Technical Assistance Consultant’s Report

Project Number: 45353-001 (RETA 8015) June 2013

Kyrgyz Republic: Developing Water Resources Sector Strategies in Central and West Asia Financed by the Multi-Donor Trust Fund under the Water Financing Partnership Facility and ADB TASF-other sources

Prepared by AHT Group AG Management and Engineering

UNICON

For the Asian Development Bank

This consultant’s report does not necessarily reflect the views of ADB the Government concerned, and

ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

CENTRAL AND WEST ASIA

Developing Water Resources Sector Strategies in Central and West Asia Kyrgyz Republic

(TA8015-REG)

Submitted to: Asian Development Bank

FINAL REPORT

Submitted by:

June 2013

ADB TA8015-REG Final Report Kyrgyz Republic

CURRENCY EQUIVALENTS Currency Unit – Kyrgyz Som (KS)

(17 May 2013) KS1.00 = $0.020777 $1.00 = KS48.13

ABBREVIATIONS ADB – Asian Development Bank BCR – benefit/cost ratio CBA – cost/benefit analysis DCP – Draft Concept Paper DWEM – Department of Water Economy and Melioration1 FAO – Food and Agriculture Organization FWOP – future without project GKR – Government of the Kyrgyz Republic ISF – irrigation service fee MoAM – Ministry of Agriculture and Melioration MOE – Ministry of Economy MOF – Ministry of Finance NGO – Non Governmental Organization NWC – National Water Council O&M – operations and maintenance OFWM – on-farm water management OIP – On-Farm Irrigation Project PIM – participatory irrigation management RAS – Rural Advisory Services SDC – Swiss Agency for Development and Cooperation SU – support unit TA – technical assistance WOP – Water Operational Plan WMIP – Water Management Improvement Project WUA(F) – Water Users Association (Federation)

WEIGHTS AND MEASURES Ha – hectare km – kilometer m – meter m3 – cubic meter

NOTES (i) The fiscal year (FY) of the Government of the Kyrgyz Republic ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends. (ii) In this report, "$" refers to US dollars.

1 In October 2012 renamed Department of Water Economy and Melioration and Land Improvement

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CONTENTS

Page

1 INTRODUCTION...... 1

PART A: SECTOR ASSESSMENT...... 2

2 WATER SECTOR OVERVIEW ...... 2 2.1 Water Resources ...... 2 2.2 Water Consumption and Demand ...... 3 2.3 Climate Change ...... 8 2.4 Assessment of Water Resources ...... 9

3 WATER RESOURCE MANAGEMENT ...... 10 3.1 Legal, Policy and Planning Framework ...... 10 3.2 Water Management Institutions...... 11 3.3 Assessment of Water Resource Management ...... 12

4 IRRIGATION SYSTEM MANAGEMENT...... 13 4.1 Management of Main Infrastructure...... 14 4.2 Management of On-Farm Infrastructure ...... 15 4.3 Management of Farm-Level Irrigation Infrastructure...... 25 4.4 Assessment of Irrigation System Management ...... 27

5 IRRIGATED AGRICULTURE...... 29 5.1 Review of Irrigated Agriculture ...... 29 5.2 Potential Causes of Low Agricultural Productivity...... 33

6 IDENTIFICATION OF KEY CHALLENGES ...... 37 6.1 Results of Sector Assessment ...... 37 6.2 Results of Stakeholder Consultations...... 37 6.3 Key Challenges...... 39

PART B: SECTOR STRATEGIES ...... 40

7 PRINCIPLES FOR DEVELOPING WATER SECTOR STRATEGIES...... 40 7.1 Assessment of Financing Gap ...... 40 7.2 Qualitative Assessment of Potential Benefits of Resolving Key Challenges ...... 41 7.3 Prioritization of Strategies ...... 41

8 DEFINITION OF RECOMMENDED WATER SECTOR STRATEGY...... 43

PART C: PRIORITY PROJECTS...... 52

9 PRIORITIZATION OF INVESTMENT PROJECTS...... 52 9.1 Overview of the Proposed Methodology...... 52 9.2 Screening...... 52 9.3 Ranking...... 56 9.4 Subproject #1: Reconstruction of Sarymsak Canal...... 57 9.5 Subproject #2: Construction of Water Storage Pond on Shamshy river...... 58

PART D: PROJECT CONCEPT...... 60

10 THE PROJECT ...... 60

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10.1 Rationale...... 60 10.2 Impact, Outcome, and Outputs ...... 61 10.3 Investment and Financing Plans ...... 62 10.4 Indicative Implementation Arrangements ...... 62 10.5 Technical Assistance ...... 62 10.6 Due Diligence...... 63 10.7 Plan Processing ...... 64

PART E: REMOTE SENSING AND IMAGE INTERPRETATION...... 65

11 REMOTE SENSING OF SUBPROJECTS ...... 65 11.1 Remote Sensing for Supporting Irrigation Water Management...... 65 11.2 Application of Remote Sensing to Subprojects...... 66 11.3 Resource and Data Requirements ...... 68 11.4 Conclusions ...... 69

12 PROPOSED SYSTEM TO MONITOR IRRIGATION PERFORMANCE WITH REMOTE SENSING DATA...... 70 12.1 Approach ...... 70 12.2 Phase 1: Assessment of Current POW ...... 70 12.3 Phase 2: Contribute to POW Improvement Strategy ...... 74 12.4 Phase 3 & 4: Project Implementation and Subproject O&M...... 75

APPENDICES 1. PROBLEM TREE ...... 76 2. DESIGN AND MONITORING FRAMEWORK...... 77 3. INITIAL POVERTY AND SOCIAL ANALYSIS...... 79 4. PROJECT PREPARATORY TECHNICAL ASSISTANCE...... 81 5. REVIEW OF COUNTRY SECTOR STRATEGY ...... 85 6. SUMMARY OF RELATED TECHNICAL ASSISTANCE ...... 87 7. PRIORITIZATION OF SUBPROJECTS...... 94 8. ASSESSMENT OF SALT MANAGEMENT...... 97 9. SUMMARY OF WORKSHOP RESULTS...... 102 10. REMOTE SENSING TECHNOLOGY ...... 104 11. SUMMARY OF STAKEHOLDER INTERVIEWS...... 113

AHT / UBI / UNICON iii ADB TA8015-REG Final Report Kyrgyz Republic

1 INTRODUCTION

1. Background. In 2011, ADB approved a technical assistance (TA) project designed to assist the Governments of the Kyrgyz Republic, and with the development of water resources sector strategies to be used for investment planning. 2 The purpose of developing these strategies was to identify and address the top three key challenges in the water sector in the short and medium term through one or more high-priority investments. 3 As such, the water sector strategies will form part of the broader National Water Strategy that is currently under development in the Kyrgyz Republic. In 2012, ADB selected the consortium AHT GROUP AG, UBI Consulting LLC, UNICON-Uzbekistan Ltd. (“the Consultant”) to assist the governments of the three countries with the preparation of water sector strategies (Phase 1), and the analysis of one or more investment projects aimed at addressing key challenges identified by the strategies (Phase 2).

2. Status of this report. This Final Report is one of four outputs of the TA for the Kyrgyz Republic (the other outputs are the Inception Report, the Draft Final Report and the Knowledge Product). It presents and synthesizes the findings, conclusions and recommendations of Phases 1 and 2, and addresses comments raised by ADB and Government of the Kyrgyz Republic on the Inception Report and Draft Final Report.

3. Report structure . The report is divided in five parts: • Part A – Water Resources Assessment. This part presents the findings of the assessment of the water resource sectors, including water supply and demand, water management institutions, irrigated agriculture and the irrigation scheme management. • Part B – Water Development Strategy. This part presents the three key challenges facing the TA sector and subsectors, and the proposed strategy to address these challenges. • Part C – Priority Projects. This part presents a description of the processes and results of identification of priority investment projects including screening and ranking, stakeholder consultation and field verification. • Part D – Priority Project Concept. This part presents the priority project concept as presented in concept paper presented to ADB in draft form in December 2012, for which comments were received and addressed within this report. • Part E – Remote Sensing and Image Interpretation . This part presents the finding and results assessment and analysis of remote sensing and image interpretation for project planning and subsequent monitoring and evaluation.

4. Disclaimer. The contents of this report do not necessarily reflect the views of ADB or the Government of the Kyrgyz Republic.

2 According to the Terms of Reference of the TA, the water resources sector includes: (i) integrated water resources management, including climate change adaptation and mitigation; (ii) irrigation, drainage, and flood protection (irrigation): (iii) water-based natural resource management; and (iv) irrigated land-based natural resources management (sustainable land management and conservation agriculture activity areas). 3 The TA also provides support to the governments of Tajikistan and Uzbekistan with the preparation of water sector strategies for investment planning. Because the TA does not cover trans-boundary investments, strategies for the other two countries are presented in separate reports.

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PART A: SECTOR ASSESSMENT

2 WATER SECTOR OVERVIEW

2.1 Water Resources

5. Background. The Kyrgyz Republic (KR) is a landlocked country, surrounded by , Uzbekistan, Tajikistan and the People’s Republic of . It covers an area of about 200,000km 2, of which over 94% is located at least 1,000 meters above sea level. The climate is continental with cold winters and hot dry summers. The frost-free season ranges from about eight months in the south to fewer than five months in mountainous provinces. Annual fluctuates from 200mm to 600mm in the north, and from 350mm to 700mm in the south. During the potential growing season the mean precipitation in the south is about 170mm, while the evapotranspiration of the mean reference crop during the same period is approxima- tely 900mm (figures for the north are somewhat lower). This means that irrigation is critical for sustained agricultural production.

6. Surface water resources. The average surface water flow of the Kyrgyz Republic is estimated at about 47km 3 per year, of which approximately 44km 3 originates from rainfall, snow and glacier melt, and the remainder from irrigation return flows. 4 The rivers of the Republic drain into six major river basins, of which the basin is by far the most important ( Table 1). The former allocated about 75% of renewable surface water flows (i.e. excluding return flows) of the Syr Darya, Chui, and basins––which all form part of the larger Basin––to the neighboring countries of Kazakhstan, Tajikistan and Uzbekistan. 5 This allocation principle has been endorsed by the five states of (including the Kyrgyz Republic), but may be superseded by a future treaty. 6 In 2011, the downstream allocation from the four basins was approximately 26 km 3. Irrigation development is largely restricted to five river basins (development in Tarim is limited), for the available surface water resources are about 11.9 km 3.

Table 1: Surface Water Flows and Water Availability by River Basin, 2011 Surface Water Flow (km 3) Available as River Basin Total Allocated Available % of Total Aral Sea Basin 26.0 25.9 10.3 29 Amu Darya 1.9 1.5 0.5 26 Chui 5.0 1.2 3.9 78 Syr Darya 27.4 22.5 4.9 18 Talas 1.7 0.7 1.0 57 Other basins 10.9 3.1 7.8 72 -Kul 4.7 3.1* 1.6 34 Tarim 6.2 - 6.2 100 Total 46.9 29.2 18.1 39 Source: DWEM (2011) * Allocation based on environmental considerations

7. Groundwater resources. At present, there are 34 known aquifers in the country with an operational potential of 13.7km 3 per year; of this amount, about 2.5km 3 is not connected to surface water. In recent years, annual abstraction has ranged from 0.7km 3 to 0.9km 3. This is substantially lower than the potential sustainable abstraction, which is estimated at 4km 3 per year (of which 2.9km 3 could be allocated to irrigated agriculture).

4 There are numerous omissions and inconsistencies in information sources. The approach adopted in this report has been to compile a best estimate from various sources including DWEM and FAO. 5 This arrangement did not apply to the Issyk-Kul basin (which is internal), and the Tarim Basin. 6 See http://www.fao.org/nr/water/aquastat/countries_regions//index.stm (accessed on 4 Sep 2012).

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8. Seasonal variation in water availability. There is a considerable temporal and spatial variability of water availability due to seasonality of river flows, which supply about 75% of the annual total (35km 3) during summer and autumn, and the balance (12km 3) in winter and spring. 7 In general, these conditions were taken into account during the design of irrigation systems, with water supply being based on acceptable reliability levels (typically in the order of the 80 th to 90 th percentile level). There is reason to believe that seasonal variation has changed in recent years as a result of rising temperatures (see Section 2.3 for details). Although there are presently 12 large dams in the Kyrgyz Republic, these are mostly located in mountainous areas and used for generating hydropower; they do not play a major role in meeting demand for irrigation water.

2.2 Water Consumption and Demand

9. Water diversions. According to official records, annual diversions from surface and groundwater declined from 11.1km 3 in 1990 to less than 8.0km 3 in 2000 (a reduction of about 32%), and have remained at that level since (Table 2). During the same period, total water deliveries declined from approximately 9km 3 to less than 5km 3, a reduction of more than 45% and the delivery efficiency declined from 81% to 62%. Part of the reductions in diversions and delivery may be attributed to the reduction in irrigated area during this period, which is estimated to have declined by about 20% (see para 10 for details). In addition, water deliveries may have declined because of a reduction in cropping intensities, and a change in cropping patterns away from high water demand crops, such as cotton to cereals. At the same time, there may also be under-recording of water diversions, because of the deterioration of water measuring equipment and intentional under-recording to avoid water fees. 8

Table 2: Water Diversions and Water Delivery, 1990-2009 1990 1995 2000 2005 2009 Amounts (km 3) Water diversions 11.1 9.3 8.0 7.9 7.6 Water delivery* 9.0 6.9 5.0 4.5 4.7 Delivery efficiency (%)** 81% 75% 62% 57% 62% Index (1990=100) Water diversions 100 84 72 71 68 Water delivery 100 77 55 50 53 Delivery efficiency* 100 92 77 70 77 Source: Water Quality in the Amu Darya and Syr Darya River Basins, SIC ICWC 9(2011) * Though referred to as ‘water use;’ in the reference based on estimated conveyance and application efficiencies, this is interpreted to mean delivery to the subsectors, for the irrigated agriculture subsector this is assumed to be to the tertiary level (On-farm (WUAs)) * Defined as: 100% x (Water Delivery/Water Diversion)

7 DWEM, 2012, Water Resources Summary supplied to TA consultant. 8 As reported by stakeholders during the Phase 1 workshop in August 2012. 9 Scientific Information Center, Interstate Commission for Water Coordination

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Figure 1: River Basins in the Kyrgyz Republic

Source: Consultant

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10. Irrigated areas. In 1994, the irrigated area of the Kyrgyz Republic was estimated at 1.07 million hectares.10 In 2011, the World Bank-financed Second On-Farm Improvement Project (OIP-2) 11 reported a total irrigated area of 1.02 million hectares, of which 737,000 were under the management of Water User Associations (WUAs). These were the vast majority of irrigation systems under the operation and maintenance of the government (Department of Water Economy and Melioration (DWEM). The balance of 283,000 hectares consist of systems not under DWEM management, mainly small systems in mountainous areas, as well as seed and livestock farms (Table 3).12 While annual records are kept for the WUA system on irrigated areas and water diversions, there are no such records available for diversions. WUA records show that in 2011 the actual sown area was 636,000 ha, or 86% of the total area. This implies that the total area for WUAs should be referred to as the irrigation system command area, and that the actual irrigated area is something less than this and is variable between years (also recorded in preceding years) possibly due to water factors (seasonal availability) and non-water factors (such as limited access to credit, seed or fertilizer). The lower area may also be due to the loss of land that is no longer in production because of salinity and waterlogging (especially in the Chui River Basin). There are no estimates of the actual annual irrigated area for the non- WUA systems, however based on the WUA ratio of actual irrigated to command area this would be of the order of 240,000 hectares. So the annual actual irrigated area nationally (including WUA and non-WUA systems) is probably in the order of 870,000 hectares, or about 150,000 hectares lower than commonly reported national total (1.02 million ha), and about 20% lower than the irrigated area reported in the early 1990s13 .

Table 3: Irrigated areas, 2011

WUA Areas Non-WUA River Basin Area Areas Basin (‘000 ha) Total Area Irrigated Area Irrigated as (‘000 ha) (‘000 ha) % of Total (‘000 ha) Amu Darya 14.2 5.8 5.8 100 8.5 Chui 320.2 218.0 177.5 81 102.2 Issyk-Kul 155.4 107.8 89.5 83 47.5 Syr Darya 386.4 299.7 259.1 86 86.7 Talas 113.0 98.4 98.4 100 14.6 Tarim 31.7 7.5 6.2 83 24.2 TOTAL 1,020.8 737.1 636.4 86 283.7 Sources: OIP-2 Quarterly Report 2011 (total area), DWEM Annual Report 2011 (WUA irrigated area)

11. Water balances. Table 4 lists water balances by river basin. In 2011, the total available supply of the six river basins is 18.1km 3 per year. In the same year, water diversions are estimated at about 7.65km 3 per year, of which approximately 3.79km 3 (or 49 % of total diversions) is consumed. 14 Total water demand was estimated at 8.38km 3, or approximately 10% higher than total diversions, with little variation among basins. While the difference is not high, it may indicate that actual crop evapotranspiration (ETa) is lower than the potential (ETc), possible because water delivery constraints (see Sections 4 and 5).

10 http://www.fao.org/nr/water/aquastat/irrigationmap/kgz/index.stm (accessed on 30 September 2012) 11 Second On-farm Irrigation Project, Quarterly report December 2011, World Bank 12 Personal communities with DWEM personnel. 13 It should be noted that various GKR planning documents including the Medium-Term Development Plan (2012- 2014) refer to the development of ‘new irrigated’ lands. However from evaluation of the proposed development projects, the term ‘new’ refers to the recovery and/or expansion of irrigated area under existing irrigation systems, and in some cases the infilling of irrigated areas within existing system through the improvement of existing irrigation infrastructure (such as for the Sarymsak irrigation project in Talas as presented in Part D). 14 The water balance annual diversions and consumption are lower than those presented in Table 1 which is a national water balance from a different source, for which the methods for determination of diversions and consumption are not specified. Table 4 is based on information records for annual diversions and irrigated area by the DWEM at raion level.

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Table 4: Water Balances by River Basin, 2011 Annual Volume (km 3) Stress Indicators* River Basin Supply Diversion Consump- Demand PCS WSR DDR tion (m 3/cap) (%) (%) Amu Darya 0.5 0.13 0.05 0.13 5,480 26 -1 Chui 3.9 2.36 1.11 2.48 2,180 61 -5 Issyk-Kul 1.6 1.07 0.45 1.21 3,550 67 -11 Syr Darya 4.9 2.93 1.74 3.22 1,660 60 -9 Talas 1.0 0.92 0.37 0.94 4,440 92 -2 Tarim 6.2 0.24 0.08 0.24 <10,000 4 -3 Total 18.1 7.65 3.79 8.38 3,250 42 -9 Sources: Diversion and consumption (consump) based on DWR records for WUA water diversion, supply and irrigated area for 2011, Demand calculated for main crop groups (wheat, cotton, fodder, fruits, vegetables and others) per river basin based on Cropwat (ETc), assumed overall system efficiency (50%), and assumed per capita consumption for municipal and industrial water diversions and consumptions. * PCS = Per Capita Supply. WSR = Withdrawal/Supply Ratio. DDR = Demand Diversion Ratio.

12. Water stress indicators. There is substantial variation in water stress among river basin, as illustrated by following indicators: (i) PCS (Per Capita Supply). For the country as a whole, water supply in 2011 was about 3,253 m3 per capita, but the average masks substantial differences among basins. The PCS ranged from less than 1,700m3 in Syr Darya (the water stress threshold) to over 128,000m 3 in Tarim (due to abundant supply and low population). (ii) WSR (Withdrawal/Supply Ratio). The average WSR in the Kyrgyz Republic is about 42%, but ranged in 2011 from 4% in Tarim to over 90% in Talas. The WSR values indicated that, with the exception of Tarim, there is substantial potential to increase the utilization of water for irrigated agriculture. For the basins with potentially irrigable lands (Amu Darya, Chui, Issykl-Kul and Syr Darya), the available water supply is currently about 3.5km 3 higher than the demand for water. Stated differently, there is an allocable water resource of approximately 3.5 km 3, which sufficient to supply an irrigated area of more than 300,000 hectares. While there is a large utilizable resource (supply) in Tarim (6.2km 3), there is limited potential for a substantial increase in irrigation due to low population densities the virtual absence of irrigable lands. (iii) Demand-Diversion Ratio (DDR). This ratio expresses the difference between actual water diversions and water demand (as a percentage of calculated water demand), with positive values indicating that diversions were greater than demand and vice versa. As shown in Table 4, total water diversions were about 9% lower than calculated demand, but varied from close to parity in Amu Darya, to a deficit of 11% in the Issyk-Kul basin.

13. Water productivity. During 2003-2010, the average annual yields of wheat and barley ranged from 1.5 to 2.3 tons per hectare, with little variation by river basin (Table 5). Yields of cotton and corn were in the order of 3t/ha and 5-6 t/ha, respectively. The yields of all four crops are low by international standards, partly because of low productivity of water. The productivity of water was estimated by river basin, based on average yields and water consumption. In most parts of the Kyrgyz Republic, the water productivity for fully irrigated wheat, unconstrained by water and with sufficient other inputs, should range from 0.6kg/m3 to 0.8kg/m3. This estimate was based on a potential yield of 4 ton/ha and annual water demand (ETa) of 6,000m3/ha.15 In recent years, water productivity of wheat was less than 0.5kg/m 3––or less than 50% of potential values and barley less than 0.4 kg/m 3 (Table 6). The reasons for substantial gap between actual and potential yields include irrigation constraints, differences between actual water demand

15 IWMI, 2007. A Comprehensive Assessment of Water Management in Agriculture (CAWMA). London

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(ETa) and calculated water demand (ETc) because of constraints to water delivery. These constraints are, in turn, due to limits on infrastructure and management, and to limits on farm inputs.

Table 5: Average Yields of Selected Crops by River Basin, 2003-2010 (ton/ha) River Basin Crop Amu Darya Chui Issyk-Kul Syr Darya Talas Tarim Wheat 1.96 2.32 2.05 2.21 2.32 1.91 Barley 1.23 2.21 1.97 1.55 1.64 1.86 Corn 5.58 6.20 3.23 5.55 6.03 4.99 Cotton – 2.77 – 2.74 – – Source: Kyrgyz Republic National Statistics 2003-2010

Table 6: Average Water Productivity of Selected Crops by River Basin, 2003-2010 (kg/m 3) River Basin Crop Amu Darya Chui Issyk-Kul Syr Darya Talas Tarim Wheat 0.31 0.44 0.37 0.39 0.44 0.34 Barley 0.20 0.42 0.35 0.28 0.31 0.33 Corn 0.89 1.18 0.58 0.99 1.15 0.87 Cotton – 0.35 – 0.34 – – Source: Consultant, based on National Statistics and calculated consumption

14. Salinity. As the Kyrgyz Republic has an abundant supply of good quality irrigation water, few areas have thus far been affected by salinity problems. According to the Department of Water Economy and Melioration (DWEM) in the Ministry of Agriculture and Melioration, less than 6% of the country’s irrigated area is presently experiencing high levels of soil salinity (Table 7). Salinity problems are most severe in the Chui river basin (which accounts for about one third of the country’s irrigated area), Syr Darya ( sub basin) and Talas, where they form a serious, albeit highly localized, threat to productive irrigated agriculture. Although a comprehensive assessment of the causes of salinization of soils and shallow groundwater is not available, they are generally attributed to the poor state of the country’s irrigation infrastructure (refer to Appendix 8 for details).

Table 7: Salinity Problems in Selected River Basins, 2011

(‘000 Ha) Area with Soil % Total Area With River Basin Salinity as % of Irrigated Area with Soil Salinity Area Soil Salinity Irrigated Area Chui 320.5 38.9 12.2% 67% Syr Darya 119.9 8.1 6.8% 14% Talas 112.5 4.3 3.9% 7% Other basins 465.8 6.7 1.4% 11% Total 1,018.7 58.0 5.7% 100% Source: DWR, Melioration Hydrogeological Expedition (2012)

15. Salt sources. The primary sources of salt originate from deposition of salt as part of the complex process of groundwater and surface water movements which may have occurred over very long time periods. In the context of the environment in the Kyrgyz Republic, these comprise the following processes (both of which need to be considered in a long-term historical context):

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(i) Groundwater movement is by default from groundwater recharge to groundwater discharge areas, with the latter located at lower elevation than the recharge areas. The groundwater has dissolved salts, which in the main recharge zones of alluvial aquifer systems in the Kyrgyz Republic are relatively low (ranging from 0.3g/l to 0.5 g/l). In discharge zones, groundwater may emerge from springs, be intercepted by rivers and lakes, or evaporate from shallow groundwater table areas. If insufficient natural surface water outflow occurs from the discharge zones, water evaporation will result in accumulation of salt in the unsaturated soil and sub-soil and in the shallow groundwater zone. (ii) Surface water may accumulate in poorly drained wetland areas, from which water will evaporate, thus causing accumulation of salts (see Appendix 8 for details).

16. Hydropower . Energy production and water resource management are closely linked in the Kyrgyz Republic because of the impact of hydropower production on water availability for irrigation. At present, there are 15 hydropower stations in the country with a combined capacity of 2,950 MW (or 80% of the total installed capacity in the Kyrgyz Republic).16 The majority of the hydropower dams are part of the cascade of dams and stations on the lower Naryn River centered on the Dam.17 This dam has a live storage volume of 14.4 billion m3, and is located approximately 90 kilometres upstream of the Kyrgyzstan-Uzbekistan border. The main power station has an installed capacity of 1,200 MW. There are four smaller hydropower stations downstream (Kurpsav, Shamlodysai, Tash-Kumyr and Uch Kurgansk) with combined generation capacity of 1,640 MW and live storage volume of 70 million m3. There is also one station upstream of the Toktogul reservoir, Kambrata 2, with live storage volume of 8 million m3. Additional dams are planned for the cascade including Kambrata 1 and Kambrata 3 both upstream of the Toktogul reservoir. While the and downstream dams modify the flow of the Naryn River, this has a minor impact on water availability for irrigation within the Kyrgyz Republic because the total size of downstream irrigated areas is approximately 3,000 ha, or about 0.3% of the total irrigated area in the country.18

2.3 Climate Change

17. Impacts of climate change on water supply and demand. According to a recent ADB study on the impacts of climate change on water resources and natural hazards in the Aral Sea Basin, annual surface water flows will increase in the short to medium term, as glaciers melt due to rising temperatures. 19 The study also predicts that annual peak flows are expected to shift from summer to spring and decrease in magnitude and shift precipitation from summer to winter. Irrigation water demand will also increase because of rising temperatures and lower summer rainfall. By 2050, in the Syr Darya Basin temperatures are predicted to be 3.0%-3.9% higher than its present level, and 3.8%-5.0% higher in the Amu Darya Basin. The expected increase in the "water gap" (demand minus supply) will result in an increase in both the frequency and severity of droughts the Aral Sea Basin. The study proposes a series of measures to adapt to the adverse impacts of climate change in the basin, the most cost- effective of which are: (i) improved agronomy, (ii) deficit irrigation, (iii) water re-use and (iv) a reduction of the irrigated area.

18. Disaster risk management related to the water sector. PreventionWeb.net, a project of the United Nations International Strategy for Disaster Reduction, publishes data that describe the exposure of a country to weather-related and other natural disasters. Three of these disasters are of direct relevance to the water sector: drought, floods and landslides. According to PreventionWeb.net, over 440,000 persons in the Kyrgyz Republic are exposed the risk of drought, a far higher number than the population exposed to floods and landslides (Table 8). The potential impact of a drought on the country’s Gross Domestic Product (GDP) is unknown,

16 Resolution of the Jogorku Kenesh, 24 April 2008, N346-V 17 http://en.wikipedia.org/wiki/Category:Hydroelectric_power_stations_in_Kyrgyzstan 18 TA Consultant estimate from Google Earth imagery. 19 ADB (FCG). 2012, TA7532, Water and Adaption Interventions in Central and West Asia.

AHT / UBI / UNICON 8 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT but likely to be substantially higher than the economic exposure to floods and landslides (which is estimated at less than $5 million).

Table 8: Exposure of KR to Selected Disaster Risks Human Exposure Economic Exposure Disaster (‘000 persons) (GDP, $ billion) Drought 444.8 NA Floods 10.1 <0.01 Landslides <0.1 <0.01 Source: http://www.preventionweb.net/countries/statistics/risk.php?cid=93 (accessed on 1 Sep 2012)

2.4 Assessment of Water Resources

19. The conclusions of the assessment can be summarized as follows: (i) Water diversions are declining . In 2011, allocable water resources in the five principal river basins were 11.9 km 3, far higher than water diversions of 7.4 km 3. The surplus of 4.5 km 3 could be used to improve irrigated agriculture through either vertical expansion (improving existing irrigated lands) or horizontal expansion (recovering previously irrigated lands or developing new irrigated lands). Historical data show that water diversions have been in decline since the early 1990s, partly because of a reduction in the irrigated area, and possibly also because of a reduction in cropping intensities. (ii) Delivery efficiency is declining. At the national level, water delivery efficiency has declined from more than 80% to close to 60% over the past thirty years. Given that the majority of water is for irrigation use, it is assumed that the decline is largely attributable to reductions in irrigation water service delivery. These reductions are, in turn, due to deterioration in the operations of irrigation systems and conveyance losses. (iii) Need to adapt to climate change. Because of climate change, droughts will become more frequent and more severe, whereas flood risks are expected to decline. This implies that the Kyrgyz Republic will need to have an irrigation system in place that uses water more productively than is currently the case, with management capable of adapting to the increasingly adverse impacts of climate change. (iv) Need for management of drought risk. The Kyrgyz Republic has a far higher exposure to the risk of drought than to flood or landslide risks. Consequently, the country's disaster risk management strategy should focus on reducing the risk (or mitigating the adverse impacts) of droughts rather than floods or landslides. An important element of such a strategy is arresting the further deterioration of irrigation infrastructure, and ensuring the future sustainability of the operations and maintenance of the infrastructure. (v) Low productivity of water, mainly because of non-water constraints. Agricultural productivity per unit area is low and concentrated in river basins where water consumption is close to demand. For wheat and barley, the main cereal crops, water productivity is typically around 0.4 kg/m 3, which is less than half the potential value. Where water consumption matches demand, low productivity is possibly a result of on- farm constraints (given that limited water supply is not a major constraint). Therefore future improvements in water productivity require that these constraints be identified and overcome.

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3 WATER RESOURCE MANAGEMENT

3.1 Legal, Policy and Planning Framework

20. Overview. The legal, policy and planning framework for the water sector in the Kyrgyz Republic consists of a large number of laws, circulars, regulations, planning documents. The most important of these are the Water User Law of 2002, the Water Code of 2005 and the National Water Strategy (which currently being developed), as summarized below.

21. Water User Law (2002). Shortly after independence in 1991, the Government of the Kyrgyz Republic dissolved many state and collective farms, which were until then responsible for irrigation of about 765,000 Ha, or 75% of the country's irrigated land. In 2002, the Parliament approved the Water User Law that defines the roles and responsibilities of Water User Associations (WUAs). These associations were established to manage off-farm and on-farm irrigation systems in lieu of the dissolved government-owned farms. At present, there are 478 in the country, which cover a combined irrigated area of about 737,000 Ha, or 72% of the total. GKR has proposed several amendments to the Water User Law, which are currently awaiting parliamentary approval. One of the proposed amendments relates to the purposes, tasks, procedures, sources of income and reserve funds of WUA Federations (WUAFs). If approved, the amended law will encourage WUAFs to assume responsibility for O&M of inter-farm and main irrigation systems, which would be financed from a doubling of the irrigation service fee (ISF) that WUAs are currently collecting from their members to pay to the raion WRD for water supplied to the WUA (see Chapter 4 for details).

22. Water Code (2005). In 2005, the Parliament passed a Water Code, which sets out principles, institutional arrangements and processes for integrated water resources manage- ment, using river basins as primary planning unit. The two important institutions envisaged by the Water Code are: (i) the National Water Council (NWC), and (ii) the State Water Administra- tion. The NWC, to be chaired by the Prime Minister, would be responsible for water sector coor- dination, planning and legislation. The State Water Administration would assume responsibility for water resources management and the implementation of the Code, including the establishment of Basin Water Administration units and Basin Councils in each major river basin (refer to Appendix 5 for a detailed review). The Code also stipulates the preparation of a National Water Strategy. To date, the implementation of the Code has been stalled principally by the failure to convene the NWC and to agree upon a strategy for implementing the Code. Once approved this strategy will allow Government to set in motion the downstream organizational arrangements and associated tasks required to transition to a basin approach to water resources management. 20, 21

23. National Water Strategy. In February 2011, DWEM issued a draft concept paper on a water resources strategy for the Kyrgyz Republic. According to DWEM, the approved strategy will also necessitate a revision of the 2005 Water Code. The concept paper sets out the following water sector goals: (i) right of access to water, (ii) national food security through development and efficient management of irrigation, (iii) energy security and (iv) sustainable water management, and medium-term principles to achieve these goals. The paper also states that the strategy will form the basis for the country's future water policy, legal and regulatory framework, government and institutional development programs and plans, and water management and water conservation activities. Although the paper presents a number of concepts for the development of water management institutions, legislation and policies, it falls short of the approach specified in the Water Code (Article 18) which includes assessment of

20 The Council was scheduled to meet in September 2012, but this did not happen following the dissolution of Parliament on 22 August 2012. 21 The mechanism for implementing this code was to be formulated by consultants recruited through the World Bank funded Water Management Improvement Project (WMIP). However, this project was rated unsatisfactory by the World Bank and the international consulting team left the Kyrgyz Republic without completing its contract. At present, a new team of International consultants is attempting to formulate a strategy for implementing the Code.

AHT / UBI / UNICON 10 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT water resources (quantity and quality), water use (current and future) and identification of implementation arrangements. It also lacks analytical basis to determining and ranking issues and actions to achieve the stated goals. However, the preparation of this paper is in conflict with the Water Code, as the latter states the National Water Resources Strategy must have input from users in the Basins including Basin Councils. As the NWC has not formally approved the National Water Basin boundaries nor has it formed the respective basin organizations or appointed Basin Councils this strategy cannot be prepared at this time. Once this document is written and approved by the NWC it will become the National Water Strategy and form the basis for the country's future water policy, legal and regulatory framework, government and institu- tional development programs and plans, and water management and water conservation activities.

3.2 Water Management Institutions

24. Ministry of Agriculture and Melioration (MoAM). In January 2012, GKR transferred the responsibilities of the State Water Committee on Water and Melioration to the Department of Water Economy and Melioration (DWEM) in MoAM. Once the Water Code is implemented the DWEM will be responsible for the management of user-owned off-farm and on-farm irrigation systems. At the and raion levels, DWEM will be replaced by Basin Water Administrations and Raion Water Administrations, respectively. DWEM's annual budget for 2011 was about $14 million, of which approximately $10 million was allocated for O&M of government-owned irrigation infrastructure. This is substantially lower than the minimum required amount for sustainable O&M, which may be as high at $22 million per year (assuming an average O&M cost of $30 per hectare for 737,000 ha of Government-served systems).22 A SWOT analysis of DWEM is presented below in Table 9.

25. Other water management institutions. • Ministry of Emergency Situation. This ministry is responsible for disaster risk management, which includes the management of floods and other water resources risks, and the provision of hydrological and agro-meteorological services, through the Agency for Hydro-meteorology ( Kyrgyz Hydromet ). • State Agency for Geology and Mineral Resources. This agency is responsible for research and monitoring of groundwater resources. • Department of Agriculture and Natural Resources of the Prime Minister's Office. The department coordinates with the relevant government agencies and reports directly to the Prime Minister. • Water User Associations and WUA Federations. See Chapter 4 for details. In additional to these institutions, several agencies are involved in the management of non- agricultural water resources. The most important of these are the Ministry of Health, which is responsible for ensuring that water quality meets public health standards, and the Ministry of Municipal Works ( Kyrgyzjilkommunsoyuz ), which is responsible for municipal water and wastewater. It is also worth noting that the Talas river basin has its own council, which was established during WMIP implementation and was instrumental in the preparation of management plans for the Talas and Kugart sub-basins.

22 For details, see Recommendations for Investment and Tariff Policy Development in the Kyrgyz Republic Irrigation Sector (SMEC, 2009).

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Table 9: SWOT Analysis of DWEM

Strengths: Weaknesses: ° Significant experience in irrigation and ° Declining staff numbers, capabilities and drainage planning and management experience ° Well organised for the task, with regional ° Low salary levels offices countrywide ° Outdated management systems resulting in ° Well established and functioning systems for inefficient management processes and over- system management, operation and staffing maintenance ° Financial management systems do not ° Extensive infrastructure in place for irrigation facilitate activity and system-based accounting water delivery ° History of “top-down” management, relatively poor client-orientated management Opportunities: Threats: ° Move to a more “business orientated” ° Deteriorating physical infrastructure management style ° Potential loss of EU funding to support ° Develop client relationships and partnerships management, operation and maintenance ° Rationalise irrigation service to be provided, costs and fee levels to be charged ° Continued under-funding by Government for ° Divest the role of “social service” to other MOM government departments ° Government fails to allow realistic levels of ISF ° Transfer irrigation systems to WUAs and ° Government continues to tax irrigation service Federation of WUAs provision by WUAs and DWEM ° Rationalise DWR structure, focus on core ° Uneconomic systems draining funds business and divest associated organisations ° Farming sector fails to respond to ° A developing economy, with more opportunities, is uncompetitive in comparison opportunities for farming community to regional producers, or not adequately supported with extension services or market opportunities ° Irrigation management transfer fails, adversely affecting ISF recovery Source: DWEM Restructuring Study Report, August 2005. ITAD Water Ltd. Hove, East Sussex, United Kingdom

3.3 Assessment of Water Resource Management

26. The conclusions of the assessment can be summarized as follows: (i) Need for investment planning in accordance with the Water Code of 2005. When implemented in full, the Water Code and National Water Strategy will provide the policy and planning frameworks for water sector management and development. However, progress with the implementation of the Water Code has been slow, and is constraining development of integrated water resources management. While delays in implementa- tion do not constrain the identification and prioritization of water sector investment projects, such projects should be planned to be compliant with the Code's goals and principles. (ii) Potentially important role for WUA federations. The approval of proposed amend- ments to the 2002 Water User Law is expected to increase the number of WUAFs which will enable WUAFs to play a more expansive role in irrigation system management. (iii) Limited institutional capacity of water management institutions. The institutional capacity of DWEM and other institutions involved in water resource management is severely constrained by limited financial and human resources. These constraints adversely affect the sustainability of the operation and maintenance of the country's irrigation systems.

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4 IRRIGATION SYSTEM MANAGEMENT

27. Introduction. Irrigation infrastructure systems were divided in the following categories: (i) Main and inter-farm irrigation Infrastructure 23 . These include irrigation infrastructure that distribute water from a source (usually a river, reservoir or pump station) to a tertiary system. Main systems consist of structures for the storage, diversion and delivery of water, as well as the main drainage system for removal of return flows. These structures typically include; local storage reservoirs, pump stations, diversion weirs, main canals, main control structures, such as regulating gates and weirs. In addition these include inter-farm canals that deliver water to groups of water users such as WUAs and WUA Federations. Most main and inter-farm irrigation systems are government-owned, and operated by DWEM, although in some cases smaller structures have been transferred from the balance of the WRD to WUAs or to smaller farmer managed systems. (ii) On-farm systems. These include the irrigation infrastructure that previously supplied irrigation water to the fields of the collective and state farms. With the breakup of the collective and state farms these on-farm canals and other control structures serving approximately 740,000 ha have been transferred to the balance of the WUAs and WUAFs (see Section 4.2). As documented in Table 10, 88% of the WUAs have the on- farm irrigation infrastructure transferred to their balance. The only other entity that still has a number of on-farm Irrigation infrastructures on their balance is Governments but this is slowly being transferred to WUAs.

Table 10: Ownership of On-Farm Irrigation Infrastructure, 2010

Number of Statement of Irrigation Assets (ownership) River Oblast Registered Village Authority DWEM Other Basin WUA WUAs Full Partial Offices Entities Syr Darya 32 31 1 - - - Chui Chui 106 85 16 5 - - Issyk-Kul Issyk-Kul 62 59 3 - - - Jalalabad Syr Darya 68 58 10 - - - Naryn Syr Darya 48 38 9 1 - - Syr Darya 92 89 3 - - - Talas Talas 70 63 3 1 1 2 Total 478 423 45 7 1 2 Source: OIP Annual Report 2011

(iii) Farmer operated land. This is the land where farmers, groups of farmers, cooperatives, state seed farms, and a limited number of commercial farms cultivate and produce crops for home consumption and to sell on the local market. In 1990, prior to the collapse of the Soviet Union there were 470 state and collective farms that controlled 96% of all agricultural land. In 1991 with the passage of the Land Code that established long-term leases of land for 49 years (later extended to 99 years), the Kyrgyz Republic was one of the first former Soviet republics to institute the process of breaking up state and collective farms. The Law on Agricultural Land and Farmers issued in 1999 provided a legal basis and foundation for the establishment of private farms for former members of the state and collective farms. As a result 75% of the agricultural land was distributed to farmers while the remainder was left in a Land Fund controlled by local governments.

23 Also commonly referred to as ‘off-farm’ part of irrigation systems in reports and data sources.

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4.1 Management of Main Infrastructure

28. Overview of historic growth of irrigated areas. Irrigation development in Kyrgyzstan started in the . In 1922, the area served by irrigation was 180,000 hectares, increasing to 530,000 Ha in 1935 and to approximately 740,000 ha in 1940. In 1990, shortly before independence from the former Soviet Union, the irrigated area of the Kyrgyz Republic was about 1.07 million ha, covering over 80% of arable land in the country. In 2012, the total irrigated area was estimated at 1.02 Ha, about 50,000 hectares less than in 1990. 24

29. Key features of main infrastructure. According to DWEM data, there were 631 main irrigation systems in the Kyrgyz Republic at the end of 2011. Of these, 87 had pump stations, which supply an estimated 10% of the total irrigated area. The average area per system ranges from less than 800ha in the Amu Darya basin to almost 4,000ha in Tarim (Table 11). About 51% of the systems cover an area of 1,000ha or less, 27% cover 1,000-2,000ha, and the remaining 22% of the systems cover irrigation areas of 2,000ha or more. Systems in the latter category cover over half of the total irrigated area in the country.

Table 11: Main Irrigation Systems by River Basin, 31 December 2011

River Irrigated Systems Size Class (% Total) Basin & sub- Area Number of Average < 500 500-1000 1000-2000 >2000 basin (‘000 ha) Systems Area (ha) ha ha ha ha Amu Darya 14 18 789 74 21 5 0 Chui 320 189 1,694 26 24 21 29 Issyk-Kul 155 53 2,924 17 13 33 38 Syr Darya - Batken 55 46 1,197 11 30 37 22 - 17 24 697 41 18 35 6 - Karadarya 188 158 1,192 18 31 34 16 - Naryn 124 85 1,460 44 31 15 10 Talas 113 50 2,260 17 21 34 28 Tarim 32 8 3,955 0 57 43 0 TOTAL 1,018 631 1,614 25 26 27 22 Source: Consultant, based on information provided by DWEM (2012)

30. Ownership of irrigation systems. Using data from an asset survey carried out under WMIP, Table 12 provides data from latest data on management of the systems in the country. At present, 315 off-farm systems are on the balance of the DWEM along with 31 off-farm systems served by Inter-region and Inter-state canals. These systems include 746,566 ha of irrigated area. With respect to on-farm area there are 705 systems that are on the balance of WUAs, WUAFs, rural administrations, etc. These include the 478 existing WUAs and 30 WUAFs that are made up of WUAs. In addition to irrigated land served by the DWEM this table indicates there are slightly more than 273,000ha of irrigated land served primarily by their own water systems. The status of this land is unclear as these individual farms and irrigation systems are not managed by DWEM and consequently are not monitored. Much of this land is in small irrigated areas in mountainous regions with water from streams and small rivers as well as water diverted from drains. How much of this land is being irrigated or the amount of water applied when it is irrigated is unknown. The remainder of this section is concerned with government-served systems only, because any ADB-financed investment project would be aimed at resolving deficiencies in government-served (as opposed to private) irrigation systems.

24 For a review of land reforms implemented in the Kyrgyz Republic during 1990s, refer to Giovarelli, Renee. 1998. Land Reform and Reorganization in the Kyrgyz Republic: Report of Fieldwork Conducted in the Kyrgyz Republic . RDI Reports of Foreign Aid and Development #96. Seattle: Rural Development Institute.

