Document of The World Bank Report No: 79517 VN INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT FOR A CREDIT IN THE AMOUNT OF US$ 180 MILLION EQUIVALENT TO THE SOCIALIST REPUBLIC OF VIETNAM FOR AN IRRIGATED AGRICULTURE IMPROVEMENT PROJECT October 7, 2013 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Document of
The World Bank
Report No: 79517 VN
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
FOR A CREDIT
IN THE AMOUNT OF US$ 180 MILLION EQUIVALENT
TO THE
SOCIALIST REPUBLIC OF VIETNAM
FOR AN
IRRIGATED AGRICULTURE IMPROVEMENT PROJECT
October 7, 2013
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective)
Currency Unit
VND21,000
= VND Vietnamese Dong
= 1US$
FISCAL YEAR January – December 31
ABBREVIATIONS AND ACRONYMSAAA Analytical and Advisory Assistance
CPMU Central Project Management Unit (under
CPO)
CPO Central Project Office
CPS Country Partnership Strategy
CSA Climate Smart Agriculture
DARD (Provincial) Department of Agriculture
and Rural Development
DSU Dam Safety Unit
DWR Department of Water Resources
EAP Environnemental Action Plan
EIA
ECOP
Environment Impact Assessment
Environmental Code of Practice
EMDP Ethnic Minority Development Plan
FM Financial Management
GAP Gender Action Plan
GHG Green- House Gases
GOV Government of Vietnam
ha Hectare
IAIP Irrigated Agriculture Improvement
Project
ICB International Competitive Bidding
IDA International Development Agency
IDMC Irrigation and Drainage Management
Company
IMT Irrigation Management Transfer
IPF Investment Project Financing
ISF Irrigation Service Fee
MARD Ministry of Agriculture and Rural
Development
MIS Management Information System
MIS Management Information System
MOF Ministry of Finance
MOF Ministry of Finance
MONRE Ministry of Natural Resources and
Environment
MPI Ministry of Planning and Investment
NCB National Competitive Bidding
NGO Non-Government Organization
O&M Operation and Maintenance
OP/BP Operational Policy/Bank Procedure
ORAF Operational Risk Assessment Framework
PAP Project Affected People
PIM Participatory Irrigation Management
PISC Project Implementation Steering
Committee
POE Panel of Experts
PPC Provincial Peoples Committee
PPMU Provincial Project Management Unit
QCBS Quality and Cost Based Consultant
Selection
RAP Resettlement Action Plan
RPF Resettlement Policy Framework
SBV State Bank of Vietnam
SCADA Supervisory Control and Data
Acquisition
SOE Statement of Expenses
SRI System of Rice Intensification
TA Technical Assistance
VAWR Vietnam Academy of Water Resources
VND Vietnam Dong
VWRAP Vietnam Water Resources Assistance
Project
WUA Water User Association
WUO Water User Organization
Regional Vice President: Axel Van Trotsenberg
Country Director: Victoria Kwakwa
Sector Director: John Roome
Sector Manager: Jennifer Sara
Task Team Leader: Abdulhamid Azad
Cuong Hung Pham
VIETNAM
Vietnam Irrigated Agriculture Improvement Project
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT .................................................................................................1
A. Country Context ............................................................................................................ 1
B. Institutional Context...................................................................................................... 2
C. Higher Level Objectives to which the Project Contributes .......................................... 2
II. PROJECT DEVELOPMENT OBJECTIVES ................................................................3
A. PDO............................................................................................................................... 3
B. Beneficiaries ................................................................................................................. 3
C. PDO-Level Results Indicators ...................................................................................... 3
III. PROJECT DESCRIPTION ..............................................................................................4
A. Project Components ...................................................................................................... 4
B. Project Financing .......................................................................................................... 5
C. Lessons Learned and Reflected in the Project Design .................................................. 5
IV. IMPLEMENTATION .......................................................................................................7
A. Institutional and Implementation Arrangements. ......................................................... 7
B. Results Monitoring and Evaluation (M&E) .................................................................. 8
C. Sustainability................................................................................................................. 8
V. KEY RISKS AND MITIGATION MEASURES ............................................................9
A. Risk Ratings Summary Table ....................................................................................... 9
B. Overall Risk Rating Explanation .................................................................................. 9
VI. APPRAISAL SUMMARY ..............................................................................................10
A. Economic and Financial Analyses .............................................................................. 10
B. Technical ..................................................................................................................... 11
C. Financial Management .............................................................................................. 12
D. Procurement ................................................................................................................ 12
E. Social (including Safeguards) ..................................................................................... 13
F. Environment (including Safeguards) .......................................................................... 14
The Project Development Objective (PDO) is to improve the sustainability of irrigated agricultural
production systems in selected provinces in the Central Coastal and Northern Mountainous Regions of
Vietnam.
.
Components
Component Name Cost (US$ Millions)
Component 1: Improved Irrigation Water Management 10
Component 2: Irrigation and Drainage Scheme Level Improvements 170
Component 3: Support Services for Climate-Smart Agricultural Practices 23
Component 4: Project Management, and Monitoring and Evaluation, 7 .
Compliance
Policy
Does the project depart from the CAS in content or in other significant
respects?
Yes [ ] No [ X ]
.
Does the project require any waivers of Bank policies? Yes [ ] No [ X ]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
iii
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Legal Covenants
Name Recurrent Due Date Frequency
Section I of Schedule 2 NO N/A
Description of Covenant:
The recipient shall maintain the implementation arrangements as described in Section I of Schedule 2 to
the Financing Agreement. .
