Document of The World Bank Report No. 12233-DO STAFF APPRAISAL REPORT DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT JANUARY 19, 1995 FILE COPY Country Department II Latin America and the Caribbean Regional Office CURRENCY UNIT Dominican Peso (RD$) EXCHANGE RATE (As of December 30, 1994) US$1.00 = RD$ 12.97 FISCAL YEAR January 1 - December 31 WEIGHT AND MEASURES Metric System and 1 TAREA = 0.062 Hectares (ha) MAP SECTION ACRONYMS AND ABBREVIATIONS AEO Agricultural Extension Officer (Oficial de Extensi6n de Agricultura) AIRAC Association of Rural Institutions for Savings and Credit (Asociaci6n de Instituciones Rurales de Ahorros y Creditos) ADESJO Association for the Development of San Jose de Ocoa (Asociaci6n para el Desarrollo de San Jose de Ocoa) BA Agricultural Bank (Banco Agrario) CATIE Tropical Agronomic Center for Investigation and Teaching (Centro Agron6mico Tropical de Investigaci6n y Ensefanza) CDE Dominican Corporation for Electricity (Corporaci6n Dominicana de Electricidad) CEA State Council for Sugar (Consejo Estatal del Azucar) CENDA North Center for Agricultural Development (Centro Norte de Desarrollo Agropecuario) EMS Environmental Monitoring System (Sistema de Monitoreo Ambiental) FIDA Agriculture Federation for Development (Federaci6n de Desarrollo de Agricultura) GEW Group Extension Workers (Grupo de Trabajadores de Extensi6n) L4D Dominican Agrarian Reform Institute (Instituto Dominicano de Reforma Agraria) INDRHI National Water Resources Institute (Instituto Nacional de Recursos Hidraulicos) INESPRE National Institute for Price Stabilization (Instituto Nacional de Estabilizaci6n de Precios) ISA Higher Institute of Agriculture (Instituto Superior de Agricultura) M&E Monitoring and Evaluation (Monitoreo y Evaluaci6n) MIS Management Information System (Administraci6n del Sistema de Informaci6n) MUV Manufacturing Unit Valve NEP New Economic Program (Nuevo Programa Econ6mico) NGO Non Governmental Organization (Organizaci6n no Gubemamental) OFWME P On-Farm Water Management Project I (Proyecto de Manejo de Agua a nivel de Finca) O&M Operation and Maintenance (Operaci6n y Mantenimiento) PEU Project Execution Unit (Unidad de Ejecuci6n del Proyecto) POA Annual Work Program (Programa Anual de Trabajo) PR&D Participatory Research & Development (Investigaci6n y Desarrollo Participatorio) PROMAF On-Farm Water Management Project (Proyecto Manejo de Agua a Nivel de Finca) PROMATREC Irrigated Land and Watershed Management Project (Proyecto de Manejo de Tierras Regadas y de Cuencas) PRYN1 Water Users Association of Nizao, Santiago (Asociaci6n de Usuarios de Agua de Nizao, Santiago) SDB Standard Bidding Documents (Documentos Corrientes para Propuestas) SEA Ministry of Agriculture (Secretaria de Estado de Agricultura) SOEs Statement of Expenditures (Cuentas de Gastos) WUA Water Users Association (Asociaci6n de Usuarios de Agua) WMF Water Management Fund (Fondo de Administraci6n de Agua) YSURA Water Users Association of Azua (Asociaci6n de Usuarios de Agua de Azua) ANNEX 10 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Documents Available in Project Flle A. Background and Project Preparation Papers 1. Dominican Republic. Agricultural Sector Study. 1986. World Bank. Report No. 6267-DO. 2. IICA. 1988. Proyecto de Desarollo Agricola en Tres Areas Prioritarias Bajo Riego. Contrato INDRHI/IICA 2426. 3. Irrigated Farming Development Project. Project Brief. 1989. FAO/CP. Report No. 157/89 CP-DOM. 14 PB. 4. Dominican Republic. Country Economic Memorandum. Beyond Stabilization: An Agenda for Sustainable Growth. 1991. World Bank. 5. Proyecto Integrado de Reforestaci6n y Conservaci6n Comunal de la Cuenca del Rio Nizao. 1992. FAO. Report TCP/DOM/2251(F). 6. Proyecto de Desarollo Agricola Bajo Riego y en la Cuenca del Nizao. Preparaci6n del proyecto. 2 volumes. 1993 FAO/CP. Report No. 55/93 CP-DOM 16. B. Working Papers 1. Detailed Project Costs and Financing Tables. WP No. 1. 2. Promotion of Credit Cooperatives. WP No. 2. 3. Irrigation Infrastructure. WP No. 3. 4. Economic and Institutional Analysis of Soil Conservation Practices in the Dominican Republic. Jose Abel Hernandez. 1992. DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Contents 1. LOAN AND PROJECT SUMMARY ................... i 2. THE SECTOR CONTEXT ......................... 1 A. The Economy ............................. 1 B. Agriculture in the Economy ..................... 1 C. The Irrigation Subsector ....................... 3 3. DEVELOPMENT POTENTIAL AND CONSTRAINTS ...... . 7 A. Potential ................................. 7 B. Current Irrigation Water Management .... ........... 7 C. Agricultural Development ...................... 8 D. Environmental Constraints ...................... 9 4. BANK INVOLVEMENT AND LESSONS LEARNED ..... ... 11 A. Bankwide Lending for Irrigation and Drainage .. ....... 11 B. Lending to Agriculture in Latin America and the Caribbean . 12 C. World Bank Involvement in the Dominican Republic ...... 12 5. PROPOSED STRATEGY, DESIGN, AND RATIONALE FOR BANK INVOLVEMENT ....................... 13 A. The Government Strategy in Irrigation .... .......... 13 B. Rationale for Bank Involvement ................... 14 C. Project Design and Strategy ..................... 15 6. THE PROJECT ................................ 17 A. Project Objectives ........................... 17 B. Project Components .......................... 17 C. Detailed Project Features ............. .......... 18 This report is based on the findings of an appraisal mission which visited the Dominican Republic in May-June 1993, comprising Mmes./Messrs. Moreau (Mission Leader), Palaco-Nielsen (Bank), Eastwood (Economist Consultant), Lafont (Irrigation Specialist Consultant), Arboleda (Sociologist Consultant). Peer reviewers were Mme. Lallement (EC4IN) and Mr. Darghouth (AF5AG). Mmes./Messrs. Edilberto Segura, Michael Baxter and Elizabeth Katz are the Department Director, Division Chief, and Task Manager, respectively, for the operation. I I 7. PROJECT COSTS AND FINANCING ...... .. .......... 24 A. Costs ................................... 24 B. Financing ................................ 25 C. Disbursements ............................. 25 D. Procurement .............................. 27 E. Cost Recovery ............................. 29 8. PROJECT ORGANIZATION ........... ............. 31 A. Project Coordination ......................... 31 B. Accounts and Audits ......................... 32 C. Monitoring and Evaluation ...................... 32 9. BENEFITS, ECONOMIC ANALYSIS, ENVIRONMENTAL IMPACT, EFFECT ON WOMEN, AND PROJECT RISKS 34 A. Benefits ................................. 34 B. Economic Analysis ........... ............... 35 C. Environmental Impact ........... .............. 36 D. Effect on Women ............ ............... 37 E. Project Risks .............................. 37 10. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDATIONS ......................... 38 ANNEXES Annex 1. Total Summary Accounts Project Components by Year Financing Plan by Disbursement Category Disbursement by Financier by Semester Estimated Schedule of Bank Disbursements Annex 2. Performance Indicators Annex 3. Supervision Plan Annex 4. Land Distribution in the Three Project Irrigated Areas Annex 5. Rio Nizao Watershed Management Program Annex 6. Participatory Research and Development Grants Scheme Annex 7. Irrigation Infrastructure Components Annex 8. Training and Technical Assistance Annex 9. Financial and Economic Analysis Annex 10. Documents Available in Project File ANNEX 9 Page 9 of 9 return in YSURA can be found in the cost of irrigation development and the benefits attributable to increased crop production. Even though investment in the irrigation system in YSURA has been limited to drainage and riverbed protection and land levelling, costs of operation and maintenance are particularly high, and the overall base cost of the irrigation component per hectare, at about US$ 1200, is above that in PRYN (US$ 1030) and Nizao- Valdesia (US$ 920). Due to the lack of investment in irrigation per se, a smaller proportion of the area benefits from infrastructure development. The cropping pattern, notwithstanding the inclusion of industrial tomatoes, also has a relatively limited representation of high value vegetable crops (reflecting the less favorable location with respect to the major urban centers and resulting poorer marketing opportunities). For these reasons, overall net crop production benefits per hectare are about 10 to 20% below those in Nizao-Valdesia and PRYN respectively. 27. Even at 14%, the IRR for YSURA is satisfactory in the context of an Opportunity Cost of Capital (OCC) of 12%. The overall rate of return for the project at 19% indicates a sound project. Sensitivity 28. Sensitivity analysis carried out for the overall project indicates a greater sensitivity to changes in benefits than in costs. Switching values at the OCC show that benefits would need to fall by 18% while costs could increase by as much as 22% before reducing the IRR to 12%. Both changes are, however, substantial and unlikely to arise. The impact of 10 and 20% changes in costs and benefits is indicated in the table below. Another possibility is a lag in benefits, if all benefits were to be delayed by one year, the IRR would fall to 14%. Essentially the test results show that relatively significant adverse conditions would be required to reduce the economic viability of the project to below acceptable levels. Sensitivity Tests on ERR ERR Base Case +10% +20% Increase in costs 19 15 12 Decrease in Benefits 19 15 11 Inc. in costs and Dec. in benefits 12 5 DOMIICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT 1. LOAN AND PROJECT SUMMARY Borrower: Dominican Republic. Implementing Agency: National Water Resources Institute (INDRHI) Beneficiaries: INDRHI; Ministry of Agriculture; Association for the Development of San Jose de Ocoa (ADESJO); Water Users Associations of Nizao, Santiago, Azua; and Nizao Watershed Farmer Associations. Poverty: Program of targeted interventions. Poverty reduction measures include investments in irrigation infrastructure in irrigated small-farm areas, a watershed management program for farmers living below the rural poverty threshold, and establishment of eligibility criteria for the allocation of research and extension programs to ensure that these programs meet the needs of the small farmers in the project areas. Amount: US$28.0 million equivalent, including up to US$800,000 of retroactive financing. Terms: Maturity of 20 years, including a 5-year grace period, at the Bank's standard variable interest rate. Commitment Fee: 0.75 % on undisbursed loan balances, beginning 60 days after signing, less any waiver. Financing Plan: See para. 7.2 Economic Rate of Return: Estimated at 19 percent average for the 3 irrigated areas. Staff Appraisal Report: 12233-DO. Maps: IBRD No. 25141, Nizao; 25142, Ysura; and 25143, PRYN. ANNEX 9 Page 8 of 9 increases by another 5% of the area each year until the 30% coverage is attained in PY7. The cropping patterns under the different irrigation systems are the same as those indicated in the financial analysis. Similarly, yields of areas without adequate irrigation or drainage are assumed to be 15% below average in the without project situation and improve to average levels with the intervention of the project. In areas benefitting from agricultural development, yields increase in accordance with the crop models and cropping intensity improves 20%. Because of the large proportion of the area affected by land levelling in PRYN and YSURA, it is assumed that this would include the 30% of the area benefitting from agricultural development. In the case of Nizao-Valdesia, the area affected by land levelling would be additional, yields would increase but there would not be any impact on cropping intensity. In PRYN, the areas receiving drainage are assumed to be among those benefitting from land levelling. Prices 23. Because of the frequent changes in trade regime and erratic implementation of tax laws, the relationship of financial to economic prices in the Dominican Republic fluctuates and is difficult to determine. Import taxes currently average 25 - 30% and there has been progress in stabilizing the exchange rate, which is now guided by market forces. For the purposes of the economic analysis of the project, an SCF of .8 has been adopted to reflect existing distortions. 24. For tradeable agricultural inputs and outputs, the border prices estimated by the preparation mission have been adopted. The appraisal mission has also followed the practice of using the financial wage rate for unskilled labor to value farm labor as off-farm employment opportunities at similar wage rates are readily available. Results 25. The cost and benefit streams used in the economic analysis are given in Tables 1 to 12 of Appendix 1 and the results are summarized below: Internal Rate of Return (%) Area IR Nizao-Valdesia 21 PRYN 21 YSURA 14 Three areas together 19 26. Costs for activities other than irrigation development have been allocated roughly in proportion to the area under the three schemes, so explanatory factors for the lower rate of I~~- ANNEX 9 Page 7 of 9 D. Economic Analysis Scope 20. Economic analysis has been carried out for the individual irrigation schemes and for the three combined, accounting for almost 90% of project costs. The analysis covers all related investment both for irrigation infrastructure as well as agricultural development and institutional strengthening. It does not include the Watershed Development component and related research in view of the experimental nature of these activities. Assumptions 21. The areas under the three irrigation schemes expected to benefit from project activities and the phasing of investment are indicated in the tables below. In addition, it is assumed that extension and research activities would have an impact on 30% of the area farmed under each scheme in the formi of adoption of improved technical packages and increased yields. Project Area (ha) Nizao-Valdesia PRYN YSURA Total area: 8500 4650 6300 Area benefitting from: Irrigation improvements 3000 600 Drainage/Protection - 1200 1800 Land Levelling 650 3400 3200 Phasing of Investment (%) PYl PY2 PY3 PY4 PY5 Nizao-Valdesia Irrigation 5% 40% 40% 15% Land Levelling 10% 40% 50% PRYN Irrigation 15% 60% 25% Drainage 15% 60% 25% Land Levelling 20% 20% 20% 20% 20% YSURA Drainage 15% 60% 25% Land Levelling 20% 20% 20% 20% 20% 22. The impact on the cropped area is assumed to occur in the year following the investment. For the agricultural development the impact starts on 5 % of the area in PY2 and - 1 - 2. THE SECTOR CONTEXT A. The Economy 2.1 The performance of the Dominican Republic's economy slowed dramatically in 1979-90 compared with 1970-78. Economic growth averaged 7.5 percent in 1970-78 but only 1.2 percent in 1988-92. In the earlier period, under conditions of domestic price stability and external equilibrium, GDP growth exceeded population growth (which was 3 percent) and allowed increasing investment and consumption per capita. But, since 1979, GDP has not grown as fast as population, and per capita consumption declined at an average annual rate of about 2 percent. 2.2 The reasons for the general stagnation of economic growth include extensive price controls, poor performance in the public sector, and inadequate policies, distortions, and uncertainties in the trade sector. These factors led to inadequate investment in public infrastructure and human capital development. 2.3 In 1990 the Government, with the support of the IMF, initiated a New Economic Program which has focussed successfully on reducing inflation and stabilizing the economy. The exchange rate system has been unified and a market- determined exchange rate has stabilized at RD$12.97 per U.S. dollar (as of December 30, 1994). Domestic prices have been liberalized and reforms have been initiated in trade, taxation, and the financial sector. These recent improvements in economic performance provide an opportunity for expanded Bank assistance. B. Agriculture in the Economy 2.4 Natural conditions in the Dominican Republic are favorable for agriculture development. The sector employs about 35 percent of the labor force. The traditional exports of sugar, coffee, cocoa, and tobacco are the main crops, occupying more than half of the agricultural land and generating more than 60 percent of merchandise exports. The remaining land suitable for agriculture is dedicated largely to food crops, of which rice is now the most important. Crops accounted in 1991 for about 68 percent of the gross value of agricultural production with the remaining 32 percent shared by livestock (28 percent) and forestry and fisheries (4 percent). But the contribution of farming to the economy has been declining. The agricultural sector--including the sugar industry--accounted for only 17 percent of GDP in 1991, compared with 19 percent in 1980 and 26 percent in 1973. Although the annual growth rate of total GDP was about 2.8 percent in 1980- 89, for agricultural GDP it was only 1.4 percent, dropping to less than 1 percent in 1988-92. ANNEX 9 Page 6 of 9 to family labor at full development is well over twice the wage rate, suggesting that there should not be a problem with paying the water charge. In fact, even in this situation, where the water charge is highest, it only represents about 11 % of total costs. Supplementary analysis of the returns per hectare for individual crops with full costing of the labor input shows that only a few crops - maize, rice and peanuts - in the situation of inadequate irrigation/drainage would not generate enough revenue to cover the cost of the with project water charge. Payment of Water Charges 18. If this is the situation, why has the record of payment of water charges, which have been much lower, been so poor in the past? and what is the implication for payment in the future? Essentially there is a problem of perception: in so far as water has been perceived as a free good and irrigation a public service, farmers have been reluctant to contribute to upkeep of the system. The situation has been aggravated when the service has not been efficient and water has not been available in adequate amounts when required. With the development of Water Users' Associations and the transfer of responsibility for upkeep of the distribution system to them, the situation has improved, as witnessed by the better payment record of WUA members. There is a greater sense of responsibility for the system and correspondingly a greater willingness to pay for its upkeep. However, experience has shown that willingness to pay is very closely linked with the quality of the service provided and the need for water. In these circumstances, the importance of ensuring the efficiency of the irrigation system is underlined. This requires not only better infrastructure but also training in improved operation and maintenance practices. It is therefore an integral part of the project to strengthen the WUAs with a view to improving the effectiveness of services rendered to members, enabling enhanced recovery of costs of irrigation system operation and maintenance and facilitating the achievement of financial viability. 19. Although payment of the water charge does not represent a significant outlay for the average farmer, it would not be realistic to expect that full cost recovery could be easily achieved under the project. Given that existing recovery is about 60 - 70% of amount due in PRYN and YSURA, where the WUAs have been established for some time, and probably lower in Nizao-Valdesia, where users are only partially organized, a reasonable target might be cost recovery of the amount required to finance WUA operations, i.e. operation and maintenance of the distribution network, by the third year of the project. By the end of the project, about 80% of total 0 & M costs might be recovered under the PRYN and Nizao- Valdesia systems, but it is unlikely that more than 50% recovery of the total 0 & M costs of YSURA could be achieved. The lower expected recovery under the YSURA system is both a reflection of the higher cost and the fact that project intervention would be less comprehensive than in the other two areas. - 2 - 2.5 When the agricultural sector is viewed more closely, the problems are clearly found mostly in the crop subsector. The average annual growth rates of agricultural GDP by subsector for 1980-89 are 3.9 percent, forestry and fisheries; 0.7 percent, crops; and 2.4 percent, livestock. Crops lacked dynamism especially in the second half of the past decade; 1981-90 average growth rates for rice, maize, sorghum, and beans were close to zero or negative. Domestic agricultural policy, a lack of credit, deterioration of mechanization services and irrigation systems, and an extreme drought in 1990, all contributed to this situation. Iblmate and Soils 2.6 The climate and soils in the Dominican Republic place practically no restrictions on growing tropical and some subtropical crops. Warm temperatures throughout the year allow a 12-month growing season with irrigation. Although the temperature does not vary substantially, the seasons are distinguished by variations in rainfall. The summer rainy season lasts from May/June to October/November when the winter dry season starts. There are very sharp differences in rainfall between the windward and leeward sides of the four mountain ranges that cross the island. The rainiest areas are in the northeast, which is exposed to the trade winds, and in the Cordillera Central (above 2,000 millimeters per year). In some southern areas, rainfall can be as low as 500 millimeters per year. This range of variations, from high humidity to semi-aridity, is aggravated by the great differences in altitude. 2.7 Soil types vary widely and thus so does production potential. Soils that have agricultural potential (Classes I to IV) cover 20 percent of the country's area, and soils suitable for pasture (classes V and VI) cover another 25 percent. The remainder (classes VII and VIII) comprises mountain areas suitable for forests (53 percent) and conservation (2 percent). Land Use and Distribution 2.8 The Dominican Republic has a total area of 4.8 million hectares, of which 2.6 million hectares or 54 percent are suitable for agricultural and livestock production. The remaining 46 percent are marginal areas and, at best, are suitable for forestry and conservation. Of this, large areas have been deforested or are without any use. Some 1.7 million hectares are under pasture and support livestock production, mainly beef and milk. Approximately 0.6 million hectares are under cultivation, with sugarcane, cocoa, coffee, tobacco, coconuts, and fruit trees occupying an estimated 0.3 million hectares. About 0.3 million hectares produce seasonal crops for the domestic market, mainly rice, maize, beans', groundnut, root and tuber crops, and tomatoes. Seasonal crops have shown a strong increase in some areas at the expense of tree crops, pasture, and forest areas. Increased irrigation may have contributed to this trend. ANNEX 9 Page 5 of 9 limitation to planting of host crops over specified periods, was proving relatively effective and industries were returning to the Azua area and expecting to substantially increase contracts for planting there in the next few years. It was therefore considered appropriate to assume that a relatively important part of the cropped area (25%) under the YSURA model would be planted with industrial tomatoes. 