World Bank Document...2005/03/21 · (Proyecto Manejo de Agua a Nivel de Finca) PROMATREC Irrigated...

Document of

The World Bank

Report No. 12233-DO

STAFF APPRAISAL REPORT

DOMINICAN REPUBLIC

IRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT

JANUARY 19, 1995

FILE COPY

Country Department IILatin America and the Caribbean Regional Office

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CURRENCY UNIT

Dominican Peso (RD$)

EXCHANGE RATE

(As of December 30, 1994)

US$1.00 = RD$ 12.97

FISCAL YEAR

January 1 - December 31

WEIGHT AND MEASURES

Metric Systemand

1 TAREA = 0.062 Hectares (ha)

MAP SECTION

ACRONYMS AND ABBREVIATIONS

AEO Agricultural Extension Officer(Oficial de Extensi6n de Agricultura)

AIRAC Association of Rural Institutions for Savings and Credit(Asociaci6n de Instituciones Rurales de Ahorros yCreditos)

ADESJO Association for the Development of San Jose de Ocoa(Asociaci6n para el Desarrollo de San Jose de Ocoa)

BA Agricultural Bank(Banco Agrario)

CATIE Tropical Agronomic Center for Investigation andTeaching(Centro Agron6mico Tropical de Investigaci6n yEnsefanza)

CDE Dominican Corporation for Electricity(Corporaci6n Dominicana de Electricidad)

CEA State Council for Sugar(Consejo Estatal del Azucar)

CENDA North Center for Agricultural Development(Centro Norte de Desarrollo Agropecuario)

EMS Environmental Monitoring System(Sistema de Monitoreo Ambiental)

FIDA Agriculture Federation for Development(Federaci6n de Desarrollo de Agricultura)

GEW Group Extension Workers(Grupo de Trabajadores de Extensi6n)

L4D Dominican Agrarian Reform Institute(Instituto Dominicano de Reforma Agraria)

INDRHI National Water Resources Institute(Instituto Nacional de Recursos Hidraulicos)

INESPRE National Institute for Price Stabilization(Instituto Nacional de Estabilizaci6n de Precios)

ISA Higher Institute of Agriculture(Instituto Superior de Agricultura)

M&E Monitoring and Evaluation(Monitoreo y Evaluaci6n)

MIS Management Information System(Administraci6n del Sistema de Informaci6n)

MUV Manufacturing Unit ValveNEP New Economic Program

(Nuevo Programa Econ6mico)NGO Non Governmental Organization

(Organizaci6n no Gubemamental)OFWME P On-Farm Water Management Project

(Proyecto de Manejo de Agua a nivel de Finca)O&M Operation and Maintenance

(Operaci6n y Mantenimiento)

PEU Project Execution Unit(Unidad de Ejecuci6n del Proyecto)

POA Annual Work Program(Programa Anual de Trabajo)

PR&D Participatory Research & Development(Investigaci6n y Desarrollo Participatorio)

PROMAF On-Farm Water Management Project(Proyecto Manejo de Agua a Nivel de Finca)

PROMATREC Irrigated Land and Watershed Management Project(Proyecto de Manejo de Tierras Regadas y de Cuencas)

PRYN1 Water Users Association of Nizao, Santiago(Asociaci6n de Usuarios de Agua de Nizao, Santiago)

SDB Standard Bidding Documents(Documentos Corrientes para Propuestas)

SEA Ministry of Agriculture(Secretaria de Estado de Agricultura)

SOEs Statement of Expenditures(Cuentas de Gastos)

WUA Water Users Association(Asociaci6n de Usuarios de Agua)

WMF Water Management Fund(Fondo de Administraci6n de Agua)

YSURA Water Users Association of Azua(Asociaci6n de Usuarios de Agua de Azua)

ANNEX 10

DOMINICAN REPUBLIC


Documents Available in Project Flle

A. Background and Project Preparation Papers

1. Dominican Republic. Agricultural Sector Study.1986. World Bank. Report No. 6267-DO.

2. IICA. 1988. Proyecto de Desarollo Agricolaen Tres Areas Prioritarias Bajo Riego. ContratoINDRHI/IICA 2426.

3. Irrigated Farming Development Project. Project Brief. 1989.FAO/CP. Report No. 157/89 CP-DOM. 14 PB.

4. Dominican Republic. Country EconomicMemorandum. Beyond Stabilization: AnAgenda for Sustainable Growth. 1991. WorldBank.

5. Proyecto Integrado de Reforestaci6n yConservaci6n Comunal de la Cuenca del RioNizao.1992. FAO. Report TCP/DOM/2251(F).

6. Proyecto de Desarollo Agricola Bajo Riego y enla Cuenca del Nizao. Preparaci6n del proyecto.2 volumes.1993 FAO/CP. Report No. 55/93 CP-DOM 16.

B. Working Papers

1. Detailed Project Costs and Financing Tables.WP No. 1.

2. Promotion of Credit Cooperatives. WP No. 2.

3. Irrigation Infrastructure. WP No. 3.

4. Economic and Institutional Analysis of SoilConservation Practices in the DominicanRepublic. Jose Abel Hernandez. 1992.

DOMINICAN REPUBLICIRRIGATED LAND AND WATERSHED MANAGEMENT PROJECT

Contents

1. LOAN AND PROJECT SUMMARY ................... i

2. THE SECTOR CONTEXT ......................... 1A. The Economy ............................. 1B. Agriculture in the Economy ..................... 1C. The Irrigation Subsector ....................... 3

3. DEVELOPMENT POTENTIAL AND CONSTRAINTS ...... . 7A. Potential ................................. 7B. Current Irrigation Water Management .... ........... 7C. Agricultural Development ...................... 8D. Environmental Constraints ...................... 9

4. BANK INVOLVEMENT AND LESSONS LEARNED ..... ... 11A. Bankwide Lending for Irrigation and Drainage .. ....... 11B. Lending to Agriculture in Latin America and the Caribbean . 12C. World Bank Involvement in the Dominican Republic ...... 12

5. PROPOSED STRATEGY, DESIGN, AND RATIONALEFOR BANK INVOLVEMENT ....................... 13

A. The Government Strategy in Irrigation .... .......... 13B. Rationale for Bank Involvement ................... 14C. Project Design and Strategy ..................... 15

6. THE PROJECT ................................ 17A. Project Objectives ........................... 17B. Project Components .......................... 17C. Detailed Project Features ............. .......... 18

This report is based on the findings of an appraisal mission which visited theDominican Republic in May-June 1993, comprising Mmes./Messrs. Moreau(Mission Leader), Palaco-Nielsen (Bank), Eastwood (Economist Consultant),Lafont (Irrigation Specialist Consultant), Arboleda (Sociologist Consultant).Peer reviewers were Mme. Lallement (EC4IN) and Mr. Darghouth(AF5AG). Mmes./Messrs. Edilberto Segura, Michael Baxter and ElizabethKatz are the Department Director, Division Chief, and Task Manager,respectively, for the operation.

7. PROJECT COSTS AND FINANCING ...... .. .......... 24A. Costs ................................... 24B. Financing ................................ 25C. Disbursements ............................. 25D. Procurement .............................. 27E. Cost Recovery ............................. 29

8. PROJECT ORGANIZATION ........... ............. 31A. Project Coordination ......................... 31B. Accounts and Audits ......................... 32C. Monitoring and Evaluation ...................... 32

9. BENEFITS, ECONOMIC ANALYSIS, ENVIRONMENTALIMPACT, EFFECT ON WOMEN, AND PROJECT RISKS 34A. Benefits ................................. 34B. Economic Analysis ........... ............... 35C. Environmental Impact ........... .............. 36D. Effect on Women ............ ............... 37E. Project Risks .............................. 37

10. SUMMARY OF AGREEMENTS REACHED ANDRECOMMENDATIONS ......................... 38

ANNEXES

Annex 1. Total Summary AccountsProject Components by YearFinancing Plan by Disbursement CategoryDisbursement by Financier by SemesterEstimated Schedule of Bank Disbursements

Annex 2. Performance Indicators

Annex 3. Supervision Plan

Annex 4. Land Distribution in the Three Project Irrigated Areas

Annex 5. Rio Nizao Watershed Management Program

Annex 6. Participatory Research and Development Grants Scheme

Annex 7. Irrigation Infrastructure Components

Annex 8. Training and Technical Assistance

Annex 9. Financial and Economic Analysis

Annex 10. Documents Available in Project File

ANNEX 9Page 9 of 9

return in YSURA can be found in the cost of irrigation development and the benefitsattributable to increased crop production. Even though investment in the irrigation system inYSURA has been limited to drainage and riverbed protection and land levelling, costs ofoperation and maintenance are particularly high, and the overall base cost of the irrigationcomponent per hectare, at about US$ 1200, is above that in PRYN (US$ 1030) and Nizao-Valdesia (US$ 920). Due to the lack of investment in irrigation per se, a smaller proportionof the area benefits from infrastructure development. The cropping pattern, notwithstandingthe inclusion of industrial tomatoes, also has a relatively limited representation of high valuevegetable crops (reflecting the less favorable location with respect to the major urban centersand resulting poorer marketing opportunities). For these reasons, overall net crop productionbenefits per hectare are about 10 to 20% below those in Nizao-Valdesia and PRYNrespectively.

27. Even at 14%, the IRR for YSURA is satisfactory in the context of an OpportunityCost of Capital (OCC) of 12%. The overall rate of return for the project at 19% indicates asound project.

Sensitivity

28. Sensitivity analysis carried out for the overall project indicates a greater sensitivity tochanges in benefits than in costs. Switching values at the OCC show that benefits wouldneed to fall by 18% while costs could increase by as much as 22% before reducing the IRRto 12%. Both changes are, however, substantial and unlikely to arise. The impact of 10 and20% changes in costs and benefits is indicated in the table below. Another possibility is alag in benefits, if all benefits were to be delayed by one year, the IRR would fall to 14%.Essentially the test results show that relatively significant adverse conditions would berequired to reduce the economic viability of the project to below acceptable levels.

Sensitivity Tests on ERR

ERR

Base Case +10% +20%

Increase in costs 19 15 12Decrease in Benefits 19 15 11Inc. in costs and Dec. in benefits 12 5

DOMIICAN REPUBLIC


1. LOAN AND PROJECT SUMMARY

Borrower: Dominican Republic.

ImplementingAgency: National Water Resources Institute (INDRHI)

Beneficiaries: INDRHI; Ministry of Agriculture; Association for the Development ofSan Jose de Ocoa (ADESJO); Water Users Associations of Nizao,Santiago, Azua; and Nizao Watershed Farmer Associations.

Poverty: Program of targeted interventions. Poverty reduction measures includeinvestments in irrigation infrastructure in irrigated small-farm areas, awatershed management program for farmers living below the ruralpoverty threshold, and establishment of eligibility criteria for theallocation of research and extension programs to ensure that theseprograms meet the needs of the small farmers in the project areas.

Amount: US$28.0 million equivalent, including up toUS$800,000 of retroactive financing.

Terms: Maturity of 20 years, including a 5-year grace period, at the Bank'sstandard variable interest rate.

Commitment Fee: 0.75 % on undisbursed loan balances, beginning 60 days after signing,less any waiver.

Financing Plan: See para. 7.2

Economic Rateof Return: Estimated at 19 percent average for the 3 irrigated areas.

Staff AppraisalReport: 12233-DO.

Maps: IBRD No. 25141, Nizao; 25142, Ysura; and 25143, PRYN.

ANNEX 9Page 8 of 9

increases by another 5% of the area each year until the 30% coverage is attained in PY7.The cropping patterns under the different irrigation systems are the same as those indicatedin the financial analysis. Similarly, yields of areas without adequate irrigation or drainageare assumed to be 15% below average in the without project situation and improve toaverage levels with the intervention of the project. In areas benefitting from agriculturaldevelopment, yields increase in accordance with the crop models and cropping intensityimproves 20%. Because of the large proportion of the area affected by land levelling inPRYN and YSURA, it is assumed that this would include the 30% of the area benefittingfrom agricultural development. In the case of Nizao-Valdesia, the area affected by landlevelling would be additional, yields would increase but there would not be any impact oncropping intensity. In PRYN, the areas receiving drainage are assumed to be among thosebenefitting from land levelling.

Prices

23. Because of the frequent changes in trade regime and erratic implementation of taxlaws, the relationship of financial to economic prices in the Dominican Republic fluctuatesand is difficult to determine. Import taxes currently average 25 - 30% and there has beenprogress in stabilizing the exchange rate, which is now guided by market forces. For thepurposes of the economic analysis of the project, an SCF of .8 has been adopted to reflectexisting distortions.

24. For tradeable agricultural inputs and outputs, the border prices estimated by thepreparation mission have been adopted. The appraisal mission has also followed the practiceof using the financial wage rate for unskilled labor to value farm labor as off-farmemployment opportunities at similar wage rates are readily available.

Results

25. The cost and benefit streams used in the economic analysis are given in Tables 1 to12 of Appendix 1 and the results are summarized below:

Internal Rate of Return (%)

Area IR

Nizao-Valdesia 21PRYN 21YSURA 14

Three areas together 19

26. Costs for activities other than irrigation development have been allocated roughly inproportion to the area under the three schemes, so explanatory factors for the lower rate of

ANNEX 9Page 7 of 9

D. Economic Analysis

Scope

20. Economic analysis has been carried out for the individual irrigation schemes and forthe three combined, accounting for almost 90% of project costs. The analysis covers allrelated investment both for irrigation infrastructure as well as agricultural development andinstitutional strengthening. It does not include the Watershed Development component andrelated research in view of the experimental nature of these activities.

Assumptions

21. The areas under the three irrigation schemes expected to benefit from projectactivities and the phasing of investment are indicated in the tables below. In addition, it isassumed that extension and research activities would have an impact on 30% of the areafarmed under each scheme in the formi of adoption of improved technical packages andincreased yields.

Project Area (ha)

Nizao-Valdesia PRYN YSURA

Total area: 8500 4650 6300

Area benefitting from:Irrigation improvements 3000 600Drainage/Protection - 1200 1800Land Levelling 650 3400 3200

Phasing of Investment (%)

PYl PY2 PY3 PY4 PY5Nizao-ValdesiaIrrigation 5% 40% 40% 15%Land Levelling 10% 40% 50%

PRYNIrrigation 15% 60% 25%Drainage 15% 60% 25%Land Levelling 20% 20% 20% 20% 20%

YSURADrainage 15% 60% 25%Land Levelling 20% 20% 20% 20% 20%

22. The impact on the cropped area is assumed to occur in the year following theinvestment. For the agricultural development the impact starts on 5 % of the area in PY2 and

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2. THE SECTOR CONTEXT

A. The Economy

2.1 The performance of the Dominican Republic's economy sloweddramatically in 1979-90 compared with 1970-78. Economic growth averaged 7.5percent in 1970-78 but only 1.2 percent in 1988-92. In the earlier period, underconditions of domestic price stability and external equilibrium, GDP growth exceededpopulation growth (which was 3 percent) and allowed increasing investment andconsumption per capita. But, since 1979, GDP has not grown as fast as population,and per capita consumption declined at an average annual rate of about 2 percent.

2.2 The reasons for the general stagnation of economic growth includeextensive price controls, poor performance in the public sector, and inadequatepolicies, distortions, and uncertainties in the trade sector. These factors led toinadequate investment in public infrastructure and human capital development.

2.3 In 1990 the Government, with the support of the IMF, initiated aNew Economic Program which has focussed successfully on reducing inflation andstabilizing the economy. The exchange rate system has been unified and a market-determined exchange rate has stabilized at RD$12.97 per U.S. dollar (as ofDecember 30, 1994). Domestic prices have been liberalized and reforms have beeninitiated in trade, taxation, and the financial sector. These recent improvements ineconomic performance provide an opportunity for expanded Bank assistance.

B. Agriculture in the Economy

2.4 Natural conditions in the Dominican Republic are favorable foragriculture development. The sector employs about 35 percent of the labor force.The traditional exports of sugar, coffee, cocoa, and tobacco are the main crops,occupying more than half of the agricultural land and generating more than 60percent of merchandise exports. The remaining land suitable for agriculture isdedicated largely to food crops, of which rice is now the most important. Cropsaccounted in 1991 for about 68 percent of the gross value of agricultural productionwith the remaining 32 percent shared by livestock (28 percent) and forestry andfisheries (4 percent). But the contribution of farming to the economy has beendeclining. The agricultural sector--including the sugar industry--accounted for only17 percent of GDP in 1991, compared with 19 percent in 1980 and 26 percent in1973. Although the annual growth rate of total GDP was about 2.8 percent in 1980-89, for agricultural GDP it was only 1.4 percent, dropping to less than 1 percent in1988-92.

ANNEX 9Page 6 of 9

to family labor at full development is well over twice the wage rate, suggesting that thereshould not be a problem with paying the water charge. In fact, even in this situation, wherethe water charge is highest, it only represents about 11 % of total costs. Supplementaryanalysis of the returns per hectare for individual crops with full costing of the labor inputshows that only a few crops - maize, rice and peanuts - in the situation of inadequateirrigation/drainage would not generate enough revenue to cover the cost of the with projectwater charge.

Payment of Water Charges

18. If this is the situation, why has the record of payment of water charges, which havebeen much lower, been so poor in the past? and what is the implication for payment in thefuture? Essentially there is a problem of perception: in so far as water has been perceived asa free good and irrigation a public service, farmers have been reluctant to contribute toupkeep of the system. The situation has been aggravated when the service has not beenefficient and water has not been available in adequate amounts when required. With thedevelopment of Water Users' Associations and the transfer of responsibility for upkeep of thedistribution system to them, the situation has improved, as witnessed by the better paymentrecord of WUA members. There is a greater sense of responsibility for the system andcorrespondingly a greater willingness to pay for its upkeep. However, experience has shownthat willingness to pay is very closely linked with the quality of the service provided and theneed for water. In these circumstances, the importance of ensuring the efficiency of theirrigation system is underlined. This requires not only better infrastructure but also trainingin improved operation and maintenance practices. It is therefore an integral part of theproject to strengthen the WUAs with a view to improving the effectiveness of servicesrendered to members, enabling enhanced recovery of costs of irrigation system operation andmaintenance and facilitating the achievement of financial viability.

19. Although payment of the water charge does not represent a significant outlay for theaverage farmer, it would not be realistic to expect that full cost recovery could be easilyachieved under the project. Given that existing recovery is about 60 - 70% of amount due inPRYN and YSURA, where the WUAs have been established for some time, and probablylower in Nizao-Valdesia, where users are only partially organized, a reasonable target mightbe cost recovery of the amount required to finance WUA operations, i.e. operation andmaintenance of the distribution network, by the third year of the project. By the end of theproject, about 80% of total 0 & M costs might be recovered under the PRYN and Nizao-Valdesia systems, but it is unlikely that more than 50% recovery of the total 0 & M costs ofYSURA could be achieved. The lower expected recovery under the YSURA system is botha reflection of the higher cost and the fact that project intervention would be lesscomprehensive than in the other two areas.

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2.5 When the agricultural sector is viewed more closely, the problems areclearly found mostly in the crop subsector. The average annual growth rates ofagricultural GDP by subsector for 1980-89 are 3.9 percent, forestry and fisheries;0.7 percent, crops; and 2.4 percent, livestock. Crops lacked dynamism especially inthe second half of the past decade; 1981-90 average growth rates for rice, maize,sorghum, and beans were close to zero or negative. Domestic agricultural policy, alack of credit, deterioration of mechanization services and irrigation systems, and anextreme drought in 1990, all contributed to this situation.