Conditions
Name Type
Description of Condition
Team Composition
Abdulhamid Azad Task Team Leader/Sr.
Irrigation Engineer
Irrigation and Drainage MNSWA
Cuong Hung Pham Co- Task Team Leader/ Sr.
Water Resources Specialist
Water Resources EASVS
Steven M. Jaffee Lead Rural Development
Specialist
Agricultural Development/
Diversification
EASER
Christopher Paul Jackson Lead Rural Development
Specialist
Agricultural Development/
Diversification
EASVS
Masood Ahmad Lead Water Resources
Specialist
Peer Reviewer SASDA
Jacob Burke Lead Irrigation Specialist Peer Reviewer TWAIWA
Yuling Zhou Lead Procurement
Specialist
Procurement EASR2
Toru Konishi Sr. Economist Water Resources EASVS
Mei Xie Sr. Water Resources Peer Reviewer WBICC
iv
Specialist
Nagara Rao Harshadeep Sr. Environmental
Specialist
Peer Reviewer AFTN1
Nina Masako Eejima Sr. Counsel Legal LEGEN
Kishor Uprety Sr. Counsel Legal LEGES
Son Duy Nguyen Sr. Operations Officer Portfolio EACVF
Khang Van Pham ET Consultant Environment EASVS
Miguel-Santiago
Oliveira
Senior Finance Officer Disbursements CTRLN
Mai Thi Phuong Tran Financial Management
Specialist
Financial Management EASFM
Tuan Anh Le Social Development
Specialist
Social and Gender EASVS
Huong Thi Mai Nong Associate Counsel Legal EACVF
Thang Toan Le Procurement Specialist Procurement EASR2
Thu Thi Le Nguyen Operations Analyst Climate Smart Agriculture EASVS
Tam Thi Do Team Assistant Team Assistant EACVF
Vansa Chatikavanij ET Consultant Water Resources SASDI
Non Bank Staff
Name Title Office Phone City
Chris Davey Sr. Irrigation and Drainage
Engineer, Consultant
King’s Lynn, United
Kingdom
Douglas Vermillion Institutional and Water
Management Specialist, FAO
Consultant
Spokane, Washington,
USA
Ravichandran Kannan Agronomist and Climate-
Smart Agriculture Specialist,
FAO Consultant
Chennai, India
Altaf Iqbal Sr. Agricultural Economist,
FAO Consultant
Lahore, Pakistan
John Weatherhogg Sr. Agriculture Economist
Consultant
Rome, Italy
.
Locations
Country Province Location - District Planned Actual Comments
Vietnam 1- Thanh Hoa
2- Ha Tinh
3- Quang Tri
4- Quang Nam
5- Ha Giang
6- Phu Tho
v
7- Hoa Binh
Institutional Data
Sector Board
Agriculture and Rural Development
.
Sectors / Climate Change
Sector (Maximum 5 and total % must equal 100)
Major Sector Sector % Adaptation
Co-benefits %
Mitigation
Co-benefits %
Agriculture (20%); Climate
change (20%); Irrigation and
Drainage (60%).
96% 13%
Total
I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information
applicable to this project.
Themes
Theme (Maximum 5 and total % must equal 100)
Major theme Theme %
Environment and natural resources
management
Water resource management 80
Rural development Rural services and infrastructure 20
Total 100
1
I. STRATEGIC CONTEXT
A. Country Context
1. Over recent decades Vietnam’s agriculture has made major gains, playing an
important role in the achievement of national objectives related to economic growth, food
security, poverty reduction, social stability, and trade. Despite broader structural and
demographic changes, the sector still accounts for 22% of Vietnam’s GDP, 30% of exports and
60% of total employment. Area expansion, productivity improvements, and diversification into
higher value crops and animal products have each contributed to Vietnam’s impressive
agricultural growth story. Thanks to this widely acknowledged success, the challenges for food
security in Vietnam are no longer about total production of rice, but about addressing nutrition,
affordability, and pockets of vulnerability.1
2. Irrigation and drainage investments have had a strong impact on agriculture
intensification, productivity and diversification. Some 9.6 million hectares or 29% of
Vietnam’s total land area is cultivated. Around 4.5 million ha or 46% are irrigated and about
2.5million ha or 26% have drainage. Long-term gains have been achieved in paddy productivity
and cropping intensity. In 2012 milled rice export exceeded 8 million tons, making Vietnam the
second largest rice exporter in the world. Irrigation has also contributed significantly to
expansion of coffee, horticulture and aquaculture production.
3. However, the sustainability of these gains is at risk. Over half of the irrigation and
drainage systems are deteriorating and/or operating below their potential capacity. Rates of water
productivity are well below international standards and this poses a threat given climate change
impacts and increased competition for water resources. The financial sustainability of many
irrigation systems is uncertain. Irrigation service providers need to improve their performance to
meet the increasingly complex demands of farmers.
4. The Central Coast Region, dominated by large schemes for rice cultivation, faces
increasing challenges for water management. Inadequate drainage and flood management
infrastructure often leads to damage to lower end distribution systems, especially earth-lined
channels. Water demand for hydropower, aquaculture, municipal and industrial needs is
increasing, but institutional arrangements for water sharing are lacking. As a result of increased
water storage, withdrawals and climate change, saline intrusion is increasing. Although rice
continues to dominate, diversification into crops such as high value horticulture and sugarcane
is growing as a result of local government initiatives and nascent market forces.
