Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004400 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-49810/IDA-H7160) ON A CREDIT IN THE AMOUNT OF SDR 14.9 MILLION (US$23.6 MILLION EQUIVALENT) AND A GRANT IN THE AMOUNT OF SDR 12.3 MILLION (US$19.4 MILLION EQUIVALENT) TO NEPAL FOR A NP MODERNIZATION OF RANI JAMARA KULARIYA IRRIGATION SCHEME - PHASE 1 ( P118179 ) March 29, 2018 Water Global Practice South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2018) Currency Unit = Nepalese Rupee (NPR) NPR 104 = US$1 US$1.46 = SDR 1 FISCAL YEAR OF NEPAL July 17, 2018 – July 16, 2019 Regional Vice President: Annette Dixon Country Director: Qimiao Fan Senior Global Practice Director: Guang Zhe Chen Practice Manager: Takuya Kamata Task Team Leader(s): Ahmed Shawky M. Abdel Ghany, Purna Bahadur Chhetri ICR Main Contributor: Susanne M. Scheierling ABBREVIATIONS AND ACRONYMS AMP Asset Management Plan BCR Benefit-to-Cost Ratio CPS Country Partnership Strategy DADO District Agricultural Development Office DIME World Bank Development Impact Monitoring and Evaluation DoA Department of Agriculture DoI Department of Irrigation EMP Environmental Management Plan ENPV Economic net present value ERR Economic rate of return FMIS Farmer managed irrigation system FMR Financial Monitoring Report FNPV Financial net present value FRR Financial rate of return FY Fiscal Year GDP Gross Domestic Product GoN Government of Nepal ICB International Competitive Bidding ICR Implementation Completion and Results Report IDA International Development Association IP Implementation Progress ISR Implementation Status and Results Report IEE Initial Environmental Examination IVCDP Indigenous Vulnerable Community Development Plan IUFR Interim Unaudited Financial Report MLE Monitoring, Learning, and Evaluation MoI Ministry of Irrigation M&E Monitoring and Evaluation NGO Nongovernmental Organization NPR Nepalese Rupee OCC Opportunity Cost of Capital O&M Operations and Maintenance PAD Project Appraisal Document PDO Project Development Objective PIO Project Implementation Office RAP Resettlement Action Plan RJKIS Rani Jamara Kulariya Irrigation Scheme SIMF Social Impact Management Framework SWCF Shadow Wage Conversion Factor WiP With Project WoP Without Project WUA Water User Association TABLE OF CONTENTS DATA SHEET ....................................................................... ERROR! BOOKMARK NOT DEFINED. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL ........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) .......................................9 II. OUTCOME .................................................................................................................... 10 A. RELEVANCE OF PDO .............................................................................................................. 10 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 11 C. EFFICIENCY ........................................................................................................................... 15 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 17 E. OTHER OUTCOMES ............................................................................................................... 17 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 17 A. KEY FACTORS DURING PREPARATION ................................................................................... 17 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 18 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 19 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 19 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 21 C. BANK PERFORMANCE ........................................................................................................... 23 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 24 V. LESSONS AND RECOMMENDATIONS ............................................................................. 25 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 27 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 38 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 41 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 43 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 51 ANNEX 6. SUPPORTING DOCUMENTS .................................................................................. 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name NP Modernization of Rani Jamara Kulariya Irrigation P118179 Scheme - Phase 1 Country Financing Instrument Nepal Specific Investment Loan Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Ministry of Finance Department of Irrigation Project Development Objective (PDO) Original PDO The project development objective is to improve irrigation water delivery to, and management in, the command area. The command area is defined as the agricultural lands to be irrigated using infrastructure to be modernized under the project. Page 1 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 23,600,000 23,600,000 20,407,138 IDA-49810 19,400,000 19,400,000 14,378,996 IDA-H7160 Total 43,000,000 43,000,000 34,786,134 Non-World Bank Financing Borrower 5,000,000 5,000,000 4,550,570 Local Communities 1,000,000 1,000,000 2,753,034 Total 6,000,000 6,000,000 7,303,604 Total Project Cost 49,000,000 49,000,000 42,089,738 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 05-Jul-2011 30-Nov-2011 24-Nov-2014 30-Sep-2016 30-Sep-2017 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 17-Aug-2015 18.38 Change in Loan Closing Date(s) 10-May-2017 31.91 Reallocation between Disbursement Categories KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Satisfactory Modest Page 2 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 20-Mar-2012 Satisfactory Satisfactory 0 02 25-Sep-2012 Satisfactory Satisfactory 5.00 03 17-May-2013 Satisfactory Satisfactory 5.64 04 27-Nov-2013 Satisfactory Moderately Satisfactory 9.73 05 21-Apr-2014 Satisfactory Moderately Satisfactory 11.81 06 13-Jun-2014 Satisfactory Moderately Satisfactory 13.54 07 30-Dec-2014 Satisfactory Moderately Satisfactory 16.42 08 15-Jun-2015 Satisfactory Moderately Satisfactory 18.38 09 11-Dec-2015 Satisfactory Moderately Satisfactory 20.32 10 13-Jun-2016 Moderately Satisfactory Moderately Satisfactory 23.23 11 31-Dec-2016 Moderately Satisfactory Moderately Satisfactory 24.87 12 06-Jun-2017 Moderately Satisfactory Satisfactory 32.36 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 73 Agricultural Extension, Research, and Other Support 6 Activities Irrigation and Drainage 58 Public Administration - Agriculture, Fishing & Forestry 9 Public Administration 4 Other Public Administration 4 Page 3 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Transportation 4 Other Transportation 4 Water, Sanitation and Waste Management 19 Other Water Supply, Sanitation and Waste 19 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 5 Finance for Development 5 Agriculture Finance 5 Urban and Rural Development 96 Rural Development 96 Rural Markets 5 Rural Infrastructure and service delivery 91 ADM STAFF Role At Approval At ICR Regional Vice President: Isabel M. Guerrero Annette Dixon Country Director: Susan G. Goldmark Qimiao Fan Senior Global Practice Director: John Henry Stein Guang Zhe Chen Practice Manager: Simeon Kacou Ehui Takuya Kamata Ahmed Shawky M. Abdel Task Team Leader(s): Joop Stoutjesdijk Ghany, Purna Bahadur Chhetri ICR Contributing Author: Susanne M. Scheierling Page 4 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Nepal has largely an agrarian-based economy. At appraisal, agriculture contributed a third of gross domestic product (GDP) and employed about 80 percent of the rural labor force. Despite civil conflict and a difficult political situation, Nepal’s economy had been growing. In FY10, real GDP increased by 4.6 percent. The incidence of poverty had fallen nationally from 32 percent in 2004 to about 22 percent in 2010. During the 2000s, income shares appeared to change, with the share from remittances, non- agricultural entrepreneurial activities, wages, and property rising. Although average income growth rates were high, inequality also increased and geographic disparities became more pronounced. Nepal faced the dual challenges of further accelerating domestic growth and sharing this growth more broadly across the population. 2. Agriculture had made only modest contributions to improved living standards, which was in large part due to the poor performance in the crop sector. Especially yields of the major cereal crops continued to be relatively low. The rural population comprised mainly smallholder farmers, and the level of agricultural income was low by international standards. The country’s agricultural sector had also become increasingly vulnerable due to erratic monsoon rains. Farmers often experienced unreliable rainfalls, with both drought and high-intensity rainfall events often occurring in the same season. More effective water control and management systems were seen as allowing farmers to focus more on other complementary investments—such as better agricultural techniques and inputs, and improved cropping intensity—that would help in transforming farming to more profitable levels. Irrigation was thus viewed as a critical input into agriculture, both during the monsoon season to overcome periods of dry spells and during the dry season when rainfall was negligible. The Government of Nepal (GoN) recognized the lack of intensive cropping, inadequate supply and use of basic agricultural inputs such as fertilizer and improved seeds, and the problems with deteriorated and inefficient irrigation systems. 3. The strategy and vision for irrigation development and management in Nepal was reflected in the Water Resources Strategy (2002), the National Water Plan (2005), and the Irrigation Development Vision and Action Plan (2006). The main vision described in the strategy and plans was to integrate agriculture and irrigation development to realize the full benefits from investment in irrigation and provide sustainable services to the agriculture sector through well-operating and well-managed irrigation facilities, based on local resource mobilization through a partnership of the users and the Government. In particular, the emphasis was on: provision of year-round irrigation services to increase the productivity of irrigated agriculture and extending the cropping seasons; the importance of a service-oriented management approach as a means for providing more efficient, reliable and flexible water services to farmers; and the progressive shifting of operations and maintenance (O&M) costs to water users to enhance efficiency, equity, and sustainability. Page 5 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 4. Irrigation systems in Nepal can be distinguished between (a) traditional farmer managed irrigation systems (FMISs) developed and managed by the communities; (b) small to large-scale surface systems developed with full or partial support of the Government; (c) Government developed tube well irrigation schemes; and (d) individually owned and operated tube wells and pumps, mostly utilizing shallow aquifers, streams, ponds, and dug wells. 5. Nepal has a long tradition of the FMISs in the hills, mountains and the Terai (that is, the southern foothills of the Himalayas). The FMISs in the hills tend to be small in size compared to the medium to large irrigation systems in the Terai. Overall, the FMISs cover about 70 percent of the 1.2 million ha of land with some form of irrigation infrastructure in the country. There tends to be a strong sense of ownership, and a direct association of water user associations (WUAs) in some form with the management of irrigation systems. They are accountable for O&M, most of which is done through labor contributions. 6. The project for the further development of one of the largest FMISs in the country, the Rani Jamara Kulariya Irrigation Scheme (RJKIS), was to contribute to the borrower’s over-arching objective of sustainable economic growth and reduction of poverty, in part to be achieved through improved reliability of irrigation water and increased agricultural production, as outlined in the GoN’s approach paper for the Three-Year Interim Plan for 2010-13. Activities to promote agriculture were to be guided by the Government’s National Agricultural Development Policy and Agricultural Development Plan. The latter recognized the importance of irrigation for improving agricultural productivity. 7. The World Bank has had a long-standing role in the development of Nepal’s irrigation and water resources sector, including in command area development and rehabilitation and modernization of higher- order irrigation systems, as well as developing WUAs and transferring improved agricultural technologies to farmers. The project for the RJKIS, located in the Kailali District of the far western Terai, one of the least developed regions in the country, was well-aligned with the World Bank’s assistance to Nepal. In particular, a pillar of the Interim Strategy Note of 2009 focused on the productive sectors by laying the foundation for sustainable and inclusive economic growth, including agriculture and irrigation. The project was ultimately to contribute toward both the borrower’s and the World Bank’s objectives of generating broad-based sustainable growth and poverty alleviation through increasing productivity in irrigated agriculture. 8. The initial proposal of the GoN requesting financing for the modernization of the RJKIS envisioned one project with three components: (a) infrastructure development, (b) institutional development with a focus on water users, and (c) agricultural development. At Concept Note stage, World Bank support for the RJKIS was proposed in two phases. The main reason was the availability of IDA funds to support the investment. The phase 1 project was to focus on (a) modernizing the higher-order irrigation infrastructure (especially intakes, feeder, and branch canals); (b) enhancing the capacity of WUAs to operate and maintain the improved or new irrigation infrastructure; and (c) preparing and initiating an agricultural development program. The phase 2 project was to cover (a) the modernization of the lower-order irrigation infrastructure (sub-branch and tertiary canals and water courses), (b) continuation of the WUA support program, and (c) implementation of a comprehensive agricultural improvement program. In line with these plans, phase 1 was prepared and implemented. Phase 2 was prepared during the last year of the implementation of phase 1 and is expected to be approved during FY18. Page 6 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 9. In addition to the two phases of the IDA supported activities, GoN planned to fund a new abstraction works on the Karnali River that supplies water to RJKIS, a main conveyance canal, and a sediment basin. This new infrastructure would later connect with the feeder canal constructed under phase 1. Yet the infrastructure funded under phase 1, including the intakes and the feeder canal, could operate independently but would be enhanced by these additional GoN investments. Theory of Change (Results Chain) 10. The theory of change, or logic, behind the design of phase 1—as described in the Project Appraisal Document (PAD)—is illustrated in figure 1. The links between the activities supported under the main components of the project and the related key outputs, desired outcomes, and long-term outcomes are presented. Table 1. Overview of the Projects Theory of Change 11. The outcomes as stated in the Project Development Objective (PDO) include (a) improved irrigation water delivery in the command area, to be achieved through the improved performance of the system— resulting from the activities under Scheme Modernization (Component 1); and (b) improved irrigation water management in the command area, to be achieved through WUAs assuming full responsibility for O&M of the scheme—resulting from the activities envisioned under Strengthening Water User Associations (Component 2). 