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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized FILE COPY Report No. 2448a-YU Public Disclosure Authorized STAFF APVPAISAL REPORT YUGOSLAVIA CROATIA SAVA DRAINAGE PROJECT Public Disclosure Authorized August 8, 1979 Public Disclosure Authorized Regional Projects Department Europe, Middle East and North Africa AgricultureIII This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS* US$ 1 = Dinars (Din) 18.0 Din 1 = US$ 0.0556 Din 1,000,000 = US$ 55,555.56 WEIGHTS AND MEASURES 1 kilogram (kg) = 2.20 pounds 1 quintal = 100 kilograms 1 metric ton (m ton) 1,000 kilograms 1 metric ton (m ton) 0.98 long ton 1 millimeter (mm) = 0.04 inch 1 centimeter (cm) = 0.39 inch 1 meter (m) = 1.09 yards 1 kilometer (km) = 0.62 mile 1 hectare (ha) = 2.47 acres 1 square meter (m2) = 10.76 square feet 1 square kilometer (km2) 0.384 square mile 1 liter (1) = 0.264 gallon 1 cubic meter (m3) = 1.31 cubic yards ABBREVIATIONS BOAL = Basic Organizationof Associated Labor (in Serbo Croatian,OOUR) OVP (SRA) = Sava River Authority (Opce Vodoprivredno Poduzece za Vodno Podrucje Sliva Save) PU = Project Unit SDK = Social Accounting Service SIZ = Self Managed Water Economy Interest Community of the Catchment Areas SR of Croatia = SocialistRepublic of Croatia SVIZ-Sava = Self Managed Water Economy Interest Community of the Sava River ZB = Zagrebacka Banka FISCAL YEAR January 1 - December 31 * The Yugoslav Dinar has been floating since July 13, 1973. The currency equivalentsgiven above are those effective in October, 1978. FOR OFFICtALUSE ONLY APPRAISAL OF CROATIA SAVA DRAINAGE PROJECT YUGOSLAVIA Table of Contents Page No. I. AGRICULTURAL SECTOR ..................................... 1 A. Project Background ............ ..................... 1 B. Agriculture Sector ..... ................. 2 C. Drainage Subsector ..... ................. 3 II. PROJECT AREA ....... ............................ 3 A. Description of the Project Area .................... 3 B. Agricultural Situation in the Project Area ......... 7 C. Principal Institutions Participating in the Project ............................................ 9 III. THE PROJECT ............................................. 11 A. Project Objectives ................................. 11 B. Project Description ................................ 11 C. Cost Estimates ..................................... 14 D. Financing ..........................................15 E. Procurement ........................................ 16 F. Disbursements ...... .............. .................. 17 G. Environmental Impact ................ ............... 18 H. Role of Women .................... .................. 18 IV. ORGANIZATION AND MANAGEMENT ............................. 19 A. Borrower: ZB .................... .................. 19 B. Implementing Agency: OP ............... ............ 21 C. Project Monitoring and Evaluation .................. 25 V. BENEFITS AND JUSTIFICATION .................. ............ 26 A. Land Use ........................................... 26 B. Production ....... .............. .................... 28 C. Markets, Market Prospects and Prices ............... 30 D. Financial Benefits ................................. 32 E. Cost Recovery .................. .. .................. 33 F. Economic Justification ................ ............. 37 G. Project Risks and Uncertainty ............ .......... 40 VI. SUMMARYOF AGREEMENTTO BE REACHED AND RECOMMENDATIONS .. 41 This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Table of Contents (Continued) ANNEXES Annex 1 - Supporting Tables and Charts 1 Cropping - Before project *...s..e.......s ................ 43 2 Cropping - Full Project Development ...... ................ 44 3 Livestock Production ........ .. ....... .......... ....... 45 4 Zagrebacka Banka -Balance Sheet ......................... 46 5 Zagrebacka Banka - Statement of Income ................... 47 6 Project-Related ZB Cash Flows during Life of Proposed IBRD Loan ........ ................ ... ... 48 7 Number of Employees according to Qualification in the Sava River Authority (OVP) as of June 30, 1978 ..... 49 8 Estimated Schedule of Expenditures .......................50 9 Estimated Schedule of Disbursements *..Of .... 51 10 Operationand MaintenanceEquipment List ................52 11 Financial and Economic Prices of Project Benefits ....... 53 12 Farm Model (Private Sector): 5 ha ....................... 56 13 Social Sector Cash Flows - Generated from Crop ProductionOperations ... 57 14 Detailed Phasing of Drainage ...... ................ 