5. The Northern Mountain Region has an underdeveloped potential for agricultural
commercialization. Its farming population is generally very poor. In this region there are
some pockets of successful sugarcane, livestock, and horticultural crop production. Irrigation
schemes tend to be small and often include pump stations. As in the Central Coast Region,
schemes are prone to flooding and drainage problems. Water storage - for multiple purposes - is
especially important in the mountainous terrain where catchments are narrow and steep.
1 “From Rice Bowl to Rural Development: Challenges and Opportunities Facing Vietnam’s Mekong Delta Region”, Jaffee et al.
(2012).
2
B. Institutional Context
6. Investments in irrigation, flood control, and to a lesser extent drainage have
dominated public expenditures in agriculture. The Department of Water Resources (DWR) at
the Ministry of Agriculture and Rural Development (MARD) is responsible for development and
management of the irrigation sub-sector. The Provincial Departments of Agriculture and Rural
Development (DARDs) are responsible for planning, operation and maintenance (O&M),
monitoring and regulation of irrigation at the provincial level under the guidance of the
Provincial People’s Committee (PPCs). O&M is financed through state and provincial budgets
and carried out by Irrigation and Drainage Management Companies (IDMCs). Farmers are
responsible for tertiary and on-farm level O&M. An increasing share of the IDMCs’ budgets is
allocated to staff salaries, while less priority is given to maintenance.
7. While irrigated agriculture has been highly successful, modernization of the
irrigation and drainage sector is needed in response to various drivers of change which
include evolving markets, competition for resources (public finance, land and water), and climate
change. Increased rice production has been achieved but consumption trends are shifting rapidly,
requiring cropping changes and more flexible irrigation systems. Systematic changes are needed
beyond infrastructure, including institutional changes, and a more equitable, precise, and flexible
service delivery. Irrigation and drainage improvement also needs to be accompanied by strong
agricultural support services for farmers to maximize investment returns and promote
sustainability. At present the participation of women in irrigation management and water users’
association decision-making processes remains limited.
8. Agricultural sector restructuring, a new Water Law, and a forthcoming Law on
Hydraulic Works present opportunities for irrigation modernization. MARD’s plan for
restructuring the agricultural sector, approved by the Prime Minister in June 2013, calls for
performance monitoring of returns on resources invested, and the added value to the economy.
The new Law on Water Resources stipulates that water must be allocated in an economically
efficient manner in anticipation of growing pressures on water resources from increased
urbanization, industrialization and climate change. Both these reforms require a more strategic,
efficient, and market-oriented approach. The new Law on Hydraulic Works (expected in 2015)
will provide an opportunity to promote new concepts of modernization for the sector, especially
with respect to institutions.
C. Higher Level Objectives to which the Project Contributes
9. This project is consistent with the World Bank Vietnam Country Partnership
Strategy (CPS) for 2012 to 2016 with respect to: (i) strengthening competitiveness through
increased productivity and land-use efficiency; (ii) enhancing sustainability through improved
water productivity; and (iii) broadening access to social and economic opportunity through
improved access to water services. It also supports CPS themes by: (i) strengthening governance
through enhanced accountability of irrigation service providers; (ii) increasing resilience to
economic and climate-related shocks through promotion of climate-smart agriculture activities;
and (iii) priority to gender issues and active participation of men and women in the project.
3
10. The Government of Vietnam has requested World Bank support to the irrigation
and drainage sub-sector. In support of MARD’s initiative of agricultural restructuring, the
Government has requested the Bank to fund selected investments and institutional strengthening
measures associated with irrigated agriculture in selected provinces located in the Central
Coastal and the Northern Mountainous Regions.
11. This project is closely linked to the World Bank portfolio in Vietnam, including
investment projects and analytical work. The World Bank currently has several active
irrigation projects in Vietnam. Small-scale investments in irrigation are also included in the
Second Northern Mountains Poverty Reduction Project. The Bank also supports policy and
institutional development in the irrigation sector in the ongoing Climate Change Development
Policy Operation Series.
12. The long-term vision is to support the Government in developing programmatic, results-
based approaches. This is predicated on the continued progression of institutional reforms, such
as irrigation management transfer to water users associations, and improvement of the
performance of the IDMCs, as well as necessary improvements in the legal, financial and
monitoring/reporting systems. Once these improvements are in place, Vietnam, like many other
countries, would benefit from launching a large-scale irrigation and drainage modernization
programme in which public-private partnerships could also play a role.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
13. The Project Development Objective (PDO) is to improve the sustainability of irrigated
agricultural production systems in selected provinces in the Central Coastal and Northern Mountainous
Regions of Vietnam.
B. Beneficiaries
14. The key beneficiaries of this project include farmers and other rural households,
irrigation and drainage entities, and water users organizations/associations in the project areas.
Through direct irrigation and drainage service investments (covering an area of 83,400 ha) and
on-farm water management focused in these areas, it is estimated that 243,000 farm families will
benefit from the project.
C. PDO-Level Results Indicators
15. The key PDO-level results indicators are (see Annex 1 for more details):
i) Area provided with improved irrigation and drainage services.
ii) Female and male water users provided with improved irrigation and drainage
services.
iii) Number of farmers adopting improved agricultural practices.
4
iv) Operational WUAs created and/or strengthened.
III. PROJECT DESCRIPTION
A. Project Components
16. Geographic Focus: The proposed project will focus on two regions of Vietnam: the
Central Coast Region (Thanh Hoa, Ha Tinh, Quang Tri, and Quang Nam provinces) and the
Northern Mountainous Region (Ha Giang, Phu Tho, and Hoa Binh provinces). The provinces
and their irrigation and drainage systems are representative of their respective regions and
therefore lessons learned under this project can be used elsewhere in the regions.
