ASIAN DEVELOPMENT BANK PCR:PHI 21049
PROJECT COMPLETION REPORT
ON THE
SECOND PALAWAN INTEGRATED AREA DEVELOPMENT PROJECT (Loans 1033(SF)/1034-PHI)
IN THE
PHILIPPINES
May 2001 CURRENCY EQUIVALENTS
Currency Unit – Philippine Peso (P)
At Appraisal At Project Completion (10 October 1989) (31 December 1999) P1.00 = $0.041 $0.025 $1.00 = P24.20 P40.20
ABBREVIATIONS
ADB – Asian Development Bank BME – benefit monitoring and evaluation CIP – communal irrigation project CIS – communal irrigation system DA – Department of Agriculture DENR – Department of Environment and Natural Resources DOH – Department of Health DPWH – Department of Public Works and Highways DSWD – Department of Social Welfare and Development EA – executing agency ECAN – environmentally critical areas network EIRR – economic internal rate of return ha – hectare IA – irrigators’ association LCB – local competitive bidding LGU – local government unit NGO – nongovernment organization NIA – National Irrigation Administration O&M – operation and maintenance OWA – overall weighted average PCSD – Palawan Council for Sustainable Development PCSDS – Palawan Council for Sustainable Development Staff PIADP I – Palawan Integrated Area Development Project Phase I PIADPO – Palawan Integrated Area Development Project Office PTFPP – Palawan Tropical Forestry Protection Program RAC – rural agricultural center SDR – special drawing rights SEP – Strategic Environmental Plan for Palawan TA – technical assistance
NOTES
(i) The fiscal year (FY) of the Government ends on 31 December.
(ii) In this report, "$" refers to US dollars. CONTENTS
Page
BASIC DATA ii
MAP viii
I. PROJECT DESCRIPTION 1
II. EVALUATION OF IMPLEMENTATION 2
A. Project Components 2 B. Implementation Arrangements 8 C. Project Costs 8 D. Project Schedule 9 E. Engagement of Consultants and Procurement of Goods and Services 9 F. Performance of Consultants, Contractors, and Suppliers 10 G. Conditions and Covenants 10 H. Disbursements 10 I. Environmental and Social Impacts 11 J. Performance of the Borrower and Executing Agencies 11 K. Performance of the Asian Development Bank 12
III. THE TECHNICAL ASSISTANCE 12
IV. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS 13
A. Financial Performance 13 B. Economic Performance 13 C. Attainment of Benefits 14
V. CONCLUSIONS AND RECOMMENDATIONS 14
A. Conclusions 14 B. Lessons Learned 15 C. Recommendations 16
APPENDIXES 18 BASIC DATA
A. Loan Identification
1. Country The Philippines 2. Loan Number 1033(SF)/1034-PHI 3. Project Title Second Palawan Integrated Area Development Project 4. Borrower Republic of the Philippines 5. Executing Agencies Department of Agriculture Department of Environment and Natural Resources Department of Health Department of Public Works and Highways Department of Social Welfare and Development National Irrigation Administration Palawan Integrated Area Development Project Office 6. Amount of Loan SDR18,245,600 (Loan 1033) $33,000,000 (Loan 1034) 7. PCR Number PCR:PHI 626
B. Loan Data
1. Appraisal - Date Started 14 Mar 1990 - Date Completed 29 Mar 1990
2. Loan Negotiations - Date Started 20 Aug 1990 - Date Completed 23 Aug 1990
3. Date of Board Approval 27 Sep 1990
4. Date of Loan Agreement 25 Oct 1990
5. Date of Loan Effectiveness - In Loan Agreement 27 Dec 1990 - Actual 2 Jan 1991 - No. of Extensions None
6. Closing Date - In Loan Agreement 30 Jun 1997 - Actual 10 Sep 1999 (Loan 1033) 13 Jul 1999 (Loan 1034) - No. of Extensions One
7. Terms of Loan
Loan 1033 (SF) - Interest Rate 0 - Service Charge 1% iii
- Maturity 35 years - Grace Period 10 years
Loan 1034 - Interest Rate Variable - Maturity 30 years - Grace Period 6 years
8. Terms of Relending None
9. Disbursements
a. Dates
Initial Disbursement Final Disbursement Time Interval
1033 (SF) 27 Sep 1991 10 Sep 1999 8 years 1034 15 Mar 1991 13 Jul 1999 8 years, 4 months
1034 Effective Date Actual Closing Date Time Interval
1033 (SF) 2 Jan 1991 10 Sep 1999 8 years, 9 months 1034 2 Jan 1991 13 Jul 1999 8 years, 6 months
b. Cancellation
Loan No. Amount Canceled Date Canceled 1033 (SF) SDR353,135.81 10 Sep 1999 1034 $314,534.91 13 Jul 1999
c. Amount
Original Revised Net Amount Allocation Allocation Disbursed Description (SDR) (SDR) (SDR) Loan 1033 (SF) Civil Works 3,780,500 11,402,817 11,402,817 Vehicles 908,600 960,462 960,462 Consulting Services 512,300 684,504 684,504 Training 51,100 32,610 32,610 Operating Expenses 461,200 2,624,999 2,624,999 Local Expenditures - Civil Works 5,600,000 - - Local Expenditures - Vehicles 65,700 - - Local Expenditures - Consulting Services 462,000 407,706 407,706 Local Expenditures - Irrigation Development 164,900 - - Local Expenditures - Operating Expenses 2,051,500 - - Local Expenditures - Incremental Administrative Cost 2,535,400 1,560,366 1,560,366 Interest during Construction 219,000 219,000 219,000 Unallocated 1,433,400 - - Total 18,245,600 17,892,464 17,892,464 iv
Original Revised Net Amount Allocation Allocation Disbursed Description ($) ($) ($) Loan 1034 Civil Works 3,047,000 20,290,636 20,290,636 Vehicles 1,367,000 1,390,110 1,390,110 Consulting Services 162,000 205,527 205,527 Training - Crop Intensification and Diversification 15,000 177,118 177,118 Operating Expenses 1,031,000 4,458,095 4,458,095 Materials and Supplies 10,000 249,208 249,208 Local Expenditures - Civil Works 14,155,000 - - Local Expenditures - Vehicles 168,000 - - Local Expenditures - Consulting Services 164,000 158,980 158,980 Local Expenditures - Training 322,000 79,369 79,369 Local Expenditures - Operational Expenditures 6,855,000 982,093 982,093 Local Expenditures - Materials and Supplies 186,000 - - Local Expenditures - Incremental Administrative Cost 1,224,000 1,694,328 1,694,328 Interest during Construction 3,000,000 3,000,000 3,000,000 Unallocated 1,294,000 - - Total 33,000,000 32,685,464 32,685,464
10. Local Costs (ADB-financed)
- Amount $14.0 million (1033 [SF]) $22.7 million (1034) - Percentage of Local Costs 57 percent - Percentage of Total Cost 43 percent
C. Project Data
1. Project Cost ($ million)
Item Appraisal Estimate Actual
Foreign Exchange Cost 20.00 21.59 Local Currency Cost 53.50 64.35 Total 73.50 85.94 v
2. Financing Plan ($ million)
Appraisal Estimate Actual Foreign Local Foreign Local Source Exchange Currency Total Exchange Currency Total
ADB ADF 11.60a 13.40 25.00 11.63 14.04 25.67 OCR 8.40b 24.60 33.00 9.96 22.73 32.69
Government 0.00 15.50 15.50 0.00 27.58 27.58 Total 20.00 53.50 73.50 21.59 64.35 85.94 ADB = Asian Development Bank, ADF = Asian Development Fund, OCR = ordinary capital resources. a Includes service charge. b Includes interest and related charges during construction.
3. Cost Breakdown by Project Component ($ million)
Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Exchange Currency Total A. Agricultural Development Crop Intensification and 1.76 4.14 5.89 1.72 6.22 7.94 Diversification Livestock Development 0.57 2.42 3.00 0.42 2.92 3.34 Fishery Support Services 0.19 0.91 1.10 0.16 1.01 1.17 Subtotal (A) 2.53 7.46 9.99 2.30 10.15 12.45
B. Irrigation Development 4.33 6.13 10.46 5.75 12.92 18.67
C. Survey and Land Titling 0.08 1.20 1.28 0.31 1.90 2.21
D. Infrastructure Development Main Roads 0.55 1.34 1.89 0.73 2.28 3.01 Feeder Roads 3.12 7.56 10.68 4.95 20.59 25.54 Port 0.32 0.57 0.89 0.82 2.75 3.57 Subtotal (D) 3.99 9.47 13.46 6.50 25.63 32.13
E. Social Services Integrated Health Program 0.87 1.76 2.63 1.17 3.17 4.34 Rural Water Supply 0.50 1.24 1.74 0.37 1.35 1.72 Women in Development 0.36 0.53 0.89 0.33 0.92 1.25 Subtotal (E) 1.73 3.53 5.26 1.87 5.44 7.31
F. Project Management 0.81 3.67 4.48 0.69 2.62 3.31
G. Interest during Construction 3.3 0.0 3.3 3.3 0.0 3.3
H. Physical and Price 3.24 22.03 25.27 0.86 5.69 6.55 Contingencies Total 20.00 53.50 73.50 21.59 64.35 85.94 vi
4. Project Schedule
Appraisal Estimate Actual Project Milestone Start Completion Start Completion A. Agricultural Development 1. Crop Intensification and Diversification Civil Works Activities Aug 1992 Oct 1996 Apr 1992 Dec 1998 Consulting Services Sep 1991 Jun 1994 Jan 1994 Dec 1996 Procurement of Agricultural Inputs Feb 1991 Jan 1994 Apr 1992 Jun 1996 Training Activities Jul 1992 Jan 1993 Jul 1993 Nov 1997 2. Livestock Development Civil Works Jun 1991 Jun 1993 Feb 1992 Jul 1995 Procurement of Vehicles and Equipment Jun 1991 Jun 1993 Feb 1993 Dec 1995 Procurement of Breeding Stocks Jun 1991 – Feb 1994 – Livestock Dispersal Sep 1991 Dec 1995 Oct 1994 Dec 1998 3. Fishery Support Services Civil Works Jun 1991 Jun 1992 Jun 1992 Jun 1996 Procurement of Equipment and Vehicles Jun 1991 Jun 1992 Mar 1993 Jun 1994 Training Extension/Capacity Building Mar 1991 Oct 1996 Mar 1992 Dec 1998 B. Irrigation Development Civil Works Jun 1991 Jun 1996 Jan 1992 Dec 1998 Procurement Activities Mar 1991 Jun 1994 Consulting Services Jun 1991 Mar 1995 Jan 1993 Dec 1998 C. Survey and Land Titling Land Resource Inventory Jan 1991 Dec 1996 Jan 1991 Dec 1998 D. Infrastructure Development 1. Main and Feeder Roads Civil Works Jun 1991 Jun 1996 Jan 1992 Dec 1998 Consulting Services Jun 1991 Jun 1995 Feb 1994 Dec 1998 2. Port Civil Works Jun 1991 Jun 1993 Jan 1995 Dec 1998 Consulting Services Jun 1991 Jun 1992 Jun 1994 Jun 1995 E. Social Services 1. Integrated Health Program Malaria Control Program Jun 1991 Jun 1997 Jun 1991 Dec 1998 Tuberculosis Control Program Jun 1991 Jun 1993 Oct 1991 Dec 1998 Nutrition Program Jun 1991 Jun 1996 Oct 1991 Dec 1998 Construction of Barangay Health Centers Jun 1991 Jun 1996 Jan 1992 May 1996 Community Education Jun 1991 Jun 1996 Oct 1991 Dec 1998 2. Rural Water Supply Consulting Services Jun 1991 Mar 1993 Jan 1993 Oct 1995 Formation of Water Users' Associations Jun 1991 – Jan 1994 – Construction of New Wells Oct 1992 Oct 1995 Feb 1993 Dec 1998 Rehabilitation of Existing Wells Jun 1991 Oct 1995 Jan 1993 Dec 1998 3. Women in Development Procurement Jan 1991 Jun 1996 Feb 1992 Jun 1997 Construction of Training Centers for Women Jan 1991 Jun 1992 Jun 1992 Jun 1994 Institution Building and Beneficiary Training Jun 1991 Oct 1995 Sep 1991 Dec 1998 F. Project Management Staff Hiring Jan 1991 Mar 1991 Jun 1991 Dec 1991 Procurement Mar 1991 Jun 1996 Mar 1991 Jun 1996 Consulting Services Jan 1992 Dec 1992 Jun 1991 Oct 1992 Planning, Coordination, and Monitoring Jun 1991 Jun 1996 Oct 1991 Dec 1998 vii
D. Data on Asian Development Bank Missions
No. of Name of No. of Person- Mission Date Persons Days Specialization of Members
Loan Appraisal 14-29 Mar 1990 9 128 Senior Agronomist Senior Project Benefit Monitoring and Evaluation Specialist Agro-forestry Specialist Counsel Programs Officer Project Specialist - Sector Planning Young Professional Staff Consultant/Civil Engineer Staff Consultant/ Agricultural Economist Staff Consultant/Sociologist
Inception 13-14 Feb 1991 1 2 Project Economist
Review - 1 13-16 Oct 1991 1 4 Project Engineer
Review - 2 1-4 Jul 1992 2 28 Project Engineer Senior Clerk (Project Administration)
Review - 3 21 Jun-2 Jul 1993 1 12 Project Engineer
Review - 4 22 May-3 Jun 1994 2 26 Project Engineer Senior Clerk (Project Administration)
Review - 5 24 Jul-5 Aug 1995 2 26 Project Engineer Senior Clerk (Project Administration)
Review - 6 6-17 May 1996 2 24 Project Engineer Assistant (Project Administration)
Review - 7 10-21 May 1997 2 24 Project Engineer Assistant (Project Administration)
Review - 8 8-14 Nov 1998 2 24 Rural Development Specialist Associate Project Analyst
Project 8-24 Feb 2001 4 68 Project Economist Completion Associate Operations Analyst Review Staff Consultant/Civil Engineer Staff Consultant/Economist
Note: The Project Completion Mission comprised S. M. Scheierling, Project Economist/Mission Leader; C. M. Sayon, Associate Operations Analyst; C. J. Wensley, Staff Consultant/Civil Engineer; and F.A. Siddique, Staff Consultant/Economist. viii I. PROJECT DESCRIPTION
1. The Second Palawan Integrated Area Development Project supported the development goals of the Government of the Philippines as incorporated in the Medium-Term Philippine Development Plan (1987-1992): (i) reduce poverty, (ii) create more productive employment opportunities, (iii) promote equity and social justice, and (iv) foster sustainable economic growth. Consistent with these goals, agriculture and rural development constituted the central theme of the strategy, as the incidence of poverty was the highest in rural areas where two thirds of the country's population live. The Government also adopted the agricultural and rural development- based strategy to address the problems of less developed regions. The Project thus met the Government's twin objectives of poverty reduction and balanced regional development. The Project was also in line with the Asian Development Bank’s (ADB) operational strategy for the Philippines, which gave priority to supporting poverty reduction and employment generation especially in rural areas, and a more equitable distribution of the benefits of the development process.