Iblmate and Soils

2.6 The climate and soils in the Dominican Republic place practically norestrictions on growing tropical and some subtropical crops. Warm temperaturesthroughout the year allow a 12-month growing season with irrigation. Although thetemperature does not vary substantially, the seasons are distinguished by variations inrainfall. The summer rainy season lasts from May/June to October/November whenthe winter dry season starts. There are very sharp differences in rainfall between thewindward and leeward sides of the four mountain ranges that cross the island. Therainiest areas are in the northeast, which is exposed to the trade winds, and in theCordillera Central (above 2,000 millimeters per year). In some southern areas,rainfall can be as low as 500 millimeters per year. This range of variations, fromhigh humidity to semi-aridity, is aggravated by the great differences in altitude.

2.7 Soil types vary widely and thus so does production potential. Soilsthat have agricultural potential (Classes I to IV) cover 20 percent of the country'sarea, and soils suitable for pasture (classes V and VI) cover another 25 percent. Theremainder (classes VII and VIII) comprises mountain areas suitable for forests (53percent) and conservation (2 percent).

Land Use and Distribution

2.8 The Dominican Republic has a total area of 4.8 million hectares, ofwhich 2.6 million hectares or 54 percent are suitable for agricultural and livestockproduction. The remaining 46 percent are marginal areas and, at best, are suitablefor forestry and conservation. Of this, large areas have been deforested or arewithout any use. Some 1.7 million hectares are under pasture and support livestockproduction, mainly beef and milk. Approximately 0.6 million hectares are undercultivation, with sugarcane, cocoa, coffee, tobacco, coconuts, and fruit treesoccupying an estimated 0.3 million hectares. About 0.3 million hectares produceseasonal crops for the domestic market, mainly rice, maize, beans', groundnut, rootand tuber crops, and tomatoes. Seasonal crops have shown a strong increase in someareas at the expense of tree crops, pasture, and forest areas. Increased irrigationmay have contributed to this trend.

ANNEX 9Page 5 of 9

limitation to planting of host crops over specified periods, was proving relatively effectiveand industries were returning to the Azua area and expecting to substantially increasecontracts for planting there in the next few years. It was therefore considered appropriate toassume that a relatively important part of the cropped area (25%) under the YSURA modelwould be planted with industrial tomatoes.

15. In the without project situation of inadequate irrigation/drainage envisaged underModel A, yields are 15% below average. With improvement to the irrigation/drainagesystem under the project, yields increase to average levels. Cropping intensity does notchange. Under Model B, yields develop to the full potential identified in the crop modelswhile cropping intensity improves by about 20% to 0.94 in Nizao-Valdesia and YSURA to0.8 in PRYN. For both models, it is assumed that the farmer's family would be in aposition to provide the majority of the labor required and that only 10% of laborrequirements would be hired. In the without project situation, current water charges prevail,whereas with the project, charges are increased to cover WUA costs in the first year andsubsequently to cover the full cost of irrigation system 0 & M.

Results

16. Appendix 1 gives the results of the financial analysis in the form of farm budgets forthe various models achieving in PY5 an averaged incremental farm income of 45% in Nizao-Valdesia, 51% in YSURA, and 72% in PRYN. They are summarized in tenns of return tofamily labor below:

Summary of mnancial Analyis Results

Returns to Family Labor(RD$/person/day)

Irrigation System Without Project Full Development % Increase

PRYNModel A 138 177 28%Model B 172 217 26%

Nizao-ValdesiaModel A 157 191 22%Model B 194 246 27%

YSURAModel A 119 145 22%Model B 150 186 24%

17. In the case of Model B, the combined impact of the increase in labor input and thefull water charge in year 2 causes a drop in return to family labor below that in the withoutproject situation. This is also due to the establishment of new plantations of banana andplantain. Once the establishment phase is over, income improves to a level significantlyabove that in the without project situation. Even in YSURA in the Model A situation, return

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2.9 Land distribution is characterized by a considerable concentration ofland holdings with large farms. Census data from 1981 indicate that almost half (49

percent) of the agricultural land is titled and held by private owner-operators, 22percent is controlled by the state, 3 percent is rented or sharecropped, and 26 percentis illegally occupied state and private land--or is under unclear status. It is estimated

that 29 percent of the total irrigated area is property of the Dominican Agrarian

Reform Institute (IAD) and the State Council for Sugar (CEA), while the remainingis private land. Titles given by IAD to farmers are temporary. This severely limits

farmers' access to credit outside the Agricultural Bank (BA) and restricts full benefits

from on-farm infrastructural investments.

C. The Irigation Subsector

2.10 The Dominican Republic is well endowed with water resources.However, the distribution of those resources is not ideal for irrigation andcultivation. Precipitation ranges from 400 to 2,500 millimeters a year, with sharpdifferences even within relatively small irrigation systems. Because of the steeprelief of the catchments, aggravated by deforestation, river flows closely followrainfall. In the dry season, river flows are low and some rivers are dry in the semi-arid zones. Prospects for expanding cultivation by developing new lands are limited,but considerable opportunities exist for intensification of irrigated agriculture and, in

particular, for better use of the existing irrigation infrastructure.

2.11 Irrigation systems began to appear in the 1920s, and the period 1930-

54 marked the greatest incorporation of areas into irrigation. The National Water

Resources Institute (INDRHI) was founded in 1965, launching a policy of regulatingthe headwaters of Dominican rivers through the construction of storage dams andmodem irrigation systems not far from urban centers. A low pace of irrigationdevelopment, however, was recorded from 1960 to 1979. During these decades the

Government developed a policy of multipurpose use of water resources byconstructing dams for power generation, irrigation, industrial and civil use. From1970, a new irrigation program was initiated mainly to develop large irrigationschemes. During the same period, investments in dams and irrigation infrastructures

averaged about 10 percent of total Government expenditures or about half of allinvestments in agriculture. Hydroelectric power plants associated with 7 storagedams have a total installed capacity of 270 megawatts, with average annualgeneration of 400 million kilowatt hours contributing 12 percent of the annualgeneration of the Dominican Corporation for Electricity.

ANNEX 9Page 4 of 9

Current Water Charge with Project

Systemn RD$ WUA only *YUA + INDRMII DistrictRDS % inc. RD$ % inc.

PRYN 313 355 13% 530 69%

Nizao-Valdesia 219 315 44% 515 135%

YSURA 181 275 52% 785 334%

11. The difference, in terms of a water charge covering the full costs of 0 & M is very

significant, particularly for YSURA. The situation with respect to the costs of the WUA for

0 & M of the distribution network alone represents a relatively modest increase. This is

most true in the case of PRYN, which bears out the impression that this WUA currently

comes closest to covering the costs of its operations.

Assumptions for Financial Analysis

12. Financial analysis has been carried out on the basis of six farm models, two for each

irrigation system. All models are two hectares each, considered to be the modal size of

holding. Cropping intensity (excluding pasture) at the outset of the project reflects current

practice and is 0.78 for YSURA and Nizao-Valdesia and 0.67 in PRYN where there are

several larger holdings which are less intensively farmed. The crop models on which the

farm models are based are those developed by the FAO/CP Preparation Mission.' For

inputs, the prices were obtained from suppliers and verified by SEA technicians working in

the project area, while those for outputs represent average farmgate prices for the period

January-October. Labor was valued at the daily wage rate prevailing in the project area ofRD$ 60/day. The prices used by the Preparation Mission have been adopted with acoefficient of 1.05 to reflect the price increase since the time of collection in January 1993.

13. For each system, farm model A represents a fanner who benefits from improvementin irrigation/drainage alone, while farm model B shows a farmer with adequate irrigationwho benefits from agricultural development on his holding. The models and their evolution

over a five year period are given in Appendix 1. In each area, the cropping pattern differs

in order to represent what is typical based on past practice and an estimate of future

prospects. There is assumed to be a slight change in the relative importance of differentcrops over the development period. The proportions of total cropped area represented by thevarious crops and the yields at different stages of development are also given in Appendix 1.

14. In the case of YSURA, particular consideration has been given to the prospects for

industrial tomatoes. While this crop has been important in the past, in recent years it hasbeen a major victim of the white fly. The mission was informed that control, in terms of

1. See Appendix 5, Annex 1, Volume 1, Report 55/93 CP-DOM 16. A minor modificationwas made to the budget for vegetables (horticolas) in order to include costs of mechanizationin the without project situation.

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Legal and Insttutonal Framework

2.12 Water Rights. In the Dominican Republic, the development and useof public water resources are subject to Law 5852, Ley del Dominio de las AguasTerrestres (Water Law). This law covers virtually every aspect both of waterdevelopment, from underground and surface sources, and end uses, whetherdomestic, industrial, or agricultural. It provides, among other things, for thecreation of irrigation districts. The law also authorizes INDRHI to grant water rightsbased on an appraisal of the adequacy of existing or planned irrigation works to usethe water effectively. INDRHI has responsibility for supervising use of the waterand ensuring that all conditions of the law are met, including measuring the amountof water used and establishing priorities for use among groups of farmers suppliedfrom a common source. Under the law, a water right is tied to the land and does notbelong to the individual who owns or farms the land. Each year, water users mustrequest a specific amount of water that can be used effectively for the purposesindicated in the water right--and this request is granted or modified by INDRHI,depending on the water supply and facilities available to satisfy such requests.INDRHI can also cancel water rights or transfer them to other lands. Uses in thepublic interest have priority over private uses.

2.13 Cost Recovery. The Water Rate Law of 1982 established that allirrigation districts were to become self-financing and recommended a 50 percentrecovery of operation and maintenance expenditures in 1984, to increase annually by10 percent through 1989. INDRHI has been having difficulties enforcing this lawbecause of the unreliability of water supplies and the slow pace of organizing wateruser associations. Water tariffs, therefore, have remained low and cost recovery isunlikely to improve significantly in areas where services to water users are poor orunusable (Table 2.1).Experience with the pilotprogram of On-FarmWater Management Tal PeetRDhatYesoWaer CareProject (PROMAF) (RDS/ha/ Year)shows, however, that, Syslem Non-rice crops Ricewhen responsibility for 10 ha > 10 ha < 10 ha > 10 haoperation andmaintenance is Nizao-Valdesia 219 438 438 876transferred to the I'SURA 180 361 361 723beneficiaries in wateruser associations, feecollection rates are much higher than before. Regarding cost recovery of irrigationinvestments, the current law enables the Government, through IAD, to acquire landfor redistribution through the cuota parte (share of land) system after irrigationcanals have been constructed. Landowners must return to the Government 50

ANNEX 9Page 3 of 9

three systems which have been used in the financial and economic analysis. The revisedcosts are indicated in the table below:

Revised Operation & Maintenance Costs(RD$/ha/year)

Organization Activity Nizao- PRYN I'SURAValdesia

INDRHI Administration 30 45 75Operation 25 25 50Maintenance 145 105 385

Total: 200 175 510

WUA Administration 45 65 40Operation 135 150 100Maintenance 135 140 135

Total: 315 355 275

TOTAL 515 530 785

9. In establishing these costs, it has been assumed that INDRHI would remainresponsible for the 0 & M of feeder/main canals, drainage and river protection works,pumping stations and service roads, while the WUA would take charge of the 0 & M of thedistribution network (mostly lateral and sub-lateral canals and structures). In the calculationof WUA costs, the work of gate keepers and labor contributed by farmers for canal cleaninghave been valued. Inefficiency of the District Offices is assumed to be overcome with areduction of 50% in staff costs compared with the present situation. The existing disparity inremuneration between Santiago (PRYN) and the other areas remains, with salaries for PRYNstaff 60% higher than those elsewhere. As the project intervention in YSURA is limited, ithas been assumed that operation activities of the District Office would not improve althoughthere would be some improvement in maintenance due to the availability of new equipment;at the WUA level, performance would be only 75 % of that of PRYN. District Office 0 &M costs for YSURA are higher than for the other two systems because of the heavymaintenance required by the extensive conveyance canal, the dense drainage network and thewells.

10. The following table provides a comparison of current water charges and thoseproposed under a with-project situation on the assumption that the revised costs would befully reflected in water charges:

-5-

percent to 80 percent of their lands included in public irrigation projects. Farmerswith holdings of less than 6.3 hectares do not pay cuota parte.

2.14 Organization of Water User Asodations Law 5852 also providesfor the formation of water user associations. In 1984, a draft regulation wasprepared for the organization of water users and their representation at all decisionmaking levels of INDRHI (national, irrigation district, zonal, sector and communalfarm turnout levels). So far, water user associations have been created only at thedistrict level in three projects (Azua, Nizao, and Santiago). To help the Governmenttransfer management to water user associations, a pilot project (PROMAF) supportedby USAID was implemented with INDRHI. Two project areas, Azua (YSURA) andSantiago (PRYN Contract I), were partially developed, covering 14,400 hectares andserving 6,000 farmers. The results have been most impressive: water use is moreefficient and fee collection rates are more than 80 percent of potential against thenationwide today of 25 percent.

Public Institutions

2.15 The Ministry of Agriculture (SEA) is nominally responsible forimplementing and coordinating the agricultural policies set out by the presidency andthe National Council for Agriculture (CNA). SEA's administrative control overdecentralized agencies it funds is limited. These include the State Sugar Council(CEA) and the National Institute for Price Stabilization (INESPRE), both of whichhave a significant effect on agriculture. The activities that SEA directly controls areprimarily technical and skill-intensive, such as agricultural research, extension,training, planning, data collection and analysis; performance of these activities isgenerally poor.

2.16 The Dominican Agrarian Reform Institute is an autonomous agencythat was established in 1962 with an endowment of 192,000 hectares expropriated bythe state. Later, other lands were expropriated and entrusted to IAD to manage; forinstance, in 1972, by law, all rice holdings larger than 500 tareas' (about 31.44hectares) were expropriated. Later, all holdings over 100 tareas, which benefittedfrom Government-financed irrigation systems, were required by law to turn over tothe Government a variable fraction of the land--50 percent if the land was cultivatedbefore irrigation and 80 percent if it was not. IAD's land reform program is todistribute land to small farmers on terms that permit most of them to become self-sufficient and productive. Performance of the land distribution program is poor,however, because of cumbersome and lengthy IAD procedures.

1. One Tarea = 0.062 Hectares

ANNEX 9Page 2 of 9

C. Financial Analysis

Scope

4. Financial analysis has been carried out at the farm level in order to determine thefinancial viability for the farmers of the proposed developments and, in particular, to assesstheir capacity to pay water charges to cover the operation and maintenance of the irrigationsystems.

Water Charges

5. In accordance with the provisions of Decree No.555 of December 1982, users ofwater for irrigation provided under INDRHI projects are required to cover the costs incurredby INDRHI to operate, maintain and administer such systems through payment of annualwater charges. The basic tariff is estimated on a per hectare basis for irrigated holdings ofless than 10 ha. Users of water for more than 10 ha pay double the basic amount for eachhectare over 10 and cultivators of rice also pay double per hectare irrigated.

6. Water charges are proposed by INDRHI and established by parliamentary decree.Although they are intended to cover the costs indicated above, in fact the amount charged hasconsistently been inadequate and the amount actually collected, ranging from 20 - 60% of theamount due, considerably less. Furthermore, the process of establishing the charges issubject to political control and consequently it is difficult to introduce increases. Currentcharges were established by Decree No. 435-9 in October 1990. For the three systemscovered under the project, the rates are given below:

System Water ChargeRD$/ha/yr

Santiago (PRYN) 313Bani (Nizao-Valdesia) 219Azua (YSURA) 181

7. Where WUAs have been established, as in PRYN and YSURA, they have been giventhe responsibility for operation and maintenance of the secondary and tertiary canals andauthorized to collect water charges to cover this cost. In these areas, no separate charge iscollected by INDRHI, although the Institution remains responsible for operation andmaintenance of the main canal. Collection, at 60 - 70% of the amount due, is considerablybetter than in areas where WUAs have not been established but the WUAs still rely onINDHRI for provision of heavy equipment and sometimes other support necessary to carryout their responsibilities.

8. Current water charges are inappropriate for two reasons: (a) they are not regularlyupdated to reflect changes in costs; and (b) actual costs do not reflect efficient operation andmaintenance expenses as they are influenced by excessive staff and inadequate facilities. Inthe context of the project and following detailed analysis of budgets of INDRHI IrrigationDistrict Offices and existing WUAs, the mission has estimated revised 0 & M costs for the

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2.17 The National Water Resources Institute, an autonomous state agencyunder SEA, is responsible for planning, development and regulation of waterresources. INDRHI was created by statute in the mid-1960s. The agency hasstatutory authority to investigate potential and proposed water resource developments,to determine availability of water, to adjudicate and allocate water betweencompeting applications, and to charge and collect fees for water use. INDRHI isdivided into four departments: Planning, Projects, Administration, and IrrigationDistricts. For field operations, the country is divided into districts, which aresubdivided into zones (and occasionally subzones) and sectors. Districts are usuallydivided on the basis of watersheds, although rivers sometimes are boundaries. Onlya small portion of the area of a district comprises irrigation systems and relatedprojects.

2.18 The Agricultural Bank was established in 1952 to support theGovernment's agricultural policy by providing the necessary financing. It ismanaged by a 7-member Board of Directors. The chief executive, who is appointedby the president of the republic, is also the director general. The Board of Directorsincludes the governor of the central bank, one representative from each of thecountry's five different administrative regions, and one from the Ministry ofAgriculture. The headquarters is in Santo Domingo and there are 31 branchesthroughout the country. BA is lending mainly to small farmers who cannot obtaincommercial banking credit for reasons of collateral, creditworthiness, and distancefrom bank locations. Of about 104,000 loans that BA had outstanding in 1990, about65,000 (62 percent) averaged US$600; an additional 17,000 (16 percent) averagedUS$1,000. A large part of these small farmers are beneficiaries of the agrarianreform and, as such, have access to BA credit without providing collateral. By law,these agrarian reform loans are guaranteed by the state, which reimburses BA for theunpaid portfolio; it does so very irregularly and with considerable delay, straining onBA's resource availability.

ANNEX 9Page 1 of 9

DOMINICAN REPUBLIC


financial and Economic Analysis

A. Introduction

1. Financial and economic analysis has been undertaken for the major part of the projectwhich is concerned with the development of irrigated areas. The analysis does not cover thewatershed management component as the activities proposed at this stage are essentiallyexperimental in nature, intended to provide guidance for more extensive development in thefuture.

B. Target Population

2. It is estimated that there are about 10,300 farmers under the three irrigation systemsinvolved in the project distributed as follows:

Irrigation Scheme No.of Farmers

PRYN 2,015YSURA 4,800Nizao-Valdesia 3,500

The figures for PRYN and YSURA are up-to-date and may be considered accurate asthey refer to members of the Water Users' Associations (WUA). The number of farmersunder the Nizao-Valdesia scheme is more difficult to determine precisely as users have beenorganized in only 3 of the 8 sections, and the number of users in the 3 organized sections isabout 1,260 farmers.

3. In the PRYN area, 48% of farmers are beneficiaries of land reform and account forabout 30% of the land under the scheme. In YSURA, practically all holdings weredistributed as a result of land reform. There are only two settlements of land reformbeneficiaries under the Nizao-Valdesia scheme. Holdings of land reform beneficiariesaverage about 1.5 ha. Because of the significant presence of private landowners in thePRYN and Nizao-Valdesia schemes, there is more variation in land holding size in theseareas, although not all private landowners are large farmers. Even outside the land reformsettlements, not all farmers have title to the land they farm, often as a result of disputes overinheritance.

