditure of NRs 71,828 compared to the national average of NRs 130,853, and highest share of food expenditure (67%).

Climate change impacts on irrigation. Nepal's total irrigable area is about 2.5 million ha of which only 1.4 million ha is irrigated. Most irrigation systems are in the Terai plains (about 0.9 million ha) and operate only to irrigate during the monsoon season for paddy rice cultivation. Less than 40% of irrigation systems provide perennial irrigation services. Climate change is expected to reduce rainfall reliability and increase irrigation demand. Droughts have been the most severe hazard and have contributed to 39% of agriculture-related losses caused by weather-related events between 1971 and 2007.

Irrigation infrastructure development and sustainability. The expansion of irrigated areas and provision of reliable irrigation services during the dry season is constrained due to the high investment costs of infrastructure. This includes storage dams, inter-basin water transfers, and surface irrigation systems. Year-round irrigation in the Terai area can be achieved by abstracting available and renewable groundwater through efficient and sustainable mechanized pumped irrigation. Nepal is increasingly challenged by a lack of sustainable financing for MOM of irrigation schemes. This is because of: (i) inadequate government budget allocation for irrigation system MOM; (ii) public agencies' lack of knowledge and resources for MOM (iii) weak MOM capacity, inadequate asset inventory and operation and management planning; and (iv) poor cost recovery from the water user associations, which have struggled to maintain and operate small irrigation systems. Continuing conventional approaches to MOM is unsustainable and more innovative approaches are required. This includes providing alternative MOM institutional options, including private sector participation. Poor irrigation system performance results in low crop yields and land productivity, inefficient water management, and further constrains year-round water availability for irrigation.

Impact

A self-reliant, sustainable, competitive, and inclusive agriculture sector attained; and livelihoods, food, and nutrition security improved

Outcome

Agricultural productivity in the project area increased

Outputs

Sustainable groundwater irrigation systems in Rautahat and Sarlahi established

Climate-resilient and diversified cropping practices supported

Geographical Location

Nation-wide

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

B

Summary of Environmental and Social Aspects

Environmental Aspects

The project will not cause serious unpleasant and diverse environmental impacts in the target locations. There were analyses and reports that served as reference materials to acquire preliminary understandings of groundwater resources and its interactions with the surface environment. In fact, the amount of water withdrawal through the high lift irrigation schemes were estimated insignificant compared to high river discharge and limited downstream users. The project locations have no environmentally-sensitive areas and the impacts are mostly momentary disturbance during construction. Due diligence will be carried out during project preparation.

Involuntary Resettlement

Small portions of private land will be required for pumping stations. The project will construct 500 deep tube well schemes, covering an area of 22,400 hectares (ha). Each scheme will involve construction of (i) a head tank and pump house, occupying 5x5 m of private land and, (ii) a network of buried pipes and outlets. Each pumping irrigation scheme involves the construction of: (i) one high lift pump and pump house, occupying 3x5 m of private land, (ii) one storage tank; occupying 6x5 m of private land, and (iii) buried pipelines and outlets connecting the storage tank to the field. Small portions of private land will be required to accommodate the pumping stations and storage tanks. This irrigation infrastructure is ideally placed in the corner of adjoining paddocks so that farmers can access water to irrigate their crops. In such cases, the ADB project team proposes that farmers be given the option to voluntarily donate small portion of land to the project, provided that the farmer: (i) directly benefits from the project, (ii) can exercise power of choice, (iii) the donated land is less than 5% of the farmer's holding, (iv) the farmer's decision to donate is made free of coercion. The full extent of physical and economic losses associated with the project, including to non-title holders that may live on government land, will be assessed during project preparation.

Indigenous Peoples

A desk-based demographic analysis highlights the presence of indigenous peoples (IP) in the project areas, however, the extent to which IPs are impacted by the project is unknown. IP studies from the region indicate that the Terai IPs (the Tharu and others) derive their livelihood from non-farming activities and thus may not be directly or indirectly impacted. A poverty and social assessment will be conducted during project preparation to determine whether the project triggers ADB's Indigenous Peoples policy.

Stakeholder Communication, Participation, and Consultation

During Project Design

During Project Implementation

Business Opportunities

Consulting Services

The executing agency will administer consulting activities.

Procurement

The executing agency will administer procurement activities.

Contact

Responsible ADB Officer

L'Hostis, Marie

Responsible ADB Department

Sectors Group

Responsible ADB Division

Agriculture, Food, Nature, and Rural Development Sector Office (SG-AFNR)

Executing Agencies

Ministry of Energy, Water Resources and Irrigation

Timetable

Concept Clearance

19 Sep 2022

Fact Finding

09 Apr 2024 to 19 Apr 2024

MRM

-

Approval

-

Last Review Mission

-

Last PDS Update

19 Sep 2022

Funding