2. The Project was the fourth in a series of ADB-financed integrated area development projects in the Philippines, which typically included agriculture-based livelihood programs with provisions for social and physical infrastructure designed to benefit the rural population. It was a follow-up project to the first Palawan Integrated Area Development Project (PIADP I) implemented from 1982 to 1990. PIADP I was envisaged as the first phase of development of the island province of Palawan and covered the central and southern parts of the province's mainland. The Project was designed along the lines of PIADP I while incorporating lessons learned from previous integrated area development projects.1
3. The objective was to develop the available land and water resources of the province, with a view to raising the level of agricultural production and productivity and generating employment opportunities, so as to increase rural incomes, reduce the high incidence of poverty, and improve the quality of life of subsistence farmers and fisherfolk. The Project also addressed the problem of environmental degradation to ensure the sustainability of the natural resource base through appropriate land use.
4. The project components were designed to (i) remove the constraints on agricultural production; (ii) build irrigation facilities, roads, and other rural infrastructure; (iii) support social services; and (iv) protect the environment by controlling shifting cultivation and rehabilitating critical upper catchments. An integrated approach was adopted for proper sequencing of project activities in accordance with their complementarities and linkages.
5. The Project had seven components, which focused on the northern part of the mainland and the island municipalities, but included activities throughout Palawan. Five municipalities on the mainland (El Nido, Rizal, Roxas, San Vicente, and Taytay) and 10 island municipalities (Agutaya, Araceli, Balabac, Busuanga, Cagayancillo, Coron, Cuyo, Dumaran, Linapacan, and Magsaysay) were specifically targeted.
1 The project preparatory technical assistance TA 1097-PHI: Palawan Integrated Area Development II, for $355,000 (including $150,000 from ADB and $205,000 from the United Nations Development Programme) was approved on 29 December 1988 and implemented in 1989. 2 II. EVALUATION OF IMPLEMENTATION
A. Project Components
1. Agricultural Development
6. Crop Intensification and Diversification. The subcomponent aimed to (i) develop and promote sustainable farming systems by growing cashew, cacao, and coffee as intercrops for coconut; (ii) establish mixed orchards; (iii) promote hillside farming to minimize hill degradation and provide incomes for poor upland farmers; and (iv) provide support services. The Department of Agriculture (DA) executed the subcomponent. Targets as revised in 1995 were generally met (Appendix 1). Agricultural support services were strengthened by establishing 14 rural agricultural centers (RACs) where on-farm demonstrations to introduce improved farm technology and integrated pest management were conducted. Farmers contributed labor to the RACs to repay the cost of planting materials. Other achievements of the subcomponent include the preparation of 37 key resource area development plans; formation of 133 farmers’ associations, 115 agricultural clubs, and 46 cooperatives; production and dissemination of information materials; and consultative meetings and farm visits.
7. Although most targets for the subcomponent have been met, a number of problems occurred during implementation. Because it was difficult to establish coffee and cacao with coconut, they were instead established under thinned forest canopy. Improved cashew varieties from Thailand introduced in 1997 had a very low germination rate. In addition, the El Niño drought caused a considerable mortality of tree crops and forest fires in 1998, destroyed newly established coffee and cacao plantings, particularly in Rizal. Recently, changing weather patterns have also made cashew production unpredictable. Hillside farming was the least popular among farmers due to the effort involved. Because many farmers had large landholdings in the lowlands, they concentrated on mixed orchards. They generally adopted the improved agricultural practices promoted under the subcomponent, and mixed orchards have been successful. The majority of the agricultural technicians hired under the Project were contract staff, and most contracts were terminated at project completion. DA handed over the RACs to the provincial government, pending eventual handover to the municipalities when viable. However, provincial funding to support the activities initiated under the subcomponent is limited.
8. Livestock Development. The subcomponent executed by DA aimed at improving the livestock industry in Palawan to meet the need for meat, milk, and eggs; augment household income; and supply draft animals for farming. The following activities envisaged at appraisal have been carried out: (i) a carabao breeding center was set up: 14 of the 41 offspring produced were distributed to farmers; (ii) a swine breeding center and a swine dispersal substation were established; at project completion a breeding stock of 52 sows and 5 boars was maintained, and 994 piglets had been distributed; (iii) heifers and bulls of improved breeds were procured for distribution through the RACs, and such distribution continues; (iv) some 8,000 poultry birds in mating pairs were distributed, and about 1,370 birds collected and distributed, but mortality due to diseases was high; (v) an animal diagnostic laboratory was constructed, and the RACs treated, vaccinated, and dewormed more than 79,000 animals; (vi) a pilot dairy demonstration farm was established and 10 cows are currently being milked; and (vii) livestock technicians assigned to the RACs trained farmers in animal health care, pasture development, and livestock management.
9. During implementation, initial fund releases were delayed, holding up the construction of livestock facilities. There were delays in procuring cattle, and in 1997 the decision was taken to procure the cattle from Australia. Additional delays occurred in distributing livestock to island municipalities due to the nonavailability of sea transport. Stress during road and sea transport caused considerable cattle mortality, approaching 40 percent in some areas. Mortality due to diseases was also high among all distributed animals. However, farmers are generally pleased 3 with the program, and livestock distribution continues. The carabao breeding center has been turned over to the DA regional office to become part of a national network of carabao breeding centers. DA also retained the dairy farm, and the swine breeding center was turned over to the provincial government.
10. Fishery Support Services. The purpose of this subcomponent executed by DA was to support coastal communities that depend on fishing for subsistence. To reduce losses and spoilage, the subcomponent (i) provided fish landing facilities for small boats at nine locations; (ii) improved or constructed nine fish markets; (iii) provided extension services and training facilities for fisherfolk; and (iv) established a diagnostic fish laboratory in Puerto Princesa to detect fish illegally caught with explosives or poisonous chemicals. Fisheries technicians were hired and trained, and assigned to the RACs to provide training and technical assistance.
11. As anticipated at appraisal, the majority of the fish landing facilities were constructed of wood. However, due to a commercial logging ban from 1992, the timber used was inappropriate, and six of the nine landings rapidly deteriorated. The remaining three have been improved by the respective municipalities with the use of local funds and are operational, but many fisherfolk continue to land their catch on the beach. The new fish markets were considered too small and were not actively used, although improvements to existing markets were generally beneficial. Eight demonstration farms and four demonstration farmhouses were constructed for mussel/oyster, seaweed, and cage fish production; and fisherfolk were trained. The facilities were constructed using temporary materials, and have since deteriorated. All facilities have been formally turned over to the municipalities.
2. Irrigation Development
12. The component executed by the National Irrigation Administration (NIA) aimed to improve water availability for existing communal irrigation systems (CISs) and provide new communal irrigation projects (CIPs) to enhance rice production in the province. Five CISs constructed in the 1970s and covering 1,760 hectares (ha) were to be rehabilitated, and 15 CIPs covering 4,700 ha to be constructed. NIA's participatory approach in planning, designing, and implementing systems was used to organize irrigators’ associations and to train irrigators in system operation and maintenance (O&M).
13. The start of implementation was delayed by delays in the release of funds. This situation was compounded by a ban on hiring new government staff in 1992, and by a delay of almost a year in engaging the consultants. During the preparation of the feasibility studies, the appraisal cost estimates were determined to be too low and several proposals2 to not be feasible. As a result, the scope of the component was reduced in 1995 to 1 CIP and 10 CISs covering a total of about 3,500 ha. The Government later proposed including 2 of the original proposals3 to be completed with local funding.
14. By November 1998, the 11 CIPs and 2 CISs were completed, serving about 5,300 ha and 1,300 farmers (Appendix 2). NIA had organized and trained 15 irrigators' associations. Farmer beneficiaries were involved in the construction of the schemes, and contributed equity to the schemes through a portion of their wages; however, due to the high unit cost of these schemes, the contribution amounted to only 2-5 percent of the total direct cost. The farmers have yet to complete land development to bring the full command area into production. All systems have been handed over to irrigators' associations, but farmers report that deficiencies in the canal network and control structures remain. A large number of farmers do not repay the amortized direct construction cost. NIA’s provincial irrigation office, which relies on amortization payments for a
2 Including Ilian I CIS, Ilian II CIS, Layok CIS, and Cataban CIP, covering a total of 607 ha. 3 Maasin CIP and Tamlang CIS, covering a total of 2,000 ha. 4 large portion of its operating budget for technical services to CISs and CIPs, is thus unable to provide the services required. Farmers welcome the impending devolution of all CISs and CIPs from NIA to the respective municipal local government units (LGUs), as mandated under the Local Government Code of 1991. Farmers perceive the LGUs as being more aware of and responsive to their needs.4 But the majority of LGUs lack the technical capacity to take over irrigation facilities, and funding for sustainable O&M remains a significant issue.
3. Survey and Land Titling
15. The aim of this component was to halt the encroachment on forest areas and to increase security of tenure by facilitating the issuance of land tenure documents under the Government’s agrarian reform program. Executed by the Department of Environment and Natural Resources (DENR), the component supported ongoing activities and funding was used to continue land titling activities initiated under PIADP I. The appraisal targets of cadastral surveys covering 18,600 ha in Busuanga and isolated surveys of 54,000 ha on mainland Palawan were met,5 and 20,000 titles were issued. The titles (free patents, homesteads, and sales patents) were issued to beneficiaries occupying agricultural land and housing lots. The component benefited about 15,900 farmers.
16. The start of implementation was delayed due to delays in initial fund releases, recruitment of personnel, and lack of transportation. Further delays were due to changes in program priority, late payment of back taxes by title applicants, and the centralized signing authority in the issuance of land titles. DENR resolved the latter issue by granting the community environment and natural resources offices the authority to issue titles.6 Assessment of the impact of the subcomponent on encroachment is difficult, but recent land zoning activities are reducing unchecked settlement.7 Interviews with recipients of titles indicated considerable satisfaction with the outcome. The titles provide security of tenure and the opportunity to apply for loans using land as collateral. For the province, the issuance of titles leads to rising revenues from land taxes.