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3. DEVELOPMENT POTENTIL AND CONSTRAINTS

A. Potential

3.1 Temperatures are conducive to year-round crop growth. And totalaverage precipitation in many areas of the Dominican Republic (Santiago, forexample) may appear to be satisfactory for rainfed crop production, reaching 1,000millimeters per year. But the irregularity of the rainfall pattern and highevapotranspiration rates most commonly produce high risk for rainfed cropproduction. Thus high-input crops, such as tomatoes for processing, face specialconstraints. Typically, areas with average precipitation of 6,000 millimeters/year to1,000 millimeters/year are still classified as having an arid climate. A 1978 studyestimated the country's irrigation potential at 550,000 hectares which would require43 percent of the total annual flow.2 This potential is considered overoptimistic,even unrealistic, however, as it is based on assumed irrigation efficiencies of 50 to60 percent--85 to 90 percent for the conveyance and distribution systems and 60 to65 percent for on-farm efficiency. Irrigated area today is believed to total 230,000hectares. This area has considerable potential given the near proximity of a largeexport and import substitution market.

B. Current rrigation Water Manag t

3.2 The most pressing problem, in all regions in the country but especiallyin irrigated areas, is poor management of existing resources, as reflected by a verylow overall irrigation efficiency, of about 25 percent in the Dominican Republic.This is attributed to the relative abundance of water supplies; in some areas, thefarmer has little incentive to manage water efficiently. Lack of properly designedand constructed primary and secondary canals and of adequate water control,measurement structures, and sufficient farm turnout devices are also key. In most ofthe country's irrigation systems little attention has been paid to minor canals, watermanagement, and on-farm development, which has resulted in low field efficiencies.Similarly, there is insufficient main drainage infrastructure to provide drainageoutlets to all farm units. As a result, about 20 to 25 percent of the land in theirrigation systems suffers from waterlogging, salinity, and high water tables. Otherdeficiencies include poor condition of the irrigation systems, including silted canal

2. INDRHI, 1978: Plan Nacional de Investigaci6n, Aprovechamiento y Control deAguas Subterrdneas (PLANIACAS).

ANNEX 8Page 6 of 6

and implementation and management of adaptive research in the field as well as practicalexperience in technology transfer. Experience with participatory approach would be a strongadvantage. The Research Specialist would speak and write fluent Spanish.

19. Duration of Contract. The assignment would be for 2 months in PY1, then 1month each year during the last four years of project implementation.

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and drains, inoperative gates, and the siltation of regulating and--to a lesser extent--storage reservoirs 3

3.3 Other factors that contribute to the inefficient use of irrigation systemsare the problems in the layout of on-farm irrigation canals because of the incompleteor outdated cadastral maps of the irrigated areas; the poorly developed agriculturalproduction plans and cropping patterns, which are not based on available waterresources in the storage reservoirs at the beginning of each dry season; insufficientknowledge by INDRHI and water user associations of the actual crop coverage; and alack of operational manuals. In addition, irrigation requirements are not calculatedon the basis of crop needs and actual rainfall, but are estimates. Water is deliveredon demand when there is no scarcity and on a rotational basis at other times todifferent farmers, usually without strict time limits. There is no irrigation at nightand on Sundays.

3.4 As a result of system deficiencies and a past mobility to adjust tovariations in demand, large volumes of water are lost to the drains or to the farms atnight and during the rainy season--and substantial areas are affected by waterloggingand salinization.

C. Agriuural Deveopment

3.5 As noted above, agriculture in the Dominican Republic is characterizedby a dualistic system of large and small holdings (para. 2.9). The coexistence ofextensively operated large farms and many smallholders producing mainly forsubsistence constrains technological development, appropriate use of resources, andincreases in productivity. The levels of agricultural technology vary by region, crop,and fann type, but remain generally low. Intensive use of modern production inputsis limited to sugarcane, rice, tobacco, and some vegetables. Reliable data on areasplanted to rainfed or irrigated seasonal crops and agroeconomic comparisons betweenthe two farming systems are lacking. In general, the low productivity of crops in theDominican Republic can be traced to weak research and extension services; lowcropping intensity; inefficient management of farms, particularly those producinglivestock and permanent crops; high cost of inputs; and land tenure and the relatedlimited access to formal credit. In addition, poor water management, low irrigationefficiency and the problems of waterlogging and salinity associated with irrigation

3. Development Strategies for Fragile Lands. 1990. Evaluation of the on-farm watermanagement project in the Dominican Republic. USAID contract no. DHR - 5439-C-19-6054-00.

4. World Bank. 1986. Dominican Republic - Agricultural Sector Study Report no.6267-DO.

ANNEX 8Page 5 of 6

provide on-the-job training in watershed management, as well as help establish the format andtrend of watershed planning during the initial years of project implementation.

12. Scope of Work. Working closely with ADESJO, the specialist would assistproject staff to formulate work plans to guide watershed management planning andimplementation in the Nizao watershed area following the guidelines and concepts presented inAnnex 5. With the project team, the incumbent would assist to assemble baseline data includingmaps, aerial photos, statistical output data, land-use data, climatic data, streamflow and sedimentdischarge data, etc. In addition, he will participate in the definition of research programs andin the preparation and setting-up of an Environmental Monitoring system.

13. Qualification and other Experience. The incumbent would be DR national andwould hold a degree in either watershed management, agricultural science, or forestry. Hewould possess at least 10 years of experience in soil and water resource management. Inaddition, he would be versed in each of the following teclhical skills:

(a) Computer literate in word processing and use of standard spreadsheets;

(b) Soil sampling, soil survey, land use capability, and soil classification;

(c) Soil loss and run-off estimation procedures including for non-agricultural lands;

(d) Participatory land management procedures;

(e) Soil and water conservation;

(f) Mapping skills, aerial photos interpretation.

14. Place of Duty. San Jose de Ocoa.

15. Duration of Contract. 5 years.

Participatory Research Specialist

16. Duties. The Participatory Research Specialist would work with the PEU and thewatershed specialist to establish a Participatory Research and Development Grants Scheme aspresented in Annex 6.

17. Scope of Work. The Research Specialist would prepare detailed technical biddingdocuments for the four major PR&D contracts. In the course of project implementation he/shewould advise the PR&D-GB in preparing standard format for RD&D proposals and in reviewingthe technical proposals as well as their costing.

18. Qualification and Experience. The Research Specialist would be internationallyrecruited and would have agricultural qualifications and post graduate training in rainfed andirrigated crop production. He/she will have more than 10 years field experience in the planning

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also contribute to low productivity. An increase in crop productivity and moreefficient land use depend on the removal of these constraints. The Government hasinitiated development projects aimed at increasing the productivity of some exportcrops, such as coffee and cocoa, but insufficient attention has been given to other

crops.

3.6 Major potential for increasing production lies in improved use ofirrigation facilities, which would allow the present cropping intensity--about 80percent--to be increased to 130 to 140 percent. As mentioned earlier, efficientfunctioning of the existing irrigation system is constrained by institutional, financial,and system design issues of INDRHI and water user associations.

D. Environmental Constraints

Drainage and Salinization

3.7 Most irrigable land in the Dominican Republic is in the 3 large riftvalleys that lie between the island's 4 mountain ranges. The topography of theirrigable areas varies from moderately hilly and undulating to uniformly flat. Slopesof 2 to 5 percent and the many streams allow good surface drainage of gently slopingland. However, incomplete irrigation infrastructure and over-irrigation has produceddrainage problems in low-lying areas. As a result, the permanent waterlogging ofsome plots has created a "water-bridge" between the saline water table and the toplayers of the soil. Little research has been done on this issue. Another problem isthe potential threat of saline intrusion in coastal aquifers. This is most likely tooccur where storage for hydroelectricity or consumptive use of water for irrigation inthe dry season reduce flows near river mouths or estuaries so much that groundwater recharge cannot prevent the advance of seawater. There has been no indicationthat this process is under way in the southwest or northwest, which would affect thequality of water available to the increasing population at beach resorts and othercoastal towns. Nevertheless, the prospect cannot be ignored in view of likelyincreased demands for water for irrigation, industrial production, and domesticconsumption. There is only limited information on the behavior of aquifers (coastalor inland) with which to estimate the probability of saline intrusion and designremedial or preventive measures. The proposed project would require thatinvestments for such areas address this issue as part of the environmental monitoring.

Degradation of Natural Resources

3.8 Deforestation, combined with inappropriate agricultural use ofmountain and hill areas, has intensified soil erosion, which in some areas hasirreversibly damaged the soil's productive capacity. Soil erosion has causedexcessive sedimentation in riverbeds, storage dams, and irrigation canals. The loss

ANNEX 8Page 4 of 6

6. Job descriptions for the T.A. specialists, Economist/MIS/Monitoring Specialist,Watershed Management Specialist, and Participatory Research Specialist would be as describedbelow:

Economist/MIS/Monitoring Specialist

7. Duties. The internationally recruited specialist would be required assist hiscounterpart in PEU to develop practical Management Information Systems/EnvironmentalMonitoring System and to devise a program for monitoring project activities in the irrigatedareas as well as in the Nizao watershed.

8. Scope of Work. The specialist would work closely with PEU personnel andWUAs and ADESJO staff. He/she would devise systems and source for the collection andanalysis of technical and financial parameters of project activities. During projectimplementation, in the irrigated areas, the data base so created would be continuously updatedso that each WUA would be in a better position to manage carefully the use of lands and ofirrigation water, as well as the cash-flow of the different farm models. In the Nizao watershed,the data base would be used to accurately review the MC development plans as low cost,technically and economically viable. The tools and approach to the participatory approach toMC management would be constantly under review and the MIS would assist management todevise ever more transparent means of explanation of options, in the smooth planning andimnplementation, with modifications, if appropriate. Both in irrigated areas and in the watershedarea, the specialist would propose key socioeconomic indicators of project impact (qualitativeand quantitative).

9. Qualifications and Experience. The Economist/MIS/Monitoring specialist wouldhold a degree in agricultural economics and relevant experience extending over at least ten years.He/she would demonstrate ability to work with multi-disciplinary teams and competence to setup operational procedures. Technical skills would include:

(a) computer literacy with experience in setting up large database systems, usingspreadsheets and word processing;

(b) micro project planning and economic and financial feasibility analysis;

(c) knowledge of farm survey participatory approach and systems.

Fluency in Spanish. Experience of working in the irrigated areas and/orwatershed areas would be an advantage.

10. Duration of Contract. 3 months during PYL.

Watershed ant Specialist

11. Duties. The Watershed Management Specialist would work closely with theProject Executing Unit, technical staff of ADESJO, and farming communities representativesto develop management plans for priority microcatchments. In so doing, the incumbent would

- 10 -

of vegetative cover has reduced water retention capacity in the catchment areas,producing irregular water flows and flooding, and has reportedly led to the drying upof hundreds of small rivers and streams. In addition, the useful life of hydraulicinfrastructre such as storage and re-regulating reservoirs is shortened.

3.9 Little has been done to address the deforestation and inappropriate useof mountain slopes which cause the erosion. Preliminary experience with the PlanSierra (Sierra Plan) and a few projects of the General Forestry Directorate and theMinistry of Agriculture suggests that responsibility for soil and water conservationand management of forest areas are dispersed among various government institutionswith overlapping activities and conflicting objectives. Moreover, land rights andregulations on land use are not clear. Thus, where an individual settler occupiesstate land, neither the individual nor the state is willing to invest in the land, eventhrough tree planting. Private sector involvement generally is constrained by a lackof clear rules about land to be used for forests and uncertainty about future changesin regulations. All these issues would be addressed on a pilot basis through theproposed project.

ANNEX 8Page 3 of 6

* project objectives and participatory MC planning;* study trips to demonstrations and treatment sites;* forest land management treatments;* agroforestry management treatments;* rainfed and irrigated farming techniques;* village responsibilities in the management of community lands.

Detailed training programs would be worked out with the help of the technicalteam and the sociologist/training specialist recruited for reinforcing the team of ADESJO.

Technical Assistance

5. In order to help upgrade technical skills and develop managerial capabilities at thelevel of each WUAs and ADESJO, the project envisages Technical Assistance (TA). TA isidentified as being both national and international and recruitment would be carried outaccordingly.

Technical Assistance Pi, I PY2 PY3 PY4 PY5

Short-Term T.A. (month)

Economist/MIS/Monitoring 3 -

Specialist

Accountant 3 1

Legal Expert 1 -

Procurement Specialist 2

Research Specialist 2 1 1 1 1

Long-Term T.A. (year)

Project Coordinator 1 1 1 1 1

Watershed Management 1 1 1 1 1Specialist l

Civil Engineer 1 1 1 1 1

Water Management Expert 1 1 1

Agriculturalist 1 1 1 1 1

Monitoring Specialist 1 1 1 1 1

Administrator 1 1 1 1 1

Accountant 1 1 1 1 1

Computer Specialist 1

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4. BANK INVOLVEMENT AND LESSONS LEARNED

A. Bankwide Lending for Irrigation and Drainage

4.1 Irrigation and drainage projects account for about one-third of Banklending to agriculture. Although Bank-supported investments in irrigation anddrainage have been generally beneficial, there is growing concern about the quality ofsome of the projects. The overall operational performance has been poorer thanexpected and the sustainability of many investments is uncertain. Recurring issuesinclude the effectiveness of large-scale, public sector, gravity irrigation systems asopposed to largely private-sector irrigation development; the proportion of projectsnot completed, especially under program or time-slice approaches; poor preparationand design of schemes; overestimation of irrigation system efficiency; substandardconstruction quality; the low level of cost recovery; and the role of major commodityprice shifts. The physical infrastructure has often deteriorated, leading in some casesto long-term declines in production and low efficiency in water use. Inadequateoperation and maintenance funding and institutional and organizational problems havecontributed to this shortfall in performance. Borrowers often disengaged too earlyfrom projects, leaving irrigation and drainage systems incomplete and landdevelopment unfinished, with complementary services inadequate or seriouslydelayed.5 In addition, some Bank-financed projects suffer from underestimated costsbecause of inadequate engineering designs, preparing tender documents, and bids;slower-than-estimated civil works construction and equipment delivery times; andlower-than-estimated water use efficiencies.'

4.2 Poor design of the system has also contributed to a poor cost-recoveryrecord in Bank-financed irrigation projects. In most cases, no capital costs wererecovered, and in two-thirds of the Bankwide projects reviewed, the covenantrequiring that cost recovery fully satisfy operation and maintenance funding had notbeen met, with the proportion of operation and maintenance costs recovered generallyreaching only a range of 15 to 45 percent. In addition to an unreliable water supplyresulting from poor design and poor operation and maintenance, the two other factorsin weak cost recovery are the often heavy burden of direct and indirect taxes alreadyimposed by governments on farming and a lack of government commitment torecover costs.7

5. Evaluation Results for 1989, Operations Evaluation Department (OED).

6. Annual Review of Evaluation Results for 1989 - Agriculture and RuralDevelopment, OED.

7. World Bank Lending Conditionality: A Review of Cost Recovery in IrrigationProjects, OED, OPS No. 6283, June 1, 1986.

ANNEX 8Page 2 of 6

3. Farmer Training. The content of any training would dependon the training received by the extension staff and the findings of theparticipatory research. Allowance has been made in the costs for a certainnumber of days per year for training in production techniques and watermanagement, and also for field days and visits to research stations orexperimental farms. Provision has also been made for the establishment of ademonstration plot in each sector at a cost of RD$5,000/plot/year. The costsfor the different types of training and the number per year per system areabout DR$60 per participant for training in production techniques and watermanagement, DR$20 for field days, and DR$10 for visits.

Numbers of Participants

Course/Systen PYI PY2 PY3 PV4 PY5S

Productiontechniques

Nizao 700 1000 1000 1000 1000

PRYN 400 600 600 600 600

YSURA 950 1500 1500 1500 1500

WaterManagement

Nizao 700 1000 1000 1000 1000

PRYN 400 600 600 600 600

YSURA 950 1500 1500 1500 1500

Fleld Days

Nizao 1000 2000 3000 3000 a 3000

PRYN 500 1000 1500 1500 1500

YSURA 1000 2500 3500 3500 3500

Visits

Nizao 500 1000 1500 1500 1500

PRYN 400 800 1200 1200 1200

YSURA 800 1500 2500 2500 2500

4. Training in the Nizao watershed will be done following the guidelines describedin Annex 5. Throughout project implementation, the microcatchment planning process willintroduce project objectives, the participatory mode of operation, the technical treatment optionsand their estimated effect on production, the local responsibilities for management of communitylands and the cost sharing arrangements to the concerned villagers. This can be done throughvisits to sites where different demonstration treatments have been implemented. The trainingwould in summary cover the following topics:

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B. Lending to Agriculture in Latin America and the Caribbean

4.3 From recent Bank experience lending to agriculture in the LatinAmerica and the Caribbean Region, several factors have been identified ascontributing to poor project performance: lack of a supportive policy environment;inadequate counterpart funding; weak implementation institutions in the sector; overlycomplex design; and technical shortcomings in preparing and appraising projects.The institutional weakness suggests that the size and complexity should be largelydetermined by the demonstrated implementing and funding capacity--andcommitment--of the agencies involved. For irrigation projects, the failure toadequately involve proposed beneficiaries in project design and implementation isalso seen as a major cause of unsatisfactory performance. The result is overlyoptimistic assumptions about efficiency and productivity increases.

C. World Bank Involvement in the Dominican Republic

4.4 The Dominican Republic experience shows more than a decade ofcheckered relationships between the Government and the Bank. The Bank lent onlyUS$86 million to the Dominican Republic between 1969 and 1978. The relativelysmall amount loaned was mainly a result of the Government's lack of clearinvestment priorities, inadequate project preparation capacity, reluctance to addresssectoral issues in the context of project financing, and extremely conservative policiesregarding external borrowing. Moreover, project implementation performance wasdisappointing and disbursements were slow, while poor management of the publicinvestment program and public finances led to a perennial shortage of counterpartfunds. At the end of the 1970s, a spurt increased Bank lending to US$172 million.Between 1982 and 1986, total Bank lending was only US$66.6 million, 46 percent ofwhich was canceled for similar reasons as in 1969-78.

4.5 The progress of the Government's New Economic Policy has beenencouraging (para. 2.3). Inflation has been dramatically reduced and internationalreserves accumulated. All targets under the first Stand-by Arrangement with theIMF agreed to in August 1991 were met. A Paris Club rescheduling was achieved inNovember 1991 and most of the corresponding bilateral settlements have beencompleted. All arrears to multilateral creditors were eliminated early in 1991, andthe Government has serviced its debt to them on time since then. A second Stand-byAgreement was approved in July 1993. These recent improvements in economicmanagement give the Bank an opportunity to assist the country's developmentthrough an increase in conventional investment lending.

4.6 The Bank has made five agricultural credits or loans to the DominicanRepublic in the past two decades, totaling some US$104 million. Two of them wereirrigation projects--a US$13.0 million IDA credit for the Yaque del Norte Irrigation

ANNEX 8Page 1 of 6

DOMINICAN REPUBLIC


Traning and Technical A 2iEanc

1. There is good technical experience within INDRHI inconstruction of irrigation infrastructure, however experience in water andirrigated land management, as well as watershed management is limited. Akey feature of successful irrigated land and watershed management is theclose involvement of the people who use the resources in question. Unlessthe program responds to their priorities and requirements and brings quickand substantial benefits, the improvements are unlikely to be sustained. Thiskind of "participatory" or "interactive" planning is to a large extent new inthe Dominican Republic. ADESJO, the NGO working in the Ocoa area, isone of the few organization with some experience in this domain. Moreover,some gaps have been identified in the areas of financial management,monitoring information system, and management of research and extensionprograms. The training and technical assistance component of the project isdesigned to overcome these gaps in the domestic experience and to upgradethe technical skill of farmers and technical staff in the selected areas who willbe involved in project execution. Recruitment of staff will be done on acontractual basis to give better leverage to the users to monitor and controlthe contracted services.

Traning

2. Staff Training:

(a) Communications. This is the training in extensionmethodology with the interactive process that would be carriedout by ADESJO. Extension staff from the WUAs would go toSan Jose de Ocoa for 6 days each year. The cost per person isestimated on the basis of DR$200/day plus DR$100 formaterials.