17. Project Components: The project will have four components. (Detailed descriptions are
provided in Annex 2.)
18. Component 1: Improved Irrigation Water Management (US$10 million). This
component will improve institutional capacity for modern, efficient, and accountable irrigation
and drainage service delivery. The establishment of a financially self-reliant and transparent
water services sector will enable reduction in recurring government expenditure on O&M of
irrigation systems in all project provinces and at Ministry level. The component will include: i)
formation or strengthening of water user organizations and associations and the application of
the concept of Irrigation Management Transfer (IMT); ii) enhancing irrigation and drainage asset
management and investment planning at provincial and scheme levels; iii) updating and applying
efficiency and performance standards for water user organizations and associations as well as
irrigation and drainage management companies; and (v) application of remote sensing imagery
for monitoring of crop performance.
19. Component 2: Irrigation and Drainage Scheme Level Improvements
(US$170 million). The poor condition of irrigation and drainage infrastructure in the project area
is a major factor in poor water service delivery and low efficiency. This component represents
the bulk of infrastructure investments in the project areas (83,400 ha). It will improve bulk water
delivery to irrigation systems, service delivery, and management in the selected irrigation and
drainage schemes through: (i) physical improvement of selected existing large, medium and
small-scale irrigation and drainage infrastructure such as canals, pumps, weirs, pipes, and control
structures; (ii) improvement of protection works for existing dams; (iii) rehabilitation or
construction of small multi-purpose village ponds; and (iv) construction of measuring devices
and installation of control and data acquisition systems for improved water management, with
associated logistical support.
20. Component 3: Support Services for Climate-Smart Agricultural Practices
(US$23 million). This component will build on the improved irrigation infrastructure and water
delivery activities realized under Component 2 to improve the productivity and quality of
agriculture, increase farmers’ incomes, and reduce their vulnerability to adverse climatic events.
It will involve: i) enhancing on-farm systems for crop intensification and diversification; ii)
provision of laser land-leveling services; iii) advisory services to facilitate shifts towards feed
and horticultural crop production; iv) identification and implementation of measures to reduce
the water and environmental footprints of cropping systems; v) promoting community-led
5
initiatives to increase ownership and accountability at the local level; and vi) stimulating
modernization by promoting the use of sprinkler and drip irrigation systems. Through Farmer
Field Schools (FFS) and other methods information will be disseminated and field
demonstrations will be organized. Each province will undertake research projects on technical
and policy-related issues to resolve specific problems which occur with regard to water
management and agricultural production as a result of climate change. This research will be
carried out during the first two years so that results can be applied during the last four years of
project implementation.
21. Component 4: Project Management, Monitoring and Evaluation (US$7 million). This component supports the operating costs of the implementing agencies including MARD and
the selected provinces. It will finance: (a) incremental operating costs; (b) equipment and
vehicles purchase; (c) monitoring and evaluation, including third-party monitoring; (d) staff
training; (e) internal and external audits; and (f) various consultancies for the design,
construction supervision, quality control support, a gender action plan, and safeguards
compliance.
B. Project Financing
22. The lending instrument is Investment Project Financing (IPF). The total project cost over
a six-year implementation period is estimated at US$210 million, of which the World Bank will
provide US$180 million. The Government of Vietnam will provide the remaining US$30
million.
Table 1: Project Cost and Financing Plan
(US$ Million)
Project
Project Cost and Component Cost
US$ million
Component 1: Improved Irrigation Water Management 10
Component 2: Irrigation and Drainage Scheme Level Improvements 170
Component 3: Support Services for Climate Smart Agricultural Practices 23
Component 4: Project Management, Monitoring and Evaluation 7
Total project cost (including physical and price contingencies) 210
Government of Vietnam (14%) 30
World Bank (86%) 180
C. Lessons Learned and Reflected in the Project Design
23. The project builds on international irrigation, drainage and agricultural sector experience,
gained notably from the recently completed Vietnam Water Resources Assistance Project
(VWRAP), and from the findings of the recent technical assistance (TA) on the Irrigated
6
Agriculture and Irrigation Systems Management Reform. The project design also recognizes
Vietnam’s irrigated agriculture sector’s vulnerability to climate change.
24. Irrigation and drainage improvement also needs strong agricultural support
services to maximize investment returns and promote sustainability. To maintain
productivity in the face of climate change impacts, and to diversify production systems in line
with changing economic conditions and demands, farmers need to acquire and apply knowledge
about improved agronomic and risk management practices.
25. Irrigation management and infrastructure improvements must go hand in hand. Extensive international experience has demonstrated that irrigation modernization is not merely a
matter of adding measurement and control structures, but also requires a mindset change:
irrigation services for farmers, and existing institutional arrangements and policies must be
systematically analyzed and redefined. Therefore, project design is based on a combination of
infrastructure improvement and management solutions (e.g. improvements in monitoring,
planning, institution strengthening, and operation).
26. Transparency and accountability are core elements of performance management
and service delivery. There is a need to strengthen accountability and governance on the side
of the providers (IDMCs) as well as the recipients (farmers) of the service. To overcome
chronic problems of poor maintenance and inadequate service delivery in irrigation schemes,
the aforementioned TA emphasized the importance of having a clear agreement between
IDMCs, WUAs and farmers about respective roles and responsibilities, proper financing
arrangements2, and transparency and accountability in monitoring the agreement
3.