15. In the without project situation of inadequate irrigation/drainage envisaged under Model A, yields are 15% below average. With improvement to the irrigation/drainage system under the project, yields increase to average levels. Cropping intensity does not change. Under Model B, yields develop to the full potential identified in the crop models while cropping intensity improves by about 20% to 0.94 in Nizao-Valdesia and YSURA to 0.8 in PRYN. For both models, it is assumed that the farmer's family would be in a position to provide the majority of the labor required and that only 10% of labor requirements would be hired. In the without project situation, current water charges prevail, whereas with the project, charges are increased to cover WUA costs in the first year and subsequently to cover the full cost of irrigation system 0 & M. Results 16. Appendix 1 gives the results of the financial analysis in the form of farm budgets for the various models achieving in PY5 an averaged incremental farm income of 45% in Nizao- Valdesia, 51% in YSURA, and 72% in PRYN. They are summarized in tenns of return to family labor below: Summary of mnancial Analyis Results Returns to Family Labor (RD$/person/day) Irrigation System Without Project Full Development % Increase PRYN Model A 138 177 28% Model B 172 217 26% Nizao-Valdesia Model A 157 191 22% Model B 194 246 27% YSURA Model A 119 145 22% Model B 150 186 24% 17. In the case of Model B, the combined impact of the increase in labor input and the full water charge in year 2 causes a drop in return to family labor below that in the without project situation. This is also due to the establishment of new plantations of banana and plantain. Once the establishment phase is over, income improves to a level significantly above that in the without project situation. Even in YSURA in the Model A situation, return -3 - 2.9 Land distribution is characterized by a considerable concentration of land holdings with large farms. Census data from 1981 indicate that almost half (49 percent) of the agricultural land is titled and held by private owner-operators, 22 percent is controlled by the state, 3 percent is rented or sharecropped, and 26 percent is illegally occupied state and private land--or is under unclear status. It is estimated that 29 percent of the total irrigated area is property of the Dominican Agrarian Reform Institute (IAD) and the State Council for Sugar (CEA), while the remaining is private land. Titles given by IAD to farmers are temporary. This severely limits farmers' access to credit outside the Agricultural Bank (BA) and restricts full benefits from on-farm infrastructural investments. C. The Irigation Subsector 2.10 The Dominican Republic is well endowed with water resources. However, the distribution of those resources is not ideal for irrigation and cultivation. Precipitation ranges from 400 to 2,500 millimeters a year, with sharp differences even within relatively small irrigation systems. Because of the steep relief of the catchments, aggravated by deforestation, river flows closely follow rainfall. In the dry season, river flows are low and some rivers are dry in the semi- arid zones. Prospects for expanding cultivation by developing new lands are limited, but considerable opportunities exist for intensification of irrigated agriculture and, in particular, for better use of the existing irrigation infrastructure. 2.11 Irrigation systems began to appear in the 1920s, and the period 1930- 54 marked the greatest incorporation of areas into irrigation. The National Water Resources Institute (INDRHI) was founded in 1965, launching a policy of regulating the headwaters of Dominican rivers through the construction of storage dams and modem irrigation systems not far from urban centers. A low pace of irrigation development, however, was recorded from 1960 to 1979. During these decades the Government developed a policy of multipurpose use of water resources by constructing dams for power generation, irrigation, industrial and civil use. From 1970, a new irrigation program was initiated mainly to develop large irrigation schemes. During the same period, investments in dams and irrigation infrastructures averaged about 10 percent of total Government expenditures or about half of all investments in agriculture. Hydroelectric power plants associated with 7 storage dams have a total installed capacity of 270 megawatts, with average annual generation of 400 million kilowatt hours contributing 12 percent of the annual generation of the Dominican Corporation for Electricity. ANNEX 9 Page 4 of 9 Current Water Charge with Project Systemn RD$ WUA only *YUA + INDRMII District RDS % inc. RD$ % inc. PRYN 313 355 13% 530 69% Nizao-Valdesia 219 315 44% 515 135% YSURA 181 275 52% 785 334% 11. The difference, in terms of a water charge covering the full costs of 0 & M is very significant, particularly for YSURA. The situation with respect to the costs of the WUA for 0 & M of the distribution network alone represents a relatively modest increase. This is most true in the case of PRYN, which bears out the impression that this WUA currently comes closest to covering the costs of its operations. Assumptions for Financial Analysis 12. Financial analysis has been carried out on the basis of six farm models, two for each irrigation system. All models are two hectares each, considered to be the modal size of holding. Cropping intensity (excluding pasture) at the outset of the project reflects current practice and is 0.78 for YSURA and Nizao-Valdesia and 0.67 in PRYN where there are several larger holdings which are less intensively farmed. The crop models on which the farm models are based are those developed by the FAO/CP Preparation Mission.' For inputs, the prices were obtained from suppliers and verified by SEA technicians working in the project area, while those for outputs represent average farmgate prices for the period January-October. Labor was valued at the daily wage rate prevailing in the project area of RD$ 60/day. The prices used by the Preparation Mission have been adopted with a coefficient of 1.05 to reflect the price increase since the time of collection in January 1993. 13. For each system, farm model A represents a fanner who benefits from improvement in irrigation/drainage alone, while farm model B shows a farmer with adequate irrigation who benefits from agricultural development on his holding. The models and their evolution over a five year period are given in Appendix 1. In each area, the cropping pattern differs in order to represent what is typical based on past practice and an estimate of future prospects. There is assumed to be a slight change in the relative importance of different crops over the development period. The proportions of total cropped area represented by the various crops and the yields at different stages of development are also given in Appendix 1. 14. In the case of YSURA, particular consideration has been given to the prospects for industrial tomatoes. While this crop has been important in the past, in recent years it has been a major victim of the white fly. The mission was informed that control, in terms of 1. See Appendix 5, Annex 1, Volume 1, Report 55/93 CP-DOM 16. A minor modification was made to the budget for vegetables (horticolas) in order to include costs of mechanization in the without project situation. -4- Legal and Insttutonal Framework 2.12 Water Rights. In the Dominican Republic, the development and use of public water resources are subject to Law 5852, Ley del Dominio de las Aguas Terrestres (Water Law). This law covers virtually every aspect both of water development, from underground and surface sources, and end uses, whether domestic, industrial, or agricultural. It provides, among other things, for the creation of irrigation districts. The law also authorizes INDRHI to grant water rights based on an appraisal of the adequacy of existing or planned irrigation works to use the water effectively. INDRHI has responsibility for supervising use of the water and ensuring that all conditions of the law are met, including measuring the amount of water used and establishing priorities for use among groups of farmers supplied from a common source. Under the law, a water right is tied to the land and does not belong to the individual who owns or farms the land. Each year, water users must request a specific amount of water that can be used effectively for the purposes indicated in the water right--and this request is granted or modified by INDRHI, depending on the water supply and facilities available to satisfy such requests. INDRHI can also cancel water rights or transfer them to other lands. Uses in the public interest have priority over private uses. 2.13 Cost Recovery. The Water Rate Law of 1982 established that all irrigation districts were to become self-financing and recommended a 50 percent recovery of operation and maintenance expenditures in 1984, to increase annually by 10 percent through 1989. INDRHI has been having difficulties enforcing this law because of the unreliability of water supplies and the slow pace of organizing water user associations. Water tariffs, therefore, have remained low and cost recovery is unlikely to improve significantly in areas where services to water users are poor or unusable (Table 2.1). Experience with the pilot program of On-Farm Water Management Tal PeetRDhatYesoWaer Care Project (PROMAF) (RDS/ha/ Year) shows, however, that, Syslem Non-rice crops Rice when responsibility for 10 ha > 10 ha < 10 ha > 10 ha operation and maintenance is Nizao-Valdesia 219 438 438 876 transferred to the I'SURA 180 361 361 723 beneficiaries in water user associations, fee collection rates are much higher than before. Regarding cost recovery of irrigation investments, the current law enables the Government, through IAD, to acquire land for redistribution through the cuota parte (share of land) system after irrigation canals have been constructed. Landowners must return to the Government 50 ANNEX 9 Page 3 of 9 three systems which have been used in the financial and economic analysis. The revised costs are indicated in the table below: Revised Operation & Maintenance Costs (RD$/ha/year) Organization Activity Nizao- PRYN I'SURA Valdesia INDRHI Administration 30 45 75 Operation 25 25 50 Maintenance 145 105 385 Total: 200 175 510 WUA Administration 45 65 40 Operation 135 150 100 Maintenance 135 140 135 Total: 315 355 275 TOTAL 515 530 785 9. In establishing these costs, it has been assumed that INDRHI would remain responsible for the 0 & M of feeder/main canals, drainage and river protection works, pumping stations and service roads, while the WUA would take charge of the 0 & M of the distribution network (mostly lateral and sub-lateral canals and structures). In the calculation of WUA costs, the work of gate keepers and labor contributed by farmers for canal cleaning have been valued. Inefficiency of the District Offices is assumed to be overcome with a reduction of 50% in staff costs compared with the present situation. The existing disparity in remuneration between Santiago (PRYN) and the other areas remains, with salaries for PRYN staff 60% higher than those elsewhere. As the project intervention in YSURA is limited, it has been assumed that operation activities of the District Office would not improve although there would be some improvement in maintenance due to the availability of new equipment; at the WUA level, performance would be only 75 % of that of PRYN. District Office 0 & M costs for YSURA are higher than for the other two systems because of the heavy maintenance required by the extensive conveyance canal, the dense drainage network and the wells. 10. The following table provides a comparison of current water charges and those proposed under a with-project situation on the assumption that the revised costs would be fully reflected in water charges: -5- percent to 80 percent of their lands included in public irrigation projects. Farmers with holdings of less than 6.3 hectares do not pay cuota parte. 2.14 Organization of Water User Asodations Law 5852 also provides for the formation of water user associations. In 1984, a draft regulation was prepared for the organization of water users and their representation at all decision making levels of INDRHI (national, irrigation district, zonal, sector and communal farm turnout levels). So far, water user associations have been created only at the district level in three projects (Azua, Nizao, and Santiago). To help the Government transfer management to water user associations, a pilot project (PROMAF) supported by USAID was implemented with INDRHI. Two project areas, Azua (YSURA) and Santiago (PRYN Contract I), were partially developed, covering 14,400 hectares and serving 6,000 farmers. The results have been most impressive: water use is more efficient and fee collection rates are more than 80 percent of potential against the nationwide today of 25 percent. Public Institutions 2.15 The Ministry of Agriculture (SEA) is nominally responsible for implementing and coordinating the agricultural policies set out by the presidency and the National Council for Agriculture (CNA). SEA's administrative control over decentralized agencies it funds is limited. These include the State Sugar Council (CEA) and the National Institute for Price Stabilization (INESPRE), both of which have a significant effect on agriculture. The activities that SEA directly controls are primarily technical and skill-intensive, such as agricultural research, extension, training, planning, data collection and analysis; performance of these activities is generally poor. 2.16 The Dominican Agrarian Reform Institute is an autonomous agency that was established in 1962 with an endowment of 192,000 hectares expropriated by the state. Later, other lands were expropriated and entrusted to IAD to manage; for instance, in 1972, by law, all rice holdings larger than 500 tareas' (about 31.44 hectares) were expropriated. Later, all holdings over 100 tareas, which benefitted from Government-financed irrigation systems, were required by law to turn over to the Government a variable fraction of the land--50 percent if the land was cultivated before irrigation and 80 percent if it was not. IAD's land reform program is to distribute land to small farmers on terms that permit most of them to become self- sufficient and productive. Performance of the land distribution program is poor, however, because of cumbersome and lengthy IAD procedures. 1. One Tarea = 0.062 Hectares ANNEX 9 Page 2 of 9 C. Financial Analysis Scope 4. Financial analysis has been carried out at the farm level in order to determine the financial viability for the farmers of the proposed developments and, in particular, to assess their capacity to pay water charges to cover the operation and maintenance of the irrigation systems. Water Charges 5. In accordance with the provisions of Decree No.555 of December 1982, users of water for irrigation provided under INDRHI projects are required to cover the costs incurred by INDRHI to operate, maintain and administer such systems through payment of annual water charges. The basic tariff is estimated on a per hectare basis for irrigated holdings of less than 10 ha. Users of water for more than 10 ha pay double the basic amount for each hectare over 10 and cultivators of rice also pay double per hectare irrigated. 6. Water charges are proposed by INDRHI and established by parliamentary decree. Although they are intended to cover the costs indicated above, in fact the amount charged has consistently been inadequate and the amount actually collected, ranging from 20 - 60% of the amount due, considerably less. Furthermore, the process of establishing the charges is subject to political control and consequently it is difficult to introduce increases. Current charges were established by Decree No. 435-9 in October 1990. For the three systems covered under the project, the rates are given below: System Water Charge RD$/ha/yr Santiago (PRYN) 313 Bani (Nizao-Valdesia) 219 Azua (YSURA) 181 7. Where WUAs have been established, as in PRYN and YSURA, they have been given the responsibility for operation and maintenance of the secondary and tertiary canals and authorized to collect water charges to cover this cost. In these areas, no separate charge is collected by INDRHI, although the Institution remains responsible for operation and maintenance of the main canal. Collection, at 60 - 70% of the amount due, is considerably better than in areas where WUAs have not been established but the WUAs still rely on INDHRI for provision of heavy equipment and sometimes other support necessary to carry out their responsibilities. 8. Current water charges are inappropriate for two reasons: (a) they are not regularly updated to reflect changes in costs; and (b) actual costs do not reflect efficient operation and maintenance expenses as they are influenced by excessive staff and inadequate facilities. In the context of the project and following detailed analysis of budgets of INDRHI Irrigation District Offices and existing WUAs, the mission has estimated revised 0 & M costs for the -6 - 2.17 The National Water Resources Institute, an autonomous state agency under SEA, is responsible for planning, development and regulation of water resources. INDRHI was created by statute in the mid-1960s. The agency has statutory authority to investigate potential and proposed water resource developments, to determine availability of water, to adjudicate and allocate water between competing applications, and to charge and collect fees for water use. INDRHI is divided into four departments: Planning, Projects, Administration, and Irrigation Districts. For field operations, the country is divided into districts, which are subdivided into zones (and occasionally subzones) and sectors. Districts are usually divided on the basis of watersheds, although rivers sometimes are boundaries. Only a small portion of the area of a district comprises irrigation systems and related projects. 2.18 The Agricultural Bank was established in 1952 to support the Government's agricultural policy by providing the necessary financing. It is managed by a 7-member Board of Directors. The chief executive, who is appointed by the president of the republic, is also the director general. The Board of Directors includes the governor of the central bank, one representative from each of the country's five different administrative regions, and one from the Ministry of Agriculture. The headquarters is in Santo Domingo and there are 31 branches throughout the country. BA is lending mainly to small farmers who cannot obtain commercial banking credit for reasons of collateral, creditworthiness, and distance from bank locations. Of about 104,000 loans that BA had outstanding in 1990, about 65,000 (62 percent) averaged US$600; an additional 17,000 (16 percent) averaged US$1,000. A large part of these small farmers are beneficiaries of the agrarian reform and, as such, have access to BA credit without providing collateral. By law, these agrarian reform loans are guaranteed by the state, which reimburses BA for the unpaid portfolio; it does so very irregularly and with considerable delay, straining on BA's resource availability. ANNEX 9 Page 1 of 9 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT financial and Economic Analysis A. Introduction 1. Financial and economic analysis has been undertaken for the major part of the project which is concerned with the development of irrigated areas. The analysis does not cover the watershed management component as the activities proposed at this stage are essentially experimental in nature, intended to provide guidance for more extensive development in the future. B. Target Population 2. It is estimated that there are about 10,300 farmers under the three irrigation systems involved in the project distributed as follows: Irrigation Scheme No.of Farmers PRYN 2,015 YSURA 4,800 Nizao-Valdesia 3,500 The figures for PRYN and YSURA are up-to-date and may be considered accurate as they refer to members of the Water Users' Associations (WUA). The number of farmers under the Nizao-Valdesia scheme is more difficult to determine precisely as users have been organized in only 3 of the 8 sections, and the number of users in the 3 organized sections is about 1,260 farmers. 3. In the PRYN area, 48% of farmers are beneficiaries of land reform and account for about 30% of the land under the scheme. In YSURA, practically all holdings were distributed as a result of land reform. There are only two settlements of land reform beneficiaries under the Nizao-Valdesia scheme. Holdings of land reform beneficiaries average about 1.5 ha. Because of the significant presence of private landowners in the PRYN and Nizao-Valdesia schemes, there is more variation in land holding size in these areas, although not all private landowners are large farmers. Even outside the land reform settlements, not all farmers have title to the land they farm, often as a result of disputes over inheritance. -7- 3. DEVELOPMENT POTENTIL AND CONSTRAINTS A. Potential 3.1 Temperatures are conducive to year-round crop growth. And total average precipitation in many areas of the Dominican Republic (Santiago, for example) may appear to be satisfactory for rainfed crop production, reaching 1,000 millimeters per year. But the irregularity of the rainfall pattern and high evapotranspiration rates most commonly produce high risk for rainfed crop production. Thus high-input crops, such as tomatoes for processing, face special constraints. Typically, areas with average precipitation of 6,000 millimeters/year to 1,000 millimeters/year are still classified as having an arid climate. A 1978 study estimated the country's irrigation potential at 550,000 hectares which would require 43 percent of the total annual flow.2 This potential is considered overoptimistic, even unrealistic, however, as it is based on assumed irrigation efficiencies of 50 to 60 percent--85 to 90 percent for the conveyance and distribution systems and 60 to 65 percent for on-farm efficiency. Irrigated area today is believed to total 230,000 hectares. This area has considerable potential given the near proximity of a large export and import substitution market. B. Current rrigation Water Manag t 3.2 The most pressing problem, in all regions in the country but especially in irrigated areas, is poor management of existing resources, as reflected by a very low overall irrigation efficiency, of about 25 percent in the Dominican Republic. This is attributed to the relative abundance of water supplies; in some areas, the farmer has little incentive to manage water efficiently. Lack of properly designed and constructed primary and secondary canals and of adequate water control, measurement structures, and sufficient farm turnout devices are also key. In most of the country's irrigation systems little attention has been paid to minor canals, water management, and on-farm development, which has resulted in low field efficiencies. Similarly, there is insufficient main drainage infrastructure to provide drainage outlets to all farm units. As a result, about 20 to 25 percent of the land in the irrigation systems suffers from waterlogging, salinity, and high water tables. Other deficiencies include poor condition of the irrigation systems, including silted canal 2. INDRHI, 1978: Plan Nacional de Investigaci6n, Aprovechamiento y Control de Aguas Subterrdneas (PLANIACAS). ANNEX 8 Page 6 of 6 and implementation and management of adaptive research in the field as well as practical experience in technology transfer. Experience with participatory approach would be a strong advantage. The Research Specialist would speak and write fluent Spanish. 