(b) Technical. For extension staff from the WUAs, trainingwould be provided by the contracted specialized institutions fortechnology generation and transfer. 10 days per year at a costof DR$200/day.

(c) Study trips to other WUAs. For extension staff to meet andexchange experiences. One day per trimester at a cost ofDR$100/day.

- 13 -

Project, approved in 1973, and a US$27.0 million Bank loan for the Nizao IrrigationProject, approved in 1979. The others were livestock development, cocoa and coffeedevelopment, and sugar rehabilitation projects. For the two irrigation loans that havebeen evaluated by OED ERRs as calculated by OED have been much lower than inthe respective SAR or PCR. Three lessons are relevant. First, given theinstitutional weakness of public agencies in the agricultural sector, sustainability forirrigated farming development requires the involvement of the private sector.Second, some institutional support is, nevertheless, required for public institutions toensure adequate monitoring, coherent policies, and a long-term investment strategy.Third, implementation of rural development requires a participatory approach. Thisasks for a starting phase of group management training for the farming community todesign and agree on needed investments and rules for managing the land in a holisticand sustainable manner.

5. PROPOSED STRATEGY, DESIGN, AND RATIONALEFOR BANK INVOLVEMENT

A. The Government Strategy in Irrigation

5.1 Agriculture accounts for 17 percent of GDP and more than 70 percentof the country's earnings from merchandise exports. The Government has investedheavily in the sector. Investments in dams and irrigation canals averaged about 10percent of total Government expenditures on capital formation in the last decade orabout half of all investments in agriculture. Little attention has been paid, however,to infrastructure maintenance, on-farm development, water management, and thedevelopment of productive support services. The proposed project reflects the shiftof emphasis from capital-intensive projects to projects that will generate quick returnsand will not rely too heavily on the public sector. With the liberalization of pricesand the transfer of the marketing of most crops to the private sector, the fullexploitation of partially developed irrigation potential offers the best and quickestmeans to increase agricultural production and incomes.

5.2 The Dominican Government has decided to increase investment in theirrigation subsector in order to sustain agricultural and export growth, protectsignificant existing investments in irrigation infrastructure, increase the productivecapacity of small farmers in poor rural areas, and produce the environmentallysustainable systems. Toward this end, the Government has taken several actions tofix the problems of the irrigation sector. The Government is now implementing aprogram to increase water charges, so that the irrigation districts become financiallyself-sufficient, and to transfer the responsibility of operation and maintenance to the

- 14 -

beneficiaries. INDRHI's investment program includes three categories: newprojects, involving irrigation and multi-purpose use; rehabilitation and improvementprojects, including structures missing or in need of repair, to cover about 150,000hectares; and completion projects, to finish up several irrigation systems served byexisting storage dams. The proposed project is one of six priority projects economy-wide for which the Government has sought support from the internationalcommunity.

B. Rationale for Bank Involvement

5.3 The Bank has had a limited lending program in the country, with fewsuccessful projects. There are currently no Bank-financed agricultural projects underimplementation in the Dominican Republic. There is a need to rebuild credibilityand mutual confidence between the Bank and the Government. In this context, theBank has renewed its attempts to develop a policy dialogue in agriculture through in-depth sector work to identify additional measures that can be taken to help theagricultural sector fully benefit from the macro reforms. The proposed projectprovides an opportunity to complement this sector work through limited participationin a project which can achieve useful results without having to tackle issues sector-wide. It builds on a dual lesson from the past: the need for strong Governmentownership and as much private-sector participation as possible--based on a carefulassessment of the risks. This is preferable to relying on weak Governmentinstitutions.

5.4 The main reasons for Bank participation in the project have alreadybeen described above. Irrigation is the major area of focus of Government inagriculture at present. The successful pilot operation (PROMAF) aims to transferresponsibility for operation and maintenance to the beneficiaries organized in wateruser associations. Through the proposed project, the Bank will be able to play a keyrole in helping Government to strengthen and reorient supporting activities--extension, watershed management, cost recovery, the transfer of full responsibilityfor operation and maintenance to farmer groups, approaches to sustainablemanagement by water users, land titling, and defining of the roles of the public andprivate sectors. The Bank has extensive experience in Latin America and elsewherein all these issues.

5.5 The proposed project is consistent with the objectives enunciated in theCountry Assistance Strategy that accompanies this Report, of broadening the benefitsof economic growth and promoting sustainable natural resource use. The project isalso consistent with the Bank lending strategy in agriculture in the DominicanRepublic and the full commitment of the Government to do three things: formulateand implement a rational long-term strategy and policies for irrigation development,complementing the initial steps to be taken under the proposed project; strengthen the

ANNEX 7

DOMINICAN REPUBLIC


Iriation I rastructure Components

Nizao-Valdesia PRYN I YSURA'

Related Areas (ha)Gross 10,000 5,500 7,500Net irrigable 8,500 4,650 6,300

Conveyance and Distribution- Rehabilitation and Completion

of canals (kIn) 55 -

- Construction of elevated canals/canalettis (km) 20

- Repairing, replacement ofgates (nb) - 32

- Lateral water intake (nb) 30 -

- Water intake civil works (nb) 845- Junction and Escape civil works (nb) 20 11 -

Drainage and canal protection- Rehabilitation of existing drains (km) - 42 37- Construction of new main drains (km) - - 31- Installation of drain pipes (Iam) - - 13- Main canal ditch protection (nb) - 2

On-farm civil works- Underground pipe drains (Iam) - - 150- Land levelling (net ha) 650 3,400 3,200

Heavy Equipment for O&M- Dredger - 1 1- Back digger 1 1 1-Grader 1 1 1- Pick-up 1 1 1

1. excluding the eastern part of Rio Jura (about 30% of the total area)

- 15 -

institutional framework, allowing the public sector to play a stronger role inpromoting private sector participation for a more efficient and flexible use ofirrigated areas in a sustainable manner; and alleviate land titling constraints. It isalso consistent with the 1990 World Bank Agricultural Sector Review, whichemphasized the need to promote private sector participation in rehabilitation andmodernization and selected expansion of the irrigated area. Bank involvement wouldhelp strengthen the capacities of the private sector, improve the allocation of publicinvestment, and provide support for improved natural resource management andenvironmental impact assessment in the subsector.

C. Project Design and Strategy

5.6 The strategy for promoting improved irrigation management anddevelopment and the design of the proposed project incorporate lessons learned fromprojects in the Dominican Republic and Latin America and the Caribbean, as well asthe more general lessons from wider Bank lending in irrigation. These relateparticularly to the need to improve the operational performance and the sustainabilityof irrigation projects. The project has been kept small in scope and as simple aspossible to test the implementation capacity of the executing agency and thesubcontracted organizations--and to ensure it would be implemented adequatelyduring the relatively short time of 5 years. If implementation goes smoothly, a quickfollow-up project with larger scope and scale is envisaged.

5.7 The proposed project would be the third Bank-financed irrigationinvestment in the Dominican Republic. It differs from the previous projects in that itwould focus on private user associations. It is designed to support beneficiaryparticipation in irrigation development as a mean of avoiding many of the pitfallsassociated with large-scale public irrigation schemes. In addition, the proposedproject would be innovative by addressing sustainable development andenvironmental issues in the Nizao watershed holistically. So, it should be considerednot only as an irrigation project but as an Irrigated Land and Watershed Managementproject.

5.8 The project would include a relatively large investment program toimprove water management of the overall main and distribution irrigation system, aswell as leveling and drainage in the 3 selected irrigated areas--Nizao-Valdesia,YSURA, and PRYN1. In addition, a pilot program in the Nizao watershed woulddevelop and test methodologies for the protection and sustainable agriculturaldevelopment of the upper part of the Nizao river basin. The different water userassociations and farming community associations have been extensively consulted inproject design and played an active role in project preparation. During projectpreparation, a participatory rural assessment was made by a national team led by arural sociologist.

- 16 -

5.9 During implementation, farmer approval would be required forproposed investments and for proposed institutional strengthening programs for theiruser organizations. Further, to ensure that investments do not subsidize and promoteinadequate operation and maintenance practiced by private users, agreements withbeneficiaries would specify standards for operation and maintenance and remedies fornoncompliance. There is little or no discriminatory taxation of agriculture. Theproject would help water user associations set overall parameters for cost recoveryand implement a creditable system for collection.

5.10 Last, the project design includes components for agricultural andinstitutional development of water user associations and watershed farmerassociations. Agricultural support services would be contracted to specialized privateorganizations by establishing a competitive system for allocating funds for technologygeneration and transfer--participatory research and development--based on clear,precise eligibility criteria (Annex 6). For Nizao watershed management, 5 microcatchments have been selected, which represent the major farming systems of theregion; models of micro catchment management would be developed that could beextrapolated to the whole Nizao river basin. Because of the project's limitedobjectives, it will not deal with problems of the agricultural credit system. Mostfarmers in the project area are small farmers. Most of the required inputs andexisting technologies are modular and can be adopted gradually, so little capitalwould be needed initially. Project support would be limited to providing assistancefor the preparation of necessary credit documentation and the organization andtraining of farmers' groups of mutual guarantee.

5.11 Beyond the rehabilitation and completion of the three selectedirrigation schemes, the project and the proposed Bank-supported agricultural sectorwork would help with development of a long-term strategy for subsectoral irrigation.The strategy likely will include more clearly defining roles of the public and privatesectors and setting up a participatory approach for sustainable management by theusers of existing irrigated areas. For the Nizao watershed management pilotprogram, the main findings of the project would be analyzed during a workshop thatwould be organized in the fourth year of project implementation. The workshopwould develop a national strategy for natural resources management.

Participatory Research and DevelopmentDetailed Cost

(US$ 000)

Commercial I Watershed| nCrops Irrigated Management,

Technological Land Mtapping andCost Packages Management IPM ENMS Total

Equipment 27,000 146,250 50,000 3,000 226,250

Vehicles: 52,500 52,500 35,000 65,000 205,0004WD bicab (x3) (x3) (x2) (x4) (x12)Motocycle (x3) (x3) (x3) (x2) (xlI )

Demonstration Plots 7,000 149,200 7,000 7,000 170,200

Contract EMS l 198,000 198,000

Contract Mapping r 57,720 57,720

Personnel Expenses 858,850 865,750 218,700 218,700 2,162,000

Operating Costs 598,325 102,749 92,650 92,650 886,374

Vehicle O&M 65,625 65,625 43,750 68,125 243,125OQ

Training Expenses 107,500 161,300 50,000 10,000 328,800 ! w

l I IIIITOTAL I 1,716,800 1,543,374 497,100 720,195 4,477,469 o

- 17 -

6. THE PROJECr

A. Project Objectives

6.1 The project's main objective is to improve small-farner income in theselected areas and to test and develop methodologies that can be replicatednationwide both for efficient production support services, water management, andoperation and maintenance of irrigation systems and for sustainable andenvironmentally sound watershed management. The criteria for selection of the threeirrigation areas were based on agronomic and economic potential as well as thestrength of local water users' associations, which are key project beneficiaries andimplementing agencies. The project will also rehabilitate and improve existingirrigation systems and strengthen user associations for the development andmanagement of the selected irrigated areas and the Nizao watershed. The Nizaowatershed was chosen because of its importance to downstream hydroelectric andirrigation facilities, and because of the existence of a strong, local NGO that willplay a key role in mobilizing community participation in the Project. Last, theproject should help reduce the fiscal cost of irrigation schemes to the Governmentthrough appropriate cost-recovery policies.

B. Project Components

6.2 The project would have several activities related to irrigated land andwatershed management. First, it would include investment in rehabilitation andimprovement of irrigation and drainage infrastructure and leveling. Second isprovision of grants to communities in the Nizao watershed to promote improvedmicrocatchment management treatments including farming practices and soil andwater conservation measures. A third activity is to promote agricultural developmentby strengthening support services--technology generation and transfer, extension, andsavings and credit cooperative services to ease access to credit for farmer groups--primarily through contractual arrangements between users and private firms andNGOs. A fourth activity is institutional development for the strengthening of userassociations in the selected areas and of INDRHI through a technical assistance team.The project would also provide for technical studies for the detailed design ofrehabilitation and completion of irrigation and drainage infrastructure and for thedesign of water control devices. Sixth, the project would address development of amanagement information system and the setting up within INDRHI of a unit formonitoring and evaluation, including environmental monitoring. Project financewould be mainly for civil works, training, technical studies, and technical assistancefor producer organizations and INDRHI.

6.3 Land titling is critical, because it enables farmers in the DominicanRepublic to gain access to credit and thus provides farmers an incentive to invest in

ANNEX 6Page 4 of 5

Criteria for Allocating Funds for PR&D Projects

Selection Criteria | Points Qualification concepts

1. No Negative Environ Yes/No * Environmental Assessment of proposed-mental Impact technology

2. Farmers' Interest 50 * Rapid Rural Diagnosis*Farmers' participation

3. Economic Importance 30 * Ranking of main crops (Quantity andof: Value)a) existing crops * National and/or International marketb) new crops potential

4. Short/Medium term 20 * status of existing technologies;expected results and * extent of validation trials required;impact * yield increase and/or production cost

decrease

5. Regional priority 10 * Regional/National ResearchI ____________________ ___________ Development Plan

6. Institutional Capacity 10 * Experience with past and/or on-goingresearch projects in the proposedresearch area;

* National/Regional facilities;* Linkages with related National/Regional

/International Research Institutions

- 18 -

their land. The project would specifically address land titling through the financingof additional equipment, vehicles and technical assistance to accelerate the titledistribution program in the project areas. To ensure that titling problems would notlimit agricultural development in project areas, a condition of disbursement forinvestment in irrigation infrastructure in the respective irrigated areas would be thatINDRHI have submitted to the land courts (Tribunales de Tierra) the documentationrequired to initiate the appropriate legal actions for the award of final land titles to atleast 80% of farmers living in each of the project areas (para. 10.2(b)). Althoughland values in the Nizao watershed are much less attractive than in irrigated areas,the Government during negotiations agreed that a land title distribution program forthe watershed would be completed during project implementation (para. 10.3(f)).This is to ensure adequate farm land management through labor-intensive investmentsin required soil protection measures. For community land management, prior tonegotiations the Government agreed that community land management responsibilitywould be given to farmer associations at the village level for soil protection measuresand for planting and exploiting trees.

C. Detailed Project Features

Irrigtion Infrastructure (UJS$11.8 million, 36.8 percent of total base cost)

6.4 Under this component, the project would finance rehabilitation,completion and modernization of existing schemes, land-leveling and drainage inNizao-Valdesia, YSURA, and PRYNI.

6.5 Civil Works. The following is a summary description of theenvisaged infrastructure operations (Annex 7).

* Completion or rehabilitation of irrigation distribution systems.The project would complete the existing distribution systems in Nizao-Valdesia (55 kilometers of secondary and tertiary canals) and inPRYN1 (20 kilometers of elevated canals or canalettis).

* Upgrading of main canals and control structure. To facilitateoperation and maintenance operations, reduce water losses, andimprove flexibility in water distribution, the project would repair andupgrade the main canals and control structures in Nizao-Valdesia andPRYN1.

* Completion or rehabiliation of surface drainage and land leveling.The project would improve the surface drainage systems on anaggregate area of 1,200 hectares in PRYN1 (42 kilometers of primaryopen drains) and of 1,800 hectares in YSURA (68 kilometers of

ANNEX 6Page 3 of 5

5. Membership of the PR&D Grants Board. The Board wouldhave a membership of nine, one from the Secretariat of Agriculture, onefrom INDRHI as the Chairman, two from the PROMATREC/EU, fourrepresentatives of the respective Users Associations, and one externalResearch Specialist. Specialists would be co-opted to the Board, ifnecessary, to review PR&D proposals. The Board would meet once a year.The PROMATREC/EU would be responsible for the PR&D-GS TechnicalSecretariat.

6. Adm te Procedures.1

o The PR&D-GB would publicize the availabilityof grants to universities and to other competentprivate sector institutions, the broad objectivesand the procedures to be followed;

o PR&D proposals would be submitted to thePR&D-GS Technical Secretariat in a standardformat, complete with detailed costing;

o Following review, the Board would approvedselected proposals that meet the criteria andjudged to make a significant contribution toagreed priority R&D topics;

o The proposals would be reviewed by the Bankfollowing a preliminary review by the PR&D-GB;

o Procurement of specified items would be doneby INDRHI in consultation with the selectedinstitution;

o Funds for agreed operational expenses would betransferred, quarterly and iti advance, to adedicated account, set up by the selectedinstitution;

o Expenditure would be subject to audit as withother project funding;

o Progress with PR&D funded through the PR&D-GS would be reviewed annually by the PR&D-GB and the Bank, prior to the release of fundingfor the next year's work program.

1. To be formally agreed with the Bank prior to disbursement of funds.

- 19 -

primary drains) to address recurrent waterlogging and soil salinityproblems. It would also improve water distribution at the farm levelby land leveling necessity areas in Nizao-Valdesia (650 hectares),YSURA (3,200 hectares), and in PRYN1 (3,400 hectares).

Nizao Watershed ManemenTreatments (US$2.36 million, 7.4 percent of totabase cost)

6.6 The project would promote improved management systems in selectedmicrocatchments in the Nizao watershed. The amounts of anticipated project workshave been estimated from the size of the project area, land uses (see Table 1, Annex5), the physical and socioeconomical characteristics of the Nizao watershed area, andthe general experience of adoption of such treatments. Activities need to beintegrated across the watershed and among land uses in order to bring aboutsustained improvements and the right balance of short-term and long-term benefits.Five microcatchments have been selected representing the major farming systems ofthe region, and models of microcatchment management would be developed thatcould be used as demonstrations and for extrapolation to the whole Nizao river basin.

6.7 The project would use grants to finance seeds or planting material andfertilizer package for the first year of subproject implementation for villagecommunities who have agreed on a village management plan on community lands andwho will adopt the recommended treatments. Cost-sharing would be done essentiallythrough labor provided for community land preparation, terracing, afforestation, andmaintenance of rehabilitated areas. In addition, the project would finance income-supporting activities for each microcatchment as needed--for instance, off-farm,small-irrigation infrastructure, including diversion and headwork structures, PVCpipelines, and pressure tanks. Individual on-farm investments would be borne byproject beneficiaries and financed by credit through existing financial intermediariesor by cash from the farmers given the already well-known profitability. However, tosupport activities by women's groups, the project would use grants to financerequired activities such as beekeeping and upgrading of small livestock.

Agicutual Development (US$3.0 million, 9.3 percent of total base cost)

6.8 For the full benefit of investments in irrigated areas and in the Nizaowatershed, most of the farmers will need agricultural support services. But, becauseirrigation-related technology and--especially--sustainable conservation and productiontechniques are lacking in the upper parts of watersheds, adaptive and applied on-farmresearch will be needed in the project areas. Given the weaknesses of publicagricultural support services, the only effective way to obtain these services would befor fanner associations to contract private firms or NGOs such as the Higher Instituteof Agriculture (ISA), Agriculture Federation for Development (FDA), IICA (Inter-

ANNEX 6Page 2 of 5

o Relevance to the interest and priorities expressedby the farming communities;

o Economic importance of existing and potentialcrops for which technological packages would beproposed, in the context of national and/orinternational market potential;

O Likelihood of producing results of use to smallproducers in the short/medium term;

o Relevance to the regional priorities;

o Institutional capacity. Experience and ability tocomplete the proposal with existing staff andfacilities. Linkages with relatednational/regional/international institutions;,

o Appropriateness of experimental approach andmethodology for technology transfer.

o Cost.

A system of weighing the selected criteria would be developedas described in the following table.

4. Criteria for Type of Expenditu The type of expenditurefor support under the PR&D Grants Scheme would include:

o Equipment;

o Vehicles;

O Operational expenses, including operating costsof vehicles and equipment, the cost of casuallabor for field experiments and travel andsubsistence expenses for R&D staff; and

O salaries of contractual staff.