12. The activities under Agricultural Production Support (Component 3) were expected to lead to some gains in production increases, crop diversification, and improved marketing. This was reflected in an outcome indicator on increased yields of the main irrigated crops. Modest increases were expected to occur especially in the upper part of the command area and less in the lower command area as no investments in the lower-order irrigation infrastructure were planned to be made during phase 1. The main aim of the agricultural support during phase 1 was to prepare for a comprehensive agricultural support program to be implemented during phase 2. Page 7 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 13. The outcomes as stated in the PDO were to contribute to the higher-level objective of building resilience against water-induced hazards, such as droughts, floods, and changes in water availability during the agricultural seasons. Together with the support to agricultural development, this would result in increased agricultural production, productivity, and incomes, an important aspect in the strategy and vision for the country’s irrigation development and management. In the long-term, a contribution would be made to more sustainable and inclusive economic growth, a higher-level objective of both the borrower and the World Bank’s Interim Strategy Note. Project Development Objective (PDO) 14. The PDO is to improve irrigation water delivery to, and management in, the command area. The command area is defined as the agricultural lands to be irrigated using infrastructure to be modernized under the project. 15. The PDO was not changed during project implementation. Key Expected Outcomes and Outcome Indicators 16. The project’s key expected outcomes are the improvement of the performance of the irrigation systems and the strengthening of the community-based irrigation management. In addition, agricultural development is supported, which will result in a modest increase in yields in especially the upper part of the command area, but the main aim is to prepare for a comprehensive agricultural support program to be implemented during phase 2. 17. The key outcome indicators are (a) irrigation service delivery by service providers (WUAs) assessed as satisfactory by water users; (b) resources generated by water users for the operation and maintenance of the modernized irrigation systems; (c) increase in irrigated crop yields of main crops rice, wheat and maize (in about 40 percent of the command area at the head of the canal systems); and (d) number of female and male water users (defined as member of the WUA) provided with improved water delivery services. Also, to be measured is the percentage of female WUA executive committee members. Components 18. The project has four components, as summarized in the following paragraphs. Component 1: Scheme Modernization (estimated allocation: US$38.6 million; actual allocation: US$33.3 million) 19. Under this component, the feeder canal linking the three branch canal (or irrigation) systems Rani, Jamara, and Kulariya was constructed, and the three branch canals rehabilitated and modernized. Also, protection works were carried out to protect the command area with gabion embankment against flooding from adjacent rivers. Village roads were improved with gravelling works, and bridges and culverts were constructed. Page 8 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Component 2: Strengthening Water User Associations (WUAs) (estimated allocation: US$ 2.2 million; actual allocation: US$1.1 million) 20. This component was aimed at enabling the WUAs to assume full responsibility for O&M of the infrastructure constructed under Component 1. Based on a training needs assessment, training modules were developed and training programs carried out. Study tours to successful WUAs were organized. In addition, offices for each of the three WUAs in their respective irrigation scheme and central WUA offices were constructed, and office equipment and motorcycles were procured. Component 3: Agricultural Production Support (estimated allocation: U$S2.9 million; actual allocation: US$2.8 million) 21. Activities under this component included demonstrations, farmer field schools, and field-based trainings. Strategic studies on topics such as agricultural diversification and value addition were carried out, and packages developed on topics such as integrated pest management. High quality seed production and marketing was promoted, as well as the production and collective marketing of fruits and vegetables. Component 4: Project Management (estimated allocation: US$4.3 million; actual allocation: US$2.5 million) 22. This component supported overall project management, monitoring and evaluation (M&E), and reporting. This included operation of a small liaison office in Kathmandu, and construction and operation of a project office in Tikapur, a town within the command area of the RJKIS; arrangement for a management and information system and M&E; dissemination of project activities; and preparation of phase 2 of the project. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 23. The PDO and outcome targets were not changed during project implementation. Revised PDO Indicators 24. The PDO indicators were not revised. In 2014 three core indicators were added: (a) water users provided with new/improved irrigation and drainage services (total and female water users); (b) client days of training provided (total and female); and (c) technologies demonstrated in the project areas (for seed storage, soil testing, and seed multiplication). Revised Components 25. The components were not substantially revised during project implementation. Page 9 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Other Changes 26. The project was restructured in 2015 and 2017. The key revision in 2015 was a no-cost extension of the loan closing date by one year. The Restructuring Paper approved in May 2017 provided for a reallocation of IDA funds between disbursement categories—without changes in project design or safeguards. The reallocation involved a shifting of funds from category 2 to categories 1 and 3 for the grant part of the project and did not result in the implementation of additional activities as most of the planned activities under categories 1 and 3 had been committed. A request made in 2017 for another extension of the closing date was not agreed to. However, financing for additional activities to be undertaken before effectiveness of the proposed phase 2 project was made possible through retroactive financing. Rationale for Changes and their Implication on the Original Theory of Change 27. The rationale for the extension of the project implementation period in 2015 was to allow for the completion of some of the works. The rationale for the reallocation of funds in 2015 was that category 1 had been overdrawn due to a limited increase in civil works costs compared to the pre-bid estimates and an increase in the amounts of works, and that category 3 had been overdrawn due to an increase in the demand for agricultural demonstrations under Component 3. The remaining funds under Component 2 were sufficient for undertaking the activities as planned. Overall, the changes did not have implications on the original theory of change. II. OUTCOME A. RELEVANCE OF PDO 28. The PDO ‘to improve irrigation water delivery to, and management in, the command area’ remained highly relevant to Nepal’s priorities in irrigation development and management and in agricultural development. From its initiation, the GoN had included the RJKIS project among its national priority projects. Based on the Water Resources Strategy (2002) and the National Water Plan (2005), the Department of Irrigation (DoI) of the Ministry of Irrigation (MoI) has continued to focus on rehabilitating FMISs as one of its main themes. Based on the experience with the phase 1 project, for example, the DoI is currently preparing a project in Babai, another FMIS in the far western Terai; it will have the same PDO (and an additional objective to reflect an integrated agricultural and water component) and the same four components as the phase 1 project. 29. The PDO was consistent with the World Bank’s Interim Strategy Note at the time of approval and remained consistent with the current Country Partnership Strategy (CPS) for FY14-18 (83148-NP, discussed by the Board on May 19, 2014) and its aim to support poverty reduction and shared prosperity in Nepal. In particular, the project was aligned with Pillar 2 of the CPS ‘Increasing Inclusive Growth and Opportunities for Shared Prosperity’. It recognizes irrigation as a key sector for Nepal’s continued efforts to reduce poverty and enhance shared prosperity in the face of increasing vulnerability to erratic monsoon floods and droughts. The project was also consistent with the World Bank’s twin goals of ending poverty and boosting shared prosperity. Page 10 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Assessment of Relevance of PDOs and Rating 30. With the alignment of the PDO to the current CPS, as well as its relevance to Nepal’s national irrigation and agricultural policies, the relevance of the PDO is rated ‘High’. B. ACHIEVEMENT OF PDOs (EFFICACY) 31. The PDO consists of two parts: (a) improve irrigation water delivery in the command area, and (b) improve irrigation water management in the command area. An outcome that is not explicitly reflected in the PDO but is included as an outcome indicator is: increase irrigated crop yields of the main crops rice, wheat and maize in about 40 percent of the command area at the head of the canal system. This additional outcome is included in the assessment of efficacy. Overall, the project largely achieved the PDOs according to the agreed outcome and intermediate results indicators. Assessment of Achievement of Each Objective/Outcome 32. PDO #1: Improve irrigation water delivery in the command area. This first part of the PDO, improving irrigation water delivery, mainly involved the modernization of the RJKIS’s three branch canal systems Rani, Jamara and Kulariya by constructing control and regulating structures, command area protection, and rehabilitation of the rural road system. The three systems were developed by farmers more than a century ago. Each had an intake point at the Karnali River, an unpredictable gravel bed river that often changes its course. The overall command area of the RJKIS covered 14,300 ha (comprising Rani with 5,359 ha, Jamara with 4,586 ha, and Kulariya with 4,355 ha) and included about 25,000 households, or 157,000 people, with the majority comprising people from the indigenous Tharu community. The RJKIS regularly suffered from either shortage of water or severe flood damage. It lacked permanent intake and control structures, flood protection works, and cross drainage and escape structures. Typical problems included difficulty of coping with changes in the river morphology and in diverting water to the three systems during low river flows, uncontrolled major flooding during high river flow events that could inundate three quarters of the command area, sedimentation of the canals; frequent wash-out of the temporary diversion works made by WUAs at the intake and offtake sites from branch to sub-branch canals, erosion of canal banks from the uncontrolled intake of water; inability to manage the water equitably and efficiently, and poor road connections that often became inaccessible during the monsoon season. 33. Component 1 contributed to the first part of the PDO, with the main activities comprising the following: (a) construction of a feeder canal to link the three branch canal systems, including the construction of three offtakes, three road bridges and other structures in the feeder canal along with gravelling of the service road, and feeder canal lining of 7.3 km from the Kulariya offtake to the Jamara offtake; (b) rehabilitation and modernization of the Rani, Jamara, and Kulariya branch canals (with 16.6 km, 15.8 km, and 14.5 km, respectively) focusing on intake structures, control and diversion structures, and canal bank protection; (c) command area protection works against flooding from adjacent rivers, such as the Karnali, Mohana, and Patharaiya (involving gabion projection for 12 km, 3 km, and 8 km, respectively); and (d) upgrading of village roads with gravelling (117 km) and construction of bridges and culverts. Page 11 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 34. The intermediate results were measured with five indicators on completed structures. These indicators have been achieved or exceeded, with one exception. A total of 15 structures, compared to the planned 7, were built in connection with the feeder canal (including road bridges, drops and siphones). The three intakes to branch canals were built as planned. Instead of 10 control structures in branch canals, 15 were built. A total of 121 bridges and culverts were built compared to the 26 initially planned, in part as a result of the increased need due to the gravelling of the service road. The exception was the construction of the offtakes to sub-branch canals, where 33 of the planned 41 were completed.1 35. Over the last two seasons, irrigation water has been supplied through the newly constructed structures in the three branch canals. While irrigators have faced over several years of project implementation disruptions in the traditionally operated canal systems as a result of the construction works along the branch canals, and irrigation water was frequently interrupted and not delivered on time, some improvements are now being felt as a result of the reshaping and lining of the feeder canal and the new intake structures in the branch canals. Owing to these permanent intakes and control structures, the intake of water from the Karnali River can now be much better controlled for all of the three systems, benefiting agricultural production activities. In part, because the additional GoN investments in the headworks on the Karnali River are still awaiting completion (expected in mid-2018), a year-round supply of irrigation water is currently not yet available for the whole command area. The water management practices of the WUAs at the different levels of the scheme are also still adjusting to the new structures. A survey assessing farmers’ satisfaction with the irrigation water delivery through the WUAs was carried out in early 2017. It was based on interviews with farmers, with three randomly selected respondents from each of the 48 sub-branches that are connected to the three branch canals, one each from the head, middle and tail area. About 52 percent of the interviewed farmers were satisfied. This was a significant improvement against the baseline of 8 percent, and exceeded the target of 50 percent. The main cause of dissatisfaction was the continuing lack of a systematic water allocation system, in particular a proportional water distribution to all sub-branches and head- and tail-enders. Progress at these levels of the systems is expected to come from the planned phase 2 investments. They will focus on improving the lower-order structures and further strengthen the WUAs—including those responsible for allocating water at the lower levels, such as the sub-branches—thus helping to address current concerns. 