27. IDMC business plans can be an effective tool to improve water delivery. The IDMC
business plans can clarify performance indicators, and specify methods and targets for
improving service delivery, human resources, asset management, cooperation with WUAs, and
financial accountability.
28. The Government’s decentralization of project planning and supervising has
improved irrigation performance. The project will further strengthen this decentralized
approach both at scheme level and at field level by supporting the formation of WUAs.
29. Scaling up local knowledge and initiatives on sustainable farming practices is
essential. A close linkage between farmers and researchers has been fostered under many
previous initiatives and has led to an increased capacity, nationally and locally, to design and
guide the implementation of climate-smart agriculture. This project will engage with local
research institutes and universities to support the (continued) application by water users
associations/organizations of sustainable farming practices and techniques in project areas.
2 A Government Decree 115/2008/ND-CP in 2008 exempted most farmers from paying fees for services provided
by the IDMCs. 3 The deficiencies of the current irrigation monitoring system have been acknowledge in MARD’s strategy
Restructuring the Agriculture Sector towards Greater Added value and Sustainable Development (August 2012).
7
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements.
30. The Ministry of Agriculture and Rural Development (MARD) will be the executing
agency for the project. Through previous projects, MARD has built substantial capacity and
knowledge about Bank procedures at the sectoral and project levels. MARD will establish a
Project Implementation Steering Committee (PISC) to be led by the Vice-Minister for Irrigation,
with the support of the Vice-Minister for Agriculture.
31. At ministry level the Vice-Minister for Irrigation will oversee project implementation,
provide policy and strategy related guidance, and chair the PISC. Within MARD, the Vice-
Minister for Irrigation is supported by the Department of Construction Management and the
Directorate of Water Resources (DWR) which are mandated to provide policy, planning, and
management oversight of irrigation schemes. The Department of Crop Production and of Plant
Protection will be responsible for overseeing the implementation of Component 3. To ensure
smooth implementation a clear division of responsibilities amongst the various implementation
departments within MARD has been defined and is presented in the Project Operational Manual
(POM).
32. The project owner would be MARD’s Central Project Office (CPO) which manages all
ODA-financed water resources sector projects. CPO staff, which include managers, engineers,
safeguards specialists, procurement specialists, and financial management specialists, are
familiar with both Governmental and Bank requirements. A Central Project Management Unit
(CPMU) has been established within CPO to provide day-to-day project management and
coordination support between the implementation agencies, the Bank, provincial authorities and
other relevant departments of MARD. This arrangement is in line with Government Decree 38
on management and utilization of ODA projects/programs.
33. The key principles of project management are as follows:
Full decentralization and empowerment will be granted from MARD and the provincial
authorities to the appropriate project implementing agencies at both the project and sub-
project levels.
MARD and CPO will provide supervision, monitoring and technical assistance support to
the project at all levels involved. They will also participate in the Bank’s regular
implementation support missions throughout project implementation.
34. Implementation of the subprojects will take place at the provincial level though the
existing Provincial Project Management Units (PPMU). The PPMUs will be composed primarily
of staff from the provincial Departments of Agriculture and Rural Development (DARD) and the
Irrigation and Drainage Management Companies (IDMCs), under the authority of the Provincial
8
People’s Committees (PPCs)4. Operating under the overall MARD project management
framework, the PPMUs will be responsible for launching the calls for proposals, conducting
proposal screening and short-listing, managing procurement for the subproject, supervising
construction activities, and making payments to contractors. MARD’s CPMU will oversee
management of the project designated account, the procurement of ICB and QCBS contracts, and
will ensure safeguards compliance. The CPMU will report to IDA and MARD as appropriate.
B. Results Monitoring and Evaluation (M&E)
35. The project’s M&E system will focus on tracking and assessing project implementation
progress, outputs, outcomes and impacts across the four components.
36. The CPMU will be responsible for monitoring implementation progress (see Annex 1
project results and monitoring framework). During implementation, the CPMU will recruit
dedicated staff to monitor project progress and update the monitoring indicators. Reports on
progress, financial and procurement information, as well as updated indicators will be provided
to the Bank on a semi-annual basis.
37. An external third-party agency, such as a university or research institute, will be
responsible for evaluating the project’s impact on beneficiaries. For this purpose, funding is
included to undertake baseline and final year surveys, including a provision for any thematic
studies that the Government and the Bank jointly regard as relevant, justified and supportive of
Components 1, 2 and 3. As an important part of M&E the project will utilize remote sensing
studies on an experimental basis to assess irrigated areas, water volume consumed by crops
(actual evapotranspiration) and agricultural production (yields).
38. Prior to the mid-term review, the CPMU will provide the Bank with a summary project
progress report, updated results indicators (as in Annex 1), updated project cost estimates, and
plans for completion. The CPMU will also prepare environmental and social safeguards
implementation reports,
C. Sustainability
39. Sustainability is a core project principle and has been factored into the project design
through the following features:
40. Commitment to institutional reform (related to Component 1): Long-term
sustainability of the project’s benefits depends primarily on the introduction of institutional
reforms supported by the provincial authorities under MARD oversight. The Government and
MARD recognize the need to develop appropriate legal codes and guides to improve public and
private sector governance, management and financing of irrigation and drainage systems.