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Table 12: Number of Irrigated Systems by Owner and Irrigated Area, 2012 Number of Irrigation Systems* Irrigated Area (‘000 ha) On DWEM Inter- Oblast Other** Off-farm On-farm balance region and TOTAL TOTAL (on farm) systems systems (off-farm) Inter-state Batken 22 3 55 80 40 18 57 Chui 49 7 47 103 273 47 320 Issyk-Kul 49 2 78 129 106 49 155 Jalalabad 58 9 93 160 96 29 126 Naryn 32 - 215 247 45 75 120 Osh 63 14 111 188 88 41 129 Talas 42 6 106 154 100 14 113 Total 315 41 705 1,051 747 273 1,020 Source: Data from WMIP Asset Survey Attachment 5 * The classification of systems and schemes differed from earlier and other sources (DWEM), due to a different definition of irrigation systems on a hydrographic basis rather than administrative and territorial boundaries as well as minor irrigation system discovered in the Asset Survey that were not included in the previous data, hence the differences in total systems of 631 and 1,051 between Table 11 and Table 12, respectively ** Includes balances of WUA, rural administrations, joints ventures and WUA federations

31. Assessment of main irrigation systems. Information on the current status and performance of main irrigation systems is limited and incomplete. 25 However, there appears to be a general consensus that irrigation infrastructure has been deteriorating since the 1990s as a result of a substantial reduction in investment and O&M budgets for irrigation systems, and a concurrent loss of institutional capacity in DWEM. This consensus was confirmed during a recent workshop held in . 26 The budget of DWEM increased from about KR400 million ($9.4m) in 2004 to over KS660 million ($14.4m) in 2011, an increase of about 65%. However, because general price inflation increased at a higher rate during the same period, the purchasing power of DWEM’s budget was lower in 2011 than in 2004 (Table 13). As mentioned in Section 3.2, the minimum required amount for sustainable O&M of government-served irrigation systems is estimated at about $22 million per year, more than double the current DWEM budget. Limited funding has also resulted in a loss of institutional capacity across the Ministry of Agriculture.

Table 13: DWEM Budgets in Current and Constant 2000 Prices, 2004-2011 Unit 2004 2005 2006 2007 2008 2009 2010 2011 Current KS million 401.1 369.1 428.5 534.7 501.5 552.0 643.4 664.4 Current $million 9.4 9.0 10.7 14.3 13.7 12.9 14.0 14.4 Constant $million* 7.9 7.0 7.6 8.9 7.0 6.3 6.2 5.5 Source: Budgets in KS: DWEM (2011), exchange rates and price deflators: ADB (2012) * Constant 2000 prices

4.2 Management of On-Farm Infrastructure

32. Background. Shortly after independence from the former Soviet Union, the Kyrgyz Republic dissolved most state and collective farms, which were until then responsible for the management of tertiary irrigation infrastructure. In response, in some areas water users created hydro-services by recruiting former irrigation brigade staff. In other areas unofficial farmer organizations were formed to try to address problems farmers faced managing their on-farm

25 WMIP Component 2 of the project “Water Resource Management” covers a study of irrigation system operation and maintenance costs. While potentially a useful source of information on system O&M costs only progress and partial reports have been available from the project to date. 26 TA8015 Phase 1 workshop, Bishkek, August 2012.

AHT / UBI / UNICON 15 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT irrigation systems. These organizations were formed without any technical assistance and had no legal basis to function as participatory farmer organizations.

33. Establishment of Water User Associations. Recognizing the solution to sustain irrigation systems was for users to participate in O&M of the on-farm system as well as pay for water delivered by the State, the Kyrgyz Republic was one of the first republics to assess a water fee and to form participatory WUAs to take over on-farm irrigation O&M. A major step toward establishing legally registered and properly organized WUAs that were sustainable was the passage of a WUA law in 2002, which recognized a clear separation between governance and management. Responsibility for policy making decisions rests with the unpaid General Assembly of Members (or Representative Assembly) and Management Board while operations and maintenance activities are the responsibility of a hired manager and other hired staff. At the end of 2011, there were 478 legally registered WUAs serving 737,000 hectares of irrigated land, or about 72% of the national total (Table 14).

Table 14: Key Data on WUAs by Oblast

Number of Irrigated Area (‘000 ha) % Irrigated Average Oblast Registered Served by Area Served WUA Area Total WUAs WUAs by WUAs (‘000 ha) Batken 32 57 48 83 1.48 Chui 106 320 218 68 2.06 Issyk-Kul 62 155 108 69 1.74 Jalalabad 68 126 98 78 1.44 Naryn 48 120 68 57 1.42 Osh 92 130 99 77 1.08 Talas 70 113 98 87 1.40 Total 478 1,020 737 72 1.54 Source: DWEM (2012) * These two columns include potential irrigated area that was developed prior to the break-up of the Soviet Union and actual irrigated area that is managed by the 478 WUAs. In both cases the amount of land actually irrigated each year varies depending upon a number of circumstances.

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Table 15: SWOT Analysis of WUAs

Strengths: Weaknesses: ° Formed throughout the country covering the ° On-farm delivery system was not maintained main 737,000 irrigated ha in the country since breakup of Soviet Union—makes difficult ° Organized according to the law and legally to manage water deliveries to members registered ° Are still learning about participatory farmer ° Recognized in the country as the association and how to exert their rights as administrative body to carry out O&M at on- members farm level ° Association lacks technical machinery, ° Developed with separation between transport and modern water management Governance and Management with equipment Management Board and Representatives ° Technical skills of management staff are weak elected from members and with low wage levels difficult to recruit new ° Over past 11 years have paid 92% of their graduates water fees to the DWEM and are self-financing ° Water fees are set by Parliament—held too low which sends a negative signal to members ° History of “top-down” management hard to overcome Opportunities: Threats: ° Donor assistance is focused on on-farm rehab ° Low Government budget means off-farm and WUAs system will continue to degrade ° Along with DWEM WUA SU can develop ° Government focus on hydro-power income strong client relationship with DWEM generation means reduction in water supply at ° Improvements in agricultural system and critical periods markets can increase agricultural returns ° Government fails to increase ISF to realistic ° Formation of WUA Federations to take over levels for sustainability management of inter-farm system ° Government continues to attempt to tax ° With asset transfer can invest in improvement irrigation service provided by WUAs of their irrigation infrastructure ° Government continues to tax WUAs savings ° WUA Law gives some tax protection and can accounts needed to pay for future investment start to generate other sources of income ° Agricultural and rural sector is not adequately ° A developing economy, with more supported with extension services or market opportunities for farming community opportunities ° Economic and social disturbances adversely affect WUA development and maturation

34. WUA support units. With little understanding and experience with participatory WUAs it was critical that the Kyrgyz Republic establish some type of structure to help establish, train and provide technical assistance for WUAs. To establish this capability DWEM formed support units (SUs) responsible for all aspects of WUAs establishment, training and technical support. The Support Unit has a central office in DWEM, one at each DWEM office at oblast level, and offices in 41 DWEM offices at raion level. By 2006, there were 122 WUA SU staff members in 41 offices throughout the country (Table 16). All offices were provided by the respective DWEM unit at the central, oblast and raion level, and equipped with a vehicle, computer, telephone, fax, photocopier and office furniture as required. At the time of establishment, it was agreed that over time all of the support unit staff would be absorbed into the DWEM as they were to become a permanent unit within the DWEM staff organizational structure. This was to be completed by the end of OIP-1 but in fact did not happen until 2009, half way through the follow up project, OIP-2. However, recent budget cuts to the SUs have limited somewhat the ability of the SUs to work with WUAs and carry out planned training programs.

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Table 16: Number of Offices and Staffing Levels of WUA Support Units, 2006 Number of Offices Staffing Levels Oblast Central Oblast Raion Central Oblast Raion Raion-C* TOTAL Batken 1 2 3 6 1 10 Bishkek 1 1 7 7 Chui 1 7 3 21 1 25 Issyk-Kul 1 3 3 9 2 14 Jalalabad 1 5 3 15 3 21 Naryn 1 3 3 9 2 14 Osh 1 4 3 12 3 18 Talas 1 3 3 9 1 13 Total 1 7 27 7 21 81 13 122 Source: OIP Third Quarterly Report, 2006 * Raion-level support unit without office (coordinator only)

35. Mobilization and formation of WUAs . After the passage of the WUA Law the first priority was to organize WUAs according to the law. In order to do that an International set of WUA specialists were recruited. With assistance from the WUA lawyer they developed a series of training courses including one on WUA formation and establishment. The WUA SU staff at the Central WUA SU and Oblast WUA SU were then trained on the process and then they were responsible for training WUA SU staff at the raion level. In order to be certain the proper forms were completed correctly, staff from the Ministry of Justice met with the WUA SU staff and they all agreed on the necessary forms and legal procedures. In addition meetings were held with oblast, raion and village officials to inform them about the WUA Law and the role of WUAs to ensure they supported the process. Radio and TV programs were organized and brochures were prepared to hand out the farmers so that they could understand this new concept. After that WUA SU staff at each raion met with their respective Oblast WUA SU to plan a strategy for WUA development in each raion. In general, each raion has an irrigated area of about 30,000ha and that as It was assumed the average WUA would be 2,000ha that meant forming and registering about 15 WUAs per raion. Obviously, there were raion with more and raion with less but it was felt that raion WUA SU staff could easily develop a strong rapport with 10-15 WUAs and in fact that proved to be the case. In about 150 areas there were water user associations that had already been established. These had to be restructured and reorganized to comply with the law but they provided a good initial location to start WUA formation.

36. Motivating WUAs . Under the On-Farm Irrigation Project a decision was made that WUAs would be formed throughout the country and not in a pilot area(s). There was to be about 120,000ha on on-farm irrigated area to be rehabilitated under OIP-1. With the assumption of around 2,000ha per WUA this required 60 WUAs. But recognizing that all WUAs would not mature at the same time a decision was made to form around 120 WUAs. A set of seven milestones were formulated. These were: • Milestone #1: WUA establishment, including legal registration and bank account opened. • Milestone #2: Recruitment of WUA staff and necessary training. • Milestone #3: WUA Board has prepared a plan of O&M and the general assembly has approved this plan—this includes setting a sustainable fee to cover O&M and ISF costs. • Milestone #4: WUA members have paid O&M costs and ISF payment to water supplier. • Milestone #5: WUA and DWEM have developed alternatives for rehabilitation and determined their costs—WUA members are involved in these discussions. • Milestone #6: WUA members have selected an alternative for rehabilitation.

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• Milestone #7: A majority of water users in the WUA have agreed to borrow the credit for rehabilitation and to repayment under OIP terms and the WUA Board officially requests the credit and signs for repayment After WUAs achieved Milestone #4 they started discussing their rehabilitation requirements with raion WUA SU staff in a series of meetings and organized walk-throughs with WUA members to identify their rehabilitation requirements. Usually three alternatives were made and as WUA members had to repay 25% of the rehabilitation costs all members were very involved in the formulation of the best alternative. In addition to deciding that the project would not have a pilot area approach a decision was made that WUAs that achieved the milestones first were first to qualify for rehabilitation. This "first come first served" approach facilitated WUA formulation and proper organization under the law as members knew they would not qualify for rehabilitation unless they followed the law in the organization of their WUA.

37. Training WUAs . Recognizing that farmers and Government officials were not familiar with the WUA concept and extensive training program was organized. International experts with extensive field experience working with WUAs prepared a set of training courses and then trained Central WUA SU and Oblast WUA SU staff members. They then traveled throughout the country organizing training and at the same time training the trainers. Raion WUA SU staff members were able to interact on a personal basis and organize training either at the WUA or at the raion training office that was provided in all and raions. From 2003 through mid- 2009, WUA Support Unit provided over 60,000 training days to WAU staff members (Table 17).

Table 17: Participants Trained by WUA Support Units, 2003-2009 Year 2003 2004 2005 2006 2007 2008 2009* Participant days (‘000) 9.1 8.9 10.7 13.1 9.1 6.9 2.3 * Until 30 June.

38. Need for focused support to WUAs. With the maturation of WUAs as well as the for- mation of more and more WUA Federations WUA SUs need to be able to provide more focused support to meet individual needs of WUAs. For example, using the WUA Assessment procedure as well as WUA Annual Reports to the Regulatory Authority, it is possible to identify WUAs that are not performing well. Some of these WUAs are too small or located in mountainous areas that cannot sustain an irrigation system. No matter how much support provided these WUAs are unlikely to be viable. SUs have to ignore these WUAs and concentrate on WUAs that have problems that SUs can solve. Once SUs have identified WUAs that are potentially viable, SU staff members must organize one-on-one individual training to help them identify their problems and resolve them.

39. Other support needs. These include: • Training for WUAs on the process, including forms to be used, for repayment of rehabilitation and technical credit. • Development of Business Plans to justify technical machinery purchases on credit. • How to develop irrigation systems assets inventory, defects lists, maintenance schedules, and maintenance budgets. • Improved water management, training for engineers and mirabs, training for water management demonstration plots, training for soil sampling and determination of soil-plant- water requirements. • International standards for WUA accounting and Kyrgyz taxation requirements. • Training for agricultural extension and interactions with RAS to help establish demonstrations in farmer fields. • Training for WUA Federations (legal organization and registration of Federations, computerized water management system for Federations, computerized accounting systems for Federations, training of trainers for Federation support activities; etc.).

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40. Performance of WUAs. In June 2009 an IDA Consultant identified a list of items that provided a methodology for making a quick assessment of performance of WUAs and Federations. These indices could quickly be obtained during brief interviews with WUA and Federation staff members. This process allowed WUA SU Unit staff to identify weaknesses of WUA activity. Once WUAs with weaknesses were identified, WUA SU staff members then developed individual programs to address their weaknesses. The following activities of WUAs or Federations were assessed: (i) general management, (ii) finance, (iii) water regulation, (iv management and assets maintenance, and (v) level of services provided. Each WUA was ranked as either “good", "satisfactory" or "bad." In September 2009, 46% of 214 WUAs were rated "good", 37% "satisfactory" and the remaining 17% "bad" (Table 18). Based on these rankings, R-WSUs and O-WSUs 27 have developed focused programs to improve the performance of WUAs that were determined to be unsatisfactory

Table 18: Assessing WUA Performance, 2009 Number SU Assessment of WUA Performance Oblast of WUAs Good Satisfactory Bad Batken 32 19 10 3 Chui 106 54 24 28 Issyk-Kul 62 29 27 6 Jalalabad 68 29 25 14 Naryn 48 24 14 10 Osh 87 32 47 8 Talas 66 27 30 9 TOTAL 469 214 177 78 Source: Central WUA SU Annual Report (2009)

41. Payment of irrigation service fees by WUA. For DWEM, payments by WUAs has been critical. In 2001, prior to the restructuring of WUAs under the law, WUAs owed approximately $1.5 million to the DWEM for unpaid ISF. However, with the formation of WUAs and increased payments of ISF by the first quarter of 2007 this was reduced to approximately $275,000. SU staff members have continuously encouraged WUAs to increase funds collected from members for use by the WUA to pay for water supplied, as well as have the necessary resources required to sustain their on-farm irrigation system. During 2001-2011 WUA members paid $9.05 million out of $9.98 million owed, or around 92% of total water fees owed to DWEM. Payments for ISF have increased from less than $0.5 million to almost $1.0 million from 2001 to 2011 and are expected by DWEM to exceed $1.3 million in 2012 ( Table 21 ).

Table 19: Irrigation Service Fees Paid by WUAs to DWEM, 2001-2011 (KS million) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Owed to DWEM 27.8 32.6 42.8 56.5 42.6 43.2 40.7 37.9 43.5 49.8 46.8 Paid to DWEM 19.8 25.5 36.1 45.7 38.2 45.6 43.6 40.1 42.9 46.3 41.4 Paid (% owed) 71 78 84 81 90 106 107 106 99 93 88 Source: DWEM Accounting and Financial Management Unit (2011)

42. Willingness to pay for rehabilitation . The World Bank-funded On-Farm Irrigation Projects (OIP-1 and OIP-2) and the ADB-funded Chui AADP 28 included an agreement that farmers would finance 25% of on-farm rehabilitation costs and 100% of machinery costs from sub-loans to be repaid over seven years with a four-year grace period. In order to implement this process when signing agreements for rehabilitation of their on-farm infrastructure at least

27 R-WSUs and O-WSUs; Raion and Oblast Water User Support Units respectively 28 AADP; Agricultural Area Development Project

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85% of all WUA members had to sign to confirm acceptance with the repayment requirement. To date, OIP-1 has signed agreements on repayment of loan funds with those WUAs where on- farm irrigation infrastructure was been rehabilitated and with those WUAs who received technical credit. Sub-loan agreements for civil works were signed with 63 WUAs for KS222 million, which is equivalent to about $6 million (Table 20). Over 200 WUAs signed sub-loan agreements for technical credit in an amount of KS47.3 million, of which about KS0.2million was repaid by the end of December 2011 (Table 21) as discussed below.

Table 20: Status of Sub-Loans for Civil Works under OIP-1, 31 Dec 2011

Number of KS million Oblast Loan Total Loan Amount Amount Balance Agreements (A) Repaid (B) (= A-B) Batken 7 29.7 0.1 29.6 Chui 0 - - - Issyk-Kul 9 33.5 0.3 33.2 Jalalabad 13 57.1 1.2 55.9 Naryn 11 33.1 0.8 32.3 Osh 15 48.9 1.5 47.4 Talas 8 19.8 0.3 19.5 TOTAL 63 222.0 4.1 217.9 Source: OIP-2 PIU M&E Staff, 2009

Table 21: Status of Sub-Loans for Technical Credit under OIP-1, Dec 2011 KS million Number of Loan Oblast Agreements Total Loan Amount Amount Balance (A) Repaid (B) (= A-B) Batken 25 5.14 0.04 5.10 Chui 26 1.15 - 1.15 Issyk-Kul 22 7.16 0.02 7.14 Jalalabad 36 11.48 0.01 11.47 Naryn 36 6.48 - 6.48 Osh 58 14.42 0.01 14.41 Talas 36 1.47 0.14 1.33 TOTAL 239 47.31 0.23 47.08 Source: OIP-2 PIU M&E Staff, 2009

43. Establishing water fund . To date, WUAs and WUA members have continued to express willingness to make these payments. Yet, although the Government, including the Ministry of Finance, have been very supportive of the requirement for WUA members to repay 25% of rehabilitation costs, for numerous reasons the Government has found it very difficult to agree upon a repayment procedure. Given the long delays in resolving disputes and legal issues on repayment, there are now cases of confusion amongst some WUA members regarding their requirement to repay their share of rehabilitation costs. It is important to resolve this issue of repayment of the agreed share of investments, as this is a cornerstone of project design, and failure to do so will seriously undermine future investments under the Additional Financing for OIP-2 and GAFSP 29 , as well as future ADB-funded projects. This issue has been further complicated by the crisis of 2010, and the resulting impacts on farm income and profitability. Therefore, in late 2010 a new strategy was instituted to resolve this issue. Within the framework of negotiations with GKR for the Additional Financing (AF) for OIP-2 the issue was resolved in principle. It was agreed with the Government that the administration of the

29 GAFSP; Global Agriculture and Food Security Program

AHT / UBI / UNICON 21 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT technical credits and repayment for rehabilitation works for selected WUAs under the OIP-1, the OIP-2, the AF, AADP, and the WMIP will be transferred from the Ministry of Finance to DWEM. In consultation with the relevant Government agencies, DWEM would initiate the implementation of the procedures for this transfer, including drafting or revising the relevant acts and regulations required for this transfer of the repayment administration.

44. Monitoring of water use. At present, DWEM charges WUAs irrigation service fees for about 4,000m3 to 5,000m 3 of water per hectare. In many cases this is far less than what is actually required by the water users. In fact, this amount would barely satisfy the evaporative demand of the irrigated crops (not even including unavoidable system losses). In many cases DWEM is unable to adequately monitor the actual amounts of water that are being delivered. To some extent, this is understandable, as many of the hydroposts that were used during the Soviet period to measure water flows no longer exist. Current meters, which are required to calibrate the hydroposts do not exist either, or (if at all available) have usually not been checked for accuracy for many years. Thus, flows are often just estimated or guessed at. Therefore, DWEM needs assistance in accurately measuring the water delivered to water users and WUAs. Most of the on-farm rehabilitation projects have replaced hydroposts but in other systems it is necessary to re-establish a means of measuring flows. Training in the design and construction of long throated flumes and broad crested weirs to accurately measure water flows would also improve the ability to measure and charge for the water that is being delivered.

45. WUA Federations. Although the WUA Law does not recognize WUAFs they have been formed in the country starting since 2005. These are presently legally registered under a variety of laws. The amendments to the WUA Law to legalize WUAs are in the final reading and should be approved by the end of the year. Once this is done WUAFs will all be reregistered under the WUA Law. By the end of 2011, 29 WUAFs were responsible for O&M of almost 200,000 ha serving 133 WUAs (Table 22). Of these WUAFs, only about ten are very active but with increased encouragement by DWEM for the formation of WUAFs it is expected that these number will increase. A major driving factor in this push for federations is the short fall in funds to maintain and operate the inter-farm delivery system. WUAs on their part believe that federations formed by WUAs can in fact operate and maintain the off-farm system at a lower cost than the water fee currently charged by DWEM. If the irrigation service fee doubled to around $1.28/1,000 m 3 (as proposed by DWEM) would be approved, it is likely that the growth rate of WUA Federations will accelerate rapidly.

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Table 22: WUA Federations in Kyrgyz Republic, 31 December 2011 Month of Area Number of Federation Oblast Federation Registration (‘000 ha) WUAs Active 30 Chui Kichi-Kemin Suubashy July 2008 6.9 2 Yes Batken Leilek September 2005 12.5 8 Batken Тoktogul-Batken June 2006 9.5 6 Batken Аk-Suu December 2009 4.4 4 Jalalabad Kara-Ungur-Sai August 2005 15.5 8 Jalalabad Ala-Buka Sugat suu April 2009 6.8 4 Yes Jalalabad Chanach- Sugat suu NA 6.5 3 Jalalabad Bazar-Korgon- Sugat suu November 2009 8.2 7 Jalalabad Egemen-suu November 2009 3.9 2 Jalalabad Dyikan-suu November 2009 2.9 2 Issyk-Kul Suubashy February 2007 5.3 3 Yes Issyk-Kul Sara-Juku January 2009 6.0 2 Naryn -Sook April 2006 8.8 2 Yes Naryn Togol-Suu July 2006 2.8 3 Osh Аk-Suu May 2006 5.7 6 Yes Osh Uvam July 2006 6.4 7 Yes Osh Besh-Aryk December 2009 2.2 4 Yes Osh Too-Moyun-Suu December 2009 4.5 5 Talas Kosh-Kol May 2009 6.0 4 Talas Kem-Kol NA 5.9 2 Talas Suuluu-Аrabek December 2012 11.5 7 Yes Talas Аltyn-Та mchy December 2012 19.2 15 Talas Кumushtak February 2006 5.2 4 Yes Talas Umaral March 2008 10.7 6 Talas Bakay-Alysh January 2011 4.9 4 Talas Saza-Baisuu July 2006 3.0 4 Yes Talas Kydyraly December 2006 7.3 4 Talas Jorgo-Bala-Saruu January 2011 4.3 3 TOTAL 197.7 133 Source: DWEM Central WUA SU Annual Report 2011

46. Water fees . WUA members pay a water fee that covers the O&M costs as well as any repairs plus the payment to the Raion DWEM for water service to the WUA. When formed WUAs set fees that just barely covered the fees they had to pay to the DWEM. However, as can be seen In Table 23 WUA members appear to have learned that they had to increase the approved fee In order to cover the O&M costs of the WUA itself, as well as fixed costs such as for their office and management and office staff. Water fees to be paid to the DWEM are set by Parliament and have remained low and as a result irrigation systems suffer as the DWEM does not have sufficient funding to properly maintain and operate the system. At present, the rate is 30 KS (or $0.64) per 1,000 m 3. On average, WUAs are collecting water fees around $1.30 per 1,000 m 3 in total. This means they are now collecting slightly more for their WUA than for DWEM.

30 Empty cell intimates in active WUAF

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Table 23: Average Irrigation Service Fees by Oblast, 2001-2011 Tyin/m 3 * Year $/’000 m 3 Osh J’bad Batken Issyk-Kul Naryn Talas Chui ALL 2001 3.14 3.72 2.29 2.07 0.96 3.29 3.69 2.74 0.57 2002 3.24 3.32 2.56 2.33 1.10 3.34 3.83 2.82 0.60 2003 3.57 3.56 2.88 3.70 1.17 3.45 4.39 3.25 0.74 2004 3.72 4.56 3.36 4.38 2.58 3.51 4.48 3.80 0.89 2005 3.44 4.14 4.17 4.93 2.11 3.79 4.83 3.92 0.95 2006 3.75 3.39 4.95 4.21 3.03 4.16 4.95 4.06 1.01 2007 3.94 3.93 6.31 5.85 3.31 4.48 4.96 4.68 1.25 2008 6.47 5.62 7.66 6.05 3.13 4.60 5.17 5.53 1.51 2009 5.46 4.86 9.62 6.42 3.18 5.09 5.04 5.67 1.32 2010 7.26 6.51 9.28 5.99 2.20 6.05 7.40 6.38 1.39 2011 6.21 7.54 7.96 4.75 3.30 4.80 5.80 5.77 1.25 Source: DWEM * 1 Tyin = 0.01KS

47. WUA budgets. Table 24 shows planned and actual O&M and repair expenditure for all WUAs in in 2008. The total expenditure in that year was about US$2.1 million, which was covered by water fees. This is low but it covers all their payments to their staff, pays their O&M and some repair costs and pays their water fees to the Raion WRD. Eventually the Government will realize it is undervaluing the water the system delivers and will increase the fee. WUA members will complain but they can afford to pay more and know the irrigation water is worth much more than they are presently paying.

Table 24: Planned and Actual O&M and Repair Expenditures by WUAs, 2008 O&M Expenditure Repair Expenditure Area Oblast KS million KS/ha KS million KS/ha (‘000 ha) Planned Actual Actual Planned Actual Actual Batken 47.6 9.0 7.8 163 1.7 1.5 31 Chui 197.4 14.9 10.6 53 2.7 1.9 9 Issy-Kul 94.2 7.4 5.4 57 1.9 1.7 17 Jalalabad 99.6 16.4 5.9 58 3.7 4.1 40 Naryn 47.1 4.4 2.7 56 1.6 1.4 29 Osh 99.0 16.7 13.5 135 4.9 4.3 43 Talas 97.0 11.8 12.3 127 1.5 2.2 23 TOTAL 681.9 80.7 58.1 85 18.1 17.1 25 US ($ million) 2.21 1.59 0.49 0.47 Source: DWEM Central WUA SU Report (2009)

48. Ongoing activities aimed at improving WUA performance. (i) Water Management Improvement Project. This project has introduced field workshops to increase irrigation efficiency on demonstration plots through improved surface irrigation methods. WMIP has established demonstration plots in 20 WUAs throughout the country. This support has been well received and will be expanded during 2012 until WMIP funding is completed around September 2013. Additional activities may be implemented under OIP-2 AF or GAFSP.

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(ii) FAO initiatives. Pilot innovative irrigation projects for WUAs are being implemented by FAO in cooperation with DWEM. Farmer Field Schools for improved water management are being introduced in the oblast of Jalalabad. A total of 24 independent farmer field schools have been established to strengthen the farmer groups and improve their skills on irrigated agriculture. A total of 25 local farmers were trained as facilitators, learned the basic principles of participatory approaches and acquired advisory skills for agricultural consulting and the training of other farmers. In 2012-2015, as per request for technical assistance from the Kyrgyz Government, FAO is preparing a new project and mobilizing donor investments to disseminate this experience to other regions in the country. (iii) Helvetas On-Farm Water Management . This project supports WUAs in pilot areas to Improve their governance structure and management capabilities which leads to better service delivery, including a more reliable water supply. Farmers in the pilot areas are trained on advanced Irrigation practices and enabled to make more informed decisions about efficient water use. The project works with WUAs and through them to Water User Groups (WUGs) and farmers. The 2012 Project Review 31 documented that the project focused on the “last mile” and spread methods of efficient water use on the level of farmer's fields. It successfully enhanced knowledge and skills of WUAs. However, the Review stated the outreach of the project remained limited and due to the concentration on the farmer level the interventions were too selective to have a systemic impact. In 2012 the project concentrated on 6 WUAs but recognizes this is a small number of the 478 in the country and 166 WUAs in the three southern oblasts. If Helvetas cannot generate enough funding to upscale their activities they may close the project by the middle of 2013. (iv) WUA Union. The Union of Water Users Association of the Kyrgyz Republic was established in October 2005 and registered in March 2006. At present, the union has 210 WUA members, representing more than 100,000 WUA members farming an irrigated area in excess of 300,000ha. The union coordinates WUA activities and relations between WUAs and other water management units and state bodies. From 2013 onward, the union plans to offer training programs in support of its WUA members.

49. All of these models offer an alternative system for delivering support to WUAs and WUA members. Fortunately, the WUA development process has created WUGs in all the WUAs in the country so they can be used for outreach and extension. However, it must be recognized that WUGs cover an area of 25-50ha depending upon the average land holding of farmers, with WUGs established around a smaller area in the south and larger In the north. There are 40-80 WUGs in a 2,000ha WUA or a total of more than 13,000 WUGs in the south and 9,000 WUGs in the north. An outreach program that plans to use WUGs has to have a large number of outreach staff to be effective.

4.3 Management of Farm-Level Irrigation Infrastructure

50. Farm-level infrastructure. Individual farmers are responsible for the management of their infrastructure for distribution of water they receive from WUAs on their own fields. Irrigation methods almost exclusively consist of surface irrigation methods, mainly furrow and small basins (depending on soil type and cropping patterns). The performance of farm level irrigation system depends on: (i) the quality of water delivery from the tertiary system (by WUAs), and (ii) the uniformity and distribution of water within the farm plots (by farmers themselves). Although field irrigation is the last link in the supply chain from water source to crops, yields are highly sensitive to the depth and uniformity of water applications across the farm plot. Suboptimal applications have a direct adverse impact on farm productivity.

31 Peter Schmidt, Jyldyz Abdyllaeva and Lydia Pluss. On Farm Water Management Project Review , August 2012.

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51. Assessment of farm level irrigation. While there is limited information on the performance of field irrigation systems, (seasonal) lack of water and low efficiency were identified as key issues during the August 2012 stakeholder workshop (see also Appendix ???). Common causes of poor performance are: (i) irregular surface levels, resulting in high and low areas with non-uniform water distribution, (ii) poor construction of furrows and basin bunds, resulting in overtopping and water losses to drainage, and (iii) poor timing of water distribution to furrows and basins, leading to under-watering or over-watering.

52. Potential for improved performance of farm level irrigation. Improvements in the performance of farm irrigation may be attained by laser leveling 32 , shortening of furrow lengths to improve application uniformity, the use of head ponds at the head of furrows, and by training farmers in irrigation scheduling. To date, most irrigation projects in the Kyrgyz Republic have focused on main and inter-farm systems as well as on-farm systems including the development and strengthening of WUAs, with very little focus on improved farm and field level improved irrigation. A logical extension of the role of WUA would be to facilitate the provision of irrigation extension services at the farm level. Service providers for this may include NGOs currently involved in improved farmer water management such as ACTED and Helvetas, possibly in collaboration with providers of agricultural extension services such as RAS. In order to ensure long-term continuity this has to work closely with the WUA Support Units.

53. Rural Advisory Service (RAS). The RAS is the only agricultural extension service operating throughout the country. It was established in 1999 under an initiative sponsored by GRK, the Government of Switzerland, the World Bank, and IFAD. The RAS has independent offices in all oblasts and advisors in every raion of the country. RAS was set up to provide agronomic education and training to the rural population with the idea that farmers would pay for these services. While some groups have paid for small training programs, this is relatively rare. For the most part, RAS acts as a consulting company, bidding on proposals from donors. But because it is registered as a non-profit organization with a special charter, it has none of the advantages of a for-profit organization. Thus, the outreach of RAS is limited almost solely to participants in various donor programs. RAS has received limited commercial funding since 2008; virtually all of its funds are derived from contracts with donors.

54. At present, RAS has 360 employees, of which 180 are working full-time. Current contracts include a WB pasture management program and a one-year program with the EC on small agri-businesses (fruit and vegetable processing, small dairy, wool project). Helvetas conducted an independent review evaluating the effectiveness of RAS. 33 “The assessment evaluated services in terms of outcomes in the farmers’ fields, herds and household economies”, and resulted in a very favorable assessment of RAS’s achievements. Consultants interviewed 800 RAS clients. More than two thirds of the clients rated RAS services as “very useful”, and 30% as “fairly useful”, only 0.4% rated the services as “not useful”. Virtually all participants applied what they learned, which for the most part resulted in higher profits or incomes. RAS has a number of problems that hinder its effectiveness. Because it is a non-profit organization, only 1% of its income can be used for professional training. There are no funds for travel or exchange. Thus, the organization finds it difficult to maintain or develop what would be considered an experienced professional staff.

55. Helvetas and ACTED. Both of these NGOs are working with WUAs in the south of the Kyrgyz Republic. Helvetas’ program is called SEP - Efficient Use of Water Project. SEP has been working with six WUAs through a local NGO (Metan Shafkot), assisting local communities primarily with institutional development and training. Acted is also working with three to five WUAs and has provided some funds for canal improvement for the WUAs that they have been assisting. An evaluation of the capabilities of these organizations was beyond the scope of the investigators due to time limitations. However, since both organizations have only recently

32 As adopted in the World Bank Fergana Valley Water Resources Management Project. 33 Effectiveness of the Rural Advisory Services (RAS). February 2011 (with some updates in December 2011). Helvetas, Swiss Cooperation Office in the Kyrgyz Republic.

AHT / UBI / UNICON 26 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT begun their activities it is unlikely that they have the technical competence or training capabilities that are processed by the DWEM’s WUA Support Units.

4.4 Assessment of Irrigation System Management

56. Overview . In 2011, about half of the country’s irrigations system and 75% of the irrigated area are managed by the Government and WUAFs, with average system areas of 2,000 and 6,800 hectares respectively (Table 25). The other half of the systems with 25% of the irrigated area are small systems (with an average area of 800 hectares) operated by local communities and irrigators. Of the WUAF managed systems, only 9 of the 29 WUAFs (with an irrigated areas of about 62,000ha) are currently active 34 . Within the Government/WUAF systems there are 478 WUAs, with an average irrigated area of about 1,600ha. It is reported that there are about 22,000 WUGs in the WUAs, with an average irrigated area of just over 30 hectares.

57. A typology of causes of poor performance of irrigation systems. The poor performance of main, on-farm and farm level irrigation systems in the Kyrgyz Republic adversely affects irrigation water delivery and thereby agricultural productivity. The root causes of poor performance are: (i) limited investment and O&M budgets, and (ii) obsolete irrigation system design, and (iii) limited institutional capacity. These causes have contributed to: (iv) poor system operations, and (v) poor system maintenance, and thereby to a deterioration of irrigation infrastructure throughout the country (refer to Appendix 1 for a problem tree).

Table 25: Summary of Irrigation System Management, 2011 Number of Total Area Average Management Level Systems (‘000 ha) Area (ha) All Systems Govt/Community 631 1,002 1,588 Community Whole system 345 273 792 DWEM HW* + Main 286 549 1,919 WUAF Main 29 ** 198 6,816 WUA On-farm 478 747 1,562 WUG On-farm 22,000 747 34 Source: Consultant; summary from preceding information * Headworks ** Of which 9 are reportedly active (these 9 systems have an irrigated area of approx. 62,000ha)

58. Limited investment and O&M budgets. Underfunding of O&M remains a major constraint to the sustainability of irrigation systems at all levels. The funding of main system O&M is constrained by limited state budgets for water resource management (which have declined in real terms in recent years) and by irrigation service tariffs that are substantially lower than tariffs needed to cover the full cost of operations and maintenance. Because of fund limitations, investment in rehabilitation or construction of new irrigation infrastructure has come to a standstill. To ensure the financial sustainability of irrigation systems, it is necessary to increase irrigation service tariffs. In addition, GKR may consider assigning part of the responsibility for O&M to WUA Federations and contract out O&M activities to private sector parties.

59. Table 26 presents a summary of required and actual operating and maintenance costs for the two system levels, Main and inter-farm (largely government operated) and on-farm (WUA

34 The term ‘active’ refers to the WUAFs provided with assistance under the WMIP and therefore were reported as being active. In terms of the status of the balance of WUAFs at the time of study there was no additional information available on their activity level (hence the blank entry in Table 22). However as recently reported the SDC does actively support a large WUAF in Aravan Raion in Osh and Helvetas also works with a few smaller WUAFs in the south. These appear to be functioning but obviously do not have the level of support as WUAFs supported under WMIP.

AHT / UBI / UNICON 27 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT operated). Total annual O&M costs are estimated to be of the order of $25 million or the equivalent of $45 per hectare. However current funding levels from Government and irrigator service charges are approximately $13 million ($17 per hectare), or less than half the required level. There is currently a significant difference between required and actual funding levels, of the order of $20 million per year, or close to $30 per hectare. As discussed above, while WUA fee recovery rates are high, they are from a relatively low rate, and there is concern whether irrigator are willing to meet the required fee rates for sustainable O&M. Likewise, government funding is also significantly below required levels, and has been for a number of years, leading to the current deteriorated status of irrigation infrastructure. Table 26: Summary of Irrigation System O&M Costs, 2011 Required (A) Actual (B) Gap (= A-B) System Level $ million $/ha $ million $/ha $ million $/ha Government 22.40 30.38 10.00 13.56 12.40 16.82 WUA 11.06 15.00 2.79 3.78 8.27 11.22 TOTAL 33.46 45.38 12.79 17.34 20.67 28.04 Source: Consultant; summary from preceding information

60. Obsolete irrigation system design. The existing irrigation infrastructure was designed and constructed over 30 years ago, based on design and construction standards for design and construction developed by the former Soviet Union. In the country there have been considerable changes in farming systems, with the breakup of state farms. Where previously fields were 25- 50-75ha on the collective and state farms they are now closer to 2ha In the south and 8-10ha in the north. It is necessary to put more control structures and gates in the rehabilitated systems. This along with other changes will improve performance through a reduction in percolation and run-off losses, which would result in lower maintenance costs. Other improvements include: canal lining or alternative lining technologies, replacing siphons, addition or improvement of de- silting structures and reconstructing or adding measurement structures. At the farm level, there is potential to improve application efficiencies through land leveling and to reduce water wastage..

61. Limited institutional capacity. Low and declining budgets have adversely affected the institutional capacity of DWEM and other water management institutions. While there have been considerable efforts in the establishment of WUAs, there is still a need to increase their capacity to effectively and efficiently operate and maintain the tertiary infrastructure through, inter alia , asset management planning and planning and supervision of maintenance works.

62. Poor system operations. The limited reliability of water delivery at tertiary levels (and probably also main system level) is a constraint to farm productivity, and is often caused by sub- optimal operation of irrigation systems. Common causes of poor operation are: (i) poor scheduling of irrigation cycles (application duration and return intervals), and (ii) poor regulation of delivery flow rates (i.e. farm off-take flow rates are either above or below the required discharge rate) due to operator error or inadequate equipment.

63. Poor system maintenance. The Kyrgyz Republic has witnessed a sustained deterioration of its irrigation infrastructure over the past 30 years. Underfunding, together limited institutional capacity and obsolete system design, have resulted in poor maintenance of irrigation systems. This, in turn, has led to a decline in water diversions and a reduction in the irrigation area (which Is now smaller than it was in 1990). Although the World Bank, USAID and other development partners have invested in the rehabilitation of tertiary systems, there remains a considerable maintenance backlog at both main and tertiary levels.

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5 IRRIGATED AGRICULTURE

64. This chapter presents a review of irrigated agriculture and assesses constraints (other than constraints related to off-farm water infrastructure) to increasing agricultural productivity.

5.1 Review of Irrigated Agriculture

65. Background. Virtually all of the arable land within the Kyrgyz Republic is irrigated. From an agricultural point of view the country has two distinctly different agricultural regimes. Irrigated land in the north is at a higher elevation with a shorter growing season (as compared to the south) along with being situated in relatively flat plains; thus, the majority of areas that are poorly drained or have salinity problems are concentrated in the north. The north has been said to be the bread basket of the Kyrgyz Republic with about 75% of the arable land. It is better suited for the production of high gluten wheat while cotton is only produced in the south. The south also appears to have a climatic advantage for the production of fruit and vegetables.

66. Farm structure. Most farmers in the Kyrgyz Republic may be classified as subsistence farmers (with smallholdings of less than 5ha) and make up 97% of the farming enterprises (Table 27). The definition of what is defined as a subsistence farmer is somewhat arbitrary, but for the most part subsistence farmers are growing crops primarily for their own consumption and do not market much of their own product. Thus, high agricultural input costs hurt them more than larger producers. The most recent agricultural census in 2002 showed that 83% of land owners have less than one hectare and about 41% of cultivated land comprises farms of less than 10 hectares. There is a considerable amount of land that is leased; thus, farm size tends to be significantly larger than the amount of land owned by a farmer. For example, a farm survey by IFDC showed that 30-50% of the area farmed by an individual farmer was rented (Table 28).

Table 27: Farm Structure in the Kyrgyz Republic, 2008

** Number of Farms Arable land Average Farm Type * ‘000 %Total ‘000 ha %Total Farm Size (ha) Subsistance 951.3 97 408.0 31% 0.4 Commercial *** 32.0 3 897.3 69% 28.0 TOTAL 983.3 100 1,305.3 100 % 1.4 Source: FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and agricultural productivity. 2009. * Includes all types of agricultural production unit (including household plots), but excludes farms without arable land (such as livestock farms with access to pasture) and 55,686 peri-urban gardens. ** About 80% of arable land in the Kyrgyz Republic is irrigated. *** Defined as a farm with more than 5ha of arable land.

67. Crop yields . Crop yields across the nation have remained low over the last decade. In fact there has been little improvement in agricultural productivity during this period despite numerous donor projects. Virtually all crops, but particularly wheat, have consistently yielded less than half of their potential. Reasons for low productivity are numerous but in general the reasons are related to low investment in the agriculture sector. Figure 3 shows the share to GDP from various economic sectors. While agriculture contributes more to GDP than any other sector, its share of bank loans is the lowest of all sectors.

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Table 28: Average Farm Size, 2011

Type of North South Farm Land ha % Farms ha % Farms Cultivated 11.7 100 1.7 100 Owned 6.0 51 1.2 71 Rented 5.8 49 0.5 29 Irrigated 7.1 57 1.1 63 Rainfed 4.7 43 0.6 37 Source: The data shown here is from a sample survey of 406 seed distribution participants. Note: The survey was not designed to obtain information regarding average farm sizes for the country or region. Monitoring and Evaluation Report of Seed Distribution Program. April-November 2011 US-GOK Economic Development Program (EDF). IFDC.Data taken from IFDC survey of 406 farms.

Figure 2: Trends in Production of Selected Crops, 2003-2010

1,600.0

1,400.0

1,200.0

1,000.0

800.0

600.0 metric tons (1000)

400.0

200.0

0.0 2003 2004 2005 2006 2007 2008 2009 2010 Year Wheat Corn for grain Raw cotton2 Potatoes Vegetables Fruits and berries

Source: National Statistics Committee

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Figure 3: Imbalance between Agriculture GDP and Bank Lending

Source: FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and agricultural productivity. 2009.

68. Crop areas and production of wheat and other grains. Wheat is the dominant crop grown both in the north and the south and comprises about one third of the total irrigated area. When other grains (barley and maize) are included, the total area amounts to about 574,000 ha or about 50% of the total irrigation command area (Table 29). Fodder crops would be the next most abundant crop by area, though much of the fodder is grown on non-irrigated land.

Table 29: Sown Area by Oblast and Farm Type, 2010 (‘000 ha) Oblast Crop HH Batken Jala- Issyk- Naryn Osh Talas Chui Total Private Plot labad Kul Grain 625.8 552.1 34.0 40.1 68.8 93.3 25.1 93.3 59.7 244.4 including: Wheat 376.7 337.4 12.0 21.7 39.4 71.4 15.3 71.2 14.9 142.7 Barley 125.4 108.4 7.3 7.5 1.8 21.3 9.7 6.0 1.1 77.9 Maize for grain 73.4 59.3 12.6 6.6 24.3 0.0 - 14.4 5.1 22.0 Rice 6.6 6.3 0.0 2.6 2.5 - - 1.6 - - Pulse 42.1 39.5 2.1 1.7 0.8 0.1 - 0.3 38.6 0.5 Oats 1.2 0.9 0.0 - - 0.4 - - - 0.8 Rye 0.0 0.0 ------0.0 Sugar beets* 8.4 6.7 0.9 - - - - - 1.0 7.4 Raw cotton 26.7 24.7 0.0 0.1 14.6 - - 12.0 - - Tobacco 4.1 3.9 0.0 0.6 0.3 - - 3.2 - 0.0 Oil crops 55.3 49.1 3.4 2.2 23.0 0.1 0.0 18.5 1.6 9.7 Potatoes 84.3 58.6 24.5 2.2 7.4 32.9 5.6 10.2 15.5 10.3 Vegetables 41.9 23.3 17.6 2.3 9.1 2.7 0.5 5.9 3.6 17.2 Melons 7.3 7.0 0.3 0.2 3.5 - - 1.7 0.02 1.9 Fruits and berries 48.7 15.0 29.4 10.5 7.3 8.2 0.3 9.4 3.1 8.9 Grapes 6.2 4.3 1.7 2.2 1.4 0.0 - 0.6 0.0 1.9 Fodder crops 291.5 NA NA 12.4 16.1 46.5 64.4 26.1 19.2 106.7 Total area 1,146.4 991.6 98.3 60.3 142.9 175.6 95.6 170.9 100.7 397.8 Source: National Statistics Committee (2011) * Factory

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69. Crop areas and production of cotton and vegetables. Cotton yields are very low and in general should be more than double the mean yields that are being achieved. Cotton is only grown in the south and for many years, it along with wheat, were the dominant field crops grown there. Over the last 5 to 6 years the area planted to cotton has rapidly decreased by about half, along with a concurrent increase in vegetable and fodder production. Cotton, while a good cash crop, requires substantial inputs which subsistence farmers may find difficult to cope with. Thus fodder, which requires less in the way of inputs, has been steadily replacing cotton. A subsistence farmer’s bank account has often been said to be his animals; they provide food, few input costs, and can be easily marketed. Vegetable production can be carried out on a relatively small area requiring far less labour then cotton while returning greater profits.