36. The command area protection works were mostly completed, with some of the remaining works being carried out with retroactive financing of the phase 2 project. According to a rapid impact assessment carried out in January 2018 to assess the impacts of the different project components, irrigators and local communities felt that the structures had been constructed well and in time, and were beneficial to them leading to the protection of many villages and cultivated lands against floods. In previous years, settlements and crops were often affected by flooding. Some communities were forced to live in temporary resettlements in each monsoon season. During the big flood of 2013, 75 percent of the command area (or more than 11,000 ha) were inundated. Yet during a period of torrential rain in August 2017, when large areas of the Kailali District (where the command area of the RJKIS is located) were inundated, the RJKIS was not much affected. According to information from the DoI, only some parts of the command area (significantly less than during the big flood of 2013) were inundated and no 1In the PAD, the baseline for this intermediate results indicator was zero —even though 5 offtakes to sub-branch canals already existed at appraisal. Therefore, only 36 offtakes had to be constructed to reach the planned 41 offtakes. Of these, 33 offtakes were completed (thus achieving 92 percent of the target) and 2 are still under construction. Page 12 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) major loss of lives, property, or agricultural land was reported. This was the result of the proper functioning of the command area protection work and drainage facilities, and the proper operation of the new canal structures that prevented excess water from entering the three branch canals. 37. The investments in rural infrastructure, including the planned upgrading of 117 km of village roads to gravel roads, and the related roads, bridges, and culverts, improved connectivity, access to markets and public health facilities, and reduced road accidents and casualties (such as injuries to children and the elderly) that had frequently occurred in the monsoon season near the old wooden bridges. The rapid impact assessment carried out in early 2018 also found that farmers were able to get higher prices for their produce because they did not have to sell them locally. Savings up to 50 percent were reported in the transportation of goods. The improvements in roads and bridges also contributed to increased land values, with respondents reporting a doubling of land values especially in villages near Tikapur. 38. PDO #2: Improve irrigation water management in the command area. This second part of the PDO, improving irrigation water management, was mainly aimed to strengthen WUAs to assume full responsibility for O&M of the works constructed under the project. There were three WUAs, one for each of the branch canal systems and one central WUA (WUA federation) that coordinates the three systems. The WUAs had much experience in mobilizing members to carry out tasks such as digging channels for water diversions from the Karnali River, desilting channels, and constructing make shift intakes from forest products. The modernization of the infrastructure required different types of management and operation activities. 39. Component 2 supported the second part of the PDO. The main activities were: (a) training and support to WUAs, carried out by the DoI in collaboration with specialized consultants and nongovernmental organizations (NGOs) with a focus on the development and implementation of adequate O&M plans, setting of irrigation service fees, maintenance of records and accounts, participatory monitoring, conflict resolution, improvement of higher-order system water management, and awareness raising on ethnic and gender issues; (b) construction of office buildings and provision of office equipment and field facilities for each of the three WUAs of the three branch canals as well as the central committee; (c) motorcycles and O&M equipment for diverting sufficient water from the Karnali River and desilt feeder and branch canals; and (d) organization of study tours for the WUA committee members and selected water users to successful WUAs, including two study tours to Thailand and Indonesia. 40. These activities have strengthened the capability of the WUAs to shoulder more responsibility for the O&M of the modernized system. The three WUAs at the branch canals and the WUA federation are now registered under GoN rules, and their constitutions amended. In 2016, new WUA Executive Committees were formed for a five-year tenure. Their operation has improved with the new office buildings and equipment. At project completion, the targets for annual WUA Executive Committee meetings (one in each month plus an annual general assembly meeting) were fully achieved for each of the four WUAs, compared to baselines of zero. Another target for women holding a third of the positions in WUA Executive Committees was basically achieved at project completion (overall with 32.2 percent, including seven, six, eight, and seven female members representing Rani, Jamara, Kulariya and the central committee, respectively). According to the survey on farmers’ satisfaction of 2017, WUAs at the 48 sub-branches have also been established, with a total 195 female members in the committees. Page 13 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 41. Training was provided to 87 percent of the envisioned 2,500 WUA members. The training was based on a training needs assessment for WUAs carried out in 2014. The three WUAs at the branch canals have been expediting efforts to register all water users in their area and list them as members. Members receive cards, and close to 16,000 cards have been issued—covering about two thirds of the water users. 42. The WUAs are also focusing on increasing the collection of irrigation service fees. During project implementation, the amount collected more than tripled to NPR 1.3 million. The resources generated for O&M were expected to reach 90 percent of the required resources, and estimates suggest that about 67 percent have been achieved. This is a preliminary result, as the final O&M cost, including in-kind costs, need to be reassessed when the asset management plan (AMP) with the canal operation rules is completed (with retroactive financing under the phase 2 project). The WUAs have plans to double the irrigation service fee from NPR 150 to NPR 300 per hectare. The labor mobilization for maintenance work by WUAs at different levels continued, most recently involving about 170,000 days per year. Maintenance at the head intake is carried out every year and requires several days (in the past several months) for thousands of people. Other types of canal repair and cleaning work at the branch and sub- branch level is carried out by the concerned farmers as needed. 43. Additional outcome: Improve yields of main irrigated crops in about 40 percent of the command area. The activities related to agricultural production support focused on increasing the production and productivity of not only the main irrigated crops, but also vegetables and fruits, by introducing improved technologies and practices and better use of irrigation water. 44. The main activities included the provision of agricultural infrastructure such as collection centers for post-harvest handling of fresh fruits and vegetables, and storage houses for seed produced by members of cooperatives and farmer groups. Also, farmer field schools, field based trainings and demonstrations were carried out—as well as studies on options for agricultural diversification and value addition. 45. All intermediate results indicators, except one, were achieved. In addition to the three existing agriculture service centers, five additional agricultural contact points were planned. Yet the existing centers were adequate for the technicians to provide quality extension services, and the lack of the additional agricultural contact points did not constrain the activities to largely accomplish the targeted programs. Progress for farmer field schools was 95 percent of the targeted 90 farmer field schools due to a shortage of trained facilitators. More than 2,200 farmers were trained in subjects such as crop management and integrated pest management. In terms of the core indicator client days of training provided, more than 180 percent of the target of 7,000 days has been achieved; for women separately, more than three times the planned 2,250 days have been achieved. Production demonstrations conducted in individual farmers’ fields and fields selected by farmers groups were targeted at 200. Yet, 222 primary demonstrations were conducted; an additional 836 secondary or follow-up demonstrations were established in fields for wider dissemination. The number of technologies demonstrated in the project area was fully achieved for seed storage and seed multiplication and more than double in the case of soil testing. More than 1,800 soil samples were tested, and farmers received recommendations for the application of deficient nutrients. Page 14 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 46. Overall, the agricultural production support was implemented through farmers groups, agricultural cooperatives, and private agricultural firms in coordination with WUAs. It focused on a demand-driven and community participatory approach of extension while delivering targeted services. This further included the construction of five collection centers for vegetables and fruits, more than initially envisioned due to the demand of farmers who wanted to scale up their commercial activities. The demonstrations for cereals, for example, included 17 varieties and 52 cultivation practices for commercial cultivation. They were shown in farmers’ fields, covering 790 ha of land and helped these and other farmers to assess and learn about the best-performing practices. Vegetable demonstrations included cauliflower, cabbage, potato, cucumber, chilli, and tomato, among others, and covered 410 hectares. Banana production blocs covered 145 ha. Seed production involving paddy, wheat, and potato was carried out on 750 ha, and produced more than 3,400 tons of seed. Also, more than 400 agricultural machines, such as power tillers and paddy and wheat harvesting machines were provided for agricultural cooperatives, private firms, and farmer groups on a 50 percent cost-sharing basis. According to data from the Project Implementation Office (PIO), this combination of activities contributed to a better outcome than expected, with yield increases for the main irrigated crops—in particular, spring and summer paddy, wheat, and maize—higher than their respective targets. Justification of Overall Efficacy Rating 47. Given that the project largely achieved its intended outcomes, the overall efficacy is rated ‘Substantial’. C. EFFICIENCY 48. Economic analysis. A cost-benefit analysis was conducted to reassess the project’s ex post economic viability. Except some modifications, the analysis followed the approach adopted in the PAD to ensure methodological consistency and comparability. 49. Before phase 1, around 11,000 ha of the total RJKIS command area of 14,300 ha were linked to the canal irrigation network; yet water delivery was unreliable and insufficient, especially in the winter months. The remaining 3,300 ha were rainfed (not linked to the canal irrigation network), and prone to uncontrolled annual flooding during the monsoon season. During high river flow events, there could also be major flooding of up to three-quarters of the total command area. Overall, the RJKIS lacked permanent intake and control structures, diversion and drop structures, flood protection structures, and cross drainage and escape structures. 50. The economic and financial analysis at appraisal expected that benefits would be derived from increased production, intensification of production, and reduced productivity losses caused by uncontrolled flooding. In particular, the following benefits were assumed: (a) a 10 percent increase in agricultural production at the head section of the command area with 6,000 ha, (b) an increase in cropping intensity in from 157 percent to 191 percent (as a weighted average for the entire command area), (c) a 10 percent reduction in paddy yield losses caused by uncontrolled flooding, and (d) modest crop diversification in winter and spring crop seasons toward wheat, maize, and vegetables. The benefits were measured with three farm models that represented typical situations of farms located in the head, middle, Page 15 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) and tail-end sections of the command area. The analysis was carried out for a period of 25 years at 2010 prices and used an opportunity cost of capital (OCC) of 12 percent. The financial rate of return (FRR) was estimated at 13.4 percent, the financial net present value (FNPV) at NPR 118.2 million and the benefit-to- cost ratio (BCR) at 1.04. The economic rate of return (ERR) was estimated at 16.9 percent, the economic net present value (ENPV) at NPR 415.0 million, and the BCR at 1.16. 51. During project implementation, the project benefits were not monitored separately for the head, middle, and tail-end sections of the irrigation scheme. Thus, the economic and financial analysis at the Implementation Completion and Results Report (ICR) stage did not follow the farm model-based approach of the appraisal analysis. Instead, it reassessed economic and financial benefits for the entire command area (with a success rate of 65 percent) based on actual crop yields, cropping intensity, and cropping patterns. Since the crop yields reported in the PIO data were based on a few samples from farmers’ fields, the analysis used slightly more conservative yield levels. Apart from these modifications, the ICR analysis used the same approach as the appraisal analysis, including a project life of 25 years and an OCC of 12 percent. 52. The ICR analysis estimated an ERR at 14.3 percent and FRR at 12.5 percent, somewhat lower than the appraisal values. The ENPV at NPR 451 million and FNPV at NPR 146.4 million were modestly higher than the appraisal values, largely due to the use of 2017 prices. The average incremental net return was estimated at NPR 26,600 per hectare, higher than the appraisal estimate of NPR 22,000 per hectare. 53. Overall, even with a transfer of the parts of command area protection works (protecting around 1,000 ha in the command area) to phase 2 and a no cost extension of the project implementation period (that affected the accumulation of benefits), the phase 1 investments were estimated to generate a higher FNPV and ENPV and a higher BCR than the appraisal values but somewhat lower rates of return. More details are in annex 4. 