19. Duration of Contract. The assignment would be for 2 months in PY1, then 1 month each year during the last four years of project implementation. - 8 - and drains, inoperative gates, and the siltation of regulating and--to a lesser extent-- storage reservoirs 3 3.3 Other factors that contribute to the inefficient use of irrigation systems are the problems in the layout of on-farm irrigation canals because of the incomplete or outdated cadastral maps of the irrigated areas; the poorly developed agricultural production plans and cropping patterns, which are not based on available water resources in the storage reservoirs at the beginning of each dry season; insufficient knowledge by INDRHI and water user associations of the actual crop coverage; and a lack of operational manuals. In addition, irrigation requirements are not calculated on the basis of crop needs and actual rainfall, but are estimates. Water is delivered on demand when there is no scarcity and on a rotational basis at other times to different farmers, usually without strict time limits. There is no irrigation at night and on Sundays. 3.4 As a result of system deficiencies and a past mobility to adjust to variations in demand, large volumes of water are lost to the drains or to the farms at night and during the rainy season--and substantial areas are affected by waterlogging and salinization. C. Agriuural Deveopment 3.5 As noted above, agriculture in the Dominican Republic is characterized by a dualistic system of large and small holdings (para. 2.9). The coexistence of extensively operated large farms and many smallholders producing mainly for subsistence constrains technological development, appropriate use of resources, and increases in productivity. The levels of agricultural technology vary by region, crop, and fann type, but remain generally low. Intensive use of modern production inputs is limited to sugarcane, rice, tobacco, and some vegetables. Reliable data on areas planted to rainfed or irrigated seasonal crops and agroeconomic comparisons between the two farming systems are lacking. In general, the low productivity of crops in the Dominican Republic can be traced to weak research and extension services; low cropping intensity; inefficient management of farms, particularly those producing livestock and permanent crops; high cost of inputs; and land tenure and the related limited access to formal credit. In addition, poor water management, low irrigation efficiency and the problems of waterlogging and salinity associated with irrigation 3. Development Strategies for Fragile Lands. 1990. Evaluation of the on-farm water management project in the Dominican Republic. USAID contract no. DHR - 5439- C-19-6054-00. 4. World Bank. 1986. Dominican Republic - Agricultural Sector Study Report no. 6267-DO. ANNEX 8 Page 5 of 6 provide on-the-job training in watershed management, as well as help establish the format and trend of watershed planning during the initial years of project implementation. 12. Scope of Work. Working closely with ADESJO, the specialist would assist project staff to formulate work plans to guide watershed management planning and implementation in the Nizao watershed area following the guidelines and concepts presented in Annex 5. With the project team, the incumbent would assist to assemble baseline data including maps, aerial photos, statistical output data, land-use data, climatic data, streamflow and sediment discharge data, etc. In addition, he will participate in the definition of research programs and in the preparation and setting-up of an Environmental Monitoring system. 13. Qualification and other Experience. The incumbent would be DR national and would hold a degree in either watershed management, agricultural science, or forestry. He would possess at least 10 years of experience in soil and water resource management. In addition, he would be versed in each of the following teclhical skills: (a) Computer literate in word processing and use of standard spreadsheets; (b) Soil sampling, soil survey, land use capability, and soil classification; (c) Soil loss and run-off estimation procedures including for non-agricultural lands; (d) Participatory land management procedures; (e) Soil and water conservation; (f) Mapping skills, aerial photos interpretation. 14. Place of Duty. San Jose de Ocoa. 15. Duration of Contract. 5 years. Participatory Research Specialist 16. Duties. The Participatory Research Specialist would work with the PEU and the watershed specialist to establish a Participatory Research and Development Grants Scheme as presented in Annex 6. 17. Scope of Work. The Research Specialist would prepare detailed technical bidding documents for the four major PR&D contracts. In the course of project implementation he/she would advise the PR&D-GB in preparing standard format for RD&D proposals and in reviewing the technical proposals as well as their costing. 18. Qualification and Experience. The Research Specialist would be internationally recruited and would have agricultural qualifications and post graduate training in rainfed and irrigated crop production. He/she will have more than 10 years field experience in the planning -9 - also contribute to low productivity. An increase in crop productivity and more efficient land use depend on the removal of these constraints. The Government has initiated development projects aimed at increasing the productivity of some export crops, such as coffee and cocoa, but insufficient attention has been given to other crops. 3.6 Major potential for increasing production lies in improved use of irrigation facilities, which would allow the present cropping intensity--about 80 percent--to be increased to 130 to 140 percent. As mentioned earlier, efficient functioning of the existing irrigation system is constrained by institutional, financial, and system design issues of INDRHI and water user associations. D. Environmental Constraints Drainage and Salinization 3.7 Most irrigable land in the Dominican Republic is in the 3 large rift valleys that lie between the island's 4 mountain ranges. The topography of the irrigable areas varies from moderately hilly and undulating to uniformly flat. Slopes of 2 to 5 percent and the many streams allow good surface drainage of gently sloping land. However, incomplete irrigation infrastructure and over-irrigation has produced drainage problems in low-lying areas. As a result, the permanent waterlogging of some plots has created a "water-bridge" between the saline water table and the top layers of the soil. Little research has been done on this issue. Another problem is the potential threat of saline intrusion in coastal aquifers. This is most likely to occur where storage for hydroelectricity or consumptive use of water for irrigation in the dry season reduce flows near river mouths or estuaries so much that ground water recharge cannot prevent the advance of seawater. There has been no indication that this process is under way in the southwest or northwest, which would affect the quality of water available to the increasing population at beach resorts and other coastal towns. Nevertheless, the prospect cannot be ignored in view of likely increased demands for water for irrigation, industrial production, and domestic consumption. There is only limited information on the behavior of aquifers (coastal or inland) with which to estimate the probability of saline intrusion and design remedial or preventive measures. The proposed project would require that investments for such areas address this issue as part of the environmental monitoring. Degradation of Natural Resources 3.8 Deforestation, combined with inappropriate agricultural use of mountain and hill areas, has intensified soil erosion, which in some areas has irreversibly damaged the soil's productive capacity. Soil erosion has caused excessive sedimentation in riverbeds, storage dams, and irrigation canals. The loss ANNEX 8 Page 4 of 6 6. Job descriptions for the T.A. specialists, Economist/MIS/Monitoring Specialist, Watershed Management Specialist, and Participatory Research Specialist would be as described below: Economist/MIS/Monitoring Specialist 7. Duties. The internationally recruited specialist would be required assist his counterpart in PEU to develop practical Management Information Systems/Environmental Monitoring System and to devise a program for monitoring project activities in the irrigated areas as well as in the Nizao watershed. 8. Scope of Work. The specialist would work closely with PEU personnel and WUAs and ADESJO staff. He/she would devise systems and source for the collection and analysis of technical and financial parameters of project activities. During project implementation, in the irrigated areas, the data base so created would be continuously updated so that each WUA would be in a better position to manage carefully the use of lands and of irrigation water, as well as the cash-flow of the different farm models. In the Nizao watershed, the data base would be used to accurately review the MC development plans as low cost, technically and economically viable. The tools and approach to the participatory approach to MC management would be constantly under review and the MIS would assist management to devise ever more transparent means of explanation of options, in the smooth planning and imnplementation, with modifications, if appropriate. Both in irrigated areas and in the watershed area, the specialist would propose key socioeconomic indicators of project impact (qualitative and quantitative). 9. Qualifications and Experience. The Economist/MIS/Monitoring specialist would hold a degree in agricultural economics and relevant experience extending over at least ten years. He/she would demonstrate ability to work with multi-disciplinary teams and competence to set up operational procedures. Technical skills would include: (a) computer literacy with experience in setting up large database systems, using spreadsheets and word processing; (b) micro project planning and economic and financial feasibility analysis; (c) knowledge of farm survey participatory approach and systems. Fluency in Spanish. Experience of working in the irrigated areas and/or watershed areas would be an advantage. 10. Duration of Contract. 3 months during PYL. Watershed ant Specialist 11. Duties. The Watershed Management Specialist would work closely with the Project Executing Unit, technical staff of ADESJO, and farming communities representatives to develop management plans for priority microcatchments. In so doing, the incumbent would - 10 - of vegetative cover has reduced water retention capacity in the catchment areas, producing irregular water flows and flooding, and has reportedly led to the drying up of hundreds of small rivers and streams. In addition, the useful life of hydraulic infrastructre such as storage and re-regulating reservoirs is shortened. 3.9 Little has been done to address the deforestation and inappropriate use of mountain slopes which cause the erosion. Preliminary experience with the Plan Sierra (Sierra Plan) and a few projects of the General Forestry Directorate and the Ministry of Agriculture suggests that responsibility for soil and water conservation and management of forest areas are dispersed among various government institutions with overlapping activities and conflicting objectives. Moreover, land rights and regulations on land use are not clear. Thus, where an individual settler occupies state land, neither the individual nor the state is willing to invest in the land, even through tree planting. Private sector involvement generally is constrained by a lack of clear rules about land to be used for forests and uncertainty about future changes in regulations. All these issues would be addressed on a pilot basis through the proposed project. ANNEX 8 Page 3 of 6 * project objectives and participatory MC planning; * study trips to demonstrations and treatment sites; * forest land management treatments; * agroforestry management treatments; * rainfed and irrigated farming techniques; * village responsibilities in the management of community lands. Detailed training programs would be worked out with the help of the technical team and the sociologist/training specialist recruited for reinforcing the team of ADESJO. Technical Assistance 5. In order to help upgrade technical skills and develop managerial capabilities at the level of each WUAs and ADESJO, the project envisages Technical Assistance (TA). TA is identified as being both national and international and recruitment would be carried out accordingly. Technical Assistance Pi, I PY2 PY3 PY4 PY5 Short-Term T.A. (month) Economist/MIS/Monitoring 3 - Specialist Accountant 3 1 Legal Expert 1 - Procurement Specialist 2 Research Specialist 2 1 1 1 1 Long-Term T.A. (year) Project Coordinator 1 1 1 1 1 Watershed Management 1 1 1 1 1 Specialist l Civil Engineer 1 1 1 1 1 Water Management Expert 1 1 1 Agriculturalist 1 1 1 1 1 Monitoring Specialist 1 1 1 1 1 Administrator 1 1 1 1 1 Accountant 1 1 1 1 1 Computer Specialist 1 - 11 - 4. BANK INVOLVEMENT AND LESSONS LEARNED A. Bankwide Lending for Irrigation and Drainage 4.1 Irrigation and drainage projects account for about one-third of Bank lending to agriculture. Although Bank-supported investments in irrigation and drainage have been generally beneficial, there is growing concern about the quality of some of the projects. The overall operational performance has been poorer than expected and the sustainability of many investments is uncertain. Recurring issues include the effectiveness of large-scale, public sector, gravity irrigation systems as opposed to largely private-sector irrigation development; the proportion of projects not completed, especially under program or time-slice approaches; poor preparation and design of schemes; overestimation of irrigation system efficiency; substandard construction quality; the low level of cost recovery; and the role of major commodity price shifts. The physical infrastructure has often deteriorated, leading in some cases to long-term declines in production and low efficiency in water use. Inadequate operation and maintenance funding and institutional and organizational problems have contributed to this shortfall in performance. Borrowers often disengaged too early from projects, leaving irrigation and drainage systems incomplete and land development unfinished, with complementary services inadequate or seriously delayed.5 In addition, some Bank-financed projects suffer from underestimated costs because of inadequate engineering designs, preparing tender documents, and bids; slower-than-estimated civil works construction and equipment delivery times; and lower-than-estimated water use efficiencies.' 4.2 Poor design of the system has also contributed to a poor cost-recovery record in Bank-financed irrigation projects. In most cases, no capital costs were recovered, and in two-thirds of the Bankwide projects reviewed, the covenant requiring that cost recovery fully satisfy operation and maintenance funding had not been met, with the proportion of operation and maintenance costs recovered generally reaching only a range of 15 to 45 percent. In addition to an unreliable water supply resulting from poor design and poor operation and maintenance, the two other factors in weak cost recovery are the often heavy burden of direct and indirect taxes already imposed by governments on farming and a lack of government commitment to recover costs.7 5. Evaluation Results for 1989, Operations Evaluation Department (OED). 6. Annual Review of Evaluation Results for 1989 - Agriculture and Rural Development, OED. 7. World Bank Lending Conditionality: A Review of Cost Recovery in Irrigation Projects, OED, OPS No. 6283, June 1, 1986. ANNEX 8 Page 2 of 6 3. Farmer Training. The content of any training would depend on the training received by the extension staff and the findings of the participatory research. Allowance has been made in the costs for a certain number of days per year for training in production techniques and water management, and also for field days and visits to research stations or experimental farms. Provision has also been made for the establishment of a demonstration plot in each sector at a cost of RD$5,000/plot/year. The costs for the different types of training and the number per year per system are about DR$60 per participant for training in production techniques and water management, DR$20 for field days, and DR$10 for visits. Numbers of Participants Course/Systen PYI PY2 PY3 PV4 PY5S Production techniques Nizao 700 1000 1000 1000 1000 PRYN 400 600 600 600 600 YSURA 950 1500 1500 1500 1500 Water Management Nizao 700 1000 1000 1000 1000 PRYN 400 600 600 600 600 YSURA 950 1500 1500 1500 1500 Fleld Days Nizao 1000 2000 3000 3000 a 3000 PRYN 500 1000 1500 1500 1500 YSURA 1000 2500 3500 3500 3500 Visits Nizao 500 1000 1500 1500 1500 PRYN 400 800 1200 1200 1200 YSURA 800 1500 2500 2500 2500 4. Training in the Nizao watershed will be done following the guidelines described in Annex 5. Throughout project implementation, the microcatchment planning process will introduce project objectives, the participatory mode of operation, the technical treatment options and their estimated effect on production, the local responsibilities for management of community lands and the cost sharing arrangements to the concerned villagers. This can be done through visits to sites where different demonstration treatments have been implemented. The training would in summary cover the following topics: - 12 - B. Lending to Agriculture in Latin America and the Caribbean 4.3 From recent Bank experience lending to agriculture in the Latin America and the Caribbean Region, several factors have been identified as contributing to poor project performance: lack of a supportive policy environment; inadequate counterpart funding; weak implementation institutions in the sector; overly complex design; and technical shortcomings in preparing and appraising projects. The institutional weakness suggests that the size and complexity should be largely determined by the demonstrated implementing and funding capacity--and commitment--of the agencies involved. For irrigation projects, the failure to adequately involve proposed beneficiaries in project design and implementation is also seen as a major cause of unsatisfactory performance. The result is overly optimistic assumptions about efficiency and productivity increases. C. World Bank Involvement in the Dominican Republic 4.4 The Dominican Republic experience shows more than a decade of checkered relationships between the Government and the Bank. The Bank lent only US$86 million to the Dominican Republic between 1969 and 1978. The relatively small amount loaned was mainly a result of the Government's lack of clear investment priorities, inadequate project preparation capacity, reluctance to address sectoral issues in the context of project financing, and extremely conservative policies regarding external borrowing. Moreover, project implementation performance was disappointing and disbursements were slow, while poor management of the public investment program and public finances led to a perennial shortage of counterpart funds. At the end of the 1970s, a spurt increased Bank lending to US$172 million. Between 1982 and 1986, total Bank lending was only US$66.6 million, 46 percent of which was canceled for similar reasons as in 1969-78. 4.5 The progress of the Government's New Economic Policy has been encouraging (para. 2.3). Inflation has been dramatically reduced and international reserves accumulated. All targets under the first Stand-by Arrangement with the IMF agreed to in August 1991 were met. A Paris Club rescheduling was achieved in November 1991 and most of the corresponding bilateral settlements have been completed. All arrears to multilateral creditors were eliminated early in 1991, and the Government has serviced its debt to them on time since then. A second Stand-by Agreement was approved in July 1993. These recent improvements in economic management give the Bank an opportunity to assist the country's development through an increase in conventional investment lending. 4.6 The Bank has made five agricultural credits or loans to the Dominican Republic in the past two decades, totaling some US$104 million. Two of them were irrigation projects--a US$13.0 million IDA credit for the Yaque del Norte Irrigation ANNEX 8 Page 1 of 6 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Traning and Technical A 2iEanc 1. There is good technical experience within INDRHI in construction of irrigation infrastructure, however experience in water and irrigated land management, as well as watershed management is limited. A key feature of successful irrigated land and watershed management is the close involvement of the people who use the resources in question. Unless the program responds to their priorities and requirements and brings quick and substantial benefits, the improvements are unlikely to be sustained. This kind of "participatory" or "interactive" planning is to a large extent new in the Dominican Republic. ADESJO, the NGO working in the Ocoa area, is one of the few organization with some experience in this domain. Moreover, some gaps have been identified in the areas of financial management, monitoring information system, and management of research and extension programs. The training and technical assistance component of the project is designed to overcome these gaps in the domestic experience and to upgrade the technical skill of farmers and technical staff in the selected areas who will be involved in project execution. Recruitment of staff will be done on a contractual basis to give better leverage to the users to monitor and control the contracted services. Traning 2. Staff Training: (a) Communications. This is the training in extension methodology with the interactive process that would be carried out by ADESJO. Extension staff from the WUAs would go to San Jose de Ocoa for 6 days each year. The cost per person is estimated on the basis of DR$200/day plus DR$100 for materials. (b) Technical. For extension staff from the WUAs, training would be provided by the contracted specialized institutions for technology generation and transfer. 