Table 30: Mean Crop Yields by Farm Type and Oblast, 2010 (centner/ha). Oblast Crop HH Batken Jala- Issyk- Naryn Osh Talas Chui Total Private Plot labad Kul Grain 25.3 25.2 34.7 25.2 34.8 28.4 19.1 18.0 22.8 25.1 including: Wheat 21.7 22.0 21.6 20.1 23.0 22.9 19.3 18.6 23.5 22.3 Barley 18.9 19.1 19.8 14.6 16.5 15.5 18.5 16.4 16.8 20.0 Maize for grain 59.3 59.6 58.8 55.7 56.3 61.7 - 50.4 61.2 61.6 Rice 30.5 30.7 30.9 27.7 33.5 30.7 - - - - Pulse 17.4 17.4 18.0 15.6 14.1 11.0 - - 17.6 18.6 Oats 24.9 25.5 21.4 ------28.1 Rye 36.5 36.5 ------36.5 Sugar beets* 165.7 169.9 145.5 - - - - - 164.7 165.9 Raw cotton 27.9 28.3 21.3 18.4 29.4 26.3 - - - - Tobacco 24.5 24.5 21.3 22.2 21.8 25.2 - - - 21.9 Oil crops 10.7 10.8 10.8 14.7 10.7 11.1 11.4 10.7 9.5 9.0 Potatoes 158.1 160.3 152.9 138.8 139.2 153.7 165.0 141.0 168.4 151.9 Vegetables 179.8 372.2 346.2 162.8 205.4 168.0 159.4 116.9 188.8 176.6 Melons 212.8 213.5 193.8 149.1 237.7 170.3 - - 194.8 211.9 Fruits and berries 43.3 45.5 47.4 50.0 57.4 51.3 45.0 17.4 50.5 17.8 Grapes 7.5 2.6 20.5 6.8 3.6 23.2 4.8 - 11.2 5.8 Source: National Statistics Committee (2011) * Factory

70. International comparison of crop yields. Crop yields across the Kyrgyz Republic are low. Average wheat yields along with all other grains are at least half of what they should be. Reasons for low yields are primarily low fertilizer applications and the lack of quality seeds. In many cases, subsistence farmers grow wheat not for sale, but only for home consumption; thus, they tend not to invest in it.

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Table 31: Crop Yields in the Kyrgyz Republic, Central Asia and the European Union, 2009 Ton/ha Index (EU = 100) Crop Kyrgyz Central European Kyrgyz Central European Republic Asia Union Republic Asia Union Wheat 2.63 1.64 5.41 49 30 100 Barley 2.34 1.53 4.47 52 34 100 Sunflower 1.13 5.99 7.40 15 81 100 Sugar Beet 11.09 13.05 71.04 16 18 100 Potato 16.81 16.95 30.04 56 56 100 Source: FAO Stats, Monitoring and Evaluation Report of Seed Distribution Program. April-November 2011 US-GOK Economic Development Program (EDF). IFDC.

5.2 Potential Causes of Low Agricultural Productivity

71. Primary causes. Despite numerous initiatives to improve farm productivity, actual yields remain far lower than potential yields. The general order of concern among farmers, with the most pressing first is: (i) lack of agricultural machinery and limited capital investment, (ii) high cost and limited availability of agricultural inputs (fertilizer, seeds and fuel), (iii) poor irrigation management and need for irrigation system rehabilitation, and (iv) lack of agronomic and pest management training.

72. Lack of agricultural equipment and limited capital investment. In 2007, the agricultural sector accounted for over 30% of total GDP, but its share in outstanding bank loans was less than 5%. 35 Partly because of limited access to credit, there is a major shortage of agricultural equipment throughout the country. The lack of tractors, harvesters, and related equipment has resulted in a series of undesirable effects, all of which adversely affect agricultural productivity: • land is not prepared for planting in a timely manner, • seeds are not planted properly, • fertilizers are not applied in appropriate amounts or in a timely manner, • crops are harvested late, and • on-farm irrigation infrastructure is not maintained or repaired. According to FAO, the use of outdated machinery and delays in harvesting are causing sub- stantial losses, which are 15-25% higher than normal production losses. In 2007 alone, an estimated 110,000-185,000 tons of wheat was lost, with an export value of $25-40 million. 36

73. High cost and limited availability of agricultural inputs. (i) Fertilizer. In 2010, total fertilizer application was about 78 kg per hectare, or less than half that the amount required by the Ministry of Agriculture. 37 The low level of fertilizer use is severely limiting crop yields, and is caused by the limited availability and high unit cost of fertilizer. At present, the Kyrgyz Republic is almost entirely dependent on Uzbekistan as a source of fertilizer. In recent years, the supply of Uzbek fertilizer has been erratic, especially during critical crop stages. At the same time, the unit cost of nitrogen fertilizers has doubled. The most common fertilizer used is ammonium nitrate, which contains about 34% nitrogen; the amount of phosphorous fertilizer applied is minimal with some 2,000 tons imported annually, whereas potassium-based fertilizer is virtually unused.

35 FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and Agricultural Productivity . 2009. 36 Ibid. 37 FAO/WFP. Crop and Food Security Assessment Mission to Kyrgyzstan . 7 December 2010.

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(ii) Seeds. Quality seed is an important component to increasing yields. However, without proper fertilization seed quality has little to no impact on grain yield. 38 At present, there appears a need for new entrants to the market for seed multiplication, which is now dominated by poorly managed and unstable cooperatives. However, many disincentives exist for new entrants and for seed farms to aggressively market their seed to farmers, including a lack of transparency in licensing, preferential tax treatment for existing seed farms, illegal seed imports, and seed procurement and distribution by MoAM itself. (iii) Fuel. The introduction of more efficient machinery, as well as more efficient agricultural practices, would decrease the amount of fuel required for agricultural operations and thereby contribute to a reduction in the total cost of agricultural inputs.

74. Poor irrigation management . As mentioned in Chapter 2, the Kyrgyz Republic has an abundant supply of good quality irrigation water. However, because of seasonal variations, water supplies often do not correspond to need. For example, wheat requires one to three irrigations in spring and early summer, when river flows tend to be low (they usually do not increase substantially until mid-May to late June, when the spring melt takes place). As a result, wheat farmers often experience water shortages, particularly at the tail end of irrigation systems. Although total water supplies are usually sufficient water to meet demand, the lack of water control and discipline within the system means that many farmers are unable to obtain sufficient quantities of water to satisfy crop demands. This problem is exacerbated by the deterioration of irrigation infrastructure described earlier in this report.

75. Throughout irrigation network of the Kyrgyz Republic, there is a general lack of discipline in the delivery of water. Better management of water comes with a cost; the cost either entails increased capital investment or increased labor. The lack of water control on sloping lands means that furrow irrigation is directed down steeply sloping fields. This results in tremendous soil losses and increased silt loads in tail waters. Soil carried back into the irrigation network then becomes a problem for downstream users. Thousands of hectares of irrigated land have been lost to irrigation due to the blocking or filling up of delivery canals with silt. While glacial outwash streams will always carry fairly high silt loads, the mismanagement of farm land, along with over grazing of pastures, results in the continued loss of irrigated land or at best, increased costs of maintaining the system. At the same time, one of Kyrgyzstan’s most valuable resources, top soil, is slowly being eroded away. Ten, twenty, thirty years from now, these productive soils will no longer exist.

76. Lack of training. The Kyrgyz Republic has an agricultural extension service, known as Rural Advisory Services or RAS (see also Section 4), RAS has a number of problems that hinder its effectiveness. Because it is a non-profit organization only 1% of its income can be used for professional training. There are no funds for travel or exchange. Thus, the organization finds it difficult to maintain or develop what would be considered an experienced professional staff. The organization also needs resources to adequately train its staff. Salaries are low and turnover is high. The RAS could be more effective and reach a wider audience if it would not need to compete for funds from external financiers. This requires a commitment from GKR to provide RAS with a stable budget that is sufficiently high to reward its staff with decent salaries, so that turnover is reduced and experienced staff is retained.

77. WUAs in the Kyrgyz Republic are well organized sustainable organizations; they have good communication links to all of their members and to the community at large. WUAs cover more than three fourths of the total irrigated area and there is a national WUA organization in place that can coordinate activities among WUAs. There are many more activities that WUAs are capable of taking on, linkages with extension or advisory services is one that would be beneficial for the WUA and its members. WUAs would also

38 Monitoring and Evaluation Report of Seed Distribution Program (US-GOK Economic Development Program, April- November 2011).

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be excellent intermediaries for farmer credit programs along with providing distribution points for fertilizer distribution to members. There is much that can be done to make these organizations more valuable for both their members and the country. RAS is virtually the only organization within the Kyrgyz Republic that has substantial experience, coverage and capabilities to provide extension services. Any program developed by ADB would need to utilize this expertise. Table 32 lists a SWOT summary for the agriculture support services.

Table 32: Agriculture Support Services SWOT Strengths : RAS would appear to have an advantage over ACTED and SEP in regards to depth of personnel. RAS has been operating for a number of years and has access to personnel with relevant agricultural experience along with access to agricultural university professors. SEP and ACTED programs are relatively new and thus may not have the depth of experience that is possessed by RAS. However, the training provided and advice given to farmers is only as good as the extension agents providing those services. Both SEP and ACTED have most likely hired individuals with some experience; these individuals would likely be previous RAS workers (though we have no direct evidence of this). ACTED and SEP would be capable of paying higher salaries then RAS and thus may be able to hire better qualified agricultural advisors. Weaknesses: SEP and ACTED are small programs and relatively young. Thus, the depth of knowledge and practical experience necessary to provide good agricultural advice is most likely limited. But again, because we did not have the time or resources to investigate this, we cannot make this statement with any degree of certainty. RAS is limited in the amount that they can pay their employees and turnover is high; thus, maintaining experienced personnel is difficult. SEP and ACTED are NGO’s funded by foreign aid programs. These programs are only sustainable to the extent that these agencies continue to have interest in WUAs and do not shift funding to other programs or eliminate funding altogether. Opportunities: Both SEP and ACTED have a mission to assist WUAs, and are funded through foreign aid agencies. The synergies of more than one funding source may allow ADB to contract services through SEP and or ACTED at costs lower then would be practical for RAS. RAS needs assistance to maintain personnel and to develop relevant experience. RAS is the only organization within the Kyrgyz Republic that is dedicated to assisting farmers for many years to come. ADB, WB, and Helvetas have funded and contracted RAS for agricultural services. Much has been invested in the organization, to continue to do so would be beneficial to both RAS and the country as a whole. Threats: All three organizations may not be able to provide quality advisory services. SEP and ACTED could lose funding as country priorities shift or funding is cut. SEP and ACTED may not be interested or may not be able to contract with ADB or GKR to carry out services. Conclusions: Both SEP and ACTED activities with WUAs are small and have been operating for a relatively short time. Both organizations would therefore appear to have limited capacities to carry out the advisory services; in addition neither organization has an agriculturally trained senior staff to oversee work. RAS on the other hand is a large organization with an experienced senior staff and the capacity to provide quality trainers. In this regard it would seem logical to contract with RAS rather than gamble that either SEP or ACTED could provide the services needed to increase agricultural production. Source: Consultant

78. Framework for analysis. Table 33 presents a framework for analyzing the causes and potential solutions to the above constraints to improving agricultural productivity, based on the above review and the results of stakeholder consultation. It lists services and providers required for implementation of solutions, as well as supporting facilitation.

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Table 33: Analytical Tool for Developing an Investment Strategy for Irrigated Agriculture Causes Solutions Providers Services Constraints Facilitation 1. Lack of credit Rural / Rural / agricultural Credit packages Relatively large Involve WUAs / agricultural credit institutions suitable for overheads Credit Institutions credit farmers in credit administration 2. Lack of Import / Machinery service Machinery hire lack of funds to Rural credit machinery manufacture providers and/or services; buy /hire / lease (see 1) appropriate private farmers machinery lease machinery machinery themselves services, owner operations 3. High cost Make fertilizer Private traders Selling fertilizers lack of funds to Rural credit (or restricted wider available Government buy fertilizer (see 1) availability) of distributors fertilizer 4. High cost of Fuel efficient Machinery service Machinery hire (see 2 above) Rural credit fuel machinery, providers; Agric services; (see 1) minimum tillage research and Extension on extension services tillage and planting practices. 5. Restricted Increase quality Plant breeders and Breed and Lack of funds to Rural credit availability of seed production seed multiplication multiply quality buy quality (see 1) Extension (quality) seed and distribution; farms (private and seeds, seed seeds; Less on benefits of make quality cooperative), seed quality control; knowledge on good seeds. seeds more quality control distribute and benefits of good Alleviate other available institute, Ministry of sell. seeds; other constraints Agriculture, constraints that impacting seed distributors/traders. limit production industry. (see 2, 3, 6, 7) 6. Inadequate Improve on- Machinery service Field leveling Lack of funds or Rural credit on-farm farm irrigation: providers services. interest to (see 1) for irrigation field levelling, DWEM Support Extension improve on-farm machinery. water control Units and RAS services for on- irrigation Training and and extension services. farm water infrastructure; budget for management. management. weak WUA extension organizations; services; work weak extension through WUAs. services from RAS and DWEM Support Units. 7. Lack of Improve Extension services Training and Weak extension Training and agronomic agronomic and and commercial extension on services budget for and pest pest control firms selling ag agronomy and extension control knowledge and inputs. pest control services; knowledge skills of farmers 8. Lack of Improve market Private traders, Marketing Insufficient Analyse value markets outlets for processors, farmer (buying) of farm interest of private chains and involve agricultural market produce sector; few and private sector; produce organizations weak farmer establish and marketing strengthen farmer groups; marketing groups; Processing improve credit for equipment needs processors. modernization. Source: Consultant

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6 IDENTIFICATION OF KEY CHALLENGES

79. As defined in the TA TOR, the approach to the water sector assessment and strategy development is intentionally non-holistic but rather focused on the three key challenges that can be addressed through the proposed investment projects. This section therefore presents a synthesis of the issues in the previous sections; water resources, water management, irrigation management and irrigated agriculture, to identify the key challenges and priority solutions to addressing these challenges, both of which form the foundation to the strategy developed in Chapter 7.

6.1 Results of Sector Assessment

80. Summary . The agricultural productivity of the Kyrgyz Republic is far lower than potential productivity levels, thereby suppressing farmer incomes, food security and economic growth (refer to Appendix 1 for a problem tree). Low agricultural productivity is caused by the low productivity of water and land. Low water productivity is mainly caused by: (i) poor irrigation infrastructure, and (ii) poor irrigation water delivery. As to the limited productivity of land, various constraints (mostly unrelated to water manage- ment), have resulted in: (iii) low farm productivity.

81. Poor irrigation infrastructure. It is widely acknowledged that the irrigation infrastruc- ture of the Kyrgyz Republic has been deteriorating since the country's independence from the former Soviet Union, mainly because of a major decline in capital investment and O&M budgets for irrigation. Because of fund limitations, the country has not been able to rehabilitate or replace irrigation infrastructure, or adequately maintain its existing infrastructure. This problem has been exacerbated by low irrigation service fees, which only cover a small portion of the minimum required cost of sustainable O&M.

82. Poor irrigation water delivery. Low and declining budgets have also adversely affected the institutional capacity of DWEM and other water management institutions to properly operate irrigation infrastructure. This, together with obsolete design of most systems, has resulted in sub-optimal irrigation water delivery. Because of climate change, the demand for irrigation water will increase whereas supply will become more variable, thereby placing additional demands on adequate management of irrigation water delivery.

83. Low farm productivity. Although poor water delivery to farm plots appears an important constraint to increasing agricultural productivity, farm productivity is also constrained by other factors, the most important of which are: (i) poor on-farm water management, (ii) limited investment in agricultural machinery, (iii) lack of training, and (iv) and the high cost of essential agricultural inputs such as seed and fertilizer.

6.2 Results of Stakeholder Consultations

84. Objective of stakeholder consultations. On 29 August 2012, the Consultant organized a one-day workshop in Bishkek. The purpose of the workshop was to enlist the support of key stakeholders in the water sector (GKR, development partners and NGOs) with identifying water sector issues, key challenges and solutions to overcome these challenges.

85. Working groups. The stakeholders contributed through participation in two discussion group sessions: (i) key issues and causes, and (ii) solution to issues. To focus the discussions, participants were assigned to three groups: (i) water resources management, (ii) irrigation system management and (iii) agricultural production.

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86. Water resource management. The main issue identified was low level of irrigation (low irrigation water diversions) caused by lack of finance and water corruption (under recording of water diversions to avoid paying water fees). Other issues included; problems with drainage, water resource management (poor), poor monitoring and poor organizational development, due to poor infrastructure, lack of quality research, lack of technical resources and methods and lack of law enforcement for water regulations. The solutions to these issues are; to increase in funding and to scientifically select priority interventions and to solve these progressively. The solution providers included a range of organizations including; local government, NGOs, donors, research organizations and water law enforcement agencies.

87. Irrigation system management. the main issue was underfunding of irrigation system O&M, due to lack of state funds, low ability of farmers to pay (water fees) and low agricultural production (linked to low ability to pay). Solutions included; increase in water fees, attract international donors, lobby for increase in state funding, modify the water service policy, and develop and implement better tools/methods for water service fee collection. The other issues included lack of O&M institutional capacity and poor on-farm irrigation efficiency, due to lack of state funds, ineffective water code, dilapidated irrigation infrastructure, lack of water measurement and low WUA staff capacity. The solutions included; attracting funds, staff training, establishment of cooperative farms, and reconstruction of irrigation infrastructure and increasing institutional capacity (training and funding). The principal providers identified were governmental (DWEM), WUAs and providers of agricultural extension services (RAS).

88. Agricultural production. The main issues identified by this working group were lack of credit, and lack of machinery, both caused by high interest rates, substantial requirements for collateral, short repayment periods and late release of funds. Inadequate on-farm irrigation was attributed to lack of knowledge, lack of water and destroyed infrastructure. The fourth issue was lack of agronomic and pest control knowledge due to lack of information, extension services, finances, innovations and methodologies. The proposed solutions for credit and machinery constraints included lobbying for low interest rates and increased funding from the state budget and other sources. Solutions to improving on-farm irrigation efficiency included the rehabilitation of infrastructure and raising awareness about the importance of sustainable O&M. Improved extension services were proposed to overcome agronomic constraints,.

89. Summary of stakeholder consultations. The results of the discussion group exercises, while based on subsector groupings, produced a number of common issues and causes (and interlinked issues and causes), which can be grouped into: (i) lack funding across the sector, for water management, irrigation system O&M, and on-farm activities (farm machinery) and (ii) poor irrigation system performance at all levels which is attributed to poor and inadequate infrastructure and to poor operational capacity. The solutions likewise can be grouped, with general agreement on the need to increase funding, generally from the state (though this is unlikely to be a sustainable option in the near future) and from increase of water service revenue and/or change in the water pricing policy (also difficult under the current policy). Improvement in irrigation infrastructure, both off-farm and on-farm is a solution, along with increasing institutional capacity at all levels (for water management, irrigation system management (main and tertiary) and on-farm (rural extension services and farmer). The list of providers for solutions covers all key stakeholder organizations. The main constraints to solutions included: limited access to funding, water corruption (unaccounted-for-water to avoid service fees), limited institutional capacity, low agricultural productivity (resulting in a limited ability to pay for services including water and credit).

90. Comparison of workshop results with sector assessment. The results of the workshop are largely consistent with the issues and solutions identified in this report, although presented in a slightly different order (for example, lack of funding was seen an issue rather than a cause of poor irrigation system performance). In spite of these differences, there seems to be general agreement that poor irrigation system performance is a major issue which is due to poor irrigation infrastructure and operation at all levels (main, tertiary and on-farm), and that

AHT / UBI / UNICON 38 ADB TA8015-REG Final Report Kyrgyz Republic PART A: SECTOR ASSESSMENT this is linked to financial and institutional constraints. The workshop also established the link between low farm productivity and the limited ability of farmers to afford higher water service fees improve the sustainability of system O&M. The participants to the workshop also confirmed the range of agencies that are seen as principal contributors to provision of services.

6.3 Key Challenges

91. Top three challenges. Based on the results of the sector assessment and stakeholder consultations, the top three challenges in the irrigated water sector of the Kyrgyz Republic are the following: i. Sustainable irrigation system maintenance. The challenge is to arrest the current decline system maintenance and to achieve sustainable maintenance in the future. ii. Improve irrigation water delivery. This requires ensure the sustainability of irrigation system operations. iii. Improve farm productivity. Poor irrigation water delivery is one of many constraints that adversely affect agricultural productivity. To better utilize the improved water service deliveries, it is necessary to overcome non-water constraints, such as limited access to credit, lack of training, and the high cost of agricultural inputs.

92. The key challenges are organized by system levels as presented in Table 34 . As set out in the table a number of solutions for the subsectors are identified to achieving the challenge objectives. These proposed solutions are as identified within this study and during the stakeholder workshop and form the starting point in the formulation of proposed focused strategy to addressing the key challenges and for adoption in preparation of the phase 2 concept paper, as presented in Chapters 7 and 8.

Table 34: Key Challenges by System Level Main and inter-farm system Challenge / Responsible # Objective Priority Solutions Level Organisation 1 Maintenance; Sustainability of DWEM Rehabilitate and improve systems sustainability of inter-year water and/or WUAF Increase funding main system deliveries Improve asset management Transfer system O&M to WUAF 2 Operation; Meeting water DWEM Improve irrigation infrastructure to improve water service deliveries and/or WUAF reduce losses and increase supply service deliveries to on-farm Improve system operation including systems measurement and regulation On-farm system 1 Maintenance; Sustainability of WUA / WUGs Rehabilitation and improvement of on- sustainability of inter-year water farm system on-farm systems deliveries to Increase service funding farms Improve asset management 2 Operation; Improve service WUA / WUGs Seasonal supply adequacy delivery Farm level 3 Increase water Increase applica- Farmers Improve farm irrigation systems productivity tion efficiency Improve farm water management 3 Increase farm Increase yields Farmers Increase inputs productivity Improve farmer knowledge Source: Consultant

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PART B: SECTOR STRATEGIES

7 PRINCIPLES FOR DEVELOPING WATER SECTOR STRATEGIES

93. Introduction. This chapter first presents a brief analysis of the financing gap in the irrigation sector, and shows that GKR has not secured funding for most of the 24 investment projects in the irrigation sector planned for 2011-2015. This means that newly developed water sector strategies will not need to take ongoing initiatives into account. A qualitative analysis of the potential benefits of resolving key challenges identified in Chapter 6 concludes that benefits are highest for investments that: (i) benefit subsistence farmers, and (ii) consist of simultaneous improvements in the irrigation water delivery and farm productivity. The final section presents principles proposed for the development of water sector strategies presented in Chapter 8.

7.1 Assessment of Financing Gap

94. Financing requirements. (i) Capital investment. On 16 May 2011, GKR issued Decree #229, which describes an investment program for the construction of water management facilities and the development of new irrigated land for the period 2011-2015. The program consists of 22 investment projects with a total cost of KS9.8 billion, or approximately $210 million. GKR's Medium Term Development Plan for 2012-2014 listed six investment projects in the irrigation sector, four of which were already included in Decree #229. The total cost of the additional two projects was estimated at $180 million. The combined amount of $390 million was taken as the Government's estimate of the medium-term financing requirements of capital investments in the irrigation sector. However, most of these projects involve construction of new infrastructure. In 2011, the World Bank estimated the cost of rehabilitation of existing irrigation infrastructure at $348 million. If this amount is included, financing requirements for capital investment rise to over $700million. 39 (ii) O&M. As mentioned in Chapter 4, minimum required O&M spending on irrigation infrastructure in the Kyrgyz Republic is estimated at $34 million per year. This amount does not include financing requirements of the O&M of new irrigation infrastructure. If GKR would implement its approved medium-term investment program in full, O&M financing requirements would increase by about $10 million per year (assuming that annual O&M costs are equivalent to 5% of the capital investment cost).

95. Available financing. (i) Capital investment. The Kyrgyz Republic is currently running a substantial deficit. Because of budget constraints, the Ministry of Finance expects that all 21 of 22 projects listed by Decree #229, as well as the two additional projects mentioned in the Medium Term Development Plan, will be financed by development partners (with the exception of counterpart funds contributions for non-eligible expenditures, which usually account for up to 15% of the project cost). 40 (ii) O&M. At present, DWEM spends an estimated $10 million per year on operations and maintenance of the country's irrigation infrastructure. This amount may increase to $15 million per year if the Parliament would: (i) approve a 50% increase in the irrigation service fee (as proposed by DWEM), which would Increase total fee revenue by about

39 Kyrgyz Republic Agricultural Policy Update – Main Report , World Bank, December 2011. The estimate is based on the balance of existing systems, on-farm and off-farm, not covered by previously funded (international donors) rehabilitation projects (44% and 25% of off-farm and on-farm system areas respectively). The estimate is based on a pro rata rate for works, and is not project specific (unlike GKR estimates for specific projects), and are based on existing irrigated area where as the GKR projects are focused on expansion of irrigated areas within existing irrigation systems, so the two cost estimates are largely complementary. 40 On 13 October 2012, DWEM informed the Consultant that GKR had secured financing from the Government of to complete the development of Burgandy land tracts in the Kadamjay rayon of Batken oblast (estimated cost: approximately $12 million).

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$0.5 million, and (ii) approve an increase of DWEM's budget from $14.4 million in 2011 to $20 million (which would free up an additional $4-5 million). Even under these admittedly highly optimistic assumptions, O&M spending on irrigation infrastructure would remain substantially lower than the minimum required amount for sustainable operations and maintenance.

96. Financing gap. Based on the above observations, there is a financing gap in the irrigation sector of at least $700million for capital investment, and a financing gap of $15-25 million per year for O&M.

7.2 Qualitative Assessment of Potential Benefits of Resolving Key Challenges

97. Summary of potential benefits. As described in Chapter 6, resolving the three key challenges in the water sector of the Kyrgyz Republic (poor irrigation infrastructure, poor irrigation water delivery, and low farm productivity) is expected to result in improved agricultural productivity. This, in turn, would lead to increased farmer incomes and improved food security. The positive impact of improved agricultural productivity on food security is both direct (as higher productivity reduces the need to import food) and indirect (higher farm incomes make it easier for farmers to purchase the food they need).

98. Realization of potential benefits. As mentioned in Chapter 5, crop yields in the Kyrgyz Republic are at least 50% lower than average yields in the European Union. Stated differently, there a potential to increase agricultural productivity by at least 100% from its current level. The Second On-Farm Project (OIP2) aimed at improving the agricultural productivity of members of 33 WUAs by 10% through investments in rehabilitation of tertiary infrastructure and training of WUA staff in irrigation water management. By its own admission, the project has not been able to achieve this target in most WUAs, often because of constraints unrelated to irrigation water. 41 This implies that addressing the key challenges of poor irrigation water and poor infrastructure will only have a limited impact on improved agricultural productivity. To further increase productivity, it is necessary to also invest in improvements in farm productivity.

99. Distribution of potential benefits. The benefits of improved agricultural productivity mainly consist of increased farm incomes. For commercial farmers, agricultural productivity will result in higher profits. For subsistence farmers, whose farms are often too small to meet their own needs, improved agricultural productivity will result in a reduction in food purchases from third parties. Because the cost of purchased food is substantially higher than the cost of home- grown food, investment projects that improve the productivity of subsistence farms are inherently more beneficial than projects aimed at improving commercial farm productivity -- both from a social and economic perspective. As will be shown in Chapter 9, the strategies of the GKR favor the provision of irrigation infrastructure to subsistence farmers as a means to alleviate poverty and improve food security.

7.3 Prioritization of Strategies

100. Prioritization principles. Chapter 8 presents a water sector strategy aimed at resolving the three key challenges resulting from the sector assessment and stakeholder consultations. These strategies were prioritized based on the following criteria: (i) Consistency with the National Water Strategy. The primary objectives of this strategy are to ensure: (i) access to water, (ii) national food security through development and efficient management of irrigation, (iii) energy security, and (iv) sustainable water management. (ii) Favorable cost/benefit ratio. As described in Section 7.2, the benefits of investments in irrigated agriculture are highest if aimed at subsistence farmers and provided in an integrated manner (by combining investments in irrigation infrastructure with concurrent

41 Interview with TA consultant, 24 August 2012.

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investments in improving farm productivity). Note that this criterion is only used to identify sector strategies that are likely to be beneficial. Individual investment projects will still be subjected to an economic cost-benefit analysis (see Chapter 9 for details). (iii) Achievability in the short or medium term. The proposed water sector strategies are expected to result in improved agricultural productivity within 3-5 years. This criterion eliminates strategies with unfavorable framework conditions.

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8 DEFINITION OF RECOMMENDED WATER SECTOR STRATEGY

101. Strategic context . The primary purpose of the TA is the development of a strategic approach to the planning of water sector development project(s) investment. The proposed water sector strategy is focused on achieving an improvement in irrigated agricultural productivity by addressing the three key challenges mentioned in Section 6.3. And as outlined in preceding sections this strategy should be consistent with and complementary to the national water policy, legislation and planning.

102. Objectives. The overall objective of the strategy (for the irrigated agriculture subsector) is to improve and sustain the productivity of land and water. This will in turn contribute to addressing broader national goals and objectives of reducing rural poverty and increasing food security. As identified by the key challenges, this objective will be achieved by sustainably improving the maintenance and operation of irrigation infrastructure at all levels to provide reliable service delivery to the farm, and by improving the utilization of irrigation water at the farm level by improvements in farm production.

103. Scope. The scope of the strategy is initially limited to the proposed irrigation project(s) selected for phase 2 and as to be presented Parts C and D. Based on the current long-list of projects, the strategy will be implemented on one or more projects. However, in the longer term goal if project implementation and M&E results are encouraging the strategy could be equally relevant to irrigated agriculture in all regions and future investment programmes.

104. Integrated system approach . The strategy takes an integrated approach addressing the three key challenges (sustainability of maintenance, sustainability of operation and agricultural productivity) across the three irrigation system subunits (main, on-farm and farm), for selected irrigation systems. The strategy elements will ultimately form project subcomponent activities in the concept paper and project appraisal document(s). This integrated system approach is recommended as a synergy of solutions and project elements is required to address the key challenges.

105. Strategic framework . Table 35 present a strategic framework for the irrigated agriculture sector in the Kyrgyz Republic. For each subsector (main, on-farm and farm), the framework identifies challenges and institutional weaknesses, and priority solutions to overcome the challenges. For the challenges (and subset of key constraints) priority solutions are proposed to achieve challenge objectives. The priority solutions are those identified during stakeholder consultation and from the subsector assessments. The institutions and organisations for implementation of solutions, draws on the assessment of institutional capacity and constraints to implementing solutions.

106. Subsector #1: Improving main and inter-farm system operation and maintenance. The priority solutions in this sub-sector are: (i) (Assess system infrastructure and management to identify options for improvement of conveyance efficiency and service delivery to WUAs (by DWEM). (ii) Improve priority infrastructure works to sustain current operation capacity and to reduce recurrent maintenance costs (by DWEM); the identification of priority works should be based on condition and risk assessment criteria. (iii) Develop and implement asset management plans by DWEM and WUAFs (by DWEM and WUAFs). (iv) Improved flow monitoring and accounting to reduce under-accounting of water deliveries and thereby increase revenue from water fees (by DWEM and WUAFs). (v) Transfer responsibility for of operation and maintenance activities for inter-farm systems to existing and newly established WUAFs (by DWEM). (vi) Develop and implement joint operational plans (by DWEM and WUAFs). (vii) Improve capacity of DWEM, WUAF and WUA to help implement priority solutions (by Engineering Consultants, NGOs).

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107. Subsector #2: Improving on-farm system operation and maintenance. The priority solutions in this subsector are: (i) Conduct system audit to identify priority works for improvement of service deliveries (by WUAs). (ii) Prepare and implement system assessment management plans (by WUAs and WUGs). (iii) Negotiate ISF at levels required for sustainable maintenance and operation (by WUAs and their members). (iv) Provide access to credit for funding of machinery for canal maintenance (by supporting local lending institutions). (v) Assess system infrastructure and management to identify operation improvements in service delivery and reduction in losses (by developing WUA capacity). (vi) Prepare and implement annual operational plans, inclusive of implementation of system of water contracts (by WUAs and their members). (vii) Develop and implement measurement of water flow and volume at headgates and key points to identify areas with water constraints (by improving WUA capacity). (viii) Establish a system to bill members by number of irrigations per season (by WUAs). (ix) Improve capacity WUA Support Units and WUGs to implement solutions in collaboration with NGOs with water sector experience (by provision of training programmes).

108. Subsector #3: Improving farm productivity. Non-water priority solutions can be classified in the following four categories: (i) Improve access to credit (by Ayil Bank and WUAs). GKR has succeeded in expanding credit to agriculture through the Aiyl Bank and various microfinance organizations. However, lending has thus far been concentrated on livestock. Any future ADB program should promote agricultural credit towards farm machinery and other agricultural inputs (notably fertilizers and pesticides). In 2009, FAO published a report that discusses the shortage of agricultural equipment, and made the following recommendations: 42 • Promote the demand for farm machinery, by developing credit lines for agricultural productive assets, leasing, and facilitating access to second hand equipment. • Increase the supply of farm machinery, by facilitating the development of mechanical services contracting and improving access to farm machinery import markets, including second-hand equipment. Low interest loans can be directed toward banks and/or leasing companies with loan guarantees provided. Lease agreements with WUAs and WUA federations would seem to be a simple procedure. These agreements could be carried out with no need for collateral. If the WUA or Federation defaults on its payments then the lease agreement could be easily cancelled by the bank or leasing company and the equipment returned to the leasing company. The Kyrgyz microfinance sector has been among the most successful in the world largely because it has followed market principals. This has not been the case with other finance institutions. The World Bank in their Agricultural Policy Update, Kyrgyz Republic, 2011 reviewed agricultural credit and made a number of recommendations that should be adopted by the government (see Agricultural Development Annex for specific recommendations). 43 Restrictions on the use of land as collateral should be removed. Maintaining the restriction on the sale of agricultural land to citizens in the same aiyl okmotu undermines the usefulness of land as collateral and suppresses land market activity and the value of land.

42 FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and agricultural productivity. 2009 43 Kyrgyz Republic Agricultural Policy Update. December 2011. World Bank. ECSSD. Europe and Central Asia Region

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(ii) Promote increased use of fertilizers (by provision of credit). If agricultural production is to increase, more fertilizer, particularly nitrogen and phosphorus, will need to be applied in timely and appropriate amounts. The biggest limiting factor to improving this situation is the lack of agricultural credit. Currently, there is no reasonable credit source available to farmers. While micro-credit is available, the interest rates charged for micro-credit is far too expensive for farmers. WUAs would seem to be a natural opening for the banking industry to provide farm credit. One of the problems with micro-credit is its high administrative costs to service the loans. WUAs could be used as intermediaries to facilitate loan agreements with farmers, along with facilitating the purchase of fertilizers in bulk and delivery to individual farmers. (iii) Provide training : Farmers in the Kyrgyz Republic need extension services, not only for water management but also to improve agricultural practices. Such services may be provided by: • Rural Advisory Service : Although RAS has been successful with providing advisory services to farmers, these services have been tied to specific donor projects which have contributed significant inputs to participants. RAS could be far more effective and reach a much wider audience if it did not have to compete for funds from donor organizations. RAS should be appropriately supported by the government. However, in the short-term, sufficient support for RAS is not likely; therefore, any ADB-funded irrigation project should contract RAS to provide agricultural training to stake holders within the project area. While there are a number of NGO’s and consulting groups competing with RAS for donor funds; the need to develop a long term stable organization with experienced staff should be a priority. RAS needs to be strengthened and the most logical way to accomplish this is by providing project support. • WUA Support Units. Because WUAs are relatively new organizations, many have limited management, operational, financial, and organizational skills. They have limited experience in electing representatives, developing budgets, and managing and operating their irrigation systems. In this regard it was important that under OIP I and II that a DWEM Support Unit existed to provide training and extension services to the WUAs along with supervising reclamation activities. The SU was subsequently absorbed into the DWEM. Unfortunately the government, while providing salaries, has not provided sufficient funding for this organization to properly carry out its mission. Nevertheless, the SU has well qualified engineers, trainers, and experienced organizers. They have well developed training programs and considerable experience in conducting them. Any future ADB program will be better served by utilizing the experience and knowledge that has been gained and established in the SU. This is a far better solution to contracting NGO’s who have limited technical expertise and experience with assisting WUAs and WUA federations. • Academic training for irrigation engineers and agriculturalists. Currently, there are few to no irrigation engineers being graduated from the nation’s universities. In short, one of the most important sectors within the country is rapidly loosing its expertise. The GRK with the assistance of ADB needs to consider various methodologies to support the University system and encourage carreers in irrigation engineering; this could entail exchange programs of professors and students with national and foreign Universities. Support for irrigation research within Universities in conjunction with DWEM and other government institutions would be another way of improving the technical capabilities of both students and irrigation professionals within the country. The same considerations need to be applied to agronomists and crop management specialists. Few if any KR nationals have worked with modern agricultural equipment or agricultural practices. There is a great need to provide practical experience to University professors that teach agriculture and to extension personnel who advise

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farmers. Exchange programs with foreign universities and real farmers would go along way to improving the technical capacity within the Kyrgyz Republic. (iv) Improve access to export markets : If the Kyrgyz Republic is to develop new markets for both producers and processors, significant inflows of capital and technology will be required. The one bright spot within the agricultural sector has been the growth of exports of live animals and meat products.44 One would think that the GRK would do everything within its power to promote this success. However, the GRK has been painfully slow to develop testing labs for both animal and exported vegetable products. The lack of these facilities, which has been mandated by trading partners of the Kyrgyz Republic, has hurt the growth of this industry. ADB must work with the government to remove this barrier which is and will continue to hinder trade and markets.

44 See Appendix 2. Foreign trade. Data from the National Statistics Committee.

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Table 35: Strategic Framework for the Irrigated Agriculture Sector in the Kyrgyz Republic # Challenges Priority Solutions Institutions and Organizations Key constraints Strategy - Priority Solutions Assessment Strategy Priority Solution 1 - IMPROVEMENT OF IRRIGATION SYSTEM MAINTENANCE 1.1 MAIN SYSTEM MAINTENANCE 1. Deteriorated state of infrastructure ° Improvement of priority works to ° DWEM; limited funding for ° Increase funding through a project 2. Lack of funding for repairs and arrest infrastructure degradation, maintenance works (partially due investment plan(s). maintenance and upgrading reduce maintenance costs and to low ISF), and potential to ° Enhance DWEM capacity to plan 3. Limited institutional capacity for increase irrigation efficiency. enhance management capacity and manage maintenance development of maintenance ° Increase revenue through ° WUAFs and WUAs; lack of programmes, and funding of plans, and design of improved flow monitoring recording technical skills, resources and capital works for improvement and improvements to reduce (reduce water corruption) and funding system development through maintenance requirements increase ISFs to WUA, and ° Engineering consultant; design capacity building program. increase government funding institutes and private companies ° Promote the Federation of WUAs ° Develop and implement a joint have design and supervision to WUAF for main/off-farm system DWEM-WUAF/WUA asset experience but require upskilling. O&M. management plan. ° Construction contractors: local ° Develop WUAF and WUA skills for ° Federate WUAs, to form WUAFs, companies have limited experience asset planning and management. and transfer main system but construction methods and ° Promote development and management (O&M) to WUAFs. standards require improvement. improvement of design and construction standards with design institutes and contractors through capacity building during project implementation. 1.2 ON-FARM SYSTEM MAINTENANCE 1. Poor and deteriorated condition of ° Assessment of system ° DWEM – SU; limited capacity due ° Develop SU capacity to support infrastructure infrastructure to identify priority to staffing and funding constraints WUA development 2. Underfunding of WUA works to improve system ° WUA/WUG; limited skills for ° WUA/WUG to set ISFs to levels for maintenance programs, with low performance and maintenance planning and management of maintenance sustainability, levels of member contributions for sustainability. maintenance programme, low develop training programs, and O&M. ° Preparation of asset management service and lack of assess to provide lines of credit for purchase 4. Lack of resources particularly plan machinery for canal and drain essential machinery. machinery for clean canals and ° WUAs to negotiate ISF with cleaning ° Form working agreement(s) drains members for maintenance ° NGOs; Helevatas and ACTED between WUA and NGOs for

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Table 35: Strategic Framework for the Irrigated Agriculture Sector in the Kyrgyz Republic # Challenges Priority Solutions Institutions and Organizations Key constraints Strategy - Priority Solutions Assessment Strategy Priority Solution 5. Lacks maintenance program sustainability limited capacity and lack provision of training and capacity ° Provide credit for funding of mechanism for contribution to building. machinery for canal maintenance projects and programmes ° # 2. IMPROVEMENT OF IRRIGATION SYSTEM OPERATION 2.1 MAIN/OFF-FARM SYSTEM 1. Lack of flow monitoring ° Assessment of system ° DWEM; management unit limited ° Develop DWEM capacity for 2. Obsolete design with lack of infrastructure and management to capacity and resources for system system assessment and adequate levels of flow and water determine opportunities to improve assessment due to funding infrastructure and management level control. in system performance and service constraints and staff capacity improvements, through capacity 3. Poor operation systems delivery to WUAs ° WUAF; limited number active (9) building and recruitment of management due to capacity and ° Upgrading infrastructure to with low technical skills for system qualified staff funding improve system service delivery analysis and for development of ° Promote the federation of WUAs to 4. Constrained institutional capability based on the above. operational plans. WUAF, with sufficient resources due to loss and/or lack of trained ° Develop and implement a joint ° Engineering consultant; institutions and capacity for effective system staff DWEM-WUAF operations plan, and private companies have operation 5. Lack of funding and finances due including implementation of relevant skill and experience (?) ° Develop WUAF capacity for the to low ISF and low levels of state monitoring and recording system preparation and implementation of funding ° Capacity building of DWEM and annual operation planning, WUAFs to improve operating including planning and monitoring methods. of water demand and deliveries. 2.2 ON-FARM SYSTEM 1. Lack of flow control and ° Assessment of system ° DWEM – SU; limited capacity due ° Develop SU capacity to support measurement with WUAs infrastructure and management to to staffing and funding constraints WUA development 2. Poor water scheduling identify priority works and ° WUA/WUG; limited skills for ° WUA/WUG to set ISFs to levels for 3. Obsolete and /or inadequate operations for improvement planning and management of maintenance sustainability, system infrastructure for current ° Implement system of water maintenance programme, low develop training programs, and farm organization contracts by WUA members. service and lack of assess to provide lines of credit for purchase ° Based on contracts map cropping machinery for canal and drain essential machinery. mix cleaning ° Form working agreement(s) ° Develop seasonal delivery ° NGOs; Helevatas and ACTED between WUA and NGOs for schedule to match cropping limited capacity and lack provision of training and capacity calendar mechanism for contribution to large building.