Specifically, following the enactment of the Water Resources Law in January 2013, MARD is
drafting the Law on Hydraulic Works. The provisions of the current draft include the collection
of baseline surveys, planning, financing, management and institutional reform. The
4 Except for Ha Tinh province where implementation responsibility rests with the South-Ha Tinh Irrigation and
Drainage Management Company acting through its PPMU
9
Government’s commitment to institutional reform is evident through the project’s PIM programs
which will be established in each of the project provinces to help provide a forum for increased
farmer interaction with the IDMCs.
41. Irrigated agriculture investments (related to Component 2 and 3): Close engagement of
WUOs, WUAs and farmers as well as the Government is necessary to ensure adequate human
and financial resources for operation and maintenance of the investments, which is vital for
future sustainability. All activities, including the major infrastructure works and agriculture
packages are designed to involve stakeholder participation. For instance, the designs for the
rehabilitation of the infrastructure works will involve extensive community consultations,
involving both the Women’s Union and Farmer’s Union. This approach is considered critical to
ensuring that the investment impacts are long-lasting.
42. Service-delivery and physical asset sustainability. The project creates incentives and
provides support for good asset maintenance and management, including assets procured through
the project. With regard to institutional capacity, the PDO reflects the overall project focus of
building viable irrigation and drainage schemes and improved capacity for service delivery.
43. Borrower’s commitment and ownership: The Government’s commitment to the project
is evident through the resources it has allocated to the project such as: i) sufficient budget and
staff have been provided to various divisions under MARD to undertake preparatory work and to
ensure a smooth transition into project implementation; and ii) the GOV’s agreement to finance
14% of the total project cost.
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Stakeholder Risk M
Implementing Agency Risk
- Capacity M
- Governance S
Project Risk
- Design M
- Social and Environmental M
- Program and Donor NA
- Delivery Monitoring and Sustainability M
Overall Implementation Risk M
B. Overall Risk Rating Explanation
44. The overall risk rating for this project is moderate given the high level of ownership
displayed at the Government, WUOs, and farmer’s level, as well as the experience of the
10
Government in implementing Bank-funded projects. Various consultations with a number of
Governmental departments and stakeholders have been conducted since the concept stage to
build ownership of the project at all levels. These consultations will continue during
implementation. MARD will continue to oversee and guide the implementation and monitoring
of all project activities in order to ensure synergy and coordination amongst activities and
relevant agencies. The risks identified and mitigation measures proposed are detailed in Annex 4,
the Operational Risk Assessment Framework (ORAF).
VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
45. Project Benefits: The project will improve the water services in each sub-project
command area, resulting in a more reliable, flexible, equitable, and responsive water delivery to
users, including farmers. The irrigation modernization component is expected to increase the
land area under full gravity-serviced irrigation, while reducing the non-irrigated and/or
unreliably irrigated land area. Improved water supply and irrigation will also provide farmers
with the opportunity to intensify and/or diversify their present cropping patterns. For example, an
increased diversification into higher-value crops such as peanuts and soy beans is expected to not
only provide farm families with increased income but also improve soil fertility, and reduce pest
and disease incidence by breaking the cycle of grain cropping.
46. The main benefits will be to agricultural production in the command area, and most of the
benefits will accrue as increases in crop production arising from the conversion from rain-fed to
irrigated agriculture, or from improvements in output of existing irrigated areas resulting from
more reliable and timely available water supply.
47. Economic Rate of Return: The analysis indicates that irrigation rehabilitation is
economically viable in all the regions, with internal rates of returns (ERRs) ranging from 14 to
24% as detailed in Annex 6. The overall ERR is calculated at 18% with a net present value at a
10% discount rate of US$66.0 million (VDN 1,386 billion). These results are robust across a
range of sensitivity tests relating to changes in project cost and benefit assumptions.
48. Financial Analysis. The farm-level analysis indicates that annual net margins for a
typical 0.34 ha full gravity-irrigated farm increases by around VND 1.84 million or US$88
annually at full project development. For the partially irrigated and pumped 0.34 ha farm the
increase is VND 2.2 million or US$ 107 annually. Overall, about 243,000 families will benefit
directly from improved irrigation and drainage. The irrigation improvement works would give
the greatest benefit to farms at the lower end of canal systems which presently suffer from
inadequate irrigation or flooding, and to farms currently only rain-fed. These areas are home to
the poorest families in the schemes and the project is therefore inherently poverty-targeted.
49. Fiscal Impact. The project is expected to have a positive impact in reducing the
Government’s O&M costs in several ways, including: (i) conversion of schemes from
(expensive) pumped to (cheaper) gravity irrigation; (ii) support to formation and strengthening of
WUOs and WUAs to enable them to take over an increased share of the O&M burden currently
resting on the IDMCs; (iii) reduction in O&M costs as a result of canal lining and other
11
improvements as well as expansion of the scheme command areas; and (iv) improvement in
overall management efficiency of MARD and the IDMCs. In addition to these cost reduction
benefits there would be an increase in tax revenue as a result of the increased agricultural
production.
50. The project will reduce the pump- irrigated area from 17,524 ha to only 2,159 ha in the
project areas. Associated pumping costs currently being paid by the farmers would be reduced by
88%. In monetary terms, this is equivalent to a reduction from VND 7.010 billion (US$ 0.334
million) to VND 0.864 billion (US$ 0.041 million) per annum. Savings in the pumping costs
would reduce the burden on the Government of subsidies being offered to the farmers.
51. The above cost savings and increased tax revenue from most schemes would likely be
sufficient to cover debt servicing at the provincial level, assuming continued government
subsidies to the IDMCs. Therefore, the overall fiscal impact of the project is expected to be
generally neutral.