10 days per year at a cost of DR$200/day. (c) Study trips to other WUAs. For extension staff to meet and exchange experiences. One day per trimester at a cost of DR$100/day. - 13 - Project, approved in 1973, and a US$27.0 million Bank loan for the Nizao Irrigation Project, approved in 1979. The others were livestock development, cocoa and coffee development, and sugar rehabilitation projects. For the two irrigation loans that have been evaluated by OED ERRs as calculated by OED have been much lower than in the respective SAR or PCR. Three lessons are relevant. First, given the institutional weakness of public agencies in the agricultural sector, sustainability for irrigated farming development requires the involvement of the private sector. Second, some institutional support is, nevertheless, required for public institutions to ensure adequate monitoring, coherent policies, and a long-term investment strategy. Third, implementation of rural development requires a participatory approach. This asks for a starting phase of group management training for the farming community to design and agree on needed investments and rules for managing the land in a holistic and sustainable manner. 5. PROPOSED STRATEGY, DESIGN, AND RATIONALE FOR BANK INVOLVEMENT A. The Government Strategy in Irrigation 5.1 Agriculture accounts for 17 percent of GDP and more than 70 percent of the country's earnings from merchandise exports. The Government has invested heavily in the sector. Investments in dams and irrigation canals averaged about 10 percent of total Government expenditures on capital formation in the last decade or about half of all investments in agriculture. Little attention has been paid, however, to infrastructure maintenance, on-farm development, water management, and the development of productive support services. The proposed project reflects the shift of emphasis from capital-intensive projects to projects that will generate quick returns and will not rely too heavily on the public sector. With the liberalization of prices and the transfer of the marketing of most crops to the private sector, the full exploitation of partially developed irrigation potential offers the best and quickest means to increase agricultural production and incomes. 5.2 The Dominican Government has decided to increase investment in the irrigation subsector in order to sustain agricultural and export growth, protect significant existing investments in irrigation infrastructure, increase the productive capacity of small farmers in poor rural areas, and produce the environmentally sustainable systems. Toward this end, the Government has taken several actions to fix the problems of the irrigation sector. The Government is now implementing a program to increase water charges, so that the irrigation districts become financially self-sufficient, and to transfer the responsibility of operation and maintenance to the I - 14 - beneficiaries. INDRHI's investment program includes three categories: new projects, involving irrigation and multi-purpose use; rehabilitation and improvement projects, including structures missing or in need of repair, to cover about 150,000 hectares; and completion projects, to finish up several irrigation systems served by existing storage dams. The proposed project is one of six priority projects economy- wide for which the Government has sought support from the international community. B. Rationale for Bank Involvement 5.3 The Bank has had a limited lending program in the country, with few successful projects. There are currently no Bank-financed agricultural projects under implementation in the Dominican Republic. There is a need to rebuild credibility and mutual confidence between the Bank and the Government. In this context, the Bank has renewed its attempts to develop a policy dialogue in agriculture through in- depth sector work to identify additional measures that can be taken to help the agricultural sector fully benefit from the macro reforms. The proposed project provides an opportunity to complement this sector work through limited participation in a project which can achieve useful results without having to tackle issues sector- wide. It builds on a dual lesson from the past: the need for strong Government ownership and as much private-sector participation as possible--based on a careful assessment of the risks. This is preferable to relying on weak Government institutions. 5.4 The main reasons for Bank participation in the project have already been described above. Irrigation is the major area of focus of Government in agriculture at present. The successful pilot operation (PROMAF) aims to transfer responsibility for operation and maintenance to the beneficiaries organized in water user associations. Through the proposed project, the Bank will be able to play a key role in helping Government to strengthen and reorient supporting activities-- extension, watershed management, cost recovery, the transfer of full responsibility for operation and maintenance to farmer groups, approaches to sustainable management by water users, land titling, and defining of the roles of the public and private sectors. The Bank has extensive experience in Latin America and elsewhere in all these issues. 5.5 The proposed project is consistent with the objectives enunciated in the Country Assistance Strategy that accompanies this Report, of broadening the benefits of economic growth and promoting sustainable natural resource use. The project is also consistent with the Bank lending strategy in agriculture in the Dominican Republic and the full commitment of the Government to do three things: formulate and implement a rational long-term strategy and policies for irrigation development, complementing the initial steps to be taken under the proposed project; strengthen the ANNEX 7 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Iriation I rastructure Components Nizao- Valdesia PRYN I YSURA' Related Areas (ha) Gross 10,000 5,500 7,500 Net irrigable 8,500 4,650 6,300 Conveyance and Distribution - Rehabilitation and Completion of canals (kIn) 55 - - Construction of elevated canals/ canalettis (km) 20 - Repairing, replacement of gates (nb) - 32 - Lateral water intake (nb) 30 - - Water intake civil works (nb) 845 - Junction and Escape civil works (nb) 20 11 - Drainage and canal protection - Rehabilitation of existing drains (km) - 42 37 - Construction of new main drains (km) - - 31 - Installation of drain pipes (Iam) - - 13 - Main canal ditch protection (nb) - 2 On-farm civil works - Underground pipe drains (Iam) - - 150 - Land levelling (net ha) 650 3,400 3,200 Heavy Equipment for O&M - Dredger - 1 1 - Back digger 1 1 1 -Grader 1 1 1 - Pick-up 1 1 1 1. excluding the eastern part of Rio Jura (about 30% of the total area) - 15 - institutional framework, allowing the public sector to play a stronger role in promoting private sector participation for a more efficient and flexible use of irrigated areas in a sustainable manner; and alleviate land titling constraints. It is also consistent with the 1990 World Bank Agricultural Sector Review, which emphasized the need to promote private sector participation in rehabilitation and modernization and selected expansion of the irrigated area. Bank involvement would help strengthen the capacities of the private sector, improve the allocation of public investment, and provide support for improved natural resource management and environmental impact assessment in the subsector. C. Project Design and Strategy 5.6 The strategy for promoting improved irrigation management and development and the design of the proposed project incorporate lessons learned from projects in the Dominican Republic and Latin America and the Caribbean, as well as the more general lessons from wider Bank lending in irrigation. These relate particularly to the need to improve the operational performance and the sustainability of irrigation projects. The project has been kept small in scope and as simple as possible to test the implementation capacity of the executing agency and the subcontracted organizations--and to ensure it would be implemented adequately during the relatively short time of 5 years. If implementation goes smoothly, a quick follow-up project with larger scope and scale is envisaged. 5.7 The proposed project would be the third Bank-financed irrigation investment in the Dominican Republic. It differs from the previous projects in that it would focus on private user associations. It is designed to support beneficiary participation in irrigation development as a mean of avoiding many of the pitfalls associated with large-scale public irrigation schemes. In addition, the proposed project would be innovative by addressing sustainable development and environmental issues in the Nizao watershed holistically. So, it should be considered not only as an irrigation project but as an Irrigated Land and Watershed Management project. 5.8 The project would include a relatively large investment program to improve water management of the overall main and distribution irrigation system, as well as leveling and drainage in the 3 selected irrigated areas--Nizao-Valdesia, YSURA, and PRYN1. In addition, a pilot program in the Nizao watershed would develop and test methodologies for the protection and sustainable agricultural development of the upper part of the Nizao river basin. The different water user associations and farming community associations have been extensively consulted in project design and played an active role in project preparation. During project preparation, a participatory rural assessment was made by a national team led by a rural sociologist. - 16 - 5.9 During implementation, farmer approval would be required for proposed investments and for proposed institutional strengthening programs for their user organizations. Further, to ensure that investments do not subsidize and promote inadequate operation and maintenance practiced by private users, agreements with beneficiaries would specify standards for operation and maintenance and remedies for noncompliance. There is little or no discriminatory taxation of agriculture. The project would help water user associations set overall parameters for cost recovery and implement a creditable system for collection. 5.10 Last, the project design includes components for agricultural and institutional development of water user associations and watershed farmer associations. Agricultural support services would be contracted to specialized private organizations by establishing a competitive system for allocating funds for technology generation and transfer--participatory research and development--based on clear, precise eligibility criteria (Annex 6). For Nizao watershed management, 5 micro catchments have been selected, which represent the major farming systems of the region; models of micro catchment management would be developed that could be extrapolated to the whole Nizao river basin. Because of the project's limited objectives, it will not deal with problems of the agricultural credit system. Most farmers in the project area are small farmers. Most of the required inputs and existing technologies are modular and can be adopted gradually, so little capital would be needed initially. Project support would be limited to providing assistance for the preparation of necessary credit documentation and the organization and training of farmers' groups of mutual guarantee. 5.11 Beyond the rehabilitation and completion of the three selected irrigation schemes, the project and the proposed Bank-supported agricultural sector work would help with development of a long-term strategy for subsectoral irrigation. The strategy likely will include more clearly defining roles of the public and private sectors and setting up a participatory approach for sustainable management by the users of existing irrigated areas. For the Nizao watershed management pilot program, the main findings of the project would be analyzed during a workshop that would be organized in the fourth year of project implementation. The workshop would develop a national strategy for natural resources management. Participatory Research and Development Detailed Cost (US$ 000) Commercial I Watershed | nCrops Irrigated Management, Technological Land Mtapping and Cost Packages Management IPM ENMS Total Equipment 27,000 146,250 50,000 3,000 226,250 Vehicles: 52,500 52,500 35,000 65,000 205,000 4WD bicab (x3) (x3) (x2) (x4) (x12) Motocycle (x3) (x3) (x3) (x2) (xlI ) Demonstration Plots 7,000 149,200 7,000 7,000 170,200 Contract EMS l 198,000 198,000 Contract Mapping r 57,720 57,720 Personnel Expenses 858,850 865,750 218,700 218,700 2,162,000 Operating Costs 598,325 102,749 92,650 92,650 886,374 Vehicle O&M 65,625 65,625 43,750 68,125 243,125 OQ Training Expenses 107,500 161,300 50,000 10,000 328,800 ! w l I IIIITOTAL I 1,716,800 1,543,374 497,100 720,195 4,477,469 o - 17 - 6. THE PROJECr A. Project Objectives 6.1 The project's main objective is to improve small-farner income in the selected areas and to test and develop methodologies that can be replicated nationwide both for efficient production support services, water management, and operation and maintenance of irrigation systems and for sustainable and environmentally sound watershed management. The criteria for selection of the three irrigation areas were based on agronomic and economic potential as well as the strength of local water users' associations, which are key project beneficiaries and implementing agencies. The project will also rehabilitate and improve existing irrigation systems and strengthen user associations for the development and management of the selected irrigated areas and the Nizao watershed. The Nizao watershed was chosen because of its importance to downstream hydroelectric and irrigation facilities, and because of the existence of a strong, local NGO that will play a key role in mobilizing community participation in the Project. Last, the project should help reduce the fiscal cost of irrigation schemes to the Government through appropriate cost-recovery policies. B. Project Components 6.2 The project would have several activities related to irrigated land and watershed management. First, it would include investment in rehabilitation and improvement of irrigation and drainage infrastructure and leveling. Second is provision of grants to communities in the Nizao watershed to promote improved microcatchment management treatments including farming practices and soil and water conservation measures. A third activity is to promote agricultural development by strengthening support services--technology generation and transfer, extension, and savings and credit cooperative services to ease access to credit for farmer groups-- primarily through contractual arrangements between users and private firms and NGOs. A fourth activity is institutional development for the strengthening of user associations in the selected areas and of INDRHI through a technical assistance team. The project would also provide for technical studies for the detailed design of rehabilitation and completion of irrigation and drainage infrastructure and for the design of water control devices. Sixth, the project would address development of a management information system and the setting up within INDRHI of a unit for monitoring and evaluation, including environmental monitoring. Project finance would be mainly for civil works, training, technical studies, and technical assistance for producer organizations and INDRHI. 6.3 Land titling is critical, because it enables farmers in the Dominican Republic to gain access to credit and thus provides farmers an incentive to invest in ANNEX 6 Page 4 of 5 Criteria for Allocating Funds for PR&D Projects Selection Criteria | Points Qualification concepts 1. No Negative Environ Yes/No * Environmental Assessment of proposed -mental Impact technology 2. Farmers' Interest 50 * Rapid Rural Diagnosis *Farmers' participation 3. Economic Importance 30 * Ranking of main crops (Quantity and of: Value) a) existing crops * National and/or International market b) new crops potential 4. Short/Medium term 20 * status of existing technologies; expected results and * extent of validation trials required; impact * yield increase and/or production cost decrease 5. Regional priority 10 * Regional/National Research I ____________________ ___________ Development Plan 6. Institutional Capacity 10 * Experience with past and/or on-going research projects in the proposed research area; * National/Regional facilities; * Linkages with related National/Regional /International Research Institutions - 18 - their land. The project would specifically address land titling through the financing of additional equipment, vehicles and technical assistance to accelerate the title distribution program in the project areas. To ensure that titling problems would not limit agricultural development in project areas, a condition of disbursement for investment in irrigation infrastructure in the respective irrigated areas would be that INDRHI have submitted to the land courts (Tribunales de Tierra) the documentation required to initiate the appropriate legal actions for the award of final land titles to at least 80% of farmers living in each of the project areas (para. 10.2(b)). Although land values in the Nizao watershed are much less attractive than in irrigated areas, the Government during negotiations agreed that a land title distribution program for the watershed would be completed during project implementation (para. 10.3(f)). This is to ensure adequate farm land management through labor-intensive investments in required soil protection measures. For community land management, prior to negotiations the Government agreed that community land management responsibility would be given to farmer associations at the village level for soil protection measures and for planting and exploiting trees. C. Detailed Project Features Irrigtion Infrastructure (UJS$11.8 million, 36.8 percent of total base cost) 6.4 Under this component, the project would finance rehabilitation, completion and modernization of existing schemes, land-leveling and drainage in Nizao-Valdesia, YSURA, and PRYNI. 6.5 Civil Works. The following is a summary description of the envisaged infrastructure operations (Annex 7). * Completion or rehabilitation of irrigation distribution systems. The project would complete the existing distribution systems in Nizao- Valdesia (55 kilometers of secondary and tertiary canals) and in PRYN1 (20 kilometers of elevated canals or canalettis). * Upgrading of main canals and control structure. To facilitate operation and maintenance operations, reduce water losses, and improve flexibility in water distribution, the project would repair and upgrade the main canals and control structures in Nizao-Valdesia and PRYN1. * Completion or rehabiliation of surface drainage and land leveling. The project would improve the surface drainage systems on an aggregate area of 1,200 hectares in PRYN1 (42 kilometers of primary open drains) and of 1,800 hectares in YSURA (68 kilometers of ANNEX 6 Page 3 of 5 5. Membership of the PR&D Grants Board. The Board would have a membership of nine, one from the Secretariat of Agriculture, one from INDRHI as the Chairman, two from the PROMATREC/EU, four representatives of the respective Users Associations, and one external Research Specialist. Specialists would be co-opted to the Board, if necessary, to review PR&D proposals. The Board would meet once a year. The PROMATREC/EU would be responsible for the PR&D-GS Technical Secretariat. 6. Adm te Procedures.1 o The PR&D-GB would publicize the availability of grants to universities and to other competent private sector institutions, the broad objectives and the procedures to be followed; o PR&D proposals would be submitted to the PR&D-GS Technical Secretariat in a standard format, complete with detailed costing; o Following review, the Board would approved selected proposals that meet the criteria and judged to make a significant contribution to agreed priority R&D topics; o The proposals would be reviewed by the Bank following a preliminary review by the PR&D- GB; o Procurement of specified items would be done by INDRHI in consultation with the selected institution; o Funds for agreed operational expenses would be transferred, quarterly and iti advance, to a dedicated account, set up by the selected institution; o Expenditure would be subject to audit as with other project funding; o Progress with PR&D funded through the PR&D- GS would be reviewed annually by the PR&D- GB and the Bank, prior to the release of funding for the next year's work program. 1. To be formally agreed with the Bank prior to disbursement of funds. - 19 - primary drains) to address recurrent waterlogging and soil salinity problems. It would also improve water distribution at the farm level by land leveling necessity areas in Nizao-Valdesia (650 hectares), YSURA (3,200 hectares), and in PRYN1 (3,400 hectares). Nizao Watershed ManemenTreatments (US$2.36 million, 7.4 percent of tota base cost) 6.6 The project would promote improved management systems in selected microcatchments in the Nizao watershed. The amounts of anticipated project works have been estimated from the size of the project area, land uses (see Table 1, Annex 5), the physical and socioeconomical characteristics of the Nizao watershed area, and the general experience of adoption of such treatments. Activities need to be integrated across the watershed and among land uses in order to bring about sustained improvements and the right balance of short-term and long-term benefits. Five microcatchments have been selected representing the major farming systems of the region, and models of microcatchment management would be developed that could be used as demonstrations and for extrapolation to the whole Nizao river basin. 6.7 The project would use grants to finance seeds or planting material and fertilizer package for the first year of subproject implementation for village communities who have agreed on a village management plan on community lands and who will adopt the recommended treatments. Cost-sharing would be done essentially through labor provided for community land preparation, terracing, afforestation, and maintenance of rehabilitated areas. In addition, the project would finance income- supporting activities for each microcatchment as needed--for instance, off-farm, small-irrigation infrastructure, including diversion and headwork structures, PVC pipelines, and pressure tanks. Individual on-farm investments would be borne by project beneficiaries and financed by credit through existing financial intermediaries or by cash from the farmers given the already well-known profitability. However, to support activities by women's groups, the project would use grants to finance required activities such as beekeeping and upgrading of small livestock. Agicutual Development (US$3.0 million, 9.3 percent of total base cost) 6.8 For the full benefit of investments in irrigated areas and in the Nizao watershed, most of the farmers will need agricultural support services. But, because irrigation-related technology and--especially--sustainable conservation and production techniques are lacking in the upper parts of watersheds, adaptive and applied on-farm research will be needed in the project areas. Given the weaknesses of public agricultural support services, the only effective way to obtain these services would be for fanner associations to contract private firms or NGOs such as the Higher Institute of Agriculture (ISA), Agriculture Federation for Development (FDA), IICA (Inter- ANNEX 6 Page 2 of 5 o Relevance to the interest and priorities expressed by the farming communities; o Economic importance of existing and potential crops for which technological packages would be proposed, in the context of national and/or international market potential; O Likelihood of producing results of use to small producers in the short/medium term; o Relevance to the regional priorities; o Institutional capacity. Experience and ability to complete the proposal with existing staff and facilities. Linkages with related national/regional/international institutions;, o Appropriateness of experimental approach and methodology for technology transfer. o Cost. A system of weighing the selected criteria would be developed as described in the following table. 