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Table 35: Strategic Framework for the Irrigated Agriculture Sector in the Kyrgyz Republic # Challenges Priority Solutions Institutions and Organizations Key constraints Strategy - Priority Solutions Assessment Strategy Priority Solution ° Measure water at headgate and and national level projects and key points to identify areas with programs. water difficulties ° Establish system to bill members by number of irrigations #3. IMPROVEMENT OF FARM PRODUCTIVITY 3.1 FARM MANAGEMENT (Non-Irrigation system constraints) 1. Lack of agricultural inputs ° Provide rural credit to farmers and ° Ayil Rural Bank or other ° Work with the GRK and other including inadequate inputs of equipment service providers commercial banking organizations. donors to improve the banking fertilizers and pesticides will limit enabling them to purchase needed While the banking industry has sector including changes in lending any productivity improvements inputs and equipment. This could improved in the last few years, and policies and legislation. through better water be accomplished by providing low Ayil Bank (Rural Bank) is currently ° Work with GRK to remove management. interest loans to commercial banks making a significant number of restrictions on the use of land as 2. Lack of agricultural machinery and (such as Ayil Bank), with the leasing agreements for agricultural collateral. Maintaining the equipment results in low yields stipulation that the funds be equipment, there are a number of restriction on the sale of due to the following: directed towards farmers and/or policies that should be changed to agricultural land to citizens in the • Land is not prepared properly for WUAs in the project area for the make this sector more effective. same aiyl okmotu undermines the planting and it is not prepared in purchase of agricultural inputs. ° WUAs in the Kyrgyz Republic are usefulness of land as collateral and a timely manner. ° Provide credit to WUAs through developing the capacity to operate suppresses land market activity • Seeds are not planted properly commercial credit organizations for and manage their irrigation and the value of land. or in a timely manner. purchase of inputs to be distributed systems. However, because they ° If WUAs are to be used as “central to members. are new organizations many have • Fertilizers are not applied clearing houses” for the not developed the technical and properly, in proper amounts, or ° Improve agronomic and pest dispersement of ag inputs management capacities that will be in a timely manner. control knowledge and skills of purchased with lines of credit from required in the future. Thus, • farmers. Agronomic advisory financial institutions, then they will Crops are harvested late service to provide agronomic continued support, primarily in need assistance and training with resulting in large losses. training and irrigation management training and mentoring will need to managing this new task. This will 3. Lack of agronomic and pest training to WUA personnel and be a key element within any ADB require a more complicated control knowledge farmers in the project area. project. accounting system then is ° Provide farm demonstration sites ° RAS extension services. RAS has presently being taught to the to highlight optimum irrigation and a number of problems that hinder WUAs by the DWEM WUA SUs. agronomic practices. its effectiveness. Because it is a Consultants, familiar with the non-profit organization only 1% of complexities of warehousing

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Table 35: Strategic Framework for the Irrigated Agriculture Sector in the Kyrgyz Republic # Challenges Priority Solutions Institutions and Organizations Key constraints Strategy - Priority Solutions Assessment Strategy Priority Solution its income can be used for materials and handling materials professional training. There are no on lines of credit will need to be funds for travel or exchange. Thus, utilized. This will need to be the organization finds it difficult to coordinated with the requirements maintain or develop what would be of the banking institutions within considered an experienced the Kyrgyz Republic. professional staff. Salaries are low ° The project should work with the and turnover is high. Currently the GRK to remove tax liabilities that organization must pay taxes, presently exist on RAS in including VAT on services that it particular, due to the unusual provides to farmers or charter that was forced on RAS, associations. but also on NGO’s in general ° There are very few equipment which includes WUAs. service providers throughout the ° Neither RAS nor WUAs are strong Kyrgyz Republic. Most equipment in technical capabilities; therefore, for farm operations is obtained it will be necessary to utilize from neighboring farmers who international consultants to work have managed to obtain with local extension providers and equipment. If the project can find a other stake holders to increase way to assist or promote technical capabilities and equipment service providers it experience. would be beneficial. ° Establishing proper demonstration ° Establishing proper demonstration sites will require proper agricultural sites will require utilizing proper equipment that will need to be agricultural equipment (plows, disc acquired. The project might harrows, planters, harvesters, consider grants or discounted etc.). Most of this equipment is not loans to either WUAs or private currently available in the Kyrgyz equipment service providers to Republic. purchase this equipment. 3.2 FARM IRRIGATION SYSTEM 1. Poor water distribution on farm ° Improve on-farm field application ° It is doubtful that there is any land ° The project will have to consider fields, due to poorly leveled fields, efficiencies by leveling fields to leveling equipment in the Kyrgyz options to obtain leveling leads to over and under irrigation appropriate slopes. Promote Republic. Consideration as to how equipment and to put this

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Table 35: Strategic Framework for the Irrigated Agriculture Sector in the Kyrgyz Republic # Challenges Priority Solutions Institutions and Organizations Key constraints Strategy - Priority Solutions Assessment Strategy Priority Solution resulting in low application siphon irrigation. this equipment can be obtained equipment into the hands of WUAs efficiency, ET a < ET c, low water ° Level fields to appropriate slopes and put into use will have to be a or other equipment service productivity (POW) reduced crop and introduce contour furrow consideration for project providers. It should not be done yields and poor crop uniformity. irrigation. Promote siphon implementers. has a grant. This needs to be 2. Erosion of top soil due to furrows irrigation. ° There is little to no experience established into the private sector, running directly downhill reduces within the farming or irrigation otherwise it is not sustainable and soil fertility, lowers water community in the design of would be a waste of funds that application efficiencies, and properly sized and sloped furrow could be better utilized elsewhere. carries sediments into drains and irrigation fields. ° International consultants will need canals leading to silted and ° There may not be appropriate to be hired to assist with the design blocked canals, and high water equipment to create the furrows and implementation of properly tables. that would be required on sloping designed and sloped furrow land surfaces. irrigation fields. This should be established on any demonstration sites that are established by the project. Additionally, training programs and hands on implementation should be provided to both RAS and DWEM WUA SUs. ° Project will have to consider options to obtain proper equipment to establish the furrows discussed above.

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PART C: PRIORITY PROJECTS

9 PRIORITIZATION OF INVESTMENT PROJECTS

109. Introduction. As described in Chapter 7, the total cost of addressing the three key challenges identified in this report will, in all likelihood, be far higher than the amount of funds available in the short and medium term. It is therefore essential that scarce funds for improving agricultural productivity are allocated to their best possible use. Against this background, this chapter presents a methodology to assist decision-makers in the Government of the Kyrgyz Republic with the prioritization of investment projects proposed to implement the water sector strategies defined in Chapter 8.

9.1 Overview of the Proposed Methodology

110. Summary of screening and ranking procedure. The proposed methodology assumes the existence of a longlist 1 of infrastructure investment projects for which basic information is available (Figure 4). Projects on the longlist are subjected to two types of analysis: (i) Screening. Each project on the longlist is screened for compliance with two sets of criteria: (i) ADB-specific criteria, and (ii) cost-benefit criteria. If a project meets all screening criteria, it enters a “shortlist” of prospective investment projects. If not, is not considered further. The purpose of the screening process is to eliminate investment projects that are a priori unlikely to qualify for ADB financing, or that should not be undertaken in any case because the expected cost to the national economy are likely to be higher than the expected benefits. (ii) Ranking. For all projects on the shortlist, a simplified cost-benefit analysis (CBA) is undertaken. The outcome of each CBA is a benefit/cost ratio (BCR), which is used to rank projects. The project with the highest BCR is ranked highest, as it is likely to generate the highest benefit per unit of cost. The purpose of the ranking process is to identify projects that are likely to best address the strategies of GKR and the key challenges identified in Chapter 6, so that scarce funds are allocated to their best possible use. Upon completion of the ranking process, a feasibility analysis should be prepared for the highest ranked projects, subject to a budget constraint. For example, if a government intends to spend US$200 million on water infrastructure projects, it should only commission the preparation of feasibility studies for the highest ranked projects that, taken together, have an estimated cost of about US$200 million. This final step of preparing feasibility studies is, however, outside the scope of the methodology

9.2 Screening

111. Overview of the screening process. An investment project on the longlist is shortlisted if it fully complies with two sets of screening criteria: (i) ADB-specific screening criteria. These are criteria used to eliminate projects that are unlikely to be eligible for ADB financing. (ii) Cost-benefit screening criteria. These are criteria used to eliminate projects that are a priori unlikely to generate net economic benefits to the national economy.

1 As discussed in Part D there were a total of 24 ‘longlist’ projects identified by the GKR for investment.

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Figure 4: Overview of Methodology for Prioritization of Water Infrastructure Projects

Longlist of Water Inf rastructure Projects

No SCREENING Project meets all screening criteria? Reject Project

Yes

Shortlist of Water Investment Proje cts

RANKING Analyze Fit with Government Strategy and Key Challenges

Ranked Shortlist of Water Investment Projects

Prepare Feasibility Studies (highest ranked projects only)

Source: Consultant

112. ADB-specific screening criteria. In order to be eligible for ADB financing, it was assumed that a water infrastructure investment project must meet all of the following criteria: (i) In need of financing. An investment project will only be eligible for ADB financing if GKR has not secured funding for the project from its own or other external sources. (ii) No direct cross-boundary impacts. ADB envisages that the newly developed water strategies “will not be holistic and will instead address the top three challenges in each country”.2 This implies that ADB will only finance investment projects whose (direct) impacts are confined to a single country. (iii) Availability of sufficient information. ADB has indicated that it will only consider investment projects for which basic information (in the form of a pre-feasibility study or better) is available at the time the project is included in the longlist. (iv) No significant adverse environmental impacts. A project is not be considered as eligible for ADB financing it is likely that the bank would classify the project in environmental category A. Projects in this category are likely to have significant adverse environmental impacts that are irreversible, diverse, or unprecedented, and these impacts may affect an area larger than the sites or facilities subject to physical works. (v) No significant adverse social impacts. Similarly, a project does not pass the screening process if it would be classified as a category A resettlement project. Projects in this category are likely to result in significant involuntary resettlement impacts.

2 See page 4 of the Consultant’s Terms of Reference.

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Involuntary resettlement is deemed significant if 200 or more persons will be physically displaced from their homes, or lose 10% or more of their productive or income- generating assets. (v) No exclusive focus on development of new irrigable land. On 18 October 2012, ADB informed DWEM that it would not be able to finance projects that would only create new irrigable land in view of the potential environmental and social risks, and apparent inconsistencies with the key challenges (the first of which calls for halting the further deterioration of existing irrigation infrastructure). (vii) Within financial scope. Because of relatively high (and largely fixed) project prepara- tion costs, ADB does not wish to finance projects with limited funding requirements. Based on experience with past projects, the minimum project cost was set at $10 million (a series of smaller but related projects with a combined cost of at least $10m also pass screening, provided they are not be located in different parts of the country). If an investment project on the longlist does not meet all of the above criteria, it does not enter the shortlist. This does not mean that the project should not be undertaken. It only means that the project is unlikely to be eligible for ADB financing.

113. Cost-benefit screening criteria. As mentioned in Section 9.1, shortlisted projects are ranked by their cost/benefit ratio. The estimation of a BCR requires an analysis of economic costs and benefits. This a relatively complex exercise, which has usually not been undertaken for investment proposals on a longlist. To avoid conducting a CBA for all investment projects under consideration, which is expensive and time-consuming, screening criteria were developed to eliminate projects that are a priori unlikely to be economically feasible. These are projects that have a very high economic costs vis-à-vis their expected economic benefits. The threshold cost is set at $5,000 per hectare for projects for improving existing irrigated areas and $25,000 per hectare for projects with new irrigated area.

114. Results of screening exercise. Fifteen of the 24 longlisted projects did not meet all screening criteria, and were therefore not included in the shortlist (see Table 36 and Figure 5 for details). More specifically: (i) one project did not require financing, (ii) one project would result in direct trans-boundary impacts on the Republic of Uzbekistan (the same project was also expected to result in significant adverse social and environmental impacts), (iii) for six projects, GKR has not yet prepared a feasibility study or similar document, (iv) five projects were unlikely to be economically feasible, in view of the unfavorable relationship between capital cost and benefits (as measured by the number of hectares of improved or new irrigable land that the project was expected to provide), and (v) two projects exclusively involved the development of new irrigable land. The combined cost of the short-listed projects was about $109 million. The total irrigated area was about 28,000 hectares, of which 19,300 ha improvement of existing irrigated lands, and 8,600 ha proposed expansion of irrigated area (Table 39).

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Table 36: Shortlisted Investment Projects

River Cost Irrigated Area (Ha) Project Basin ($ million) Improved Expanded Total 1 Construction of Karakyshtak-Boz canal Syr Darya 5.3 700 568 1,268 2 Construction of aquaduct in Maksat Syr Darya 34.0 7,551 1,800 9,351 3 Construction of P-4хв canal Syr Darya 9.0 2,000 1,000 3,000 4 Construction of Shibe-Jekendi canal Syr Darya 8.5 462 500 962 5 Irrigation of central part of Kulanak Syr Darya 31.9 5,080 1,500 6,580 valley, Naryn rayon 6 Improvement of water intake on Ak- Syr Darya 1.3 200 500 700 Say river 7 Irrigation of lands in Kara-Burun tract Issyk-Kul 1.7 700 774 1,474 8 Reconstruction of Sarymsak canal Talas 16.0 1,600 2,000 3,600 9 Construction of water storage pond on Chui 1.2 1,025 - 1,025 Shamshy river Total 108.9 19,318 8,642 27,960 Source: Consultant, based on DWEM (2012)

Figure 5: Locations of Shortlisted Investment Projects

21 – Storage pond 18 – Diversion of 20 – Reconstruction on Shamshy River Karkyra River runoff of Sarymsak Canal

19 – Irrigation in 4 – Construction of Kara-Burun tract Aquaduct in Maksat 16 – Irrigation of Kulanak Valley 17 – Rehabilitation of Water Intake on Ak-Say River 11 – Construction of Buyiga Canal 6 – Construction 12 – Construction of Shibe-Jekendi Canal of P-4хв Canal 2 – Construction of Karakyshtak-Boz Canal

Source: Consultant

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9.3 Ranking

115. Overview of the ranking process. Projects that passed the screening process are ranked by their “fit” with GKR strategies and the key challenges identified in Chapter 6, and investment projects with the best strategic fit will be considered as the most prospective projects for further analysis. The proposed ranking process consists of three steps (Figure 4): (i) score projects by fit with GKR strategies, (ii) score projects by fit with key challenges, and (iii) reconcile scores (to the extent required). The third step is needed because projects that best address GKR strategies do not necessarily also best address the three key challenges. This is especially the case because the key challenges call for a rehabilitation of existing irrigation infrastructure, whereas GKR strategies prioritize the development of new irrigable land.

116. Strategic fit with GKR strategies. GKR strategies assign high priority to poverty alleviation and the improvement of the nation’s food security. In irrigated agriculture, the Government favors the development of extension of irrigable land in conjunction the improvement of existing (or formerly) irrigated land, and prioritizes the highest to planned projects, followed by ongoing projects (which GKR intends to complete with financing from its own resources). It was assumed that projects best able to achieve these objectives were located in oblasts with the highest poverty incidence and the highest level of food insecurity (as measured by UNDP in 2009), and focused on extension of irrigated land (as opposed to solely improving existing irrigable land), and were planned rather than ongoing or suspended.

117. Strategic fit with key challenges. Chapter 6 identifies three means to address the key challenges identified therein: (i) restore the sustainability of system maintenance, (ii) restore the sustainability of system operations, and (iii) overcome non-water constraints, such as limited access to credit, lack of training, and the high cost of agricultural inputs. It was assumed that projects best able to achieve the three key challenges were located in areas with a functioning WUA, focused on agricultural development only, and wholly focused on improving existing irrigable land (as opposed to developing new land).

118. Results of the screening exercise. After consultation with stakeholders in a workshop that was held in Bishkek on 17 October 2012, and subsequent discussions with ADB, DWEM assigned highest priority to the following projects: (i) construction of Karakyshtak-Boz canal in Kadamjay rayon (Batken oblast), (ii) construction of P-4хв canal and building-up of existing P-4 canal in Batken rayon (Batken oblast), and (iii) reconstruction of Sarymsak canal, Kara-Buura rayon (Talas oblast). In addition, ADB and DWEM agreed upon two reserve projects: (iv) improvement of water intake on Ak-Say river, and (v) construction of water storage pond on Shamshy river (Chui oblast).

119. Field verifications. During 3-8 Nov 2012, the Consultant conducted a verification mission to collect additional information from stakeholder meetings and site inspections for the three high-priority subprojects. The mission concluded that none of the three subprojects were likely to result in significant adverse environmental or resettlement impacts, or in adverse impacts on indigenous peoples.

120. Selected subprojects. Upon completion of the verification mission, MoAM indicated that would want ADB to co-finance (i) the reconstruction of Sarymsak canal, and (ii) the construction of water storage pond on Shamshy river. The rationale for the selection of the projects being that of merit in the case of the Sarymsak system, and proximity in the case of the Shamshy system (to avoid scattered projects). The non-selection of the two projects in southern

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Kyrgyzstan (Karakyshtak Boz canal and Px4B canal) was justified on the grounds of a recent funding agreement with the Government of Turkey which will increase funding levels for projects in the south.

9.4 Subproject #1: Reconstruction of Sarymsak Canal

121. Location . The system is located in the Kara-Buura rayon of the Talas oblast approximately 60 km west of Talas township (at coordinates N42 o32 ’ E71 o32 ’).

122. Water source . The water source is from the Kara-Buura reservoir3 with a design storage capacity of 27Mm3 of which about 18Mm 3 is currently utilized for irrigation supply4, and balance is available for expansion of irrigated area. In addition to the Sarymsak system, the reservoir supplies two additional canals (command areas), located to the east and north of Kara-Say, with a combined irrigated area of 6,200 hectares (of which Sarymsak is approximately 1,600 ha).

123. Command areas. The system command area is approximately 3,600 hectares of which only 1,600 ha are currently irrigated due to the the poor state of the existing infrastructure resulting in high conveyance losses and low main canal duties. The current irrigated area is divided between 3 communities (Kara Buura, Cholponbay and Bakay Yr). The system is managed by four Water User Associations (Shilbili, Akkyia, Mol Bulak and Kok Salma), and an area of 860ha is managed directly by the Rayvodhoz. WUA membership is 95% of households. Water fees range from 3 to 5 tyin per cubic metre. The new irrigated area is largely within the Bakay Yr community lands and will be available for use by rent by the Kara-Buura community households through the State Land Redistribution Fund.

124. Existing cropping patterns. The principal crops are green beans (70%), wheat and fodder crops. High sown area under beans is explained by the fact that the Turkish and Chinese companies contract local farmers and purchase all yields. It is expected that the newly irrigated lands will be characterized by similar cropping patterns.

125. Existing irrigation infrastructure . The existing main canal (design duty of 4 m 3/s) is approximately 14 kilometres in length, comprising an upper lined section of 4 kilometres (rectangular section) in poor condition, and lower 10 kilometres of unlined earth canal also in poor condition. Main canal structures include control gates, in poor condition, and a number of bridges, vehicle and foot. The inter-farm and on-farm canals are predominately unlined earth canals, generally in poor condition. Farm irrigation is furrow irrigation methods. 2.

126. Proposed works. The works include: • Repair and rehabilitation of the existing main canal (14 km) with repair of the existing upper lined section (4 km) and reconstruction and lining of the lower section (10 km). Repair and/or replacement of existing structures. • Construction of approximately 6.5 km of new lined canal to the new command area (a short section of the canal, with a length of about 300m is currently under construction). • Repair and rehabilitation of the inter-farm and on-farm irrigation canals and structure to the existing irrigated area (1,600 ha) • Construction of the inter-farm and on-farm irrigation infrastructure to the new irrigated lands (2,000 ha) The total cost of the project updated to current costs is estimated at KS750 million, or about $16 million.

3 The reservoir is estimated (Consultant) to have a catchment area of the order of 750 km 3 4 Storage and annual volumes reported by DWEM during field verification Nov. 2012, the potential annual water supply is assumed to be greater than the reservoir storage volume, due to the catchment area (approx. 750 km 2), annual precipitation rate and run-off coefficient.

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127. Subproject beneficiaries. There are approximately 5,600 households in the command area, with a total population of 27,000, of which more than 35% are in poverty (Table 37). Over 90% of the population is Kyrgyz, and remainder mostly Russian, Uzbek or Kazakh.

Table 37: Key Characteristics of Communities Served by the Sarymsak Irrigation System Poverty Community # Population #HHs* Ethnicity Incidence Kara Buura 3 16,000 3,700 Kyrgyz (90%), Kurds, Russian, Uzbek, 32% Kazakh, Ukrainian, Moldavian, Tatar Cholponbay 2 5,800 930 Kyrgyz (95%), Kurds, 35% Bakay Yr 2 5,256 953 Kyrgyz (99%), Russian, Uzbek, Kazakh 40% TOTAL 7 27,056 5,583 Source: Consultant * HH = household

128. Impact Assessment . Based on the ADB checklist the project is rated: • Environmental: Category B (due to the need for mitigation of potential impacts of development of new irrigated lands) • Resettlement; Category B • Indigenous Peoples: Category C

9.5 Subproject #2: Construction of Water Storage Pond on Shamshy river

129. Location . The system is located in the Shamshy raion of Chui oblast approximately 25 km east of the city of (at coordinates of N43.39 o E75.23 o).

130. Water Source. The water source is from the diversion of run-of-river flows from the Shamshy river. For the proposed works, there are two intakes; (i) an upper intake (1 m 3/s) and (ii) lower intake (16m3/s).

131. Command area . The command areas for the two intakes comprise; (i) existing irrigated area of approximately 1,000 hectares and (ii) an existing irrigated area estimated at 14,000 ha (5,000ha on the left bank and 9,000ha on the right bank, respectively. Both irrigation command areas are managed directly by Raivodhoz. According to the local population WUA would not be able to manage high social tension due to lack of irrigation water during summer months.

132. Existing cropping patterns . Crops cultivated in both command areas are fodder (48%), wheat, barley, maize and other grains (46%), sugar beet (5%), and sunflower and other (the remaining 1%).

133. Existing irrigation Infrastructure . These consists of: (i) Upper intake: in river rock diversion structure, head gate and unlined canal to the command area, and on-farm unlined canals, all in poor condition with high distribution losses. (ii) Lower intake: diversion structure comprising intake and flood release gate, the structure was reconstructed after flood damage in 2002 but is poorly designed and constructed and in need of replacement, and main concrete lined canal in good condition.

134. Proposed works . The proposed works include: (i) Upper intake and command area: construction of intake structure and headworks on the Shamshy river to improve the intake flow, reconstruction and lining of the main canal (approx. 3.2km) to reduce distribution losses, and construction of storage reservoir of approx . 42,000m3 to water service deliveries to the command area. In addition from the

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field verification that the on-farm system distribution efficiency could be improved through rehabilitation of secondary and tertiary canals. (ii) Lower intake and command area: reconstruction of the intake to ensure its safety and efficient operation in terms of sustaining water supply to the main canal and command area. While the main canal is in good condition, it was not possible to review on-farm systems during the verification therefore it is recommended that these also be assessed for potential improvement during the PPTA. The total cost of the works is estimated at $2 million of which $1.2 million is for the works on the upper take (intake structure, headworks, main canal and storage reservoir) and $0.8 million for the lower intake.

135. Subproject beneficiaries . The system is farmed by inhabitants of the Shamsy district, which has a population of about. The rehabilitation of the headworks would allow improving the irrigation systems in use by three more districts: Ibraimov, On Bir and Chui district. All districts are predominately Kyrgyz (90%). About 20% of households are classified as poor (Table 38).

Table 38: Key Characteristics of Communities Served by the Shamsy Irrigation System Poverty Community # Villages Population #HHs* Ethnicity Incidence Shamsy 4 2,500 387 Ibraimov 6 5,500 917 Kyrgyz (90%), Russian, Kazakh, } } 20% On Bir 4 5,600 933 German, Moldavian Chui 1 1,730 289 TOTAL 15 15,330 2,526 Source: Consultant field verification *HH = household

136. Impact Assessment . Based on the ADB checklist the project is rated: • Environmental: Category B (due the construction of the storage reservoir) • Resettlement; Category C • Indigenous Peoples: Category C

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PART D: PROJECT CONCEPT

10 THE PROJECT

137. Introduction. This part presents the project concept for the proposed ADB investment program. The structure and content are consistent with the ADB template for preparation of project concept papers and with the previously submitted draft concept paper for the Irrigated Agriculture Improvement Project. 1 While the DWEM provided information on the systems, including maps and tables, no comprehensive system feasibility studies (FSs) have been prepared for any of the long-listed subprojects. Therefore the PPTA will need to be extended and expanded to include full FSs for the selected subprojects, including participatory performance assessment and diagnoses (PPADs) to identify and prioritize complementary system management (O&M), infrastructure and agricultural interventions.

10.1 Rationale

138. The proposed Kyrgyz Republic Irrigated Agriculture Improvement Project consists of two subprojects: (i) the improvement and expansion of the Sarymsak irrigation system in the Talas river basin, and (ii) the improvement of the Shamshy irrigation system in the Chui river basin. 2 The key technical and infrastructure features of the two subprojects are: i. Subproject #1: Sarymsak system. This system is located in the district (raion) of Kara Bura, approximately 60km north of Talas and 300km west of the capital of Bishkek. It is supplied by the Kara Bura reservoir (located on a tributary of the Talas River), which is located about 2km to the south and upstream of the irrigated area. The system has an existing irrigated area of about 1,600 hectares; (ha) upon completion of the subproject, the command area will contain an additional 2,000ha of new irrigated lands. While water resources are sufficient to supply the newly irrigated lands 3, the existing infrastructure is incapable to deliver water to the command area, mainly because of its limited capacity (which has been exacerbated by poor maintenance). The proposed works include: improvement and extension of the main canal, improvement of existing inter-farm canals, construction of new inter-farm canals to new irrigated lands, improvement of existing on-farm canals, construction of new on-farm canals to new irrigated lands, and improvement and construction of the drainage network (inter-farm and on-farm). ii. Subproject #2: Shamshy system. This system is located in the Shamshy raion, about 100km east of Bishkek. It consists of two command areas, each with separate intake structures on the Shamshy River and main canals. The upper intake supplies an irrigated area of about 1,000ha, whereas the lower intake supplies about 9,000ha. The purpose of the proposed subproject is: (i) to improve and increase the reliability of the water supply to improve agricultural production on the upper system, and (ii) to ensure the continued operation of the main intake structure to main water supply on the lower system. The proposed works on the upper system include: construction of main intake structure on the Shamshy River, canal head works, a main canal with a length of about 3km, and a daily storage reservoir with a capacity of 40,000m3. On the lower system, it is proposed to replace the on-river diversion structure. In addition to these proposed works, there is scope for improvement of inter-farm and on-farm canals and structures. Both systems have good access to regional markets. Sarymsak is located near the border of Kazakhstan (which is already now a major market for agricultural produce of the Talas oblast) and the Shamshy system is located within a two-hour from both Bishkek and Almaty. This means that both systems have substantial crop diversification potential.

1 The draft Project Concept Paper was submitted for ADB review and comment in Dec 2012. This part takes in to consideration these comments. 2 Refer to Appendix 4 for details on proposed project preparation technical assistance (PPTA). 3 As the annual water demand is within the currently under utilised storage capacity of the Kara Bura reservoir (Part D)

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139. The two subprojects were selected in consultation with Government of the Kyrgyz Republic and key stakeholders from a long list of 24 irrigation infrastructure projects that were either listed in Decree #229 of 2011 (which describes a public investment program for the construction of water management facilities and the development of new irrigated land for the period 2011-2015) or in GKR’s Medium-Term Development Plan for 2012-2014. The subprojects were selected because they: (i) passed a series of screening criteria agreed between ADB and GKR (no direct cross-boundary impacts, no major adverse environmental or social impacts, availability of background information, relatively high benefit/cost ratio), and (ii) better addressed the key sector challenges. These were identified in the Assessment and Strategy developed by the consultant and agreed with stakeholders during the Phase 1 consultation workshop on 29 August 2012. Compliance of the selected subprojects with the key assessment challenges, as well as GKR and ADB strategies, are summarized below: (i) Compliance with key challenges. Firstly, the proposed projects focus on improving existing irrigable land, as a means to stop further deterioration of irrigation infrastructure and to improve the utilization of allocable water resources (key challenge #1). 4 Secondly, water user associations (WUAs) are already present in both subproject areas, so that the institutional setup needed to help improve irrigation water delivery (key challenge #2) is already in place. (ii) Compliance with GKR strategies. Both systems aim to improve the welfare of communities in areas where poverty and food insecurity are at above the national average. 5 The GKR food security strategy focuses on increasing food crop production. However the recent World Bank Agricultural Policy Update and GKR proposal to the GAFSP (synthesize and reference) both argue that poverty is the underlying cause of food insecurity. This favors the promotion of commercial cash crops, over subsistence food crops, as the latter address only food security whereas the former addresses poverty alleviation as well as food security. (iii) Compliance with ADB strategies. The Joint Country Support Strategy JCSS (2007- 2010) 6 supports the national development strategy objectives (sustainable economic growth and poverty reduction) and identified agriculture and natural resources as key sectors (along with education and roads). ADB reports 7 that inclusive economic growth is the proposed overarching objective of the draft Country Partnership Strategy 2013- 2017. Inclusive growth requires both economic growth and inclusivity. Economic growth also favors commercial diversified crops over subsistence food crops.

140. Therefore the TA 8015 agriculture Strategy is assumed to favor promotion of commercial cash crops, over subsistence food crops.

141. The project cost is indicatively estimated at $25 million. Of this amount, $20 million will be financed from loan provided from ADB’s ordinary capital resources, and the remainder by contributions the Government of the Kyrgyz Republic (GKR) and project beneficiaries. The project will be implemented during 2015-2019.

10.2 Impact, Outcome, and Outputs

142. The project will contribute to increased incomes and improved food security for rural communities dependent upon water deliveries from the Sarymsak and Shamshy irrigation

4 The Sarymsak subproject also includes an expansion of the command area by 2,000 ha. This expansion was included because of the very low marginal cost (as the main irrigation infrastructure is already in place) and a high and demonstrated unfulfilled demand for irrigable land in the Kara Bura raion. 5 In 2010, in the Chui and Talas oblasts, the proportion of underweight children aged 1-6 years was 9.4% and 10.1%, respectively. This was higher than the national average of 7.4%. In the same year, poverty incidence in the oblasts of Talas and Chui was 42.3% and 21.9%, respectively. The figure for Chui was below the national average of 33.7%, mainly because of relatively low poverty incidence in urban areas near Bishkek. 6 ADB, 2007, Kyrgyz Republic, Country Partnership Strategy, Manila 7 ADB, 2013, comments on draft DCP

AHT / UBI / UNICON 61 ADB TA8015-REG Final Report Kyrgyz Republic PART D: PROJECT CONCEPT systems. The outcome will be the increased value of agricultural production due to increased irrigation service area, cropping intensity and productivity of water consumed ($ ha -1). The outputs of the project will be improved: (i) irrigation infrastructure, (ii) systems management (operation and maintenance), (iii) agricultural extension and OFWM service delivery and (iv) project management. The problem tree is in Appendix 1, preliminary design and monitoring framework in Appendix 2, and initial poverty and social analysis in Appendix 3.

10.3 Investment and Financing Plans

143. The total cost of the project is tentatively estimated at $25 million (Table 39). The cost of investments in water infrastructure and farm development programs (inclusive of system management and agricultural extension 8 components) is estimated at about $20 million (about $18.5 million for the Sarymsak subproject, and $1.5 million for the Shamshy subproject). The cost of project management and capacity building is estimated at $5 million. Beneficiaries will provide counterpart fund contributions to finance investments in small-scale improvements to farm level infrastructure, which are valued at $1 million. The Government of the Kyrgyz Republic will finance costs not eligible for ADB financing (these mainly consist of the cost of compensation for resettlement, and taxes and duties, and are estimated at $4 million). ADB will finance all other costs ($20 million).

Table 39: Tentative Financing Plan Amount Share Source ($ million) (% Total) Asian Development Bank 20.0 80 Government 4.0 16 Beneficiary contributions 1.0 4 Total 25.0 100 Source: Consultant’s estimate

10.4 Indicative Implementation Arrangements

144. The Ministry of Agriculture and Melioration (MoAM) will be the project Executing Agency (EA). The MoAM Department of Water Economy and Melioration and Melioration will implement the off-farm infrastructure and system management subcomponents. The relevant MoAM departments, assisted by suitable and experienced NGOs (international and/or national), will implement the other components to: (ii) develop WUA capacity, to perform on-farm PIM and infrastructure improvement functions, and (iii) act as agricultural extension intermediaries.

10.5 Technical Assistance

145. A project preparatory technical assistance (TA) grant of $1.5 million will be provided from ADB’s Technical Assistance Special Fund (TASF) to prepare the project. The TA will design an investment project aimed at improving the welfare of communities dependent upon water from the Sarymsak and Shamshy irrigation and drainage systems by improving water resources management and increasing agriculture productivity in the subproject areas. The major outputs of the TA are a participatory performance assessment and diagnosis (PPAD), formulation of investment packages and farm development programmes, feasibility studies (which are not available for either subproject in a form required for due diligence by ADB), development of programs for institutional strengthening, monitoring and evaluation with remote sensing, and advance actions to preclude delays in implementing the loan investment project. It is envisaged that these outputs will be prepared with the support of DWEM and international NGOs with a presence if the subproject areas. The same NGOs would also be seen as candidates to provide capacity building support to WUAs during project implementation (refer to Appendix ??? for details).

8 Inclusive of capacity development of agricultural support service implementing agencies

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10.6 Due Diligence

146. The project requires due diligence for the following aspects: (i) Technical. The PPTA Consultant will facilitate participatory system performance assessments and diagnoses (PPADs), of both existing irrigation systems, to identify current constraints to increasing the value of agricultural production and formulate investment packages needed to overcome the constraints and increase production. Remote sensing image interpretation (RSII), described in Part C hereto, will be important inputs to PPADs. Given that deteriorating irrigation infrastructure is a key challenge in the irrigated agriculture subsector, it would be especially important to establish arrangement for sustainable O&M. 9 (ii) Economic and financial. The TA will prepare feasibility-level designs to assess the project’s economic and financial viability. In accordance with ADB's latest Guidelines for the Economic Analysis of Projects , the economic and financial analysis will cover demand analysis, alternatives and least-cost analysis, cost-benefit analysis, financial and institutional sustainability analysis, sensitivity and risk analysis, and distribution analysis. The project costs and benefits will be evaluated, financial and economic inter- nal rates of return calculated, and risk mitigation strategies and approaches identified. (iii) Governance. As a part of the institutional analysis, and in accordance with ADB’s latest guidelines for Financial Management and Analysis of Projects, DWEM’s financial management capacities will be assessed. Financial management risks will be identified and mitigation measures will be developed. The TA will identify constraints on staff capabilities in the technical disciplines required to ensure sufficient operation of Sarymsak and Shamshy irrigation systems. In addition, the TA will conduct an organizational assessment of the participating WUAs, including their relationship with DWEM, governance structure, management, cost structure, and capacity for sustainable O&M. A capacity development program will be developed to establish core compe- tencies within DWEM and WUAs to ensure that works can be successfully implemented and the rehabilitated facilities properly managed, operated, and maintained. (iv) Poverty and social. The distribution of project effects and impact on poverty reduction will be taken into account during project design. Poverty and social assessments and initial environmental examinations, and a gender development strategy will be developed. The TA will, in particular, assess to what extent women participate in decision about irrigated agriculture and develop strategies to improve participation (v) Safeguards. The project will be subject to social, environmental, and economic assessments in accordance with ADB’s latest Safeguard Policy Statement and government requirements. The assessments and reviews of environmental and involuntary resettlement impacts of the project, and environmental and social compliance audit of the existing irrigation facilities will be carried out. Based on the findings of these assessments, detailed implementation arrangements in compliance with SPS will be proposed.

147. Risks. There are two major risks that may adversely affect the delivery of project benefits. As identified by TA-7532, drought is the main water-related disaster risk. Climate change is expected to increase the risk of drought as water demand will increase with temperature. The project will mitigate these risks by developing the capacity of WUAs to manage drought and adapt to climate change. However GKR may not fully support genuine WUA capacity development? This will limit the effectiveness of participatory irrigation management, payment of irrigation service fees and agricultural extension. This risk will be mitigated by making support for WUA capacity development a condition of loan effectiveness.

9 See, for example, McPhail et al. 2012. Achieving Financial Sustainability and Recovering Costs in Bank Financed Water Supply and Sanitation and Irrigation Projects , World Bank Water Paper.

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10.7 Plan Processing

148. Risk categorization. The project is categorized as a low-risk project given that: (i) the loan amount does not exceed $200 million, (ii) ADB has a sound record of experience in irrigated agriculture sector in the Kyrgyz Republic, (iii) the executing agency has a demonstrated capacity to administer externally financed projects, and (iv) the safeguard categorization of the project is B for impact on environment and involuntary resettlement, and C for impact on indigenous people.

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PART E: REMOTE SENSING AND IMAGE INTERPRETATION

11 REMOTE SENSING OF SUBPROJECTS

149. Introduction . This part of the report contains a description of the state-of-the-art of Remote Sensing Image Interpretation (RSII) technology and its application in irrigation water management and its relevance and application to the proposed investment projects in the Kyrgyz Republic. It first presents an overview of RSII and its application for irrigation management. This is followed by a review of information from the country visit and field visit to the subprojects and assessment of the potential applications in the Kyrgyz Republic. Finally, it provides a description of the proposed use of RSII in the PPTA inclusive of the recommended terms of references for the PPTA and use of RSII at project and post-implementation.

11.1 Remote Sensing for Supporting Irrigation Water Management

150. Introduction. A number of policy makers and leading international water organizations recognize that irrigated agriculture must utilize its water resources effectively. National laws, policies and governmental regulations now encourage efficient water use in agriculture. Several United Nation programs, international institutes and NGO’s endorse this. The availability of guidelines on good practices and a spatially distributed measurement system is a first pre- requisite to bring irrigation management to a higher level.

151. One of the main challenges to improving irrigation management is to gain access to sufficient spatial data, both at the level of the irrigation main canal, as well as for individual fields. Agricultural processes such as soil moisture distribution, crop evapotranspiration, biomass production and crop growth are all dynamic processes that change with the phenological stages of the crop, the weather conditions, and the irrigation supply management.

152. The Kyrgyz Republic has limited in situ measurements of unknown quality with flow meters, flumes, hydraulic structures and soil moisture probes. This data does not meet the information requirements to improve the management of irrigation systems. Improvement of the management of irrigation systems requires data streams, and a real time system that measures the major processes consistently. Traditional methods to measure soil-vegetation-atmosphere processes are prone to error due to absence of a field observatory, the access to data, the human interpretation of the data and the accessibility of the information. Remote Sensing based methods can provide unbiased spatially distributed quantified estimations of climate, plant and soil parameters. Satellite remote sensing (i.e. visible, near-infrared, thermal-infrared, passive microwave) can be used in conjunction with physically based interpretation algorithms to compute spatial data related to (i) water, (ii) crops and (iii) climate.

153. Given the varying scales in which information needs to be collected, satellite-based spatial data is an option is gaining more attention by the international irrigation and drainage community and its donor agencies. The land surface is measured by satellites at time steps ranging from 1 day to 25 days, depending on satellite characteristics. With the recent launches of satellites that have large swath widths, any location on earth can be revisited daily, with resolutions (i.e. pixel dimensions) ranging from 5 m to 250 m. The pixel is the smallest resolvable component of the image, often times referred to as the resolution of an image. The swath width indicates a wide area in a single frame. The swath width that is covered ranges from 20 to 3000 km. Constellations of satellites make it feasible to cover the entire globe daily. This presents a prodigious database with great potential, out of which crucial information for irrigation system performance can be retrieved, provided that proper combinations of raw satellite data and algorithms are selected, along with expert interpretation and judgment.

154. Appendix 10 presents a summary of remote sensing technology including methods and tools for monitor irrigation system performance, ranging between individual fields up to scheme

AHT / UBI / UNICON 65 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII level using satellite data. It also describes how satellites can be used determine crop consumptive use. Spatially distributed information on crop consumptive use and gross rainfall provides strategic information of the incremental crop water use due to withdrawals. The magnitude of this incremental crop evapotranspiration is a good indicator of the real irrigation practices that occur in the field. While the measurements are indirect – the data needs to be interpreted by means of algorithms – it provides the possibility to get daily digital data, in a regular way and in a transparent manner. The Appendix lists case examples of the application of RSII in Egypt and Morocco.

11.2 Application of Remote Sensing to Subprojects

155. Assessment of potential use. As described in Part A the key water sector challenges facing the Kyrgyz Republic are: i) deterioration of irrigation Infrastructure, ii) poor water service delivery and iii) low irrigated agriculture productivity resulting in low water productivity. The select subprojects (Part C) require improvement on these challenges, and in the case of the Sarymsak system to improve water productivity at system level with the increase of the irrigated area under system command. Remote sensing can provide up to date and spatially distributed information to identify and quantify current constraints on water deliveries within system subunits, and therefore better plan system improvements, and secondly improvements in system management to improve water service deliveries. Both aspects can ultimately contribute to improvements in farm and system water productivity.

156. The consultant conducted interviews with Ministries, Universities, Research Centers and the private sector as presented in Appendix 11. A field visit to the shortlisted subprojects (Shamshy and Sarymsak irrigation systems) was made, and for which an assessment of the potential use of remote sensing data is described below.

157. The major challenges mentioned above can be improved in the subprojects by conducting a complete irrigation performance assessment followed by the implementation of recommended improvements at design and implementation stage and the setup of an operational monitoring system. A complete assessment requires field data that is often not available, and is difficult and/or expensive to obtain. Using remote sensing can provide objective information on irrigation performance to be used at design and operation stages of the schemes. To conduct such an assessment, accurate information is required on: • area, • crop type, • irrigation water requirements, • actual crop water consumptive use, • irrigation efficiency, • biomass and yield production, • water productivity, • adequacy and crop water deficit, and • soil salinisation. During fieldwork information was gathered on the availability of this information; the current availability and need for this information are described below, as well as how the information can be obtained.

158. Area information. Detailed spatial area information of irrigation schemes that is required to analyze irrigation performance indicators. By linking data attribute information and other information, such as cadastral information on land ownership, to the areas, comparisons and analysis can be made at different scales (e.g. district, region, command area and plot) required for a diagnostic, comparative, but also operational performance assessment. Currently, most area information is available in tabular or hardcopy form. Using very high resolution satellite imagery spatial area information on field sizes can be obtained but this is (relatively) expensive. Alternatively available hardcopy irrigation scheme blueprints can be digitized.

AHT / UBI / UNICON 66 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII

159. Crop type. A crop map detailing actual crop type, area and location and information on phenological stages and harvest date is required to convert accumulated biomass production into yield using biomass/yield relationships. Currently, crop information is available, but in a tabular form that is related to the tabular area information. This information can be digitized and appended to area information, provided that the plots match, i.e. that the spatial areas details the plots sufficient to distinguish boundaries between crop varieties. Alternatively cropping information can be obtained by a land use classification using remote sensing. The resolution of the satellite determines the accuracy in which the crop map can be detailed. The field plots vary in width where small fields of less than 100 meters will be difficult to classify using high resolution imagery if adjacent fields grow different crops. Because the general crop distribution is 60% beans, 30% fodder and 10% wheat it is feasible to classify these crops provided that ground truth detailing sample locations of crops is available.

160. Irrigation water requirements. The amount of water needed for the crop depends on 3 different factors: the potential crop ET, the effective rainfall that meets part of this crop ET and the system losses between the point of withdrawals and the root zone. The irrigation water requirements can be computed daily or weekly, and are used to determine how much water needs to be released into the canals. Currently, an irrigation water distribution schedule using USSR standard irrigation norms is developed at the beginning of the irrigation season by the DWEM District offices based on Information on crops/irrigated areas provided by the WUA`s (Sarymsak) or farmers (Shamshy). During the season this schedule is monitored with field visit/complainants management, resulting in possibly biased water management and conflict situations.

161. The Relative Water Supply indicator is the ultimate indicator that describes the deviation between the flow delivered, and the flow needed. It will immediately reveal whether under- or over-irrigation takes place, being the threat for water logging and salinisation. By deriving the potential ET and the net rainfall from remote sensing measurements and the local conveyance and field scale losses from the classical data collection procedures the indicator can be determined to indicate areas at risk.

162. Actual crop water consumptive use (i.e. actual ET). This information is required to estimate adequacy and crop water deficit and when combined with water flows, the irrigation efficiency can be calculated, provided that accurate flow measurements are available. Currently, the crop ET is not monitored/recorded at any organizational level. Remote sensing can provide timely quantified unbiased spatial information on the water that is actually consumed by the crops as evapotranspiration (crop ET c). Water deficit by crops as evapotranspiration deficit (ET c - ET a ) is a direct expression of adequate water supplies without the need to have access to flow data. Currently this is not monitored/calculated. Having access to RS-based information on water deficit will indicate water stressed areas that can be used for the design phase of the PPTA, and for water management purposes.

163. Irrigation efficiency. It could not be ascertained if the irrigation efficiency, (consumption less effective rainfall)/withdrawal, is currently monitored. While withdrawal is often measured, 58 consumption, or actual crop evapotranspiration (ET a), is usually assumed equal to potential crop evapotranspiration (ET c). Therefore efficiency is overestimated where ET a is less than ET c.

164. Biomass and yield production. Biomass indicates the dry matter production of tubers, roots, stems, flowers, needles, cereals and fruit over time. Yield is a culmination of biomass production at the end of the growing season. Biomass production and yield are currently not monitored during the growing season, but yield is measured at harvest time. Having access to near-real time accurate biomass production and derived yield information can be of great value to quantitatively describe the production related performance indicators. It provides a clear

58 This requires accurate water distribution data including delivery times and volumes.

AHT / UBI / UNICON 67 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII overview of production during the season and the gross returns. A baseline for production can be established and used to identify area`s with higher/lower production. Also predictions on seasonal yield can be obtained. To obtain this quantified information on biomass production full seasonal monitoring is required using remote sensing; a first relative estimation that can serve as input for the design PPTA can be made by monitoring the last month of the growing seasons.

165. While biomass production can be computed without crop identification, crop yield requires the crop type to be known. An initial estimation on yield to serve as input for the design phase of the PPTA can be established by relating relative biomass growth to actual yield produced at selected fields, providing that this information can be made available. Currently measured yields are: beans yield 2-3 ton/ha and returns of 58 KS/Kg, wheat yield 2-4 ton/ha at 18 KS/kg and fodder yields 7 ton/ha at 4 KS/kg.

166. Water productivity. The POW is currently not monitored. The biomass POW can be established from biomass production and actual water consumption by evapotranspiration. The established ratio can be of great value to the design phase of the PPTA by providing unbiased spatial information identifying areas of lower POW that can be used to determine areas that need further investigation. The crop POW is defined as the crop yield/actual water consumption if yield and a land cover map are available, per crop if a land cover map is available and also per command area if cadastral information on the schemes is available.

11.3 Resource and Data Requirements

167. Satellite Imagery. Satellite imagery is required for the input of remote sensing algorithms, including crop classification processes. Because the location of the Sarymsak and Shamsy irrigation schemes will not fit within one satellite image scene, separate imagery sets need to be acquired if both schemes are included in the PPTA. The field plots have an average width of 30 meter, thus high resolution imagery is required. Blue, Green, Red, Near-Infrared and Thermal wavelengths are needed. Imagery from the Disaster Monitoring Constellation (DMC, 20 m), the ASTER sensor (15 m), the SPOT satellites (10 m), RapidEye constellation (5 m) and possibly the Landsat Data Continuity Mission (LDCM, 30 m) that has been brought in orbit successfully during February 2013 can be explored.