B. Technical
52. The project will introduce innovations in the selected project provinces. These will
include (i) using the global best practice of climate-smart agriculture to ensure that agricultural
and water productivity are maximized; (ii) (continued) support to the state and provincial
agricultural and water agencies to enhance agricultural modernization plans; (iii) using the
project framework to help facilitate coordination across various programs and departments; and
(iv) introducing better water governance through improving information, water user
participation, and accountability for the irrigation and drainage service delivery.
53. Improvement of irrigation and drainage schemes will focus on structural and non-
structural measures. There is a need to improve both the physical systems, as well as institutional
arrangements for system operation. The physical works will be implemented by reputable
contractors under adequate day-to-day supervision by consultants appointed by DARD. Similar
irrigation projects have been carried out successfully, which gives support to the expectation that
the project works can be implemented without major difficulties.
54. The project will develop climate-smart agriculture which implies an effective and
efficient use of the irrigation and drainage systems. The effective adoption of climate-smart
practices will require intensive awareness building and training through farmer-field schools, and
learning-by-doing approaches.
55. The project proposes improvements in modern agricultural practices for improving both
technical and service delivery. It includes supporting farmers in adopting systems of rice
intensification (SRI) and crop diversification, introducing and promoting drip and sprinkler
irrigation systems, integrated pest management, improved fertilizer use based on soil tests and
the utilization of crop residues to reduce emission.
56. The project includes the conversion of irrigated areas from pumped irrigation to gravity.
One of the large-scale irrigation and drainage schemes will be converted to gravity by the supply
12
of water from a recently completed reservoir. Appropriate modern technologies (such as turbine
pumps and low-cost drip irrigation) will be introduced in some areas within the schemes.
C. Financial Management
57. The CPMU will be responsible for financial management (FM) at a central level. Key
financial management personnel will have experience in managing Bank projects. The financial
management function in the provinces will be performed by existing provincial PPMUs except in
the two new provinces Ha Giang and Hoa Binh where new PPMUs will be established. These
arrangements meet the Bank’s minimum financial management requirements at both central and
provincial level.
58. Fund flow will be channeled through the Designated Account and provincial project
accounts opened at commercial banks. There will be one segregated Designated Account (DA)
denominated in US$ dollars maintained by CPMU for the whole project. Each of the provinces
will maintain a provincial project account in VND at a commercial bank in the province to
receive funds from the Designated Account for the activities to be implemented by the provinces.
59. There will be a single auditor, hired by CPMU. CPMU will consolidate all provincial
financial statements to provide one overall project financial statement, to be audited and
submitted to the Bank annually within 6 months after the year-end. Interim Financial Reporting
(IFR) will be done on a semester basis to be submitted to the Bank within 45 days after the end
of each semester.
D. Procurement
60. The CPMU will lead and coordinate the procurement activities for the whole project,
provide guidance to the PPMUs on all procurement-related aspects, and monitor the procurement
activities to be carried out by the PPMUs, while PPMUs will be responsible for procurement
within their respective provinces. The capacity assessment of the CPMU and PPMUs has been
conducted by reviewing the project organization structure and functions, past experience of
implementing agencies, staff skills, quality and adequacy of supporting and control systems, and
the legal and regulatory aspects. The CPMU and several PPMUs are familiar with the Bank’s
procurement procedures. However, there is a risk that procurement delays occur at all stages of
the procurement cycle including planning, preparation of procurement documents, bid
evaluation, approval of bid evaluation report and award recommendation and contract
management.
61. Procurement plan and readiness for implementation. The procurement plan for
activities to be taken up during the first 18 months of project implementation has been agreed
and is available in the project files. The procurement of major civil works, goods and
consultancies has been identified. Detailed engineering designs and bidding documents for over
35,000 ha, or more than 42% of the project area have been completed. More details on the
procurement arrangements are provided in Annex 3.
13
E. Social (including Safeguards)
62. The project promotes transparency and informed participation of the target beneficiaries,
encouraging farmer participation and supporting the realization of the project’s expected broad
range of positive social impacts including reduced time and efforts needed to irrigate fields and
to maintain irrigation canals; reduced conflicts as a result of better on-farm water management
practices and more reliable irrigation services; improved access to water at tail-ends of the
canals; increased participation of women in water users organizations and associations and on-
farm irrigation, resulting from less physically-demanding operations at the farm outlet.
Agricultural productivity and resilience to climate variability and extreme weather events are
expected to increase with the improvement of irrigation and drainage infrastructure, the
promotion of enhanced climate-smart practices, and the building of stakeholders’ capacity.
63. A Social Assessment (SA) was carried out during project preparation to: (a) explore
potential positive and negative impacts of the project to inform the project design and impact
mitigation measures; and (b) to consult with ethnic minority peoples present in the project area in
accordance with OP 4.10. The SA confirmed that the overall social impact of the project is
positive, given its aim to strengthen national, provincial, and local capacities for better irrigation
management. However, some negative impacts, primarily related to acquisition of land to allow
for rehabilitation of existing infrastructure, is unavoidable. In some sub-project areas, land
acquisition is expected to affect ethnic minority households. The results of the SA are set out in
Annex 7 and summarized as follows:
64. Loss of land would affect some 4,500 households, but 95% of these would lose only
a small strip beside the canal. Affected households number 220, of which 13 may require
relocation. Some 97 ha would need to be permanently acquired and 105 ha temporarily
during construction. 65. Adverse impact on ethnic minority peoples is primarily due to land acquisition to
allow rehabilitation of the existing infrastructure. However, for them, too, the project will
lead to improved water availability. The project design has furthermore kept the number of
affected households to a minimum, project preparation included full consultation and the
ethnic minority peoples have indicated community support for the project and will be fully
involved in Participatory Irrigation Management (PIM).