54. Administrative efficiency. The administration of the project was planned for a five-year period from November 2011 to September 2016. Even though project implementation was delayed by a number of factors, including external factors beyond project control (see section III.B.), it was only extended by a year. The delays concerned all project components, and much effort was made, including during the last year of project implementation with the strengthening of WUAs, to still achieve most key outputs. 55. A restructuring in 2015 provided for the project extension and the use of savings in IDA loan and grant amounts for additional works and activities. The savings resulted from competitive procurement of civil works, consultancies, and goods—with some contracts awarded below the amounts estimated at appraisal (see annex 3). A second restructuring in 2017 provided for a reallocation of IDA funds between disbursement categories and did not result in the implementation of additional activities. Assessment of Efficiency and Rating 56. Including both the efficiency of the economic analysis and the administrative efficiency, efficiency can be rated ‘Substantial’. Page 16 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) D. JUSTIFICATION OF OVERALL OUTCOME RATING 57. Based on the above-mentioned assessment and ratings—relevance of the PDO rated High, efficacy of the PDO rated Substantial, and efficiency of the project rated Substantial—the overall outcome rating of the project is rated ‘Moderately Satisfactory’. E. OTHER OUTCOMES 58. Gender. Even though the phase 1 project was not gender-tagged, it contributed to some extent to the closing of gender gaps. Three indicators under Component 1 and one indicator under Component 3 were monitored disaggregated by gender, including (a) number of water users (defined as member of the WUA) provided with improved water delivery services, (b) number of water users provided with new/improved irrigation and drainage services, (c) percentage of female WUA Executive Committee members, and (d) client days of training provided. The targets for the first and second indicators involved more male than female water users; both targets were not fully met, neither for male nor female water users. Regarding the third indicator, membership in the WUA Executive Committees, the share of women significantly increased from 19.0 percent to 32.2 percent—close to the target of 33 percent set by the project, as well as by the GoN, for the WUA Executive Committees. The fourth indicator, client days of training, related to Component 3 was more than three times higher for women than planned (with 7,453 days as compared to 2,250 days). The number of days for men was also higher, but to a lesser extent (with 5,385 days as compared to 3,750 days). This indicates a strong demand from women to be trained in subjects related to improved agricultural production. Furthermore, the training for strengthening WUAs under Component 2 also included courses with modules on women’s participation in irrigation. 59. Institutional strengthening. The phase 1 project contributed to institutional strengthening, particularly of the WUAs in the RJKIS (see section II.B.). III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 60. Phasing of project. The initial Concept Note of the GoN envisioned one large project, with the modernization of the higher-order infrastructure (intakes and feeder and branch canals) as well as the lower-order infrastructure (sub-branch and tertiary canals and water courses) combined under Component 1. Limited IDA funding at the time prevented this approach. Also lessons from similar projects with large irrigation infrastructure components suggested that a phased approach is often better to allow institutional and agricultural components to also be implemented well. Therefore, at appraisal, support to the modernization of the RJKIS was proposed in two phases. Phase 2 was to start about two years after the start of phase 1, when the construction works on the branch canals and intakes was ongoing, to ensure a good overlap of the two phases. 61. At appraisal, an alternative design of phase 1 was considered, but not adopted, that is, to fully complete (with higher- and lower-order infrastructure investments) at least one of the three irrigation Page 17 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) systems. However, consultations with the WUAs and other stakeholders revealed that this approach would contribute to tension and possibly conflict among local beneficiaries. Thus, a conflict sensitive approach was selected with an equal and equitable development of the three irrigation systems under the two phases. 62. Design of components and results framework. The above background on the phasing of the project partly explains the design of the components and results framework for phase 1. The design followed the Concept Note of the GoN with the three key components: scheme modernization, WUA strengthening, and agricultural production support. Yet it envisioned that the main aim of the agricultural production support provided under phase 1 would be to prepare for a comprehensive agricultural support program to be implemented under phase 2. 63. In line with this thinking, the activities under Component 3 on agricultural production support were not included in the PDO, but reflected in an outcome indicator. They were expected to lead to some gains in production increases, crop diversification and improved marketing. The outcome indicator focused on increased yields for the main irrigated crops rice, wheat, and maize. Modest increases were expected to occur especially in the upper part of the command area, and less in the lower command area as no investments in the lower-order irrigation infrastructure were planned for phase 1. 64. Adequacy of risk assessment. At appraisal, the key project risks were adequately identified— including risks related to project stakeholders, the implementing agencies, and the project —and mitigation measures were proposed. For example, to address the risk associated with contracts and contract management for the capital-intensive infrastructure works, it was recommended to use, to the extent possible, International Competitive Bidding (ICB) as the mode of procurement. To ensure that the design of the infrastructure is conducive to the capacity of WUAs to properly operate and maintain them, the design was to be based on modern design standards yet compatible with local conditions and sustainable with acceptable levels of O&M requirements. B. KEY FACTORS DURING IMPLEMENTATION 65. Government commitment and implementation arrangements. Arrangements for project implementation were made at the national and local levels. A Project Steering Committee with representatives from the relevant ministries and chaired by the Secretary of the MoI was set up as the apex body for the project. The DoI had the main responsibility for project implementation, with the Department of Agriculture (DoA) of the Ministry of Agricultural Development as the implementing agency for the agricultural production support under Component 3. A small liaison office was established in the DoI, but the PIO was located in Tikapur, a town within the command area of the RJKIS. Component 3 was implemented for the first two years by the District Agriculture Development Office (DADO) in Dhangadhi, a town situated 110 km away from the project site, and later by a separate office, the Agriculture Component Implementation Unit, established in Tikapur. The commitment and leadership of the GoN was evident though the attention and support the project received at all levels of the Government. 66. Implementation issues. Project implementation was at times delayed by external factors that were beyond the control of the project, and internal factors that over time could be addressed. Page 18 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 67. Among the external factors was a big flood in 2013 that inundated a large part of the command area, and washed away part of the construction at the GoN funded abstraction works on the Karnali River. A major earthquake in April 2015 caused significant disruption to the construction activities under Component 1. While the direct impacts on the command area were limited, many machine operators, drivers, engineers and other staff came from districts that were severely impacted. They had to leave to take care of their families, and hence work suffered during the peak construction season. Frequent flooding of the command area during the monsoon season also led to the stoppage of work in the branch canals. An economic blockade in the Terai along India’s border with Nepal, that began in September 2015 led to a shortage of fuel, cement, and other construction materials; and again, to significant disruption of the construction work. 68. Among the internal factors was the good but slower-than-expected work of one of the ICB contractors under Component 1; this was partly due to another contract on the main conveyance canal funded by the GoN. Implementation of Component 3 was difficult for the first two years when it was managed by the DADO from Dhangadhi. After the establishment of the separate office in Tikapur, service delivery accelerated, but a shortage of qualified DoA staff—especially in areas such as agronomy and plant protection—continued to affect implementation. 69. Frequent staff changes at the PIO, including the project director, senior engineers and other key staff, also had impact on project implementation. Disruptions occurred specially when transfers took place, making the tasks difficult for the incoming staff, the contractors, and the water users. The position of sociologist was kept vacant for a substantial period of time which affected the interactions with WUAs and the implementation of training program under Component 2. The PIO staff included an environmental expert only at the beginning of project implementation; later this position was not filled any more. The lack of dedicated M&E staff affected the amount and quality of project monitoring data. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 70. The project followed a clearly structured theory of change, as described in section I.A. It outlined how project activities of each component would contribute to achieving the PDO. The PDO was disaggregated into four main PDO indicators that covered the activities’ contribution to the PDO. 71. The M&E activities under Component 4 envisioned a project monitoring, learning, and evaluation (MLE) framework to facilitate (a) results-based management through timely monitoring, analysis, and feedback of relevant indicators; (b) learning and process enhancement, through process monitoring by participatory methods, involving reviews and satisfaction survey; and (c) impact evaluation, involving the use of appropriate baseline and controls. An M&E specialist in the PIO would be responsible for planning and coordinating the MLE activities, involving the implementing departments, an external M&E agency for intermittent surveys and studies, and the beneficiaries, primarily WUAs. The PIO, supported by short-term consultants, would have overall responsibility for developing systems and procedures for appropriate Page 19 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) analysis and presentation of the collected monitoring and learning data to ensure appropriate use of the indicators for project MLE. 72. The MLE activities were designed to include baseline studies, regular performance tracking of inputs and outputs by concerned implementing departments, intermittent performance monitoring by an external M&E agency, systematic (panel data type) analysis of project impacts through repeated monitoring of the same sample set of water users (farmers) through the project lifetime, and mid-term and final impact evaluations. M&E Implementation 73. The M&E activities were not implemented as designed, although a few World Bank missions mentioned the issue. A mission in 2012 found that the Project Implementation Manual was inadequate in describing the requirements for an effective M&E system, and recommended that an M&E plan and terms of references for an M&E specialist be prepared. A mission in 2014 downgraded the M&E performance rating to ‘Moderately Satisfactory’ due to the delay in recruiting the M&E specialist. The Mid-term Review identified gaps in data collection, and recommended that contracts be awarded for conducting the specialized M&E studies as planned. In 2016, an activity of the World Bank’s Development Impact Evaluation (DIME) initiated an impact evaluation of the modernization of irrigation systems and agricultural extension services. Although the DIME activity was conducted and outcomes were useful for the preparation of phase 2, it could not serve as project M&E. 74. With the lack of an M&E specialist, the PIO focused on the systematic monitoring of the indicators of the results framework. Contracts were also closely monitored. A number of useful surveys were carried out, including (a) a survey based on a representative sample of households in the command area to establish a pre-intervention baseline for Component 3 in 2013 (with smaller follow-up surveys related to the agricultural support activities in the following years), (b) a training needs assessment of the WUAs for Component 2 in 2014, (c) a study on the status of project affected people of 2015, (d) a survey assessing farmers’ satisfaction with the irrigation water delivery through the WUAs for Component 1 in early 2017 , and (e) with retroactive financing, a rapid impact assessment for the overall project in January 2018. M&E Utilization 75. The M&E activities under phase 1 were used effectively to track the changes in outcome and intermediate results indicators and collect data in specialized studies. The PIO acknowledges the need for phase 2 to mobilize full-time consultants for M&E. It also plans to request the development of M&E software for phase 2. Justification of Overall Rating of Quality of M&E 76. M&E was not carried out as designed. An M&E specialist was not hired, and the PIO staff carried out multiple tasks, including M&E roles. Sufficient data were collected to allow the monitoring of the outcome and intermediate results indicators, and overall impacts were assessed in a study after project closing. Therefore, the overall rating of quality of M&E is ‘Modest’. Page 20 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 77. Environmental compliance. The RJKIS abstracts water from the Karnali River, a major left-bank tributary of the Ganges River. With its source in China, the Karnali River flows through Western Nepal into India. It was thus identified as an international waterway for purposes of OP 7.50. Before phase 1, diversion of Karnali River water into the three branch canals of the RJKIS was uncontrolled, typically with excessive water entry and large losses through seepage and water logging. With the expectation that the phase 1 investments would result in a reduction of water abstraction from the Karnali River, estimated at over 40 percent of the previous water abstraction, an exception to the notification requirement under OP 7.50 was received from South Asia’s Regional Vice President in February 2011. 