4. Infrastructure Development
17. Roads. The subcomponent aimed to provide access to remote areas in the province, assist poor farmers and fisherfolk increase production and obtain access to markets, and establish linkages with other project components. It included the construction or rehabilitation of 579 kilometers (km) of gravel surfaced main (national) and feeder (provincial) roads throughout the province. However, underestimating the civil works quantities at appraisal resulted in a cost increase of 80 percent. In 1995 the scope of the subcomponent was modified, which reduced road construction to 286 km. A total of 314 km was completed; several road sections were lengthened during construction to serve additional communities.
18. The subcomponent made good initial progress, with surveys, designs, specifications, and contract documents prepared in-house by the Executing Agency (EA), the Department of Public Works and Highways (DPWH). The roads were constructed in line with specifications, although problems were encountered with drainage and enforcement of the contractors’ obligation to repair defects during the one-year maintenance period. Poor drainage maintenance has resulted in damage to many road sections, and the gravel surface needs replacement in many areas. Comprehensive routine maintenance is lacking, although potholes are repaired. The DPWH
4 It has not yet been decided whether NIA or the LGUs will receive the amortization payment, and whether this will be used for O&M, or as a reserve for future development/rehabilitation. 5 Balabac is the only municipality in Palawan for which the cadastral survey has not yet been completed. 6 Approval authority for issuing titles of less than 5 ha rests with the provincial DENR Officer; for 5-10 ha, with the regional executive director; and for greater than 10 ha, with the DENR secretary. 7 Land-use zoning is currently being introduced under the zoning requirements of the Comprehensive Land Use and Water Plans carried out by each municipality, using the Environmentally Critical Areas Network under the Strategic Environmental Plan for Palawan as the framework (para. 27). 5 barangay (district) office is in charge of maintaining the main roads, while the feeder roads have been turned over to the provincial government.
19. Port. The subcomponent executed by DPWH covered the repair and completion of the port facilities at Brooke's Point initiated under PIADP I to provide safe berthing for interisland ships and deep-sea fishing vessels. The pier suffered considerable typhoon damage in 1988. So repair and extension of the pier, and construction of a breakwater and ancillary mooring facilities for the port were included under the Project. Although engaging the consultant to review the design was delayed, the design report was completed in June 1995. A roll-on/roll-off ramp and turnaround were provided for the pier. Five-ton concrete tetrapods8 replaced the 5 ton rock specified for breakwater protection due to difficulties in supplying the rock. These modifications, as well as the high cost of rubber fenders and high bid prices, resulted in cost increases from $1.25 million to $3.6 million. The works have been satisfactorily completed, the facilities turned over to the Philippine Ports Authority, and the pier is being used as anticipated.
5. Social Services
20. Integrated Health Program. The subcomponent supported (i) a malaria control program including the provision of drugs and equipment, house spraying, stream clearing, seeding of streams with larvivorous fish, and information dissemination; (ii) a tuberculosis control program, including the provision of drugs, support facilities, training of health personnel, and an information campaign; (iii) a nutrition support program comprising food commodities and micronutrients for malnourished children, pregnant women, and lactating mothers, and a nutrition information campaign; and (iv) establishment of barangay health stations to provide basic medical and family planning services. Executed by the Department of Health (DOH), the subcomponent was implemented by DOH's regional office in support of its ongoing programs. Coordination with other agencies, nongovernment organizations (NGOs), and volunteer groups such as the barangay health workers was strengthened.
21. As planned at appraisal, the malaria control program covered 17 municipalities and one city, and the tuberculosis control program 8 municipalities. The coverage of the nutrition program was reduced from 78 to 19 barangays to allow for the provision of a 12 month instead of a 3 month feeding scheme for underweight children. Vehicles, including motorcycles, and equipment were procured, and training for municipal and barangay health workers conducted. The number of barangay health stations was reduced from 78 to 66 due to cost overrun. Their construction experienced delays because the initial building design did not conform to DOH guidelines. All barangay health stations have been turned over to the respective LGUs which are now allocating funds for the O&M of the stations.
22. Although it is difficult to isolate the impact of the subcomponent, province-wide indicators show health improvements. The malaria control program contributed to a reduction in the annual parasite index from 29 cases/1,000 population (which was the five-year average for 1984-1988) to 10.7 cases/1,000 population at the end of 1998 (appraisal target: 9 cases/1,000 population, revised target: 21 cases/1,000 population). The tuberculosis control program reduced the prevalence rate from 5.2 percent in 1991 to 2.6 percent at the end of 1998 (appraisal target: 3.0 percent). The nutrition support program significantly reduced the malnutrition prevalence rate from 31.1 percent in 1991 to 4.9 percent at the end of 1998 (appraisal target: 18.4 percent).
23. Rural Water Supply. The objective of this subcomponent executed by DPWH was to help rural communities develop and maintain safe drinking water facilities. Activities included at
8 Tetrapods are interlocking, pre-cast mass concrete blocks used for coastal protection works. 6 appraisal were (i) the development of 537 level I9 water supply systems, (ii) rehabilitation of 81 level I and 1 level III water supply systems, and (iii) community education and training programs to ensure appropriate use and maintenance of the water supply systems.
24. Implementation started in 1992 with the rehabilitation of the level I and III systems. Due to delays in the release of funds and procurement of materials, the new level I systems were not started until 1994. Additional delays were caused by the nonavailability of local labor contractors and the remote location of some communities. By project completion in 1998, 517 new level I systems had been installed, and 181 barangay water users' associations had been formed to operate and maintain the systems. Consultants helped to form and strengthen the water users' associations. However, due to completion of consulting services in 1996, when only 175 of the new wells had been installed, and DPWH's lack of approval for a supplemental consulting contract, many water users' associations received little or no training. Partly as a result of this, the ongoing O&M of the wells is weak. Surveys conducted in 1997 showed that about 37 percent of the new level I systems were nonfunctional, mainly due to minor failures of the pump mechanism. Of the functional systems, about 70 percent yield water that is nonpotable due to high levels of iron and manganese.10 Maintenance is a problem as beneficiaries believe the Government should fund repairs.
25. Women in Development. Aiming to improve the opportunities available to women and enable them to work more productively, this subcomponent (i) identified and organized marginalized or disadvantaged women into viable groups; (ii) built capacity, including training of staff and beneficiaries; (iii) provided seed capital to organized groups for income-generating activities to bridge the gap until groups are credit-worthy for conventional bank loans; and (iv) constructed three training centers for women. Executed by the Department of Social Welfare and Development (DSWD), the subcomponent was expected to benefit about 6,400 women in four municipalities and one city.
26. About 5,500 women were organized into 195 women-in-development associations and trained in self-enhancement, nutrition, hygiene, sanitation, and business skills development including formulating project proposal. Five municipal women-in-development federations were formed, and a provincial federation is planned. A total of P5.5 million seed capital was awarded to 1,190 women for livelihood projects such as trading, food processing, crop and livestock production, fishing, sewing crafts, and handicrafts. During 1992-1995 loans were given under a scheme that did not rely on group pressure for loan recovery, and repayment rates were as low as 31 percent. In 1995 a new approach similar to the one used by the Grameen Bank in Bangladesh was adopted, with a focus on group training and loan accountability. This resulted in an increase in recovery rates to more than 90 percent during 1995-1997. Three training centers for women were constructed and 1,055 women trained in food processing, rattan crafts, and sewing crafts. Two centers are currently not used much due to their relatively remote location (which depended on land donations), and lack of interest in the training offered. The handover of the centers and some personnel to the respective municipalities was completed in 1998. DSWD and the provincial government continue to provide assistance to the women-in-development associations.
9 Water supply systems in the Philippines are classified as follows: level III–water supply to individual houses through pipe networks; level II–tubewells or springs with piping and communal faucets; and level I–individual domestic deep or shallow tubewells. 10 At appraisal, it was found that only 35 percent of the expected beneficiaries were using the water supply systems provided under PIADP I. The level I systems under the Project were intended to be based on natural springs to improve potability, but in many sites this proved to be difficult to implement and almost all of them are deep or shallow tubewells with similar water quality problems. 7 6. Forestry and Environmental Stabilization
27. This component was formulated on the basis of a study (Strategic Environmental Plan for Palawan [SEP]) financed by the European Community under PIADP I, and aimed at ensuring the long-term sustainability of the natural resource base of Palawan through farmers’ adoption of appropriate land uses, catchment rehabilitation, and environmental monitoring. The European Union was expected to separately finance the component at an estimated cost of $9.8 million. After the Government adopted the SEP as a comprehensive framework for Palawan's sustainable development under Republic Act 7611 in 1992, the European Union granted Euro17.0 million (about $15.6 million) for the Palawan Tropical Forestry Protection Program (PTFPP). The seven- year PTFPP started in mid-1995. The PTFPP is to protect forests by establishing replicable approaches using catchment-based community planning and management. The components include a geographic information system, the demarcation of areas designated as critical catchments under SEP's environmentally critical areas network (ECAN) framework, strengthening of the sustainable management of protected areas, promotion of sustainable upland agricultural techniques, institutional strengthening, an environmental awareness campaign, and project management.
28. In collaboration with the Palawan Council for Sustainable Development Staff (PCSDS), the geographic information system was installed, and the delineation of ECAN boundaries applying three criteria completed. Microprojects for upland communities, including agroforestry, marketing, preventive health, and microfunds, are being implemented. In 1998, the PTFPP shifted from a component-based to an area-based approach and is now focusing on establishing a replicable forest conservation model in one critical catchment in each of 12 municipalities, with communities preparing catchment management plans. These plans are intended to form part of the municipal comprehensive land use plans, which are required by a zoning ordinance under the Local Government Code of 1991. Several of the catchment management plans under preparation cover project-supported CISs, and are expected to reduce flashfloods and soil erosion. The environmental awareness campaign covers the whole mainland.
7. Project Management
29. The Palawan Integrated Area Development Project Office (PIADPO) established under PIADP I was envisaged to continue to act as a focal point for planning, monitoring and coordinating the Project. Funding was provided to strengthen PIADPO through additional staff, vehicles, and office equipment; and develop its management information systems for project progress monitoring and reporting. Four barangay management offices were established while the funds originally allocated for two additional offices were used to rehabilitate the existing PCSDS head office. Transport and office equipment were also provided for project benefit monitoring and evaluation (BME) activities. PIADPO was envisaged to summarize key indicators from comprehensive benchmark profiles developed by the respective executing agencies (EAs), as well as to undertake and coordinate a BME review study to assess the implementation of each component prior to loan closing.
30. The organizational structure of project management changed with the conversion of PIADPO to PCSDS in 1992 as a result of Republic Act 7611 (Appendix 3). PCSDS became the professional support staff of the Palawan Council for Sustainable Development (PCSD), which is mandated to provide policy direction in governance and implementation of the SEP. PCSD is under the Office of the President and comprises representatives from the national and provincial governments, the private sector, and the executive director of PCSDS as the secretary. After the conversion, PCSDS was responsible not only for coordinating the Project, but also for a range of other tasks. Instead of the originally planned 118 staff, only 20 permanent and 19 contract staff worked exclusively for the Project. Additional support staff was hired as needed in the areas of planning, research, and environmental concerns. For six person-months in 1992, an international 8 project management specialist helped PCSDS to establish an improved management information system that showed project status in terms of outputs. The system has subsequently been adopted by PCSDS for monitoring the PTFPP and other PCSDS activities.
31. Project BME suffered delays. Each EA was tasked with benchmark profiling its own components. Under PIADP I that duty had been the responsibility of PIADPO. Due to the lack of capable staff in the EAs, aggravated by the hiring ban of the Attrition Law (Republic Act 7430), the benchmark profiles were carried out only between 1992 and 1995. Comparing the with-project and without-project scenarios was therefore difficult. Because they depended on the benchmark profiles, monitoring surveys were not conducted on time. The BME staff in PCSDS was reshuffled twice, and had a high turnover since most had contractual positions. The local BME specialist was engaged only in 1996 to assist in drafting the BME system and carrying out a second round of beneficiary surveys, and then again in 1998 to help prepare the BME review study.