O overhead costs. Up to 20% of total direct costswould be granted.

Expenditures not eligible for support under the PR&D GrantsScheme would include:

O salaries of permanent staff;0 civil works.

- 20 -

American Institute for Cooperation on Agriculture), Tropical Agronomic Center forInvestigation and Teaching (CATIE), and Association for the Development of SanJos6 de Ocoa (ADESJO). As part of project preparation, an agricultural developmentplan has been prepared and would be implemented under the guidance andsupervision of PEU/INDRHI research and extension specialists following theparticipatory research and development grants scheme (Annex 6).

6.9 Adaptive Research. According to proposed eligibility criteria, theselected firm(s) would expand existing research lines and would initiate new specificlines of adaptive research in project areas (Annex 6). The research would emphasizea participatory approach and would cover all aspects of irrigation and drainage andsustainable conservation and production techniques. National, regional, orinternational firms or institutions specialized in agricultural research would beselected to undertake these activities. The selected firm(s) would subcontract, ifrequired, the use of existing facilities or personnel in the research stations of ElEscondito (Nizao-Valdesia), CIAZA (Ysura), and CENDA in the Santiago-PRYN. Itwould be PEU/INDRHI's responsibility to ensure that these activities are conductedin accordance with the overall adaptive research objectives of the Irrigated Land andWatershed Management Project, agreed to by the respective user associations, anddone in a manner satisfactory to the Bank.

6.10 Transfer of Technology. To complement the research work, theselected firm(s) would also be responsible for the initial diffusion of improvedtechnologies. Technology transfer programs would include demonstration plots inthe fields of farmers who volunteer, field days, discussion groups, and regulartraining sessions and workshop for extension and research personnel. The projectwould support the establishment and functioning of irrigation-focused demonstrationplots. Most of the technology would be based on existing knowledge with resultsfrom the adaptive research to be fed into the program as they become available. Inthe Nizao watershed, the project would follow the same approach and would supportthe establishment and functioning of demonstration plots in each selectedmicrocatchment.

6.11 A condition of disbursement for this component would be that a shortlist of institutions for participatory research and development support services hasbeen presented to the Bank for its review and approval (para.10.1(f)). Duringnegotiations, assurances were obtained that contracts for participatory research anddevelopment support services would be signed no later than June 30, 1995(para. 10.3(d)).

6.12 Extension. Groups of 15 to 25 farmers would be organized to benefitfrom extension services in the field. Group extension workers and an agriculturalextension officer would be contracted by the water user associations in the irrigated

ANNEX 6

DOMINICAN REPUBLIC

IRRIGATED LAND AND WATERSHEDMANAGEMENT PROJECT

Participatory Research and Development Grants Scheme

1. The general term "Participatory Research and Development"refers to the whole process of diagnosis, priority setting, technologygeneration, technology testing and transfer with the participation of farmingcommunities. The project would provide finance to establish a ParticipatoryResearch and Development Grants Scheme (PR&D-GS) to enable specializedinstitutions to undertake agricultural technology generation, testing andtechnology transfer that would contribute to priorities of the farmingcommunity in the project areas. A Participatory Research & DevelopmentGrants Board (PR&D-GB) would be established to review PR&D proposals.Their first task would be to establish criteria for assessing these proposals.This Annex sets out initial proposals for these criteria. Following detailedreview by the PR&D-GB, a final list of criteria would be prepared andagreed with the Bank by June 30, 1995. This Annex also sets out theproposed membership of the PR&D Grants Board and arrangements for theadministration of the PR&D Grants Scheme.

2. Recommendation Areas. Four main recommendation areashave been identified:

(a) irrigated land management including water management,drainage, soil management, saline soil reclamation, andirrigated farming system;

(b) technological packages for existing and potential crops, witha market oriented approach (internal and international);

(c) integrated pest management focussed on the reduction ofpesticides;

(d) watershed management and environmental monitoying.

3. Criteria for Type of PR&D projects. Grants would normallybe for two or three years and PR&D proposals eligible for support under thePR&D Grants Scheme would be assessed against the following criteria:

0 Environmental impact. Likelihood of having anegative environmental impact would besufficient for rejecting the proposal;

- 21 -

areas and by ADESJO in the watershed. The extension support is expected to reachan estimated 5,000 small farmers in the irrigated areas and about 1,500 farmers inthe Nizao watershed.

Institional Development (US$13.93 million, 43.5 percent of total base cost).

6.13 The project appraisal included an institutional capacity assessment todetermine the ability to implement the proposed program. Institutional capacity gapshave been identified against program tasks.

6.14 User groups would require substantive improvements in four areas:administration, personnel management, financing, and accounting; for water userassociations, technical matters related to system operation (irrigation programming,water distribution, monitoring, and control), system maintenance (contractualprocedures, maintenance programming and implementation), and cost-recoveryprocedures; procedural matters, such as water and land rights; and organizationalaspects concerning preparation and implementation of meetings, report preparation,and so on. The project would support a training program centered on the above-mentioned aspects. INDRHI would be responsible for implementing this trainingprogram with the help of external consultants, when required.

6.15 In addition, to help farmers obtain access to credit and to provide theman incentive to invest in their land, the project includes a land titling component.IAD together with INDRHI, has an ongoing program to distribute land titles forfarmers throughout the country. This program involves recompilation of existinginformation, updating cadastral maps, farm surveys, farmers interviews, as well aslegal procedures to distribute official and registered land titles. The project wouldfinance required additional equipment, vehicles and technical assistance to acceleratethe title distribution program in the project areas. INDRHI would be responsible forexecuting this component by contracting additional topographic teams and specializedlegal consultants.

6.16 In INDRHI, the implementing capacity for the proposed program is,by and large, in place. The major gaps found are limited to a lack of experience inthe areas of management information system, monitoring and evaluation, andfinancial management. Setting up the project execution unit within INDRHI wouldrequire the modernization of managerial and communications systems with basichardware, such as a system of personal computers to link the divisions of INDRHI,regional offices, and water user associations. The project would provide a total of21 consultant-months, including 5 person-months of technical expertise to supportimprovement of both the operation and maintenance system and training for wateruser associations, 4 person-months of financial management expertise, 6 person-months of a research management specialist to support the establishment of the

- 22 -

participatory research and development grants system, 3 person-months of aneconomics or management information system or monitoring specialist, one person-month of land titling legal expertise, and 2 person-months of procurement expertise.Establishment of PEU in manner satisfactory to the Bank and fully staffed, includingthe Project manager, with personnel of experience and qualifications satisfactory tothe Bank would be a condition of effectiveness (para. 10.2(e)). In addition, tofacilitate field travel and the maintenance of main canals in the irrigation districts, afleet of three small four-wheel-drive pickup trucks, two motorgraders, threeretroexcavators, and one dredge would be financed.

Studies (US$0.91 million, 3 percent of total base cost).

6.17 The project would finance all the works required to rehabilitate andimprove the irrigation and drainage systems and leveling in Nizao-Valdesia, YSURA,and PRYN I. To improve the overall water management of these irrigation systems,project financing would cover (a) a technical study on main canal regulation, canalsystem management, and the design of distribution systems in the selected areas,taking into account the experience gained with the use of automatic water-levelregulators (counterweight gate) in PRYN I, and (b) a detailed study on the layout ofthe irrigation and drainage system. Given the urgent need for these studies to selectconsulting firms and start preparations, prior to negotiations, the Bank received thedraft terms of reference for technical studies for the design of water control devicesand the detailed layout designs for the first 2-year investments in conveyance anddistribution systems, drainage, and leveling. At negotiations, assurances wereobtained that: (i) the irrigation control studies would be completed by no later thanDecember 31, 1995; (ii) the recommendations of such studies would be reviewedjointly with the Bank by no later than June 30, 1996; and (iii) immediately thereafter,such recommendations would be implemented in a manner satisfactory to the Bank(para. 10.3(e)).

6.18 Cadastral maps of the irrigated areas will be updated. And in theNizao watershed, aerial photos will be needed to set up an environmental andevaluation unit. The project would finance socioeconomic rapid rural assessments,land registers, an operation and maintenance manual, a mid-term review of theproject, preparations for a follow-up project, and a comprehensive review of legaldocuments on water rights, water tariffs, cost recovery, land rights, and userassociations. In addition, a maximum of US$200,000 will be made available to theMinistry of Agriculture (SEA) for the carrying out of agricultural policy studies.

Monitoring and Evaluation

6.19 The project would develop a management information system toimprove the technical and financial management of irrigated schemes at the water

Annex 5Attachment 1

Page 11 of 11

MC INDICATIVE PLAN - OUTLINE

1. Introduction

2. Basis for selection

3. MC characteristics

3.1 Physical resources3.2 Land use and crop production3.3 Human resources3.4 Livestock resources3.5 Summary table

4. Project framework (treatment menu adapted to MC conditions)

5. Problem census

6. Rapid resource appraisal

7. Problem analysis and solutions

7.1 Analysis of key problems in utilization of natural resources7.2 Linkages between priority problems and project framework7.3 Selection of treatments7.4 Linkages between key treatment and supporting activities7.5 Management of range and forest land

8. Indicative plan for villages and MC as a whole

9. Summary of forest activities

10. Summary of agricultural activities (annual and perennial crops)

11. Summary of village affairs activities

- 23 -

user associations level and the INDRHI level. Assurances were obtained duringnegotiations that the design of a management information system would be completedin a manner satisfactory to the Bank by no later than December 31, 1995 andimmediately thereafter a such system would be implemented in a manner satisfactoryto the Bank (para. 10.3(g)).

6.20 Monitoring and evaluation of project activities and of environmentalaspects (development of an environmental monitoring system), would be undertakenwith the help of external technical assistance. A calendar of key events would bemaintained to document issues as they arise and actions of water user associationsand INDRHI management. Topics would include progress on civil works,agricultural development, institution strengthening, staff training (includingperformance of technical assistance), procurement, budget preparation anddisbursement, watershed activities, cost and expenditure monitoring, and cost-sharingactivities. Project finance would cover purchase of equipment, contracting, externalsupport and studies.

ANNEX 5Page 10 of 11

training and consensus reaching process with the involved farmingcommunities at the village and micro-catchment levels.

Tentative Physical Objectives

l \ e~~N'arslProposed Treatments j PY3| Total ]

- Area covered (ha) 3,000 3,500 5,600 7,400 19,500

- Forestry Area planted (ha) 2,200 3,100 3,100 3,600 12,000

- Agroforestry and Agriculture Area treated according 500 1.660 2670 2.700 7,500to % of slope:

0 - 25% Annual Crops (ha) 170 550 900 900 2,52025 - 40% Coffee (ha) 270 900 1,435 1,435 4,04040 - 55% Fruit Crops (ha) 60 210 335 365 940

- Living Hedges - average of 850 m/ha (km) 415 1,370 2,200 2,250 6,235

- Earth contour ridges - average of 850 m/ha (km) 415 1,370 2,200 2,250 6,235

- Tree individual terraces - 150 u/ha 9.000 31,500 50,250 54,750 145,500

- Contour stone lines - average of 50 m/ha (km) 20 80 130 150 380

- Composting Pits (unit) 210 700 1,120 1,220 3,250

- Windbreaks - 200 m/ha (km) 45 150 250 275 720

- 24 -

7. PROJECT COSTS AND FINANCING

A. Costs

Table 6.1: Proposed Proieci Features and Projected Costs

Local Foreign Total Local Foreign Total " B % TotalBa%e

-DR million --. -... US$ million .-.. FE Cosis

Investmeni Costs

Cisil Works 58.41 87.43 145 85 4 73 7.08 I IR8 60% 38.04

VehicleslEqwpment 6 79 29 64 36.43 0 55 2 40 2 95 80' c 8 52

Technical Assisrance. 42 11 21.12 63 23 3 41 1 'I 5 12 40% 14.13

Srudies.TYasning

Support Sen Ices 32 72 4 1 37 54 2 65 0 19 3 04 13; 9 80

Granes for Waltershed 22 72 6 42 29 14 1.84 0 52 2 36 22% 7.61

Sub-Tc'aj 162 77 149.43 312 21 13 18 12 1) 25 28 48% 78.80

Recurrent Costs 59 28 24 7 83 98 4 60 2 (K) 6 80 29'. 21.20

Base Cost 222.05 174.13 396 19 179At 14 10 32 08 4%. Q100.00

Phbsical Connngencies 22.23 20 13 42 36 1 80 I 63 3 43 47'. 10 73

Pnce Conungencies 75.95 19 26 95 34 6 I5 1 56 7 72 20% 24.10

TOTAL PROJECT COST 32036 213.65 534 1( 2594 173 0 4324 40% 13480

7.1 Project costs are estimated at the equivalent of US$43 million about 40

percent of it foreign exchange. Investments account for about 78 percent of base

costs and recurrent expenditures--mainly operation and maintenance of the irrigation

schemes--for 21 percent. Physical contingencies have been estimated at 10 or 15

percent, depending on the item financed; overall physical contingencies amount to10.7 percent of base costs. Price contingencies reflect an estimate of local inflationat 10 percent per annum and foreign inflation estimated in accordance with the World

Bank manufacturing unit valve index at 2.67 percent in 1995 and 3.5 percentthereafter. Overall price contingencies amount to 24.1 percent of base costs.

ANNEX 5Page 9 of 11

the signatures of the farmers' associations representatives and the individualrecipients of treatments.

24. Finalization of Indicative MC Management Plan. Anoutline of this report is attached in Attachment 1. The report wouldsummarize the results of the interactive planning process described in thepreceding paragraphs and would thus contain sections provided the generalcharacteristics of the MC, the results of the problems census discussions, therapid resource appraisal and the problem solving discussions as well as asumrnaiy of the agreed treatments. The report would provide an aggregationof the village plans and would give the framework within which ADESJOwould operate. It would also give an indication of the size and the phasingof its work.

25. Approval of Indicative MC Management Plan. Tlhe MCplanning/technical team would submit the Indicative Plan to the ProjectExecutive Unit PEU, which would be responsible for quality control(responsiveness to guidelines, completeness and depth of analysis, adequacyof proposed treatments and cost implications) and for approval of the Plan.

E. Preparation of Annual Work Plans and Budget

26. The Indicative MC Management Plan would be elaborated toprovide the work program and budget for the first year of implementation.In subsequent years, it would be necessary to review progress made andexperience gained as well as possible results from pilot work anddemonstrations and the MC planning/technical team would need to interactand agree with the MC villages on the appropriate modifications to theoriginal Indicative Management Plan. The activities would be aggregated forthe MC and broken down by activities.

F. Physical Objectives for Forestry and Soil Conservation M ent

27. In accordance with the PC-PCPS approach, the final choice oftechnologies is made based on the existing ecological constraints and thecommunity's objectives. Therefore, the physical objectives of the WatershedManagement program are only tentative and should not be viewed asindicators of project achievements. The EMS and Participatory RuralAssessment missions would provide required information on thesocioeconomic and ecological impact of the program. Short-ternmimplementation would be monitored according to the specific investmentobjectives included in each project's annual work plan, based on the villageand MC plans after they have been negotiated and agreed upon with theproject Executing Unit. The first year of project implementation has beenconsidered as a zero year in term of physical achievements since theparticipatory approach will require a relatively long period of sensibilization,

- 25 -

B. Financing

7.2 The project would be financed by the Bank, the users, and theGovernment. A Bank loan equivalent to US$28 million is proposed to finance 65percent of eligible project costs, net of taxes and duties. An amount of up to$800,000 will be provided to finance retroactively goods and services required forproject start-up, especially consultants' services for technical assistance as describedin Annex 8. Bank financing, on a net taxes and duties basis, would cover 100percent of foreign exchange expenditures. The Bank would finance 80 percent oftotal project expenditures on civil works, including studies and engineering anddesign (US$13.3 million), and on required investments for support services. Itwould also finance 100 percent of technical assistance to INDRHI's ProjectExecution Unit. Operating costs for adaptive research, technology transfer,extension services, and promotion of credit cooperatives would be carried out jointlywith counterpart funds and loan funds. Loan financing for operating costs would bemade on a declining basis during project implementation. Users would provide thenecessary counterpart funds (equivalent to US$0.9 million) to finance on-farminvestments, part of the operating expenditures for agricultural support services andoperation and maintenance costs in the irrigated areas on an increasing basis. TheGovernment's contribution (equivalent to US$14.3 million) would finance the balanceof local currency requirements for civil works and equipment/vehicles and ofoperating expenses, and would be met by annual budget appropriation to INDRHI.The Government would make the proceeds of the loan available to INDRHI.Assurances that the Government would provide the necessary annual counterpartfunding to INDRHI according to each annual work program were obtained duringnegotiations (para. 10.3(b)).

C. Disbursements

7.3 Loan proceeds are expected to be fully disbursed by June 30, 2003, aperiod of 8 years, the standard disbursement profile for Bank-financed projects in theDominican Republic (Table 7.1). Statement of Expenditures will be used for alldisbursements of incremental operating costs and for works and goods, exceptcontracts exceeding US$1 million equivalent for civil works and US$200,000equivalent for goods and the first contract for works and goods over US$200,000 andUS$25,000 respectively, and consulting services of firms and individuals exceeding$50,000 and $20,000 respectively, for which submission of full documentation wouldbe required in accordance with Bank guidelines. Relevant documentation in supportof statement of expenditures would not be submitted to the Bank, but would beretained at the project execution unit for auditing and for ex-post review by Bankmissions.

ANNEX 5Page 8 of 11

(h) Discussion of rainfed and irrigated farming situation;

(i) Selection of treatment options specially for promoting rainfed

and irrigated horticulture;

(j) Discussion of supporting activities (beekeeping, terraces,

irrigation, small livestock) and how they can be used to

facilitate for target groups (range and forest land users, owners

of marginal lands, etc.) to accept key treatments; and

(k) Agreement on a program of demonstrations and pilot work.

21. It should be clear to the villagers that they will need to choose

among treatments to meet their priorities. The resource available under the

project for the five MCs amount for an average MC of 4,000 ha to US$0.4

million. If more is spent in a particular area, it means either that less will

be spent in another MC or that the total project area will be reduced. The

latter option would unfortunate in view of the widespread nature of the

degradation problems in the Nizao watershed and the need to find cost

effective and replicable solutions. Viewing watershed development as a

continuous process, there is considerable scope to make a good start within

this indicative cost frame by varying the area treated, the phasing and

selection of treatments. The supporting treatments (irrigation, rainfed

terraces, horticulture, beekeeping, small livestock,

trees on field boundaries, etc.) would be linked to the adoption of treatments

of the range and forest community lands and would be subject to a ceiling of

33% of total treatment cost.

22. Preparation of draft village management plan. Guided by

the problem solving discussions (paras above), the MC planning/technical

team would prepare the village treatment plan showing the recipients,

volumes, phasing and location (map) of different treatments. The phasing of

the works may be spread over at most a four year period. Applying the unit

costs indicated in the treatment menu the total and average cost per hectare

cost can be calculated (cost would be updated on an annual basis) and the

responsibilities of the implementing agency (ADESJO) determined. The

responsibilities of the village and its individual members in terms of

management practices and cost sharing should be indicated. A check should

be made to ensure that the average cost of supporting treatments per village

household does not deviate too much from one village or MC to another.

23. Discussion of draft village management plan. 'The draft will

be presented to and reviewed in the village as the frame for the collaboration

during the following four years (detailed work plans would be prepared each

year in the light of progress and experience). Amendments would be made

where necessary and the village should be asked to indicate its agreement by

- 26 -

7.4 Duringnegotiations,assurances were Table 7.1: DISBURSEMENT CATEGORIES

obtained that theBorrower would CaLegory Amounm of Loan Percentage of Expendirures

establish a special Allocated to he financed

account in the Banco (US$ millions)

Central de la Civil Works 9.50 80 f

Repuiblica Goods other than 2.25 100% of foreign expenditures.