78. The environmental risks identified during preparation were mainly related to construction disturbances, human health and safety issues, as well as tree/forest and biodiversity issues. Hence, OP 4.01, OP 4.04, and OP 4.36 were triggered. The adverse impacts on human health and safety and the natural environment were related to physical construction activities. Furthermore, the Karnali and Mohana Rivers are known to have important aquatic species, and there were reports of occasional movement of wildlife in the adjoining forests. Adjoining the command area of the RJKIS are community forests, and some sections of the feeder canal constructed under Component 1 were located in the community forests. Hence, during project preparation, the DoI prepared the Initial Environmental Examination (IEE) as required by country law, and the Environmental Management Plan (EMP) to meet the World Bank environmental safeguard policies. Specific mitigation measures related to OP 4.01, OP 4.04, and OP 4.36 were identified in the IEE and EMP. 79. Project implementation did not encounter any highly significant or sensitive impacts. During the early stage of project implementation, delays occurred in implementing some of the mitigation measures. However, this improved over time as the PIO formed the Local Environmental Monitoring Committee; hired an environmental specialist; organized orientations to the contractor and awareness training to local stakeholders; and engaged with Community Forest User Groups, the District Forest Office, the National Park Authority, and local NGOs. 80. The main environmental mitigations work implemented included compensatory plantation for the loss of trees/ forest, water sprinkling to control dust, restriction on extraction of sand and gravel from river banks, sanitation facilities for workers, health and safety provisions, awareness raising on biodiversity, including Dolphin conservation, and awareness training on the risk of pesticide use, integrated pest management, and forest area fencing works for promoting the regeneration of trees and the protection of existing trees. One of the difficulties faced during implementation was frequent turnover and, at times, absence of the environmental specialist—leading to inadequacy in regular on-site supervision, support, and coordination. Overall, environmental performance was rated ‘Moderately Satisfactory’. 81. Social safeguards. During project preparation, the DoI conducted a social assessment, based on which the Social Impact Management Framework (SIMF) was prepared. The SIMF provided the detailed planning procedure to address the possible social impacts under the project. It covered involuntary resettlement in compliance with World Bank OP 4.12 on Involuntary Resettlement; issues related to indigenous people in compliance with OP 4.10 on Indigenous Peoples; gender and social inclusion; as well Page 21 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) as information dissemination, communication, consultation, and participation. The SIMF included a Land Acquisition and Resettlement Framework; a Vulnerable Community Development Framework; a Gender Equality and Social Inclusion Strategy; and an Information, Communication, and Consultation and Participation Strategy. 82. During project implementation, no need for acquisition of private land arose but a few private structures were affected. A Resettlement Action Plan (RAP) and an Indigenous Vulnerable Community Development Plan (IVCDP) to manage social impacts due to construction of the feeder canal were prepared in line with the SIMF. The compensation covered cost of the structures and housing, business disruption allowances, and additional support to vulnerable groups among the households affected by the project. These compensation amounts were paid in accordance with the valuation criteria set by the Compensation Fixation Committee. However, training activities planned under the RAP and mitigation measures in the IVCDP could not be implemented as there was a change in community needs due to the delay in implementing the plans. The Social Environmental and Institutional Unit, responsible for implementation of social safeguard activities, suffered from frequent turnover and absence of staff/specialist which greatly affected timely support, implementation, and monitoring of the planned mitigation activities. During the preparation of phase 2, the social safeguard implementation gaps during phase 1 were assessed and, in consultation with the concerned community, mitigation plans were prepared. 83. Procurement. The activities under Component 1 were carried out under two large ICB contracts (ICB-1 and ICB-2), several National Competitive Bidding contracts for command area protection works, and consulting services for tasks such as construction supervision and quality insurance. Overall, procurement management was satisfactory with the timely completion of most procurement activities. 84. A number of challenges had to be overcome. The work of the ICB-1 contractor was affected by the frequent transfer and turnover of key engineering staff. Significant design changes became necessary after contract agreement. Due to inadequate planning of supervision arrangements for the construction works, the allocated operating costs were quickly exhausted and alternative funding had to be sought. Mobilization of personnel was delayed due to a long duration of unrest in Kailali, the district within which Tikapur and the command area of the RJKIS are located. Delays also occurred due to frequent flooding in the command area, the major earthquake in April and, later in 2015, the economic blockade along India’s border with Nepal that led to a shortage of construction materials for several months. Yet, despite such an adverse environment, the PIO team managed—through a continuous effort in reaching out to contractors, local agencies, and WUAs—to ensure the completion of almost all envisioned construction activities before project closing. 85. Financial management. The project complied with the fiduciary covenants. The books of accounts were properly maintained and updated. The timeliness and quality of the financial monitoring reports (FMRs)/interim unaudited financial reports (IUFRs) were satisfactory. There were some delays in the submission of audit reports, and auditors provided unqualified opinions in the audit reports. The internal control arrangements were found adequate. There were no outstanding FMRs/IUFRs, audit reports, or audit issues. According to the last Aide Memoire, financial management performance was satisfactory. The separate budgetary allocation, a strong financial management team, and good coordination were key to a smooth implementation. Page 22 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) C. BANK PERFORMANCE Quality at Entry 86. The project’s quality at entry was satisfactory. The design of the project was strategically relevant, and in line with a well-prepared Concept Note of the GoN. The Government’s decision to assist the farmers in one of the largest FMISs in the country, and to request World Bank assistance, was also in line with its overarching objective of sustainable economic growth and poverty reduction as it would help one of the poorest areas in the Kailali District. The area is also inhabited by the indigenous Tharu community which make up about 48 percent of the local population. The Tharus are known for their skills in digging and managing irrigation channels. The uncontrolled flow of the Karnali River water into their systems through rudimentary channels and temporary brushwood and gabion works burdened them in terms of constant upkeep of the systems and made the diversion of river water into the branches, sub-branches, tertiary canals, and onto farmers’ land difficult. 87. The design of the project took into consideration lessons learned from the management and O&M by the WUAs of the RJKIS who for more than a century had used and improved upon their traditional methods. The project was designed to largely keep these effective traditional customs in place. The project also considered lessons from other nearby irrigation systems—especially from the Rajapur Irrigation System, another large FMIS located near the RJKIS, and also using water from the Karnali River. Especially the design of the structures for protecting the command area was partly influenced by the lessons learned from the Rajapur Irrigation System. The inclusion of these activities would save farmers’ land and villages from annual flooding and constant erosion from floodwaters of various neighboring rivers. 88. Fielding of World Bank task teams with capable technical, social, environmental, and fiduciary members added to the quality at entry. Risk ratings and the M&E design were adequate. Proper consultations with the GoN and with stakeholders in the field seem to have taken place. The SIMF and EMP ensured that strong safeguard tools were built into the project design. Another strong feature was the establishment of full-fledged project office in Tikapur, a town located in the project area. Quality of Supervision 89. The quality of supervision was satisfactory. The World Bank task team provided implementation support to the GoN with sufficient staff and knowledge resources. Aide-Memoires were regularly prepared, except during the period of the devastating earthquake event and the period of political unrest in the project area when the World Bank missions were suspended. The task team drew the attention of the GoN and the PIO team to the issues in project implementation and provided appropriate advice and suggestions. 90. The Implementation Status and Results Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. Implementation progress (IP) was continuously rated ‘Moderately Satisfactory’ starting from ISR-4 until ISR-11—mainly due to the slow progress of work under the ICB-1 contract. Because of the delay in completing some of the important control structures which could have affected the project in meeting Page 23 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) the project objective, the task team rightly downgraded the PDO rating from ‘Satisfactory’ to ‘Moderately Satisfactory.’ The Practice and Country Management seemed to have provided proper guidance to the task team on this. The task team regularly monitored safeguard and fiduciary compliances and drew attention on the need to establish an M&E system. Constant project monitoring also helped address the main procurement issues, and the ICB-1 works were to a large extent completed on time. The World Bank conducted a Mid-term Review in November/December 2014 and assessed progress on all project components, implementation issues, and the actions to be taken to ensure a successful completion of the project. There was no turnover in team leadership or in members of the key team for a major part of the implementation period. A change in team leadership only took place in April 2017. Justification of Overall Rating of Bank Performance 91. Based on the quality of World Bank performance at entry and at supervision, the overall rating of World Bank performance is ‘Satisfactory’. D. RISK TO DEVELOPMENT OUTCOME 92. Even though the WUAs have been strengthened during the project, a risk to development outcome pertaining to project completion of phase 1 is the ability of the WUAs to assume full responsibility for the O&M of the modernized infrastructure under Component 1. This necessitates the adaptation of a well-established traditional system involving many water users with small land holdings to the requirements of new irrigation infrastructure. Much of the training activities under Component 2 has taken place only toward the end of the project implementation period. According to the survey assessing farmers’ satisfaction carried out in early 2017, among the issues that still need to be addressed are the mobilization of all farmers for canal maintenance, an increased ability of the WUAs to carry out all their responsibilities, more awareness among farmers on the WUA functioning, and increased transparency and more effective communication by WUAs. Another issue is that the WUA Executive Committees at the sub-branch levels have only recently been formed under the provision of the amended WUA constitutions and are not yet carrying out their roles and responsibilities. They will be necessary to improve water allocation in the lower levels of the system. According to the satisfaction survey, farmers feel that under phase 2 permanent intakes in all sub-branches and tertiary canals should be constructed to replace the temporary ones that traditionally have been manually secured. 93. The full O&M cost have not yet been determined because under phase 1 only higher-level infrastructure works were constructed, with some of them not yet fully operational. O&M requirements may increase (though probably require less manual labor over time), and WUAs need to be able to manage the required resources. Irrigation service fees are increasingly collected by the WUAs, but are currently not sufficient to meet the requirements in the three irrigation systems. The AMP and the O&M manual are still under development with retroactive financing from the phase 2 project. After their dissemination to the WUAs, a training program on the AMP and the O&M manual will be launched. Another training program will be launched on the collection of irrigation service fee which can be in cash or labor contribution. The traditional system of ‘Desawar’, the mass labor contribution by water users, will continue to be important for the desilting and reshaping of canals, but structural maintenance and some operational activities will require collected cash. Aware of this risk to the development outcome, the Page 24 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) design of phase 2 includes a substantial subcomponent on further strengthening of WUAs. V. LESSONS AND RECOMMENDATIONS 94. Proper phasing of activities. The phase 1 investments were designed based on the insight from the implementation of many irrigation projects that a focus solely on irrigation infrastructure (off- or on- farm) for improving water delivery and management may not achieve much in terms of higher-level outcomes. Yet when infrastructure works are combined with institutional strengthening and agricultural support, the proper phasing of activities becomes important. This tends to require coordination across different ministries and departments, and the timely involvement of relevant expertise in the project office and in the field. This becomes even more important in an environment with high risks and uncertainties such as the one in Nepal. 95. In the case of modernization of the RJKIS, a decision was made during project preparation to design the interventions in two phases. Phase 2 was originally envisioned to start after about two years of implementation of phase 1 when the construction on the three branch canals and intakes had begun. It will now start several months after closing of phase 1, just in time to provide retroactive financing for the completion of some of the phase 1 activities. The effect of this delay on the functioning of the RJKIS and the activities of the WUAs and water users in different parts of the command area has not been assessed, but it is likely to be nontrivial. While the agricultural support component was not reflected in the PDO of phase 1, it played a major role in the creation of project benefits. With its demand-driven and community participatory approach, farmers and farmer groups were keen to participate in its activities. This interest will likely increase even more when the lower-order infrastructure investments of phase 2 will be initiated. To help farmers benefit as much as possible from the additional gains in production, productivity, and diversification, it will be important to strengthen post-harvest support and marketing as part of phase 2. 