B. Implementation Arrangements
32. In support of the Government’s decentralization initiatives at appraisal, the office of the provincial governor was given responsibility for the overall direction, supervision, and coordination of the Project. PIADPO was under the administrative control of the governor’s office and was responsible for overall project management. A project executive committee, established under PIADP I and chaired by the provincial governor to promote coordination among the EAs and review budgets, continued to function with the addition of a representative of NGOs. Managing and implementing individual components remained the responsibility of the national line agencies. Project management offices, each with a project manager and competent staff, were established in the provincial office of each EA to implement the respective components.
33. Project implementation arrangements were satisfactory. The conversion of PIADPO to PCSDS at the beginning of the implementation period and the accompanying reduction of staff working exclusively on project coordination were partly compensated by the experience of staff in implementing PIADPO I, and by the established linkages with national and regional agencies as well as LGUs. Field coordination and monitoring was facilitated by the barangay management offices of PCSDS. The barangay management offices acted as secretariats to municipal monitoring teams involving municipal staff, including the mayors, and representatives of the EAs at the field level. Issues and problems encountered in the course of project implementation were discussed at this level. Resolution of problems which could not be addressed at the municipal level was facilitated by PCSDS through regular monthly project executive committee meetings. Through its Manila-based liaison office PCSDS followed up on concerns with the respective national and regional agencies. However, PCSDS felt that project implementation could have been better if PCSDS had had more influence over the EAs, including some financial control.
C. Project Costs
34. At appraisal, total project cost was estimated at $73.5 million equivalent, of which $20.0 million (27 percent) was the foreign exchange cost (including interest during construction of $3.3 million) and $53.5 million equivalent (73 percent) was the local currency cost. ADB financed the entire foreign exchange cost of $20.0 million, and $38.0 million equivalent of the local currency cost. The Government agreed to provide the balance of local currency cost financing of $15.5 million equivalent from its own resources. The ADB financing was provided in two parts, a loan of $25.0 million from the Asian Development Fund and a loan of $33.0 million from its ordinary capital resources.
35. At completion, the project cost amounted to $85.9 million equivalent, of which ADB loans accounted for $58.3 million, and the balance of $27.6 million equivalent was provided by the Government. There was an overrun in local currency costs because of a cost increase in some 9 components such as irrigation development (62 percent) and roads and port (83 percent) because of an underestimation of the cost and amount of civil works during appraisal, and local inflation and the devaluation of the peso by about 80 percent during project implementation. The cost overrun resulted in a revision in the scope of some components, and the need to provide for additional counterpart funds. The appraisal and actual project costs are shown in Appendix 4.
D. Project Schedule
36. The Project was originally envisaged to be completed over six years beginning in January 1991 and ending in December 1996, with the loan closing date scheduled on 30 June 1997. An extension was required to complete the components, and actual project implementation was carried out over eight years (Appendix 5). The actual loan closing date was 13 July 1999 for the ordinary capital resources loan, and 10 September 1999 for the Asian Development Fund loan. All Project components were delayed by one to two years. This was largely due to (i) delayed release of funds due to the Department of Budget and Management's budgetary constraints, especially during 1991-1993; (ii) delayed submission and endorsement of the modified project scope and reallocation of loan proceeds; (iii) delayed recruitment of consultants; and (iv) delayed construction of infrastructure due to the commercial logging ban included in Republic Act 7611. However, once initiated, the components were generally completed within the time frame anticipated at appraisal.
E. Engagement of Consultants and Procurement of Goods and Services
1. Consultants and NGOs
37. The Project provided loan financing for 64 person-months of international consulting and 216 person-months of domestic consulting. All consultants were engaged for the periods envisaged at appraisal, although the engagement was delayed in almost all cases. Reasons for the delays included late initiation of engagement procedures by the EAs, difficulties in shortlisting and evaluating consultants, unfamiliarity with ADB’s engagement requirements, and delays in negotiations.
38. The Project provided for the recruitment of NGOs to assist DA in implementing the agricultural development component. Four NGOs were initially identified to undertake the tasks, but this number was later reduced to two, a Manila-based NGO and a Palawan-based NGO. The services of the two NGOs were initiated about two years later than planned, in 1993 and 1994, respectively.
2. Procurement of Goods and Services
39. As agreed during appraisal, all procurement was conducted in accordance with ADB’s Guidelines for Procurement. Civil works were generally contracted out by the EA concerned under local competitive bidding (LCB) procedures for the construction of: (i) infrastructure under the roads, port, and rural water supply subcomponents; (ii) RACs; (iii) barangay health stations; and (iv) training centers for women. All irrigation systems were constructed by force account, according to NIA because of lack of interest by contractors.11 The construction, extension, and rehabilitation of office buildings, equipment storage, cattle sheds, and laboratory and nursery structures were carried out by the EA concerned under LCB or force account, as appropriate. Procurement of vehicles, equipment, and materials was carried out under international shopping for supply contracts exceeding $50,000, or by the concerned EA following standard local procedures acceptable to ADB. Due to the scattered locations and time spread, locally available materials
11 NIA directly procured a range of construction plants and equipment, which are now retained by the provincial irrigation office and hired out for maintenance activities. 10 including agricultural inputs were purchased by the EAs under LCB. A list of equipment envisaged at appraisal and as procured is shown in Appendix 6.
F. Performance of Consultants, Contractors, and Suppliers
1. Consultants and NGOs
40. The performance of consultants under the Project was generally satisfactory. The performance of the NGOs under the agricultural development component was below expectations. The Manila-based NGO developed the training materials and subcontracted the services of a local NGO to undertake field activities in the northern island municipalities. After a year, the contract of the Manila-based NGO was terminated due to nonperformance, and another Palawan-based NGO was engaged for a year to organize cooperatives on the mainland. However, due to a funding shortage, the NGOs did not achieve the target for organizing cooperatives, and the RACs completed the activity.
2. Contractors and Suppliers
41. Delays in fund releases led to delays of one to two years in awarding civil works and supply contracts for all components. No particular problems were encountered in managing the contracts. In the case of the roads subcomponent, ADB review missions expressed concern that contractors did not satisfactorily complete the works during the one-year maintenance period. Late delivery of materials for rural water supply delayed implementation of this subcomponent, although additional delays in implementation were due to the lack of availability of local labor contractors to drill wells. The procurement of improved cattle under the livestock development component was delayed due to delays in initial fund releases and the unavailability of local stocks.
G. Conditions and Covenants
42. The Loan Agreement was signed by the Government on 27 December 1990. The loan was declared effective five days after the agreed time frame, on 2 January 1991. The Government and the EAs have complied with the majority of the loan covenants (Appendix 7). The Borrower had difficulty (i) recovering amortization payments for the CISs from beneficiary farmers; (ii) carrying out O&M for some project facilities; (iii) providing sufficient training to water users' associations for O&M of rural waterworks; and (iv) establishing BME as envisaged at appraisal.
H. Disbursements
43. The Project was approved on 27 September 1990 and became effective on 2 January 1991. The first disbursement was made on 27 September 1991 for the ordinary capital resources loan and 15 March 1991 for the Asian Development Fund loan. At the loan closing date of the ordinary capital resources loan, $32.68 million had been disbursed, and the unutilized loan balance of $0.31 million was canceled. The total amount disbursed represents about 99 percent of the original allocation. At the closing date of the Asian Development Fund loan, SDR17.89 million (equivalent to $25.67 million) had been disbursed and the unutilized loan balance of SDR0.35 million (equivalent to $0.48 million) was canceled. The detailed allocation of loan proceeds is presented in Appendix 8.
44. During project implementation, the Government requested the use of an imprest account and statement of expenditures procedures, which was approved by ADB on 29 July 1991. An initial amount of $1.66 million was provided to facilitate the flow of funds to the Project. All EAs except DPWH utilized the imprest account. The advances to the imprest account were fully liquidated on 10 September 1999. 11 I. Environmental and Social Impacts
45. Population pressure resulting from uncontrolled migration from nearby provinces and Mindanao, coupled with illegal logging and slash and burn farming in the uplands, have contributed to a depletion of natural resources, including deforestation. The adoption of the SEP and the conversion of PIADPO into PCSDS under the Republic Act 7611, which resulted from a study funded by the European Union under PIADP I, is showing an increasingly positive impact on Palawan's environment. The commercial logging ban, which was included in the Republic Act 7611, has helped to reduce the annual deforestation rate from an estimated 19,000 ha in the 1980s to 14,300 ha during 1992-1998. PCSDS is now facilitating the implementation of the ECAN framework as the main strategy of the SEP, which involves (i) delineating and marking boundaries of different land use zones, (ii) identifying prescribed activities and resource use for each zone, and (iii) enforcing regulatory measures to prevent environmentally destructive measures.
46. The Project's agricultural development component has improved people's livelihood, and reduced their dependence on forest resources. Increased opportunities for tree farming and irrigated agriculture in the lowlands contributed to the abandonment of slash and burn farming in the uplands by inducing farmers to relocate in the lower slopes of the catchments. Improved technology used for hillside farming is contributing to a reduction in flood-generating runoff, which often damages roads and bridges and increases O&M costs in downstream irrigation systems. By providing increased security in land tenure, survey and land titling is also reducing the pressure of unchecked encroachment into critical forest and watershed areas. The ongoing activities of the PTFPP are also helping to conserve the forest canopy at higher elevations and reducing the occurrence of floods.
47. Social impacts of the Project include the enhancement of awareness in health care, family planning, and nutrition in rural areas through the work of the additional barangay health stations. The prevalence of malaria, tuberculosis, and malnutrition was significantly reduced during project implementation. Some women who worked as barangay health workers have been elected as barangay and municipal councilors. Women were also empowered through the training and seed capital provided under the women-in-development subcomponent. More rural households have access to reliable water supply. The rehabilitated and new roads have benefited remote communities by increasing opportunities to participate in economic activities. Access to main centers, formerly many hours’ travel by boat along rivers and the coastline, has been much improved with regular passenger and cargo transport. Many new crops are being grown for market rather than subsistence. Also, communities now have ready access to agricultural inputs, and extension and social services such as education and health.
J. Performance of the Borrower and Executing Agencies
48. Budget constraints and delays in fund releases affected the Government’s ability to implement the Project as planned at appraisal. Government restrictions on hiring personnel, in force at the start of the Project, affected initial operations. However, the situation had generally improved by 1993 when fund releases were made on time and the Project was provided with adequate funds and a full complement of staff (except PCSDS).
49. Implementation and management problems encountered during PIADP I were generally overcome, with project management offices for all EAs established in Palawan. Delegated authority to the project management offices was generally appropriate. Project executive committee meetings were held regularly, communication and coordination between PCSDS and EAs were generally good, and progress reports were generally prepared on time using the Project's management information system. Handover plans were developed on the initiative of PCSDS as early as 1995. However, BME activities got off to a late start, with poorly conducted follow-up surveys in later years. 12
50. Two pieces of legislation significantly affected the Project during implementation. The Local Government Code adopted in 1991 devolved many of the functions of the national Government to the provincial and municipal governments, requiring modified staffing arrangements and closer coordination between EAs and the respective LGUs. The adoption of the SEP in 1992 and the associated conversion of PIADPO into a national council under the Office of the President strongly supported the sustainable and environmental initiatives under the Project. However, the reduced number of staff working exclusively for the Project under PCSDS limited its ability to undertake BME activities as envisaged at appraisal.
K. Performance of the Asian Development Bank
51. A number of implementation problems could have been avoided if more detailed assessments had been carried out during appraisal. Detailed design studies for the major civil works components, including irrigation development and infrastructure development, were only carried out during project implementation. This contributed to delays, cost overruns, and a revision in scope of these components. A needs assessment for the agricultural development component would have shown that there is little demand for hillside farming. The problems experienced with level I water supply systems under PIADP I should have led to an improved design of the rural water supply subcomponent. Less problems would also have been encountered with BME if the task of benchmark profiling had been transferred from PCSDS to the EAs after an assessment of the capabilities of the EAs.
52. Annual project review missions conducted by ADB provided guidance during project implementation. ADB effectively coordinated with PCSDS, DA, NIA, DENR, DPWH, DOH, and DSWD during the course of implementation to help resolve issues relating to financial matters, and took timely action to resolve these matters. This included the approval of the use of imprest account and statement of expenditures procedures in 1991 and approval of the reallocation of loan proceeds and an extension of the loan closing date in 1996. Although the frequency of missions was generally appropriate, ADB could have acted more proactively on a number of problems such as the slow implementation of benchmark profiles and subsequent BME activities. Overall, greater attention should have been paid to the qualitative aspects of loan administration, with a greater focus on the expected outcomes of the Project rather than merely monitoring the physical achievements.