168. Hydrometeorology data. Spatially distributed information on air temperature, wind speed, and relative humidity is required that can be obtained by processing point data collected by meteorological stations. Two meteorological stations operated by the Hydrometeorology Agency are located in the Chui region and one in the . Because the Agency delivers this data to the DWEM, it is proposed to obtain data from the Ministry directly. Meteorological data is also available at the Central Asia Institute for Applied Geosciences (8 stations) and the Rural Advisory Services, who collects this from meteorology equipment located at Rayon test plots. While this data first needs to be assessed for accuracy and reliability, its availability must be assessed at the beginning of the PPTA.

169. Water distribution data. Accurate water distribution data including delivery times and volumes are required for each command area. While this Information is collected at Rayon and Oblast DWEM offices, it is unclear if this data can be provided and what the quality of the data is.

170. Crop identification ground data. A detailed map indicating the major crop types is required to be able to compute crop distributions for the entire scheme on the basis of an automatic classification algorithm and multi-spectral imagery. Currently no detailed crop type map is available. Information on crops grown per season is available, but in tabular non-spatial form. A field survey with GPS is necessary to prepare the detailed crop map.

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171. Crop yield ground data. Crop cutting experimental data need to be collected for the major crop types. Ideally the field measurements take place on fields with low and high production performance.

172. Cadastral information. For the analysis of the various irrigation performance indicators proposed per command area, cadastral information of the short-listed irrigation schemes is required. While some information is available in Autocad format for the Talas scheme, it is not available for the Chui scheme. Organizations Identified that are capable of making/updating cadastral maps are the Central Asia Institute for Applied Geosciences, the Department Geodesy and Geoinformatics of the Kyrgyz State University, the Academy of Sciences Institute for Water Problems and the SME Image Mapping LTD.

173. ICT infrastructure and software development. For operational monitoring purposes an ICT infrastructure is required, varying from PC`s with internet access at the client side, to webservers at the implementation side. Also software development and capacity building is required. A first quick scan reveals that in terms of client side sufficient hardware is available. The World Bank WMIP project includes installation of an ICT infrastructure, ensuring internet access at the Rayon DWEM office levels, as is required to access an online monitoring system. Web services capabilities are available at the Central Asia Institute for Applied Geosciences, software development support has not been identified although some experience at research level is available at the Department Geodesy and Geoinformatics of the Kyrgyz State University.

174. Capacity building. During project implementation capacity building for the use of an remote sensing based operational monitoring system is required at the Oblast, Rayon/WUA and farmer levels. This support could be provided after a trainer of trainer courses for Oblast/Rayon level by the Ministry of Education, Lab for Information and Mapping Systems, with support of the Department Geodesy and Geoinformatics of the Kyrgyz State University, and at the farmer level by Rural Advisory Services.

175. Institutional support. There is institutional support at all levels for the use of remote sensing at both design stage and for operation and management purposes.

11.4 Conclusions

176. The major challenges mentioned above can be improved in the subprojects by conducting a complete irrigation performance assessment using remote sensing followed by the implementation of recommended improvements at design and implementation stage and the setup of an operational monitoring system. Currently, this type of state-of-the-art irrigation water management methodology is currently not used in the Kyrgyz Republic.

177. As such, satellite based information can contribute significantly to the PPTA feasibility study(s), by providing a spatially distributed unbiased estimation of the present set of minimum irrigation performance indicators related to (i) productivity (including WP), (ii) irrigation management processes and (iii) sustainability for the shortlisted Irrigation Systems at an early stage of the PPTA. Also, during the PPTA crop/water productivity and waterlogging/salinization monitoring activities can be recommended - as well as optimized irrigation water supplies that meet crop water demands - contributing to a strategy to improve POW based on technologies as discussed in Section 11.1.

178. The information thus provided can be used in the design stage of the PPTA to not only indicate areas that need further investigation, but also to provide timely unbiased spatial information that can support the conclusions in the feasibility study.

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12 PROPOSED SYSTEM TO MONITOR IRRIGATION PERFORMANCE WITH REMOTE SENSING DATA

12.1 Approach

179. A four-phased approach is proposed where at phase 1 the current water productivity and other key performance indicators (as specified below) are estimated to serve as input for the feasibility study, at phase 2 a TOR for a satellite based irrigation management and monitoring system is defined that will serve as a blueprint during project implementation (phase 3) and O&M (phase 4). Phase 1 and 2 can be executed during the PPTA; phase 3 can be executed as part of the TA project implementation and phase 4 after project completion. Combined, the 4 phases lead to an operational remote sensing based irrigation monitoring system that will give up-to-date information on irrigation water management, land and water productivity, and the sustainability of the various canal command areas.

12.2 Phase 1: Assessment of Current POW

Objectives

180. Objective. The objective of this phase is to estimate the values of the present key irrigation performance indicators (including POW) of the irrigated area of the shortlisted irrigation schemes of Shamshy and Sarymsak to serve as input for the feasibility assessment of the PPTA.

181. Period to be analyzed. A retrospective analysis is proposed to have the first results available at an early stage of the PPTA, i.e. within 2 months after the start. A time period for analysis can be selected covering a period from a recent growing season, preferably of the previous year; however this is depending on satellite imagery availability. As a retrospective study is proposed, only imagery available in archives can be used. A first survey in the archives show that there are 22 high resolution images available covering the period 17 April to 24 September 2012. Since the implementation period of the PPTA is not yet defined, satellite availability is yet uncertain. It is therefore proposed to select a one-month period in a period of high water use and intensive irrigation practices.

182. Method. High resolution imagery will be analyzed to derive actual-, potential- and deficit evapotranspiration, biomass production, crop yield, biomass and crop water productivity, relative water supply, irrigation efficiency, annual irrigation intensity, system water balances and saline waterlogged fields, i.e. the key irrigation performance indicators.

Tasks

183. Image pre-processing. Archived satellite images need to be selected, acquired, downloaded and pre-processed.

184. Meteorological (pre)processing. Meteorological data is required from meteorological stations, preprocessed and gridded. Tools to convert point data from meteorological stations into spatially distributed data have been developed and should be used. These tools convert 3- hourly / daily measurements from meteorological stations into spatial data accounting for surface elevation, atmospheric processes and marine influences.

185. Crop classification. A detailed crop classification is required to be able to analyze crop yield and WP by crop type. This classification can be performed based on a combination of satellite imagery and field information. Field data has to be collected at pre-selected sampling areas. The sampling areas are determined based on observations from a preliminary unsupervised land use classification on available imagery. Using the collected data and satellite

AHT / UBI / UNICON 70 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII imagery a land use map is created using supervised classification. Crops to be distinguished are beans, wheat, barley, maize, cotton, fodder and fruits.

186. Soil moisture fields. Evapotranspiration, crop production, waterlogging and soil salinization are all a function of soil moisture. Top soil moisture will be acquired from the AScat scatterometer. The root zone soil moisture will be determined from thermal images that need to be collected for this sake. Special soil moisture tools will be operated to estimate the week-to- week variability of soil moisture.

187. Surface energy balance modeling. The ETLook algorithm as explained above can be used to quantify the evaporation, transpiration and biomass production when combined with local climatic data and the pre-processed soil moisture fields. The algorithm must be set up such that it provides weekly images for the selected period. The resolution of the resulting information depends on the selected satellite, but should not be larger than 30 m x 30 m. The biomass production is an output of ETLook and the weekly incremental value of total biomass production since the day of crop emergence is computed.

188. Crop yield. Crop yield can be computed if a biomass/yield relation is established per crop variety and if the cumulative biomass production over an entire growing season is estimated. Because a retrospective study is proposed, total biomass is not available, but biomass increase over the selected period can be determined. By relating a number of selected fields to the actual yield harvested, a simplified biomass/yield relationship will be established to estimate yield of the irrigation schemes. To estimate land productivity accurately, cadastral information of irrigation plots is required, alternatively the land areal extent can be estimated from the satellite imagery.

189. POW. The biomass water productivity is estimated by dividing biomass growth by actual evapotranspiration. The yield water productivity cannot be estimated because this requires a full growing season of yield and ET data. The biomass version of WP will indicate areas of low and high water productivity with a score between 1 to 10, hence 10 zones.

190. Climatic data. Spatially distributed information on air temperature, wind speed, and relative humidity is required that can be obtained by processing point data collected by meteorological stations as explained in Part A. Two meteorological stations operated by the Hydrometeorology Agency are located in the Chui region and 1 in the Talas region. Because the Agency delivers this data to the DWEM, it is proposed to obtain required retrospective data from the Ministry directly. Meteorological data is also available at RAS, who collects this from meteorology equipment located at Rayon test plots, and at the CA Institute. While this data first needs to be assessed for accuracy and reliability, its availability must be assessed at the beginning of the PPTA.

191. Satellite imagery. It is proposed to use imagery from the ASTER satellite, because the satellite has a 15m pixel size (albeit the thermal pixels have a 90 m pixel size) and an overpass time of every 16 days, so two consecutive overpasses would allow for a month of processing. It is advised that ADB establishes a partnership with the Japan Aerospace Exploration Agency (JAXA) who is a partner in the Aster and Alos programs to ensure imagery access and support. It is feasible to apply thermal sharpening techniques for acquiring high resolution thermal images. The alternative source of satellite data is Landsat.

192. Cadastral information. For the analysis of WP per command area, cadastral information of the primary and secondary units is required. While this information is available in Autocad format for the Talas scheme, it is not available for the Chui scheme. The command area of the Talas scheme needs to be further defined in Head-, Middle- and Tail sections along the canal. Head- and Tail sections are defined as the 30% of the surface area closest to respectively the inlet and end point of the command area, with the Middle section comprising

AHT / UBI / UNICON 71 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII the 40% in between. The information is available as DXF file and needs to be converted to a proper GIS format with geographic coordinates.

193. Crop distribution information. Detailed information on crop distribution is required for the land cover classification. Due to the retrospective nature of the study a minimum of 20 samples per crop type are to be collected at areas with an equal crop calendar as the period selected. Typical crops are fruits, cotton, fodder, beans and wheat. Alternatively tabular crop calendar information at plot level available at the WUA and/or District offices can be related to the imagery, although its accuracy and reliability are unknown.

194. Crop yield Information. To be able to estimate (seasonal) crop yield, actual crop yield harvested at the season must be obtained from sample plots/archive at WUA/Rayon offices.

Results

195. Yield. A yield map is provided for each short-listed irrigation scheme based on the relation established between relative biomass production and field information on yield of selected fields.

196. Water productivity. Water productivity maps are provided for each short-listed irrigation scheme containing the land productivity ( Y) in kg/unit and relative biomass water productivity 3 (WP bio ) in kg/m . These can be used during the design phase of the PPTA to identify areas that require further assessment.

197. Salinity. An indicative salinity map is provided indicating areas that are at potential risk of salinisation. This map can be used during the PPTA to identify areas for field surveys.

Diagnosis of constraints

198. Time period. Because a retrospective period is proposed, not an entire growing period is monitored and used for the estimations. Therefore, the derived actual, potential and deficit evaporation and the land- and biomass productivity maps are representative for the selected period only. Total quantified information of the entire growing season cannot be derived. During the phase 3 operational monitoring quantified seasonal information can be established during the first year of Implementation to serve as a baseline.

199. Land cover mapping. Because a retrospective land cover classification is performed, the crops on the field when the analysis is performed can be different than the crops on the satellite images due to crop calendars/rotation. Also, the small plot sizes with mixed cropping applied will cause mixels: pixels that contain multiple land cover classes, reducing overall accuracies.

200. Water productivity. The yield water productivity cannot be estimated because this requires a full growing season to be monitored; even though yield might be obtained, the actual water consumption by the crops by evapotranspiration is also required and cannot be estimated from monitoring of a limited period of the growing season.

Deliverables

201. Reports. A report per irrigation scheme must be delivered as PDF. The report will discuss the methodology and findings of analyses. In particular, the following subjects must be discussed: (i) overview of images acquired, (ii) crop classification methodology, results and accuracy, and

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(iii) crop-specific results for parameters related to system Water balances productivity, as previously listed Processed data and maps must be delivered in digital GIS format on one hard disk per irrigation scheme or made available via FTP delivery (see Table 40 for a timeline).

Table 40: Timeline for Completion of Phase 1 Period Task Week 1-2 Obtaining and preprocessing high-resolution satellite images Week 1-4 Land cover classification Week 1-2 Collection of climate data Week 1-3 Collecting field data regarding crop location and yield Week 2-6 Analysis of results, submission of draft results Week 6-8 Submission of final result Source: Consultant

202. Cost estimate. The estimate provided is for one irrigation scheme only; due to the distance between the two schemes, different datasets have to be purchased and processed. Image purchase costs are based on the acquisition of two Aster and two SPOT scenes. If no Aster images can be obtained, Image purchase costs will be $18,000, if 4 Aster images can be obtained, purchase costs will be $2,000. Additional Landsat data will be free of costs available. It is assumed that fieldwork with local experts will not exceed $7,000 and that climate data and scheme cadastral Information is provided by the DWEM at no extra costs.

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Table 41: Cost Estimate for Phase 1($ ‘000) Activity Costs Image purchase 10 Processing 28 Fieldwork 7 Analysis and Reporting 14 TOTAL 59 Source: Consultant

12.3 Phase 2: Contribute to POW Improvement Strategy

Objectives

203. Objective. Develop a Terms of Reference (TOR) and cost estimation for the development, set-up and operationalization of a remote sensing based crop and irrigation water management system for shortlisted Irrigation schemes. The proper use of such monitoring system will contribute to higher crop production in the irrigated areas, increasing water productivity and irrigation efficiency and will create a more sustainable agro-ecosystem.

204. Method. Using the Phase II RSII quick scan, and Phase 1 results assess the basic parameters of the envisaged monitoring system.

Tasks

205. Assessment of the needed functionalities. In a workshop with stakeholders define: (i) data components to be monitored, on which resolutions and frequency of delivery, (ii) required resources, including human resources and capacity, equipment, etc., (iii) appropriate and affordable data delivery options, ranging from raw data delivery to a full online application, or other customized products, and (iv) cost estimation.

Deliverable

206. Blueprint of proposed monitoring system, including system design, implementation and O&M costs, operation etc.

Timeline and cost estimate

207. Time to complete is in the order of 3 months. See Table 42 for a cost estimate.

Table 42: Cost Estimate ($ ‘000) Activity Costs Per diem and travel 7 Analysis and reporting 42 TOTAL 49 Source: Consultant

208. Proposed Terms of Reference for Concept Paper. The consultant will undertake activities to support the System Assessment and Feasibility Studies. These activities include: (i) assessment of Water productivity (WP) using Remote Sensing Energy Balance techniques for a retrospective period of 1 month including (archive) Satellite Imagery selection and procurement,

AHT / UBI / UNICON 74 ADB TA8015-REG Final Report Kyrgyz Republic PART E: RSII estimation of Actual Evapotranspiration and Biomass production of main crops, estimation of Water productivity as biomass/water. With field data to be collected by the TA national Agronomist, the consultant will also estimate yield and perform a supervised classification of main crops using ground truth field data. The specialist will provide an analysis of WP and soil salinity per command area as input for the system assessment using a scheme outline provided by other TA consultants. (ii) The specialist will develop a Terms of Reference (ToR) and cost estimation for the development, set-up and operationalization of a remote sensing based crop and water management system that can be used to monitor and manage system improvements, including: stakeholder consultation using the Phase 2 Remote Sensing Image Interpretation report, specification of agricultural processes to be monitored (e.g. evapotranspiration), assessment of required resources, assessment of data delivery options and estimation of implementation and O&M costs.

12.4 Phase 3 & 4: Project Implementation and Subproject O&M

209. Objective. Implement an operational monitoring system according to the Terms of Reference designed under phase 2 of the PPTA at the TA project implementation and continue data delivery and operation after project completion. Monitoring during the first year can serve as baseline for further WP assessments.

210. Deliverable. Operational crop and water management monitoring system and post- implementation O&M, including: (i) data component as defined under Phase 2, (ii) hosting of web services, and (iii) capacity building and training.

AHT / UBI / UNICON 75 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 1

PROBLEMPROBLEM TREETREE

Low Food Security Low Inclusive Growth Low Farm Incomes

Low Value of Agricultural Production

Low Productivity of Low Irrigated Area and Water Consumed Cropping Intensity (T/m 3 or $/m 3) Low Farm Profits Low Crop Yields or (resulting in Productivity of Land low farmer capacity to (T/ha or $/ha) pay and incentives for Lack of Developed Land Low Irrigation Low Actual sustained O&M) with Access to Efficiency Evapotranspiration Available Water

Degrading High Operational Losses High Field-Level Limited Crop Infrastructure and and Inadequate Poor Agronomy: Application Losses Diversification High Physical Losses Water Deliveries -Limited access to capital - High cost of agricultural inputs Inadequate Off-Farm Inadequate Off-Farm No Land Leveling - Poor quality of Limited and On-Farm and On-Farm Poor Field Irrigation agricultural inputs Market Access System Maintenance System Operation Methods/Scheduling

Weak WUAs Responsible High Drought Risk for On-Farm Systems Increasing With Limited Farmer Producer and Marketing Organisations Low Incentives for O&M Climate Change

Weak WRD Irrigation and WUA Service Delivery Weak Agricultural Advisory Service Delivery

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DESIGN AND MONITORING FRAMEWORK Data Sources / Assumptions Design Performance Reporting and Risks Summary Targets/Indicators Mechanisms

Impact Assumptions Farm households (hh) 59 , Average farm Socio-economic ° Central and sub-national served by the Sarymsak incomes increase by surveys and raion governments continue to & Shamshy irrigation X% from $X/hh in statistics prioritize irrigated systems, increase their 2013 to $Y/hh in agriculture incomes and improve 2020. ° Grant resources to be their food security. mobilized for surveys Average incidence of (baseline and subproject stunting (height-for- completion surveys) age) in children Risks under five reduced ° Higher than expected by X% from Y% in adverse impacts of climate 2013 to Z% in 2020. change ° Specific interventions in control group areas render monitoring results irrelevant Outcome Assumptions Sarymsak & Shamshy Irrigation service Subproject monitoring ° Availability of satellite irrigation systems area increased by with remote sensing imagery increase the value of 17% from 11,600 ha image interpretation ° Agricultural HHs are willing agricultural production. in 2014 to 13,600ha and evaluation reports to participate in O&M of in 2020 60 improved irrigation systems ° Agricultural HHs are willing Cropping intensity to pay for improvements to increased by X% for Subproject monitoring irrigation systems Y% in 2014 to Z% in and evaluation reports ° Irrigation service fee covers 2020 at least O&M cost needed Agricultural for sustainable operations productivity of water by project completion increased by X% Risks from Y $ m -3 in 2014 ° Limited ability and to Z $ m -3 in 2020 willingness to pay for irrigation services Outputs Assumptions 1. Irrigation systems 23 km of main and Subproject monitoring ° Targeted HHs are willing provide efficient and inter-farm irrigation and evaluation reports and able to utilize the reliable water to canals upgraded by improved irrigation systems targeted households project completion 61 and farm support services Risks Conveyance 2. Improved irrigation Subproject monitoring ° Delays in subproject efficiency increased systems efficiently and and evaluation reports implementation by X% from Y% in sustainably managed ° Inability to monitor water 2014 to Z% in 2020. (O&M) losses reliably By 2020 water delivered to Surveys schedules agreed between DWEM and WUAs

O&M cost recovery MoAM reports increased by X%

59 Approximately 5,580 and 2,520 households in the Sarymsak and Shamshy system, respectively. 60 Consisting of approximately 3,600ha for the Sarymsak system, and 10,000 Ha for the Shamshy system (of which 1,000 Ha from the upper intake and the remaining 9,000ha from the lower intake). 61 Approximate length of the main canals in the Sarymsak and Shamshy systems (20km and 3km, respectively). The total length of inter-farm canals is currently unknown.

AHT / UBI / UNICON 77 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 2

Data Sources / Assumptions Design Performance Reporting and Risks Summary Targets/Indicators Mechanisms

from Y$/ha in 2014 to Z$/ha in 2020.

X % of farms adapt 3. Supporting services MoAM reports improved: (i) result in improved farm agronomy and (ii) productivity irrigation practices,

including land

leveling, by 2020.

Farms with actual ETa equal to Subproject monitoring potential ETc with remote sensing increased by X% image interpretation from Y% in 2014 to and evaluation reports Z% in 2020.

Field application efficiency increased by X% from Y% in

2014 to Z% in 2020.

4. Project management Monitoring and and monitoring systems evaluation system established in 2015 are in place

Activities with Milestones Inputs 1.1 Complete design of irrigation systems ADB: $20 million (2015) Government: $4 million 1.2 Procure contractors (2015) Beneficiary contributions: $1 million 1.3 Undertake civil works to rehabilitate or Consultant services: 120 person months construct systems (2015-2019) MoAM and WUAs develop capacity, for joint irrigation system management (O&M), to achieve the above 2.1 Complete detailed plan of activities for project outputs. (ie the CD output is a project input as providing farm support services (2015) per ADB. 2011. Practical Guide to Capacity 2.1 Procure service providers (2015) Development in a Sector Context, Section H on 2.2 Deliver farm support services (2015-2019) Logical Design of CD Processes and Support). 3.1 Establish project management unit (2015) 3.2 Establish project monitoring and evaluation system (2015) Source: Consultant. Note: The Ministry of Agriculture and Melioration (MoAM) would be the Executing Agency.

AHT / UBI / UNICON 78 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 3

INITIAL POVERTY AND SOCIAL ANALYSIS

Country: Kyrgyz Republic Project Title: Irrigated Agriculture Productivity Improvement

Lending/Financing Project Investment Loan Department/ CWRD/CWER Modality: Division:

I. POVERTY IMPACT AND SOCIAL DIMENSIONS A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy In 2011, over 2.4 million people (37% of the population) in the Kyrgyz Republic lived below the poverty line, out of which 70% lived in rural areas 62 .About 4.5% of population was classified as extremely poor. Poverty in the Kyrgyz Republic also has regional aspects. The highest concentration of poor households was in Talas oblast (50.2%) and the lowest was in Bishkek city (18.4%). The project: (i) contributes to the CPS 2007-2010 at the macro (transition to market economy and inclusive growth), sector (ANR is a priority) and spatial (Talas Oblast has highest incidence of poverty: 50.2% versus 37.0% nationally) levels; (ii) promotes inclusion by selecting systems in poor areas (Sarymsak) and including the poor in representative water user associations (WUAs) and (iii) addresses the income and non-income dimensions of poverty and exclusion by building social capital and promoting a virtuous circle between (a) farmer incentives (benefits and rights) and (b) participation in irrigation management (O&M) to arrest degradation and sust ain systems on which livelihoods depend. B. Targeting Classification General Intervention Individual or Household (TI-H) Geographic (TI-G) Non-Income MDGs (TI-M1, M2, etc.) Pro-poor and inclusive project design features include: (i) selecting irrigation systems in poor areas (Sarymsak), (ii) mobilizing poor groups and including them in representative democratic water user associations (WUAs) and (iii) promoting a participatory irrigation management (PIM) process and informed inclusive decision-making by WUAs.

C. Poverty and Social Analysis 1. Key issues and potential beneficiaries. All groups: (i) infrastructure degradation and (ii) lack of O&M incentives. Shamshy: (i) commercial crop diversification and (ii) production technology, markets and agro-processing; Existing Sarymsak area: (i) productivity of land and water and (ii) poor irrigation water management and agronomy; New Sarymsak area: (i) access to irrigation water + above needs and (ii) new infrastructure + above constraints. Reconnaissance mission (RM) to provide initial data for poverty ($1.5/day; $2/day) & sector relevant social indicators, d including stunting (low height-for-age), the standard indicator of chronic ma lnutrition in children under five. 2. Impact channels and expected systemic changes. The living situation of the disadvantaged will change by having better: (a) access to effective irrigation management (O&M) and agricultural extension services; (b) oppo rtunities to raise their income and improve their sustainable livelihoods; (c) protection against drought and incremental climate change risks and (d) voice and decision-making relevance. The project will have the following impacts: Employment: increase ag ricultural production and the demand for farm labor. Income: increase gross margins and farm household incomes. Access: poor landholders will have better access to more effective irrigation management (O&M) and agricultural extension services and the poor landless will benefit from more demand for employment of farm labor. 3. Focus of (and resources allocated in) the PPTA or due diligence. The PSA will assess target group: (i) demand for improved irrigation management (O&M), agricultural extension, comme rcial diversified crops, marketing, processing and NGO support services, (ii) preferences regarding service providers and NGOs etc and (iii) existing WUAs, Farmer Organizations and/or other agricultural extension intermediary CBOs, future implementation ar rangements (dual-purpose WUAs vs separate Farmer Organizations) and PIM and Ag Ex capacity development preferences etc. The PPTA allocates 3 p-m to undertake the PSA and required social and environmental due diligence. II. GENDER AND DEVELOPMENT 1. What a re the key gender issues in the sector/subsector that are likely to be relevant to this project or program? Awaiting Country ETSW including poverty, social gender and other thematic analyses. However whether women play significant roles in irrigation water management (IWM) and/or agriculture are key issues? Women’s roles are likely significant because of high, largely male, seasonal migration in search of work. RM to assess. 2. Does the proposed project or program have the potential to make a contribution to the promotion of gender equity and/or empowerment of women by providing women’s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No Please explain. Through a ccess to and use of food security opportunities, irrigation management (O&M) and agricultural extension services, land and water resources, assets, and participation in decision-making. 3. Could the proposed project have an adverse impact on women and/or girls or widen gender inequality? Yes No Please explain. RM to assess . 4. Indicate the intended gender mainstreaming category: RM to confirm or revise . GEN (gender equity theme) EGM (effective gender mainstreaming) SGE (some gender elements) NGE (no gender elements)

62 Poverty Incidence in Kyrgyzstan for 2011, Statistical Annual, National Statistics Committee

AHT / UBI / UNICON 79 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 3

III. PARTICIPATION AND EMPOWERMENT 1. Who are the main stakeholders (SHs) of the project, including beneficiaries and negatively affected people? The main beneficiary groups are those in: (i) Shamshy service area, (i) Sarymsak existing area and (iii) Sarymsak new area. No negatively affected people identified. SHs will participate in the project design t hrough: (a) an initial social assessment (SA), (b) implementation of a participation plan (PP) and (c) participatory (irrigation system) performance assessment and diagnosis (PPAD) to identify constraints and formulate practical measures to alleviate them. 2. How can the project contribute (in a systemic way) to engaging and empowering stakeholders and beneficiaries, particularly, the poor, vulnerable and excluded groups? What issues in the project design require participation of the poor and exclu ded? Participatory irrigation management (PIM) and transfer (IMT) by/to WUAs and pluralistic agricultural extension (PAE) services with Farmer Organizations and/or WUA intermediaries supported by NGOs. 3. What are the key, active, and relevant civil soci ety organizations in the project area? What is the level of civil society organization participation in the project design? RM to assess WUAs, FOs, CBOs and NGOs. Helvetas, Acted and the Aga Khan Foundation (AKF) are active in ANR sector in other parts of the country. H Information generation and sharing M Consultation M Collaboration L Partnership 4. Are there issues during project design for which participation of the poor and excluded is important? What are they and how shall they be addressed? Yes No (i) representativeness and capacity development of WUAs and FOs (consult), (ii) agricultural extension intermediaries (FOs or WUAs) and support NGOs (consult) and (iii) formulation of the proje ct through the PPAD (collaboration). The PPTA will follow the Guidelines for involving NGOs and CBOs in project design in ADB. 2007. Handbook on Social Analysis – A Working Document. IV. SOCIAL SAFEGUARDS A. Involuntary Resettlement Category A X B C FI 1. Does the project have the potential to involve involuntary land acquisition resulting in physical and economic displacement? X Yes No Please explain, and provide inf ormation on the extent of land and assets acquisition and the estimated number of affected persons. Also describe actions/measures to be conducted during due diligence to address involuntary resettlement. Likely, particularly in the Sarymsak new developmen t area (it is expected that existing canals and drains will be improved elsewhere). RM to assess need for new canals and drains, extent of land and assets acquisition and the estimated number of affected persons. RM will also describe actions/measures to be conducted during PPTA due diligence to address involuntary resettlement. 2. What action plan is required to address involuntary resettlement as part of the PPTA or due diligence process? Resettlement plan X Resettlement framework Social impact matrix Environmental and social management system arrangement None

B. Indigenous Peoples Category A B C FI No indigenous people identified to date. RM to assess 1. Does the proposed project have the potential to directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples? Yes No 2. Does it affect the territories or natural and cultural resources indigenous peoples own, use, occupy, or claim, as their ancestral domain? Yes No 3. Will the project require broad community support of affected indigenous communities? Yes No 4. What action plan is required to address risks to indigenous peoples as part of the PPTA or due diligence process? Indigenous peoples plan Indigenous peoples planning framework Social Impact matrix Environmental and social management system arrangement None V. OTHER SOCIAL ISSUES AND RISKS 1. What other social issues and risks should be considered in the project design? RM to assess and complete . Creating decent jobs and employment M Adhering to core labor standards Labor retrenchment Spread of communicable diseases, including HIV/AIDS Increase in human trafficking M Affordability Increase in unplanned migration Increase in vulnerability to natural disasters Creating political instability Creating internal social conflicts Others, please specify ______Indicate high (H), medium (M), low (L) for selected boxes 2. How are these additional social issues and risks going to be addressed in the project design? RM to assess. VI. PPTA OR DUE DILIGENCE RESOURCE REQUIREMENT 1. Do the terms of reference for the PPTA (or other due diligence) contain key information needed to be gathered during PPTA or due diligence process to better analyze (i) poverty and social impact; (ii) gender impact, (iii) participation dimensions; (iv) social safeguards; and (vi) other social risks. Are the relevant specialists identified? Yes No 3. What resources (e.g., consultants, survey budget, and workshop) are allocated for conducting poverty, social and/or gender analysis, and participation plan during the PPTA or due diligence? May need to revise App 4: PPTA

AHT / UBI / UNICON 80 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 4

PROJECT PREPARATORY TECHNICAL ASSISTANCE

Justification

1. Project preparatory technical assistance (TA) is required to complete due diligence for the ensuing project.

Major Outputs and Activities

2. The objective of the TA is to design an investment project to increase irrigated agricultural production and improve the productivity of land and water in subproject areas.

3. The major outputs and activities are summarized in Table A4.1.

Table A4.1: Summary of Major Outputs and Activities Major Activities Completion Major Outputs Completion (i) Assess system Jun 2014 Productivity of water ($ m -3) maps, performance Jun 2014 agricultural performance constraints identified, system water balances and diagnose constraints assessed, alleviation measures formulated. (ii) Assess institutional Jun 2014 Assess implementing agencies, irrigation Jun 2014 capacity, analyze key management agencies, existing water user stakeholders and prepare associations and any farmer organizations. participation plan. (iii) Formulate projects Jun 2014 Report on scope of infrastructure and other Jun 2014 improvements for ADB finance. (iv) Topographic surveys Sep 2014 Canal and drain long and cross sections and Sep 2014 structure site surveys and mapping. (v) Feasibility studies and Dec 2014 Prepare off-farm and on-farm system Dec 2014 system infrastructure infrastructure improvements and technical improvement component. investment packages (vi) System management Dec 2014 Prepare component for effective and financially Dec 2014 (O&M) arrangements sustainable off-farm system (WRD), on-farm system and drought/climate change risk mngt. (vii) Agricultural extension Dec 2014 Prepare component including farmer irrigation Dec 2014 arrangements. method and scheduling etc. (viii) Due diligence and Dec 2014 Estimate economic & financial viability, assess Dec 2014 project safeguard EA financial/procure capacity and develop risk arrangements mitigation measures, assess poverty & food security impacts, develop gender development strategy,assess environmental & social aspects and development resettlement plan etc. (ix) Capacity development Dec 2014 Develop participatory CD process for FOs and/or Dec 2014 (CD) arrangements WUAs & support agencies. (x) Develop project Mar 2015 Project management & CD component, Mar 2015 package consulting services for infrastructure and off-farm management components, NGO support services for WUA CD, on-farm management, extension & OFWM, co-financing arrangements, project implementation arrangements, project investment & financing plans, advance implementation actions.

AHT / UBI / UNICON 81 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 4

Cost Estimate and Proposed Financing Arrangement

4. The TA is estimated to cost $1,750,000, of which $1.5 million will be financed on a grant basis by ADB's Technical Assistance Special Fund (TASF). The Government will finance the remaining $250,000 equivalent through provision of counterpart staff, office accommodation and facilities. Refer to Table A4.2 for a detailed cost estimate.

Table A4.2: Cost Estimates and Financing Plan ($ ‘000) Item Cost A. ADB Financing a 1. Consultants b a. Remuneration and Per Diem i. International Consultants (40 person-months) 1.040 ii. National Consultants (80 person-months) 200 b. International and Local Travel c 30 c. Reports and Communications 10 2. Workshops, Seminars and Training d 15 3. Surveys and Studies a. Special Studies e 90 b. Technical Surveys f 30 c. Socio-economic Surveys and Environment Studies 30 d. Preparation of Local Feasibility Studies 15 4. Miscellaneous Administrative and Support Costs g 20 5. Contingencies 20 Subtotal (A) 1,500 B. Government Financing 1. Office Accommodation and Transport 50 2. Remuneration and Per Diem of Counterpart Staff 75 3. Studies, Surveys and Data Analysis 125 Subtotal (B) 250 Total (A+B) 1,750 a Financed on grant basis from TASF. b All consultants will be recruited by ADB through a consulting firm using ADB’s quality and cost-based sys tem (QCBS) and full technical proposals, following ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). Consultant's tasks and outputs are described in Section D of this appendix. c Includes international and local travel and hired vehicles for travel within the Kyrgyz Republic. d Includes training and consultation workshops as detailed belo w. Participants Venue Duration (days) Cost ($) Inception workshop 60 Hotel 1 3,500 Midterm workshop 60 Hotel 1 3,500 Final workshop 100 Hotel 2 8,000 e Includes satellite imagery, processing and reporting f Includes topographic, geotechnical and condition surveys for preparation of FS and tender designs. g Covers the costs of office manager, secretarial and related support facilities.

AHT / UBI / UNICON 82 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 4

Consulting Services

5. The TA will provide a total of 40 international and 80 national person-months (p-m) of services in water resources management, irrigation, hydrology, operation and maintenance, procurement, economics, agriculture, remote sensing and image interpretation, environment, social development, resettlement and institutions (Table A4.3). ADB will recruit the TA consultants' team through a firm using the quality and cost-based selection (QCBS) procedure (90:10) and full technical proposals.

Table A4.3: Summary of Consulting Services Requirement INTERNATIONAL NATIONAL Position (Specialization) Months Position (Specialization) Months Irrigation Management Institutions/TL 12 Irrigation Engineering (Deputy TL) 12 Hydrology / Sedimentation 2 Hydraulic Structures Engineering 8 Irrigation and Drainage Engineering 6 Irrigation & Drainage Engineering (2) 16 Participatory Irrigation Management 6 Irrigation O&M Engineering 6 Pluralistic Agricultural Extension 4 Agricultural Development (2) 10 Procurement 1 Procurement 4 Economist and Financial Analyst 4 Economist 6 Financial Management 2 Environmental and Resettlement 3 Environmental Specialist (2) 6 Resettlement Specialist (2) 4 Remote Sensing Specialist 2 Social and Gender Specialist 6 Total 40 Total 80 Source: Consultant.

6. The TA will be implemented over a period of 12 months (Apr 2014-Mar 2015). The outline terms of references for key positions are described in paragraphs 7 to 10.

7. Irrigation Management Institutions Specialist (12 p-m international and 12 p-m national). Degree in irrigation engineering, or similar, with 20 years relevant experience of participatory irrigation management (PIM) and organizational capacity development etc. Lead the PPTA Team, manage relationships with MALR, ADB and other stakeholders and coordinate all PPTA inputs and outputs with direct responsibility for: (i) institutional assessment and stakeholder participation plan, (ii) integrated project formulation (priority interventions), (iii) organizational capacity development, (iv) project packaging and reporting.

8. Irrigation and Drainage Design Engineer (6 p-m international and 16 p-m national). Degree in irrigation engineering, or similar, with 15 years experience of irrigation and sub- surface drainage planning, design and contract documentation. Direct responsibility for (i) topographic and other surveys and (ii) technical feasibility studies, formulating the system infrastructure improvement component and detailed design. Coordinate hydraulic structures (8 p-m national) inputs and contribute to other activities as requested by the TL.

9. Participatory Irrigation Management (O&M) Specialist (6 p-m international and 6 p- m national). Degree in agricultural engineering, or similar, with 15 years experience of participatory irrigation system performance assessment and development of water user association (WUA) capacity for participatory irrigation management (PIM) and transfer (IMT). Primary responsibility for: (i) system performance assessment and diagnosis of constraints, (ii) formulation of the joint WRD-WUA system management (O&M) component and arrangements for NGOs to support WUAs. Coordinate hydrology/sedimentation (2 p-m international) and remote sensing image interpretation (2 p-m international) inputs (to estimate/map the productivity of water). Contribute to other activities as requested by the TL.

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10. Pluralistic Agricultural Extension Specialist (4 p-m international and 10 p-m national). Degree in agricultural extension, or similar, with 15 years experience of pluralistic extension methods and/or community-driven agricultural development. Primary responsibility for: (vii) agricultural development/extension and farmer irrigation method/scheduling, component, organizational arrangements (separate Farmer Organizations vs dual-purpose WUAs) and NGO support arrangements. Contribute to other activities as requested by the TL.

Implementation Arrangements

11. The Ministry of Agriculture and Melioration will be the Executing Agency of the TA. The deputy minister in charge of water resources at MoAM will serve as the director of the PIU. MoAM will also appoint a TA coordinator to facilitate communication between ADB, the TA consultants, counterpart staff in Bishkek, and staff involved in the management of the irrigation systems. MAoM will also provide the following support: (i) adequate office space in Bishkek and Talas as required for the TA team, (ii) access to telephone, heating, electricity, and water, (iii) logistical support during the field visits, access to project sites and other facilities, (iv) available data and feasibility studies as required, and (v) facilitation of workshops.

12. The proposed TA processing and implementation schedule is listed in Table A4.4.

Table A4.4: Proposed TA Processing and Implementation Schedule Milestone Expected Month of Completion Contract Negotiations Feb 2014 Commencement of TA Project Apr 2014 Delivery of Final Report Mar 2015 Financial Closure Apr 2015 Source: Consultant

AHT / UBI / UNICON 84 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 5

REVIEW OF COUNTRY SECTOR STRATEGY

1. Introduction. This appendix presents a review of two key elements of water resources sector management, the Water Code of 2005, and Concept Paper on Water Resources Strategy of Kyrgyz Republic. 63 These documents form the basis of GKR’s approach to national water resources management and therefore to investment in the water sector.

Water Code

2. Summary of the Water Code. The Water Code of 2005 established the objectives and principles of water resources management in the Kyrgyz Republic. The most important of these principles include integrated water resource management based on river basins, recognition of the economic value of water, consolidation of water resource management functions, sustainable O&M, and stakeholder participation in decision making. The Code also outlined an organizational structure for water resource management, consisting of a National Water Council (NWC), a State Water Administration, Basin Water Councils and Basin Water Administrations, with responsibilities for national and basin water planning and management, respectively. The Code also stipulated the need for the development of a National Water Strategy (see Section A3.2).

3. Proposed reforms. Important institutional and policy reforms outlined by the Water Code including the following: Water resource management • completion of the establishment State Water Administration, • preparation of a national IWRM plan, • development of a National Water Strategy, • establishment of National and Basin Water Councils, • elaboration of basin plans for development, use and protection of water resources, • establishment of a dam safety commission, and • restoration and modernization of the national hydrological monitoring system.

Irrigation and drainage • improvement of water use pricing and tariff policy, and • modernization of irrigation and drainage infrastructure with its transfer to water users and improvement of application methods.

4. Implementation to date. Under the Water Management Improvement Project (WMIP), the World Bank assisted GKR with the implementation of the Water Code. However, during implementation of WMIP there appears to have been limited progress with the adoption of several key elements of the Code, particularly the formation of the principal organizations, the most of important and pivotal being the formation meeting of the National Water Council. While the NWC was scheduled to meet in September 2012 for the first time, due to dissolution of the Kyrgyz parliament on 22 August 2012 this schedule now appears to be unlikely. The slow progress in implementation the Water Code is limiting the pace and effective of reform and development of management of the water resources sector in the Kyrgyz Republic.

5. Implications of the current status of the Water Code for investment planning. The planning of investment projects should be made conditional upon full implementation of the Water Code. However, it may be prudent to assume that the objectives and principles of the Code will be implemented in the medium term, and therefore within the operational life of an irrigation system development. For this reason, water sector projects should be planned based

63 This summary is based on a translation of the Russian version presented to the Consultant in June 2012, sub- titled “2 nd version with draft of 10.02.2011”. On 27 August 2012, the Director of DWEM informed the Consultant that a third draft was under preparation.

AHT / UBI / UNICON 85 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 5 on the key principles of the Water Codes, notably stakeholder participation, sustainability, and explicit recognition of the economic value of water.

Concept Paper on Water Resources Strategy of Kyrgyz Republic

6. Legal basis for the National Water Strategy. Article 1 of the Water Code of 2005 calls for the development of a National Water Strategy for national water resources management. According to Article 18, the purpose of the strategy is to “set out the main principles and provisions that are to be followed in the development of any plan, program, documents, decisions or actions concerning the use, protection and development of the Water Fund”. The strategy must be based on an assessment of water quantity, water quality and water demand, describe institutional and administrative arrangements for implementation, and be disseminated state bodies with water resource management responsibilities and other relevant stakeholders.

7. Status of the concept paper. In February 2011, DWEM issued a document titled "Draft Concept Paper on a Water Resources Strategy for Kyrgyz Republic". It is assumed that the paper in its final approved form will become the National Water Strategy. According to DWEM, the approved strategy will also necessitate a revision of the 2005 Water Code.

8. Review of the concept paper. The paper sets out the strategic goals and general principles for water resources management. While these appear to be in general agreement with the Water Code they also include cross-sectoral goals of national food security and energy security, as would be expected in such a strategy. The paper principally concentrates on institutional, legal and policy issues for water management. However, while a useful framework for identifying issues and intentions in terms of policy and planning, it lacks a quantified analytic base, on which to group and rank key issues, set management and development priorities and implementation goals. Without such a base it will be difficult to establish priorities for development of investment planning in the water resources sector. As stated in the Water Code the strategy should be based on assessment of water resources and current and future demand for these resources across all sectors.

AHT / UBI / UNICON 86 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 6

SUMMARY OF RELATED TECHNICAL ASSISTANCE

1. Introduction. This appendix lists technical assistance (TA) projects of various development partners aimed at increasing agricultural productivity in the Kyrgyz Republic. Although most of these projects have resulted in increased agricultural production, increases were generally substantial lower than projected or potential increases. A possible explanation for this shortfall is the absence of an integrated approach to improving agricultural productivity. Few (if any) TAs adequately addressed all components needed for yield increases that would be considered near optimum. Water projects such as OIP I and II, WUASP, and ADB’s Agricultural Area Development Project all resulted in improved water management and consequently some increase in area cropped and minor increases in crop yields, but still far below the potential with good agronomic practices. No project thus far as provided adequate agricultural training, or increased credit for crop production. Where credit was provided, as with ADB’s Agricultural Area Development Project; it was directed towards animal production, resulting in an almost immediate increase in production. Where agricultural training was provided to farmers, projects report significant yield increases. Yield results from seed programs have shown mixed reports. Positive yield responses were directly attributed to adequate fertilizer applications. All of the above programs demonstrate that all of the various agricultural inputs of water, fertilizers, machinery, and knowledge must be addressed to achieve optimum yields.

2. Virtually all donor projects have led to increased agricultural production. However, not one project has adequately addressed all of the components needed for the yield increases that should have been attained. Water projects such as OIP I and II, WUASP, and ADB’s Agricultural Area Development Project all demonstrated improved water management and consequently increased crop yields. However, none provided adequate agricultural training, or increased credit for crop production. Where credit was provided, as with ADB’s Agricultural Area Development Project for animal production; an almost immediate increase in production was reported. Where agricultural training is provided to farmers, projects report significant yield increases.

3. Yield results from seed programs have shown mixed reports. Positive yield responses were directly attributed to adequate fertilizer applications. All of the above programs demonstrate that all of the various agricultural inputs of water, fertilizers, and machinery, and knowledge must be addressed to achieve optimum yields.

4. Agricultural Investment Services Project (WB, IFAD, SDC, EC). Following wheat shortages in 2008 the donor community concentrated efforts in improving seed quality (primarily wheat) in a effort to raise production. One of the efforts was aimed at improving seed quality of a number of different crops. The “Community Seed Fund” had two components; one for improved pasture and fodder, in which participating farmers received a number of fodder seed varieties; and the second “Food Security Improvement”, in which farmers received wheat, barley and potato seeds. Under the food security program participating farmers receive high quality seed along with fertilizer supplements and training. The farmers then agree to return to the program twice the amount of seed that they received. The returned seed can then be redistributed by the CSF or sold in the local market. The CSF will run out of donor funds in the coming year, but is somewhat self-sustaining on returned seed. One of the problems of the program is that returned seeds are often of low quality and cannot be redistributed.