4. Criteria for Type of Expenditu The type of expenditure for support under the PR&D Grants Scheme would include: o Equipment; o Vehicles; O Operational expenses, including operating costs of vehicles and equipment, the cost of casual labor for field experiments and travel and subsistence expenses for R&D staff; and O salaries of contractual staff. O overhead costs. Up to 20% of total direct costs would be granted. Expenditures not eligible for support under the PR&D Grants Scheme would include: O salaries of permanent staff; 0 civil works. - 20 - American Institute for Cooperation on Agriculture), Tropical Agronomic Center for Investigation and Teaching (CATIE), and Association for the Development of San Jos6 de Ocoa (ADESJO). As part of project preparation, an agricultural development plan has been prepared and would be implemented under the guidance and supervision of PEU/INDRHI research and extension specialists following the participatory research and development grants scheme (Annex 6). 6.9 Adaptive Research. According to proposed eligibility criteria, the selected firm(s) would expand existing research lines and would initiate new specific lines of adaptive research in project areas (Annex 6). The research would emphasize a participatory approach and would cover all aspects of irrigation and drainage and sustainable conservation and production techniques. National, regional, or international firms or institutions specialized in agricultural research would be selected to undertake these activities. The selected firm(s) would subcontract, if required, the use of existing facilities or personnel in the research stations of El Escondito (Nizao-Valdesia), CIAZA (Ysura), and CENDA in the Santiago-PRYN. It would be PEU/INDRHI's responsibility to ensure that these activities are conducted in accordance with the overall adaptive research objectives of the Irrigated Land and Watershed Management Project, agreed to by the respective user associations, and done in a manner satisfactory to the Bank. 6.10 Transfer of Technology. To complement the research work, the selected firm(s) would also be responsible for the initial diffusion of improved technologies. Technology transfer programs would include demonstration plots in the fields of farmers who volunteer, field days, discussion groups, and regular training sessions and workshop for extension and research personnel. The project would support the establishment and functioning of irrigation-focused demonstration plots. Most of the technology would be based on existing knowledge with results from the adaptive research to be fed into the program as they become available. In the Nizao watershed, the project would follow the same approach and would support the establishment and functioning of demonstration plots in each selected microcatchment. 6.11 A condition of disbursement for this component would be that a short list of institutions for participatory research and development support services has been presented to the Bank for its review and approval (para.10.1(f)). During negotiations, assurances were obtained that contracts for participatory research and development support services would be signed no later than June 30, 1995 (para. 10.3(d)). 6.12 Extension. Groups of 15 to 25 farmers would be organized to benefit from extension services in the field. Group extension workers and an agricultural extension officer would be contracted by the water user associations in the irrigated ANNEX 6 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Participatory Research and Development Grants Scheme 1. The general term "Participatory Research and Development" refers to the whole process of diagnosis, priority setting, technology generation, technology testing and transfer with the participation of farming communities. The project would provide finance to establish a Participatory Research and Development Grants Scheme (PR&D-GS) to enable specialized institutions to undertake agricultural technology generation, testing and technology transfer that would contribute to priorities of the farming community in the project areas. A Participatory Research & Development Grants Board (PR&D-GB) would be established to review PR&D proposals. Their first task would be to establish criteria for assessing these proposals. This Annex sets out initial proposals for these criteria. Following detailed review by the PR&D-GB, a final list of criteria would be prepared and agreed with the Bank by June 30, 1995. This Annex also sets out the proposed membership of the PR&D Grants Board and arrangements for the administration of the PR&D Grants Scheme. 2. Recommendation Areas. Four main recommendation areas have been identified: (a) irrigated land management including water management, drainage, soil management, saline soil reclamation, and irrigated farming system; (b) technological packages for existing and potential crops, with a market oriented approach (internal and international); (c) integrated pest management focussed on the reduction of pesticides; (d) watershed management and environmental monitoying. 3. Criteria for Type of PR&D projects. Grants would normally be for two or three years and PR&D proposals eligible for support under the PR&D Grants Scheme would be assessed against the following criteria: 0 Environmental impact. Likelihood of having a negative environmental impact would be sufficient for rejecting the proposal; - 21 - areas and by ADESJO in the watershed. The extension support is expected to reach an estimated 5,000 small farmers in the irrigated areas and about 1,500 farmers in the Nizao watershed. Institional Development (US$13.93 million, 43.5 percent of total base cost). 6.13 The project appraisal included an institutional capacity assessment to determine the ability to implement the proposed program. Institutional capacity gaps have been identified against program tasks. 6.14 User groups would require substantive improvements in four areas: administration, personnel management, financing, and accounting; for water user associations, technical matters related to system operation (irrigation programming, water distribution, monitoring, and control), system maintenance (contractual procedures, maintenance programming and implementation), and cost-recovery procedures; procedural matters, such as water and land rights; and organizational aspects concerning preparation and implementation of meetings, report preparation, and so on. The project would support a training program centered on the above- mentioned aspects. INDRHI would be responsible for implementing this training program with the help of external consultants, when required. 6.15 In addition, to help farmers obtain access to credit and to provide them an incentive to invest in their land, the project includes a land titling component. IAD together with INDRHI, has an ongoing program to distribute land titles for farmers throughout the country. This program involves recompilation of existing information, updating cadastral maps, farm surveys, farmers interviews, as well as legal procedures to distribute official and registered land titles. The project would finance required additional equipment, vehicles and technical assistance to accelerate the title distribution program in the project areas. INDRHI would be responsible for executing this component by contracting additional topographic teams and specialized legal consultants. 6.16 In INDRHI, the implementing capacity for the proposed program is, by and large, in place. The major gaps found are limited to a lack of experience in the areas of management information system, monitoring and evaluation, and financial management. Setting up the project execution unit within INDRHI would require the modernization of managerial and communications systems with basic hardware, such as a system of personal computers to link the divisions of INDRHI, regional offices, and water user associations. The project would provide a total of 21 consultant-months, including 5 person-months of technical expertise to support improvement of both the operation and maintenance system and training for water user associations, 4 person-months of financial management expertise, 6 person- months of a research management specialist to support the establishment of the - 22 - participatory research and development grants system, 3 person-months of an economics or management information system or monitoring specialist, one person- month of land titling legal expertise, and 2 person-months of procurement expertise. Establishment of PEU in manner satisfactory to the Bank and fully staffed, including the Project manager, with personnel of experience and qualifications satisfactory to the Bank would be a condition of effectiveness (para. 10.2(e)). In addition, to facilitate field travel and the maintenance of main canals in the irrigation districts, a fleet of three small four-wheel-drive pickup trucks, two motorgraders, three retroexcavators, and one dredge would be financed. Studies (US$0.91 million, 3 percent of total base cost). 6.17 The project would finance all the works required to rehabilitate and improve the irrigation and drainage systems and leveling in Nizao-Valdesia, YSURA, and PRYN I. To improve the overall water management of these irrigation systems, project financing would cover (a) a technical study on main canal regulation, canal system management, and the design of distribution systems in the selected areas, taking into account the experience gained with the use of automatic water-level regulators (counterweight gate) in PRYN I, and (b) a detailed study on the layout of the irrigation and drainage system. Given the urgent need for these studies to select consulting firms and start preparations, prior to negotiations, the Bank received the draft terms of reference for technical studies for the design of water control devices and the detailed layout designs for the first 2-year investments in conveyance and distribution systems, drainage, and leveling. At negotiations, assurances were obtained that: (i) the irrigation control studies would be completed by no later than December 31, 1995; (ii) the recommendations of such studies would be reviewed jointly with the Bank by no later than June 30, 1996; and (iii) immediately thereafter, such recommendations would be implemented in a manner satisfactory to the Bank (para. 10.3(e)). 6.18 Cadastral maps of the irrigated areas will be updated. And in the Nizao watershed, aerial photos will be needed to set up an environmental and evaluation unit. The project would finance socioeconomic rapid rural assessments, land registers, an operation and maintenance manual, a mid-term review of the project, preparations for a follow-up project, and a comprehensive review of legal documents on water rights, water tariffs, cost recovery, land rights, and user associations. In addition, a maximum of US$200,000 will be made available to the Ministry of Agriculture (SEA) for the carrying out of agricultural policy studies. Monitoring and Evaluation 6.19 The project would develop a management information system to improve the technical and financial management of irrigated schemes at the water Annex 5 Attachment 1 Page 11 of 11 MC INDICATIVE PLAN - OUTLINE 1. Introduction 2. Basis for selection 3. MC characteristics 3.1 Physical resources 3.2 Land use and crop production 3.3 Human resources 3.4 Livestock resources 3.5 Summary table 4. Project framework (treatment menu adapted to MC conditions) 5. Problem census 6. Rapid resource appraisal 7. Problem analysis and solutions 7.1 Analysis of key problems in utilization of natural resources 7.2 Linkages between priority problems and project framework 7.3 Selection of treatments 7.4 Linkages between key treatment and supporting activities 7.5 Management of range and forest land 8. Indicative plan for villages and MC as a whole 9. Summary of forest activities 10. Summary of agricultural activities (annual and perennial crops) 11. Summary of village affairs activities - 23 - user associations level and the INDRHI level. Assurances were obtained during negotiations that the design of a management information system would be completed in a manner satisfactory to the Bank by no later than December 31, 1995 and immediately thereafter a such system would be implemented in a manner satisfactory to the Bank (para. 10.3(g)). 6.20 Monitoring and evaluation of project activities and of environmental aspects (development of an environmental monitoring system), would be undertaken with the help of external technical assistance. A calendar of key events would be maintained to document issues as they arise and actions of water user associations and INDRHI management. Topics would include progress on civil works, agricultural development, institution strengthening, staff training (including performance of technical assistance), procurement, budget preparation and disbursement, watershed activities, cost and expenditure monitoring, and cost-sharing activities. Project finance would cover purchase of equipment, contracting, external support and studies. ANNEX 5 Page 10 of 11 training and consensus reaching process with the involved farming communities at the village and micro-catchment levels. Tentative Physical Objectives l \ e~~N'arsl Proposed Treatments j PY3| Total ] - Area covered (ha) 3,000 3,500 5,600 7,400 19,500 - Forestry Area planted (ha) 2,200 3,100 3,100 3,600 12,000 - Agroforestry and Agriculture Area treated according 500 1.660 2670 2.700 7,500 to % of slope: 0 - 25% Annual Crops (ha) 170 550 900 900 2,520 25 - 40% Coffee (ha) 270 900 1,435 1,435 4,040 40 - 55% Fruit Crops (ha) 60 210 335 365 940 - Living Hedges - average of 850 m/ha (km) 415 1,370 2,200 2,250 6,235 - Earth contour ridges - average of 850 m/ha (km) 415 1,370 2,200 2,250 6,235 - Tree individual terraces - 150 u/ha 9.000 31,500 50,250 54,750 145,500 - Contour stone lines - average of 50 m/ha (km) 20 80 130 150 380 - Composting Pits (unit) 210 700 1,120 1,220 3,250 - Windbreaks - 200 m/ha (km) 45 150 250 275 720 - 24 - 7. PROJECT COSTS AND FINANCING A. Costs Table 6.1: Proposed Proieci Features and Projected Costs Local Foreign Total Local Foreign Total " B % Total Ba%e -DR million --. -... US$ million .-.. FE Cosis Investmeni Costs Cisil Works 58.41 87.43 145 85 4 73 7.08 I IR8 60% 38.04 VehicleslEqwpment 6 79 29 64 36.43 0 55 2 40 2 95 80' c 8 52 Technical Assisrance. 42 11 21.12 63 23 3 41 1 'I 5 12 40% 14.13 Srudies.TYasning Support Sen Ices 32 72 4 1 37 54 2 65 0 19 3 04 13; 9 80 Granes for Waltershed 22 72 6 42 29 14 1.84 0 52 2 36 22% 7.61 Sub-Tc'aj 162 77 149.43 312 21 13 18 12 1) 25 28 48% 78.80 Recurrent Costs 59 28 24 7 83 98 4 60 2 (K) 6 80 29'. 21.20 Base Cost 222.05 174.13 396 19 179At 14 10 32 08 4%. Q100.00 Phbsical Connngencies 22.23 20 13 42 36 1 80 I 63 3 43 47'. 10 73 Pnce Conungencies 75.95 19 26 95 34 6 I5 1 56 7 72 20% 24.10 TOTAL PROJECT COST 32036 213.65 534 1( 2594 173 0 4324 40% 13480 7.1 Project costs are estimated at the equivalent of US$43 million about 40 percent of it foreign exchange. Investments account for about 78 percent of base costs and recurrent expenditures--mainly operation and maintenance of the irrigation schemes--for 21 percent. Physical contingencies have been estimated at 10 or 15 percent, depending on the item financed; overall physical contingencies amount to 10.7 percent of base costs. Price contingencies reflect an estimate of local inflation at 10 percent per annum and foreign inflation estimated in accordance with the World Bank manufacturing unit valve index at 2.67 percent in 1995 and 3.5 percent thereafter. Overall price contingencies amount to 24.1 percent of base costs. ANNEX 5 Page 9 of 11 the signatures of the farmers' associations representatives and the individual recipients of treatments. 24. Finalization of Indicative MC Management Plan. An outline of this report is attached in Attachment 1. The report would summarize the results of the interactive planning process described in the preceding paragraphs and would thus contain sections provided the general characteristics of the MC, the results of the problems census discussions, the rapid resource appraisal and the problem solving discussions as well as a sumrnaiy of the agreed treatments. The report would provide an aggregation of the village plans and would give the framework within which ADESJO would operate. It would also give an indication of the size and the phasing of its work. 25. Approval of Indicative MC Management Plan. Tlhe MC planning/technical team would submit the Indicative Plan to the Project Executive Unit PEU, which would be responsible for quality control (responsiveness to guidelines, completeness and depth of analysis, adequacy of proposed treatments and cost implications) and for approval of the Plan. E. Preparation of Annual Work Plans and Budget 26. The Indicative MC Management Plan would be elaborated to provide the work program and budget for the first year of implementation. In subsequent years, it would be necessary to review progress made and experience gained as well as possible results from pilot work and demonstrations and the MC planning/technical team would need to interact and agree with the MC villages on the appropriate modifications to the original Indicative Management Plan. The activities would be aggregated for the MC and broken down by activities. F. Physical Objectives for Forestry and Soil Conservation M ent 27. In accordance with the PC-PCPS approach, the final choice of technologies is made based on the existing ecological constraints and the community's objectives. Therefore, the physical objectives of the Watershed Management program are only tentative and should not be viewed as indicators of project achievements. The EMS and Participatory Rural Assessment missions would provide required information on the socioeconomic and ecological impact of the program. Short-ternm implementation would be monitored according to the specific investment objectives included in each project's annual work plan, based on the village and MC plans after they have been negotiated and agreed upon with the project Executing Unit. The first year of project implementation has been considered as a zero year in term of physical achievements since the participatory approach will require a relatively long period of sensibilization, - 25 - B. Financing 7.2 The project would be financed by the Bank, the users, and the Government. A Bank loan equivalent to US$28 million is proposed to finance 65 percent of eligible project costs, net of taxes and duties. An amount of up to $800,000 will be provided to finance retroactively goods and services required for project start-up, especially consultants' services for technical assistance as described in Annex 8. Bank financing, on a net taxes and duties basis, would cover 100 percent of foreign exchange expenditures. The Bank would finance 80 percent of total project expenditures on civil works, including studies and engineering and design (US$13.3 million), and on required investments for support services. It would also finance 100 percent of technical assistance to INDRHI's Project Execution Unit. Operating costs for adaptive research, technology transfer, extension services, and promotion of credit cooperatives would be carried out jointly with counterpart funds and loan funds. Loan financing for operating costs would be made on a declining basis during project implementation. Users would provide the necessary counterpart funds (equivalent to US$0.9 million) to finance on-farm investments, part of the operating expenditures for agricultural support services and operation and maintenance costs in the irrigated areas on an increasing basis. The Government's contribution (equivalent to US$14.3 million) would finance the balance of local currency requirements for civil works and equipment/vehicles and of operating expenses, and would be met by annual budget appropriation to INDRHI. The Government would make the proceeds of the loan available to INDRHI. Assurances that the Government would provide the necessary annual counterpart funding to INDRHI according to each annual work program were obtained during negotiations (para. 10.3(b)). C. Disbursements 7.3 Loan proceeds are expected to be fully disbursed by June 30, 2003, a period of 8 years, the standard disbursement profile for Bank-financed projects in the Dominican Republic (Table 7.1). Statement of Expenditures will be used for all disbursements of incremental operating costs and for works and goods, except contracts exceeding US$1 million equivalent for civil works and US$200,000 equivalent for goods and the first contract for works and goods over US$200,000 and US$25,000 respectively, and consulting services of firms and individuals exceeding $50,000 and $20,000 respectively, for which submission of full documentation would be required in accordance with Bank guidelines. Relevant documentation in support of statement of expenditures would not be submitted to the Bank, but would be retained at the project execution unit for auditing and for ex-post review by Bank missions. ANNEX 5 Page 8 of 11 (h) Discussion of rainfed and irrigated farming situation; (i) Selection of treatment options specially for promoting rainfed and irrigated horticulture; (j) Discussion of supporting activities (beekeeping, terraces, irrigation, small livestock) and how they can be used to facilitate for target groups (range and forest land users, owners of marginal lands, etc.) to accept key treatments; and (k) Agreement on a program of demonstrations and pilot work. 21. It should be clear to the villagers that they will need to choose among treatments to meet their priorities. The resource available under the project for the five MCs amount for an average MC of 4,000 ha to US$0.4 million. If more is spent in a particular area, it means either that less will be spent in another MC or that the total project area will be reduced. The latter option would unfortunate in view of the widespread nature of the degradation problems in the Nizao watershed and the need to find cost effective and replicable solutions. Viewing watershed development as a continuous process, there is considerable scope to make a good start within this indicative cost frame by varying the area treated, the phasing and selection of treatments. The supporting treatments (irrigation, rainfed terraces, horticulture, beekeeping, small livestock, trees on field boundaries, etc.) would be linked to the adoption of treatments of the range and forest community lands and would be subject to a ceiling of 33% of total treatment cost. 22. Preparation of draft village management plan. Guided by the problem solving discussions (paras above), the MC planning/technical team would prepare the village treatment plan showing the recipients, volumes, phasing and location (map) of different treatments. The phasing of the works may be spread over at most a four year period. Applying the unit costs indicated in the treatment menu the total and average cost per hectare cost can be calculated (cost would be updated on an annual basis) and the responsibilities of the implementing agency (ADESJO) determined. The responsibilities of the village and its individual members in terms of management practices and cost sharing should be indicated. A check should be made to ensure that the average cost of supporting treatments per village household does not deviate too much from one village or MC to another. 