Dominicana, in U.S. those required under I00'1 of local expenditures lex-

dollars, to cover all Pan C of Lhe Project factory): 85% of local expendiures

eligible Bank for other items procured locally

expenditures under Consultants' Serviees 4.90 100%

the loan, with and raining other thanthose required under Pan C

procedures for the of the Project

operation of theGoods and Consultants 2.00 100% of foreign expenditures and 60%

special account Services under Pan C of of local expenditures

satisfactory to the the Project iPR&D contracts}

Bank (para. 10.3(a)). Subgrants under Pan B 2 40 100 % of amounLs disbursed under a of

The authorized the Project lNLZao Watershed Subgrant

allocation for the Management)

Special Account Incrernental Operating costs 0.60 100%, until withdrawal applicanons

would be $600,000, have reached the aggregate of $350,000;

with an initial deposit 80% unal withdrawal applications havereached the aggregate of S500.000; and

to be made of 50% thereafter

$300,000, and a fullamount authorized Unallocated 6.35

allocation to be TOrAL 28.0

released whendisbursements reach alevel of $6.0 million. Disbursements will be made under authorized signatures froma designated representative of the Borrower. At negotiations, Government assuranceswere received that withdrawal applications for replenishment of the Special Accountwill be prepared by INDRHI in accordance with Bank policies and procedures.

7.5 In addition, during negotiations, assurances were obtained thatINDRHI would establish a project account separate from the special account for theequivalent of US$1 million to cover counterpart expenditures. The establishment andrelease of a Dominican peso amount equivalent to US$1 million (initial deposit) intothe project account would be a condition of effectiveness (para. 10. l(c)).

7.6 There are two conditions for disbursements. First, satisfactoryevidence that INDRHI submitted to the Tribunales de Tierra the documentation

ANNEX 5Page 7 of 11

sustainable production systems) are identified. In remaining areas the mainland use featLres (forest, range and farm land) are noted and problems ofdegradation and erosion are observed and discussed (livestock trends, fodderand fueliwood shortages, cultivation practices). Having identified targetsareas it will be importanit to clarify the users/owners of these areas (e.g.users of range and forest land, owners of marginal crop land, farmers whocould benefit from conservation practices). Field appraisal offers anopportunity to explore solutions with such targets groups and to explain toparticipants the linkages between priority problems and possible projecttreatments. Problems of declining water supply may for example beremedied by efforts to improve vegetation and infiltration. Marginal landsmay be released from crop production if the owner can enhance productivityelsewhere. Range degradation may be reversed if the stall feeding seasoncan be prolonged through project activities to enhance cultivated forageproduction. The targets areas and groups would be recorded on field mapsas a basis for further discussion of solutions.

20. Village discussions of solutions and treatments priorities.On the basis of the outcome of the problem census and the rapid resourceappraisal and having given the village a chance to consider the treatmentmenu, the next step in the interaction would be:

(a) Discussion of fodder situation (objectives - subsistence or sale- and trends in livestock keeping; constraints in the form ofscarcity of labor and fodder; investments in livestock if fodderconstraints were removed; sources of winter fodder andopportunities to enhance availability; range management);

(b) Discussion of fuel wood situation (different source of energy;quantities used; sale of wood);

(c) Agreement on range and forest areas needing treatments;excluding areas which are beyond repair and those that appearto be in relatively good shape;

(d) Selection of treatment options for selected range and forestareas with due consideration to the needs for fodder and wood;

(e) Discussion of management practices for the selected range andforest areas, the benefit sharing arrangements for foresttreatments and phasing of interventions;

(f) Discussion of perennial crops situation (coffee, bananas, andfruit trees)

(g) Selection of treatment options for agroforestry practices;

- 27 -

required to initiate the appropriate legal actions for the award of final land titles to atleast 80% of farmers living in each of the irrigated areas will be required for civilworks expenditures in the respective irrigated areas (para. 10.2(b)). Second, grantsfor soil and water management to any community in the Nizao watershed area will beallowed only after an appropriate management plan of natural resources for theselected microcatchments has been agreed upon by INDRHI's project execution unitand the community (para. 10.2(c)). In general, INDRHI shall refrain frompresenting to the Bank withdrawal applications in respect of expenditures notincluded in the POA approved for the year in question (para. 10.2(a)).

D. Procurement

7.7 The Financial and Administration Subdirectorate of INDRHI would beresponsible for monitoring all procurement activities and for ensuring compliancewith Bank procurement guidelines. The Bank's standard bidding documents for allinternational competitive bidding operations would be used, and similar documentswould be agreed upon at negotiations for LCB use. Procurement would beundertaken by INDRHI, the implementing agency, which has satisfactoryprocurement capacities and experience. Present INDRHI regulations do not conflictwith application of Bank guidelines. Project execution unit staff would havetechnical expertise to carry out procurement and the project execution unit wouldretain consultants to prepare designs and bidding documents for the construction orrehabilitation of irrigation structures and for the contracting of support services.

7.8 Civil Works. Construction or rehabilitation of irrigation structures,drainage, land leveling, and riverbed protection work would be distributed in 3geographical areas with individual lots ranging in value from US$200,000 to US$2.9million (Irrigation Infrastructure Working Paper No. 3). Contracts estimated to costUS$1 million equivalent and above would be awarded through internationalcompetitive bidding procedures; contracts valued between US$200,000 and US$1million, up to an aggregate of US$3.8 million would follow LCB proceduresacceptable to the Bank (Table 7.2).

7.9 Goods. Graders, trucks, and four-wheel-drive vehicles would bepackaged as much as possible for international competitive bidding. Contracts valuedabove US$200,000 would be awarded through international competitive bidding;contracts ranging between US$25,000 and US$200,000, up to an aggregate ofUS$0.4 million, which would include smaller vehicles, motorcycles andcommunications equipment, would follow LCB procedures acceptable to the Bank;other items estimated to cost less than US$25,000, including furniture and othersmall equipment, would be acquired on the basis of price quotations from 3 qualifiedcontractors, with an aggregate of US$0.2 million.

ANNEX 5Page 6 of l1

16. Usual operational procedures obviously include discussion with

villagers. These discussions frequently take the form of obtaining village

consent to plan drawn up by respective technical teams. T'his project,

however, aims at not only involvement in approval of plans but active village

participation in the formulation and implementation of these management

plans. Such participation would ensure that the interventions respond to the

perceived local needs and priorities and that a genuine commitment to and

responsibility for the success of the operation is generated. The method used

to achieve such participation is the Farmer Centered - Problem Census

Problem Solving (FC-PCPS) approach described below. The village is the

management unit for forest and range community lands and for resource

sharing arrangements with respects to community lands. The building blocks

of the Indicative MC Plan are the village plans formulated through close

interaction over problems and solutions (chosen from the treatment menu) in

each of the selected MC villages. The MC boundaries may have to be

adjusted to avoid dividing a village and thereby complicating data collection

and interaction. The time required to prepare the Indicative MC Plan will, to

a large extent, depend of the number of villages embraced by the MC but an

average estimate of 8 weeks is given above.

17. Assemble relevant data. In preparation for village discussion,

the planning group would mobilize available information and survey

conditions in the MC villages.

18. Problem census meetings. Armed with the relevant data and

analysis a problem census meeting would be arranged in each MC village in

consultation with local authorities. Problem census meetings involve all

villagers with livestock, land or other agricultural activities. Men and

women participants record their individual problems and form small groups

to discuss and prioritize these problemis. Each small group then reports its

prioritized list of problems to the village group in a plenaiy session which

determines and prioritizes a list of problems for the village as a whole. No

problem is excluded at this stage. T'he process is structured and non

threatening. Importantly, it initiates the relation between village participants

and the project planning/technical team by listenintg to the villagers. Once

the village group has identified and prioritized problems, the treatment menu

suitably adjusted to MC conditions is presented to them and the objectives of

the project explained. The linkage between project activities and priority

problems are explored and appointments made for problem solving

discussions.

19. Rapid resource appraisal. Problem solving activities are

initiated with a field assessment of village resources. The appraisal is an

attempt to observe resource problems and discuss solutions in the field

through a combined effort by the project technical/technical team and village

participants. Using copies of topographical maps important landscape

features are recorded and areas which do not need treatments (areas with

- 28 -

7.10Investments forwatershed management Table 7.2:would generally be SUMtIARY OF PROPOSED PROtCUREMENT ARRANGEMiENTSdispersed throughout the (IUSS millions equivalent)watershed area, time- ICB LCB Other a' Totalsliced, and small scale-- c0 II Workswith an aggregate of *Infrastincnure 119 - 11.9US$3.2 million. Because 1 5 - - 19.5)tLand Le%eling - 3 8 3.8they would consist t3 01 03 01mainly of the purchase offertilizers and seeds or Equipment and Veh;le. l 0.41 0. 1 3 .24planting materialmanaged by ADESJO, Technical Asststancef

Stdies.Trdining - 7 1 7.1they would be unlikely to - i6.2) (6.2iattract foreigncompetition. Therefore, ASnculpp al De elopmen44 4.4they would be procured . ,2.9) (2 9through local works Gi-t for Watershed 3.2 3.2procedures if valued at . . I 3.2)below US$25,000 per Operanng Costs b 9.7 9 7purchase and through . . lo8) (0.B)LCB if valued above thisamount. Total 14 4 42 24.6 43 2ofl hich WBRDi 1 1.4p 13.41l (13 2) i28.0)

7.11 _i -uncunts in paredrwes %h^ IIicn,ation rron. loan pr.xeedi. vi.lu are roundea

Consultants. Theproject would contract for technical assistance and training activities with consultantswhose qualifications, experience, and terms and conditions of employment shall besatisfactory to the Bank and whose selection will be in accordance with principles andprocedures on the basis of the Bank Guidelines for the Use of Consultants by theWorld Bank Borrowers and by the World Bank as Executing Agency, publishedAugust 1981. Prior review of terms of reference, selection and contractualdocuments for individuals will be required for contracts exceeding US$20,000, andfor all consultant contracts with firms exceeding US$50,000. Contracts below therespective prior review thresholds will require only prior review of terms ofreference, subject to a total aggregated amount not exceeding US$1 million.

7.12 Review of Procurement. Prior to review by the Bank, a review ofprocurement would be required for all international competitive bidding and for thefirst LCB operation, whatever the amount for goods and works. The review willcover about 76 percent of the total value of work contracts and 80 percent of the total

ANNEX 5Page 5 of 11

12. This menu is a basic tool in the MC planning process theproject technical assistance team will help to determine on technical.economic and institutional grounds which treatments are applicable to thesituation in a particular MC. These remaining treatments would need to beexplained to the MC population in the course of the problem solvingdiscussions (see below). The menu would be revised annually in the right ofexperience with project implementation and with the help of the project M&Eunit.

13. 'I'he cost sharing arrangements between the project and thebeneficiaries during the establishment (investment) phase will be indicated foreach treatment and will be explained to the villagers in the course ofselecting priority treatments during the problem solving discussions. Thesubsequent recurring costs of operation, maintenance and management will bethe responsibility of the villages and/or individual farmers concerned.

14. The benefits of the different treatments generally accrue to thevillagers adopting the intervention in question. In the case of the forest andrange lands treatments, they are, however, shared among the villagers toestablish a Community Renewable Fund (CRF) for community agreedinvestment. The aim should be to establish a partnership between theGovernment and the villages/communities/associations in the Nizaowatershed, to develop a matching grant process for financing the first priorityinvestrnents required for a sustainable watershed management. The financingof these first priority investments will come from the project during the firstthree years of the project, then from the Nizao Watershed Management Fund( Nizao WMF) which would be established under the project. It is hopedthat after these first community investments have benefitted to the concernedvillages/communities, they will be able to replenish the CRF and thus,through this, they will ensure the sustainability of this operation.

D. The Preparation of Indicative MC Plan

15. For each selected MC model, the concerned villages will haveto prepare an Indicative MC Plan. The following steps may be distinguishedand will be discussed below. A rough indication if time required is given.

(a) Assemble relevant data 2 weeks(b) Village discussion of problems and constraints 1 week(c) Rapid Resource Appraisal 1 week(d) Village discussion of solutions and priorities 1 week(e) Preparation of draft village management plans 1 week(f) Discussion of draft village management plans 1 week(g) Finalization of indicative MC management plan 1 week(h) Approval of indicative MC management plan 1 week

- 29 -

value for goods. In addition, supervision missions would selectively post reviewcontracts below the threshold levels.

E. Cost Recovery

Irrigation Scheme

7.13 Operation and Maintenance. According to the Dominican Republic'sWater Rate Law of 1982, user groups are now officially responsible for operationand maintenance in irrigation schemes and collect charges from users to cover thefull cost of these activities. Because of the unreliability of water supplies, however,incompleteness of drainage and on-farm distribution systems, and slow pace inorganizing water user associations, INDRHI had difficulty in enforcing this law.Under the project, standards for operation and maintenance would be defined byINDRHI for each selected irrigated area.

7.14 Investment. There is a sound policy for the recovery of the capitalcost of new irrigation projects--essentially a land for infrastructure swap. Once theirrigation projects have been constructed, the Government, through IAD, mayacquire land for redistribution through the cuota parte system. Owners of 6.3hectares or more must return to the Government between 50 and 80 percent of theirlands included in such projects. A new law defining a cost-recovery mechanism fornew investments related to surface and ground water use has been prepared and isbeing submitted to the Legislative Chamber. But for rehabilitation and completion ofirrigation projects, even under the proposed new water law, no such mechanismsexist. Part of the capital costs of rehabilitation can, however, be recovered through aland betterment levy. The levy would be based on the cost of investment, net oftaxes. This amount would be divided by the total number of water rights of thescheme and, for each cropping season, based on seasonal cropping pattern,beneficiaries would pay in proportion to their share of water rights.

7.15 Given the high increase in operation and maintenance recovery costsproposed under the project, it would be unrealistic to ask for capital cost-recoverymeasures during the first 2 years (Table 7.3). But, before June 30, 1997, measuresfor a significant capital cost-recovery level would be taken for farmers with morethan 6.3 hectares of irrigated lands.

ANNEX 5Page 4 of 11

Agroforestry Management Model

10. The objective would be to increase sustainable productivity bypromoting improved management system over a limited land area of higherpotential based on timber-yielding tree plantations, multipurpose trees, coffeeand fruit trees plantations.Proposed treatments include:

(a) multipurpose coppice plantations with emphasis on legumetrees for nitrogen fixation purpose;

(b) introduction of rust resistant coffee varieties, of selectedimproved fruit trees such as avocado, lemon and bananas, aswell as of improved cultivation practices;

(c) enrichment seeding and fertilization of degraded rangelandcapable of increased production through improved soilmanagement combined with grazing management;

(d) promotion of food and forage legumes on existing fallow landto enhance soil fertility and expand food production and theavailability of forage: and

(e) promotion of living hedges, of vegetative or stone contourbunding, and of contour bench terracing techniques;

Rainfed and Irrigated Farming Model

11. The project would promote technical packages with increasedsustainable productivity, increase integration of livestock and croppingsystems, small-scale irrigation, horticulture and apiculture. Activitiesinclude:

(a) introduction of conservation tillage along the contour on slopesexceeding 4%;

(b) promotion of improved seeds, fertilization, IPM plantprotection;

(c) strengthening the present efforts to promote rainfedhorticulture on contour terraces leading to increased moistureconservation and erosion control; and

(d) when possible, promotion of irrigated horticulture usingdiversion and reservoir schemes with pressure tanks whennecessary.

- 30 -

Table 7.3 Comparison of Current Water Charges andThose Proposed under the Project

Current Water Charges with Project

System RDS RD$ percentincrease

Nizmo-Valdeds 219 515 135 percent

YSURA 181 785 334 percent

PRYNI 313 530 69 percent

7.16 Assurances concerning the implementation of cost-recovery measuresin the irrigation schemes were obtained during negotiations (para. 10.3(h)); themeasures would be incorporated into the operational manual to be prepared duringthe first year of project implementation (PYI). The presentation of an action plan,satisfactory to the Bank, to: (i) raise, by no later than June 30, 1996, the level ofthe water charges in order to recover all operation and maintenance costs; and(ii) introduce, by no later than June 30, 1997, measures that will enable INDRHI torecover from farmers holding more than 6.3 hectares of irrigated land a significantportion of the capital cost of the investments --would be a condition of projecteffectiveness (para 10.1 (b)).

Watershed

7.17 To ensure the financing of the expansion and the spreading of the soiland water management practices developed under the project, a watershedmanagement fund would be established during implementation of the project.Because improvements of watershed management would benefit farmers in the upperand middle part of the watershed but also, indirectly users downstream (CDE, thehydroelectric company, municipalities, and irrigation farmer associations), theGovernment intends to develop a strategy that would lead to the water managementfund being replenished annually by contributions from these doWnstream water users.There would be no covenant under the project to try to recover costs of externalitiesat this time. Instead, the project would work with the Government under theproposed water management fund--following the procedures indicated in the newwater law, to be enacted in a few months--and try to develop such mechanisms forthe future.

ANNEX 5Page 3 of 11

7. Treating degradation frequently involves changing the wayspeople manage the land resource. Sustainable management will requireactive participation of related communities/villages. T'he communal use offorest and range lands offers a particular challenge. Thus it is crucial thatthe Government agrees that community land management responsibility begiven to farmers' associations at a village level for soil protection measuresas well as for planting and exploiting trees. Micro-catchment developmentmust be seen as a process of gradual improvement. People may not acceptimproved management on the total forest and range area, and even if they doit may be advisable to test the capacity and the commitment of the village onpart of the area. The interaction with people, thus, often dictates phasing ofactivities and looking at the development efforts as the start of a morecontinuous process. One of the principal tasks of the technical experts inwatershed management and participatory plarning to be recruited will be toguide the MC planning and implementation process with a suitable treatmentmenu and provide on-site training to staff.

C. The Treatment Menu

Forest land Management Model.

8. Although forest land belongs to Government it is frequentlyused by villagers. Sustainable management will require active participationof related communities/ villages. Thus, it is crucial that the Governmentagrees that community land management responsibility be given to farmersassociations at a village level for soil protection measures as well as forplanting and exploiting trees.

9. Close cooperation between villages and technical staff will berequired to determine the best combinations of treatments according tovillages preferences and sites conditions. Emphasis will be placed on cost-effective measures which produce early increase in production whilemaintaining at least 40% vegetative cover over soils. Proposed treatmentsinclude:

(a) fuelwood coppice plantation on sites manually prepared and/ormechanically ripped to encourage moisture conservation;

(b) establishment of conifer plantations by planting on manuallyprepared slopes; and

(c) soil conservation afforestation which would comprise earthterracing by mechanical means where necessary, planting treesalong ripped and fertilized terraces, and broadcast seeding ofthe entire area with a mixture of forage seed, grass seed andfertilizers. Gullies would be revegetated, and small checkdams constructed where necessary.

- 31 -

8. PROJECT ORGANIZATION

A. Project Coordination

8.1 INDRHI would be the executing agency for the overall project. Allcivil works, technical assistance, and engineering services would be done undercontract, in accordance with terms acceptable to the Bank. INDRHI would supervisethe proposed technical studies and all required additional civil works for completingthe existing infrastructure in the irrigated areas of the project. Key performanceindicators of the project that were defined (Annex 2) and discussed with theGovernment and with the beneficiaries during appraisal would serve as a managementtool to monitor project implementation.

