Pakistan Public Expenditure Management, Volume II

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Pakistan Public Expenditure Management, Volume II Report No. 25665-PK PAKISTAN Public Expenditure Management Accelerated Development of Water Resources and Irrigated Agriculture VOLUME II January 28, 2004 Environment and Social Development Sector Unit Rural Development Sector Unit South Asia Region Document of the World Bank CURRENCY EQUIVALENTS Currency Unit = Pakistan Rupee US $1 = PKR 57.8 FISCAL YEAR July 1-June 30 ACRONYMS AND ABBREVIATIONS ADB Asian Development Bank MIS Management information system ADP Annual Development Plan MOWP Ministry of Water and Power AWB Area Water Board MTEF Medium Term Expenditure Framework BCM Billion cubic meters MTIP Medium Term Investment Plan CCA Canal command area NDP National Drainage Program DMP Drainage Master Plan NDS National Drainage System EFR Environmental Flow Requirement NSDS National System Drainage Study EIRR Economic internal rate of return NWFP North West Frontier Province FATA Federally Administered Tribal Areas NWP National Water Policy FGW Fresh groundwater OFWM On-farm water management FO Farmer organization O&M Operations and Maintenance GDP Gross development product PIDA Provincial Irrigation and Drainage Authority GIS Geographic Information System POE Panel of Experts GOP Government of Pakistan PRHS Pakistan Rural Household Survey HYV High yielding variety PSDP Public Sector Development Program IBIS Indus basin irrigation system PV Present Value IDA International Development Association RAP Revised Action Plan IPPs Independent Power Producers RBOD Right Bank Outfall Drain IRSA Indus River System Authority SCARP Salinity control and reclamation program ISRP Irrigation System Rehabilitation Project TYPP Ten Year Perspective Plan IWRM Integrated water resource management WAPDA Water and Power Development Authority KESC Karachi Electricity Supply Company WMO Water Management Ordinance LBOD Left Bank Outfall Drain WSIPS Water Sector Investment Planning Study Mac Million acres WSS Water Sector Strategy Study MAF Million acre-feet WUA Water user association TERMS Abiana Water charge for canal irrigation service assessed on the basis of “matured crop” acreage, crop, and canal command Kharif Summer growing season (mid-April to mid-October) Rabi Winter growing season (mid-October to mid-April) UNITS 2.54 acres = 1 hectare 1 MAF/month = 16,850 cfs = 477.2 m3/sec 1 acre foot/day = 0.5 cfs = 14.3 liters/second 1 million acre feet = 1.235 billion cubic meters Vice President: Praful Patel, SARVP Country Director: John W. Wall, SACPK Sector Director: Sadiq Ahmed, SASPR Sector Manager: Ijaz Nabi, SASPR Task Managers: Paul Wade, SASPR; Hanid Mukhtar, SASPR Parvez Hasan, Consultant TABLE OF CONTENTS EXECUTIVE SUMMARY............................................................................................................i 1. Introduction..............................................................................................................................1 2. Background: Achievements and Issues..................................................................................3 Role of Agriculture in the Pakistan Economy .................................................................................3 The Ultimate Threat to Sustainability – Water Logging and Salinity ................................................5 Water Resources and Agriculture...................................................................................................8 The Inter-Provincial Water Apportionment Accord....................................................................... 11 Environment Flow Requirements in the Lower Indus River........................................................... 15 Poverty, Water Availability, and Agricultural Productivity............................................................ 16 3. Public Sector Development Programs .................................................................................21 Trends in Public Expenditure for Water and Agriculture ............................................................... 21 Investment Programs from the 1960s to the 1990s ........................................................................ 21 The Emergence of a Program of Governance Reforms in the 1990s ............................................... 22 4. Operations and Maintenance Expenditures and Performance ......................................... 29 Provincial Operations and Maintenance Budgets........................................................................... 29 Cost Recovery............................................................................................................................ 32 Changes in the Structure of Water Pricing and the Flow of Revenues............................................. 35 5. Water Disputes and Strategy Debate: Policy and Strategy Formulation........................40 The Challenges at the Close of the 1990s ..................................................................................... 40 The Government’s Responses to Water Shortages......................................................................... 40 Water Resource Development Challenges .................................................................................... 43 Strategic Questions and Issues..................................................................................................... 45 A Framework for Formulating a Strategy ..................................................................................... 60 Changing the Paradigm to Water Management ............................................................................. 62 6. Proposed Water Sector Investment Plans ........................................................................... 64 7. Federal & Provincial Investment Trends and Options ...................................................... 69 Key Issues in the Emerging Portfolio ........................................................................................... 70 Comparison of the Federal FY03 and FY04 PSDP........................................................................ 72 Extension of the FY04 PSDP Portfolio over the MTEF Period....................................................... 75 Investment Trends and Options ................................................................................................... 77 8. The Way Forward.................................................................................................................. 83 Key Water Policy Responses....................................................................................................... 83 Addressing Strategic Questions and Issues ................................................................................... 84 What needs to be done ................................................................................................................ 86 Annex A: A Note on “Canal Basin Water Management Plans” Annex B : Provincial Investment Plans, Federal PSDP and Provincial ADPs Annex C: Review of Projects in the Core and Non-Core Portfolios TABLES Table 2.1: Average Water Balance of the Indus River System ...............................................................9 Table 2.2: Water Availability at the Farm Head in the Indus Basin System.............................................9 Table 2.3: Inter-Provincial Water Accord Allocations ...........................................................................11 Table 2.4 Shortfall in Meeting the Accord Allocations .........................................................................13 Table 4.1: Irrigation Department Budgets Since 1992 ...........................................................................29 Table 4.2: Abiana Assessment and Recovery Performance (Rs. million) ................................................33 Table 5.1: Summary of MOWP Water Sector Strategy Proposed Investments.........................................42 Table 5.2: Sub-Sector Investments in the MOWP Water Sector Strategy................................................43 Table 5.3: Water Resources Available to Meet Future Development Needs ............................................47 Table 5.4: Summary of Incremental and Projected Water Requirements.................................................49 Table 5.5: Present Power Generating Capacity .....................................................................................50 Table 5.6: Cost and Economic Returns for Proposed Major Investment Projects.....................................57 Table 5.7: Potential Water Savings from Improved Efficiencies.............................................................59 Table 5.8: Watercourse Improvement Program Needs...........................................................................60 Table 6.1: TYPP Objectives for Water Resources and Agriculture .........................................................65 Table 6.2: TYPP Strategy for Water Resources Development (2001-2011).............................................67 Table 6.3: Common Features of Proposed Investment Plans (MTEF Period) ..........................................68 Table 7.1: Emerging Water Sector Portfolio During the MTEF Period (FY03-07)...................................69 Table 7.2: Summary of Resource Allocation in the Emerging Portfolio ..................................................70 Table 7.3: Comparison of FY03 and FY04 PSDPs................................................................................72 Table 7.4: Comparison of FY03 and FY04 PSDP Resource Allocations .................................................73
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