5. On-Farm Irrigation Project I and II (World Bank). The objective of OIP I, implemented from 2000 to 2008, was to achieve increased crop production through reliable and sustainable water distribution across seven administrative regions of the country. A core activity of the project was strengthening services to about 450 WUAs, including training and support. WUA Support Units were set up at the national, provincial and district levels to assist WUAs in the formation, registration, and implementation stages of their development. The project focused on rehabilitating on-farm infrastructure under the management of WUAs. OIP II started in 2008 and

AHT / UBI / UNICON 87 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 6 is being implemented countrywide. Infrastructure improvements within approximately 29 WUAs covering an area of about 51,000ha are planned for OIP II. 64

6. Considerable success was achieved in establishing and improving the performance of WUAs. A training program for over 50,000 people was carried out. Approximately 450 WUAs, with 166,000 members, were formally registered to manage irrigation areas covering 710,000 hectares, about 70% of the country’s irrigated land. Infrastructure on 121,000 hectares managed by 63 WUAs was rehabilitated. Water delivery to farmers in 80% of the rehabilitated systems now closely matches irrigation water demands. Three agricultural seasons after completion of rehabilitation works, irrigation service fees have doubled on average and collection rates by WUAs amounted to close to 100% of total assessed fees (based on the updated annual plans for operation and maintenance). At least 80% of water users were found to be well informed and satisfied with the performance of WUA management, and at least 80% of WUAs were judged to be representative, transparent and accountable to their members.

7. Water Users Association Support Program (USAID). The Water Users Association Support Program was funded by USAID and ran from 2004 to 2010. Objectives of the project were similar to OIP I. Objectives were to: Increase organizational capacity (representation, transparency, good governance); to reach financial sustainability by improving Irrigation Service Fee (ISF) collection rates and technical management; and increase agricultural productivity and farmers’ income.

8. The project obligated 1.3 million in grants to 28 WUAs covering an area of 30,464 ha. The grants were used to rehabilitate over 200 km of drainage and irrigation canals, construct hundreds of irrigation gates and control structures, along with WUA offices and office equipment. A total of 6,720 ha of land that had lost irrigation access were put back into production by the end of the program resulting in millions of dollars in annual gross income. Due to improved irrigation farmers were able to expand secondary crops (late season crops following winter wheat - primarily maize). Due to improved water management higher value crops were replacing cotton; the area planted to cotton decreased by 33% over the life of the project. Farmers’ net income per ha increased by approximately 185% from 2005 to 2010 (average of cotton, wheat, and maize). Irrigation Service Fees (ISF) paid to the government was 100% by the end of the project and fees paid to the WUA for operation and maintenance had doubled.

9. Both OIP and WUASP were similar projects in that they both provided training and assistance for institutional development of WUAs. Both projects were successful in creating WUAs that are sustainable and both brought back into production thousands of hectares of land that had been lost to irrigation due to infrastructure failures. What WUASP demonstrated was that fairly small investments in irrigation infrastructure (less than $50 per ha) could achieve benefits similar to a much more comprehensive rehabilitation program like OIP I and II.

10. Agriculture Area Development Project (ADB). Agriculture Area Development Project was designed when the Kyrgyz Republic was making substantial progress in its transition from a centrally planned to a market-based economy; land reform was progressing, with private freehold ownership established in June 1999; and the country was suffering from the Russian crisis of 1998–1999. Agriculture accounted for 45% of gross domestic product, 40% of employment, and 30% of export earnings. This was the first investment project of the Asian Development Bank (ADB) and with the Ministry of Agriculture and Water Resources (MAWR).

11. The expected project impact was increased incomes of farmers in Chui Oblast. The expected outcome was increased farm productivity and profitability in selected areas. The components and key related outputs were (i) farm development—farms on 29,000 hectares legally registered, 12,000 farmers trained, 10 staff members from training institutions trained abroad, institutional links with foreign training institutions, credit of $3.5 million in working capital

64 WorldBank Water Feature Stories. Issue 19, October 2008.

AHT / UBI / UNICON 88 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 6 and $10 million in investment capital provided, and annual farm surveys established; (ii) drainage and irrigation—rehabilitation of 24,000 ha of drainage, and 1,000km of collector drains, technical packages for drainage, rehabilitation of irrigation on 55,000 ha, four staff members participating in study tour, and 12,000 ha of improved land management and soil protection measures; and (iii) development of private marketing and input supply services—agribusiness enterprises established, 1,000 entrepreneurs trained, and domestic and export market links established.

12. Commercial farms were developed by helping farmers prepare business plans and by providing them with access to working capital and investment loans. Activities for this output overlapped with the training of farmers. The Kyrgyz Agricultural Finance Corporation (KAFC), starting in 2002, also relent $10.5 million of ADB funds for investment, mostly for livestock, and lent $3.5 million of its own funds for working capital. The recycling of these funds resulted in $24.8 million for investment and $9.1 million for working capital. Non-performing loans were only 1% of the outstanding portfolio on 30 June 2009.

13. Lending by KAFC for investment in crop production was limited. Rather, lending focused on livestock. In 2002, loans for livestock production accounted for 82% of lending for investment, with 11% for processing, 5% for equipment, and 2% for construction. The concentration of lending in livestock reflected the significant demand among farmers to expand livestock operations, both as a means to accumulate assets and mitigate risk, given that livestock production is less susceptible to adverse climatic conditions than crop production. From 2007 to 2009 overdue loans accounted for about 1% of the portfolio, comparable with the Kyrgyz banking sector as a whole.

14. The rehabilitation of drainage and irrigation significantly increased the availability of water for farmers throughout the project schemes, including farmers at the tail end of the process. WUA staff members reported reduced water conveyance losses from 50% to as low as 5%. Increased availability of water resulted in a shift in cropping patterns, away from traditional cereal crops such as wheat to more water dependent crops such as lucerne and vegetables, reflecting market demand and their higher value. The 2004 survey showed a change in cropping patterns: before rehabilitation, winter wheat and lucerne accounted for around the same proportion of farm area, at 27%; by 2007, the area of winter wheat had fallen to 17% while that of lucerne had increased to 45%. The concentration of crops grown also increased. In 2004, the five main crops (winter wheat, lucerne, sugar beet, spring barley, and spring wheat) accounted for 81% of the cropping pattern. By 2007, the five main crops accounted for 90% and sugar beet had been replaced by winter barley as one of the five main crops. This also reflects the shift toward animal-feed crops. Cropping-pattern changes were indicative of farmers’ operational freedom in crop selection and the influence of market trends and prices on decision making.

15. The key performance indicator for outcome achievement was an increase in the yield of major crops. The project’s 2007 survey indicates that, on average, farmers’ yields were lower than projected at appraisal. However, project-trained farmers achieved noticeably higher-than average yields reported in the 2007 survey, except for wheat and barley. The yields of trained farmers were also significantly higher than the yields projected at appraisal. The RADS, which provided training under the project, reported increases in yields by trained farmers. The RADS analysis shows consistent annual increases in yield from 2004 to 2008. For example, the average yield of oil seed crops rose by 77%, sugar beet by 54%, vegetables by 43%, and cereals by 17% (Table A6.1). The total number of farmers trained under the project was almost 14,700, representing about 45% of the total number of farmers within the irrigation schemes rehabilitated under the project.

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Table A6.1: Comparison of Major Crop Yields from Implementation of the Agricultural Development Project

16. Yield increases from project activities were substantial, though less than projected. It is difficult to sort out which factors contributed most to improving yields. Obviously, improved drainage and water delivery had an impact. Agricultural training was also important. Where farmers were trained by RAS yield increases were substantially higher than originally projected; this points out the need to provide farmers with adequate extension services. Additionally, the low input of loans for fertilizers and agricultural equipment may have limited yield increases. Loans into the animal sector had an almost immediate impact with increased animal and meat production.

17. Agricultural Investment Services Project and Community Seed Fund (various). The Agricultural Investment Services Project was a 32 million dollar project funded by the World Bank (WB), International Fund for Agricultural Development (IFAD), Swiss Cooperation Office (SCO), European Community (EC), and Government of the Kyrgyz Republic (GKR). One of the programs under the “Agricultural Investment Services Project” was designed to improve seed quality for a number of different crops. This program “Community Seed Fund” has two components; one for improved pasture and fodder, in which participating farmers receive a number of fodder seed varieties; and the second “Food Security Improvement”, in which farmers receive wheat, barley and potato seeds. Under the food security program participating farmers receive high quality seed along with fertilizer supplements and training. The farmers then agree to return to the program twice the amount of seed that they received. The returned seed can then be redistributed by the CSF or sold in the local market. The CSF will run out of donor funds in the coming year, but is somewhat self-sustaining on returned seed. One of the problems of the program is that returned seeds are often of low quality and cannot be redistributed. 65

18. Water Management Improvement Project (WMIP). The project had a two-pronged development objective: (i) improving irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity; and (ii) improving national water resource governance for the benefit of water users and the nation as a whole. The project has four components: (i) Rehabilitation and modernization of irrigation infrastructure ($19.8 million) to secure the water supply to agricultural areas with an estimated command area of 85,000 ha that serve about 40,000 farm families. Twenty priority schemes had been selected. A wide range of works had been proposed to overcome these problems, with the extent of work varying from scheme to scheme.

65 Ministry of Agriculture and Melioration of Kyrgyz Republic, Agricultural Projects Implementation Unit, General Report of Activities Carried out up to 2012.

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(ii) Management of water resources ($4.85 million) to achieve sustainable and efficient water resources management. The main tasks to be accomplished under the project include: (i)implementing the recently approved water code; (ii)re forming Kyrgyz Department of Water Resources technical and financial performance, turning it into an efficient and client-orientated bulk water supply and management organization; (iii)supporting Water User Associations development, with emphasis on water management; and (iv) implementation of information and dissemination programs. (iii) Organization of beneficiaries ($2.50 million), supporting formation and development of pilot Federations of Water Users Associations and transfer of minor irrigation systems to WUAs, thereby reducing the role of government service provider. (iv) Project management ($0.99 million) to provide funding for the staffing and operation of a project implementation unit, integrated within the Department of Water Resources, so that project implementation can be carried out in a timely and effective manner.

19. The implementation of the project was slower than planned. Component 1 rehabilitation works were delayed due to the 2010 events in the south, under-resourced contractors and shortcomings in the construction supervision process. If the project is not extended, it is expected that around 6 schemes, benefiting 80,000 water users, will only be partially completed. Under Component 2, the implementation of the Water Code remains constrained by the fact that the Government has not yet convened the National Water Council to give essential policy guidance on the institutional organization of the water sector. It is expected that with the new Government in place, this matter will be resolved. Under Component 3 good progress has been made, and the transfer of minor irrigation schemes, the repairs on some schemes and the provision of equipment to manage these schemes is on-going. In February 2011, the closing date of the project was extended by one year to December 31, 2012. However, the current rate of implementation is not sufficient to meet the PDOs within the closing date, and the Government of the Kyrgyz Republic and the implementing agency are to implement a number of actions to bring the project back to satisfactory status.

20. Economic Development Fund (USAID). This project, which was also started in the aftermath of the 2008 wheat crisis, purchased 3,600 metric tons of seeds for six selected food crops and distributed the seeds to 34,000 farmers. The program involved procurement of seed from private suppliers in Kyrgyzstan and then subsequent distribution to farmers. Yield results from both of the above seed programs showed mixed results. Where farmers were supplied with adequate amounts of fertilizer the program demonstrated significant yield increases. However, many farmers did not apply sufficient amounts of fertilizers and thus did not see a yield improvement. Surveys of cooperating farmers within the Economic Development Fund reported that of the 340 farms surveyed, only 52 or 15% obtained credit. Credit sources were almost entirely through banks and micro-finance, with virtually no credit being obtained from relatives. Conclusions from the project stated that the lack of fertilizer applications, the sub-optimum levels of fertilizers that were applied, and the virtual absence of phosphate fertilizers significantly limited the success of the program.

Agricultural Support Services

21. The organizations interviewed included RAS, TAIC, and SEP (as discussed below). During the phase 1 workshop it was revealed that ACTED was also assisting WUAs in the south, but due to limited time little information could be obtained regarding their activities. What is known is that ACTED is assisting a small number of WUAs with infrastructure rehabilitation. In this regard both ACTED and SEP have relatively small programs assisting a small number of WUAs. RAS on the other hand is a significantly larger organization with offices located throughout the country.

22. Rural Advisory Service (RAS) . The Rural Advisory Service (RAS) is the only “extension service” operating throughout the country. It was established in 1999 under an

AHT / UBI / UNICON 91 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 6 initiative sponsored by the GRK, Government of Switzerland, the WB, and IFAD. The RAS has independent offices in all Oblasts and advisors in every raion of the country. RAS was set up to provide agronomic education and training to the rural population with the idea that farmers would pay for these services. While some groups have paid for small training programs, this is relatively rare. For the most part, RAS acts as a consulting company, bidding on proposals from donors. But because it is registered as a non-profit organization with a special charter, it has none of the advantages of a “for profit” organization. Thus the outreach of RAS is limited almost solely to participants in various donor programs. RAS has received no outside funding since 2008; all of its funds are derived from contracts with donors. Currently the organization has a total of 360 employees, but only 180 of these are working full time. Current contracts include a WB pasture management program and a one year program with the EC on small agri- businesses (fruit and vegetable processing, small dairy, wool project).

23. Helvetas conducted an independent review evaluating the effectiveness of RAS. 66 “The assessment evaluated services in terms of outcomes in the farmers’ fields, herds and household economies”, and resulted in a very favorable assessment of RAS’s achievements. Consultants interviewed 800 RAS clients. More than two thirds of the clients rated RAS services as “very useful”, and 30% as “fairly useful”, only 0.4% rated the services as “not useful”. Virtually all participants applied what they learned, which for the most part resulted in higher profits or incomes.

24. RAS has a number of problems that hinder its effectiveness. Because it is a non-profit organization only 1% of its income can be used for professional training. There are no funds for travel or exchange. Thus, the organization finds it difficult to maintain or develop what would be considered an experienced professional staff. Salaries are low and turnover is high. Currently the organization must pay taxes, including VAT on services that it provides to farmers or associations.

25. Training and Innovation Center (TAIC). A sister organization sharing the same building as RAS, is the Training Advisory and Innovation Center (TAIC). This organization has 34 employees (16 located in Bishkek); 28 of these are specialists in various agricultural subjects. In general RAS is used as a sub-contractor for TAIC activities. The Oblast wings of RAS are also independent organizations and not tied to RAS administratively. The organizational structure of RAS, TAIC, and the regional offices is somewhat difficult to understand. Why these separate branches have split off, rather than being in one organizational structure would seem to complicate program management, along with increasing administrative costs.

26. Helvetas. 67 Helvetas was founded in 1955 as the first private development organization in Switzerland. Helvetas is a non-partisan independent association supported by 43,000 members and 40,000 regular private sponsors. It actively works through its 16 program offices to improve the living conditions of disadvantaged people in 20 partner countries in Asia, Africa, and Latin America. In the Kyrgyz Republic, Helvetas started its activities in November 1994 with the Agroproject restructured as the Kyrgyz-Swiss Agricultural Programme (KSAP), operating in close cooperation with the Kyrgyz Ministry of Agriculture and Water Resources. Today, Helvetas is running 4 projects in the Kyrgyz Republic: LMDP, KSAP, BioCotton, and SEP.

27. Local Market Development Program (LMDP). The project has been working in the Kyrgyz Republic since January, 2005 and since October, 2006 in Tajikistan. The project works in 5 oblasts of the Kyrgyz Republic (Batken, Osh, Jalal-Abad, Chui and Issyk-Kul) and in Khatlon and Sughd oblasts in Tajikistan .

66 Effectiveness of the Rural Advisory Services (RAS). February 2011 (with some updates in December 2011). Helvetas, Swiss Cooperation Office in the Kyrgyz Republic. 67 http://www.helvetas.kg/en/aboutus/

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28. Biocotton. The Biocotton Project promotes organic farming in Central Asia, and trade of organic cotton and other organic products on the international and domestic markets, allowing interested farmers to make improve their income.

29. SEP - Efficient Use of Water Project . The Kyrgyz name of the Efficient Use of Water Project is "SEP". This word has two meanings in Kyrgyz language which can both be linked to a project on efficient water management: First, " СЭП " means "spreading water", and second, "СЭП " is the word for the dowry of the bride at a wedding (sustainable resource management in analogy to the dowry as the basis for a solid and long-lasting marriage). The SEP project aims at improving farmers' capacities to manage their often scarce water resources for agricultural production in an optimal way so that agricultural production and thus food security is increased and natural resources are preserved for the present and future population. SEP has been working with a number of WUAs in southern Kyrgyzstan assisting them primarily with institutional development and training.

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PRIORITIZATION OF SUBPROJECTS

1. The sections below list Information collated during and after the field verification visit (3 rd to 8th Nov) on the two subprojects adopted for the project concept (Part D).

1. Sarymsak Irrigation System

2. Location . The system is located in the Kara-Buura rayon (at approx. coordinates of N42 o32 ’ E71 o32 ’) of Talas oblast approximately 60 kilometres west of Talas township and 30 kilometres from Maimak railway station

3. Water Source . The water source is from the Kara-Buura reservoir located approximately 3 kilometres upstream of the command area. The reservoir has a total storage capacity of 27 million cubic metres (Mm 3), and is currently recharged to 17 Mm 3. Therefore there reportedly the potential to increase the water supply by upto 10 Mm 3. In addition, to the Sarymsak system the reservoir supplies two additional canals (command areas), located to the east and north of Kara-Say, with a combined irrigated area of 6,190 hectares (of which Sarymsak is approximately 1,600 ha). This project will allow increasing the irrigated area to 8,079ha though the current reservoir’s storage capacity is enough for irrigating 8,184ha.

4. Command Areas. The system currently has an irrigated area of approximately 1,600 hectares, which under to the project will be increased by a further 2,000 hectares, as shown in the figure below. The current irrigated area is divided between 3 communities (Kara Buura, Cholponbay and Bakay Yr). The new irrigated area is largely within the Bakay Yr community lands and will be available for use by rent by the Kara-Buura community households through the State Land Redistribution Fund.

5. Crops. The current cropping pattern includes; green beans (approx. 70%), grains, potato, sunflower and fodder crops. High sown area under beans is explained by the fact that the Turkish and Chinese companies contract local farmers and purchase all yields. Similar cropping patterns will be practiced on the new irrigated lands.

6. Irrigation Infrastructure . The existing main canal (design duty of 4 m 3/s) is approximately 14 kilometres in length, comprising an upper lined section of 4 kilometres (rectangular section) in poor condition, and lower 10 kilometres of unlined earth canal also in poor condition. Main canal structures include control gates, in poor condition, and a number of bridges, vehicle and foot. The inter-farm and on-farm canals are predominately unlined earth canals, generally in poor condition. Farm irrigation is furrow irrigation methods.

7. Proposed Works. The works include: • Repair and rehabilitation of the existing main canal (14 km) with repair of the existing upper lined section (4 km) and reconstruction and lining of the lower section (10 km). Repair and/or replacement of existing structures. • Construction of approximately 6.5 km of new lined canal 68 to the new command area. • Repair and rehabilitation of the inter-farm and on-farm irrigation canals and structure to the existing irrigated area (1,600 ha) • Construction of the inter-farm and on-farm irrigation infrastructure to the new irrigated lands (2,000 ha)

8. Communities. The system is farmed by three communities with seven villages, with total population of approx. 27,000 and 5,583 households. The communities are predominately Kyrgyz (90%) but with mix of other ethnicities. More than 30% of households are classified as in poverty.

68 A short section of the canal (approx. 300 metres) is currently under construction

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Table A7.1: Summary of Sarymsak irrigation system social parameters Community Villages Population Households Ethnicity Poverty Kara Buura 3 16,000 3,700 Kyrgyz 90%, 32% balance (1) Cholponbay 2 5,800 930 Kyrgyz 95% 35% balance (2) Bakay Yr 2 5,256 953 Kyrgyz 99% 40% balance (3) Total 7 27,056 5,583 (1) Kurds, Greek, Russian, Uzbek, Kazakh, Ukrainian, Moldavian, Tartar, (2) Kurds, Uzbeks, (3) Russian, Uzbek, Kazakh

9. Water User Associations. The system is managed by four Water User Associations; Shilbili, Akkyia, Mol Bulak and Kok Salma, and an area of 860 hectares are managed directly by the Rayvodhoz. WUA membership is 95% of households. Water fees range between 3 to 5 T per cubic metre.

10. Cost. The total cost of the project updated to current costs is 750 million Som, or the equivalent of $16 million USD.

11. Impact Assessment . Based on the ADB checklist the project is rated: • Environmental: Category B; due to the need for mitigation of potential impacts of development of new irrigated lands. • Resettlement; Category B • Indigenous Peoples: Category C

2. Sharmshy Irrigation System

12. Location . The Shamshy irrigation system is located in the Shamshy rayon (at coordinates of N43.39 o E75.23 o) in Chui oblast approximately 25 kilometres east of the city of Tokmok.

13. Water Source. The water source is from the diversion of run-of-river flows from the Shamshy river. As proposed for the works, there are two intakes; (i) an upper intake (1 m 3/s) and (ii) lower intake (16 m 3/s).

14. Command Area . The command areas for the two intakes comprise; (i) existing irrigated area of approximately 1,000 hectares and (ii) an existing irrigated area estimated at 14,000 ha (5,000 ha on the left bank and 9,000 hectares on the right bank, respectively.

15. Crops . Crops cultivated in both command areas include; fodder (48%), grain (wheat, barley and maize=46%), sugar beet (5%), sunflower and other.

(iii) Irrigation Infrastructure . The existing irrigation infrastructure includes: (iv) Upper intake: in river rock diversion structure, head gate and unlined canal to the command area, and on-farm unlined canals, all in poor condition with high distribution losses, and (v) Lower intake: diversion structure comprising intake and flood release gate, the structure was reconstructed after flood damage in 2002 but is poorly designed and constructed and in need of replacement, and main concrete lined canal in good condition.

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16. Crops Proposed Works . The proposed works include: (i) Upper intake and command area: construction of intake structure and headworks on the Shamshy river to improve the intake flow, reconstruction and lining of the main canal (approx. 3.2 km) to reduce distribution losses, and construction of storage reservoir of approx. 42,000 cubic metres to water service deliveries to the command area. In addition from the field verification that the on-farm system distribution efficiency could be improved through rehabilitation of secondary and tertiary canals. (ii) Lower intake and command area: reconstruction of the intake to ensure its safety and efficient operation in terms of sustaining water supply to the main canal and command area. While the main canal is in good condition, it was not possible to review on-farm systems during the verification therefore it is recommended that these also be assessed for potential improvement during the PPTA.

17. Communities . The system is farmed by Shamsy district with 4 villages, with total population of approx. 2,500 and 387 households. Rehabilitation of the headworks would allow improving irrigation system for three more districts: Ibraimov, On Bir and Chui district. All districts are predominately Kyrgyz (90%) but with mix of other ethnicities such as , , Germans & Moldavians. About 20% of households are classified as in poverty.

Table A7.2: Summary of Shamshy irrigation system social parameters Community Villages Population Households Shamsy AO 4 2,500 387 Ibraimov AO 6 5,500 917 On Bir AO 4 5,600 933 Chui AO 1 1,730 289 Total 15 15,330 2,526

18. Water User Association. Both irrigation command areas are managed directly by Raivodhoz. According to the local population WUA would not be able to manage high social tension due to lack of irrigation water during summer months.

19. Costs. The total cost of the works is estimated at USD 2 million of which USD 1.2 million is for the works on the upper take (intake structure, headworks, main canal and storage reservoir) and USD 0.8 million for the lower intake.

20. Impact Assessment . Based on the ADB checklist the project is rated: • Environmental: Category B; due the construction of the storage reservoir • Resettlement; Category C • Indigenous Peoples: Category C

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ASSESSMENT OF SALT MANAGEMENT

1. This appendix discusses salinity in irrigated areas, which adversely affects about 6% of the total irrigated area in the Kyrgyz Republic. It first presents an overview of primary salt sources. This is followed by an assessment of soil and water salinity. The appendix concludes with recommended solutions for salinity problems.

Assessment of Primary Salt Sources

2. The primary source of salt in surface water originates from dissolution of minerals contained in hydro-geological formations. Surface water bodies are fed directly (through rainfall runoff and snow melt) or indirectly (through inflow from groundwater), while groundwater is replenished by recharge and seepage from surface water. Precipitation is the primary source of all water feeding surface water and groundwater systems.

3. Primary sources of salt originate from deposition of such salts as part of the complex process of groundwater and surface water movements, which can have occurred over very long time periods. In brief this can, in the context of the Kyrgyzstan environment, comprise the following processes (both of which need to be considered in a long-term historical context): (i) Groundwater movement is by default from groundwater recharge to groundwater discharge area, with the latter located at lower elevation than the recharge areas. The groundwater has dissolved salts, which in the main recharge zones of alluvial aquifer systems in Kyrgyzstan are low (0.3 to 0.5 g/l). In discharge zones, groundwater can emerge from springs, can be intercepted by rivers and lakes, or evaporate from shallow groundwater table areas. If insufficient natural surface water outflow occurs from the discharge zones, water evaporation will result in accumulation of salt in the unsaturated soil and sub-soil and in the shallow groundwater zone. (ii) Surface water can accumulate in poorly drained wetland areas, from which water will evaporate, thus causing accumulation of salts.

4. The north-western area of the Chui river basin contains examples where the above processes are in evidence. Similar processes are identifiable in other river basins, yet at a smaller scale. In the Chui river basin groundwater movement is from the high elevation alluvial recharge zone to a discharge zone north of a natural spring line (located roughly along the main irrigation feeder canal). The discharge zone is widespread with discharge of deep groundwater concentrated on the areas of lowest relief. Such areas have thus natural high salinity in the shallow groundwater and soil zones and were not cultivated prior to the large scale land reclamation in the Soviet era, because of high salinity. Evaporation from wetlands that were fed from streams receiving groundwater along the spring line could have had a role in salinization although a likely lesser one than caused by shallow groundwater evaporation.

5. Irrigation water originates from rivers and has low salinity in general (0.3-0.5 g/l) unless drain water is used as a supplementary source. Irrigation water is a major source of salt entering the soil surface. In areas where groundwater levels are deep and where natural drainage is sufficient to avoid the build-up of a high groundwater table, the salts contained in the water that percolates through the base of the soil zone to the groundwater table will be of higher salinity than the applied irrigation water. The increase in salinity depends on rainfall, the amount of irrigation application (a function of the rate of evapotranspiration) and irrigation efficiency.

6. In groundwater discharge zones and, in general, in areas where natural drainage is insufficient, irrigation will inevitably lead to high groundwater table conditions and secondary salinization can occur, dependent on local conditions (described in Supplementary Appendix 3).

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Assessment of Soil and Water Salinity

7. Soil and shallow groundwater salinity, combined with waterlogging, form a serious threat to productive irrigated agriculture. The occurrence of dangerous levels of salinity in soils in irrigated areas can be due to a number of causes, which need to be considered in the context of geology, hydrogeology, hydrology and the anthropogenic influences of irrigated agriculture and drainage. Surface water salinity is low, with salinity of river water used for irrigation generally not containing more than 0.3 to 0.5 g/l in total dissolved solids.

8. The irrigated lands of Kyrgyzstan are predominantly located on geological deposits of Quaternary Age. Such deposits comprise highly transmissive sands and gravels in the piedmont outwash areas, while alternate layers of sands and clays occur at the lower elevations. In the lower areas a silt/clay layer of considerable thickness is confining the underlying aquifers. The scale and extent of such quaternary deposits varies across Kyrgyzstan with most developed formations in the Chui Valley reaching thicknesses in excess of 300m. Upward hydraulic gradients in the downstream end of groundwater systems may have been the natural cause of waterlogging and salinization prior to the introduction of irrigated agriculture. In the Naryn Valley, natural occurrence of salt in superficial clay layers contributes to salinization.

9. In general the salinity problem is most extensive in the Chui Valley, particularly in the western part, partly because of the large extent of irrigated agriculture. Other problem areas are in the Naryn Valley and in Talas.

10. The Melioration Hydrogeological Expedition (under DWEM) is responsible for monitoring of the shallow groundwater table and salinity in the shallow groundwater and the unsaturated soil horizon. Annual summary tables for all rayons in Kyrgyzstan indicate the extent of water logging and salinity. Hand-colored maps are produced to illustrate the extent of waterlogging and salinity for areas where such conditions are observed (see Table A8.1 for details).

Table A8.1: Soil Quality and Problem Areas by Oblast, 31 December 2011 (‘000 ha) Soil Quality Problem Areas Irrigated Oblast Satis- Unsatis- Water- Salini- Area Good Both factory factory logging zation Chui 320 236 28 56 16.8 31.5 7.5 Talas 113 94 8 11 6.2 4.1 0.2 Issyk-Kul 155 134 6 15 12.5 2.6 0.2 Naryn 120 98 12 10 1.5 7.9 0.2 Jalalabad 126 120 3 3 2.2 0.3 - Osh 130 122 3 3 2.4 1.1 0.0 Batken 57 52 2 3 0.5 1.9 0.6 Total 1,020 857 61 100 42.1 49.3 8.7 Source: DWEM (2012)

11. Causes of salinization. Shallow groundwater table conditions cause upward capillary flow to the soil surface from which evaporation occurs. With this upward water flow, salts are carried to the surface, or, where vegetation is present, the root zone of such vegetation. In general, the causes for waterlogging, shallow groundwater and soil salinity can be natural, anthropogenic or both.

12. Natural causes of salinization. (i) Groundwater emergence can occur naturally where the water transmitting properties of the aquifer change. This is particularly the case when high transmissivity in upstream areas are adjacent to lower transmissivity areas in the downstream areas. In the

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transition zone, springs may have been present, or more diffuse discharge from shallow groundwater table areas may have occurred. The latter situation can result in accumulation of salts near the surface. (ii) In valley area, emergence of groundwater may cause salinity problems when insufficient natural surface water drainage occurs. This is a situation that can occur in inland deltas. (iii) Saline groundwater can be caused by dissolution of salts that occur in geological formations.

13. Anthropogenic causes of salinization. (i) The major anthropogenic cause of waterlogging and salinity is related to irrigation with surface water. The excess of irrigation application and canal distribution losses contributes to groundwater storage. The aquifers that underlie such irrigated areas, very rarely have the ability to naturally remove this irrigation excess, particularly when irrigated areas are large. (ii) Shallow groundwater table conditions will thus result and the capillary upward flow from this shallow groundwater table will bring salts into the soil zone. The amount of salt thus brought up into the soil zone will depend on the salt content of both the applied irrigation water and of the shallow groundwater. (iii) The mineralization is a complex process and can be spatially variable due to local scale groundwater movement controlled by local relief.

14. Drainage systems can effectively control the groundwater table depth and thus reduce the upward capillary flow to the soil zone. The effectiveness of the drainage systems depends on their design and operational status. Without adequate maintenance and improper use of the collector drains (for example raising the water level for use of drain water for irrigation) such drainage systems will not result in adequate groundwater table and salinity control.

15. Overuse of irrigation water leads to an additional burden on drainage systems and this may hamper the effective functioning of such systems. It is thus important to analyze the effectiveness of irrigation and drainage systems in controlling waterlogging and salinity in the major irrigated regions.

16. To fully understand the salinity problems in irrigated areas, an understanding of related topics is required at both regional (river basin) and local (sub-basin) scales. These are in summarized Table A8.2. This full understanding will results in a more effective way of identifying potential solutions to alleviating the salinity problems. To develop the required understanding a good knowledge base is a pre-requisite. Such a knowledge base is not limited to the physical characteristics of hydro-geological, hydrological and irrigation and drainage infrastructure systems. It is equally important to have at hand the monitoring data related to those various characteristics so that value judgment can be made of the both the historical development of salinity problems and of the consequences of interventions.

Salt Management Issues

17. From discussion with staff from DWEM it transpired that the problems of waterlogging and salinization of soils and shallow groundwater are generally attributed to the shortcomings and state of repair of the irrigation and drainage infrastructure, yet no comprehensive assessment of the situation is available.

18. From assessment of salinity and shallow groundwater table mapping in Moscow rayon of Chui oblast it is evident that salinity is not directly associated with shallow groundwater table conditions. This is most likely due to the effects of local circulation of groundwater due to relief variations. Knowledge of local relief was not available at the time of writing and detailed topographic maps are classified as confidential. It is, however, likely that those areas suffering

AHT / UBI / UNICON 99 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 8 most from salinity are at lower relief and most likely experienced natural waterlogging and salinity problems in historic times. As already indicated in the previous section, effective salt management requires a holistic approach, taking consideration of all controlling factors at different scales of assessment.

19. Constraints to effective salt management. These include: (i) It appears from conversations with local experts that rehabilitated and adequately functioning irrigation and drainage systems will solve the salinity problems. There appears to be little interest in alternative solutions, which could include the introduction of salt-tolerant commercially viable vegetation (grasses and trees), or even a more radical change in land use (such as for example fish ponds linked to drainage systems). There is need to consider ways of building awareness of the need for adaptation to changing conditions (also in the context of possible effects of climate change), to work with nature rather than fighting too hard against it. (iii) The technical capability of the scientific institutes has significantly declined over time. The use of advanced water management tools linked to GIS and properly designed and operated monitoring systems would contribute significantly to optimizing both the functioning of irrigation and drainage systems and the optimum use of water for agriculture or other commercial purposes. To enable the development and advanced tools and monitoring facilities, strengthening of the design institutes would be required. (iii) The advantages of using modern water management techniques and the use of advanced monitoring, including the use of satellite imagery needs to be given serious consideration. On the other end of the scale, the potential benefits of engaging local communities (WUA) in local scale monitoring could be considered.

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Table A8.2: Knowledge Requirements for Effective Salt Management Geology & Hydrogeology Irrigation regions are often located on recent deposits and are generally underlain by extensive aquifer systems. Such aquifers interact with the surface system and an exchange of waters from that surface environment and the groundwater system can have a significant impact on soil and shallow groundwater salinity. For example, saline groundwater may flow upwards towards the soil surface and contribute to the salt load in the soil and shallow groundwater zone. On a localized scale, complex three-dimensional groundwater movement can result in spatial variability in the salinity problems. Historically, groundwater movement of a regional scale and emergence of such groundwater in low lying areas may have resulted in natural salinity in the shallow groundwater zone and in the overlying soil. Hydrology and Climate The knowledge on availability of surface water is essential for understanding the role of surface water in salinity management. Understanding the hydrology of the surface water system is closely linked with understanding the climatic conditions in the river basins that are the main source for irrigation water supply. Water use by irrigated crops is also directly related to climatic conditions and the crop evapotranspiration is derived directly from climate data. Surface waters carry salt and this will be delivered to the irrigated regions. Evapotranspiration is a major water discharge component in the irrigated areas, yet salts are left behind. Topography, Soils and Land Use Topography variations at the local scale can have a significant impact on groundwater and salt mobilization and movement. Soils are important in many aspects. They determine to a large extent the suitability of the land for irrigated agriculture. In the context of water resources, they control the recharge to groundwater as well as the upward flow of water and salt from the (shallow) groundwater table to the soil zone. Different soils have different soil physical characteristics and thus have an impact on the ability of soils to transmit water from the groundwater table to the root zone. For example a loamy soil allows for significant quantity of upward flow even when the groundwater table is relatively deep. This contrasts for example a clay loam, which as less favorable water transmitting properties. The type of vegetation and mainly crops used in irrigated areas influence the water requirements, with certain crops requiring less water than others. Irrigation and Drainage Infrastructure The irrigation systems carry water to irrigated fields and ‘lose’ water on the way through canal leakage. The rate of leakage loss will be a function of the type of canal (lined or unlined), its size and the groundwater table elevation that underlies the canal. Maximum leakage will occur when the groundwater table is deep, while losses will reduce with high groundwater table conditions. This is obviously relevant to understanding how intervention measures to lower the groundwater table will impact of the rate of leakage from the canals (particularly earth canals). Using a fixed canal efficiency factor would thus not be good enough to understand the dynamic of canal loss. It is very important to understand the integrity and state of repair of the irrigation system, including its control and delivery structures, as well as the on-farm land conditions and irrigation techniques. Poor conditions tend to lead to both inequitable distribution of water as well as over-application of water. Drainage systems are in place to control the groundwater table and avoid excessive salt build up in the soil and shallow groundwater table zone. To understand the functionality and effectiveness of drainage system it is important to know the original design as well as the current state of functio- nality. Also important to know is the use of drain water for irrigation, something they were not ori- ginally designed for (except where vertical drainage wells were used in conjunctive use schemes). Source: Consultant

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SUMMARY OF WORKSHOP RESULTS

1. Introduction. On 29 August 2012, at the end of Phase 1 of the assignment in the Kyrgyz Republic, the Consultant organized a one-day workshop in Bishkek. The purpose of the workshop was to enlist the support of key stakeholders with identifying water sector issues, key challenges and solutions to overcome these challenges. This appendix presents a summary of the workshop description and results. For details, refer to Supplementary Appendix 1.

2. Structure of the workshop. The workshop was divided the following three sessions: (i) Water Resource Sector Challenges. This session started with a series of presentations outlining the status and issues of water resources, water demand, water management and irrigated agriculture. The presentations were followed by working group discussion where participants discussed issues and proposed alternatives, ranked the top four issues and identified causes of the issues. (ii) Strategies to Address Challenges. This session started with two presentations, the first outlining a framework for prioritizing water sector strategies, and second strategy formulation methodology. The session continued with the discussion groups identifying solutions to key issues, providers and services to support solutions, implementation constraints and supporting facilitation. (iii) Methods for Prioritizing Investment Projects. This session presented an approach to screening and ranking investment projects in preparation for Phase 2. There appeared to be general agreement of the proposed approach.

3. Workshop participants. The Government of the Kyrgyz Republic was represented by the Ministry of Agriculture and Melioration (DWEM, and the project implementation units of WMIP and OIP-2), the Ministry of Emergency Situations, the State Agency for Geology and Mineral Resources, and the Hydrometeorology Agency. The workshop was also attended by representatives from USAID, GIZ, the Swiss Agency for Development and Cooperation (SDC), UNDP, FAO, Helvetas, ACTED, RAS and Aga Khan.

4. Results. Participants were assigned to three working groups (water resource management, irrigation system management, and agricultural production). The results of the two discussion sessions were recorded on a large-scale paper with input either recorded directly or appended as carded comments. After the workshop the outputs of each group were transferred to results spreadsheet, which are summarized below: (i) Group 1: Water Resource Management. The group mainly discussed policy issues (in contrast, the other two groups mainly discussed issues of a technical and applied nature). Out of the identified issues, most have similar causes and proposed solutions. In general it can be stated that most problems are linked to lack of finances, as well as lack of regulations and low law enforcement. In the opinion of the group, all stakeholders should try to be efficient in performing within their constraints (financial constraints, limited institutional resources), and try to produce quality even in smaller quantities and at a lower level. Current water resource monitoring is largely inadequate and only a few of the former (and needed) monitoring wells are functioning. Water diversions are being underreported. Improving the monitoring requires more resources. (ii) Group 2: Irrigation System Management. The group consisted mainly of WUA employees, water departments and employees of irrigation projects. The overall message of the group was to invest in human resources instead of only in infrastructure. A important challenge for WUAs is to overcome high staff turnover and lack of skilled personnel. Compared to undertaking infrastructure investment, capacity building efforts require more time and substantial resources. (iii) Group 3: Agricultural Production. This group mainly consisted of professionals working with value chain, extension and rural micro-finance schemes. Irrigation and

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water were considered as a means to better agricultural production. The overall statement of the group work was that a lack of affordable credit and limited competen- cies have resulted in low agricultural productivity. Therefore, intensive lobbying and a policy dialogue are required to establish more favorable conditions for rural business development.

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REMOTE SENSING TECHNOLOGY

1. Introduction. Remote sensing is the science of identifying, observing, and measuring an object without coming into direct contact with it. The radiometers aboard dozens of polar orbiting satellites, measure the land surface at different scales, ranging from small farm plots to large international river basins with pixel dimensions of 1 km (see Table A10.1). Geostationary satellites measure the land surface in intervals of 15 minutes due to their unchanged position in relation to the earth; their angular speed is identical to the earth rotation speed.

Table A10.1: Key Features of Selected Polar Orbiting Satellites by Category Pixel Dimension Swath width Category Selected Satellites (m) (km) Very high resolution 0.5-2.5 5-40 Worldview, GeoEye, Quickbird, Ikonos High resolution 2.5-30 40-700 Landsat, Spot, Aster, Formosat, Dmc, Hj, Liss, Rapideye, cbers, Radarsat Moderate resolution 30-400 700-3,000 Awifs, Modis , Meris, Npp, Fy, Asar Low resolution 400-25,000 3,000 Asar, Modis, Meris, Fy, Ascat, Npp, Trmm Source: Consultant

2. Principles of remote sensing. Satellites measure the reflected, emitted and scattered radiance in small parts of the electromagnetic spectrum. This is a form of energy emitted and absorbed by charged particles which exhibits wave-like behavior. Radiation is transmitted through the atmospheric windows in various wavelengths, including but not limited to visible, red-edge, near-infrared, thermal infrared, and microwave lengths (Figure A10.1). Since every object on the earth’s surface has its own specific spectral signature, and the signatures relate to specific properties, the signal across these wavelengths can be interpreted to generate quantitative information of the land surface (including some shallow sub-surface characteristics). Different bands of spectral reflectance and spectral emittance are combined with mathematical algorithms, so that raw pixel data can be converted into quantified information. The information relates to properties (e.g. crop type), state variables (e.g. soil moisture) and processes (e.g. rainfall). More information on remote sensing––with an emphasis on irrigation––can be found in Vidal (1997), Bastiaanssen (1998) and McVicar (2010).

3. Dissemination of satellite data. The data is archived and disseminated through data active archive centers that have developed portals for visitors to access the data. A well known example is the Land Processes Distributed Active Archive Center of the USGS (https://lpdaac.usgs.gov/). Most moderate and low resolution satellite data is available free of charge. High and very high resolution data are provided commercially via satellite data providers. There is however a tendency by the public agencies (NASA, ESA, INTA) to reduce the price for higher resolution data. Very high resolution data is relatively expensive, and therefore, less suitable for large-scale monitoring of irrigation systems.

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Figure A10.1: Wavelength and Frequency of the Electromagnetic Spectrum

Source: Consultant

4. Data attributes relevant to remote sensing of irrigation system performance. The following is a (non-exhaustive) list of data attributes that form the basis for specifying spatially distributed irrigation performance indicators that can be estimated from satellite measurements (Bastiaanssen et al., 2000; Bastiaanssen and Perry, 2009; Zwart et al., 2010): • crop type, • rainfall, • evapotranspiration (evaporation and transpiration also separately), • net irrigation water withdrawals, • soil moisture, • soil salinization, • biomass production (or carbon stock), • crop yield, • water productivity, and • standard irrigation performance indicators. In the context of this TA, water productivity is an especially relevant attribute, and is defined as the amount of crop production per unit of water consumed. The crop production can be expressed as a total biomass production, which is relatively easy to quantify. Crop yield per unit of water is more appropriate, but it requires the crop identification map to be available. Water consumed is the actual crop evapotranspiration accumulated across the growing season.

5. Objectives of assessing irrigation performance. It is essential to distinguish between the standard data attributes at the one hand and the irrigation performance indicators at the other hand. As Molden et al. (2001) describe and as demonstrated in this paper, irrigation performance assessment can be useful for different purposes and for different stakeholders: • From a strategic point of view, it is useful for higher level planners to see whether an organization is performing and using the available resources efficiently: this is called strategic performance assessment .

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• It enables to compare the performance between units, districts or regions and, using the different indicators, understand these differences and locate areas that need improve- ment actions and rehabilitation more urgently. This is a diagnostic performance assessment. This information could be useful for donor organization and politicians. • A comparative performance assessment can be used to set benchmark standards and detect processes in a system that lead to higher performance. • It can support water managers at different levels to understand the functioning of operational management processes; this is an operational performance assessment .

6. Elements of an irrigation performance assessment. The list of standard irrigation performance indicators is built around the following three elements: (i) Production. This element is related to land productivity (kg/ha) (i.e. biomass production and crop yield) and water productivity (kg/m 3) (i.e. biomass water productivity and crop water productivity). Crop yield and crop water productivity are both standard data attributes, but form also a typical component of the theme irrigation performance. The ultimate goal of irrigation is to enhance crop yield with the lowest amount of water input, and hence this element cannot be disregarded in the framework of irrigation performance. By adding market prices, it is also feasible to add an economic dimension to water productivity ($/m 3). (ii) Processes. This element expresses how the irrigation system functions biophysically. This can be expressed into adequacy (is there sufficient water available ?), uniformity (are scarce water resources divided equally ?), reliability (did the canal water arrive in time ?), beneficially (what are the consumptive use losses ?). Pixel information on (i) adequacy – defined as the difference between potential and actual crop evapotranspiration – (ii) reliability of water resources supply – defined as time series of root zone soil moisture fluctuations and (iii) uniformity – defined in terms of the spatial statistics of crop consumptive use – will provide a rapid and unbiased insight in the actual management of irrigation systems. All these indicators can be derived from satellite data, without the need to involve complex flow measurements and interpretations from field measurements. It provides key information on where processes need to be improved. (iii) Sustainability. This element is more related to the longer term changes of a given irrigation system, and the possibility to continue irrigated farming into the future by the next generation farmers. Aspects of this theme are related to soil salinization, water logging, declining groundwater tables and other environmental degradation processes. While remote sensing cannot measure all these processes, a number of key parameters can be mapped in an operational context and others only occasionally (Table A10.2).