96. The interventions of phase 1, combined with those planned under phase 2, focus on a particular approach for modernizing a large FMIS which the GoN intends to expand and replicate in other FMIS. It may be worthwhile to explore an additional phase 3 activity that would more broadly help the GoN address policy and institutional reforms to facilitate these modernization efforts while at the same time ensuring more efficient allocation and sustainable management of water resources. 97. Focus on gender and social inclusion. Phase 1 drew attention to the role of women as water users and WUA members with the monitoring of several gender-disaggregated indicators. Yet women faced a number of constraints that should be further addressed during phase 2. For example, the baseline survey of 2013 indicated that women are much less likely than men to own land. Yet land ownership is a precondition for formal WUA membership, including the right to vote on key decisions such as water management, O&M, and labor contributions. Currently even the wives of landowning men who left for work in a city cannot participate in WUA decision making. Women owning land are, on average, also likely to hold smaller land sizes than men (less than 15 percent of land holdings in the RJKIS are larger than 0.5 ha, according to the baseline survey of 2013). Yet Component C under phase 1 engaged with its improved seed activities only with individual landholders or farmer groups owning a minimum of 0.6 ha; this made it difficult for many women to participate. A related problem pointed out in the farmer satisfaction survey Page 25 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) of 2017 was that, under the current WUA rules, households need to provide equal amounts of labor contribution for canal maintenance—independent of the size of their land holdings. This is likely to create an extra burden for women owning land. More attention needs to be given to such gender-related issues in phase 2. 98. The baseline survey of 2013 suggested that about seven percent of the households in the command area do not own land. Such households benefited from the project only indirectly through the additional farm labor due to the increased construction and agricultural activities. Landless farmers have recently been granted public lands by the GoN. Under phase 2, care should be taken so that they are able to directly access the irrigation-related improvements if their land is located within the command area. 99. Addressing climate risks. The command area of the RJKIS is exposed to the climate risks of flooding in the monsoon period and drought in the winter months. Climate projections for the region suggest that rainfall is likely to intensify in flood-prone areas, while water-scarce regions become even more drought-prone. The phase 1 investments, especially the higher-order infrastructure works for improved water delivery in the command area, are likely to have helped address some of these climate risks. For example, the improved control of water intake and the more adequate drainage capacity in connection with the command area protection works have contributed to the prevention of major losses during the last big flood in 2017. The water allocation during the dry winter months has, to some extent, also improved, but probably more in the upper than in the middle and lower sections of the command area. The activities under phase 2 need to focus on further addressing these climate risks, particularly with the lower-order infrastructure investments and the additional command area protection works, and closely involve the WUAs at the different levels of the systems in the design and implementation of the activities. . Page 26 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Improved irrigation water delivery in the command area Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Water users provided with Number 0.00 25000.00 15769.00 new/improved irrigation and drainage services (number) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Water users provided with Number 0.00 6000.00 3400.00 irrigation and drainage services - female (number) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): This core sector indicator was added in April 2014. At completion, the project achieved 77percent of its original target for the total number of water users, and 57 percent for the female water users. The values are based on certified WUA membership. The achievement are lower than the target, partly because some of the modernized infrastructure is not yet fully operational, awaiting completion of GoN- funded part of the headworks by late FY18. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Irrigation service delivery by Percentage 8.00 50.00 52.10 Page 27 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) service providers (WUAs) 05-Jul-2011 30-Sep-2016 30-Sep-2017 assessed as satisfactory by water users (measured in percentage of water users). Comments (achievements against targets): At completion, the project achieved 104 percent of its original target. The assessment is based on a satisfaction survey conducted in May 2017. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of female and male Number 0.00 25000.00 15769.00 water users (defined as member of the WUA) 05-Jul-2011 30-Sep-2016 30-Sep-2017 provided with improved water delivery services. Number of female water Number 0.00 6000.00 3400.00 users. 05-Jul-2011 30-Sep-2016 30-Sep-2017 Number of male water Number 0.00 19000.00 12369.00 users. 05-Jul-2011 30-Sep-2016 30-Sep-2017 Percentage of female WUA Percentage 19.00 33.00 32.23 Executive Committee members. 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): At completion, the project achieved 63 percent of its original target for total number of water users, 57 Page 28 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) percent for female water users, and 65 percent for male water users. The values are based on certified WUA membership. The achievements are lower than the targets, in part because some of the modernized infrastructure is not yet fully operational, awaiting completion of GoN-funded part of the headworks by late FY18. The project also achieved 98 percent of the original target for female WUA Executive Committee members. Objective/Outcome: Improved irrigation water management in the command area Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Resources generated by Percentage 50.00 90.00 67.00 water users for the operation and maintenance of the 05-Jul-2011 30-Sep-2016 30-Sep-2017 modernized irrigation systems (measured in percentage of required resources). Comments (achievements against targets): At completion, the project achieved 74 percent of its original target. However, the final O&M cost, including in-kind costs, need to be further assessed after the completion of the asset management plan with the canal operation rules. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in irrigated crop Metric ton 0.00 0.00 0.00 yields of main crops rice, wheat, and maize in about 05-Jul-2011 30-Sep-2016 30-Sep-2017 40% of the command area, at the head of the canal systems. Paddy (winter) Metric ton 2.80 3.10 3.20 Page 29 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Paddy (monsoon) Metric ton 2.60 2.90 3.10 05-Jul-2011 30-Sep-2016 30-Sep-2017 Wheat Metric ton 1.70 1.90 3.00 05-Jul-2011 30-Sep-2016 30-Sep-2017 Maize Metric ton 1.60 1.80 2.90 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): At completion, the project achieved 103 percent of its original target for paddy (winter), 107 percent for paddy (monsoon), 158 percent for wheat, 161 percent for maize. The yield values are based on crop cutting samples from farmer s’ fields. A.2 Intermediate Results Indicators Component: Component 1. Scheme Modernization Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Completed Structures. Number 0.00 0.00 0.00 05-Jul-2011 30-Sep-2016 30-Sep-2017 Road bridges on branch Number 0.00 26.00 121.00 Page 30 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) canals 05-Jul-2011 30-Sep-2016 30-Sep-2017 Offtakes to sub-branch Number 0.00 41.00 33.00 canals 05-Jul-2011 30-Sep-2016 30-Sep-2017 Control structures in branch Number 0.00 10.00 15.00 canals 05-Jul-2011 30-Sep-2016 30-Sep-2017 Road Bridges, drops, Number 0.00 7.00 15.00 siphons, etc. on feeder canal 05-Jul-2011 30-Sep-2016 30-Sep-2017 Intake to branch canals Number 0.00 3.00 3.00 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): At completion, the project achieved 465 percent of its original target for road bridges on branch canals. This was the result of an increase need for these structures due to the gravel construction. (They included 11 bridges, 15 culverts, and 95 hume pipe culverts.) The project also achieved 80 percent of its original target for offtakes to sub-branch canals (see footnote 1 in the main text), 150 percent for control structures in branch canals, 214 percent for road bridges, drops, siphons, etc. on feeder canal, and 100 percent for intakes to branch canals. Component: Component 2. Strengthening Water Users Associations Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 31 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Number of Executive Number 0.00 13.00 13.00 Committee meetings and General Assembly meetings 05-Jul-2011 30-Sep-2016 30-Sep-2017 held per WUA (Annual, not cumulative). Comments (achievements against targets): At completion, the project achieved 100 percent of its original target. As envisioned, each of the three branch canal WUAs and the federation WUA held executive monthly meetings. General assembly meetings were held on an annual basis. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion No of WUA members trained Number 0.00 2500.00 2177.00 (annual number). 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): At completion, the project achieved 87 percent of its original target. Component: Component 3. Agricultural Production Support Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Technologies demonstrated Number 0.00 5.00 7.33 in the project areas (number) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): This core sector indicator was added in April 2014. At completion, the project achieved 147 percent of its original target. This is an average of three key technologies demonstrated: seed storage (original target 5, actual achieved value 5), soil testing (original target 5, actual achieved value 12), and seed multiplication (original target 5, actual achieved value 5). Page 32 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Client days of training Number 0.00 7000.00 12838.00 provided (number) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Client days of training Number 0.00 2250.00 7453.00 provided - Female (number) 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): This core sector indicator was added in April 2014. At completion, the project achieved 183 percent of its original target for total client days, and 331 percent for training days for female clients. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Agriculture Service Center Number 3.00 3.00 3.00 and Agriculture Contact Points active and providing 05-Jul-2011 30-Sep-2016 30-Sep-2017 advisory services. Comments (achievements against targets): At completion, the project achieved 100 percent of its original target. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of farmer field Number 0.00 0.00 0.00 Page 33 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) schools and demonstrations 05-Jul-2011 30-Sep-2016 30-Sep-2017 implemented (annual number). Farmers Field Schools Number 0.00 90.00 86.00 05-Jul-2011 30-Sep-2016 30-Sep-2017 Demonstrations Number 0.00 200.00 222.00 05-Jul-2011 30-Sep-2016 30-Sep-2017 Comments (achievements against targets): At completion, the project achieved 96 percent of its original target for farmers field school, and 111 percent for demonstrations. In addition to the 222 demonstrations, 836 follow-up demonstrations were established in farmers' fields. Page 34 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Improve irrigation water delivery in the command area 1. Irrigation service delivery by service providers (water user associations) assessed as satisfactory by water users (in percentage of water users) 2. Number of female and male water users (defined as members of the WUAs) provided with improved water delivery services (i) Number of female water users Outcome Indicators (ii) Number of male water users (iii) Percentage of female WUA Executive Committee Members 3. Core indicator: Water users provided with new/improved irrigation and drainage services (i) male and female water users (ii) female water users Component 1 Completed Structures: 1. Intakes to branch canals (number) Intermediate Results Indicators 2. Road bridges, drops, siphons etc. on feeder canal (number) 3. Control structures in branch canals (number) 4. Offtakes to sub-branch canals (number) 5. Road bridges/culverts on branch canals (number) 1. 3 intakes to branch canals, compared to target 3 2. 15 road bridges, drops, siphons etc. on feeder canal, compared to target 7 Key Outputs by Component 3. 15 control structures in branch canals, compared to target 10 (linked to the achievement of the Objective/Outcome 1) 4. 33 offtakes to sub-branch canals, compared to target 41 (see footnote 1 in the main text) 5. 121 road bridges/culverts on branch canals, compared to target 26 Page 35 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Objective/Outcome 2: Improve irrigation water management in the command area 1. Resources generated by water users for the operation and Outcome Indicator maintenance of the modernized irrigation systems Component 2 1. Number of Executive Committee meetings and General Assembly Intermediate Results Indicators meetings held per WUA (annual, not cumulative) 2. Number of WUA members trained (annual number) Key Outputs by Component 1. 13 meetings held per WUA, compared to target 13 (linked to the achievement of the Objective/Outcome 2) 2. 2,177 WUA members trained, compared to target 2,500 Additional Outcome: Increase irrigated crop yields of main crops in about 40 percent of the command area 1. Increase in irrigated crop yields of main crops rice, wheat, and, Outcome Indicator maize (in about 40 percent of the command area at the head of the canal system) Component 3 1. Agriculture Service Center and Agriculture Contact Points active and providing advisory services Intermediate Results Indicators 2. Number of farmer field schools and demonstrations implemented (annual number) 3.Core indicator: Technologies demonstrated in the project area (annual number) 1. 3 Agriculture Service Center and Agriculture Contact Points, compared to target 3 2. 86 farmer field schools implemented, compared to target 90 Key Outputs by Component 3. 