8.2 Active farming community participation is an innovative and essentialfeature of this project. Using a farmer-centered, problem-census, problem solvingapproach (Annex 5), contractual arrangements would be made between water userassociations and specialized institutions for support services--extension, technologytransfer, and participatory applied research. Contracts for participatory research anddevelopment would be awarded following the procedures described in Annex 6.Management of the Rio Nizao watershed would similarly emphasize participation andresponsibility of the farming community for formulating and implementing the pilotprogram in each microcatchment. ADESJO, a private NGO, would be contracted toprovide the required support services in for the Nizao watershed management pilotprogram.

8.3 No direct financing of credit is proposed under this project. Althoughthe medium- and large-scale farmers have little difficulty obtaining credit, small-scalefarmers frequently have difficulties obtaining institutional credit--apart from farmersin the Agrarian Reform, who have access to credit through the Agricultural Bank.Small farmers must show that they have a land title and they will receive technicalassistance from an known agency or private source. To overcome this, the userassociations would hire private credit specialists to help farmers organize in mutualsolidarity groups and prepare necessary paper work. The contractual arrangementswith specialized institutions (including ADESJO in the watershed area) for supportservices to the farmers combined with the proposed land title distribution program,would also facilitate small-farmer access to credit. In addition, following thesuccessful experience of the Association of Rural Institutions for Savings and Credit,the project, through its pilot program of development of savings and creditcooperatives, would provide support to the Association of Rural Institutions forSavings and Credit over a limited period of 2 years, for the promotion of grass-roots,rural, and financial organizations in the project areas.

ANNEX 5Page 2 of 11

depleted. The following table presents the possible repartition of use foreach selected zone according to the soil capacity.

Proposed land use in the sectors of the Nizao watershed area

Rancho Nizao Niahoma- Ntzao-

Polential Uise Arriba Niedio Niaboinuta Jiguey V'aldesia Total

of SoilHa % Ha % Ha % Ha % Ha % Ha %

Forestry 873 14 4,655 39 5,961 44 6,392 75 9,369 68 27,250 56.0

Agroforestry 1,727 27 4,148 34 4,828 36 805 9 4,325 32 15,833 25.9

Pasture 1,200 19 2,429 20 2,639 20 1,403 16 7,671 12.6

Crops 2,500 40 810 7 - - - - 3,310 5.4

Total 6,300 100 12,042 100 13,428 100 8,600 100 13,694 100 54,064 100

3. Five micro-catchments in the medium and upper part of the

Nizao watershed, covering an area of approximately 19,500 ha, have beenselected in representing the major farming systems of the region.

B. Objectives

4. The main objective of this project component would be theattainment of sustainable systems of resource use in the medium and upper

catchments or more generally of a sustainable watershed management system

in the Nizao river basin (i.e., bringing about a better balance between supplyand demand for fodder and wood, controlling erosion, a better use ofagricultural lands, and enhancing income and employment) through the

development of integrated management models, namely: (i) forest land;(ii) agroforestry; (iii) rainfed and irrigated farminlg.

5. Although the rationale for this component is the need to halt

degradation of natural resources in the Nizao watershed area, the realizationof tangible and immediate benefits for the farm families in the project area isof vital importance for adoption of treatments and for subsequent protectionand maintenance of investments.

6. As the main objective under this component is to developmodels and to test methodologies. the replicability i.e., the cost effectivenessof the proposed treatments will be a major concern. Priority should be given

to degraded lands which will give an adequate return to investments. Wherethere is a choice between more or less expensive but still viable treatments, a

judgement about the return per dollar spent should guide the choice.

- 32 -

8.4 A project execution unit comprising a technical division and a financeand administration division, would be set up in INDRHI and would directly report tothe general manager. The project execution unit would contract with a specializedfirm for the evaluation of project activities, including environmental aspects in theproject areas.

8.5 At negotiations, assurances were obtained that INDRHI wouldmaintain the project execution unit with staffing, functions, and organizationalstructure satisfactory to the Bank (para. 10.3(c)). Assurances were also provided thatthe project execution unit would submit semi-annual progress reports to the Bank notlater than 3 months after the end of each respective period. Such reports wouldinclude information on the status of physical works under the project, progress intraining the user associations and in having user associations increase theirresponsibilities in the management of the respective areas, the effects on agriculturalproduction, intensification of land use, development of land and water conservationmeasures in the Nizao watershed, and the levels of cost recovery achieved.

B. Accounts and Audits

8.6 INDRHI would maintain separate accounts to record expendituresmade under the project using an agreed-upon plan of project accounts. A plan ofaccounts would be prepared so that in each selected area of the project, each userassociation and project execution unit would establish an accounting procedure,acceptable to the Bank (para. 10. 1(d)). Each user association would maintain recordsof expenditures and consolidate such records. Statements of expenditures will beprepared by each user association and coordinated by the project execution unit.Copies of supporting documentation for reimbursement requests provided to theWUAs would be maintained by the project execution unit and made available tovisiting Bank missions and independent auditors, who at their discretion would makedirect visits to WUAs for purposes of the overall audit. Project accounts, includingthe special account and statement of expenditures, would be audited annually byindependent auditors, acceptable to the Bank, following terms of reference approvedby the Bank. Such audit reports would be submitted to the Bank not later than 6months after the close of each financial year.

C. Monitoring and Evaluadon

8.7 The basic tool for monitoring project activities would be the annualwork program, an instrument that integrates all Irrigated Land and WatershedManagement Project management functions into one tool: programming, workorganization, and distribution of tasks, personnel management and monitoring andevaluation. A management information system would be implemented by no laterthan December 31, 1995 (para. 10.3(g)), in each project area and aggregated at the

ANNEX 5Page 1 of 11


DOMINCAN REPUBLIC

IRIUGATED LAND AND WATERSHED MANAGEMENT PROJECT

Rio Nizao Watershed Management Program

A. Project Area

1. The total area covers about 91,600 ha, 88% of which isstrongly to severely eroded, vegetation is badly degraded, soils are shallow inmany places and soil loss is very high (about 295 t/ha/year). The main causeof this degradation is deforestation (rate of deforestation of 2.3% per year),combined with inappropriate agriculture use of hilly and steep sloping areas(70% of the total area has a slope of 32%). The population of the Nizaowatershed is about 48,000 inhabitants, with an average population/km 2

density of 53. Land distribution in the area is characterized by a dualismbetween large and very small holdings. 85 % of all holdings occupies lessthan 40% of the land, and 1.2% of the farmers have more than 25% ofagricultural lands.

Current land use in the sectors of the Nizao watershed area

Ranmbo Nbuo Mahomr- N-Arribc Medlo Mabomnha Jiguey Valdeja Teed

Ha % Ha % Ha % Ha % Ha % Ha %

CpfUw 3,702 35 2,291 14 9,182 40 3,202 32 6,692 42 25,169 27

Crop. 1,798 17 3,510 21 3,902 17 4,400 44 2,060 13 16,670 18

Crop.¢&ps 699 7 2,295 14 803 4 - 4,530 29 8.327 9

- - k! 450 3 230 1 300 3 980 1

.Wood 1,300 12 915 6 5,623 25 1,500 15 - 18,938 21

Jlbwkn 2,901 28 6,732 41 3,099 14 498 5 2,368 15 21,498 23

Totl 10,400 16,193 022839 9,900 15,650 91,582 100

Source: INDRHI-FAO, SEA, August 1992.

2. However, due to population growth, which has putunsustainable pressure on agricultural and non-agricultural lands (forest,rangeland, bush fallow) and overtaxed soil fertility, the natural resources ofabout 67 % of the area have been mined and their productive potential

- 33 -

project execution unit level. The project execution unit would coordinate the annualdevelopment of the annual work program subject to the approval of the generalmanager of INDRHI and the Bank. The project execution unit would be responsiblefor issuing, no more than 3 months after the end of each period, semi-annual reportson progress of implementation of the components, which would be submitted to thegeneral manager of INDRHI, and through it to the Bank. If implementation progressis not satisfactory for any of the components, the project execution unit would initiateremedial action in agreement with the general manager of INDRHI and the Bank.Annual reviews with Bank participation would be used for setting investment plansand work programs. Performance would also be reviewed during these missions. (Aset of key performance indicators is presented in Annex 2).

8.8 At the same time, the project would develop an Environmentalmonitoring system within INDRHI to be implemented and monitored in each irrigatedarea and in the Nizao watershed. Factors to be monitored would include climate(wind, temperature, rainfall, and so on), stream discharge in the upper part of thewatersheds, above the irrigation schemes, and below at various points, nutrientcontent of discharge water; flow and water level at critical points in the irrigationsystems; water table elevations in project areas; water salinity levels in coastal areas;physical and chemical properties of soil in irrigation areas and in the watershed area;forestry coverage; agricultural acreage in production; cropping intensity; crop yieldper unit of land and water; erosion or sedimentation rates in project areas; relationbetween water demand and supply of users (equitability of distribution); condition ofdistribution and drainage canals (siltation, presence of weeds, and condition oflinings); upstream watershed management (industrial activity and agricultural extentand practices); incidence of disease and presence of disease vectors; and healthcondition of project population.

8.9 In addition, two major evaluations of the project would be carried outby independent consultants contracted by the project execution unit. First, a mid-term review would be held by no later than December 31, 1997 to: (a) assessprogress in implementation measured by performance objectives; (b) verify thecontinued validity of the design assumption in light of implementation experience;and (c) undertake necessary adjustments in project objectives, design, andimplementation arrangements. Second, these would be an end-evaluation (project-completion) report.

8.10 Assurances to this effect were obtained at negotiations (para. 10.3(i)).Terms of reference for the design of a Monitoring and Evaluation system that wouldtrack both the indicators described in Annex 2, as well as measures of projectbenefits (para. 9.1), would be prepared by the project execution unit and agreed uponwith the general manager of INDRHI and the Bank.

- 34 -

9. BENEFITS, ECONOMIC ANALYSIS, ENVIRONMENTAL IMPACT,EFFECT ON WOMEN, AND PROJECT RISKS

A. Benefits

9.1 The proposed project likely would foster a rational nationwide long-term strategy and policies for irrigated farming and watershed development. Theseare the other main anticipated project benefits:

* increased productivity, employment, and incomes on about 5,000 smallfarms from irrigated zones that now produce at well below theirpotential. There are 10,300 farmers in the project irrigated areas.Most of the investments for distribution and drainage infrastructure andfor land leveling proposed user project financing will benefit smallfarmers because large farmers in Nizao-Valdesia and PRYN1 havealready completed the required civil works with their own financingsources. In YSURA, aLmost all of the farmers are very small farmersfrom the Agrarian Reform.

* Poverty reduction in the Nizao watershed by raising income of about1,500 small farmers (out of a total of 9,000 small farmers) to bereached by project activities during the 5-year period, most of themliving below the rural poverty threshold of about DR$3,500 (US$280).

* Saving in operation and maintenance expenditures as a result ofrehabilitation and improvement of irrigation structures, improvedmaintenance, and reduced water losses.

* Water savings from more efficient on-farm water use.

* Development and testing of methods for sustainable watershed andirrigated land management.

* Strengthening of the private sector role, thus improving efficiency andflexibility in the management of existing irrigated schemes and in theprovision of agricultural support services.

* Reduced Government subsidies through higher revenues fromincreased cost recovery.

ANNEX 4

DO fINCAN REPUBLIC

RRIGATED LAND AND WATERSED MAANAGEMENT PROJECT

LAND DISTRIBUTION IN THE THREE PRO.TECT RRIGATED AREAS

0.0-1.5. 1.6-2.5 2 6-.O 5.L40 [1-1 32100 Total |.:__.:ha ha. -ha: ha h ha.

Farmers 1,771 567 670 295 133 6 3,442Area (ha) 1,425 1,143 2,389 2,045 2,054 944 10,000

Farmers 3,404 1,161 154 46 35 - 4,800Area (ha) 3,960 2,322 461 277 480 7,500SantiagoFarmers 822 745 267 123 57 1 2.015Area (ha) 836 1,529 1,015 1,004 1,028 88 5,500

3,500-3,000 2,5002,000 1,500 \ 1,000 l

O -2zLO YSURAo N o < / Nizao-Valdesiao co Lo

u _ _

cn

- 35 -

B. Economic Analysis

9.2 Economic analyses have been done for the 3 irrigated areas onexpenditures covering, first, rehabilitation and completion of the irrigationinfrastructure and, second, overall project activities including infrastructureinvestments, agricultural support services, and institutional strengthening.

9.3 Sensitivity. Sensitivity analysis has been done on the viability of theschemes under adverse conditions. Switching values were used to determine thepercentage of changes in key variables required to reduce the ERR to the opportunitycost of capital (Table 9.1). The sensitivity of individual schemes to changes inbenefit and cost streams varies widely, given the diversity of schemes and croppingpatterns.

9.4 The results show that--at Table 9.1 Economic Rates of Return

a discount rate of 12 percent, the (percenl)assumed opportunity cost of capital inthe Dominican Republic--such schemes Nuzao-Valdesia 21

are relatively insensitive to cost Arua (YSURA 14

overruns and reduced benefit from lowerproduction (due to prudent assumptions), Average irrigated areas 19

but more sensitive to a decrease inbenefits resulting from commoditiesprice reductions. Thus, critical determinants in the viability of these schemes aremarketing conditions. Farm models have been prepared by cautiously taking intoaccounts the internal and outside markets absorption capacity. (For details offinancial analysis and economic analysis, see Annex 9).

9.5 Watershed Management Pilot Program. Given the participatoryapproach, the scope and type of interventions and, hence, incremental annualproduction at the end of the project cannot be predicted precisely. Difficulties inmaking estimates are compounded by widely varying agroecological and socialconditions between microcatchments in the watershed.

9.6 In addition, the economic analysis should take into account the cost ofsoil erosion on- and off-farm. On-farm erosion cost is the associated decrease ofcrop yield. A current study (Hernandez 1992. Working Paper No. 4) at Ocoa Riverwatershed, with a slope of 30 percent, indicates that bean yield fell by 0.26kilograms per hectare for each ton of soil loss, while pigeon pea yields fell by 2.1kilograms per hectare for each ton of soil loss. But an economic analysis of returnsto investment in soil conservation measures, such as diversion ditches and livebarriers, revealed that the internal rate of return of 17 percent would not besufficiently attractive to the farmer. Off-farn quantifiable costs of soil erosion are an

Annex 3Page 2 of 2

ApprximativeDates Expected Skill Staff Input

(month/year) Activity Requirements (staff-weeks)

5-6/97 Supervision Mission Agriculture/TM 3Financial Analysis/Economics

11-12/97 Mfd-Term Review Agriculture/TM 11to review progress in overall project Irrigation Engineeringimplementation, its socio-economical Sociologistimpact and implementation of cost Watershed Management/Forestryrecovery mechanisms Financial Analysis/Economics

M&E/MIS/EMS

1998 Two Supervision Missions Agriculture/TM 12Financial Analysis/EconomicsIrrigation Engineering

1999 Two Supervision Missions Agriculture/TM 16Financial Analysis/EconomicsWatershed Management/ForestryIrrigation EngineeringM&E/MIS/EMS

2000 Supervision Mission Agriculture/TM 8(including preparation of a PCR) Financial Analysis/Economics

EnvironmentalistSociologist

- 36 -

increased maintenance cost of irrigation systems and shortened economic life ofhydropower reservoirs because of sedimentation. The incremental maintenance costsfor irrigation systems, due to increased sedimentation have been estimated at US$2million annually out of total operating and maintenance cost of US$3.4 million. Forthe 5 principal dams in the country with a design life of 50 years, the average lifehas been reduced to 20 years--40 percent--by unanticipated sedimentation. Aprogram to extend the useful life of the Valdesia Dam through hydraulic pumping ofsediment, was initiated in 1988 and cost US$4.5 million in the first year.

9.7 If these benefits were included in the analysis of project benefits, theERR would be higher than estimated here (Table 9.1).

C. Environmental Impact

9.8 The execution of the proposed project would not increaseenvironmental hazards. On the contrary, the project would improve land and watermanagement in the selected areas, by reducing the problems of drainage and salinityin existing irrigated areas. Rehabilitation and completion of irrigation or drainageworks and the strengthening of user groups in operation and maintenance wouldimprove water use efficiency and conservation. Cost-recovery requirements wouldhelp curb excess demand for irrigation. In the Nizao watershed area, upstream fromthe irrigated area, the project--through its watershed management pilot program--would address the problems of deforestation and inappropriate use of mountain slopesthat cause the erosion.

9.9 These technical considerations relate to possible side effects. In theirrigated areas considerations involve improving water use and soil fertility. The useof fertilizers may be increased but will be carefully monitored by INDRHI throughits environmental monitoring system, to avoid wasteful or environmentally damaginglevels. Crop pest protection should be improved through the development ofintegrated pest management techniques. No land clearing is planned in noncultivatedlands and negative impact is expected. In the watershed cultivated areas soil fertilityshould be improved by replacing fallow with forage legumes and pulses. And theuse of marginal lands should be changed, increasing productivity through soil andwater conservation, agronomic practices and minor irrigation. Some soilconservation practices--including earth movement--would be undertaken to increasewater and moisture retention, but with careful design, no negative effect is expected.In the watershed range and forest areas, technical considerations involve enhancingvegetative coverage for in situ soil and moisture conservation, improvingmanagement, increasing productivity, and supporting no land clearing program inuncultivated lands. Chemical fertilizers would be used in the vegetative rehabilitationefforts but application would mainly be one time and quantities would be small and

Annex 3Page 1 of 2


DOMINICAN REPUBLIC


Supervision PlanSupervision input into Kea Activities

ApproximativeDates Expected Skill Staff Input

(month/year) Activity Requirements (staff-weeks)

5/95 Supervision Mission Agriculture/TM 8(Project Launch Workshop) Irrigation Engineering

Watershed Management/ForestrySociology/Community participationEconomics/Financial Analysis

5-6/95 - Review of bidding documents and Irrigation Engineering 6procurement plans; Procurement

- Review of design;- Review of accounting plans; Financial Ana vsis- Review of Detailed Plans for:

(a) Irrigation Infrastructure(b) Agricultural Development Agriculture/TM(c) Watershed Management Program

7/95 - Review of Plan for: 3(a) Extension Program Agriculture/TM(b) Research Program(c) Monitoring and Evaluation

(MIS/EMS) M&E/Economics

11-12/95 Supervision Mission Agriculture/TM 3to review start-up, and implementation Trainingof organizational arrangements; Irrigation Engineeringto assist in preparation of annual Watershed Managementwork plans and budgets;to assist in preparation of Associationsand Management Training Program

5-6/96 Supervision Mission Agriculture/TM 6Review of Cost Recovery Procedures

11-12/96 Supervision Mission Agriculture/TM 8to review, inter alia, progress in M&E/Economicsagricultural development/irrigation Irrigation Engineeringinfrastructure/watershed management Watershed Managementand installation of MIS and EMS

- 37 -

rapidly absorbed. Some soil conservation measures could be necessary to increasemoisture retention, but efforts to minimize earth movement would avert possiblenegative effects.

D. Effect on Women

9.10 Women traditionally are responsible for small livestock, domesticchores (including fetching water and fuelwood), and child care, but also play a majorrole in crop cultivation. In the watershed area, the afforestation program and theintroduction of forage legumes would, in the long term, reduce the burden on womenby providing larger quantities of fuel and fodder closer at hand. The participatoryapproach has been designed to give women an important role in the selection ofrecommended techniques.