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Table A10.2: Status of Data Components Available to Support Irrigation Water Management Min Time Min/Max Topic Status* Complexity Interval Pixel Size (m) Crop type Occasional data component Complex Season 10/30 Rainfall Operational data component Straightforward 3 hours 250/25,000 Evapotranspiration Operational data component Straightforward Daily 20/250 Net irrigation QODC Attention needed Monthly 20/250 withdrawal Soil moisture QODC Attention needed Daily 20/12,500 Soil salinization Occasional data component Complex Monthly 30 Biomass production Operational data component Straightforward Daily 20/250 Crop yield QODC/performance indicator Attention needed 6 months 20/250 Biomass water Operational data component/ Straightforward Monthly 20/250 productivity performance indicator Crop water productivity QODC/performance indicator Attention needed Season 20/250 Adequacy OPI Straightforward Daily 20/250 Uniformity OPI Straightforward Weekly 20/250 Reliability Semi-operational Attention needed Season 20/250 performance indicator Beneficial fraction OPI Straightforward Daily 20/250 Relative water supply OPI Complex Weekly 20/250 Annual irrigation OPI Straightforward Yearly 20/250 intensity Water sustainability OPI Attention needed Yearly 250/12,500 Source: Consultant * QODC = quasi-operational data component, OPI = operational performance indicator

Case Study #1: Nile Delta, Egypt

7. Introduction to Case Study #1. A complete irrigation performance assessment requires field data which are often not easy or expensive to obtain. This case study describes a set of indicators that can be derived from remote sensing data and that can provide objective information on irrigation performance in data scarce regions. This method was applied for all the irrigation systems in the Nile Basin in a project for the Nile Basin Initiative (NBI). A microwave version of the SEBAL model (ETLOOK) was applied together with MODIS images of 2007 to calculate actual and potential water consumption, transpiration, evaporation and biomass production. From there, the performance indicators were computed at different levels. The sustainability of the system was assessed using a long-term time-series of the Vegetation Index and the time series of soil moisture measurements obtained from remote sensing. The results for the Mahmoudia irrigation canal command area in Egypt is presented in Figure A10.2. Every performance indicator is indicated with a score. A score of 1 is related to poor performance and a 5 is an excellent performance.

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Figure A10.2: Average Indicators Scores per Tertiary Unit, Command area of Mahmoudia

Biomass production Water productivity

Crop water consumption Crop water deficit

Adequacy Beneficial fraction

Reliability Uniformity

Land sustainability Water sustainability

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8. Benefits of using remote sensing data for assessing irrigation performance. The example of Mahmoudia shows that irrigation performance requires a solid definition of the target values. Using remote sensing data for performance assessment has the following advantages: • performance indicators can be analysed at different resolutions, • the spatial variability amongst and within schemes can be encapsulated, • it is an objective way to obtain spatial and system-wide information, • it requires limited ground data, • all data collection, handling, processing and interpretation is standardized The total score of all indicators is shown in Figure A10.3; areas requiring attention are indicated.

Figure A10.3: Areas Requiring Attention in Command area of Mahmoudia

Case Study #2: Doukalla, Morocco

9. Introduction to Case Study #2. Water is the major constraint for agricultural deve- lopment under both rainfed and irrigated conditions in Morocco. The Doukkala irrigation scheme is an example where irrigation water demand exceeds water supply. As a consequence, the irrigation sector has to utilize water resources more productively. In this context, the Moroccan government stimulates a rational use and exploitation of water resources for irrigation. The Programme National d’Economie d’Eau d’Irrigation (PNEEI) is an example that foresees the conversion from flood to drip irrigation of an area of about 550,000ha. It is in this framework that FAO and the Office of Regional Agricultural Development of Doukkala (ORMVAD) and the Spanish Ministry of Agriculture (MARM), have implemented the “Projet Pilote d’économie et de valorisation de l’eau d’irrigation dans le perimeter des Doukkala” (GCP/MOR/033/SPA). The project’s objective is to develop practical conditions and arrangements to improve water efficiency and reduce water scarcity at the level of both farmers and the Office. 10. Quantification of land and water productivity. An important element of successful operational irrigation systems is crop production in relation to the depletion of irrigation water by means of crop evapotranspiration. In this project, land and water productivity in the Doukkala irrigation scheme is quantified with remote sensing data (Figure A10.4). Monthly growth indicators such as actual/potential biomass production and actual/potential transpiration are calculated for every field.

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Figure A10.4: Average soil moisture for the irrigation season in Doukalla, Morocco

Note: The blue areas with values >0.6 have sufficient water available for a favorable crop production

11. Identification of land cover and crop type. A maximum likelihood classification was performed to produce spatial information on land cover and crop type. Wheat is the major winter crop cultivated in ORMVAD (78,687ha). In addition to that, 17,510ha of faba beans and 7,051ha of sugar beets are identified. In the summer months most of the fields are idle. The main summer crop is maize (6,718ha). A variety of vegetables is cultivated, covering 7,554ha during the summer months.

12. Estimation of crop yields. The average fresh crop yield in the project area for wheat is 3,414 kg/ha, with a standard deviation of 1,516 kg/ha (cv=44.4%). The 98% percentile value is 6,469 kg/ha, being a good indication of the maximum attainable yield under the prevailing conditions of Doukkala. The average fresh yield of faba beans is 3,678 kg/ha (sd = 1,210 kg/ha: cv=32.9%), of sugar beets 47,780 kg/ha (sd = 19,788 kg/ha: cv=41.4%) and of maize 3,995 kg/ha (sd = 1,915 kg/ha: cv=47.9%). The 98% percentiles are 5,696 kg/ha, 98,369 kg/ha and 7,182 kg/ha respectively. The yield gap is the difference between actual and potential yield. The yield gaps as a percentage of the mean value are 32.7%, 23.4 %, 28.6% and 44.3% for wheat, beans, beets and maize respectively. Hence maize shows the largest yield gap and beans of the lowest yield gap.

13. Estimation of water productivity. The average crop water productivity of wheat is 0.93 kg/m 3, with a standard deviation of 0.11 kg/m 3(cv=11.8%). The worldwide average value is 0.98 kg/m 3. For faba beans this is 1.08 kg/m 3 (sd = 0.12 kg/m 3: 11.1%). On average 14.20 kg of sugar beets is produced using 1 m3 water, with a standard deviation of 1.60 kg/m 3 (cv=11.3%). The crop water productivity of maize is 1.18 kg/m 3 (sd=0.20 kg/m 3: cv=11.3%). The worldwide average value for maize is 2.25 kg/m 3. The variability of water productivity is with an average cv of 12.8% more uniform than for crop yield (average cv=41.6%), which is related to the existing positive relationship between crop yield and crop evapotranspiration. This project demonstrates that crop yield and crop water productivity have a distinct variability within Doukkala. The

AHT / UBI / UNICON 110 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 10 location of zones with lower and higher values reveal that there is a clear relationship with the location of the canals and their operations.

Figure A10.5: Example of Crop Water Productivity

Note: Areas with low and high productivity are indicated

Operational Web-Based Services

14. Web-based services for remote sensing data. The number of web-based services on remote sensing data is expanding. More agencies, irrigation districts and farmer organizations have a preference to receive the newest satellite picture of their own interest. That can be a particular canal area, village or an individual field. While these examples are more related to agricultural monitoring and to water resources conditions, they have a link to the withdrawals, application and consumptive use of irrigation water. Here is a list with examples that show how data can be disseminated and viewed: www.watplan.com : water resources Incomati Basin www.fruitlook.co.za : on-farm irrigation and fertilizer management in Western Cape www.sugarcanelook.co.za :regional water management sugarcane, Mpumalanga (S. Africa) www.grainlook.co.za : regional water management cereals, Northern Cape (S. Africa) www.grapelook.co.za : water productivity of grapes in Western Cape (S. Africa) www.fieldlook.ca : irrigation and fertilizers potato farms in Alberta (Canada) www.fieldlook.ru : crop production monitoring in Russia

By having all data being archived, it is now also possible to send this information to mobile phones. Some first projects to inform small holder farmers in developing countries on irrigation information are under execution. www.smartict-africa.com : smart-ict in Egypt, Sudan and Ethiopia www.fieldlook.com.eg : sending messages to Egyptian farmers www.fieldlook.com.et : sending messages to Ethiopian farmers

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References

Bastiaanssen W.G.M. and Perry C.J. (2009). Large Scale Irrigation Practices in the Nile Basin : Best practices, weaknesses and opportunities , NBI-LSI report part of the Efficient Water Use for Agricultural Production (EWUAP), January 2009. Bastiaanssen, W.G.M., Molden D.J. and Makin I.W. (2000). Remote sensing for irrigated agriculture: examples from research of possible applications . Agricultural Water Management, 46(2), 137-155. Bastiaanssen, W.G.M. and Bos M.G. (1999). Irrigation performance indicators based on remotely sensed data: a review of literature . Irrigation and Drainage Systems, 13, 291-311. Bos, M.G., Burton M.A. and Molden D.J. (2005). Irrigation and drainage performance assessment, practical guidelines ICID & IWMI . CABI publishing, 158 pp. Bos, M.G., Murray-Rust D.H., Merrey D.J., Johnson H.G. and Snellen W.B. (1994). Methodologies for assessing performance of irrigation and drainage management . Irrigation and Drainage Systems, 7, 231-261. Molden, D.J., Burton M., Bos M.G. (2007). Performance assessment, irrigation service delivery and poverty reduction: benefits of improved system management . Irrigation and Drainage, 56, 307-320. Zwart, S.J., L.M.C. Leclert (2010). A remote sensing based irrigation performance assessment: a case study of the Office du Niger in Mali . Irrigation Science (in press). Zwart S.J, Bastiaanssen W.G.M. (2007). SEBAL for detecting spatial variation of water productivity and scope for improvement in eight irrigated wheat systems . Agricultural Water Management, 89, 287-296.

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SUMMARY OF STAKEHOLDER INTERVIEWS

Department of Water Economy and Melioration in Ministry of Agricultural and Melioration

1. General observations. The Ministry of Agricultural and Melioration has been exposed to the use of RSII for operational monitoring at visits to Europe. The Ministry is very supportive of the system and assures that support will be given at Ministry and Government level. Explains is that while the main water shortage issues for irrigation are in the south of the country, that any experience in improving water productivity is welcomed and supported because irrigation water is currently not used properly. Being able to determine water productivity countrywide is also supported. The Ministry is looking forward to meet the team at the design stage of the PPTA.

2. DWEM, Directorate. DWEM emphasizes the usefulness of RSII technology and mentioned that the Gesellschaft für Internationale Zusammenarbeit (GIZ) has implemented RSII this technology in DWEM projects. The costs of the implementation of an operational system are issues of concern raised that need to be addressed. DWEM requests to allocate additional resources to include the RSII component as offer it as a grant within the project.

3. DWEM, Division of Information and Economic Analysis. At DWEM irrigation related information is collected at the national, Oblast/Basin, Rayon, village and field level. The Division of Information and Economic Analysis is responsible for the collection of this data. Climatology data (precipitation, temperature and humidity) is collected at 10 day interval from the Hydrometeorology department, Ministry of Emergency Situations . Field data (water discharge, irrigated land areas and yield data) is collected monthly by email from the Rayon offices in tabular form. Data is considered to be unreliable and no operational monitoring system is in place, resulting in the absence of a water balance for the irrigated areas. The division supports the implementation of RSII for monitoring because this can provide reliable, timely and unbiased information on water resources and crop production. This information can also aid in the further development of Basin authorities; currently the 7 Oblast regions are being reformed into 6 or 7 basin authorities, accurate data on water consumption/needs can support decision on these formations.

4. DWEM, Directorate for Water Facilities under Construction. The directorate is responsible for the design and construction and rehabilitation of irrigation schemes. At design and construction RSII is used indirectly; cadastral maps are used that are constructed with the aid of Very high resolution imagery. WP is determined based on data from the Division of Information and Economic Analysis . The directorate supports the implementation of RSII in system design and monitoring because the determination of WP of rehabilitation projects with RSII can provide reliable and accurate data required for the design stage of rehabilitation projects. Insight in WP can also benefit new designs and maintenance of existing systems.

5. DWEM, Oblast/Basin level. The Oblast/Basin level offices are responsible for investments, construction, machinery, wper/electricity and the maintenance of irrigation systems at regional level. Information is received from the Rayon level in hardcopy, digitized and reported to the Division of Information and Economic Analysis. Oblast level supports the implementation of an online IIRS monitoring system because not only would this system provide instant reliable data required for water distribution; it would also reduce time and paperwork as required now to pass Information on water use/needs from Rayon via Oblast/Basin to National level. Implementation should be at rayon level primarily, but Oblast/Basin level should have access for information/monitoring purposes. The Oblast office will give its full support at any follow up stage, such as the PPTA.

6. DWEM, Rayon level. The Rayon level offices are responsible for the primary level distribution of water. Accurate data on water consumption, water requirement and crop condition are not available during the season, resulting in poor WP and water conflicts among users. Rayon level supports the implementation of a RSSII monitoring system because it can

AHT / UBI / UNICON 113 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 11 simultaneous improve the irrigation water delivery and crop productivity thus benefitting both subsistence farmers and water managers. Also It will provide transparent Information on water consumption that can be used for the calculation of water rights. Facilities required for the operation of an on-line system (PC and Internet connection) are present at the Sarymsak Rayon office, also staff at sufficient academic level is available, but capacity building is still required. The Rayon office will give its full support at any follow up stage, such as the PPTA.

Other Divisions in the Ministry of Agriculture and Melioration

7. Kyrgyz Design Institute on Land Management (Giprozem), GIS Division. This is the main Cadastral Institute in Kyrgyzstan that records all types of land (agricultural, industrial, forestry, irrigation plots, etc). Provides cadastral information at Oblast-Rayon-District and Village level. While funded by the state budget, the institute also does project work. The Institute keeps topographic hardcopy maps for all regions from 1996. This data is often used for projects from donors, but also as basis for the design institute. The Institute has been working on electronic versions of the maps for 10 years. The institute also has a laboratory to define biomass/yield relationships, a first estimate is provided in Appendix 3.

8. Division on Crop Production, Agricultural Machinery and Crop Protection. This Division is knowledgeable about crop production and establish biomass-yield relationships. There is also experience with land cover mapping using RSII, but at a research level.

Other Central Government Ministries

9. Ministry of Education, Research Institute for irrigation, Lab for Information and Mapping Systems. The laboratory focusses on Research related geospatial information, mapping and databases primarily on project basis. The objective is to support rayon’s on the use of new technology. There is no expertise available on IIRS; satellite imagery is used as background for projects only. Available equipment are Pentium 3 PCs equipped with ArcGIS, MapInfo and AutoCad. Data available are a soil map (unknown origin), a map of Irrigation systems (produced in 2012) and some detailed maps of schemes at zone level, these have been donated by the OIP-PUI and are produced at a private company.

10. Ministry of Education, Research Institute for irrigation, Lab on irrigation and soil erosion studies. The laboratory focusses on Research related to soil erosion primarily on project basis. Data of Irrigation schemes are available in hardcopy and are being digitized by the Lab for Information and Mapping Systems. Data is available for the period 1956 - 1991: soil maps and climatic station data (temperature, humidity, wind speed and precipitation).

11. Ministry of Emergency Situations, Hydrometeorology Agency. The Agency provides climate information obtained from 36 meteorological stations and Remote Sensing. In Chui there are 2 stations available, at Talas there are 1 Detailed information on available parameters and costs are presented in Appendix 5 The agency has no Eddy covariance systems or scintollometers. Images used are NOAA, meteosat, CMA Cast and Carpana I.

Academic Institutions

12. Academy of Sciences, Institute for Water Problems. The institute focusses at environmental related research and uses Geographic Information Systems (GIS) and Remote Sensing (RS) for its studies. Recent experience is an extensive study on Issyk-Kul Lake, conducted to assess environmental issues caused by tourism. Research was done on agriculture, water resources, climate change and glaciers. Detailed maps of dams and cadastral information of villages are made using Image Interpretation of very high resolution satellite images. The Institute has no experience with PIMapping.

AHT / UBI / UNICON 114 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 11

13. Kyrgyz State University of Construction, Transport and Architecture, Department of Geodesy and Geoinformatics. The University has established a fully equipped GIS/RS lab with support of the University of Salzburg (Austria), equipped with PC`s and software (ERDAS, Idrisi, ArcGIS Suite). The Department serves as a regional study center for the UNIGIS network; students can access the distance education program including postgraduate degrees and diplomas awarded by the University of Salzburg. The curriculum covers Spatial Data Models, Databases, Spatial Statistics, GIS Analysis, Visualization and Cartography, Application Development and Interoperability/SDI. No Water Resources or Agricultural specific courses are available. The University has collaborated with the Central Asia Institute for Applied Geosciences on ADB projects.

14. Central Asia Institute for Applied Geosciences (CAIAG). The institute is an independent non-profit organization funded by GIZ, DLR and the GKR and focusses on Climate Change, Water Resources, Monitoring Systems and ICT at the regional (Central Asia) scale. The main purpose of CAIAG is assistance in scientific research in the field of geosciences: Geodynamics and geocatastrophes; Climate, water and geoecology; Use and protection of resources. Along with this CAIAG deals with the development of technical infrastructure and information management, as well as a raising the level of scientists’ education, training and capacity building. The institute has established a number of automated monitoring systems: 8 in Kyrgyz Republic, 2 in Tajikistan and 1 in Uzbekistan (with 2 more planned). The data is available to partners of the institute. The Institute runs a webservice containing Landsat Imagery, Topographic maps and locations of Data Acquisition Stations. The institute has an excellent ICT infrastructure, including a webserver with 124 TB of disk storage. The institute has collaborated with DWEM and the Kyrgyz State University of Construction, Transport and Architecture.

Other Stakeholders

15. Water User Association (WUA). Secondary and tertiary (farm) level water distribution is arranged at the community/Water User Association (WUA) level. At the Sarymsak Irrigation Scheme WUAs are available and cooperate with the Rayon DWEM offices. Presently water is distributed based on a schedule and visual inspection of crops resulting in loss of water. The WUA supports the implementation of a monitoring system because this will provide them not only with the tools to improve WP, but also makes the actual water consumption transparent. As a start the system should be implemented parallel with current practices and test fields should be selected/created to be used to gain experience with the technology. Because of the current market development with neighboring countries, mixed cropping is reduced and fields of sufficient size for IIRS monitoring are available. These are tertiary unit that consists of family plots ranging in size from 0.32ha to 1ha. To improve WP mixed cropping has been reduced in recent years thus neighboring plots grow the same crop. Crop distribution is 60% beans, 30% fodder and 10% wheat where beans yield 2 - 3 tons/Ha at 58 KGS/Kg, wheat yield 2 - 4 tons/Ha at 18 KGS/Kg and fodder yields 7 tons/Ha at 4 KGS/Kg. Field observations show that RSII monitoring is feasible at field level. The WUA will give its full support at any follow up stage, such as the PPTA.

16. World Bank, Water Management Improvement Project (WMIP). The World Bank project focusses on the improvement of off-farm Irrigation systems in the Kyrgyz Republic and is related to the World Bank On-farm irrigation project (OIP). In total 17 irrigation schemes are rehabilitated covering 71,000ha and 1 dam. Currently 2 schemes are completed, 3 more will be completed in 2012 and the remaining schemes are to be completed in 2013. While 70% of the budget is used for the rehabilitation of the systems, 30% is used for other improvements. An IT infrastructure is implemented that will connect national with Oblast/Basin level water managers using a shared Intranet. Rayon’s send reports in hardcopy to Oblast/basin level who will digitize and enter this information in a database that is accessible at Oblast/basin and national level. The system is not designed to return information to the Rayon level. The project supports the implementation of a RSII system that can provide timely and accurate information on water

AHT / UBI / UNICON 115 ADB TA8015-REG Final Report Kyrgyz Republic Appendix 11 consumption, requirement and crop production because this information can be used for both operation and design. Implementation should start with limited parameters at Rayon and field level. When the system is connected to the newly implemented IT-Infrastructure for data provision the data will also be available at Oblast/Basin and National level.

17. World Bank, On-farm irrigation project (OIP). The World Bank project focusses on the improvement of on-farm Irrigation systems in the Kyrgyz Republic and is related to the World Bank Water Management Improvement Project (WMIP). The project focusses on improving irrigation service delivery on a sustainable basis that will contribute to increased agricultural productivity among irrigation farmers. This will be achieved through further development of water users associations (WUAs) and rehabilitation and modernization of irrigation and drainage infrastructure. Currently the on-farm distribution and crop-predictions are made with the Scheme irrigation management information system (SIMIS) and CropWat models, both developed by the Food and Agriculture Organization (FAO). SIMIS is a computer program that processes information to provide crop water requirements and estimate irrigation needs at farm and canal level. CropWat is a computer program for the calculation of crop water requirements and irrigation requirements based on soil, climate and crop data that uses the Penman-Monteith methods. The project supports the implementation of a RSII monitoring system because it will provide constant near real-time accurate unbiased information required for Irrigation operation. Because it is new technology to the stakeholders, a change of mentality of both the water managers and farmers is required, thus capacity building is required. Implementation should be at the Rayon level, where the system should be run with minimal user input. This because technical knowhow at rayon level is low and while intensive training could prepare specialists, the high turnover of personnel could result in lack of expertise still. A fully automated system as demonstrated would therefore be most suitable. Because farmers visit the rayon stations frequently, hard copy maps could be handed out to farmers if required. For this the rayon’s need to be supplied with IT-equipment: pc, internet, printer if not available. Wper outages are not frequent and should thus not be an issue. Detailed cadastral information is not yet available (underway), plots are registered schematically on plot-by-plot notes (at WUA/rayon), no overview available.

18. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). GIZ main approach using RSII is to prepare local capacities for river basin analysis. Therefore the focus was on automatic classification using Landsat imagery 2011 and using Google Earth in a “hand-made” matter. Results will be available soon in the Basin Land Use Map and the Natural Hazard Map (floods, mudflows). GIZ partner in the area is the DLR (German Aerospace Centre, represented by the University of Würzburg Institute of Remote Sensing, Prof. Dr. Conrad). Subjects such as mapping of biomass, evapotranspiration or waterlogging are due to the different focus and the very limited capacities (personal, but also technical for example lacking Spatial Analyst as necessary tool of ArcGIS) not on the agenda.

19. Land and Real Estate Ltd. This private company is specialized in land surveying and makes for example 1:10.000 scale topographic maps. Has done work for the World Bank OIP Project. Provides training in map use and updating at WUA and Rayon level. Webservices and application development is not done; is not aware of the existence of any companies in Kyrgyzstan that can do this.

20. Rural Advisory Services (RAS). RAS is a nonprofit NGO that is contracted by different international projects (GIZ, World Bank etc.). Has done training for DWEM, WUA and farmers at Oblast and Rayon level. Training on all farming practices from sowing to harvest and irrigation practices as well as use of fertilizers, crop protection and marketing. Demonstration plots are available in all rayon’s, and have meteorology equipment installed, such as rain gauges but also ET Penman Evapotranspiration pans. Measure yield/biomass relations based on crops available on demonstration plot.

AHT / UBI / UNICON 116 CENTRAL AND WEST ASIA

Developing Water Resources Sector Strategies in Central and West Asia

Kyrgyz Republic

(TA8015-REG)

Submitted to: Asian Development Bank

EXECUTIVE SUMMARY

Submitted by:

June 2013

ADB TA8015-REG Executive Summary Kyrgyz Republic

EXECUTIVE SUMMARY

Developing a water resources sector strategy for the Kyrgyz Republic. The Kyrgyz Republic has long been facing water stress, and considers the further development of the water resources sector (WRS) as a high priority in its national development strategy. For this reason, and at the request of the Government of the Kyrgyz Republic (GKR), ADB provided regional technical assistance (RETA) to assist the Government with the development of a water resources sector strategy and the identification of investment projects aimed at addressing key challenges identified by the strategy. 1 These tasks were accomplished through an innovative process that is described in detail in this working paper. The process consists of three steps, all of which were undertaken in close consultation with key stakeholders in the WRS sector: • Step #1: Assess water resources sector. This step identifies key challenges in the sector, based on a comprehensive analysis of water resources, WRS management, irrigation systems management and irrigated agriculture. The assessment focused on irrigated agriculture, which accounts for over 90% of the country’s water consumption. • Step #2: Define water resource sector strategy. The output of this step is a WRS strategy that addresses the key challenges identified under Step #1. • Step #3: Identify high-priority investment projects. This step involves the screening and ranking of investment projects aimed at addressing the key challenges. The output of this step is a series of draft project concept papers (PCPs).

Strategic merits of the innovative process. • Strategic merits for the recipient country. The process has helped GKR to formulate its WRS challenges in an objective and transparent manner, and identify key challenges and investment projects to help overcome these challenges. This enables the country to reach agreements with development partners about the GKR’s most important needs for investment and reform and mobilize resources to address these needs. • Strategic merits for ADB. From ADB’s perspective, the process has several additional merits, the most important of which are: (i) contribute to the implementation of the Water Operational Plan (WOP) for 2011-2020, (ii) contribute to formulation of the ADB’s next Country Partnership Strategy (CPS) for the Kyrgyz Republic, and (iii) contribute to the development of ADB’s Country Operation Business Plan (COBP).

Strategic Merits and Key Outputs of Project Identification Process under RETA Strategic Key Outputs Merits #1 WRS Assessment #2 Strategy #3 Draft PCPs <<< Investment Prioritization Process Well Understood >>> For DMCs WRS challenges identified Priorities identified based Feasible projects identified and assessment gap filled on WRS assessment and through identification of strategic gap filled challenges and priorities <<< Project Identified and Project Prepared Efficiently >>> For ADB Contribute to WOP’s Strong commitment from Contribute to WOP output output and CPS DMCs (expected) and COBP development COBP = country operation business plan, CPS = country partnership strategy, DMC = developing member country, PCP = project concept paper, RETA = regional technical assistance, WOP = water operational plan

1 Developing Water Resources Sector Strategies in Central and West Asia (TA 8015-REG). The RETA was approved in 2011, and implemented from April 2012 to August 2013.

AHT / UBI / UNICON i ADB TA8015-REG Executive Summary Kyrgyz Republic

Outputs of Step #1: key challenges in the irrigated water sector. Based on the results of the sector assessment and stakeholder consultations, the following challenges were deemed most pressing in the irrigated water sector of the Kyrgyz Republic: • Sustainable irrigation system maintenance. The challenge is to arrest the current decline system maintenance and to achieve sustainable maintenance in the future. • Improve irrigation water delivery. This requires ensure the sustainability of irrigation system operations. • Improve farm productivity. Poor irrigation water delivery is one of many constraints that adversely affect agricultural productivity. To better utilize the improved water service deliveries, it is necessary to overcome non-water constraints, such as limited access to credit, lack of training, and the high cost of agricultural inputs.

Outputs of Step #2: a WRS strategy aimed at addressing the key challenges. The recommended strategy consists of series of priority solutions for three subsectors in agriculture. These subsectors are (selected priority solutions in brackets): • Subsector #1: Improving main and inter-farm system operation and maintenance (through, inter alia , improvement of main and inter-farm irrigation infrastructure works, im- proved flow monitoring and capacity building of water resource management authorities). • Subsector #2: Improving on-farm system operation and maintenance (through, inter alia , improvement of on-farm irrigation infrastructure works, improved flow monitoring and capacity building of water user associations) • Subsector #3: Improving farm productivity (through improved access to credit, increased use of fertilizers, training, and improved access to export markets).

Outputs of Step #3: draft project concept papers (PCPs). Investment projects on a long list prepared by GKR were screened and ranked by their suitability for implementing the recommended strategy. Upon completion of this process, GKR requested ADB to prepare PCPs for two investment projects with a combined cost of about US$25 million: (i) the reconstruction of Sarymsak canal, and (ii) the construction of water storage pond on Shamshy River. Together, the projects would rehabilitate about 2,600 ha of existing irrigated land, and develop 2,000 ha of new land for irrigated agriculture.

Conclusions and recommendations

The TA was based an innovative process for water resources sector assessment, strategy formulation and identification of priority investment projects. The merits of the process being that it focused on the sub-sector of principal consumptive water use, irrigated agriculture, in which it identified the key challenges to improving productivity to land and water. And stakeholder participation in identification and ranking of issues and challenges in phase 1 and in ranking of priority investment projects in phase 2.

While the process was rapid and focused, in Kyrgyzstan it was constrained by several factors, including limited timeframe for collection and analysis of information and data on water resources and management institutions, changing ADB country priorities and limited quality information on priority investment projects. Future TAs adopted the innovative process could be improved with the inclusion of an inception phase for review and modification of the process to DMC country capacity and procedures, prior coordination and agreement with DMC agencies and in RETAs ADB prioritization of country inputs and outputs.

AHT / UBI / UNICON ii CENTRAL AND WEST ASIA

Developing Water Resources Sector Strategies in Central and West Asia

Kyrgyz Republic

(TA8015-REG)

Submitted to: Asian Development Bank

KNOWLEDGE PRODUCT

Submitted by:

June 2013

ADB TA8015-REG Knowledge Product Kyrgyz Republic

CURRENCY EQUIVALENTS

Currency Unit – Kyrgyz Som (KS)

(26 August 2013) KS1.00 = $0.020683 $1.00 = KS48.35

ABBREVIATIONS ADB – Asian Development Bank BCR – benefit/cost ratio COBP – Country Operation Business Plan CPS – Country Partnership Strategy DMC – Developing Member Country DWEM – Department of Water Economy and Melioration FAO – Food and Agriculture Organization GKR – Government of the Kyrgyz Republic MoAM – Ministry of Agriculture and Land Administration MOF – Ministry of Finance NGO – Non-governmental organization NWC – National Water Council O&M – operations and maintenance OIP – On-Farm Irrigation Project PCP – Project Concept Paper RAS – Rural Advisory Services SU – support unit RETA – Regional Technical Assistance WOP – Water Operational Plan WRS – water resources sector WUA(F) – Water Users Association (Federation)

WEIGHTS AND MEASURES Ha – hectare km – kilometer m – meter m3 – cubic meter

NOTES (i) The fiscal year (FY) of the Government of the Kyrgyz Republic ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends. (ii) In this report, "$" refers to US dollars.

AHT / UBI / UNICON i ADB TA8015-REG Knowledge Product Kyrgyz Republic

CONTENTS Page

1 INTRODUCTION 1

2 PROJECT IDENTIFICATION PROCESS 3 2.1 Overview of Process 3 2.2 Implementation Arrangements 4

3 ASSESSMENT OF WATER RESOURCES SECTOR 6 3.1 Process for Assessment of the Water Resources Sector 6 3.2 Summary of Assessment of the Water Resources Sector 7 3.3 Identification of Key Challenges in the Water Resources Sector 11

4 WATER RESOURCES SECTOR STRATEGY 12 4.1 Process for Identification of Water Resource Sector Strategies 12 4.2 Prioritization of Water Resource Sector Strategies 14 4.3 Recommended Water Resource Sector Strategy 14

5 RANKING AND SELECTION OF INVESTMENT PROJECTS 17 5.1 Process for Identification of Potential Investment Projects 17 5.2 Screening of Potential Investment Projects 17 5.3 Ranking of Potential Investment Projects 19 5.4 Selected Investment Projects 21 5.5 Development of Project Concept Papers 22

6 CONCLUSIONS AND RECOMMENDATIONS 23 6.1 Summary of Key Findings 23 6.2 Lessons Learnt 24

APPENDIXES Problem Tree 25 List of Web-Linked Documents 26

AHT / UBI / UNICON ii ADB TA8015-REG Knowledge Product Kyrgyz Republic

1 INTRODUCTION

1. Background. In 2005, the Parliament of the Kyrgyz Republic passed a Water Code that set out principles, institutional arrangements and processes for integrated water resources management in the country. The Code also stipulated the need for a National Water Strategy. In 2011, the Department of Water Economy and Melioration (DWEM) in the Ministry of Agriculture and Melioration prepared a draft concept paper for such a strategy, within the framework esta- blished by the Water Code. In the same year, ADB approved a regional technical assistance (RETA) project designed to assist the Government of the Kyrgyz Republic (GKR) and the governments of two neighboring countries with the development of water sector strategies to be used for investment planning. 1 The purpose of developing these strategies was to address key challenges in the irrigation water sector in the short and medium term through the identification of high-priority investments. During 2012 and 2013, the RETA assisted the governments of the three countries with the preparation of water sector strategies, and the analysis of investment projects aimed at addressing key challenges identified by the strategy. This working paper describes the innovative process that was used by the RETA to identify high-priority projects in the Kyrgyz Republic, highlights its strategic merits and summarizes its outputs.

2. Rationale for inclusion of the Kyrgyz Republic. The Kyrgyz Republic was selected for inclusion in the RETA because the country: (i) has been facing water stress, 2 (ii) has prioritized the water resources sector (WRS) in its national development strategy, (iii) presented potential windows for highlighting the WRS in its country partnership strategy (CPS) with the Asian Development Bank (ADB), and (iv) was considered a likely candidate for water-related project financing from ADB once strategies had been developed and potential projects identified.

3. Summary of contents. The remainder of this working paper is divided in five chapters: • Chapter 2: Project Identification Process. This chapter summarizes the innovative process that forms the subject matter of this working paper, and describes its key outputs and the strategic merits for both Developing Member Countries (DMCs) and ADB. The process consists of three elements, each of which will be described in the subsequent chapters. These elements are: (i) assessment of the water resources sector, (ii) identification of a water resource sector strategy, and (iii) identification of feasible projects aimed at addressing strategic gaps. • Chapter 3: Assessment of Water Resources. This chapter discusses the four key elements of the process that was used to assess the water resources sector of the Kyrgyz Republic, which consists of assessment of: (i) the water resource itself, (ii) water resources management, (iii) irrigation system management, and (iv) irrigated agriculture. It then discusses the top-three key challenges resulting from the assessment. • Chapter 4: Water Resource Sector Strategy. This chapter establishes principles for the prioritization of strategies aimed at resolving the three key challenges resulting from the water resources assessment in Chapter 3. Based on these principles, a water sector strategy was defined. • Chapter 5: Ranking and Selection of Projects. This chapter presents a methodology to assist decision-makers in the Government of the Kyrgyz Republic with the prioritization of investment projects proposed to implement the water sector strategy described in Chapter 4. It also presents the key features of the two high-priority

1 The RETA also provided support to the governments of Tajikistan and Uzbekistan with the preparation of water sector strategies for investment planning. Because the RETA did not cover trans-boundary investments, the process used for the identification of projects in the other countries is presented in separate working papers. 2 The TA uses one of two definitions of water stress, which is the ratio of withdrawals to available resources. The 2006 United Nations World Water Development Report (UNDP, 2006; World Bank and IMF, 2008) presents the Relative Water Stress Index, defined as the “ratio of total water use to renewable water supply”. Water stress exists for ratios above 40%, while physical scarcity is reached for ratios above 75% (UNESCO, 2006).

AHT / UBI / UNICON 1 ADB TA8015-REG Knowledge Product Kyrgyz Republic

investment projects that were selected by DWEM in consultation with ADB and other stakeholders in the country’s water sector. For these two projects, Project Concept Papers (PCPs) were prepared. • Chapter 6: Conclusions and Recommendations. This final chapter identifies lessons learned regarding the efficiency, effectiveness and potential replicability of the process in other countries.

4. Disclaimer. The contents of this working paper do not necessarily reflect the views of ADB or the Government of the Kyrgyz Republic.

AHT / UBI / UNICON 2 ADB TA8015-REG Knowledge Product Kyrgyz Republic

2 PROJECT IDENTIFICATION PROCESS

2.1 Overview of Process

5. Key elements of the identification process. The approach that was used by the RETA to identify high-priority investment projects in the water resources sector in the Kyrgyz Republic consists of three steps, all of which were undertaken in close consultation with key stakeholders in the sector. The three steps and their outputs are the following (see also Table 1): (i) Step #1: Assess water resources sector. This step identifies key challenges in the sector, based on a comprehensive analysis of water resources, WRS management, irrigation systems management and irrigated agriculture. (ii) Step #2: Define water resource sector strategy. The output of this step is a WRS strategy that addresses the key challenges identified under Step #1. (iii) Step #3: Identify high-priority investment projects. This step involves the screening and ranking of investment projects aimed at addressing the key challenges. The output of this step is a series of draft PCPs.

6. Strategic merits for the recipient country. Before the implementation of the RETA, the Kyrgyz Republic had neither strategies nor plans in place for prioritizing investments in the WRS sector. The country was also facing difficulties in implementing policy and institutional reforms in the WRS sector that were urgently required to arrest the decline in water-use efficiency, water productivity, and agricultural productivity. This created uncertainty about long-term government commitments to improvements in the WRS, and made it difficult for development partners to reach agreements with governments on strategic directions, identify the government’s most important needs for investment and reform, and––ultimately––stalled the financing of much- needed investments in the sector. The innovative process described in this working paper helped GKR to formulate its WRS challenges in an objective and transparent manner, and identify key challenges and investment projects to help overcome these challenges.

Table 1: Strategic Merits and Key Outputs of Project Identification Process under RETA Strategic Key Outputs Merits WRS Assessment Strategy Draft PCPs <<< Investment Prioritization Process Well Understood >>> For DMCs WRS challenges identified Priorities identified based Feasible projects identified and assessment gap filled on WRS assessment and through identification of strategic gap filled challenges and priorities <<< Project Identified and Project Prepared Efficiently >>> For ADB Contribute to WOP’s Strong commitment from Contribute to WOP output output and CPS DMCs (expected) and COBP development formulation COBP = country operation business plan, CPS = country partnership strategy, DMC = developing member country, PCP = project concept paper, RETA = regional technical assistance, WOP = water operational plan

7. Strategic merits for ADB. From ADB’s perspective, the process has several additional merits, the most important of which are: (i) Contribute to the implementation of the WOP. ADB’s Water Operational Plan (WOP) for 2011-2020 includes a water lending target of up to $2.5 billion per year. Through the development of PCPs, the RETA supported the identification of bankable investment projects.

AHT / UBI / UNICON 3 ADB TA8015-REG Knowledge Product Kyrgyz Republic

(ii) Contribute to formulation of the CPS. The WRS assessment helped to update the sector assessment in formulating ADB’s next CPS for the Kyrgyz Republic. (iii) Contribute to development of COBP. The innovative process enables both DMCs and ADB to register feasible projects in ADB’s Country Operation Business Plan (COBP) as draft PCPs could be developed under the RETA in consultation between ADBs’ relevant division and the focal ministry well in advance of the formulation of COBP. Since draft PCPs are developed through rapid screening process incorporating technical feasibility, economic viability, and safeguard concerns with key RETA consultants’ inputs, the risk that such project will turn out to be in unfeasible is low compared to projects that did not pass such screening process.

8. Limitations to the approach. The main limitations to the project identification process can be summarized as follows: • It is recognized that the proposed approach does not guarantee prioritization of the water resources sector in ADB’s next CPS, because the inclusion of a sector in a CPS will also be based on factors unrelated to the process in this working paper, such as the assessment of the performance of WRS’s projects and technical assistances in the past, ADB’s strategic comparative advantage in WRS vis-à-vis other sectors. • The paper also recognizes a limit to contribute to the WOP. The development of the WRS assessment under the RETA could not fully meet the requirement of the water sector assessment as envisaged in the WOP. This is because the WRS defined under the RETA covered: (i) integrated water resources management, (ii) irrigation, drainage, and flood protection, (iii) water-based natural resources management; and (iv) irrigated land-based natural resources management. However, it did not cover hydropower, urban and rural water supply, environment, water quality, ground water. Therefore, additional supplementary inputs were required to produce the water assessment to meet its requirement.

2.2 Implementation Arrangements

9. The ADB was the TA lead implementing agency with the CWRD’s Agriculture, Natural Resources and Environmental Agencies as focal points. In Kyrgyzstan the focal points (3) were; representatives of the Ministry of Agriculture (2) and Melioration and the Agriculture and Industry Development Division (Prime Minister’s Office) (1). The principal focal point coordinated activities between the TA consultant and key government and non-governmental stakeholders for data and information acquisition, consultation, workshops and field visits.

10. The TA was scheduled in two phases, with the first phase preparing an assessment of the water resources sector for the identification of key challenges, developing a strategy to address key challenges and methods for screening and ranking priority projects (steps 1 and 2), and the second phase for the selection of priority investment projects and development of project concept papers (step 3). In Kyrgyzstan the phases were implemented more or less sequentially, but overlapping with activities in the other two countries (Uzbekistan and Tajikistan).

11. The TA consultant team comprised of six international specialists; Team Leader/Water Resources Management, Irrigation Management, Salt Management, Agriculture, Economist and Remote Sensing and Image Interpretation with a combined input of about 8 man months and three national specialists; Water Resources Management, Irrigation and Salt Management and Agriculture with a combined input of 11 man months.

12. Stakeholder participant included two workshops, the principal purpose of the phase 1 workshop was present of sub-sector assessments and identification and clarification of

AHT / UBI / UNICON 4 ADB TA8015-REG Knowledge Product Kyrgyz Republic

key challenges, and the phase 2 workshop presentation of the screening of priority projects and ranking (by stakeholder) investment projects. As follow-on from the phase 2 workshop field verification visit were held to the shortlisted project areas, to meet with local stakeholders including farmers, system managers and government engineers.

13. Constraints in the implementation arrangements included: • Limited time; the allocated timeframe for 4 months for three countries for phase 1 activities was unrealistically low given the scope of the work, logistics and availability of resources. • Resources; the allocation of man inputs was inadequate for the scope of the phase 1 activities for a number of international specialists. • Prioritization; there were constraints on outputs due to the need to meet ADB shifting country priorities during implementation which disrupted the work programme and delayed outputs. • Coordination; the implementation arrangements were constrained by limited coordination between ADB and the DMC at project initiation, consequently creating delays in formalising agreement on consultation with stakeholders and access to information and data sets. • Projects information; there was limited quality information on proposed investment projects (something not forseen in the TA TOR) and therefore limited project analysis for screening and ranking of priority projects.

AHT / UBI / UNICON 5 ADB TA8015-REG Knowledge Product Kyrgyz Republic

3 ASSESSMENT OF WATER RESOURCES SECTOR

3.1 Process for Assessment of the Water Resources Sector

14. Definition of water resources sector. The water resources sector was defined as: (i) integrated water resources management, including climate change adaptation and mitigation, (ii) irrigation, drainage, and flood protection (irrigation): (iii) water-based natural resource management, and (iv) irrigated land-based natural resources management (sustainable land management and conservation agriculture activity areas). The objective of the assessment was to identify key challenges in the sector for which priority projects could be developed for ADB investment. The approach was intentionally non-holistic but focused on key sub-sectors and key challenges within these sub-sectors, due to the limited RETA time and resources.

15. Elements of the assessment process. The assessment process consisted of: (i) Water resources assessment. The assessment of water resources (supply, consumption and demand) was undertaken for the country's six principal river basins. Key elements of which is the derivation of water stress indicators (per capita supply, withdrawal/supply ratio and demand/diversion ratio) and water productivity for the main irrigated agricultural crops (wheat, barley, corn and cotton). The assessment also reviewed the status of climate change impacts, salinity risk, flood risk management and potential impact of hydropower production on irrigated agriculture. Information and data for assessment of water supply, consumption and demand were from published international and regional (Scientific Information Center, Interstate Commission for Water Coordination and FAO) data sets and as supplied from the implementing agency (Ministry of Agriculture and Melioration or MoAM). (ii) Assessment of water resources management. The process presented a review of the current status and planned legal and institutional reforms of the water sector management. It also summarized the strengths, weaknesses, opportunities and threats of the lead water management institutions. (iii) Assessment of irrigation system management. Irrigation is the predominant consumptive water use in the Kyrgyz Republic, accounting for more than 90% of annual consumption. The approach to assessment of the sub-sector was to describe and analysis the organization and management of the irrigation systems at regional and local levels. Since the early 1990s system ownership and management has undergone a progressive transformation from state to community control. This has in particular included the formation of Water User Associations and a start to the federation of WUAs. Information and data on systems and management were sourced from previous development projects (ADB and World Bank) and from the lead irrigation agencies, principally the Department of Water Economy and Melioration in MoAM. (iv) Assessment of irrigated agriculture. The assessment evaluated the current and potential productivity of the sub-sector, which is generally low and been declining in recent years, and key issues and constraints to improving agricultural productivity. These were further assessed and ranked during a stakeholder workshop (along with the above sub-sector issues and constraints). Section 3.2 summarizes the key findings of the sub-sector assessments. The issues and constraints from the assessment were synthesized into three key challenges in consultation with key stakeholders in the water resources sector.

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3.2 Summary of Assessment of the Water Resources Sector

A. Water Resources Assessment

16. Water balances by river basin. In 2011, average annual water availability (supply) in the Kyrgyz Republic was about 18 km 3, allowing for downstream riparian allocations (Table 2). Water diversions are estimated at about 7.65km 3 per year, of which 49% was consumed. Total water demand was estimated at 8.38km 3, or about 10% higher than total diversions. While the difference is not high, it may indicate that actual crop evapotranspiration (ETa) is lower than the potential (ETc), possibly because water delivery constraints.