23. Discussion of draft village management plan. 'The draft will be presented to and reviewed in the village as the frame for the collaboration during the following four years (detailed work plans would be prepared each year in the light of progress and experience). Amendments would be made where necessary and the village should be asked to indicate its agreement by - 26 - 7.4 During negotiations, assurances were Table 7.1: DISBURSEMENT CATEGORIES obtained that the Borrower would CaLegory Amounm of Loan Percentage of Expendirures establish a special Allocated to he financed account in the Banco (US$ millions) Central de la Civil Works 9.50 80 f Repuiblica Goods other than 2.25 100% of foreign expenditures. Dominicana, in U.S. those required under I00'1 of local expenditures lex- dollars, to cover all Pan C of Lhe Project factory): 85% of local expendiures eligible Bank for other items procured locally expenditures under Consultants' Serviees 4.90 100% the loan, with and raining other than those required under Pan C procedures for the of the Project operation of the Goods and Consultants 2.00 100% of foreign expenditures and 60% special account Services under Pan C of of local expenditures satisfactory to the the Project iPR&D contracts} Bank (para. 10.3(a)). Subgrants under Pan B 2 40 100 % of amounLs disbursed under a of The authorized the Project lNLZao Watershed Subgrant allocation for the Management) Special Account Incrernental Operating costs 0.60 100%, until withdrawal applicanons would be $600,000, have reached the aggregate of $350,000; with an initial deposit 80% unal withdrawal applications have reached the aggregate of S500.000; and to be made of 50% thereafter $300,000, and a full amount authorized Unallocated 6.35 allocation to be TOrAL 28.0 released when disbursements reach a level of $6.0 million. Disbursements will be made under authorized signatures from a designated representative of the Borrower. At negotiations, Government assurances were received that withdrawal applications for replenishment of the Special Account will be prepared by INDRHI in accordance with Bank policies and procedures. 7.5 In addition, during negotiations, assurances were obtained that INDRHI would establish a project account separate from the special account for the equivalent of US$1 million to cover counterpart expenditures. The establishment and release of a Dominican peso amount equivalent to US$1 million (initial deposit) into the project account would be a condition of effectiveness (para. 10. l(c)). 7.6 There are two conditions for disbursements. First, satisfactory evidence that INDRHI submitted to the Tribunales de Tierra the documentation ANNEX 5 Page 7 of 11 sustainable production systems) are identified. In remaining areas the main land use featLres (forest, range and farm land) are noted and problems of degradation and erosion are observed and discussed (livestock trends, fodder and fueliwood shortages, cultivation practices). Having identified targets areas it will be importanit to clarify the users/owners of these areas (e.g. users of range and forest land, owners of marginal crop land, farmers who could benefit from conservation practices). Field appraisal offers an opportunity to explore solutions with such targets groups and to explain to participants the linkages between priority problems and possible project treatments. Problems of declining water supply may for example be remedied by efforts to improve vegetation and infiltration. Marginal lands may be released from crop production if the owner can enhance productivity elsewhere. Range degradation may be reversed if the stall feeding season can be prolonged through project activities to enhance cultivated forage production. The targets areas and groups would be recorded on field maps as a basis for further discussion of solutions. 20. Village discussions of solutions and treatments priorities. On the basis of the outcome of the problem census and the rapid resource appraisal and having given the village a chance to consider the treatment menu, the next step in the interaction would be: (a) Discussion of fodder situation (objectives - subsistence or sale - and trends in livestock keeping; constraints in the form of scarcity of labor and fodder; investments in livestock if fodder constraints were removed; sources of winter fodder and opportunities to enhance availability; range management); (b) Discussion of fuel wood situation (different source of energy; quantities used; sale of wood); (c) Agreement on range and forest areas needing treatments; excluding areas which are beyond repair and those that appear to be in relatively good shape; (d) Selection of treatment options for selected range and forest areas with due consideration to the needs for fodder and wood; (e) Discussion of management practices for the selected range and forest areas, the benefit sharing arrangements for forest treatments and phasing of interventions; (f) Discussion of perennial crops situation (coffee, bananas, and fruit trees) (g) Selection of treatment options for agroforestry practices; - 27 - required to initiate the appropriate legal actions for the award of final land titles to at least 80% of farmers living in each of the irrigated areas will be required for civil works expenditures in the respective irrigated areas (para. 10.2(b)). Second, grants for soil and water management to any community in the Nizao watershed area will be allowed only after an appropriate management plan of natural resources for the selected microcatchments has been agreed upon by INDRHI's project execution unit and the community (para. 10.2(c)). In general, INDRHI shall refrain from presenting to the Bank withdrawal applications in respect of expenditures not included in the POA approved for the year in question (para. 10.2(a)). D. Procurement 7.7 The Financial and Administration Subdirectorate of INDRHI would be responsible for monitoring all procurement activities and for ensuring compliance with Bank procurement guidelines. The Bank's standard bidding documents for all international competitive bidding operations would be used, and similar documents would be agreed upon at negotiations for LCB use. Procurement would be undertaken by INDRHI, the implementing agency, which has satisfactory procurement capacities and experience. Present INDRHI regulations do not conflict with application of Bank guidelines. Project execution unit staff would have technical expertise to carry out procurement and the project execution unit would retain consultants to prepare designs and bidding documents for the construction or rehabilitation of irrigation structures and for the contracting of support services. 7.8 Civil Works. Construction or rehabilitation of irrigation structures, drainage, land leveling, and riverbed protection work would be distributed in 3 geographical areas with individual lots ranging in value from US$200,000 to US$2.9 million (Irrigation Infrastructure Working Paper No. 3). Contracts estimated to cost US$1 million equivalent and above would be awarded through international competitive bidding procedures; contracts valued between US$200,000 and US$1 million, up to an aggregate of US$3.8 million would follow LCB procedures acceptable to the Bank (Table 7.2). 7.9 Goods. Graders, trucks, and four-wheel-drive vehicles would be packaged as much as possible for international competitive bidding. Contracts valued above US$200,000 would be awarded through international competitive bidding; contracts ranging between US$25,000 and US$200,000, up to an aggregate of US$0.4 million, which would include smaller vehicles, motorcycles and communications equipment, would follow LCB procedures acceptable to the Bank; other items estimated to cost less than US$25,000, including furniture and other small equipment, would be acquired on the basis of price quotations from 3 qualified contractors, with an aggregate of US$0.2 million. ANNEX 5 Page 6 of l1 16. Usual operational procedures obviously include discussion with villagers. These discussions frequently take the form of obtaining village consent to plan drawn up by respective technical teams. T'his project, however, aims at not only involvement in approval of plans but active village participation in the formulation and implementation of these management plans. Such participation would ensure that the interventions respond to the perceived local needs and priorities and that a genuine commitment to and responsibility for the success of the operation is generated. The method used to achieve such participation is the Farmer Centered - Problem Census Problem Solving (FC-PCPS) approach described below. The village is the management unit for forest and range community lands and for resource sharing arrangements with respects to community lands. The building blocks of the Indicative MC Plan are the village plans formulated through close interaction over problems and solutions (chosen from the treatment menu) in each of the selected MC villages. The MC boundaries may have to be adjusted to avoid dividing a village and thereby complicating data collection and interaction. The time required to prepare the Indicative MC Plan will, to a large extent, depend of the number of villages embraced by the MC but an average estimate of 8 weeks is given above. 17. Assemble relevant data. In preparation for village discussion, the planning group would mobilize available information and survey conditions in the MC villages. 18. Problem census meetings. Armed with the relevant data and analysis a problem census meeting would be arranged in each MC village in consultation with local authorities. Problem census meetings involve all villagers with livestock, land or other agricultural activities. Men and women participants record their individual problems and form small groups to discuss and prioritize these problemis. Each small group then reports its prioritized list of problems to the village group in a plenaiy session which determines and prioritizes a list of problems for the village as a whole. No problem is excluded at this stage. T'he process is structured and non threatening. Importantly, it initiates the relation between village participants and the project planning/technical team by listenintg to the villagers. Once the village group has identified and prioritized problems, the treatment menu suitably adjusted to MC conditions is presented to them and the objectives of the project explained. The linkage between project activities and priority problems are explored and appointments made for problem solving discussions. 19. Rapid resource appraisal. Problem solving activities are initiated with a field assessment of village resources. The appraisal is an attempt to observe resource problems and discuss solutions in the field through a combined effort by the project technical/technical team and village participants. Using copies of topographical maps important landscape features are recorded and areas which do not need treatments (areas with - 28 - 7.10 Investments for watershed management Table 7.2: would generally be SUMtIARY OF PROPOSED PROtCUREMENT ARRANGEMiENTS dispersed throughout the (IUSS millions equivalent) watershed area, time- ICB LCB Other a' Total sliced, and small scale-- c0 II Works with an aggregate of *Infrastincnure 119 - 11.9 US$3.2 million. Because 1 5 - - 19.5) tLand Le%eling - 3 8 3.8 they would consist t3 01 03 01 mainly of the purchase of fertilizers and seeds or Equipment and Veh;le. l 0.41 0. 1 3 .24 planting material managed by ADESJO, Technical Asststancef Stdies.Trdining - 7 1 7.1 they would be unlikely to - i6.2) (6.2i attract foreign competition. Therefore, ASnculpp al De elopmen44 4.4 they would be procured . ,2.9) (2 9 through local works Gi-t for Watershed 3.2 3.2 procedures if valued at . . I 3.2) below US$25,000 per Operanng Costs b 9.7 9 7 purchase and through . . lo8) (0.B) LCB if valued above this amount. Total 14 4 42 24.6 43 2 ofl hich WBRDi 1 1.4p 13.41l (13 2) i28.0) 7.11 _i -uncunts in paredrwes %h^ IIicn,ation rron. loan pr.xeedi. vi.lu are roundea Consultants. The project would contract for technical assistance and training activities with consultants whose qualifications, experience, and terms and conditions of employment shall be satisfactory to the Bank and whose selection will be in accordance with principles and procedures on the basis of the Bank Guidelines for the Use of Consultants by the World Bank Borrowers and by the World Bank as Executing Agency, published August 1981. Prior review of terms of reference, selection and contractual documents for individuals will be required for contracts exceeding US$20,000, and for all consultant contracts with firms exceeding US$50,000. Contracts below the respective prior review thresholds will require only prior review of terms of reference, subject to a total aggregated amount not exceeding US$1 million. 7.12 Review of Procurement. Prior to review by the Bank, a review of procurement would be required for all international competitive bidding and for the first LCB operation, whatever the amount for goods and works. The review will cover about 76 percent of the total value of work contracts and 80 percent of the total ANNEX 5 Page 5 of 11 12. This menu is a basic tool in the MC planning process the project technical assistance team will help to determine on technical. economic and institutional grounds which treatments are applicable to the situation in a particular MC. These remaining treatments would need to be explained to the MC population in the course of the problem solving discussions (see below). The menu would be revised annually in the right of experience with project implementation and with the help of the project M&E unit. 13. 'I'he cost sharing arrangements between the project and the beneficiaries during the establishment (investment) phase will be indicated for each treatment and will be explained to the villagers in the course of selecting priority treatments during the problem solving discussions. The subsequent recurring costs of operation, maintenance and management will be the responsibility of the villages and/or individual farmers concerned. 14. The benefits of the different treatments generally accrue to the villagers adopting the intervention in question. In the case of the forest and range lands treatments, they are, however, shared among the villagers to establish a Community Renewable Fund (CRF) for community agreed investment. The aim should be to establish a partnership between the Government and the villages/communities/associations in the Nizao watershed, to develop a matching grant process for financing the first priority investrnents required for a sustainable watershed management. The financing of these first priority investments will come from the project during the first three years of the project, then from the Nizao Watershed Management Fund ( Nizao WMF) which would be established under the project. It is hoped that after these first community investments have benefitted to the concerned villages/communities, they will be able to replenish the CRF and thus, through this, they will ensure the sustainability of this operation. D. The Preparation of Indicative MC Plan 15. For each selected MC model, the concerned villages will have to prepare an Indicative MC Plan. The following steps may be distinguished and will be discussed below. A rough indication if time required is given. (a) Assemble relevant data 2 weeks (b) Village discussion of problems and constraints 1 week (c) Rapid Resource Appraisal 1 week (d) Village discussion of solutions and priorities 1 week (e) Preparation of draft village management plans 1 week (f) Discussion of draft village management plans 1 week (g) Finalization of indicative MC management plan 1 week (h) Approval of indicative MC management plan 1 week - 29 - value for goods. In addition, supervision missions would selectively post review contracts below the threshold levels. E. Cost Recovery Irrigation Scheme 7.13 Operation and Maintenance. According to the Dominican Republic's Water Rate Law of 1982, user groups are now officially responsible for operation and maintenance in irrigation schemes and collect charges from users to cover the full cost of these activities. Because of the unreliability of water supplies, however, incompleteness of drainage and on-farm distribution systems, and slow pace in organizing water user associations, INDRHI had difficulty in enforcing this law. Under the project, standards for operation and maintenance would be defined by INDRHI for each selected irrigated area. 7.14 Investment. There is a sound policy for the recovery of the capital cost of new irrigation projects--essentially a land for infrastructure swap. Once the irrigation projects have been constructed, the Government, through IAD, may acquire land for redistribution through the cuota parte system. Owners of 6.3 hectares or more must return to the Government between 50 and 80 percent of their lands included in such projects. A new law defining a cost-recovery mechanism for new investments related to surface and ground water use has been prepared and is being submitted to the Legislative Chamber. But for rehabilitation and completion of irrigation projects, even under the proposed new water law, no such mechanisms exist. Part of the capital costs of rehabilitation can, however, be recovered through a land betterment levy. The levy would be based on the cost of investment, net of taxes. This amount would be divided by the total number of water rights of the scheme and, for each cropping season, based on seasonal cropping pattern, beneficiaries would pay in proportion to their share of water rights. 7.15 Given the high increase in operation and maintenance recovery costs proposed under the project, it would be unrealistic to ask for capital cost-recovery measures during the first 2 years (Table 7.3). But, before June 30, 1997, measures for a significant capital cost-recovery level would be taken for farmers with more than 6.3 hectares of irrigated lands. ANNEX 5 Page 4 of 11 Agroforestry Management Model 10. The objective would be to increase sustainable productivity by promoting improved management system over a limited land area of higher potential based on timber-yielding tree plantations, multipurpose trees, coffee and fruit trees plantations. Proposed treatments include: (a) multipurpose coppice plantations with emphasis on legume trees for nitrogen fixation purpose; (b) introduction of rust resistant coffee varieties, of selected improved fruit trees such as avocado, lemon and bananas, as well as of improved cultivation practices; (c) enrichment seeding and fertilization of degraded rangeland capable of increased production through improved soil management combined with grazing management; (d) promotion of food and forage legumes on existing fallow land to enhance soil fertility and expand food production and the availability of forage: and (e) promotion of living hedges, of vegetative or stone contour bunding, and of contour bench terracing techniques; Rainfed and Irrigated Farming Model 11. The project would promote technical packages with increased sustainable productivity, increase integration of livestock and cropping systems, small-scale irrigation, horticulture and apiculture. Activities include: (a) introduction of conservation tillage along the contour on slopes exceeding 4%; (b) promotion of improved seeds, fertilization, IPM plant protection; (c) strengthening the present efforts to promote rainfed horticulture on contour terraces leading to increased moisture conservation and erosion control; and (d) when possible, promotion of irrigated horticulture using diversion and reservoir schemes with pressure tanks when necessary. - 30 - Table 7.3 Comparison of Current Water Charges and Those Proposed under the Project Current Water Charges with Project System RDS RD$ percent increase Nizmo-Valdeds 219 515 135 percent YSURA 181 785 334 percent PRYNI 313 530 69 percent 7.16 Assurances concerning the implementation of cost-recovery measures in the irrigation schemes were obtained during negotiations (para. 10.3(h)); the measures would be incorporated into the operational manual to be prepared during the first year of project implementation (PYI). The presentation of an action plan, satisfactory to the Bank, to: (i) raise, by no later than June 30, 1996, the level of the water charges in order to recover all operation and maintenance costs; and (ii) introduce, by no later than June 30, 1997, measures that will enable INDRHI to recover from farmers holding more than 6.3 hectares of irrigated land a significant portion of the capital cost of the investments --would be a condition of project effectiveness (para 10.1 (b)). Watershed 7.17 To ensure the financing of the expansion and the spreading of the soil and water management practices developed under the project, a watershed management fund would be established during implementation of the project. Because improvements of watershed management would benefit farmers in the upper and middle part of the watershed but also, indirectly users downstream (CDE, the hydroelectric company, municipalities, and irrigation farmer associations), the Government intends to develop a strategy that would lead to the water management fund being replenished annually by contributions from these doWnstream water users. There would be no covenant under the project to try to recover costs of externalities at this time. Instead, the project would work with the Government under the proposed water management fund--following the procedures indicated in the new water law, to be enacted in a few months--and try to develop such mechanisms for the future. ANNEX 5 Page 3 of 11 7. Treating degradation frequently involves changing the ways people manage the land resource. Sustainable management will require active participation of related communities/villages. T'he communal use of forest and range lands offers a particular challenge. Thus it is crucial that the Government agrees that community land management responsibility be given to farmers' associations at a village level for soil protection measures as well as for planting and exploiting trees. Micro-catchment development must be seen as a process of gradual improvement. People may not accept improved management on the total forest and range area, and even if they do it may be advisable to test the capacity and the commitment of the village on part of the area. The interaction with people, thus, often dictates phasing of activities and looking at the development efforts as the start of a more continuous process. One of the principal tasks of the technical experts in watershed management and participatory plarning to be recruited will be to guide the MC planning and implementation process with a suitable treatment menu and provide on-site training to staff. C. The Treatment Menu Forest land Management Model. 