III. THE TECHNICAL ASSISTANCE
53. The Project included an advisory technical assistance12 aimed at (i) identifying agro-based industrial opportunities and preparing commercially viable investment projects in cashew, coffee, cacao, coconut, mango, fish and fish products, seaweed, feed and feed grains, livestock by- products, and rice (pre-drying facilities for paddy and industries based on by-products in milling) for implementation by the private sector; and (ii) recommending measures that the Government could adopt to improve the commercial attractiveness of the proposed investment projects. The EA was PIADPO, assisted by DA and the Department of Trade and Industry.
54. An international consulting firm (15 person-months) together with a team of domestic consultants commenced work in July 1991 and presented their final report in December 1991. Profiles for typical enterprises in each of the nine commodity categories were prepared and offered to the private sector. PIADPO/PCSDS together with the provincial planning and development offices were required to follow up. Despite various efforts, including a trip by provincial government representatives to Cebu to find an investor for the seaweed project, none of the proposed
12 TA 1380-PHI: Agroprocessing and Rural Enterprise, for $295,000, approved on 27 September 1990. 13 investment projects was taken up by the private sector. However, some of the proposals provided guidelines for investments in smaller projects.
IV. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS
A. Financial Performance
55. The financial impacts of the Project on the beneficiaries have been analyzed on the basis of five representative farm models, which were used as the basis of the financial assessment at appraisal. The models represent typical land uses, and illustrate the effect on farm cash income of the changes in land-use patterns implemented under the Project. They include (i) a lowland farm of 1.2 ha that converts from rainfed paddy and corn to two crops of irrigated paddy; (ii) an upland farm of 1.1 ha that converts from coconut to cashew under coconut; (iii) an upland farm of 2.9 ha that converts from coconut to cashew under coconut; (iv) an upland farm of 2.9 ha that converts from slash and burn farming with paddy and corn to mixed orchard; and (v) an upland farm of 1.0 ha that converts from slash and burn farming with paddy and corn to cashew and corn.
56. The cash income of the first model is estimated at P17,145, or 20 percent lower than the appraisal estimate of P21,577; for the second model, at P19,170, or 12 percent higher than the appraisal estimate of P17,172; for the third model, at P50,668, or 6 percent higher than the appraisal estimate of P47,820; for the fourth model, at P22,435, or 58 percent higher than the appraisal estimate of P14,168; and for the fifth model, at P10,215, or 14 percent lower than the appraisal estimate of P11,860. The differences in the estimates of cash income mainly result from the lower realized yield and cropping intensity for irrigated paddy compared with the appraisal estimate, and the higher realized yield for mixed orchard.
B. Economic Performance
57. Following the approach chosen at appraisal, the economic internal rate of return (EIRR) has been calculated for five components (crop intensification and diversification, livestock development, fishery support services, irrigation development, and roads) and for the Project as a whole. The economic analysis takes into account only directly quantifiable costs and benefits. The major assumptions and results are presented in Appendix 9.
58. The EIRR for the whole Project is estimated at 11 percent based on performance to date and expected future benefits. The EIRR estimated at appraisal was 18 percent. For crop intensification and diversification, an EIRR of 18 percent was estimated compared with an appraisal estimate of 25 percent. An EIRR of 6 percent was estimated for livestock development compared with an appraisal estimate of 9 percent. Fishery support services yielded an EIRR of minus 2 percent compared with an estimate of 24 percent at appraisal. The irrigation development component yielded an EIRR of 10 percent compared with an appraisal estimate of 22 percent. The EIRR of the roads subcomponent, which was 21 percent at appraisal, is estimated at 16 percent. The lower EIRR estimates reflect delays in implementation, unrealistic cost estimates of the major infrastructure components and the resulting reduction in scope, and the achievement of lower benefits than anticipated at appraisal.
59. The Project's EIRR is not very sensitive to changes in major variables. Returns are relatively less sensitive to increases in project costs than to decreases in project benefits. A 10 percent increase in costs will reduce the EIRR for the Project from 11 percent to 9 percent, while a 10 percent decrease in benefits will reduce the EIRR to 7 percent. A combination of these two changes will result in an EIRR of 6 percent. 14 C. Attainment of Benefits
1. Initial Project Operation
60. The crop intensification and diversification subcomponent has led to increased intercropping of high-value tree crops like cashew, cacao, and coffee under coconut trees. Fishery support services, including the construction of fish landing stations and fish markets, have led to an increase in the net marketing tonnage of fish by reducing the loss and spoilage of fish by about 5 percent. Construction of 13 communal irrigation systems has been completed. The yield of irrigated paddy has increased from 2.5 tons per ha to 4.0 tons per ha leading to the production of 15,330 tons per year. Cropping intensity has increased from 100 percent to 130 percent. The newly constructed roads are now used for transportation of agricultural produce and passengers within the project area and outside. The roads have contributed to a reduction in traveling cost and time, an increase in agricultural production and output prices, and a decrease in input prices.
2. Expected Benefits
61. Quantified Benefits. The average production of perennial and annual crops is expected to increase to 15,490 metric tons per year at full development. The average annual economic value of the incremental production of paddy and tree crops is estimated at P93.0 million and P145.0 million, respectively. The economic value of the incremental fish production is estimated at P3.3 million per year. The production of paddy has increased, and reached 15,330 tons in 2001. A further increase to 23,809 tons per year is expected at full development in 2003. This production represents about 66 percent of the appraisal target.
62. In addition to the increments in production, the creation of project facilities generated about 6,700 person-years of additional employment. This accounts for 47 percent of the appraisal estimate. At full development, an additional 2,584 person-years of employment will be generated annually through increased agricultural and infrastructure O&M. This represents 40 percent of the appraisal estimate.
63. Socioeconomic Benefits. At project completion, crop intensification and diversification has benefited about 3,053 farm households, which is about 17 percent lower than the estimate made at appraisal. Livestock development and fishery support services have benefited an estimated 3,318 households, which is higher than the appraisal estimate. Irrigation development will benefit an estimated 1,332 farm households at full development in 2003, which represents 22 percent of the appraisal estimate. The infrastructure provided under the Project has improved the quality of life of the beneficiaries in terms of health and life expectancy. Rural water supply has reached the doorsteps of about 31,260 households. The barangay health stations established under the Project serve an average of 200,000 patients annually.
V. CONCLUSIONS AND RECOMMENDATIONS
A. Conclusions
64. The criteria for rating project success are based on the Guidelines for Preparation of Project Performance Audit Reports, and cover relevance, efficacy, efficiency, sustainability, and institutional development and other impacts.
65. Relevance. The Project's objective was to develop Palawan's land and water resources in order to raise agricultural production and productivity, generate employment, raise incomes, reduce poverty, and improve the quality of life for subsistence farmers and fisherfolk. This was consistent with the priorities of the Borrower as well as ADB, both at the time of approval and at the time of evaluation. 15
66. Efficacy. The physical targets of the Project have generally been met, but the outcomes of some of these activities and of the associated technical assistance have not been as high as anticipated at appraisal. As a result, the contribution of the outcomes to the Project's objective was lower than envisaged at appraisal.
67. Efficiency. The EIRR for the Project, based on conservative estimates, has decreased to 11 percent from the 18 percent expected at the time of appraisal. Despite the lower EIRR, the Project with its integrated nature has achieved substantial positive impact with regard to its objective. Efficiency of process was mixed, with technical difficulties and delays in the provision of counterpart funding and the recruitment of consultants. PCSDS played a pivotal role in the coordinating activities at all levels of government.
68. Sustainability. Government ownership of the Project continues to be strong, and demand exists for the services provided. Most of the facilities constructed under the different components have been handed over to either the provincial or municipal government. Funding support for the O&M of the facilities and continuation of the activities initiated by the Project is a significant issue as financial constraints limit the ability of recipient LGUs to meet the budgetary requirements.
69. Institutional Development and Other Impacts. Institutional and organizational strengthening in some areas was lower than expected. Many LGUs and irrigators' associations lack the skills to take over the irrigation systems, and the water users' associations lack the training for the proper O&M of the water supply systems. However, building on the institutional framework developed under PIADP I, the Project has facilitated a considerable change in attitude to environmental protection and land-use planning. It also has enabled PCSDS to further develop its links with regional and national agencies and with provincial and municipal staff. This has facilitated the involvement of LGUs and their support to local development activities.
70. Overall Project Rating. Based on the above criteria, the Project is rated less than successful (Table 1).
Table 1: Assessment of Initial Project Performance
Rating Weight Weighted Criterion Assessment (0-3) (percent) Rating Relevance Highly Relevant 3 20 0.60 Efficacy Less Efficacious 1 25 0.25 Efficiency Less Efficient 1 20 0.20 Sustainability Less Likely 1 20 0.20 Institutional Development Moderate 2 15 0.30 and Other Impacts Overall Ratinga Less than Successful 100 1.55 a Highly successful: overall weighted average (OWA) > 2.5; successful: 2.5 > OWA > 1.6; less than successful: 1.6 > OWA > 0.6; unsuccessful: OWA < 0.6.
B. Lessons Learned
71. The experience gained in implementing the Project produced a number of important lessons:
(i) Implementation of a project with several EAs requires a strong monitoring and coordination agency that, like PCSDS, has established good rapport and cooperation with the different agencies and stakeholders. The unique organization 16 of PCSDS with a national liaison office, a provincial head office, and barangay management offices also facilitated project implementation.
(ii) In the present context of devolved government responsibilities, the LGUs should be fully involved at all stages of project planning, design, and implementation to ensure their commitment to the project goals and to build a sense of ownership of the project outputs. The project design should focus on developing the necessary financial and technical capacity to ensure that municipalities/cities can operate and maintain the facilities in a sustainable manner, and to continue activities beyond project completion.
(iii) BME activities should be carefully designed and monitored to enable accurate assessment of the benefits derived from the project. Adequate funding and implementation arrangements need to be clearly identified to avoid delays in benchmark data collection. A single agency, generally the coordinating agency should provide the lead role in BME and have control of the resources necessary to undertake studies in a timely manner.
C. Recommendations
1. Project Specific
72. Based on the lessons learned, the Project Completion Review Mission and the Government agreed that further action should be taken by the Government to ensure full realization and continuation of project benefits. The provincial and municipal governments, with the assistance of the concerned national agencies, should cooperate in the following activities:
(i) funding RAC activities including seedling production and dissemination, extension services, and support for farmers’ associations and cooperatives;
(ii) monitoring livestock and poultry distribution activities by the municipal agricultural officers and integrating of the monitoring results into the annual planning exercise, thereby ensuring funds for the delivery of extension and veterinary services;
(iii) providing technical and logistical support to the animal diagnostic laboratory from the office of the provincial veterinarian, and disseminating information on the available services with help from the provincial information office and PCSDS;
(iv) rehabilitating the swine breeding center and upgrading swine stocks through the office of the provincial veterinarian;
(v) supporting the investigation by the provincial planning and development office, in collaboration with the provincial engineer's office, of alternative funding sources such as user fees for the maintenance of feeder roads to supplement the internal revenue allotment; and
(vi) building capacity for the water users' associations, and monitoring and mobilizing resources for the rehabilitation and maintenance of level I systems to be spearheaded by the provincial planning and development office. 17 73. The national Government in cooperation with local agencies should take action to meet the following requirements:
(i) All CISs and CIPs are intended for full handover from NIA to the LGUs by end of 2003, but the capability of the irrigators' associations and the LGUs needs to be strengthened for O&M. Moreover, NIA’s future responsibilities and involvement in communal systems need to be clarified and funding identified.
(ii) Continued support should be provided to DENR to complete the survey and land titling in all municipalities, and issue outstanding titles. The eventual development of a digital cadastral database should be pursued in association with the provincial and municipal assessor’s offices to facilitate land use planning, enforcement of zoning regulations, and municipal tax collection.
(iii) The organizations formed under the women-in-development subcomponent require ongoing guidance and training from DSWD and the local governments' social welfare and development offices. These agencies should formally discuss plans and strategies to strengthen the organizations, provide successful organizations with the possibility of receiving repeat loans, and optimize the use of the training centers for women.
(iv) Appropriate funding should be provided to ensure a continuation of BME and data analysis by PCSDS to enable the Government to assess the long-term impacts of its investments. The surveys should be carried out regularly once a year and increasingly involve the LGUs. The possibility of establishing a permanent BME unit with qualified staff or a tie-up with a research-oriented institution for data processing and analysis should be explored.