Table 2: Water Balances by River Basin, 2011 Annual Volume (km 3) Stress Indicators* River Basin Supply Diversion Consump- Demand PCS WSR DDR tion (m 3/cap) (%) (%) Amu Darya 0.5 0.13 0.05 0.13 5,480 26 -1 Chui 3.9 2.36 1.11 2.48 2,180 61 -5 Issyk-Kul 1.6 1.07 0.45 1.21 3,550 67 -11 Syr Darya 4.9 2.93 1.74 3.22 1,660 60 -9 Talas 1.0 0.92 0.37 0.94 4,440 92 -2 Tarim 6.2 0.24 0.08 0.24 <10,000 4 -3 Total 18.1 7.65 3.79 8.38 3,250 42 -9 Sources: Diversion and consumption based on DWEM records for WUA water diversion, supply and irrigated area for 2011, Demand calculated for main crop groups (wheat, cotton, fodder, fruits, vegetables and others) per river basin based on Cropwat (ETc), assumed overall system efficiency (50%), and assumed per capita consumption for municipal and industrial water diversions and consumptions. * PCS = Per Capita Supply. WSR = Withdrawal/Supply Ratio. DDR = Demand Diversion Ratio.

17. Water stress indicators. There is substantial variation in water stress among river basins, as illustrated by following indicators: (i) PCS (Per Capita Supply). For the country as a whole, water supply in 2011 was about 3,250 m 3 per capita, but the average masks substantial differences among basins. (ii) WSR (Withdrawal/Supply Ratio). The average WSR in the Kyrgyz Republic is about 42%, but ranged in 2011 from 4% in Tarim to over 90% in Talas. The WSR values indicated that, with the exception of Tarim, there is substantial potential to increase the utilization of water for irrigated agriculture. (iii) Demand-Diversion Ratio (DDR). Total water diversions were about 9% lower than calculated demand, but varied from close to parity in Amu Darya, to a deficit of 11% in the Issyk-Kul basin.

18. Water productivity. In most parts of the Kyrgyz Republic, the water productivity for fully irrigated wheat, unconstrained by water and with sufficient other inputs, should range from 0.6kg/m 3 to 0.8kg/m 3. This estimate was based on a potential yield of 4 ton/ha and annual water demand (ETa) of 6,000m 3/ha. 3 In recent years, water productivity of wheat was less than 0.5kg/m 3––or less than 50% of potential values and barley less than 0.4 kg/m 3. The reasons for substantial gap between actual and potential yields include irrigation constraints, differences between actual water demand (ETa) and calculated water demand (ETc) because of constraints to water delivery. These constraints are, in turn, due to limits on infrastructure and management, and to limits on farm inputs.

3 IWMI, 2007. A Comprehensive Assessment of Water Management in Agriculture (CAWMA). London

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19. Conclusions of water resources assessment. These can be summarized as follows: (i) water diversions are declining, partly because of a reduction in the irrigated area, and possibly also because of a reduction in cropping intensities. (ii) delivery efficiency is declining, and is now substantially lower than the early 1990s, (iii) because of climate change, droughts will become more frequent and more severe, whereas flood risks are expected to decline. (iv) the Kyrgyz Republic has a far higher exposure to the risk of drought than to flood or landslide risks.

B. Assessment of Water Resources Management

20. Legal and planning framework. The legal, policy and planning framework for the water sector in the Kyrgyz Republic consists of a large number of laws, circulars, regulations, planning documents, of which the most important are the Water User Law of 2002, the Water Code of 2005 and the National Water Strategy (which currently being developed).

21. Key institutions in the water resources sector. These are: (i) The Department of Water Economy and Melioration (DWEM) in MoAM. Once the Water Code is implemented the DWEM will be responsible for the management of user- owned off-farm and on-farm irrigation systems. At the provincial ( oblast ) and district (raion ) levels, DWEM will be replaced by Basin Water Administrations and Raion Water Administrations, respectively. DWEM's annual budget for 2011 was about $14 million, of which approximately $10 million was allocated for O&M of government-owned irrigation infrastructure. This is substantially lower than the minimum required amount for sustainable O&M, which may be as high at $22 million per year (assuming an average O&M cost of $30 per hectare for 737,000 ha of Government-served systems). (ii) Water User Associations (WUAs). These associations were established to manage off-farm and on-farm irrigation systems in lieu of the dissolved government-owned farms. In 2011, there were 478 WUAs in the country, covering a combined irrigated area of about 737,000 Ha, or 72% of the total. Some WUAs have formed federations (WUAFs).

22. Conclusions of water management assessment. These are: (i) Need for investment planning in accordance with the Water Code of 2005. When implemented in full, the Water Code and National Water Strategy will provide the policy and planning frameworks for water sector management and development. However, pro- gress with the implementation of the code has been slow, and is constraining develop- ment of integrated water resources management. While delays in implementation do not constrain the identification and prioritization of water sector investment projects, such projects should be planned to be compliant with the Code's goals and principles. (ii) Potentially important role for WUA federations. The approval of proposed amend- ments to the 2002 Water User Law is expected to increase the number of WUAFs which will enable WUAFs to play a more expansive role in irrigation system management. (iii) Limited institutional capacity of water management institutions. The institutional capacity of DWEM and other institutions involved in water resource management is severely constrained by limited financial and human resources. These constraints adversely affect the sustainability of the operation and maintenance of the country's irrigation systems.

C. Assessment of Irrigation System Management

23. A typology of causes of poor performance of irrigation systems. The poor performance of main, on-farm and farm level irrigation systems in the Kyrgyz Republic adversely affects irrigation water delivery and thereby agricultural productivity. The root causes

AHT / UBI / UNICON 8 ADB TA8015-REG Knowledge Product Kyrgyz Republic of poor performance are: (i) limited investment and O&M budgets, and (ii) obsolete irrigation system design, and (iii) limited institutional capacity. These causes have contributed to poor system operations, and poor system maintenance, and thereby to a deterioration of irrigation infrastructure throughout the country.

24. Limited investment and O&M budgets. Underfunding of O&M remains a major constraint to the sustainability of irrigation systems at all levels. Required O&M costs are estimated at about $25 million per year. However, actual funding levels from Government and irrigator service charges are approximately $13 million, or about half the required level.

25. Obsolete irrigation system design. The existing irrigation infrastructure was designed and constructed over 30 years ago, based on design and construction standards for design and construction developed by the former Soviet Union. In the country there have been considerable changes in farming systems, with the breakup of state farms. Where previously fields were 25- 50-75ha on the collective and state farms they are now closer to 2ha In the south and 8-10ha in the north. It is necessary to put more control structures and gates in the rehabilitated systems. This along with other changes will improve performance through a reduction in percolation and run-off losses, which would result in lower maintenance costs. Other improvements include: canal lining or alternative lining technologies, replacing siphons, addition or improvement of de- silting structures and reconstructing or adding measurement structures.

26. Limited institutional capacity. Low and declining budgets have adversely affected the institutional capacity of DWEM and other water management institutions. While there have been considerable efforts in the establishment of WUAs, there is still a need to increase their capacity to effectively and efficiently operate and maintain the tertiary infrastructure through, inter alia , asset management planning and planning and supervision of maintenance works.

27. Impacts of poor performance. • Poor system operations. The limited reliability of water delivery at tertiary levels (and probably also main system level) is a constraint to farm productivity, and is often caused by sub-optimal operation of irrigation systems. Common causes of poor operation are: (i) poor scheduling of irrigation cycles (application duration and return intervals), and (ii) poor regulation of delivery flow rates due to operator error or inadequate equipment. • Poor system maintenance. The Kyrgyz Republic has witnessed a sustained deterioration of its irrigation infrastructure over the past 30 years. Underfunding, together limited institutional capacity and obsolete system design, have resulted in poor maintenance of irrigation systems. This, in turn, has led to a decline in water diversions and a reduction in the irrigation area (which is now lower than it was in 1990).

D. Assessment of Irrigated Agriculture

28. Key features of irrigated agriculture in the Kyrgyz Republic. Most farmers in the Kyrgyz Republic may be classified as subsistence farmers (with smallholdings of less than 5ha) and make up 97% of the farming enterprises. The most recent agricultural census in 2002 showed that 83% of land owners have less than one hectare and about 41% of cultivated land comprises farms of less than 10 hectares. The irrigated agriculture sub-sector is characterized by low productivity, the primary causes of which were identified as: (i) lack of agricultural machinery and limited capital investment, (ii) high cost and limited availability of agricultural inputs (fertilizer, seeds and fuel), (iii) poor irrigation management and need for irrigation system rehabilitation, and (iv) lack of agronomic and pest management training.

29. Lack of agricultural equipment and limited capital investment. In 2007, the agricultural sector accounted for over 30% of total GDP, but its share in outstanding bank loans was less than 5%. Partly because of limited access to credit, there is a major shortage of

AHT / UBI / UNICON 9 ADB TA8015-REG Knowledge Product Kyrgyz Republic agricultural equipment throughout the country. According to FAO, the use of outdated machinery and the resulting delays in harvesting are causing substantial losses, which are 15- 25% higher than normal production losses. In 2007 alone, an estimated 110,000-185,000 tons of wheat was lost, with an export value of $25-40 million. 4

30. High cost and limited availability of agricultural inputs. In 2010, total fertilizer application was about 78kg per hectare, less than half the amount recommended by the Ministry of Agriculture. 5 The low level of fertilizer use is severely limiting crop yields, and is caused by the limited availability and high unit cost of fertilizer. Apart from fertilizer, quality seed is an important means to increasing yields. However, without proper fertilization seed quality has little to no impact on grain yield. 6 At present, there appears a need for new entrants to the market for seed production, which is now dominated by poorly managed and unstable cooperatives. However, many disincentives exist for new entrants and for seed farms to aggressively market their seed to farmers, including a lack of transparency in licensing, preferential tax treatment for existing seed farms, illegal seed imports, and seed procurement and distribution by MoAM itself.

31. Poor irrigation management . The Kyrgyz Republic has an abundant supply of good quality irrigation water. However, because of seasonal variations, water supplies often do not correspond to need. For example, wheat requires one to three irrigations in spring and early summer, when river flows tend to be low. As a result, wheat farmers often experience water shortages, particularly at the tail end of irrigation systems. Although total water supplies are usually sufficient water to meet demand, the lack of water control and discipline within the system means that many farmers are unable to obtain sufficient quantities of water to satisfy crop demands. This problem is exacerbated by the deterioration of irrigation infrastructure.

32. Lack of training. The Kyrgyz Republic has an agricultural extension service, known as Rural Advisory Services (RAS). However, RAS is presently severely underfunded. WUAs are generally well organized and sustainable organizations, and would be excellent intermediaries for farmer credit programs along with providing distribution points for fertilizer distribution to members. There is much that can be done to make these organizations more valuable for both their members and the country. However, to date RAS is virtually the only organization within the Kyrgyz Republic that has substantial experience, coverage and capabilities to provide extension services. Any program developed by ADB would need to utilize this expertise.

4 FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and Agricultural Productivity . 2009. 5 FAO/WFP. Crop and Food Security Assessment Mission to Kyrgyzstan. 7 December 2010. 6 Monitoring and Evaluation Report of Seed Distribution Program (US-GOK Economic Development Program, April-November 2011).

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3.3 Identification of Key Challenges in the Water Resources Sector

33. Based on the results of the sector assessment and stakeholder consultations, the top three challenges in the irrigated agriculture subsector of the Kyrgyz Republic are the following: (i) Sustainable irrigation system maintenance. The challenge is to arrest the current decline system maintenance and to achieve sustainable maintenance in the future. (ii) Improve irrigation water delivery. This requires ensure the sustainability of irrigation system operations. (iii) Improve farm productivity. Poor irrigation water delivery is one of many constraints that adversely affect agricultural productivity. To better utilize the improved water service deliveries, it is necessary to overcome non-water constraints, such as limited access to credit, lack of training, and the high cost of agricultural inputs. The key challenges were organized by system levels. As set out in Table 3, a number of priority solutions for the subsectors are identified to achieving the challenge objectives. These proposed solutions are as identified within this study and during the stakeholder workshop and form the starting point in the formulation of proposed focused strategy to addressing the key challenges and for adoption in preparation of project concept paper. Refer to Annex 1 for a problem tree.

Table 3: Key Challenges by System Level Responsible Challenge / Level Objective Priority Solutions Organization Main and inter-farm system 1. Maintenance, Sustainability of DWEM - Rehabilitate and improve systems sustainability of inter-year water and/or WUAF - Increase funding main system deliveries - Improve asset management - Transfer system O&M to WUAF 2. Operation, Meeting water DWEM - Improve irrigation infrastructure to improve water service and/or WUAF reduce losses and increase supply service deliveries deliveries to on- - Improve system operation including farm systems measurement and regulation On-farm system 1. Maintenance, Sustainability of WUA / WUGs - Rehabilitation and improvement of on- sustainability of inter-year water farm system on-farm systems deliveries to - Increase service funding farms - Improve asset management 2. Operation; Improve service WUA / WUGs - Seasonal supply adequacy delivery Farm level 1. Increase water Increase appli- Farmers - Improve farm irrigation systems productivity cation efficiency - Improve farm water management 2. Increase farm Increase yields Farmers - Increase inputs productivity - Improve farmer knowledge Source: RETA (2012)

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4 WATER RESOURCES SECTOR STRATEGY

4.1 Process for Identification of Water Resource Sector Strategies

34. Overview. This chapter first presents a brief analysis of the financing gap in the irrigation sector, and shows that GKR had not secured funding for most of the investment projects in the irrigation sector planned for 2011-2015. This meant that newly developed water sector strategies would not need to take ongoing initiatives into account. A qualitative analysis of the potential benefits of resolving key challenges above concluded that benefits are highest for investments that: (i) benefit subsistence farmers, and (ii) consist of simultaneous improvements in the irrigation water delivery and farm productivity.

A. Assessment of Financing Gap

35. Financing requirements. (i) Capital investment. On 16 May 2011, GKR issued Decree #229, which describes an investment program for the construction of water management facilities and the development of new irrigated land for the period 2011-2015. The program consists of 22 investment projects with a total cost of KS9.8 billion, or approximately $210 million. GKR's Medium Term Development Plan for 2012-2014 listed six investment projects in the irrigation sector, four of which were already included in Decree #229. The total cost of the additional two projects was estimated at $180 million. The combined amount of $390 million was taken as the Government's estimate of the medium-term financing requirements of capital investments in the irrigation sector. However, most of these projects involve construction of new infrastructure. In 2011, the World Bank estimated the cost of rehabilitation of existing irrigation infrastructure at $348 million. If this amount is included, financing requirements for capital investment rise to over $700million. 7 (ii) O&M. As mentioned above, minimum required O&M spending on irrigation infrastructure in the Kyrgyz Republic is estimated at $34 million per year. This amount does not include financing requirements of the O&M of new irrigation infrastructure. If GKR would implement its approved medium-term investment program in full, O&M financing requirements would increase by about $10 million per year (assuming that annual O&M costs are equivalent to 5% of the capital investment cost).

36. Available financing. (i) Capital investment. The Kyrgyz Republic is currently running a substantial deficit. Because of budget constraints, the Ministry of Finance expects that all 21 of 22 projects listed by Decree #229, as well as the two additional projects mentioned in the Medium Term Development Plan, will be financed by development partners (with the exception of counterpart funds contributions for non-eligible expenditures, which usually account for up to 15% of the project cost). 8 (ii) O&M. At present, DWEM spends an estimated $10 million per year on operations and maintenance of the country's irrigation infrastructure. This amount may increase to $15 million per year if the Parliament would: (i) approve a 50% increase in the irrigation service fee (as proposed by DWEM), which would Increase total fee revenue by about

7 Kyrgyz Republic Agricultural Policy Update – Main Report , World Bank, December 2011. The estimate is based on the balance of existing systems, on-farm and off-farm, not covered by previously funded (international donors) rehabilitation projects (44% and 25% of off-farm and on-farm system areas respectively). The estimate is based on a pro rata rate for works, and is not project specific (unlike GKR estimates for specific projects), and are based on existing irrigated area where as the GKR projects are focused on expansion of irrigated areas within existing irrigation systems, so the two cost estimates are largely complementary. 8 On 13 October 2012, DWEM informed the RETA Consultant that GKR had secured financing from the Government of Turkey to complete the development of Burgandy land tracts in the Kadamjay rayon of Batken oblast (estimated cost: approximately $12 million).

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$0.5 million, and (ii) approve an increase of DWEM's budget from $14.4 million in 2011 to $20 million (which would free up an additional $4-5 million). Even under these admittedly highly optimistic assumptions, O&M spending on irrigation infrastructure would remain substantially lower than the minimum required amount for sustainable operations and maintenance. (iii) Financing gap. Based on the above observations, there was an estimated financing gap in the irrigation sector of at least $700million for capital investment, and $15-25 million per year for O&M.

B. Qualitative Assessment of Potential Benefits of Resolving Key Challenges

37. Summary of potential benefits. Resolving the three key challenges in the water sector of the Kyrgyz Republic (poor irrigation infrastructure, poor irrigation water delivery, and low farm productivity) is expected to result in improved agricultural productivity. This, in turn, would lead to increased farmer incomes and improved food security. The positive impact of improved agricultural productivity on food security would be realized directly (as higher productivity reduces the need to import food) and indirectly (higher farm incomes make it easier for farmers to purchase the food they need).

38. Realization of potential benefits. As mentioned earlier, crop yields in the Kyrgyz Republic are lower, typically at least 50% lower than average yields in the European Union. Stated differently, there a potential to increase agricultural productivity by at least 100% from its current level. The Second On-Farm Project (OIP2), which was financed by the World Bank, aimed at improving the agricultural productivity of members of 33 WUAs by 10% through investments in rehabilitation of tertiary infrastructure and training of WUA staff in irrigation water management. By its own admission, the project has not been able to achieve this target in most WUAs, often because of constraints unrelated to irrigation water. 9 This implies that addressing the key challenges of poor irrigation water and poor infrastructure will only have a limited impact on improved agricultural productivity. To further increase productivity, it is necessary to also invest in improvements in farm productivity.

39. Distribution of potential benefits. The benefits of improved agricultural productivity mainly consist of increased farm incomes. For commercial farmers, agricultural productivity will result in higher profits. For subsistence farmers, whose farms are often too small to meet their own needs, improved agricultural productivity will result in a reduction in food purchases from third parties. Because the cost of purchased food is substantially higher than the cost of home- grown food, investment projects that improve the productivity of subsistence farms are inherently more beneficial than projects aimed at improving commercial farm productivity -- both from a social and economic perspective. The strategies of the GKR favor the provision of irrigation infrastructure to subsistence farmers as a means to alleviate poverty and improve food security.

9 Interview with TA consultant, 24 August 2012.

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4.2 Prioritization of Water Resource Sector Strategies

40. Prioritization principles. The water sector strategy below is aimed at resolving the three key challenges resulting from the sector assessment and stakeholder consultations. These strategies were prioritized based on the following criteria: (i) Consistency with the National Water Strategy. The primary objectives of this strategy are to ensure: (i) access to water, (ii) national food security through development and efficient management of irrigation, (iii) energy security, and (iv) sustainable water management. (ii) Favorable cost/benefit ratio. It was found that the benefits of investments in irrigated agriculture are highest if aimed at subsistence farmers and provided in an integrated manner (by combining investments in irrigation infrastructure with concurrent investments in improving farm productivity). Note that this criterion was only used to identify sector strategies that are likely to be beneficial. Individual investment projects would still be subjected to an economic cost-benefit analysis (see Chapter 5 for details). (iii) Achievability in the short or medium term. The proposed water sector strategies are expected to result in improved agricultural productivity within 3-5 years. This criterion eliminates strategies with unfavorable framework conditions.

4.3 Recommended Water Resource Sector Strategy

41. Background. The primary purpose of ADB’s technical assistance is the development of a strategic approach to the planning of water sector development project investment. The proposed water sector strategy focused on achieving an improvement in irrigated agricultural productivity by addressing the three key challenges mentioned in Section 3.3. The proposed strategy should be consistent with and complementary to the country’s legal and planning framework, in particular its national water policy.

42. Objective of the strategy. The overall objective of the strategy (for the irrigated agriculture subsector) is to improve and sustain the productivity of land and water. This will in turn contribute to addressing broader national goals and objectives of reducing rural poverty and increasing food security. As identified by the key challenges, this objective will be achieved by sustainably improving the maintenance and operation of irrigation infrastructure at all levels to provide reliable service delivery to the farm, and by improving the utilization of irrigation water at the farm level by improvements in farm production.

43. Strategic framework. Initially, the strategy was applied to long-list of projects in the irrigated agricultural subsector that the Government of the Kyrgyz Republic had prioritized for 2011-2015 (see Chapter 5 for details). The strategy takes an integrated approach addressing the three key challenges (sustainability of maintenance, sustainability of operation and agricultural productivity) across the three irrigation system subunits (main, on-farm and farm), for selected irrigation systems. The strategy elements would ultimately form project subcomponent activities in the concept paper and project appraisal document(s). This integrated system approach is recommended as a synergy of solutions and project elements is required to address the key challenges. The remainder of this section summarizes the strategic framework for the irrigated agriculture sector in the Kyrgyz Republic. For each subsector (main, on-farm and farm), the framework identifies challenges and institutional weaknesses, and priority solutions to overcome the challenges. For the challenges (and subset of key constraints) priority solutions are proposed to achieve challenge objectives. The priority solutions are those identified during stakeholder consultation and from the subsector assessments. The institutions and organizations for implementation of solutions, draws on the assessment of institutional capacity and constraints to implementing solutions.

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44. As listed below for the key challenges 10 (and subset of key constraints) priority solutions are proposed to achieve challenge objectives. The priority solutions are those identified during stakeholder consultation and from the subsector assessments. The institutions and organizations for implementation of solutions, draws on the assessment of institutional capacity and constraints to implementing solutions.

45. Subsector #1: Improving main and inter-farm system operation and maintenance. The priority solutions in this sub-sector are: (i) Assess system infrastructure and management to identify options for improvement of conveyance efficiency and service delivery to WUAs (by DWEM). (ii) Improve priority infrastructure works to sustain current operation capacity and to reduce recurrent maintenance costs (by DWEM); the identification of priority works should be based on condition and risk assessment criteria. (iii) Develop and implement asset management plans by DWEM and WUAFs (by DWEM and WUAFs). (iv) Improve flow monitoring and accounting to reduce under-accounting of water deliveries and thereby increase revenue from water fees (by DWEM and WUAFs). (v) Transfer responsibility for of operation and maintenance activities for inter-farm systems to existing and newly established WUAFs (by DWEM). (vi) Develop and implement joint operational plans (by DWEM and WUAFs). (vii) Improve capacity of DWEM, WUAF and WUA to help implement priority solutions (by Engineering Consultants, NGOs).

46. Subsector #2: Improving on-farm system operation and maintenance. The priority solutions in this subsector are: (i) Conduct system audit to identify priority works for improvement of service deliveries (by WUAs). (ii) Prepare and implement system assessment management plans (by WUAs and WUGs). (iii) Negotiate irrigation service fees at levels required for sustainable maintenance and operation (by WUAs and their members). (iv) Provide access to credit for funding of machinery for canal maintenance (by supporting local lending institutions). (v) Assess system infrastructure and management to identify operation improvements in service delivery and reduction in losses (by developing WUA capacity). (vi) Prepare and implement annual operational plans, inclusive of implementation of system of water contracts (by WUAs and their members). (vii) Develop and implement measurement of water flow and volume at head gates and key points to identify areas with water constraints (by improving WUA capacity). (viii) Establish a system to bill members by number of irrigations per season (by WUAs). (ix) Improve capacity WUA Support Units and WUGs to implement solutions in collaboration with NGOs with water sector experience (by provision of training programs).

47. Subsector #3: Improving farm productivity. Non-water priority solutions can be classified in the following four categories: (i) Improve access to credit (by Ayil Bank and WUAs). GKR has succeeded in expanding credit to agriculture through the Ayil Bank and various microfinance organizations. However, lending has thus far been concentrated on livestock. Any future ADB program should promote agricultural credit towards farm machinery and other agricultural inputs (notably fertilizers and pesticides). In 2009, FAO published a report

10 Key challenges i) and ii) are aggregated by subsectors as subsector #1 inter-farm and main system and subsector #2 on-farm system.

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that discusses the shortage of agricultural equipment, and made the following recommendations: 11 • Promote the demand for farm machinery, by developing credit lines for agricultural productive assets, leasing, and facilitating access to second hand equipment. • Increase the supply of farm machinery, by facilitating the development of mechanical services contracting and improving access to farm machinery import markets, including second-hand equipment. Low interest loans can be directed toward banks and/or leasing companies with loan guarantees provided. Lease agreements with WUAs and WUA federations would seem to be a simple procedure. These agreements could be carried out with no need for collateral. If the WUA or Federation defaults on its payments then the lease agreement could be easily cancelled by the bank or leasing company and the equipment returned to the leasing company. (ii) Promote increased use of fertilizers (by provision of credit). If agricultural production is to increase, more fertilizer, particularly nitrogen and phosphorus, will need to be applied in timely and appropriate amounts. The biggest limiting factor to improving this situation is the lack of agricultural credit. Currently, there is no reasonable credit source available to farmers. While micro-credit is available, the interest rates charged for micro- credit is far too expensive for farmers. WUAs would seem to be a natural opening for the banking industry to provide farm credit. One of the problems with micro-credit is its high administrative costs to service the loans. WUAs could be used as intermediaries to facilitate loan agreements with farmers, along with facilitating the purchase of fertilizers in bulk and delivery to individual farmers. (iii) Provide training : Farmers in the Kyrgyz Republic need extension services, not only for water management but also to improve agricultural practices. Such services may be provided by RAS, WUA Support Units and training through the nation’s existing educational system. (iv) Improve access to export markets : If the Kyrgyz Republic is to develop new markets for both producers and processors, significant inflows of capital and technology will be required. The one bright spot within the agricultural sector has been the growth of exports of live animals and meat products. One would think that the GRK would do everything within its power to promote this success. However, the GRK has been painfully slow to develop testing labs for both animal and exported vegetable products. The lack of these facilities, which has been mandated by trading partners of the Kyrgyz Republic, has hurt the growth of this industry. ADB must work with the government to remove this barrier which is and will continue to hinder trade and markets.

11 FAO Report 53536. The Kyrgyz Republic, Farm Mechanization and agricultural productivity. 2009

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5 RANKING AND SELECTION OF INVESTMENT PROJECTS

48. Introduction. As described in Chapter 3, the total cost of addressing the three key challenges identified in this working paper would, in all likelihood, far exceed the amount of funds available in the short and medium term. It was therefore essential that scarce funds for improving agricultural productivity would be allocated to their best possible use. Against this background, this chapter presents a methodology that was used to help prioritize investment projects proposed to implement the recommended water sector strategy defined in Chapter 4.

5.1 Process for Identification of Potential Investment Projects

49. In 2011, the Government of the Kyrgyz Republic identified 24 high-priority projects in the water resources sector. 12 Projects on the longlist were subjected to two types of analysis (see also Figure 1): (i) Screening. Each project on the longlist was screened for compliance with two sets of criteria: (i) ADB-specific criteria, and (ii) cost-benefit criteria. If a project met all screening criteria, it would enter a “shortlist” of prospective investment projects. If not, it was not considered further. The purpose of the screening process was to eliminate investment projects that are a priori unlikely to qualify for ADB financing, or that should not be undertaken in any case because the expected cost to the national economy are likely to be higher than the expected benefits. (ii) Ranking. For all projects on the shortlist, a simplified cost-benefit analysis (CBA) was undertaken. The outcome of each CBA was a benefit/cost ratio (BCR), which was used to rank projects. The projects with the highest BCR were ranked highest, as these were likely to generate the highest benefit per unit of cost. The purpose of the ranking process was to identify projects that would best address the strategies of GKR and the key challenges identified in Chapter 3, so that scarce funds would be allocated to their best possible use. Upon completion of the ranking process, a feasibility analysis should be prepared for the highest ranked projects, subject to a budget constraint. For example, if a government intends to spend US$200 million on water infrastructure projects, it should only commission the preparation of feasibility studies for the highest ranked projects that, taken together, have an estimated cost of about US$200 million. This final step of preparing feasibility studies was, however, outside the scope of the methodology

5.2 Screening of Potential Investment Projects

50. Overview of the screening process. An investment project on the longlist was short- listed if it fully complied with two sets of screening criteria: (i) ADB-specific screening criteria. These are criteria used to eliminate projects that are unlikely to be eligible for ADB financing. (ii) Cost-benefit screening criteria. These are criteria used to eliminate projects that are a priori unlikely to generate net economic benefits to the national economy.

12 Twenty-two of these projects are listed in Decree #229 of May 2011. GKR's Medium Term Development Plan for 2012-2014 listed six additional investment projects, four of which were already included in Decree #229.

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Figure 1: Overview of Methodology for Prioritization of Water Infrastructure Projects

Longlist of Water Inf rastructure Projects

No SCREENING Project meets all screening criteria? Reject Project

Yes

Shortlist of Water Investment Proje cts

RANKING Analyze Fit with Government Strategy and Key Challenges

Ranked Shortlist of Water Investment Projects

Prepare Feasibility Studies (highest ranked projects only)

Source: RETA Consultant

51. ADB-specific screening criteria. In order to be eligible for ADB financing, it was assumed that a water infrastructure investment project must meet all of the following criteria: (i) In need of financing. An investment project would only be eligible for ADB financing if GKR has not secured funding for the project from its own or other external sources. (ii) No direct cross-boundary impacts. ADB envisages that the newly developed water strategies “will not be holistic and will instead address the top three challenges in each country”.13 This implies that ADB will only finance investment projects whose (direct) impacts are confined to a single country. (iii) Availability of sufficient information. ADB indicated that it would only consider invest- ment projects for which basic information (in the form of a pre-feasibility study or better) was available at the time the project was included in the longlist. (iv) No significant adverse environmental impacts. A project was not considered as eligible for ADB financing if the bank would classify the project in environmental category A. Projects in this category are likely to have significant adverse environmental impacts that are irreversible, diverse, or unprecedented, and these impacts may affect an area larger than the sites or facilities subject to physical works. (v) No significant adverse social impacts. Similarly, a project would not pass the screening process if it would be classified as a category A resettlement project. Projects in this category are likely to result in significant involuntary resettlement impacts. (v) No exclusive focus on development of new irrigable land. ADB informed GKR that it would not be able to finance projects that would only create new irrigable land in view of

13 See page 4 of the RETA Consultant’s Terms of Reference.

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environmental and social risks, and apparent inconsistencies with the key challenges (the first of which calls for halting the further deterioration of existing irrigation systems). (vii) Within financial scope. Because of relatively high (and largely fixed) project prepara- tion costs, ADB does not wish to finance projects with limited funding requirements. Based on experience with past projects, the minimum project cost was set at $10 million (a series of smaller but related projects with a combined cost of at least $10m also pass screening, provided they are not be located in different parts of the country).

52. Cost-benefit screening criteria. Project on the shortlist were ranked by their benefit/ cost ratio (BCR). The estimation of a BCR requires an analysis of economic costs and benefits. This a relatively complex exercise, which is normally not been undertaken for investment proposals on a longlist. To avoid conducting a CBA for all investment projects under consideration, which is expensive and time-consuming, screening criteria were developed to eliminate projects that are a priori unlikely to be economically feasible. These are projects that have a very high economic costs vis-à-vis their expected economic benefits. The threshold cost was set at $5,000 per hectare for projects for improving existing irrigated areas and at $25,000 per hectare for projects with new irrigated area.

53. Results of screening exercise. Fifteen of the 24 longlisted projects did not meet all screening criteria, and were therefore not included in the shortlist (see Table 4 and Figure 2 for details). More specifically: (i) one project did not require financing, (ii) one project would result in direct trans-boundary impacts on the Republic of Uzbekistan (this project would also result in significant adverse social and environmental impacts), (iii) for six projects, GKR has not yet prepared a feasibility study or similar document, (iv) five projects were unlikely to be economically feasible, in view of the unfavorable relationship between capital cost and benefits (as measured by the number of hectares of improved or new irrigable land that the project was expected to provide), and (v) two projects exclusively involved the development of new irrigable land. The combined cost of the short-listed projects was about $109 million. The total irrigated area was about 28,000 hectares, of which 19,300 ha improvement of existing irrigated lands, and 8,600 ha proposed expansion of irrigated area (Table 4).

5.3 Ranking of Potential Investment Projects

54. Overview of the ranking process. Projects that passed the screening process were ranked by their “fit” with GKR strategies and the key challenges identified in Chapter 3. The proposed ranking process consisted of three steps: (i) score projects by fit with GKR strategies, (ii) score projects by fit with key challenges, and (iii) reconcile scores (to the extent required). The third step was needed because projects that best address GKR strategies did not necessarily also best address the three key challenges (for example, the key challenges called for a rehabilitation of existing irrigation infrastructure, whereas GKR strategies prioritized the development of new irrigable land.)

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Table 4: Shortlisted Investment Projects in the Kyrgyz Republic

River Cost Irrigated Area (Ha) Project Basin ($ million) Improved Expanded Total 1 Construction of Karakyshtak-Boz canal Syr Darya 5.3 700 568 1,268 2 Construction of aqueduct in Maksat Syr Darya 34.0 7,551 1,800 9,351 3 Construction of P-4хв canal Syr Darya 9.0 2,000 1,000 3,000 4 Construction of Shibe-Jekendi canal Syr Darya 8.5 462 500 962 5 Irrigation of central part of Kulanak Syr Darya 31.9 5,080 1,500 6,580 valley, Naryn rayon 6 Improvement of water intake on Ak- Syr Darya 1.3 200 500 700 Say river 7 Irrigation of lands in Kara-Burun tract Issyk-Kul 1.7 700 774 1,474 8 Reconstruction of Sarymsak canal Talas 16.0 1,600 2,000 3,600 9 Construction of water storage pond on Chui 1.2 1,025 - 1,025 Shamshy river Total 108.9 19,318 8,642 27,960 Source: RETA Consultant, based on DWEM (2012)

Figure 2: Locations of Shortlisted Investment Projects

Source: RETA Consultant

55. Strategic fit with GKR strategies. GKR strategies assign high priority to poverty alleviation and the improvement of the nation’s food security. In irrigated agriculture, the Government favors the development of extension of irrigable land in conjunction the improvement of existing (or formerly) irrigated land, and prioritizes the highest planned projects, followed by ongoing projects (which GKR intends to complete with financing from its own resources). It was assumed that projects best able to achieve these objectives were located in

AHT / UBI / UNICON 20 ADB TA8015-REG Knowledge Product Kyrgyz Republic oblasts with the highest poverty incidence and the highest level of food insecurity (as measured by UNDP in 2009), and focused on extension of irrigated land (as opposed to solely improving existing irrigable land), and were planned rather than ongoing or suspended.

56. Strategic fit with key challenges. Chapter 3 identified three means to address the key challenges identified therein: (i) restore the sustainability of system maintenance, (ii) restore the sustainability of system operations, and (iii) overcome non-water constraints, such as limited access to credit, lack of training, and the high cost of agricultural inputs. It was assumed that projects best able to achieve the three key challenges were located in areas with a functioning WUA, focused on agricultural development only, and wholly focused on improving existing irrigable land (as opposed to developing new land).

57. Results of the screening exercise. After consultation with stakeholders in a workshop that was held in Bishkek on 17 October 2012, and subsequent discussions with ADB, MoAM assigned highest priority to the following projects: (i) construction of Karakyshtak-Boz canal in Kadamjay raion (Batken oblast), (ii) construction of P-4хв canal and building-up of existing P-4 canal in Batken raion (Batken oblast), and (iii) reconstruction of Sarymsak canal, Kara-Buura rayon (Talas oblast). In addition, ADB and DWEM agreed upon two reserve projects: (iv) improvement of water intake on Ak-Say river, and (v) construction of water storage pond on Shamshy river (Chui oblast).

5.4 Selected Investment Projects

58. Rationale for selection. In November 2012, a consultant contracted by ADB conducted site inspections of the three high-priority projects, and concluded that none of the three projects were likely to result in significant adverse environmental or resettlement impacts, or in adverse impacts on indigenous peoples. Upon completion of the site inspections, MoAM requested ADB to co-finance the reconstruction of Sarymsak canal, and the construction of water storage pond on Shamshy river. The rationale for the selection of the projects being that of merit in the case of the Sarymsak system, and proximity in the case of the Shamshy system (to avoid scattered projects). In addition, GKR expected to receive funding from the Government of Turkey to co- finance the two projects in southern Kyrgyzstan (Karakyshtak Boz canal and Px4B canal).

59. Key features of investment project #1: reconstruction of Sarymsak canal. This system is located in the district ( raion ) of Kara Bura, approximately 60km north of Talas and 300km west of the capital of Bishkek. It is supplied by the Kara Bura reservoir (located on a tributary of the Talas River), which is located about 2km to the south and upstream of the irrigated area. The system has an existing irrigated area of about 1,600 hectares; (ha) upon completion of the subproject, the command area will contain an additional 2,000ha of new irrigated lands. While water resources are sufficient to supply the newly irrigated lands, the existing infrastructure is incapable to deliver water to the command area, mainly because of its limited capacity (which has been exacerbated by poor maintenance). The proposed works include: improvement and extension of the main canal, improvement of existing inter-farm canals, construction of new inter-farm canals to new irrigated lands, improvement of existing on- farm canals, construction of new on-farm canals to new irrigated lands, and improvement and construction of the drainage network (inter-farm and on-farm).

60. Key features of investment project #2: construction of water storage pond on Shamshy river. This system is located in the Shamshy raion , about 100km east of Bishkek. It consists of two command areas, each with separate intake structures on the Shamshy River

AHT / UBI / UNICON 21 ADB TA8015-REG Knowledge Product Kyrgyz Republic and main canals. The upper intake supplies an irrigated area of about 1,000ha, whereas the lower intake supplies about 9,000ha. The purpose of the proposed subproject is: (i) to improve and increase the reliability of the water supply to improve agricultural production on the upper system, and (ii) to ensure the continued operation of the main intake structure to main water supply on the lower system. The proposed works on the upper system include: construction of main intake structure on the Shamshy River, canal head works, a main canal with a length of about 3km, and a daily storage reservoir with a capacity of 40,000m 3. On the lower system, it is proposed to replace the on-river diversion structure. In addition to these proposed works, there is scope for improvement of inter-farm and on-farm canals and structures.

61. Indicative project cost and financing plans. The combined cost of the two investment projects was tentatively estimated at $25 million ($18.5 million for the Sarymsak project, $1.5 million for the Shamshy project, and US$5 million for project management and capacity building) Beneficiaries would provide counterpart fund contributions to finance investments in small-scale improvements to farm level infrastructure, which were valued at $1 million. The Government of the Kyrgyz Republic would finance costs not eligible for ADB financing (these mainly consist of the cost of compensation for resettlement, and taxes and duties, and are estimated at $4 million). ADB would finance all other costs ($20 million).

5.5 Development of Project Concept Papers

62. Need for project preparatory technical assistance (PPTA). At the time of project selection, there were no full feasibility studies available for either investment project. ADB therefore intended to procure consultant services to help GKR prepare both projects (it was envisaged that the PPTA would be financed from a grant from ADB’s Technical Assistance Special Fund). To define the major outputs and activities of the PPTA, a Project Concept Papers (PCPs) were prepared for both investment projects.

63. Outline of PCPs. Following ADB’s standard format for PCPs, each concept paper described, in some detail: (i) the background of the investment project, (ii) the proposed technical assistance (justification, major outputs and activities, cost estimates and proposed financing arrangement, outline terms of reference, and implementation arrangements), (iii) due diligence required, (iv) processing plan, and (v) key issues.

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6 CONCLUSIONS AND RECOMMENDATIONS

6.1 Summary of Key Findings

64. The TA key findings are: (i) Water resources; while Kyrgyzstan has relatively abundant water supply (18 km 3/yr) diversions for irrigation, the principal consumptive use have declined from more than 11 km 3/yr in the early 1990s to less than 8 km 3/yr. This decline has been attributed to deterioration in irrigation infrastructure and constraints of irrigation system and water resources management. A compounding and mitigating factor is low productivity of irrigated agriculture reducing the affordability of improvements in system infrastructure and management. (ii) Water resources management; the management of the water resources sector for the past few years has been undergoing a number of reforms, legislation and institutional, towards integrated water resources management. And while there has been progress, with the pasting of legislation for Water User (2002) and Water Code (2005), key institutional reforms are yet to be completed, most notably the formation of a National Water Council and State Water Administration. The key institutes and organisations (DEWM and WUAs) responsible for the irrigation sub-sector, suffer from low and/or loss of capacity and underfunding from state sources and low water service fees. (iii) Irrigation management; water user associations are well established in Kyrgyzstan with approximately 478 to which nearly 90% of the former state on-farm irrigation systems (approx 747,000 ha) have been transferred. However, the performance of WUAs and WUAFs is mixed, with less than half rated as being satisfactory 14&15 . Areas for improvement of irrigation management include increases in funding through higher water service fees, improving management capacity and improved system operation and maintenance. (iv) Irrigated agriculture; the agriculture sector is highly dependent on irrigation, however productivity remains low by regional and international levels, typically less than 50% of potential for the latter. Primary causes of low productivity for the sub-sector are attributed to weak agricultural service delivery leading to limited access to credit, limited access to markets, low levels of inputs and poor farm irrigation management, and for which the cumulative impacts are low crop yields and low farm profits. (v) Key challenges; as outlined above the three main challenges identified by the TA are i) sustainable irrigation system maintenance, to arrest the current decline system maintenance and to achieve sustainable maintenance in the future, ii) Improve irrigation water delivery, to ensure the sustainability of irrigation system operations, and iii) improve farm productivity, to better utilize the improved water service deliveries, it is necessary to overcome non-water constraints. (vi) Water sector strategy; in the medium term more than $700 million is required for investment projects and irrigation system rehabilitation and O&M. The objective of the water sector strategy is the improvement of irrigated agricultural productivity, with the result impacts of improving inclusive growth, increased food security and improved farm incomes. The strategy outcomes will be achieved through the implementation of priority solutions addressing the key challenges (above). (vii) Project screening and ranking; the GKR identified 24 priority investment projects for donor funding in the irrigated agriculture sub-sector, of which 11 projects were

14 Central WUA SU Annual Report (2009) 15 DWEM Central WUA SU Annual Report 2011

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shortlisted for stakeholder ranking, and from which two projects are identified for the project concept paper. (viii) Project concepts; the Sarymsak and Shamshak irrigation schemes, located in the Talas and Chui river basins respectively, are presented in the project concept paper. The schemes have combined irrigated area, post development of approximately 13,600 ha. The proposed project activities include rehabilitation and improvement of infrastructure, improvement of WUA capacity for O&M, and improvement of agricultural support services. The total cost for the project is approx. $25 million of which $20 million is for infrastructure improvements at inter-farm and on-farm levels, and $5 million for capacity building, support services and project management.

6.2 Lessons Learnt

65. The lessons learnt from implementation of the innovative process are: (i) Inception; the process did not include an inception phase for verification of the proposed process and recommended modifications to the implementation programme. The inclusion of an inception phase would have identified a number of issues with the process implementation, including ADB priorization of country inputs, constraints on data availability and constraints on timing of stakeholder workshops. (ii) Timeframes; the overall timeframe for the phases and TA were unrealistically short for some elements of the TOR, particularly elements associated with data and information on resources and irrigation systems. The planned timeframe of 1 month for phase 1 needed to take into consideration time and delays in acquiring ‘official’ data and information. (iii) Prioritization; there were constraints on outputs due to the need to meet ADB shifting country priorities during implementation which disrupted the work programme and delayed outputs. For future TAs the process could be improved with consideration of potential priority changes, to better schedule inputs and to allow for potential delays in inputs. (iv) Coordination; the implementation arrangements were constrained by limited coordination between ADB and the DMC at project initiation, consequently delayed the formalization of agreements on consultation with stakeholders and access to information and data sets. Given the short timeframe of the process, it is essential that implementation is preceded by formal agreement between ADB and the DMC on coordination and cooperation with key agencies and transfer of information and data. (v) Projects information; there was limited quality information on proposed investment projects (something not forseen in the TA TOR) and therefore limited project analysis for screening and ranking of priority projects. To improve the quality of information, it is recommended that the DMC associated agency(s) be informed of the type, scope and quality of information required for project identification, screening and ranging.

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PROBLEMPROBLEM TREETREE

Low Food Security Low Inclusive Growth Low Farm Incomes

Low Value of Agricultural Production

Low Productivity of Low Irrigated Area and Water Consumed Cropping Intensity (T/m 3 or $/m 3) Low Farm Profits Low Crop Yields or (resulting in Productivity of Land low farmer capacity to (T/ha or $/ha) pay and incentives for Lack of Developed Land Low Irrigation Low Actual sustained O&M) with Access to Efficiency Evapotranspiration Available Water

Degrading High Operational Losses High Field-Level Limited Crop Infrastructure and and Inadequate Poor Agronomy: Application Losses Diversification High Physical Losses Water Deliveries -Limited access to capital - High cost of agricultural inputs Inadequate Off-Farm Inadequate Off-Farm No Land Leveling - Poor quality of Limited and On-Farm and On-Farm Poor Field Irrigation agricultural inputs Market Access System Maintenance System Operation Methods/Scheduling

Weak WUAs Responsible High Drought Risk for On-Farm Systems Increasing With Limited Farmer Producer and Marketing Organisations Low Incentives for O&M Climate Change

Weak WRD Irrigation and WUA Service Delivery Weak Agricultural Advisory Service Delivery

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LIST OF WEB-LINKED DOCUMENTS

To be confirmed by ADB

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