E. Project Risks

9.11 The risks involve whether the Government is willing enough to movetowards more privatization of the irrigation subsector and of rural developmentgenerally, the availability of adequate counterpart funds, and the enforcement of cost-recovery and self-financing schemes. These risks would be minimized by front-loading actions, such as granting land titles to ensure ownership of the irrigated landand community rights for watershed community land. Technical risks are limited, asrequirements for irrigation rehabilitation, leveling, and drainage works are relativelyunsophisticated and well known in the country. Investment in civil works in theinitial year of the project has purposely been kept low in order to minimize the riskof falling behind schedule. Moreover, INDRHI, which has proved effective duringpreparation, with its proposed project execution unit reporting directly to the generalmanager, will increase the effectiveness of coordination. And Bank missions wouldbe scheduled to participate in formulating and reviewing annual operation plans andbudgets. Considerable emphasis is also being given to participatory research anddevelopment in order to ensure effective use of improved irrigation systems andbetter exploitation of market opportunities. Both the size and complexity of theproposed project appear to be within the capacity of INDRHI and the privateorganizations involved, namely water user associations, and ADESJO.

ANNEX 2Page 2 of 2

Performance Indicators

ACTIVITY UNIT PY1 PY2 PY3 Pl4 PY5 TOTAL

Field days* Nizao-Vldesia man*day 1,000 2,000 3,000 3,000 3,000 12,000

* Ysura man*day 1,000 2,500 3,500 3,500 3,500 14,000

* PRYN man*day 500 1,000 1,500 1,500 1,500 6,000

Visits* Nizao-Wldesia man*day 500 1,000 1,500 1,500 1,500 6,000

* Ysura man*day 800 1,500 2,500 2,500 2,500 9,800

* PRYN man*day 400 800 1,200 1,200 1,200 4,800

Demonstration plots* Nizao-Vldesia Plots 2 4 6 6 6 24

* Ysura Plots 2 5 7 7 7 28

* PRYN Plots 2 5 5 5 5 22

Total Farmers Farmers 1,500 4,120 5,150 6,200 7,200 7,200

contacted

D. StudiesWater Contml % of Total 100% - - - 100%

(Nizao-Valdesia)Land Register* Nizao-Valdesia % of Total 40% 60% - 100%* Ysura % of Total 40% 60% - - 100%

* PRYN (+ maps) % of Total 30% 50% 20% - 100%

Mid-Term Review - - 100% - 100%

Project Preparation - - - 100% 100%

E. Monitorine- MIS development % of Total 40% 60% - 100%-EMS ,i of Total 40% 60% - - - 100%

E InstitutionalDevelopment

INDRHI T.A. T.A.*month 11 2 1 1 1 16

Training WUA. WUA Officials man*day 90 90 90 9tl 90 450

. WUA Staff man*day 150 150 150 150 150 750

Nizao WatershedT.A. T.A.*month 12 12 12 12 12 60

. Training of staff man*day 930 30 30 30 30 1,050

. Overseas visits week - 2 2 2 - 6

. National Workshop man*day - - 160 160

E. Reporting andAudit

POA for PYI readyby Dec 31, 1994 12/31/1994

and subsequent POAson November 30 of 11/30 11/30 11/30 11/30each year thereafter.Audit compleed 05/1995 05/1996 05/1996 05/1997

Operating Manual. Prepared 12/31/1994. Disseminated 03/1995. Implemened. 06/1995

- 38 -

10. S1MMARY OF AGREEMEIT REACHIED AND RECOMMENDATIONS

During negotiations of the proposed Loan, agreement from the Government ofthe Dominican Republic was reached on the following main actions.

10.1 Conditions of effectiveness:

(a) Signing of the Subsidiary Agreement.

(b) Opening of the Project Account with an initial deposit of US$1.0million to cover counterpart expenditures (para. 7.5).

(c) Adoption of a plan of accounts satisfactory to the Bank (para. 8.6).

(d) Presentation of an Annual Operating Plan for 1995 satisfactory to theBank.

(e) Establishment of PEU in manner satisfactory to the Bank and fullystaffed, including the Project manager, with personnel of experienceand qualifications satisfactory to the Bank (para. 6.16).

10.2 Conditions of disbursement:

(a) Irrigation Infrastructure Component. Satisfactory evidence thatINDRHI has submitted to the Tribunales de Tierra the documentationrequired to initiate the appropriate legal actions for the award of finalland titles to at least 80% of farmers living in each of the irrigatedareas will be required for civil works expenditures in the respectiveirrigated areas (para. 6.3; 7.6).

(b) Nizao Watershed Management Treatments Component. The ADESJOAgreement and subgrant agreements must be signed; subgrants tocommunities for soil and water management measures in the Nizaowatershed would be allowed only if a comprehensive natural resourcesmanagement plan for the selected microcatchment has been agreed toby the INDRHI, project execution unit and related communities (para.7.6).

(c) Agricultural Development Component. Finalization of criteria andprocedures, satisfactory to the Bank, for carrying out the component;presentation of a short list of firms for participatory research anddevelopment support service contracts (para. 6.11).

ANNEX 2Page 1 of 2


DOMINICAN REPUBLIC


Firformance Indicators

ACTIVITY ULIT PYI PV2 PV'3 PY4 PY5 TOTAL

A. Civil Works* Nizao-Valdesia

Final Design % of Total 40% 40% 20% - 100%Irrigation Works % of Total 5% 40% 40% 15% 100%Land Levelling ha 65 ha 260 ha 325 ha - 650 ha

* YSURAFinal Design % of Total 60% 40% - 100%Major drainage/ % of Total 15% 60% 25% 100%Flood control

Farm drainage % of Total 25% 75% - - 100%Land Levelling ha 225 ha 562 ha 675 ha 788 ha 2,250 ha

* PRYNFinal Design % of Total 40% 30% 30% - 100%Gated Structures Unit 10 22 - 32Irrigation works % of Total 5% 35% 60% - - 100%Land Levelling ha 340 ha 680 ha 850 ha 1,020 ha 510 ha 3,400 ha

B. Operation &Maintenance

- O&M Equipment % of Total 100% - - - - 100%- O&M Training for

each system,Users Course 4 4 4 4 4 20, WUA off. and staff Course 2 2 2 2 2 10, INDRHI staff Course 2 2 2 2 2 10

-O&M Manual* Nizao-Wldesia % of Total 70% 30% - - - 100%* PRYN % of Total 50% 50% 100%

C. AericulturalDevelol..ent'

- Research, Expand lines lines n.a. n.a. n.a. n.a. n.a. n.a,

Initiate new lines lines n.a. n.a. n.a. n.a. n.a. n.a.- Training of Extension

Staff* Nizao-Valdesia man*day 140 140 140 140 140 700* Ysura man*day 160 160 160 160 160 800* PRYN man*dy 120 120 120 120 120 600

- Tbchnology Transfer* Nizao-Valdesia man*day 1,400 2,000 2,000 2,000 2,000 9,400* Ysura man*day 1,900 3,000 3,000 3,000 3,000 13,900* PRYN man*day 800 1,200 1,200 1,200 1,200 5,600

1. for irrigated areas only. Given the nature of the development program in the Nizaowatershed area, no key indicator has been proposed (see Annex 5).

- 39 -

10.3 Assurances were obtained that:

(a) The Government would establish a special account in the BancoCentral, in U.S. dollars, to cover all eligible Bank expenditures underthe loan with procedures for the account's operation clearly establishedand acceptable to the Bank (para. 7.4).

(b) The Government would provide the necessary annual counterpartfunding to INDRHI according to each annual work program (para.7.2).

(c) INDRHI would maintain the project execution unit with staffing,functions, and organizational structure satisfactory to the Bank (para.8.5).

(d) INDRHI would refrain from presenting to the Bank withdrawalapplications in respect of expenditures not included in the POAapproved for the year in question (para. 7.6).

(e) Contracts for participatory research and development support serviceswould be signed no later than June 30, 1995 (para. 6.11).

(f) The irrigation control studies would be completed by no later thanDecember 31, 1995; the recommendations of such studies would bereviewed jointly with the Bank by no later than June 30, 1996; andimmediately thereafter, such recommendations would be implementedin a manner satisfactory to the Bank (para. 6.17).

(g) By no later than December 31, 1996, the Government would prepareand furnish a land title distribution action plan, satisfactory to theBank, for the farmers of Nizao watershed who have not received finaltitles; by no later than June 30, 1997, the Government would start theimplementation of such action plan; and by no later than June 30,1999, the Government would complete the implementation of theaction plan (para. 6.3).

(h) The design of a management information system would be completedin a manner satisfactory to the Bank by no later than December 31,1995 and immediately thereafter such system would be implemented ina manner satisfactory to the Bank (para. 6.19).

(i) By no later than December 31, 1995, the Government would presentan action plan, satisfactory to the Bank, to: (i) raise, by no later than

ANNEX 1Page 4 of 4

DOMINICAN REPUBLIC


Estimated Schedule of Bank Disbursements(In US$ million)

Disbursement Cumulatihe Balance ofFY/End of Semester During Semesier Amount Loan

July 30, 1995 28.00

FY 1996

Dec. 31, 1995 0.78 0.78 27.22June 30, 1996 1.18 1.96 26.04

FY 97

Dec. 31, 1996 1.68 3.64 24.36June 30, 1997 2.08 5.72 22.28

FY 98

Dec. 31, 1997 2.08 7.80 20.20June 30, 1998 1.04 8.84 19.16

FY 99

Dec. 31, 1998 2.08 10.92 17.08June 30, 1999 3.12 14.04 13.96

FY 2000

Dec. 31, 1999 2.08 16.12 11.88June 30, 2000 2.08 18.20 9.80

FY 2001

Dec. 31. 2000 3.12 21.32 6.68June 30, 2001 2.08 23.40 4.60

FY 2002

Dec. 31, 2001 1.74 25.14 2.86June 30, 2002 1.74 26.88 1.12

FY 2003

Dec. 31, 2002 1.12 28.00 0.00

- 40 -

June 30, 1996, the level of the water charges in order to recover alloperation and maintenance costs; and (ii) introduce, by no later thanJune 30, 1997, measures that will enable INDRHI to recover fromfarmers holding more than 6.3 hectares of irrigated land a significantportion of the capital cost of the investments (para. 7.16);

(j) Two major evaluations of the project would be conducted: a mid-termreview by the Government and the Bank and an end-evaluation(project-completion) report (para. 8.9, 8.10).

10.4 With the above assurances, the proposed project would be suitable fora Bank loan of US$28.0 million equivalent on standard terms with 20 years' maturityand variable interest rate.

ANNEX 1Page 3 of 4

DOMINICAN REPUBLIC


Financing Plan by Disbursement Categorv(EJS$ 000)

Users'Associations World Rank Ooverrment Total Local

---------------............................-------- ----- For. CExcL.Amount X Amount X Amount X Amount X Exch. Taxes)

A. C1vil Works 0.0 0.0 12300.1 78.2 - 3429.1 21.8 15729.2 36.4 8870.9 6858.3B. Equipment 0.0 0.0 2464.3 78.3 682.9 21.7 3147.2 7.3 2464.3 682.9C. Studies, Training, TA 0.0 0.0 5909.5 100.0 0.0 0.0 5909.5 13.7 2038.5 3871.10. Contracts 0.0 0.0 2865.8 64.5 1574.1 35.5 4439.8 10.3 504.7 3935.1E. Funds 0.0 0.0 3213.2 100.0 0.0 0.0 3213.2 7.4 591.0 2622.2F. 0 & 4 WUA 646.0 18.6 9.1 0.3 2815.7 81.1 3470.8 8.0 598.9 2871.9C. 0LH IJNDHR 55.4 4.0 0.0 0.0 1334.8 96.0 1390.1 3.2 496.8 M8.4H. 0 H NDORNI 28.1 1.6 0.0 0.0 1748.8 98.4 1776.8 4.1 634.9 1141.9I. Other 0 S N 0.0 0.0 743.9 35.2 1367.7 64.8 2111.6 4.9 743.9. 1367.7J. Personnel 0.0 0.0 0.0 0.0 814.7 100.0 814.7 1.9 0.0 814.7K. Land Titling 187.0 15.0 623.3 50.0 436.3 35.0 1246.6 2.9 363.7 882.9........................................ _........._. _ . ........ _._..__,______.--______Total Disbursement 916.4 2.1 28129.2 65.0 14204.0 32.8 43249.6 100.0 17307.5 25942.0

----------- s=s====-5__=s=ss s se _ =s s =s- _

4/26/1994 10:51

Disbursement by Financier by Semester(US$ 000)

Users"Associa Yorld Goverrntions Bank ent Totat

Amount Amount Amount Amout

Semester

1 137.3 3499.0 1529.2 5165.42 137.3 3499.0 1529.2 5165.43 53.8 3756.3 1618.7 5428.84 53.8 3756.3 1618.7 5428.85 71.6 3219.3 1512.9 4803.86 71.6 3219.3 1512.9 4803.87 87.7 1929.6 1234.4 3251.68 87.7 1929.6 1234.4 3251.69 107.9 1660.5 1206.7 2975.1

10 107.9 1660.5 1206.7 2975.1

TOTAL 916.4 28129.2 14204.0 43249.6

4--/26 ----19-94 10:51- ---------4/26/1994 10:51

ANNFXJ 4Page o


DOMNICAlN REPUBLIC

IRRIGATED LAND AND WATERSHED MANAGEMENT PROTECT

Project Components bv Year

Base Costs Totat

1995 1996 1997 1998 1999 DR5000 USS000

A. Irrigation1. Nizao-VaLdesis 19671.8 29752.6 30025.6 13731.9 4774.8 97956.7 7836.52. YSURA 25288.0 33524.9 18849.3 .8366.8 8366.8 94395.7 7551.73. PRYN 20722.1 16211.2 10469.6 6368.4 6368.4 60139.6 4811.2

............................................................ …...........Sub-total 65681.9 79488.7 59344.5 28467.1 19509.9 252492.0 20199.4B. watershed Management 3198.7 5763.9 7209.0 9077.6 10887.7 36137.0 2891.0C. Agricultural Development1. Extension Nizao-Valdesia 624.8 339.1 374.1 467.8 374.1 2179.9 174.42. Extension YSURA 692.7 422.8 462.8 556.5 462.8 2597.7 207.03. Extension PRYN 574.1 270.4 284.4 346.9 284.4 1760.2 140.84. Participatory Research 16075.7 10384.2 10086.9 9710.7 9710.7 55968.4 4477.5

….......................................................................Sub-total 17967.4 11416.5 11208.2 11082.0 10832.0 62506.1 5000.5D. tnst. Strengthening

1. INORHI/Executive Unit 19820.1 7518.3 9010.1 5422.6 4187.0 45958.2 3676.72. WUA Nizao-Valdesia 164.8 102.5 102.5 102.5 102.5 575.0 46.03. IUUA YSURA 94.8 102.5 102.5 102.5 102.5 505.0 40.44. IJA PRYN 94.8 102.5 102.5 102.5 102.5 505.0 40.45. Credit Cooperatives 863.3 1582.5 0.0 0.0 0.0 2445.7 195.7

. .......................................................... ...........

Sub-total 21037.8 9408.4 9317.8 5730.3 4494.7 49988.9 3999.1............................................................ ...........

Total BASELINE COSTS 107885.8 106077.5 87079.4 54357.1 45724.3 401124.0 32089.9Physical Contingencies 11660.4 11771.7 9922.7 5551.7 4054.8 42961.3 3436.9Price Contingencies 9589.0 17871.6 23092.5 21382.4 24598.5 96534.0 7722.7

............................................... .........................

Total PROJECT COSTS 129135.1 135720.9 120094.6 81291.1 74377.7 540619.4 43249.6

Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0Foreign Exchange 66076.2 60525.5 47990.4 24616.1 17135.9 216344.0 17307.5

..... ........ 1........................................................................................4/26/1994 10:51


DOMINICAN ItEPUBLIC

IRRIGATED LAND AND WATERS[ED MANAGrEMENT PROJECT

ToIal SuLnijnnLry Accounts

DRS 000 USS 000 X Total--- ~ - - I- X Foreign Base

Local Foreign Total Local Foreign Total Exchange Costs.............................. ........................... ....................1. INVESTMENT COSTS

....... _.......

A. Civil Works1. Irrigation Structures 27050.4 40575.6 67626.0 2164.0 3246.0 5410.1 60.0 16.92. Drainage 18268.8 27403.2 45672.0 1461.5 2192.3 3653.8 60.0 11.43. On-Farm Works 13736.0 20604.0 34340.0 1098.9 1648.3 2747.2 60.0 8.6............... ........................... . .. ..................... .......... ............................... .......... .... ............

Sub-TotaL 59055.2 88582.8 147638.0 4724.4 7086.6 11811.0 60.0 36.8B. Equipment1. Office/Training 2238.7 3577.8 5816.5 179.1 286.2 465.3 61.5 1.52. Irrigation 4248.9 16995.6 21244.5 339.9 1359.6 1699.6 80.0 5.3.............................. ........................... ....................

Sub-TotaL 6487.6 20573.4 27061.0 519.0 1645.9 2164.9 76.0 6.7C. VehicLes 301.6 5729.7 6031.2 24.1 458.4 482.5 95.0 1.50. Technical Assistance 20494.3 11140.9 31635.2 1639.5 891.3 2530.8 35.2 7.9E. Land Titling 9100.0 3900.0 13000.0 7?8.0 312.0 1040.0 30.0 3.2F. Training 7977.7 3807.4 11785.1 638.2 304.6 942.8 32.3 2.9G. Studies 5326.5 6102.3 11428.8 426.1 488.2 914.3 53.4 2.8H. Grants for Watershed 22990.6 6497.7 29488.3 1839.3 519.8 2359.1 22.0 7.41. Support Services Contract 33088.6 4954.1 38042.7 2647.1 396.3 3043.4 13.0 9.5

Total INVESTMENT COSTS 164822.1 151288.3 316110.4 13185.8 12103.1 25288.8 47.9 78.8

It. RECURRENT COSTS................

A. 0 & H INDRHI 17180.2 11453.5 28633.7 1374.4 916.3 2290.7 40.0 7.18. 0 A H WUA 24243.0 6060.7 30303.7 1939.4 484.9 2424.3 20.0 7.6C. Operating Costs 11557.2 7534.7 19091.9 924.6 602.8 1527.4 39.5 4.8D. Personnel 6984.2 0.0 6984.2 558.7 0.0 558.7 0.0 1.7 P

Total RECURRENT COSTS 59964.7 25049.0 85013.6 4797.2 2003.9 6801.1 29.5 21.2.. _.__........................... ................................ .... __.... ...... ........ ___......_.....__,__,____.iTTotal BASELINE COSTS 224786.8 176337.3 401124.0 17982.9 14107.0 32089.9 44.0 100.0 oPhysical ContingencIes 22547.8 20413.5 42961.3 1803.8 1633.1 3436.9 47.5 10.7Price ContIngencles 76940.8 19593.2 96534.0 6155.3 1567.5 7722.7 20.3 24.1 4-.............................. ........................... ....................Total PROJECTS COSTS 324275.4 216344.0 540619.4 25942.0 17307.5 43249.6 40.0 134.8

4/26/199gm==223s53.UUWE g== .:S==== ZW.8UU Csuuuuauu!-'i=-U 2

4/26/1994 10:51

DOMINICAN REPUBLIC -20' 71 69' 20'

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WATERSHED MANAGEMENT PROJECT Sanhi

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KILOMETERS I 738 m /'

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- MAIN ROADS

SECONDARY ROADS

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/ A .~~~~~~~~0

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\ / t g i ' t~~~~~~~~~~~~~~~~~~~~~ 2\~~~~~~~\Pu m pt~~~~~~~upng plantSabanet _____ A CANALS

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\ : w T-' -a S - ~~~~~~DAMS B-A o.oo zoWlrhd~ ' (- RESERVOIR 0 10 20 30

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L > oP>=rahona | Puerto Viejo r : , i ,1w e c1 * S e a OCIOLt 1993

OCTOBER 1993

World Bank Document...2005/03/21 · (Proyecto Manejo de Agua a Nivel de Finca) PROMATREC Irrigated...

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Transcript of World Bank Document...2005/03/21 · (Proyecto Manejo de Agua a Nivel de Finca) PROMATREC Irrigated...