8. Although forest land belongs to Government it is frequently used by villagers. Sustainable management will require active participation of related communities/ villages. Thus, it is crucial that the Government agrees that community land management responsibility be given to farmers associations at a village level for soil protection measures as well as for planting and exploiting trees. 9. Close cooperation between villages and technical staff will be required to determine the best combinations of treatments according to villages preferences and sites conditions. Emphasis will be placed on cost- effective measures which produce early increase in production while maintaining at least 40% vegetative cover over soils. Proposed treatments include: (a) fuelwood coppice plantation on sites manually prepared and/or mechanically ripped to encourage moisture conservation; (b) establishment of conifer plantations by planting on manually prepared slopes; and (c) soil conservation afforestation which would comprise earth terracing by mechanical means where necessary, planting trees along ripped and fertilized terraces, and broadcast seeding of the entire area with a mixture of forage seed, grass seed and fertilizers. Gullies would be revegetated, and small check dams constructed where necessary. - 31 - 8. PROJECT ORGANIZATION A. Project Coordination 8.1 INDRHI would be the executing agency for the overall project. All civil works, technical assistance, and engineering services would be done under contract, in accordance with terms acceptable to the Bank. INDRHI would supervise the proposed technical studies and all required additional civil works for completing the existing infrastructure in the irrigated areas of the project. Key performance indicators of the project that were defined (Annex 2) and discussed with the Government and with the beneficiaries during appraisal would serve as a management tool to monitor project implementation. 8.2 Active farming community participation is an innovative and essential feature of this project. Using a farmer-centered, problem-census, problem solving approach (Annex 5), contractual arrangements would be made between water user associations and specialized institutions for support services--extension, technology transfer, and participatory applied research. Contracts for participatory research and development would be awarded following the procedures described in Annex 6. Management of the Rio Nizao watershed would similarly emphasize participation and responsibility of the farming community for formulating and implementing the pilot program in each microcatchment. ADESJO, a private NGO, would be contracted to provide the required support services in for the Nizao watershed management pilot program. 8.3 No direct financing of credit is proposed under this project. Although the medium- and large-scale farmers have little difficulty obtaining credit, small-scale farmers frequently have difficulties obtaining institutional credit--apart from farmers in the Agrarian Reform, who have access to credit through the Agricultural Bank. Small farmers must show that they have a land title and they will receive technical assistance from an known agency or private source. To overcome this, the user associations would hire private credit specialists to help farmers organize in mutual solidarity groups and prepare necessary paper work. The contractual arrangements with specialized institutions (including ADESJO in the watershed area) for support services to the farmers combined with the proposed land title distribution program, would also facilitate small-farmer access to credit. In addition, following the successful experience of the Association of Rural Institutions for Savings and Credit, the project, through its pilot program of development of savings and credit cooperatives, would provide support to the Association of Rural Institutions for Savings and Credit over a limited period of 2 years, for the promotion of grass-roots, rural, and financial organizations in the project areas. ANNEX 5 Page 2 of 11 depleted. The following table presents the possible repartition of use for each selected zone according to the soil capacity. Proposed land use in the sectors of the Nizao watershed area Rancho Nizao Niahoma- Ntzao- Polential Uise Arriba Niedio Niaboinuta Jiguey V'aldesia Total of Soil Ha % Ha % Ha % Ha % Ha % Ha % Forestry 873 14 4,655 39 5,961 44 6,392 75 9,369 68 27,250 56.0 Agroforestry 1,727 27 4,148 34 4,828 36 805 9 4,325 32 15,833 25.9 Pasture 1,200 19 2,429 20 2,639 20 1,403 16 7,671 12.6 Crops 2,500 40 810 7 - - - - 3,310 5.4 Total 6,300 100 12,042 100 13,428 100 8,600 100 13,694 100 54,064 100 3. Five micro-catchments in the medium and upper part of the Nizao watershed, covering an area of approximately 19,500 ha, have been selected in representing the major farming systems of the region. B. Objectives 4. The main objective of this project component would be the attainment of sustainable systems of resource use in the medium and upper catchments or more generally of a sustainable watershed management system in the Nizao river basin (i.e., bringing about a better balance between supply and demand for fodder and wood, controlling erosion, a better use of agricultural lands, and enhancing income and employment) through the development of integrated management models, namely: (i) forest land; (ii) agroforestry; (iii) rainfed and irrigated farminlg. 5. Although the rationale for this component is the need to halt degradation of natural resources in the Nizao watershed area, the realization of tangible and immediate benefits for the farm families in the project area is of vital importance for adoption of treatments and for subsequent protection and maintenance of investments. 6. As the main objective under this component is to develop models and to test methodologies. the replicability i.e., the cost effectiveness of the proposed treatments will be a major concern. Priority should be given to degraded lands which will give an adequate return to investments. Where there is a choice between more or less expensive but still viable treatments, a judgement about the return per dollar spent should guide the choice. - 32 - 8.4 A project execution unit comprising a technical division and a finance and administration division, would be set up in INDRHI and would directly report to the general manager. The project execution unit would contract with a specialized firm for the evaluation of project activities, including environmental aspects in the project areas. 8.5 At negotiations, assurances were obtained that INDRHI would maintain the project execution unit with staffing, functions, and organizational structure satisfactory to the Bank (para. 10.3(c)). Assurances were also provided that the project execution unit would submit semi-annual progress reports to the Bank not later than 3 months after the end of each respective period. Such reports would include information on the status of physical works under the project, progress in training the user associations and in having user associations increase their responsibilities in the management of the respective areas, the effects on agricultural production, intensification of land use, development of land and water conservation measures in the Nizao watershed, and the levels of cost recovery achieved. B. Accounts and Audits 8.6 INDRHI would maintain separate accounts to record expenditures made under the project using an agreed-upon plan of project accounts. A plan of accounts would be prepared so that in each selected area of the project, each user association and project execution unit would establish an accounting procedure, acceptable to the Bank (para. 10. 1(d)). Each user association would maintain records of expenditures and consolidate such records. Statements of expenditures will be prepared by each user association and coordinated by the project execution unit. Copies of supporting documentation for reimbursement requests provided to the WUAs would be maintained by the project execution unit and made available to visiting Bank missions and independent auditors, who at their discretion would make direct visits to WUAs for purposes of the overall audit. Project accounts, including the special account and statement of expenditures, would be audited annually by independent auditors, acceptable to the Bank, following terms of reference approved by the Bank. Such audit reports would be submitted to the Bank not later than 6 months after the close of each financial year. C. Monitoring and Evaluadon 8.7 The basic tool for monitoring project activities would be the annual work program, an instrument that integrates all Irrigated Land and Watershed Management Project management functions into one tool: programming, work organization, and distribution of tasks, personnel management and monitoring and evaluation. A management information system would be implemented by no later than December 31, 1995 (para. 10.3(g)), in each project area and aggregated at the ANNEX 5 Page 1 of 11 STAFF APPRAISAL REPORT DOMINCAN REPUBLIC IRIUGATED LAND AND WATERSHED MANAGEMENT PROJECT Rio Nizao Watershed Management Program A. Project Area 1. The total area covers about 91,600 ha, 88% of which is strongly to severely eroded, vegetation is badly degraded, soils are shallow in many places and soil loss is very high (about 295 t/ha/year). The main cause of this degradation is deforestation (rate of deforestation of 2.3% per year), combined with inappropriate agriculture use of hilly and steep sloping areas (70% of the total area has a slope of 32%). The population of the Nizao watershed is about 48,000 inhabitants, with an average population/km2 density of 53. Land distribution in the area is characterized by a dualism between large and very small holdings. 85 % of all holdings occupies less than 40% of the land, and 1.2% of the farmers have more than 25% of agricultural lands. Current land use in the sectors of the Nizao watershed area Ranmbo Nbuo Mahomr- N- Arribc Medlo Mabomnha Jiguey Valdeja Teed Ha % Ha % Ha % Ha % Ha % Ha % CpfUw 3,702 35 2,291 14 9,182 40 3,202 32 6,692 42 25,169 27 Crop. 1,798 17 3,510 21 3,902 17 4,400 44 2,060 13 16,670 18 Crop. ¢&ps 699 7 2,295 14 803 4 - 4,530 29 8.327 9 - - k! 450 3 230 1 300 3 980 1 .Wood 1,300 12 915 6 5,623 25 1,500 15 - 18,938 21 Jlbwkn 2,901 28 6,732 41 3,099 14 498 5 2,368 15 21,498 23 Totl 10,400 16,193 022839 9,900 15,650 91,582 100 Source: INDRHI-FAO, SEA, August 1992. 2. However, due to population growth, which has put unsustainable pressure on agricultural and non-agricultural lands (forest, rangeland, bush fallow) and overtaxed soil fertility, the natural resources of about 67 % of the area have been mined and their productive potential - 33 - project execution unit level. The project execution unit would coordinate the annual development of the annual work program subject to the approval of the general manager of INDRHI and the Bank. The project execution unit would be responsible for issuing, no more than 3 months after the end of each period, semi-annual reports on progress of implementation of the components, which would be submitted to the general manager of INDRHI, and through it to the Bank. If implementation progress is not satisfactory for any of the components, the project execution unit would initiate remedial action in agreement with the general manager of INDRHI and the Bank. Annual reviews with Bank participation would be used for setting investment plans and work programs. Performance would also be reviewed during these missions. (A set of key performance indicators is presented in Annex 2). 8.8 At the same time, the project would develop an Environmental monitoring system within INDRHI to be implemented and monitored in each irrigated area and in the Nizao watershed. Factors to be monitored would include climate (wind, temperature, rainfall, and so on), stream discharge in the upper part of the watersheds, above the irrigation schemes, and below at various points, nutrient content of discharge water; flow and water level at critical points in the irrigation systems; water table elevations in project areas; water salinity levels in coastal areas; physical and chemical properties of soil in irrigation areas and in the watershed area; forestry coverage; agricultural acreage in production; cropping intensity; crop yield per unit of land and water; erosion or sedimentation rates in project areas; relation between water demand and supply of users (equitability of distribution); condition of distribution and drainage canals (siltation, presence of weeds, and condition of linings); upstream watershed management (industrial activity and agricultural extent and practices); incidence of disease and presence of disease vectors; and health condition of project population. 8.9 In addition, two major evaluations of the project would be carried out by independent consultants contracted by the project execution unit. First, a mid- term review would be held by no later than December 31, 1997 to: (a) assess progress in implementation measured by performance objectives; (b) verify the continued validity of the design assumption in light of implementation experience; and (c) undertake necessary adjustments in project objectives, design, and implementation arrangements. Second, these would be an end-evaluation (project- completion) report. 8.10 Assurances to this effect were obtained at negotiations (para. 10.3(i)). Terms of reference for the design of a Monitoring and Evaluation system that would track both the indicators described in Annex 2, as well as measures of project benefits (para. 9.1), would be prepared by the project execution unit and agreed upon with the general manager of INDRHI and the Bank. I - 34 - 9. BENEFITS, ECONOMIC ANALYSIS, ENVIRONMENTAL IMPACT, EFFECT ON WOMEN, AND PROJECT RISKS A. Benefits 9.1 The proposed project likely would foster a rational nationwide long- term strategy and policies for irrigated farming and watershed development. These are the other main anticipated project benefits: * increased productivity, employment, and incomes on about 5,000 small farms from irrigated zones that now produce at well below their potential. There are 10,300 farmers in the project irrigated areas. Most of the investments for distribution and drainage infrastructure and for land leveling proposed user project financing will benefit small farmers because large farmers in Nizao-Valdesia and PRYN1 have already completed the required civil works with their own financing sources. In YSURA, aLmost all of the farmers are very small farmers from the Agrarian Reform. * Poverty reduction in the Nizao watershed by raising income of about 1,500 small farmers (out of a total of 9,000 small farmers) to be reached by project activities during the 5-year period, most of them living below the rural poverty threshold of about DR$3,500 (US$280). * Saving in operation and maintenance expenditures as a result of rehabilitation and improvement of irrigation structures, improved maintenance, and reduced water losses. * Water savings from more efficient on-farm water use. * Development and testing of methods for sustainable watershed and irrigated land management. * Strengthening of the private sector role, thus improving efficiency and flexibility in the management of existing irrigated schemes and in the provision of agricultural support services. * Reduced Government subsidies through higher revenues from increased cost recovery. ANNEX 4 DO fINCAN REPUBLIC RRIGATED LAND AND WATERSED MAANAGEMENT PROJECT LAND DISTRIBUTION IN THE THREE PRO.TECT RRIGATED AREAS 0.0-1.5. 1.6-2.5 2 6-.O 5.L40 [1-1 32100 Total | .:__.:ha ha. -ha: ha h ha. Farmers 1,771 567 670 295 133 6 3,442 Area (ha) 1,425 1,143 2,389 2,045 2,054 944 10,000 Farmers 3,404 1,161 154 46 35 - 4,800 Area (ha) 3,960 2,322 461 277 480 7,500 Santiago Farmers 822 745 267 123 57 1 2.015 Area (ha) 836 1,529 1,015 1,004 1,028 88 5,500 3,500 -3,000 2,500 2,000 1,500 \ 1,000 l O - 2zLO YSURA o N o < / Nizao-Valdesia o co Lo u _ _ cn - 35 - B. Economic Analysis 9.2 Economic analyses have been done for the 3 irrigated areas on expenditures covering, first, rehabilitation and completion of the irrigation infrastructure and, second, overall project activities including infrastructure investments, agricultural support services, and institutional strengthening. 9.3 Sensitivity. Sensitivity analysis has been done on the viability of the schemes under adverse conditions. Switching values were used to determine the percentage of changes in key variables required to reduce the ERR to the opportunity cost of capital (Table 9.1). The sensitivity of individual schemes to changes in benefit and cost streams varies widely, given the diversity of schemes and cropping patterns. 9.4 The results show that--at Table 9.1 Economic Rates of Return a discount rate of 12 percent, the (percenl) assumed opportunity cost of capital in the Dominican Republic--such schemes Nuzao-Valdesia 21 are relatively insensitive to cost Arua (YSURA 14 overruns and reduced benefit from lower production (due to prudent assumptions), Average irrigated areas 19 but more sensitive to a decrease in benefits resulting from commodities price reductions. Thus, critical determinants in the viability of these schemes are marketing conditions. Farm models have been prepared by cautiously taking into accounts the internal and outside markets absorption capacity. (For details of financial analysis and economic analysis, see Annex 9). 9.5 Watershed Management Pilot Program. Given the participatory approach, the scope and type of interventions and, hence, incremental annual production at the end of the project cannot be predicted precisely. Difficulties in making estimates are compounded by widely varying agroecological and social conditions between microcatchments in the watershed. 9.6 In addition, the economic analysis should take into account the cost of soil erosion on- and off-farm. On-farm erosion cost is the associated decrease of crop yield. A current study (Hernandez 1992. Working Paper No. 4) at Ocoa River watershed, with a slope of 30 percent, indicates that bean yield fell by 0.26 kilograms per hectare for each ton of soil loss, while pigeon pea yields fell by 2.1 kilograms per hectare for each ton of soil loss. But an economic analysis of returns to investment in soil conservation measures, such as diversion ditches and live barriers, revealed that the internal rate of return of 17 percent would not be sufficiently attractive to the farmer. Off-farn quantifiable costs of soil erosion are an Annex 3 Page 2 of 2 Apprximative Dates Expected Skill Staff Input (month/year) Activity Requirements (staff-weeks) 5-6/97 Supervision Mission Agriculture/TM 3 Financial Analysis/Economics 11-12/97 Mfd-Term Review Agriculture/TM 11 to review progress in overall project Irrigation Engineering implementation, its socio-economical Sociologist impact and implementation of cost Watershed Management/Forestry recovery mechanisms Financial Analysis/Economics M&E/MIS/EMS 1998 Two Supervision Missions Agriculture/TM 12 Financial Analysis/Economics Irrigation Engineering 1999 Two Supervision Missions Agriculture/TM 16 Financial Analysis/Economics Watershed Management/Forestry Irrigation Engineering M&E/MIS/EMS 2000 Supervision Mission Agriculture/TM 8 (including preparation of a PCR) Financial Analysis/Economics Environmentalist Sociologist - 36 - increased maintenance cost of irrigation systems and shortened economic life of hydropower reservoirs because of sedimentation. The incremental maintenance costs for irrigation systems, due to increased sedimentation have been estimated at US$2 million annually out of total operating and maintenance cost of US$3.4 million. For the 5 principal dams in the country with a design life of 50 years, the average life has been reduced to 20 years--40 percent--by unanticipated sedimentation. A program to extend the useful life of the Valdesia Dam through hydraulic pumping of sediment, was initiated in 1988 and cost US$4.5 million in the first year. 9.7 If these benefits were included in the analysis of project benefits, the ERR would be higher than estimated here (Table 9.1). C. Environmental Impact 9.8 The execution of the proposed project would not increase environmental hazards. On the contrary, the project would improve land and water management in the selected areas, by reducing the problems of drainage and salinity in existing irrigated areas. Rehabilitation and completion of irrigation or drainage works and the strengthening of user groups in operation and maintenance would improve water use efficiency and conservation. Cost-recovery requirements would help curb excess demand for irrigation. In the Nizao watershed area, upstream from the irrigated area, the project--through its watershed management pilot program-- would address the problems of deforestation and inappropriate use of mountain slopes that cause the erosion. 