74. ADB may undertake the project performance audit review by mid-2003.
2. General
75. Integrated Area Development. Future integrated area development projects should provide for closer linkages, both in area coverage and activities, between different components such as agricultural development, social services, and physical infrastructure to build synergy. When several EAs are involved, the agency tasked with overall program management should be given adequate financial control to enable effective coordination of project implementation.
76. Gender Issues. Improving opportunities for women should not be an add-on component of a project. Although a women-in-development component may be able to mobilize women, it is more effective to include gender analysis in project planning to ensure gender considerations in all components.
77. Implementation Schedule and Cost Estimates. Appraisal of a project should include adequate investigation and preliminary feasibility studies for major civil works such as roads and irrigation systems to realistically assess the appropriate implementation period and avoid large cost overruns that impact negatively on project performance.
78. Handover. Attention to sustainability issues should be paid starting from project planning. Loan covenants should include requirements for preparing and agreeing on a handover plan for the transfer of facilities on project completion to ensure the commitment of, and necessary funding from, concerned agencies to manage the facilities in a sustainable manner beyond project completion. 18 APPENDIXES
Number Title Page Cited on (page, para.)
1 Summary of Major Project Features 19 2, 6
2 Major Civil Works Contracts 21 3, 14
3 Project Implementation and Coordination Structure 23 7, 30
4 Comparison of Estimated and Actual Project Costs 24 8, 35
5 Implementation Schedule Planned at Appraisal and 25 9, 36 Actual Schedule
6 List of Equipment at Appraisal and as Procured 27 9, 39
7 Compliance with Loan Covenants 28 10, 42
8 Status of Loan Utilization 32 10, 43
9 Economic Performance 33 13, 57 19 Appendix 1, page 1
SUMMARY OF MAJOR PROJECT FEATURES
At As Achievement Component Unit Appraisal Revised Actual(percent) Remarks A. Agricultural Development 1. Crop Intensification and Diversification Planting of 3,500 ha Cashew ha 3,500 3,480 3,377 97 Planting of 350 ha Coffee ha 350 437 437 100 Planting of 301 ha Cacao ha 301 120 120 100 Rehabilitation of 3,000 ha Existing Cashewha 3,000 4,069 4,069 100 Establishment of 1,100 Mixed Orchard ha 1,100 1,630 1,630 100 Intercropping of Mixed Orchard with Hillside Farming ha 1,100 901 901 100 Construction of Rural Agricultural Centers no. 14 14 14 100 Establishment of On-Farm Demonstration Farms no. 139 130 130 100 Consulting Services (6 p-m for Land Use And 6 p-m for Integrated Pest Management) p-m 12 12 12 100 2. Livestock Development Establishment of Carabao Breeding Center (San Vicente) no. 1 1 1 100 Establishment of Swine Breeding Center (Dumaran) no. 1 1 1 100 Establishment of Swine Distribution Substation (Cuyo) no. 1 1 1 100 Establishment of Livestock Quarantine Station (Taytay) no. 1 1 Construction was Establishment of Diagnostic Laboratory canceled. (Puerto Princesa) no. 1 1 1 100 Construction of Dairy Demonstration Farm (Puerto Princesa) no. 1 1 1 100 Procurement of Heifers head 1,457 1,192 1,192 100 Bulls head 75 79 79 100 Poultry Breeders head 9,100 8,003 8,003 100 Cara-Heifers head 80 120 120 100 Cara-Bulls head 8 8 8 100 Boars head 5 6 6 100 Sows head 50 52 52 100 3. Fishery Support Services Construction of Fish Landing Facilities no. 9 9 9 100 Construction of Fish Markets no. 9 9 9 100 Construction of Fish Laboratory (Puerto Princesa) no. 1 1 1 100 B. Irrigation Development Rehabilitation of Existing Communal Irrigation Systems no. 5 2 2 100 Feasibility studies for all systems were completed but only two were carried out due to cost overrun. Construction of New Communal Irrigation Projects no. 15 11 11 100 Feasibility studies for all projects were completed but only eleven were carried out due to cost overrun. Consulting Services (24 p-m for Design Engineer; 60 p-m for Construction Supervision, and 24 p-m for Hydrologist) p-m 108 108 108 100 20 Appendix 1, page 2
SUMMARY OF MAJOR PROJECT FEATURES (continued)
At As Achievement Component Unit Appraisal Revised Actual(percent) Remarks C. Survey and Land Titling Isolated Surveys lot 10,000 10,000 10,000 100 Cadastral Surveys lot 3,345 1,679 1,679 100 Issuance of Patents, Awards, Contracts, and Leases no. 20,000 20,000 20,000 100 D. Infrastructure Development Rehabilitation of Main Roads km78 38 33 87 Rehabilitation of Feeder Roads km 230 115 129 112 Construction of New Feeder Roads km 271 133 152 114 The construction of about 100 km of feeder roads was deferred due to lack of funds. Construction of 150m Breakwater and Ancillary Facilities no. 1 1 1 100 Consulting Services (108 p-m for Road and 4 p-m for Port) p-m 112 112 112 100 E. Social Services 1. Integrated Health Program Construction of Barangaya Health Centers no. 78 66 66 100 2. Rural Water Supply Provision of Level I Water System no. 537 521 517 99 Rehabilitation of Existing Level I Water Systemb no. 81 81 81 100 Rehabilitation of Existing Level III Water Systemb no. 1 1 1 100 Consulting Services (24 p-m for Civil Engineer and 18 p-m for Sociologist) p-m 42 42 42 100 3. Women in Development Construction of Women Training Centers no. 3 3 3 100
F. Project Management Construction of Field Management Office no. 6 6 6 100 Consulting Services (6 p-m Project Management) p-m 6 12 12 100 ha = hectare, km = kilometer, no. = number, p-m = person-month. a Barangay = district. b Level I = individual domestic deep or shallow tubewell; level III = water supply to individual houses through pipe networks. Source: Palawan Council for Sustainable Development Staff. 21 Appendix 2, page 1
MAJOR CIVIL WORKS CONTRACTS
Area Design Area/ Generated/ Mode ofProject Cost Date Date Name and LocationProject Description Length Procurement(P million) Started Completed A. Irrigation Development (NIA) 1. Talakaigan CIP, Aborlan 540 ha 350 ha FA 39.4 01-Jul-93 31-Oct-96 2. Sabsaban CIS, Brooke's Point 300 ha 350 ha FA 19.2 01-Aug-94 30-Jun-97 3. Candawaga CIP, Rizal 400 ha 430 ha FA 34.8 01-Jun-93 20-Jul-96 4. Iraan CIP, Rizal 300 ha 350 haa FA 41.5 16-May-93 30-Jul-95 5. Marangas CIP, Bataraza 500 ha 500 ha FA 37.1 12-Apr-93 15-Jul-95 6. Lamikan CIP, Quezon 400 ha 400 ha FA 38.3 04-Nov-91 16-Nov-94 7. Tagbuaya CIP, Quezon 250 ha 250 ha FA 16.9 01-Nov-91 31-Oct-93 8. Quinlogan CIP, Quezon 250 ha 250 ha FA 11.4 12-Nov-91 22-Oct-93 9. Tamlang CIP, Brooke's Point 800 ha 800 ha FA 76.5 16-Feb-95 30-Jun-97 10. Maasin CIS, Brooke's Point 1,016 ha 1,380 ha FA 46.1 01-Aug-94 30-Jun-97 11. Pinamaratan CIP, Coron 80 ha 80 ha FA 9.8 01-Jul-94 28-Feb-97 12. San Nicolas CIP, Coron 80 ha 80 ha FA 13.1 01-Jul-94 31-Dec-96 13. Sto. Nino CIP, Busuanga 80 ha 80 ha FA 10.9 01-Jul-94 31-Oct-98 Subtotal (A) 395.0 B. Road (DPWH) 1. Contract Package B-1; Gravel road with 4 9.8 km LCB 16.3 09-May-93 08-Jun-94 Paglaum-Itangil Road, bailey bridges Dumaran 2. Contract Package B-2; Itangil- Gravel road with 3 14.5 km LCB 20.7 01-Mar-92 27-Feb-93 Layok and Itangil-Latongay bailey bridges Road, Dumaran
3. Contract Package B-3; Gravel road with 7 20.5 km LCB 46.4 10-Jun-93 09-Jul-94 Latongay-Sta. Teresita Road, bailey bridges, 4 Dumaran RCBC and installation of reinforced concrete pipe culvert
4. Contract Package B-4; Gravel road 13.9 km LCB 12.9 01-Jun-92 07-Nov-94 Junction National Road- Tumarbong Road, Dumaran
5. Contract Package B-6; Gravel road with 2 16.0 km LCB 28.5 01-Jan-93 10-Sep-94 Bacungan-Nagtabon Road bailey bridges and Salvacion Bahile- Macarascas Road, Puerto
6. Contract Package B-7; Gravel road with 2 12.8 km LCB 22.8 29-Sep-92 10-Mar-94 Junction Coron-Busuanga bailey bridges National Road-YKR Airport Road Busuanga 7. Contract Package B-5; Gravel road with 3 18.2 km LCB 61.5 07-Oct-94 24-Mar-97 Tumarbong-Sta. Teresita bailey bridges and Road, Roxas RCBC
8. Contract Package B-10B; San Gravel road with 7 31.2 km LCB 53.6 07-Oct-94 26-Oct-96 Fernando-Pasadena-Lamoro bailey bridges and 2 Road, El Nido RCBC 22 Appendix 2, page 2
MAJOR CIVIL WORKS CONTRACTS (continued)
Area Project Description/ Generated/ Mode ofProject Cost Date Date Name and LocationDesign Area Length Procurement(P million) Started Completed 9. Contract Package A-2; Gravel road with 13 38.0 km LCB 111.3 12-Dec-94 15-Nov-97 Liminangcong-Cataban- bailey bridges and 2 Busybees-Polariquen Road, RCBC Taytay
10. Contract Package A-5; Magara-Gravel road with 10 36.2 km LCB 102.9 16-Jun-95 30-Apr-99 Little Caramay Settlement- bailey bridges and 3 Caruray Road and Old RCBC Caruray-New Caruray Road,
11. Contract Package B-10A; El Gravel road with 10 34.5 km LCB 37.6 28-Feb-97 28-Mar-98 Nido-Lamoro-New Ibajay-San bailey bridges and 1 Fernando Road, El Nido RCBC
12. Contract Package A-1A; Coron-Gravel road with 13 30.7 km LCB 109.9 29-Jan-96 25-Jul-98 Sto. Nino Road, Coron bailey bridges and 7 RCBC 13. Contract Package A-6C and A- Gravel road with 13 48.0 km LCB 130.5 10-Oct-96 31-Mar-99 6B-1; Puntabaja-Sicud Road bailey bridges and and Sicud-Panalingaan Road, 31 RCBC Rizal Subtotal (B) 754.8
C. Port (DPWH) 1. Improvement and Expansion Construction of R. LCB 33.9 03-Nov-95 02-Aug-97 of Brooke's Point, Phase II, C. Landing Ro/Ro Pier Ramp and turn- around structure
2. Improvement and Expansion Construction and LCB 99.2 19-Sep-97 30-Jun-98 of Brooke's Point, Phase II, ancillary works Breakwater (150 meters)
Subtotal (C) 133.1
D. Rural Water Supply (DPWH) 1. Rehabilitation of Level III Rehabilitation works LCB 4.7 17-Apr-95 25-Sep-95 System in San Vicente
2. Construction/Installation of 521 Construction/ LCBb 25.4 12-Sep-97 30-Apr-99 units of Level I System in installation various municipalities
Subtotal (D) 30.1
Total 1,313.0 CIP = communal irrigation project, CIS = communal irrigation system, DPWH = Department of Public Works and Highways, FA = force account works, ha = hectare, LCB = local competitive bidding, NIA = National Irrigation Administration, RCBC = reinforced concrete box culvert. a Only 50 ha are currently irrigated due to sediment/travel problems at intake. b Labor gang contracts. Source: NIA and DPWH. PROJECT IMPLEMENTATION AND COORDINATION STRUCTURE (as completed)
Office of the Government of the President Philippines
Palawan Council For Sustainable National Executing National Economic Development Agencies (EAs) Development (PCSD) Authority (NEDA)
Regional Offices of Regional National Executing Development Agencies Council 23 Palawan Council for Sustainable Project Executive Office of the Development Staff Committee Provincial Governor (PCSDS)
Project Management Project Management Project Management Project Management Project Project Management Office Department of Office National Office Department of Office Department of Management Office Office Department of Agriculture Irrigation Public Works and Environment and Natural Department of Health Social Welfare and (DA) Administration Highways Resources (DOH) Development (DSWD) (NIA) (DPWH) (DENR)
______Implementation Responsibility ------Coordination
Source: Palawan Council for Sustainable Development Staff. Appendix 3 24 Appendix 4
COMPARISON OF ESTIMATED AND ACTUAL PROJECT COSTS ($ '000)
Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Exchange Currency Total A. Agricultural Development 1. Crop Intensification and Diversification 1,755 4,135 5,890 1,719 6,216 7,936 2. Livestock Development 579 2,421 3,000 417 2,921 3,338 3. Fishery Support Services 192 908 1,100 165 1,009 1,174 Subtotal (A) 2,526 7,464 9,990 2,302 10,146 12,447