222 demonstrations implemented, compared to target 200 (linked to the achievement of the Outcome Indicator) 4. Core indicator: Client days of training provided (number) 5. Technologies demonstrated: 5 on seed storage, compared to target 5 Page 36 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 12 on soil testing, compared to target 5 5 on seed multiplication, compared to target 5 Page 37 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Title Unit Role Preparation Joop Stoutjesdijk Lead Irrigation and Drainage SASDA Task Team Leader Specialist Hiramani Ghimire Senior Governance Specialist SASGP Governance Shambhu Prasad Procurement Specialist SARPS Procurement Uprety Bigyan Pradhan Senior Financial Management SARFN Financial Management Specialist Mei Wang Senior Counsel LEGES Country Lawyer Akiko Ogawa Counsel LEGES Country Lawyer Tumurdavaa Senior Rural Development Specialist SASDA Rural Development Bayarsaihan Purna Bahadur Chhetri Senior Rural Development Specialist SASDA Rural Development Chaohua Zhang Senior Social Sector Specialist SASDS Social Safeguards Drona Raj Ghimire Environmental Specialist SASDI Environment Safeguards Tara Shrestha Team Assistant SASDO Team Assistant Narayan Sharma Road/Procurement Specialist - Road and Procurement Shyam Ranjitkar Consultant FAO Water Resources Achyut Man Singh Consultant FAO Engineer Kunduz Masylkanova Consultant FAO Economist Prachandra Pradhan Consultant FAO WUA Development Ohn Myint Consultant SASDA Irrigation Engineer Supervision/ICR Ahmed Shawky Senior Water Resources GWA06 Task Team Leader Management Specialist Purna Bahadur Chhetri Senior Agricultural Specialist GFA12 Task Team Leader Shambhu Prasad Senior Procurement Specialist GGO06 Procurement Specialist Uprety Chandra Kishor Mishra Procurement Specialist GGO06 Procurement Specialist Neena Shrestha Procurement Assistant GGO06 Procurement Specialist Rupa Shrestha Temporary GGO06 Procurement Assistant Yogesh Bom Malla Senior Financial Management GGO24 Financial Management Specialist Drona Raj Ghimire Senior Environmental Specialist GEN06 Environmental Safeguards Rekha Shreesh Social Development Specialist GSU06 Social Safeguards Bandita Sijapati Senior Social Development Specialist GSU06 Social Development Parthapriya Ghosh Senior Social Development Specialist GSU06 Social Development Suryanarayan Satish Senior Social Development Specialist GSU06 Social Development Page 38 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Jun Zeng Senior Social Development Specialist GSU06 Social Development Joop Stoutjesdijk Lead Irrigation and Drainage GWA02 Former Task Team Leader Specialist Zakia B. Chummun Program Assistant GWA06 Program Assistant Kiran Gautam Senior Program Assistant SACNP Program Assistant Tara Shrestha Program Assistant SACNP Program Assistant Kazuhiro Yoshida Senior Irrigation and Drainage GWA09 Irrigation and Drainage Specialist Bigyan Pradhan Senior Operations Officer SACNP Operations Susanne M. Scheierling Senior Irrigation Water Economist GWAGP ICR Author Prachandra Pradhan Consultant FAO WUA Development Shyam Ranjitkar Consultant FAO Irrigation Engineer Achyut Man Singh Consultant FAO Irrigation Engineer Pradeep Shrestha Consultant GGO24 Financial Management Ramesh Raj Bista Consultant GGO06 Procurement Ben Obrien Consultant FAO Agricultural Specialist Kunduz Masylkanova Consultant FAO Economist John Whittle Consultant FAO M&E Specialist Odbayar Batmunkh Consultant DECIE Data Analyst Hiromi Yamaguchi Consultant GEE03 Water Operations Dikshya Dawadi Consultant - Operations Khushbu Mishra Consultant - Economics and M&E Page 39 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 4.012 28,990.85 FY11 38.947 137,624.17 FY12 2.510 2,655.80 Total 45.47 169,270.82 Supervision/ICR FY12 13.024 57,926.57 FY13 19.633 70,453.54 FY14 15.604 59,257.11 FY15 17.245 66,986.23 FY16 16.619 65,503.05 FY17 27.730 114,585.24 FY18 24.963 120,247.04 Total 134.82 554,958.78 Page 40 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual Amount at Project Closing of Approval Percentage (US$, millions) (US$, millions) Water Water Users Users Total Total Components IDA GoN IDA GoN Loan Grant Loan Grant Component 1. Scheme 22.6 11.2 4.8 1.0 39.6 20.0 8.2 4.4 2.8 35.4 89 Modernization Component 2. Strengthening 0.0 2.1 0.0 — 2.2 0.2 0.6 0.1 — 0.9 41 Water Users Associations Component 3. Agricultural 0.5 2.3 0.1 — 2.9 0.3 3.0 0.0 — 3.2 110 Production Support Component 4. Project 0.5 3.8 0.1 — 4.3 — 2.6 — — 2.6 60 Management Total 23.6 19.4 5.0 1.0 49.0 20.4 14.4 4.6 2.8 42.1 86 1. Project cost at approval—including physical and price contingencies, taxes and duties—was estimated at US$49.0 million. This comprised financing from IDA of US$43.0 million (with a loan of US$23.6 million and a grant of US$19.4 million) and the GoN of US$5.0 million, as well as in-kind contributions from the water users to the O&M of the irrigation schemes of US$1.0 million. 2. Actual cost at project closing—including contingencies, taxes and duties—was estimated at US$42.1 million. This comprised financing from IDA of US$4.4 million (US$20.4 million from the loan and US$14.4 million from the grant) and US$4.6 million from the GoN, as well as in-kind contributions from the water users of US$2.8 million. The actual project cost excludes the cost of unfinished work of phase 1 of about US$1.31 million that was transferred to the phase 2 project. 3. The implementation of the project was planned for a five-year period from November 2011 to September 2016. In 2015, the project was restructured to extend the implementation period by one year and use savings in IDA loan and grant amounts for additional works and activities. The savings resulted from competitive procurement of civil works, consultancies, and goods—with some of the contracts awarded below the amounts estimated at appraisal. This included the five civil works packages for command area protection works along the Karnali and Mohana Rivers; they were estimated at appraisal at US$8.6 million and procured for US$5.2 million, resulting in savings of US$3.4 million. The heavy maintenance machinery for the WUAs was also procured below the cost estimated at appraisal. Another factor that contributed to the savings were the higher-than-actual estimates for some civil works for which designs had not been available at appraisal for accurate cost projections. The additional works and activities approved at project restructuring in 2015 included lining of feeder canals, command area Page 41 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) protection works, and the preparation of an O&M manual for the irrigation scheme. 4. At project closing, not all works and activities were completed, partly due to disruptions in the supply of construction materials from India that occurred during the political turmoil in the second half of 2015. Some of these works and activities, including command area protection works (US$1.15 million), the preparation of the O&M manual (US$0.25 million), and the impact assessment survey (US$15,000), were transferred to phase 2. They are to be carried out through retroactive financing before the phase 2 project becomes effective. 4. The actual in-kind contribution of water users to routine and incremental project-related O&M work, amounting to US$2.8 million, was higher than the estimate at approval of US$1.0 million. This may be partly the result of inaccurate records of the WUAs on labor contributions. Another factor was increases in market wage rates during the period of project implementation. At the time of appraisal, the daily market wage rate was around NPR 60to NPR 90. Migration of rural labor to cities in Nepal as well as to India and the Gulf countries resulted in a substantial increase in daily wage rates. In the last two years of project implementation, the average daily market wage rate was around NPR 300, reaching NPR 450 during peak agricultural seasons. Page 42 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 4. EFFICIENCY ANALYSIS DETAILED ECONOMIC AND FINANCIAL ANALYSIS 1. Cost-benefit analysis was conducted to reassess the economic viability of the Modernization of Rani Jamara Kulariya Irrigation Scheme – Phase 1 Project at the ICR stage. Except some modifications, the analysis adopted the same approach as at project appraisal to ensure methodological consistency and comparability. 2. The modernization of the (RJKIS was planned for implementation under two phases. Phase 1 aimed at improving irrigation water delivery to, and management in, the command area through investments in the following areas: (a) construction and modernization of the higher-order irrigation infrastructure, including a feeder canal, various hydraulic structures, command area protection works, and upgrading of village roads; (b) strengthening of WUAs to take full responsibility for the management and O&M of the modernized infrastructure; and (c) agricultural production support to prepare for a comprehensive agricultural support program under phase 2 when more reliable and year-round irrigation water delivery in the whole command area is secured through investments in the lower-order infrastructure. 3. The RJKIS depends on water from the Karnali River, an unpredictable gravel bed river that often changes its course. Before the phase 1 investments, each of the three irrigation systems (Rani, Jamara, and Kulariya) comprising the scheme had an intake point on the Karnali. The systems regularly suffered from either shortage of water or severe flood damage. Overall, the scheme lacked permanent intake and control structures, diversion and drop structures, flood protection works, and cross drainage and escape structures. Typical problems included difficulty of coping with changes in the river morphology and in diverting water to the three irrigation systems during low river flows; uncontrolled major flooding during high river flow events that could inundate three quarters of the command area; frequent wash-out of the temporary diversion works made by WUAs at the intake sites and offtake sites from branch to sub-branch canals; erosion of canal banks from uncontrolled intake of water; sedimentation of canals; inability to manage the water equitably and efficiently; and poor road connections that often became inaccessible during the monsoon season. 4. Before phase 1, about 11,000 ha of the total (developed) command area of the RJKIS of 14,300 ha were linked to the canal irrigation network. Because of the unreliable and insufficient water delivery, some farmers also used groundwater which was costly. The remaining 3,300 ha were rainfed and not linked to the canal irrigation network. They were prone to uncontrolled annual flooding during the monsoon season, as well as uncontrolled major flooding during high river flow events. This often led to yield reductions or total production losses, depending on the location of the land within the tail-end sections. Economic and Financial Analysis at Project Appraisal 5. The economic and financial analysis at appraisal expected that benefits would be derived from increased production, intensification of production, and reduced productivity losses caused by uncontrolled flooding. In particular, the following benefits were assumed: (a) a 10 percent increase in Page 43 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) agricultural production at the head section of the command area with 6,000 ha; (b) an increase in cropping intensity in from 157 percent to 191 percent (as a weighted average for the entire command area); (c) a 10 percent reduction in paddy yield losses caused by uncontrolled flooding; and (d) modest crop diversification in winter and spring crop seasons toward wheat, maize, and vegetables. 6. The benefits were measured with three farm models that represented typical situations of farms located in the head, middle, and tail-end sections of the command area. The farmers in the head section with 6,000 ha were projected to benefit from modest improvements in canal water supply and adoption of improved agricultural practices, which would lead to (a) a 10 percent increase in crop yields, (b) a 27 percent increase in cropping intensity (from 180 percent to 207 percent), and (c) a modest diversification in the winter and spring seasons toward wheat, maize, and vegetables. The farmers in the middle section with 5,964 ha were projected to benefit from a modest improvement in water availability and the adoption of improved agricultural practices, which would lead to (a) a 30 percent increase in cropping intensity (from 170 percent to 200 percent) and (b) a minor diversification toward vegetable and potato crops. The tail-end farmers with 3,336 ha were assumed to benefit from (a) a 10 percent reduction in paddy losses from flooding and soil degradation that averaged about 10-25 percent of the yield, and (b) a 50 percent increase in cropping intensity (from 100 percent to 150 percent) as a result of improved water availability during the dry season coupled with improved agricultural practices. 7. The benefits were assumed to accumulate starting from project year 3 when around 30 percent of the rehabilitation and modernization works would be completed, and to reach 100 percent in project year 6. The benefits were estimated for a period of 25 years, which would include the project implementation period of five years and the technical life of the irrigation and flood protection infrastructure—at 2010 prices and an OCC of 12 percent. 8. The financial prices for traded inputs (fertilizer, chemicals) and commodities were converted into economic prices by deducting transfer payments, taxes, and duties. Economic prices of imported inputs and outputs were calculated at border parity prices. Agricultural labor wages were converted at the shadow wage conversion factor (SWCF) of 0.60. 9. The financial base cost of the project, including physical contingencies, was estimated at NPR 2.7 billion (US$37.5 million). Taxes and duties were removed from the financial base cost to obtain the economic cost of the project. 10. The appraisal analysis estimated the FRR at 13.4 percent, the FNPV at NPR 118.2 million, and the BCR at 1.04 (table 4.1). The ERR was estimated at 16.9 percent, the ENPV at NPR 415.0 million, and the BCR at 1.16. 11. The sensitivity analysis suggested that the project would remain economical in the events when the project cost increases by 20 percent and when the benefits decline by 20 percent. The ERR was projected to drop below 12 percent if there was a delay of two years in project implementation. Page 44 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Table 4.1. Economic and Financial Indicators at Appraisal FNPV ENPV FRR ERR (NPR, BCR (NPR, BCR (%) (%) millions) millions) Base scenario 13.4 118.2 1.04 16.9 415.4 1.16 Project cost increase by 20% 9.4 12.8 Benefit decline by 20% 10.1 13.6 Two-year delay in benefit accumulation 8.6 11.3 12. In terms of sustainability, the appraisal analysis assumed that farmers’ contribution to the O&M of irrigation schemes would double from the pre-project level at NPR672. The respective shares of the incremental O&M cost in incremental gross margins for farmers were estimated at 2.3 percent for the head section, 3.6 percent for the middle section, and 4.5 percent for the tail-end section. Economic and Financial Analysis at the ICR Stage Methodology and Key Assumptions 13. During project implementation, the project benefits were not monitored separately for the head, middle and tail-end sections of the irrigation scheme. Thus, the economic and financial analysis at ICR stage did not follow the farm model-based approach of the appraisal analysis. Instead, it re-assessed economic and financial benefits for the entire command area (with a success rate of 65 percent) based on actual crop yields, cropping intensity, and cropping patterns. Apart from these modifications, the ICRR analysis used the same methodology as the appraisal analysis. 