9.9 These technical considerations relate to possible side effects. In the irrigated areas considerations involve improving water use and soil fertility. The use of fertilizers may be increased but will be carefully monitored by INDRHI through its environmental monitoring system, to avoid wasteful or environmentally damaging levels. Crop pest protection should be improved through the development of integrated pest management techniques. No land clearing is planned in noncultivated lands and negative impact is expected. In the watershed cultivated areas soil fertility should be improved by replacing fallow with forage legumes and pulses. And the use of marginal lands should be changed, increasing productivity through soil and water conservation, agronomic practices and minor irrigation. Some soil conservation practices--including earth movement--would be undertaken to increase water and moisture retention, but with careful design, no negative effect is expected. In the watershed range and forest areas, technical considerations involve enhancing vegetative coverage for in situ soil and moisture conservation, improving management, increasing productivity, and supporting no land clearing program in uncultivated lands. Chemical fertilizers would be used in the vegetative rehabilitation efforts but application would mainly be one time and quantities would be small and Annex 3 Page 1 of 2 STAFF APPRAISAL REPORT DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Supervision Plan Supervision input into Kea Activities Approximative Dates Expected Skill Staff Input (month/year) Activity Requirements (staff-weeks) 5/95 Supervision Mission Agriculture/TM 8 (Project Launch Workshop) Irrigation Engineering Watershed Management/Forestry Sociology/Community participation Economics/Financial Analysis 5-6/95 - Review of bidding documents and Irrigation Engineering 6 procurement plans; Procurement - Review of design; - Review of accounting plans; Financial Ana vsis - Review of Detailed Plans for: (a) Irrigation Infrastructure (b) Agricultural Development Agriculture/TM (c) Watershed Management Program 7/95 - Review of Plan for: 3 (a) Extension Program Agriculture/TM (b) Research Program (c) Monitoring and Evaluation (MIS/EMS) M&E/Economics 11-12/95 Supervision Mission Agriculture/TM 3 to review start-up, and implementation Training of organizational arrangements; Irrigation Engineering to assist in preparation of annual Watershed Management work plans and budgets; to assist in preparation of Associations and Management Training Program 5-6/96 Supervision Mission Agriculture/TM 6 Review of Cost Recovery Procedures 11-12/96 Supervision Mission Agriculture/TM 8 to review, inter alia, progress in M&E/Economics agricultural development/irrigation Irrigation Engineering infrastructure/watershed management Watershed Management and installation of MIS and EMS - 37 - rapidly absorbed. Some soil conservation measures could be necessary to increase moisture retention, but efforts to minimize earth movement would avert possible negative effects. D. Effect on Women 9.10 Women traditionally are responsible for small livestock, domestic chores (including fetching water and fuelwood), and child care, but also play a major role in crop cultivation. In the watershed area, the afforestation program and the introduction of forage legumes would, in the long term, reduce the burden on women by providing larger quantities of fuel and fodder closer at hand. The participatory approach has been designed to give women an important role in the selection of recommended techniques. E. Project Risks 9.11 The risks involve whether the Government is willing enough to move towards more privatization of the irrigation subsector and of rural development generally, the availability of adequate counterpart funds, and the enforcement of cost- recovery and self-financing schemes. These risks would be minimized by front- loading actions, such as granting land titles to ensure ownership of the irrigated land and community rights for watershed community land. Technical risks are limited, as requirements for irrigation rehabilitation, leveling, and drainage works are relatively unsophisticated and well known in the country. Investment in civil works in the initial year of the project has purposely been kept low in order to minimize the risk of falling behind schedule. Moreover, INDRHI, which has proved effective during preparation, with its proposed project execution unit reporting directly to the general manager, will increase the effectiveness of coordination. And Bank missions would be scheduled to participate in formulating and reviewing annual operation plans and budgets. Considerable emphasis is also being given to participatory research and development in order to ensure effective use of improved irrigation systems and better exploitation of market opportunities. Both the size and complexity of the proposed project appear to be within the capacity of INDRHI and the private organizations involved, namely water user associations, and ADESJO. ANNEX 2 Page 2 of 2 Performance Indicators ACTIVITY UNIT PY1 PY2 PY3 Pl4 PY5 TOTAL Field days * Nizao-Vldesia man*day 1,000 2,000 3,000 3,000 3,000 12,000 * Ysura man*day 1,000 2,500 3,500 3,500 3,500 14,000 * PRYN man*day 500 1,000 1,500 1,500 1,500 6,000 Visits * Nizao-Wldesia man*day 500 1,000 1,500 1,500 1,500 6,000 * Ysura man*day 800 1,500 2,500 2,500 2,500 9,800 * PRYN man*day 400 800 1,200 1,200 1,200 4,800 Demonstration plots * Nizao-Vldesia Plots 2 4 6 6 6 24 * Ysura Plots 2 5 7 7 7 28 * PRYN Plots 2 5 5 5 5 22 Total Farmers Farmers 1,500 4,120 5,150 6,200 7,200 7,200 contacted D. Studies Water Contml % of Total 100% - - - 100% (Nizao-Valdesia) Land Register * Nizao-Valdesia % of Total 40% 60% - 100% * Ysura % of Total 40% 60% - - 100% * PRYN (+ maps) % of Total 30% 50% 20% - 100% Mid-Term Review - - 100% - 100% Project Preparation - - - 100% 100% E. Monitorine - MIS development % of Total 40% 60% - 100% -EMS ,i of Total 40% 60% - - - 100% E Institutional Development INDRHI T.A. T.A.*month 11 2 1 1 1 16 Training WUA . WUA Officials man*day 90 90 90 9tl 90 450 . WUA Staff man*day 150 150 150 150 150 750 Nizao Watershed T.A. T.A.*month 12 12 12 12 12 60 . Training of staff man*day 930 30 30 30 30 1,050 . Overseas visits week - 2 2 2 - 6 . National Workshop man*day - - 160 160 E. Reporting and Audit POA for PYI ready by Dec 31, 1994 12/31/1994 and subsequent POAs on November 30 of 11/30 11/30 11/30 11/30 each year thereafter. Audit compleed 05/1995 05/1996 05/1996 05/1997 Operating Manual . Prepared 12/31/1994 . Disseminated 03/1995 . Implemened. 06/1995 - 38 - 10. S1MMARY OF AGREEMEIT REACHIED AND RECOMMENDATIONS During negotiations of the proposed Loan, agreement from the Government of the Dominican Republic was reached on the following main actions. 10.1 Conditions of effectiveness: (a) Signing of the Subsidiary Agreement. (b) Opening of the Project Account with an initial deposit of US$1.0 million to cover counterpart expenditures (para. 7.5). (c) Adoption of a plan of accounts satisfactory to the Bank (para. 8.6). (d) Presentation of an Annual Operating Plan for 1995 satisfactory to the Bank. (e) Establishment of PEU in manner satisfactory to the Bank and fully staffed, including the Project manager, with personnel of experience and qualifications satisfactory to the Bank (para. 6.16). 10.2 Conditions of disbursement: (a) Irrigation Infrastructure Component. Satisfactory evidence that INDRHI has submitted to the Tribunales de Tierra the documentation required to initiate the appropriate legal actions for the award of final land titles to at least 80% of farmers living in each of the irrigated areas will be required for civil works expenditures in the respective irrigated areas (para. 6.3; 7.6). (b) Nizao Watershed Management Treatments Component. The ADESJO Agreement and subgrant agreements must be signed; subgrants to communities for soil and water management measures in the Nizao watershed would be allowed only if a comprehensive natural resources management plan for the selected microcatchment has been agreed to by the INDRHI, project execution unit and related communities (para. 7.6). (c) Agricultural Development Component. Finalization of criteria and procedures, satisfactory to the Bank, for carrying out the component; presentation of a short list of firms for participatory research and development support service contracts (para. 6.11). ANNEX 2 Page 1 of 2 STAFF APPRAISAL REPORT DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Firformance Indicators ACTIVITY ULIT PYI PV2 PV'3 PY4 PY5 TOTAL A. Civil Works * Nizao-Valdesia Final Design % of Total 40% 40% 20% - 100% Irrigation Works % of Total 5% 40% 40% 15% 100% Land Levelling ha 65 ha 260 ha 325 ha - 650 ha * YSURA Final Design % of Total 60% 40% - 100% Major drainage/ % of Total 15% 60% 25% 100% Flood control Farm drainage % of Total 25% 75% - - 100% Land Levelling ha 225 ha 562 ha 675 ha 788 ha 2,250 ha * PRYN Final Design % of Total 40% 30% 30% - 100% Gated Structures Unit 10 22 - 32 Irrigation works % of Total 5% 35% 60% - - 100% Land Levelling ha 340 ha 680 ha 850 ha 1,020 ha 510 ha 3,400 ha B. Operation & Maintenance - O&M Equipment % of Total 100% - - - - 100% - O&M Training for each system ,Users Course 4 4 4 4 4 20 , WUA off. and staff Course 2 2 2 2 2 10 , INDRHI staff Course 2 2 2 2 2 10 - O&M Manual * Nizao-Wldesia % of Total 70% 30% - - - 100% * PRYN % of Total 50% 50% 100% C. Aericultural Develol..ent' - Research , Expand lines lines n.a. n.a. n.a. n.a. n.a. n.a, Initiate new lines lines n.a. n.a. n.a. n.a. n.a. n.a. - Training of Extension Staff * Nizao-Valdesia man*day 140 140 140 140 140 700 * Ysura man*day 160 160 160 160 160 800 * PRYN man*dy 120 120 120 120 120 600 - Tbchnology Transfer * Nizao-Valdesia man*day 1,400 2,000 2,000 2,000 2,000 9,400 * Ysura man*day 1,900 3,000 3,000 3,000 3,000 13,900 * PRYN man*day 800 1,200 1,200 1,200 1,200 5,600 1. for irrigated areas only. Given the nature of the development program in the Nizao watershed area, no key indicator has been proposed (see Annex 5). - 39 - 10.3 Assurances were obtained that: (a) The Government would establish a special account in the Banco Central, in U.S. dollars, to cover all eligible Bank expenditures under the loan with procedures for the account's operation clearly established and acceptable to the Bank (para. 7.4). (b) The Government would provide the necessary annual counterpart funding to INDRHI according to each annual work program (para. 7.2). (c) INDRHI would maintain the project execution unit with staffing, functions, and organizational structure satisfactory to the Bank (para. 8.5). (d) INDRHI would refrain from presenting to the Bank withdrawal applications in respect of expenditures not included in the POA approved for the year in question (para. 7.6). (e) Contracts for participatory research and development support services would be signed no later than June 30, 1995 (para. 6.11). (f) The irrigation control studies would be completed by no later than December 31, 1995; the recommendations of such studies would be reviewed jointly with the Bank by no later than June 30, 1996; and immediately thereafter, such recommendations would be implemented in a manner satisfactory to the Bank (para. 6.17). (g) By no later than December 31, 1996, the Government would prepare and furnish a land title distribution action plan, satisfactory to the Bank, for the farmers of Nizao watershed who have not received final titles; by no later than June 30, 1997, the Government would start the implementation of such action plan; and by no later than June 30, 1999, the Government would complete the implementation of the action plan (para. 6.3). (h) The design of a management information system would be completed in a manner satisfactory to the Bank by no later than December 31, 1995 and immediately thereafter such system would be implemented in a manner satisfactory to the Bank (para. 6.19). (i) By no later than December 31, 1995, the Government would present an action plan, satisfactory to the Bank, to: (i) raise, by no later than ANNEX 1 Page 4 of 4 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Estimated Schedule of Bank Disbursements (In US$ million) Disbursement Cumulatihe Balance of FY/End of Semester During Semesier Amount Loan July 30, 1995 28.00 FY 1996 Dec. 31, 1995 0.78 0.78 27.22 June 30, 1996 1.18 1.96 26.04 FY 97 Dec. 31, 1996 1.68 3.64 24.36 June 30, 1997 2.08 5.72 22.28 FY 98 Dec. 31, 1997 2.08 7.80 20.20 June 30, 1998 1.04 8.84 19.16 FY 99 Dec. 31, 1998 2.08 10.92 17.08 June 30, 1999 3.12 14.04 13.96 FY 2000 Dec. 31, 1999 2.08 16.12 11.88 June 30, 2000 2.08 18.20 9.80 FY 2001 Dec. 31. 2000 3.12 21.32 6.68 June 30, 2001 2.08 23.40 4.60 FY 2002 Dec. 31, 2001 1.74 25.14 2.86 June 30, 2002 1.74 26.88 1.12 FY 2003 Dec. 31, 2002 1.12 28.00 0.00 - 40 - June 30, 1996, the level of the water charges in order to recover all operation and maintenance costs; and (ii) introduce, by no later than June 30, 1997, measures that will enable INDRHI to recover from farmers holding more than 6.3 hectares of irrigated land a significant portion of the capital cost of the investments (para. 7.16); (j) Two major evaluations of the project would be conducted: a mid-term review by the Government and the Bank and an end-evaluation (project-completion) report (para. 8.9, 8.10). 10.4 With the above assurances, the proposed project would be suitable for a Bank loan of US$28.0 million equivalent on standard terms with 20 years' maturity and variable interest rate. ANNEX 1 Page 3 of 4 DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT Financing Plan by Disbursement Categorv (EJS$ 000) Users' Associations World Rank Ooverrment Total Local ---------------............................-------- ----- For. CExcL. Amount X Amount X Amount X Amount X Exch. Taxes) A. C1vil Works 0.0 0.0 12300.1 78.2 - 3429.1 21.8 15729.2 36.4 8870.9 6858.3 B. Equipment 0.0 0.0 2464.3 78.3 682.9 21.7 3147.2 7.3 2464.3 682.9 C. Studies, Training, TA 0.0 0.0 5909.5 100.0 0.0 0.0 5909.5 13.7 2038.5 3871.1 0. Contracts 0.0 0.0 2865.8 64.5 1574.1 35.5 4439.8 10.3 504.7 3935.1 E. Funds 0.0 0.0 3213.2 100.0 0.0 0.0 3213.2 7.4 591.0 2622.2 F. 0 & 4 WUA 646.0 18.6 9.1 0.3 2815.7 81.1 3470.8 8.0 598.9 2871.9 C. 0LH IJNDHR 55.4 4.0 0.0 0.0 1334.8 96.0 1390.1 3.2 496.8 M8.4 H. 0 H NDORNI 28.1 1.6 0.0 0.0 1748.8 98.4 1776.8 4.1 634.9 1141.9 I. Other 0 S N 0.0 0.0 743.9 35.2 1367.7 64.8 2111.6 4.9 743.9. 1367.7 J. Personnel 0.0 0.0 0.0 0.0 814.7 100.0 814.7 1.9 0.0 814.7 K. Land Titling 187.0 15.0 623.3 50.0 436.3 35.0 1246.6 2.9 363.7 882.9 ........................................_........._. _ . ........_._..__,______.--______ Total Disbursement 916.4 2.1 28129.2 65.0 14204.0 32.8 43249.6 100.0 17307.5 25942.0 ----------- s=s====-5__=s=ss s se _ =s s =s- _ 4/26/1994 10:51 Disbursement by Financier by Semester (US$ 000) Users" Associa Yorld Goverrn tions Bank ent Totat Amount Amount Amount Amout Semester 1 137.3 3499.0 1529.2 5165.4 2 137.3 3499.0 1529.2 5165.4 3 53.8 3756.3 1618.7 5428.8 4 53.8 3756.3 1618.7 5428.8 5 71.6 3219.3 1512.9 4803.8 6 71.6 3219.3 1512.9 4803.8 7 87.7 1929.6 1234.4 3251.6 8 87.7 1929.6 1234.4 3251.6 9 107.9 1660.5 1206.7 2975.1 10 107.9 1660.5 1206.7 2975.1 TOTAL 916.4 28129.2 14204.0 43249.6 4--/26 ----19-94 10:51- --------- 4/26/1994 10:51 ANNFXJ 4 Page o STAFF APPRAISAL REPORT DOMNICAlN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROTECT Project Components bv Year Base Costs Totat 1995 1996 1997 1998 1999 DR5000 USS000 A. Irrigation 1. Nizao-VaLdesis 19671.8 29752.6 30025.6 13731.9 4774.8 97956.7 7836.5 2. YSURA 25288.0 33524.9 18849.3 .8366.8 8366.8 94395.7 7551.7 3. PRYN 20722.1 16211.2 10469.6 6368.4 6368.4 60139.6 4811.2 ............................................................…........... Sub-total 65681.9 79488.7 59344.5 28467.1 19509.9 252492.0 20199.4 B. watershed Management 3198.7 5763.9 7209.0 9077.6 10887.7 36137.0 2891.0 C. Agricultural Development 1. Extension Nizao-Valdesia 624.8 339.1 374.1 467.8 374.1 2179.9 174.4 2. Extension YSURA 692.7 422.8 462.8 556.5 462.8 2597.7 207.0 3. Extension PRYN 574.1 270.4 284.4 346.9 284.4 1760.2 140.8 4. Participatory Research 16075.7 10384.2 10086.9 9710.7 9710.7 55968.4 4477.5 …....................................................................... Sub-total 17967.4 11416.5 11208.2 11082.0 10832.0 62506.1 5000.5 D. tnst. Strengthening 1. INORHI/Executive Unit 19820.1 7518.3 9010.1 5422.6 4187.0 45958.2 3676.7 2. WUA Nizao-Valdesia 164.8 102.5 102.5 102.5 102.5 575.0 46.0 3. IUUA YSURA 94.8 102.5 102.5 102.5 102.5 505.0 40.4 4. IJA PRYN 94.8 102.5 102.5 102.5 102.5 505.0 40.4 5. Credit Cooperatives 863.3 1582.5 0.0 0.0 0.0 2445.7 195.7 . .......................................................... ........... Sub-total 21037.8 9408.4 9317.8 5730.3 4494.7 49988.9 3999.1 ............................................................ ........... Total BASELINE COSTS 107885.8 106077.5 87079.4 54357.1 45724.3 401124.0 32089.9 Physical Contingencies 11660.4 11771.7 9922.7 5551.7 4054.8 42961.3 3436.9 Price Contingencies 9589.0 17871.6 23092.5 21382.4 24598.5 96534.0 7722.7 ............................................... ......................... Total PROJECT COSTS 129135.1 135720.9 120094.6 81291.1 74377.7 540619.4 43249.6 Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Foreign Exchange 66076.2 60525.5 47990.4 24616.1 17135.9 216344.0 17307.5 ..... ........1........................................................................................ 4/26/1994 10:51 STAFF APPRAISAL REPORT DOMINICAN ItEPUBLIC IRRIGATED LAND AND WATERS[ED MANAGrEMENT PROJECT ToIal SuLnijnnLry Accounts DRS 000 USS 000 X Total ---~ - - I- X Foreign Base Local Foreign Total Local Foreign Total Exchange Costs .............................. ........................... .................... 1. INVESTMENT COSTS ......._....... A. Civil Works 1. Irrigation Structures 27050.4 40575.6 67626.0 2164.0 3246.0 5410.1 60.0 16.9 2. Drainage 18268.8 27403.2 45672.0 1461.5 2192.3 3653.8 60.0 11.4 3. On-Farm Works 13736.0 20604.0 34340.0 1098.9 1648.3 2747.2 60.0 8.6 ............... ........................... . .. ..................... .......... ............................... .......... .... ............ Sub-TotaL 59055.2 88582.8 147638.0 4724.4 7086.6 11811.0 60.0 36.8 B. Equipment 1. Office/Training 2238.7 3577.8 5816.5 179.1 286.2 465.3 61.5 1.5 2. Irrigation 4248.9 16995.6 21244.5 339.9 1359.6 1699.6 80.0 5.3 .............................. ........................... .................... Sub-TotaL 6487.6 20573.4 27061.0 519.0 1645.9 2164.9 76.0 6.7 C. VehicLes 301.6 5729.7 6031.2 24.1 458.4 482.5 95.0 1.5 0. Technical Assistance 20494.3 11140.9 31635.2 1639.5 891.3 2530.8 35.2 7.9 E. Land Titling 9100.0 3900.0 13000.0 7?8.0 312.0 1040.0 30.0 3.2 F. Training 7977.7 3807.4 11785.1 638.2 304.6 942.8 32.3 2.9 G. Studies 5326.5 6102.3 11428.8 426.1 488.2 914.3 53.4 2.8 H. Grants for Watershed 22990.6 6497.7 29488.3 1839.3 519.8 2359.1 22.0 7.4 1. Support Services Contract 33088.6 4954.1 38042.7 2647.1 396.3 3043.4 13.0 9.5 Total INVESTMENT COSTS 164822.1 151288.3 316110.4 13185.8 12103.1 25288.8 47.9 78.8 It. RECURRENT COSTS ................ A. 0 & H INDRHI 17180.2 11453.5 28633.7 1374.4 916.3 2290.7 40.0 7.1 8. 0 A H WUA 24243.0 6060.7 30303.7 1939.4 484.9 2424.3 20.0 7.6 C. Operating Costs 11557.2 7534.7 19091.9 924.6 602.8 1527.4 39.5 4.8 D. Personnel 6984.2 0.0 6984.2 558.7 0.0 558.7 0.0 1.7 P Total RECURRENT COSTS 59964.7 25049.0 85013.6 4797.2 2003.9 6801.1 29.5 21.2 .. _.__........................... ................................ .... __.... ...... ........ ___......_.....__,__,____.iT Total BASELINE COSTS 224786.8 176337.3 401124.0 17982.9 14107.0 32089.9 44.0 100.0 o Physical ContingencIes 22547.8 20413.5 42961.3 1803.8 1633.1 3436.9 47.5 10.7 Price ContIngencles 76940.8 19593.2 96534.0 6155.3 1567.5 7722.7 20.3 24.1 4- .............................. ........................... .................... Total PROJECTS COSTS 324275.4 216344.0 540619.4 25942.0 17307.5 43249.6 40.0 134.8 4/26/199gm==223s53.UUWE g== .:S==== ZW.8UU Csuuuuauu!-'i=-U2 4/26/1994 10:51 DOMINICAN REPUBLIC -20' 71 69' 20' IRRIGATED LAND AND ' Pryn Area WATERSHED MANAGEMENT PROJECT Sanhi NIZAO AREA - - 7 DOMINICA RP7I:omig <> 5 J Fansa&REPUBLIC 1 MS i~~~~~~~~Sn RANCHO ARRIBA B-h Wtrh Aroeo A- s, , ../ \ 1 _ / \ 1*_.'' 71, 70 69° \CTrrodelCroswr Villa Altagracia L. SELECTED MICROCATKHrAtAIJI NIZAb MEDIO MAIN CANALS 6 ( It3/ ( f) I LATERAL CANAL -_ MAHOMA I IRRIGATED AREAS ' \ (MAHOMITA I _ DAMS () 2 8t3 h4 I t, * RESERVOIRS A Jsgu storagds o.V....... RIVERS \ San Jose , - MAIN ROADS dde Dcoo Q JIGUEY \ r75 SANTO SECONDARY ROADS J/ G9 900 Ua I S DOMINGO Aguacale dar' - N o5 10 I: ? l~~~~~~~~~~~~~onsa da lae Palma I ' KILOMETERS I 738 m /' NIZAO* j TAa, VALDESIA' 1 San Hana To Azua S . s r~on aIH > k 1 1 -^ es.l F|] ) ;1 I h.: CrisicObol , tValdesia;o'. v _._ t ~~~~~~~~~~~~~~slaroge dom n . . ] | $;u~~~~~~~~~~~~~~~~~~~~~~~e.eslolustn dan.m Naoyo No ayo Ni 0 Sabane Grande > M~~~~~oanzas Inc Calderas Thi,s mp has b-en prepored by The WanId Banksstaff Nencisisaty to the con -nience NIZAO AREA f readers a,nd is for tha ;na laeof The Wand Bank Grap. Tha d-nasninaan ase ad the baunaries shd - MAIN CANALS no this cop do nat snply, an the MAIN CANALS ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~part of The World Bank Groop, any a~d g-n t an the 1agal LATERAL CANALS sa f any trit-y o, Ony eRndorsment or acceptance of IRRIGATED AREAS sob b-adaria - DAMS I RESERVOIRS V RIVERS Valdesia Dam - MAIN ROADS SECONDARY ROADS Barias Dam 0 1 2 3 4 KILOMETERS To Azua \ ~~~Jua,, Caballero Conol ) ) To Son Cristobal and Santa Daoningo \ AGRARIAN REFORM ! / ...................... ~~~~~~~~~~~~~~~~~~~~~~~Gregorio i~ ~ ~ ~ ~~~~~~~~~~~~~~~~~Bn M.c AETTLEMENT-01 To- A Las Calderas 0 O j_L a (n~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~O _ |a_ DOMINICAN REPUBLIC IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT PRYN AREA Monte Cristi Puerto Plato V\1illa Vasquez Imbert / A .~~~~~~~~0 - ? DOMINICAN ii SITUA N MP Cmira aBian PUon BLI -0 M CANAL \ / t g i ' t~~~~~~~~~~~~~~~~~~~~~ 2\~~~~~~~\Pu m pt~~~~~~~upng plant Sabanet _____ A CANALS Are Santo Domingo IRRI(ATED ARASantiago / t) ~~~~~~~~~~~~~~~~~~~~~~~Diversijn -20 oro o 70 6J 20-- R I 0 10o20Ver d om r?z --> ~ATL4NTIC OCEAN Ysura Area ua ISanto Domingo )AIRRIGATED AREAAREA \ : w T-' -a S - ~~~~~~DAMS B-A o.oo zoWlrhd~ ' (- RESERVOIR 0 10 20 30 -18° * ~~~~Areaz1- == RIVERS KILOMETERS . ~~~~Car-lbbeanw Sea - MAIN ROADS PRYN AREA _ z \ 4C°< ~~~~~~~~~~~~~~~~~MAJOR INFRASTRUCTURE MAIN CANAL C GV-o¢c / > ~~~~~~~~~~~~~~~~~~~~~~~LATERAL CANALS \ \ 7 >2 ~~~~~~~~~~~~~~~~~~~~~~IRRIGATED AREA > To Imbert ~ RIVERa ( MLt= A y ~~~~~~~~~~~~~~~ARROYOS \ i\ =Navtirxe / .................. ~~~~MAIN ROADS O ~ ~~~~~~~ ~ ~ ~ ~ ~ a_ adan an the le> A l~~~~~~~~sae of aa tertryo>a by T h da en World cptancs f plant m nd hha boundories shown \ n profTh e Wor/ h o nk b.- p p-edfvroe O bsy rudgen W- n S. eglo '0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~at w0 (5oh, d. KILpEER o -h b- - ILM TR o Z w~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~t IBRD 25142 20' ~~~~71' 70 69W 0 YSURA AREA W.,sf.e-P odf DOMINICAN REPUBLIC ATLANTiC OCeAN SITUATION MAP ;IIl /o}l'Zo.nvmd IRRI GAT E D LAN D AN' Dh .o ogo i 0 5 10 15 20 and ib. bouodo,sPicodelYague lhio.p d. ,hoilyon Ph. WATERSHED MANAGEMENT PROJECT I I I Pica del 'togae on~~~~~~~~~~~, ibi Th. W-do no, G-.pty M N G M N DOMICA KILOMETERS c /3,5/1.e port. fYTheWodBRnAGroup, - AREA R on DO aINICANBLIC \~~~~~~~~~~P on Duarten on _h lgo i | \ Z 2°2216Mils C Q r d i I I e 2,175m lomoRedollM s.LhunAr:-s || _ ^tAINCANAL5 | RESERVaORecfon |A MAIN CANALS RESERVOIR A 2,226o V,295m. c______4 \_ LATERAL CANALS RIVERS N2 mYsura Area R Santo Domingo Hoto Viejo CLATMERLJ CAREALS - RMINEROAS B Sabone 0, B ... h- .6~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~______Bresn Sabmnefa C \ DAMS SECONDARY ROADS i Worhonked dam 18' Area~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ae C a ri b b e o n Sea 1t ) I Constanza 71' 70' 69' To Los Maiasdce ( ,)YSU RA AREA Forfo n MaA o2,188 m 0 1 2 3 4 5 Farfan ,/ / e°b\'./ A',188. MAJOR INFRASTRUCTURE '> //<\ Bohechio C>9° y | KILOMETERS l 'u~~~~~~~~~n Juan ,etr r5 Padre los CascŽ To Son Juan ] S [ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e rlra Maguano r _i diversion do Vullarbando a A Lorno Pauzo do,, , p \ ' 1 10 t e l l9 \ l t i/e r r)a Ak>! L loma Polnzom,a do) uraro | / 10690 j M.erlo PierolP o L Vies TobarC rib ea | 9 ~ ~~~~~~~~~~ Neybc6a B robbr,ry|| Sea~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~el L > oP>=rahona | Puerto Viejo r : , i ,1w e c1 * S e a OCIOLt 1993 OCTOBER 1993