B. Irrigation Development 4,328 6,132 10,460 5,754 12,922 18,675
C. Survey and Land Titling 76 1,204 1,280 314 1,904 2,218
D. Infrastructure Development 1. Main Roads 547 1,343 1,890 735 2,281 3,015 2. Feeder Roads 3,125 7,555 10,680 4,948 20,594 25,543 3. Port 318 572 890 819 2,750 3,569 Subtotal (D) 3,990 9,470 13,460 6,502 25,625 32,127
E. Social Services 1. Integrated Health Program 870 1,760 2,630 1,175 3,170 4,345 2. Rural Water Supply 500 1,240 1,740 367 1,350 1,717 3. Women in Development 358 532 890 329 921 1,250 Subtotal (E) 1,728 3,532 5,260 1,871 5,441 7,312
F. Project Management 814 3,666 4,480 690 2,619 3,309
G. Interest during Construction 3,300 0 3,300 3,300 0 3,300
H. Physical and Price Contingency 3,238 22,032 25,270 857 5,690 6,547
Total 20,000 53,500 73,500 21,589 64,347 85,936
Source: Palawan Council for Sustainable Development Staff and Loan Financial Information System of the Asian Development Bank. IMPLEMENTATION SCHEDULE PLANNED AT APPRAISAL AND ACTUAL SCHEDULE
Major Activities 1991 1992 1993 1994 1995 1996 1997 1998
A. Agricultural Development 1. Crop Intensification and Diversification Civil Works
Procurement of inputs
Training
Consulting Services
2. Livestock Development Civil Works
Procurement of Vehicles and Equipment
Livestock Dispersal
3. Fishery Support Services Civil Works 25 Procurement
Training/Extension/Capacity Building
B. Irrigation Development Civil Works
Procurement
Consulting Services and Training
C. Survey and Land Titling Survey, Land Titling, and Resource Inventory
D. Infrastructure Development 1. Roads Appendix 5,page1 Civil Works (Main and Feeder)
Consulting Services
2. Port Civil Works
Consulting Services IMPLEMENTATION SCHEDULE PLANNED AT APPRAISAL AND ACTUAL SCHEDULE (continued)
Major Activities 1991 1992 1993 1994 1995 1996 1997 1998
E. Social Services 1. Integrated Health Program Malaria/Nutrition Program
Procurement
Staff Training/Community Education and Evaluation
Building of Barangay Health Centers
2. Rural Water Supply Civil Works
Formation of Water Users' Associations
Rehabilitation and Construction of New Wells
Training
Consulting Services 26
3. Women in Development Procurement and Organization
Construction of Training Centers
Institution Building and Beneficiary Training
F. Project Management Organization and Staffing
Procurement Appendix 5,page2
Consulting Services
Planning and Monitoring
Project Benefit Monitoring Evaluation
Institutional Development
At appraisal Actual Source: Palawan Council for Sustainable Development Staff. 27 Appendix 6
LIST OF EQUIPMENT AT APPRAISAL AND AS PROCURED
Component Unit At Appraisal Actual A. Agricultural Development 1. Crop Intensification and Diversification Transport Equipment no. Audiovisual/Farm/Laboratory Equipment no. 562 LS 2. Livestock Development Transport Equipment no. 6 Laboratory/Farm Equipment no.88 55 3. Fishery Support Services Transport Equipment no. 2 Laboratory Equipment no.90 5 B. Irrigation Development Survey Equipment no. 50 36 Office Equipment no. 26 32 Construction/Service Equipment no. 108 92 C. Survey and Land Titling Transport Equipment no. 7 6 Office Equipment no. 56 51 Survey Equipment no. 37 37 D. Infrastructure Development Main and Feeder Roads no. nil nil E. Social Services 1. Integrated Health Program Transport Equipment no. 25 24 Office Equipment no. 12 12 Laboratory Equipment no. 34 34 Medicines lot LS LS 2. Rural Water Supply Transport Equipment no. 5 5 3. Women in Development Transport Equipment no. 4 4 Office Equipment no. LS 75 Training Equipment no. LS 52
F. Project Management Transport Equipment no. LS 25 Office Equipment no. LS LS
LS = lump sum. Source: Palawan Council for Sustainable Development Staff. 28 Appendix 7, page 1
COMPLIANCE WITH LOAN COVENANTS
Covenants Reference Status Project Management and Coordination 1. The project executive committee Loan Agreement Complied with. established under the Palawan Integrated (L.A.), Area Development Project financed by the Schedule 6, Asian Development Bank (ADB) will be para. 5 maintained as project executive committee.
2. At the regional level, the Regional L.A., Schedule 6, Complied with. Development Council, Region IV, will be para. 7 responsible for policy decisions and for maintaining consultations as to the development of the project area.
Beneficiary Participation in Project Planning and Implementation
3. The Department of Agriculture (DA) will L.A., Schedule 6, Complied with. establish 14 rural agricultural centers para. 8 (RACs) that will act as the focal points of all activities related to agricultural development within the area under their command.
4. Each RAC, in consultation with the L.A., Schedule 6, Complied with. beneficiary farmers and with the assistance para. 9 of a land-use specialist, will prepare an action plan that will reflect the views, preferences, and capabilities of the beneficiary farmers.
5. DA will engage the services of L.A., Schedule 6, Complied with. NGOs nongovernment organizations (NGOs), para. 10-13 meeting these meeting certain requirements, for requirements were motivating and mobilizing beneficiary engaged but results were farmers in planning and implementation of not as expected. agricultural activities in accordance with procedures satisfactory to ADB.
6. The Borrower will, prior to commencement L.A., Schedule 6, Complied with. of rehabilitation/construction works on each para. 14 communal irrigation system (CIS), organize the beneficiary farmers into an irrigators’ association (IAs). 29 Appendix 7, page 2
Covenants Reference Status 7. The National Irrigation Administration (NIA) L.A., Schedule 6, Complied with. will prepare, arrange, coordinate, and para. 16 supervise the necessary training of the members of the IAs in irrigation systems operation and maintenance (O&M), budgetary planning and procedures, and financial management and control systems.
8. The Borrower will make available to L.A., Schedule 6 Complied with (item 9). beneficiary farmers adequate credit to para. 17 (i) purchase agricultural inputs.
9. The Borrower will mobilize its institutional L.A., Schedule 6, Complied with, but little and financial resources, through its para. 17 (ii) credit utilized due to Agricultural Credit Policy Council, to mismatch between formulate a rural credit program. programs available and ability of beneficiaries to meet credit criteria.
10. DA will contract NGOs to motivate and L.A., Schedule 6, Complied with. NGOs organize farming communities to establish Para. 17 (iii) were engaged but results multi-activity cooperatives to facilitate use were not as expected. of credit and impart training in credit management, recording, monitoring, and marketing of agricultural produce.
11. The Borrower will submit to ADB within L.A., Schedule 6, Complied with. three months of the effective date, the para. 18 details of the rural credit program as in item 9 above.
12. Beneficiary farmers will provide the L.A., Schedule 6, Partially complied with. equivalent of 10 percent of the cost of para. 19 (i) The IAs provided rehabilitation or construction of CISs in between 2 percent and 5 cash, materials, or labor inputs. percent of the cost.
13. Beneficiary farmers will repay the balance L.A., Schedule 6, Partially complied with. of such to the Borrower through NIA in cash para. 19 (ii) NIA is having difficulty in or in kind, without interest, in annual collecting amortization installments in accordance with the existing payments from IAs. procedures of NIA. All operation and maintenance costs will be met and paid by the concerned IAs.
14. The Borrower will formulate a cost recovery L.A., Schedule 6, Complied with. program to recover from beneficiary farmers para. 20 the (i) costs or production of planting materials for the crop intensification and 30 Appendix 7, page 3
Covenants Reference Status diversification component of the Project; and (ii) the costs of provision of veterinary services.
Operation and Maintenance (O&M)
15. O&M of the facilities provided for the L.A., Schedule 6, Partially complied with. purposes of the Project will be carried out. para. 21 Many of the agencies do not have adequate allocation for O&M.
16. Community organizers of the Department of L.A., Schedule 6, Partially complied with. Public Works and Highways (DPWH), with para. 22 Only limited training was the assistance of the institutional specialist received by many water to be engaged under the Project, will users’ associations. organize water users’ associations to operate and maintain the rural waterworks to be installed under the Project.
17. The Borrower will make available sufficient L.A., Schedule 6, Partially complied with. resources during and after implementation para. 23 After project completion of the Project to ensure proper O&M of limited funding has been project facilities by the Executing Agencies made available for some (EAs) responsible for such O&M. activities.
Project Benefit Monitoring and Evaluation (BME)
18. BME will be carried out for each L.A., Schedule 6, Complied with, but component. Each EA will develop para. 24 benchmark profiles were benchmark profiles for the component developed after start of which it is implementing. implementation.
19. The Palawan Integrated Area Development L.A., Schedule 6, Partially complied with. Office (PIADPO) will summarize key para. 25 Data cannot be indicators from the benchmark profiles and compared between develop them into a standardized database benchmark profiles and to be used as a basis for assessing the follow-up surveys. benefits/impact of each component.
20. Each EA will establish or upgrade a L.A., Schedule 6, Complied with. management information system to assist para. 26 in the management and monitoring of the Project components. Summaries of each findings will be included in the quarterly progress reports submitted to ADB. 31 Appendix 7, page 4
Covenants Reference Status 21. PIADPO will, not less than three months L.A., Schedule 6, Complied with. prior to the loan closing date, prepare a para. 27 Consultant’s report was BME review study, assessing each submitted to ADB but no component and the benefits derived comments were received therefrom and submit to ADB for review and from ADB. comments.
22. Each EA will prepare quarterly progress L.A., Schedule 6, Complied with. reports and submit them to PIADPO. para. 28
23. PIADPO will review and consolidate the L.A., Schedule 6, Complied with. reports, and submit a brief assessment of para. 29 the overall status of project implementation to ADB, Regional Development Council, National Economic Authority, and Department of Budget and Management.
Financial
24. Each EA will maintain separate accounts, L.A., Article IV, Complied with. have such related financial statements Section 4.06(b) audited annually, and furnish to ADB no later than nine months after the end of each related year.
Other Matters
25. Promptly after completion of the Project, but L.A., Article IV, Complied with, but actual not later than six months after the closing Section 4.07 (c) costs of components date, the Borrower will furnish to ADB a were not included. project completion report.
26. The Borrower will continue to procure L.A., Schedule 6, Complied with. locally and with the use of its own para. 31 resources, heifer, bull, cara-heifer, cara- bulls, sows, and boars required under its ongoing livestock distribution and improvement program.
27. The Borrower will ensure that the budgetary L.A., Schedule 6, Complied with after funds required to carry out the Project are para. 32 delays. promptly and directly released by the Department of Budget and Management.