66. Involuntary Resettlement (OP 4.12) was triggered due to the need for land acquisition
and a Resettlement Policy Framework (RPF) was prepared to guide Resettlement Action Plans
(RAP).
67. Indigenous Peoples (OP 4.10) was triggered and an Ethnic Minority Policy Framework
(EMPF) prepared. As detailed in Annex 7, the EMPF was developed to ensure ethnic minorities
have an opportunity to receive socioeconomic benefits from the project in a way that is culturally
appropriate to them, and to provide guidance on preparation of Ethnic Minority Development
Plans (EMDP) for sub-projects to be identified during project implementation.
14
68. Social safeguards implementation: The implementation of the RAPs and EMDPs will
be the responsibility of the respective PPMUs. Land acquisition will be financed by the
Government whereas the budget for EMDP will be funded by the Bank.
69. Gender mainstreaming: Females in the project area are generally at a disadvantage.
Although equality laws have been passed, men still dominate most aspects affecting agricultural
development, including implementing processes for improving productivity. Men dominate at
meetings where landowners meet, including extension training. Men also dominate in water
management since they are considered more able to resolve disputes and technical problems. In
community organizations about 30% of the members are women, but they mostly hold the lower
clerical-type positions. The GAP has been developed during project preparation, and it has
included consultation with relevant governmental mass organizations at the central level (Central
Women’s Unions and Farmers’ Associations). The GAP aims to change the ideas, attitudes and
behaviors of the community with regard to full participation of women in project activities,
which will benefit the position and power of women in the project areas. The GAP will be
implemented and monitored as part of Component 4.
70. Public Consultations and Information Disclosure: A series of public consultations
have been conducted in accordance with Bank policy requirements and national laws. Before
conducting public consultations, the relevant project documents have been disseminated to
project-affected groups and local NGOs. The Vietnamese and English versions of these
documents were disclosed at the Bank’s InfoShop and in Vietnam during the period from June
19 to July 16, 2013.
F. Environment (including Safeguards)
71. The overall environmental impacts of the project are expected to be positive. The
improvement and upgrading of irrigation and drainage infrastructure and on-farm irrigation and
drainage will lead to more efficient and productive use of irrigation water and increased crop
yields. The dissemination of irrigation technology and the strengthening of water users
associations and local farmer organizations will further improve overall water and land
management at the local level. For purposes of O.P. 4.01 on Environmental Assessment, the
project has been classified as Category B, given that no significant, irreversible or long-term
adverse environmental impacts are anticipated and that any identified adverse impacts can be
effectively addressed through appropriate preventative or mitigating measures. The project could
result in intensifying crop production in terms of vertical expansion, which could increase the
residual pesticide/ fertilizer load per hectare in some project areas. These and other
environmental issues were examined closely during the Environmental Impact Assessment (EIA)
and are addressed in the Environmental Management Plan (EMP). The CPMU will be
responsible for implementation of the EMP, whereas the day-to-day management of the
prevention/ mitigation activities will be undertaken by PPMUs. The EMP addresses the
environmental impacts identified by the EIA through a combination of preventative actions and
mitigation measures, including environmental monitoring/benchmarking and institutional
capacity building.
72. Further details are provided in Annex 7. The project triggers five environmental safeguard
policies, namely:
15
OP/BP 4.01(Environmental Assessment): The project has civil works for irrigation and
drainage schemes. An Environmental and Social Management Framework (ESMF) has been
prepared for the project and Environmental Management Plans (EMP) and Environmental
Codes of Practices (ECoP) have also been prepared for sub-projects in accordance with Bank
safeguards policies.
OP/BP 4.11 (Physical Cultural Resources): Relocation of 12 graves in Thanh Hoa sub-
project triggered OP/BP 4.11. Mitigation measures have been included in the EMP for this
sub-project. Also, a “chance find procedures” will be included in EMP and ECOP in case any
unexpected cultural resources are found during construction.
OP/BP 4.09 (Pest Management): The project will not finance the purchase of pesticides but
with the increase in irrigated land area to 83,400 ha the amount of agricultural chemicals
including fertilizers and pesticides will increase. An Integrated Pest Management Plan
(IPMP) has been prepared by MARD as part of the ESMF.
OP/BP 4.37(Safety of Dams): A Dam Safety Framework has been prepared to comply with
the requirements on dam safety.
OP/BP 7.50 (International Waterways): The sub-project to improve the South Ma scheme
will draw water from the Cua Dat Reservoir, located on the trans-boundary Chu River. This
project falls within the exception provided for in paragraph 7(a) of OP 7.50.
16
Annex 1: Results Framework and Monitoring
Irrigated Agriculture Improvement Project
.
Project Development Objectives
The Project Development Objective is to improve the sustainability of irrigated agricultural production systems in selected provinces in the Central Coastal
5 Area under ICM cultivation in scheme commands including: appropriate varieties; good quality seed/seedlings; appropriate plant density; proper management of plants
(fertilization, irrigation, weeding); integrated pest management (IPM); appropriate harvest and post-harvest technique; and proper management of waste. 6 ICM is the complete technique package covering all the production steps from preparation to harvest and post-harvest. Depending on the local conditions, ICM can be
adopted completely or only partly. However, in any case IPM and appropriate balanced fertilizer regimes will need to be followed.