14. The ICR analysis assessed the project benefits for a period of 25 years, which includes the project implementation period of six years and the technical life of irrigation and flood protection infrastructures—at 2017 prices and an OCC at 12 percent.2 15. Financial prices of locally traded outputs and inputs were converted into economic values by removing transfer payments, taxes and duties. The appraisal SWCF rate of 0.60 was used to convert financial cost of unskilled labour into economic costs. 16. The actual total financial cost of the project, inclusive contingencies, taxes and duties, in the amount of NPR 4.25 billion was used in the financial analysis. It was converted into economic values by removing taxes and duties. 17. The analysis used the project M&E data, including agricultural data from the project baseline, mid- term and thematic surveys, and cross-cutting crop surveys conducted by the DoA. In addition, the analysis used the data of the World Bank’s DIME survey, data and information shared by farmers during the implementation supervision mission in March-April 2017 and ICR mission in November 2017, and data 2 Although the new Bank guidelines on economic and financial analysis recommend using the OCC at 5 percent and less, the ICR analysis uses the appraisal value of 12 percent to make the results comparable with the appraisal estimates. Page 45 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) shared by the project implementation office. The impact assessment survey was carried out in January 2018. The survey did not collect required data for economic analysis, however. Project Benefits 18. Crop yields. At project appraisal, a modest 10 percent yield increase was projected for the head section of the command area with 6,000 ha. The PIO data reported higher-than-projected productivity increases, covering larger areas than projected at appraisal (table 4.2). This included yields sampled in farmers’ fields with 3.1 t/ha for summer (or monsoon paddy), 3.2 t/ha for spring paddy, 3.0 t/ha for wheat, and 2.9 t/ha for maize. With the data collection being based on a few samples, the analysis at the ICR stage was based on slightly more conservative yield values, including 2.9 t/ha for monsoon paddy, 3.0t/ha for spring paddy, 2.7 t/ha for wheat, and 2.1 t/ha for maize. Table 4.2. Crop Yield Estimates at Appraisal and ICR Stage Appraisal ICR PIU6 1 Head Middle Tail Total Total Total WoP WiP WoP WiP WoP WiP WoP WiP WiP WiP Paddy (monsoon) 2.6 2.9 2.6 2.6 2.0 2.2 2.6 2.7 2.9 3.1 Paddy (winter) 2.8 3.1 2.8 2.8 n.a 2.8 n.a 3.0 3.0 3.2 Paddy (flooded areas) 1.98 2.2 1.98 n.a Wheat 1.7 1.9 1.6 1.6 n.a 1.6 1.7 1.8 2.7 3.0 Maize 1.6 1.8 1.6 1.6 n.a 1.6 1.6 1.7 2.1 2.9 Oilseeds 0.5 0.6 0.5 0.5 n.a 0.5 0.5 0.5 1.1 n.a Pulses/legumes 2 0.3 0.3 0.3 0.3 n.a 0.3 0.3 0.3 0.6 n.a Vegetables 3 15.0 16.5 13.0 13.0 n.a 13.0 14.6 15.1 19.9 n.a Potato 5.0 5.5 5.0 5.0 n.a 5.0 5.0 5.3 7.5 n.a Spice crops 4 8.5 n.a Fruits 5 18.0 n.a Sugarcane 64.0 n.a Notes: 1 Appraisal ‘with project’ (WiP) assumed a 10 percent reduction in yield losses to floods, and yields of other crops similar to the ‘without project’ (WoP) yields in the middle section. 2 Pulses and legumes are represented by lentil. 3 ICR WiP yields are for cucumber, cauliflower, bitter gourd, bottle gourd, cabbage, and tomato. 4 Spice crops are represented by chilli. 5 Fruits are represented by banana. 6 PIU presentation from November 16, 2018. 19. In addition to modernization of the irrigation scheme, which was expected to improve water sources at off-farm level and link around 3,500 ha of arable lands to the irrigation network, the project invested in strengthening of WUAs and support to farmers’ agricultural knowledge and access to improved seeds and other inputs and markets. Therefore, higher yield increases than anticipated resulted from a combination of factors, including (a) improved quality seeds of paddy, maize, wheat, potato, vegetables, mustard, and lentil produced under Component C; (b) better access to markets, including for quality seeds and high-yielding varieties as a result of the investments in rural roads and bridges under Component A; (c) improved soil fertility resulting from soil testing and training on the application of Page 46 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) appropriate organic and nonorganic soil nutrients under Component C; and (d) adoption of improved agricultural practices, such as the system of rice intensification, direct and line sowing technologies for paddy, line sowing technology for wheat, mustard and maize, and zero tillage for wheat and maize crops promoted under Component C. In terms of improved seeds, the seed cooperatives supported by the project annually produce around 960 tons of improved paddy, wheat, maize, and potato seeds through contract farming with project farmers. According to the seed cooperatives, the seeds are largely used within the command area of the RJKIS. 20. Cropping intensity. Based on the data available at the time of the project preparation, the appraisal analysis assumed the ‘without project’ (WoP) cropping intensity at 100 percent in the tail-end, 170 percent in the middle and 180 percent in the head sections, with the weighted average for the entire command area at 157 percent (table 4.3). At project closing, the average cropping intensity in the entire command areas was reported at 208 percent by the PIU team.3 (The DIME survey found a cropping intensity rate of 228 percent.) The analysis at the ICR stage revised the WoP and ‘with project’ (WiP) cropping intensity rates based on the baseline survey and PIU data. 21. According to the PIO and the DoA team, improved access to quality and short duration seeds and markets for agricultural inputs and outputs as well as the adoption of production technologies that allow a shorter crop production period were critical drivers of higher than expected increases in cropping intensity. At the project start, for instance, only one traditional variety of paddy with lower productivity and growing period was available. The project introduced around 17 varieties of paddy through demonstrations and training. The project also invested in production of six paddy varieties locally, of which two are short-duration and four are high-yielding varieties. Apart from the paddy seeds, the project supported production, processing, and storage of improved, certified, and foundation seeds for wheat, potato, and vegetables. Currently, the project-supported seed cooperatives produce improved seeds sufficient for around 50 percent of paddy, 62 percent of wheat, and 18 percent of potato areas. Farmers, who are contracted for the seed production, earn 15-25 percent higher profits. 22. The project investments in rural roads and bridges, as some of the old wooden bridges were for pedestrian crossing only, improved farmers access to agricultural input and output markets. Improved accessibility reportedly enabled farmers to purchase quality inputs when needed and at lower prices, contributed to reduction of farmgate sales at lower prices, and transportation losses of vegetables and other perishable cash crops such as leafy vegetables, cucumber, and tomatoes. 3 Based on PIO presentations from November 16-17, 2017, and the feasibility study for phase 2. Page 47 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Table 4.3. Estimates of Cropping Patterns and Intensity at Appraisal and ICR Stage Appraisal ICR Head Middle Tail Total Total WoP WiP WoP WiP WoP WiP WoP WiP WoP WiP Paddy (monsoon) 5,845 4,771 4,500 4,650 3,336 3,269 13,681 12,690 11,800 11,395 Paddy (winter/spring) - 1,908 - 1,400 - - - 3,308 1,430 755 Wheat 1,491 2,982 1,200 2,000 - 1,334 2,691 6,316 3,127 4,290 Maize 835 298 750 250 - 67 1,585 615 644 1,275 Oilseeds 895 477 750 250 - 33 1,645 760 1,855 2,145 Pulses/legumes 1,312 835 1,150 750 - 100 2,462 1,685 2,021 3,182 Vegetables 179 537 50 350 - 100 229 987 772 4,000 Potato 179 537 50 350 - 100 229 987 682 1,565 Spice crops - - - - - - - - 800 Fruits - - - - - - - - 31 143 Sugarcane - - - - - - - - 22 250 Cultivated areas (ha) 10,735 12,345 8,450 10,000 3,336 5,004 22,521 27,349 22,382 29,800 Physical areas (ha) 5,964 5,964 5,000 5,000 3,336 3,336 14,300 14,300 14,300 14,300 Cropping intensity (%) 180 207 169 200 100 150 157 191 157 208 23. Diversification. The appraisal economic analysis projected that winter and spring crops would diversify somewhat from maize, oilseeds, and pulses toward wheat, vegetables, and potatoes. For example, the area of monsoon paddy would decrease by 14 percent and the areas of maize, oilseeds, and pulses by 5 percent each; and the areas of winter paddy, wheat, vegetables, and potato would increase by 12 percent, 11 percent, 3 percent, and 3 percent, respectively. 24. A comparison of the updated WoP cropping pattern with the actual cropping pattern at project closing shows that diversification toward high-value crops was moderately higher than the appraisal estimates. Shares of paddy areas in gross cultivated areas, for instance, declined by around 24 percent, maize areas by 4 percent, and pulses by 1 percent. The respective share of areas under vegetables was higher by 10 percent, spice crops by 3 percent, and potatoes and pulses by 2 percent each. 25. The appraisal estimates for diversification assumed that farmers would switch to non-paddy crops only when irrigation water delivery to farm fields will be secured under phase 2 of the project. However, the project investments in farmer knowledge and improved access to seeds, markets, rural roads and bridges contributed to higher-than-expected diversification. 26. Flood benefits. Because the RJKIS lacked flood protection structures, the command area was prone to annual and major flooding. The most recent major flood occurred in July 2013 and inundated 75 percent of command area, damaging crops and houses, washing away livestock and necessitating the temporary relocation of 750 households. Flood damages were estimated at NPR 7 million. In addition, around 3,500 ha4 of command areas are prone to annual flooding. Soil degradation, erosion, and excessive water from flooding would cause around 10-25 percent losses in already low paddy yields at 1.98 t/ha. The appraisal analysis assumed that the paddy losses would be reduced by 10 percent. 4 At appraisal, the area estimated as being prone to annual flooding was 3,336 ha; this was updated to 3,500 ha. Page 48 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) 27. Project investments in flood protection structures enabled the protection of 2,500 ha from major and annual flooding; current paddy yields in these areas were reported at 2.4 t/ha. The analysis however assumed only insignificant losses in paddy yield, or 2.0 t/ha. Parts of the command area protection works along the Mohana and Pathraiya Rivers, which would protect an additional 1,000 ha, were not completed under phase 1. They have been transferred to phase 2 financing and are expected to be completed before the monsoon season in 2018. The ICR analysis assumed no incremental change to paddy yields in these areas still unprotected from flooding. 28. Other unquantified benefits. Project investments in rural roads and bridges significantly improved accessibility for the local population and generated positive impacts. For example, some of the previous wooden bridges were designed only for pedestrians or had a low carrying capacity. Vehicles, buses, and trucks would cross through sections of the irrigation canals. Yet, during monsoon season, the traffic of vehicles through the canals would be blocked for up to 2.5 months due to high water levels, and other bridges and roads located about 40 km away would have to be used. In some years, flooding would make the bridges unusable. Some parents were reluctant to send their children to school during monsoon season because of non-fatal accidents at the wooden bridges. The newly built bridges can technically withstand major flooding and have higher carrying capacity. The analysis at the ICR stage did not incorporate these positive impacts due to a lack of data. Financial Analysis 29. When the average farm sizes in each irrigation system are accounted, annual net incremental benefits to average farm households are estimated to range from around NPR 13,300 to NPR 17,300 (table 4.4). Table 4.4. Summary Financial Returns to Farm Households Rani Jamara Kulariya Total Command area (ha) 5,359 4,586 4,355 14,300 Average landholding (ha) 0.65 0.50 0.65 Total (undiscounted) incremental returns (NPR, millions) 18,300 15,700 14,900 48,817 Total (undiscounted) incremental returns per ha (NPR, millions) 3.41 Average incremental returns per annum (NPR, millions) 142 122 116 380 Annual (undiscounted) incremental returns per ha (NPR) 26,600 26,600 26,600 26,600 Annual (undiscounted) incremental returns to average farm 17,300 13,300 17,300 household (NPR) 30. Sustainability. The incremental cost for O&M of the irrigation schemes during phase 1 is estimated at NPR 119 billion, or NPR 1,378 per hectare. The phase 2 investments are expected to reduce the incremental O&M costs. Not taking into account the expected phase 2 reduction in O&M cost, the incremental O&M cost per hectare amounts to about 5 percent of the average incremental net returns of NPR 26,600 per ha, suggesting the cost is affordable to farmers. 31. The ICR financial analysis estimated an FRR of 12.8, slightly lower than the FRR at appraisal. The FNPV is modestly higher, at NPR 146.4 million, as is the BCR at 1.06 (table 4.5). Page 49 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) Economic Analysis 32. The economic returns estimated at the ICR stage are lower than the appraisal estimates, with the ERR at 14.3 percent. The ENPV is somewhat higher at NPR 450.8 million, and the BCR is the same at 1.16 (table 4.5). Table 4.5. Economic and Financial Results at Appraisal and ICR Stage Appraisal ICR 12% OCC 12% OCC Financial Analysis FRR (%) 13.4 12.8 FNPV (NPR, millions) 118.2 146.4 BCR 1.04 1.06 Economic Analysis ERR (%) 16.9 14.3 ENPV (NPR, millions) 415.4 450.8 BCR 1.16 1.16 33. Both the FNPV and ENPV estimates at the ICR stage are higher than the appraisal estimates because the ICR analysis uses 2017 prices and captures the impacts of improved access to agricultural inputs and outputs. Page 50 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS 1. Comments from the borrower were received on March 27, 2018. They included editorial comments and comments elaborating on completed works and correcting data on accomplishments. The ICR was revised to incorporate all comments. Page 51 of 52 The World Bank NP Modernization of Rani Jamara Kulariya Irrigation Scheme - Phase 1 ( P118179 ) ANNEX 6. SUPPORTING DOCUMENTS • PAD, 2011 • Aide Memoires of Implementation Review and Support Missions, 2012-2017 (nine plus one technical mission) • ISRs, 2012-2017 (12 ISRs) • Restructuring Paper, 2015 • Borrower’s Implementation Completion Report, 2018 • Rapid Impact Assessment of Rani Jamara Kulariya Irrigation Project, 2018 Page 52 of 52