58 15 Drained Area by Catchmentat Full Project Development 59 16 Detailed Phasing of Cropped Area (ha) ...................60 17 Detailed Phasing of Crop Production(tons) ...............61 18 Detailed LivestockPhasing .............................. 62 19 Incremental Costs. ....................................... 63 20 IncrementalEconomic Benefits and Costs ..................64 Chart 1 - Participating Agencies in the Project Area ............... 65 Annex 2 - Related Documents and Data Available in the Project File . 66 MAP IBRD No. 14150 General Layout APPRAISAL OF CROATIA SAVA DRAINAGE PROJECT YUGOSLAVIA I. AGRICULTURAL SECTOR A. Project Background 1.01 Numerous generations have searched for hydrotechnical solutions to prevent Sava River flooding and enable drainage of swampy areas in its basin. The first proposals to solve the drainage problem date back to 1770. Basic concepts and approaches were developed in the period from 1770 to 1868. In 1868 the Lonjsko Polje Drainage Act was passed by the Croatian Parliament, after which a consortium was established to prepare and execute works. Due in large part to a lack of financial means, these proposals were not implemented. After the Second World War, the Five-Year Plan Act of 1947 set out the task of preparing a feasibility study of drainage in the project area. In 1957 the question of land reclamation in the middle Sava River valley was again raised by the district authorities. Flooding of the town of Zagreb in 1964, and floods in Sisak and Karlovac in 1965 and 1966 urged the pressing need for the protection of these towns from floods, and the Direckcija za Savu-Zagreb (Sava River Authority) undertook a study of the problem. The Federal Govern- ment of Yugoslavia asked the United Nations for technical assistance in the elaboration of the complex study "Regulation and Management of the Sava River". The UN Special Fund selected a group of experts for the study from Polytechna, Prague, and Carlo Lotti, Rome. The study was completed in 1972 with the assistance of Direkcija za Savu and other Yugoslav experts. The result of the study was the definition of a Water Management Plan proposing a large number of actions to be implemented in stages until Year 2000. The principal components of the flood control part of the Water Management Plan are flood relief reservoirs and channels. Detailed analyses indicate that the Middle Sava Basin can be protected by two storage reservoirs and key relief channels, Odra (52 km), Lonja-Strug (105 km) and Kupa-Kupa (22 km). At present construction of the storage reservoirs and flood relief channels has reached a stage at which it is possible to proceed with drainage of the project area. 1.02 The proposed project has been prepared by the Sava River Authority (OVP) with the assistance of FAO/IBRD Cooperative Program staff and Bank staff. This report is based on the findings of an appraisal mission to Croatia in October/November 1978 comprising Messrs. H. Feuerstein, A. Akant (Bank), and M. Fireman, P. Harrison, C. Maierhofer and M. Walshe (Consul- tants). - 2 - B. Agriculture Sector Sector Development 1.03 Of the total territory of Yugoslavia, 44% is mountainous and 56% or 14.6 million hectares is agriculturally productive, with 70% of arable land and the remainder permanent pastures. Droughts, and in some areas flooding, are common, causing frequent instability in production. About 35% of the population still lives in the rural areas and, of these, about one-third is in the poverty target group. More than 40% of the labor force is still engaged in agriculture. A key feature of Yugoslav agriculture is the co-existence and complementarity of the individual and social sectors. The social sector, with 15% of the agricultural land and about 6% of agricultural manpower, produces one-third of the total agricultural output. The individual sector, which owns 85% of the cultivated land and employs over 90% of agricultural manpower, is handicapped by small, fragmented, lesser quality holdings, and has been neglected relative to the social sector in terms of access to basic infra- structure, financing and technology. In 1976 the agricultural sector as a whole accounted for 16% of the national product and for about 12% of total commodity exports. Thus, notwithstanding a policy of rapid industrialization, the role of agriculture, while declining, remains one of basic importance in the overall development of the Yugoslav economy. 1.04 In the current (1976-1980) Five-Year Plan, the more rapid develop- ment of agriculture is a stated precondition to achieving the planned growth rate, self-sufficiency in agricultural products and to fulfilling the three major long-term country
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