Source: Palawan Council for Sustainable Development Staff. STATUS OF LOAN UTILIZATION
Original Allocation Revised Allocation Net Amount Disbursed Loan 1033 Loan 1034Loan 1033 Loan 1034Loan 1033 Loan 1034 Item (SDR) ($) ($) (SDR) ($) ($) (SDR) ($) ($)
A. Agricultural Development 1. Crop Intensification and - - 5,694,000 - - 5,306,023 - - 5,306,023 Diversification 2. Livestock Development - - 1,903,000 - - 1,674,921 - - 1,674,921 3. Fishery Support Services - - 1,029,000 - - 774,051 - - 774,051 Subtotal (A) - - 8,626,000 - - 7,754,995 - - 7,754,995
B. Irrigation Development 9,334,400 13,009,707 9,779,917 14,055,111 9,779,915 14,055,111
C. Survey and Land Titling - - 1,155,000 1,322,045 1,322,045
D. Infrastructure Development 1. Main Roads - - 2,375,000 - - 2,491,534 - - 2,491,534 2. Feeder Roads 1,669,900 2,327,403 12,512,000 2,258,821 3,264,783 16,225,238 2,258,820 3,264,783 16,225,238
3. Port 741,500 1,033,457 - 1,689,319 2,362,727 1,689,317 2,362,728 32 Subtotal (D) 2,411,400 3,360,860 14,887,000 3,948,140 5,627,510 18,716,772 3,948,137 5,627,511 18,716,772
E. Social Services 1. Integrated Health Program 2,427,300 3,383,020 - 2,679,049 3,852,722 - 2,679,048 3,852,722 - 2. Rural Water Supply 1,622,400 2,261,200 - 645,521 938,378 - 645,518 938,379 - 3. Women in Development 797,700 1,111,785 - 620,837 876,210 - 620,835 876,210 - Subtotal (E) 4,847,400 6,756,005 - 3,945,407 5,667,310 - 3,945,401 5,667,311 -
F. Project Management - - 4,038,000 - - 1,891,652 - - 1,891,652
G. Interest during Construction 219,000 305,229 3,000,000 219,000 320,096 3,000,000 219,000 320,096 3,000,000
H. Unallocated 1,433,400 1,997,784 1,294,000 ------
Total 18,245,600 25,429,585 33,000,000 17,892,464 25,670,027 32,685,464 17,892,453 25,670,029 32,685,464
SDR = special drawing rights. Source: Loan Financial Information System of the Asian Development Bank. Appendix 8 33 Appendix 9, page 1
ECONOMIC PERFORMANCE
A. Introduction
1. The economic analysis has been undertaken on the basis of the methodology used at project appraisal. Economic internal rates of return (EIRRs) have been estimated for each of five components and for the Project as a whole. The five components are (i) crop intensification and diversification, (ii) livestock development, (iii) fishery support services, (iv) irrigation development, and (v) roads. Given the strong interdependence between these components, the EIRR estimates for individual components should be seen as approximations. Due to implementation delays and data deficiencies, the assessment of benefits is based on progress to date, projections, and experience elsewhere in the Philippines.
B. Major Assumptions
1. Economic Prices
2. Prices are expressed in constant 2001 terms. The economic prices, at the farm gate, of internationally traded agricultural outputs and inputs are based on world market prices in World Bank's commodity price forecasts published in April 2000. They have been adjusted to a 2001 level using the World Bank’s manufacturing unit value (MUV) index. Adjustments have also been made for quality, freight, insurance, handling, inland transport, and processing. The derivation of economic prices for internationally traded commodities is presented in Table A9.1.
3. Economic prices for nontraded commodities, including materials, civil works, and transportation, are derived from financial prices using a standard conversion factor of 0.86. The valuation of inputs and outputs in economic terms is excluding internal transfer payments such as taxes and subsidies as these represent domestic monetary movements and have no bearing on real resources costs. The financial and economic prices of crop inputs and outputs are given in Table A9.2.
2. Value of Draft Animal and Unskilled Labor
4. There is a shortage of animal labor in the project area. The hire charge (P200 per animal pair/day) therefore represents an economic cost, and no adjustment has been made. There is no surplus of agricultural labor in the project area. Labor is difficult to obtain during peak times of agricultural activity, and during other times labor is also not always readily available. Thus the current market price of labor appears to be a reasonable indicator of the opportunity cost of labor, and has been used as the economic value of labor.
3. Period of Analysis
5. Following the approach taken at appraisal, the economic life of the Project is assumed to be 30 years.
4. Project Costs
6. The calculations are based on actual investment costs incurred between 1991 to 1999. Costs are expressed in economic prices by excluding taxes and duties, and by applying the standard conversion factor of 0.86 to the local component of costs. The actual costs incurred 34 Appendix 9, page 2 have been updated to 2001 prices by applying price escalation factors to the local component of costs and MUV index to the foreign exchange component.
5. Project Benefits
7. The value of incremental net benefits is taken as project benefits in the analysis. The crop production value under the without-project situation is subtracted from the crop production value estimated for the with-project situation to obtain the incremental benefit stream. The EIRRs estimate the returns to the Philippines economy resulting from the implementation of the individual components and the Project as a whole.
C. Economic Internal Rates of Return
1. Crop Intensification and Diversification
8. The incremental production of high-value tree crops from the intercropping of cashew, cacao, coffee, and mixed orchard are considered as benefit of the component. Three crop models were used at appraisal: intercropping, mixed orchard, and hillside farming. The analysis is based on the rehabilitation (4,069 hectare [ha]) and new planting of cashew (3,377 ha), planting of cacao (301 ha) and coffee (437 ha), establishment of mixed orchard (1,630 ha) under coconut trees, and planting on hillsides. Data used are based on the project completion report of the Department of Agriculture and interviews with farmers. The most popular tree crops under mixed orchard and hillside farming are mango, jackfruit, kalamansi, banana, guava, and pineapple.
9. Appraisal assumptions on tree crop yields have been maintained. The EIRR of the component is estimated at 18 percent against the appraisal’s estimate of 25 percent. Optimistic yield projection of all tree crops at appraisal are the main cause for the lower EIRR estimate.
2. Livestock Development
10. The evaluation of the component follows the approach used at appraisal. The cattle, carabao, swine, and poultry distribution programs have resulted in an increase in the production of these animals. The incremental number of animals and the increase in the value per head are considered as economic benefits. However, the component was not implemented as appraised. There were long delays in livestock dispersal. Failure to develop the planned breeding herds at the breeding centers combined with high mortality rates, which sometimes were as high as 40 percent, led to shrinking herds. A calving rate of 80 percent and a mortality rate of 10 percent have been assumed. The EIRR has been estimated at 6 percent against 9 percent estimated at appraisal.
3. Fishery Support Services
11. The approach used at appraisal has been maintained to analyse the component. The construction and improvement of fish landing stations and markets have resulted in an increase in tonnage of fish marketed through reduced spoilage, both due to the introduction of new marketing opportunities, the transfer of technology, and training. However, the outcome of the component is well below appraisal targets. Of the nine fish landing stations and markets constructed under the component, only three are in use. At each fish landing station, an average of 6-7 tons of fish per week is assumed to be landed during the peak season and about 1 ton per week during the lean period. Thus an estimated 832 tons of different species of fish 35 Appendix 9, page 3 are landed at the landing stations for marketing annually. Of these, about 10 percent are estimated to be first class, about 50 percent second class, and the remaining third class. The facilities provided by the component are assumed to contribute to a 5 percent reduction in the loss and spoilage of fish. Based on these assumptions, the EIRR is estimated at minus 2 percent compared with the appraisal estimate of 24 percent.
4. Irrigation Development
12. The incremental paddy production in the lowlands from the rehabilitation and construction of irrigation systems is considered an economic benefit of the irrigation development component. In computing the incremental benefits, the technology transfer through extension services is assumed to allow farmers to produce higher yields. An area of 5,300 ha is serviced by the component, which is lower than the appraisal estimate of 6,460 ha. The yield projection at appraisal of 4.5 tons per ha was too optimistic. Field verification suggests that the yield per ha is about 4.0 tons per ha, which is used for the analysis.
13. Two crops a year are grown in the irrigated areas. Due to water availability and the incomplete development of the irrigation infrastructure, farmers currently can grow a second crop only on 30 to 35 percent of the land. To derive benefits, a buildup of the cropping intensity from 100 percent in year 1 to 130 percent in year 5, and 156 percent in year 8 has been assumed. At appraisal an EIRR of 22 percent was estimated. At completion, the EIRR is estimated at 10 percent. The estimate is lower due to a lower crop yield and cropping intensity, and a higher unit rate for irrigation infrastructure development than assumed at appraisal.
5. Roads
14. The construction of main and feeder roads has caused a substantial reduction in transportation cost for agricultural produce and inputs. It has also resulted in an increase in agricultural production. Following the approach used at appraisal, the benefits considered in the analysis are derived from the increase in cropped area for rainfed paddy and tree crops. About 300 km of main and feeder roads have been constructed under the component. The total land area within the zone of influence of these roads is assumed to be 180,000 ha. About 10 percent of this area, or about 18,000 ha, is estimated to have benefited from an increase in production of paddy and other perennial crops. This is considered to be the economic benefit of the component. The reduction in transport cost for the incremental production is already implicit in the assumed farm-gate value of the crops, and is also reflected in the analysis of the irrigation development and crop intensification and diversification components. At appraisal the EIRR was estimated at 21 percent compared with the completion estimate of 16 percent.
D. Results
15. Based on the above assumptions for the respective components, the EIRR of the Project as a whole is estimated at 11 percent compared with the appraisal estimate of 18 percent. The lower EIRR is due to delays in implementation, unrealistic cost estimates of the major infrastructure components and the resulting reduction in scope, and the achievement of lower benefits than anticipated at appraisal. In particular, the performance of the crop intensification and diversification and livestock development components has been lower than expected due to problems in implementation. The rate of return of fishery support services is negative. The irrigation development component has performed considerably below projections, but it is still economically viable because of the Philippine's continuing rice import. Other benefit- generating components have fallen short of expectations but remain economically viable. The 36 Appendix 9, page 4 calculation of the EIRRs for the whole Project and the five components is summarized in Table A9.3. The comparison of estimated EIRRs at appraisal and completion is shown in Table A9.4.
Table A9.4: Estimated EIRRs at Appraisal and Completion
Item EIRR at Appraisal EIRR at Completion Crop Intensification and Diversification 25% 18% Livestock Development 9% 6% Fishery Support Services 24% -2% Irrigation Development 22% 10% Roads 21% 16% Project 18% 11% EIRR = economic internal rate of return. Source: Staff estimates.
E. Sensitivity Analysis
16. A sensitivity analysis was undertaken to measure the impact of changes in the economic environment on the Project’s stream of benefits and costs. The sensitivity analysis does not indicate a high sensitivity of the results to changes in major variables. Returns are relatively less sensitive to increases in cost than to changes in production values. For example, a 10 percent increase in cost would reduce the EIRR for the Project from 11 percent to 9 percent, while a 10 percent decrease in benefits would reduce the EIRR to 7 percent. A combination of these two changes would result in an EIRR of 6 percent. 37 Appendix 9, page 5
Table A9.1: Computation of Economic Prices of Internationally Traded Commodities
Rice/ Triple Sulphur Item Paddy Corn Urea Phosphate At Import Parity ($ per metric ton) Projected 1990/95 Value FOB Sourcea 257 128 119 168 Quality Factor 1 1 1 1 Adjusted FOB Value 193 115 119 168 Freight/Insuranceb 20 23 25 25 Value CIF Manila Port 213 138 144 193 Port Dues/Handlingc 5 5 5 5
At Import Parity (P per metric ton) Value CIF Puerto Princesa ($1=P47) 10,234 6,730 7,003 9,306 Handling/Transport/Storaged 692 692 692 692 Value Ex-Store/Market 9,542 6,038 6,311 8,614 Transport/Handlinge 348 108 108 108 Processing Ratio 0.62 0.90 Farmgate Price 5,568 5,327 6,419 8,722 Farmgate Price (per kilogram) 5.57 5.33 6.42 8.72
CIF = cost, insurance, and freight; FOB = free on board; km = kilometer; t = metric ton. a Based on World Bank's commodity price projections (April 2000). Averages of 1990 and 1995 projections in 1985 constant dollars inflated to 2001 values using the increase in Manufacturing Unit Values (MUV) as an index of international inflation. Price bases: rice: Thai, milled, 5% broken, FOB Bangkok; corn: Canadian No. 1 Western Redspring, Thunder Bay; urea: FOB Chittagong/Chalna; triple sulphur phosphate: FOB US Gulf. b Between Puerto Princesa and source of destination. c Average of $5. d Average of 350 km at P2.3 per t/km converted to border values using a standard conversion factor of 0.86. e Average of 15 km at P8.3 per t/km converted to border values using a standard conversion factor of 0.86. Source: Staff estimates. 38 Appendix 9, page 6
Table A9.2: Financial and Economic Prices of Crop Inputs and Outputs
Financial Economic Prices (P) Item Unit Prices (P) Traded Non-traded A. Inputs 1. Seed/Planting Material Paddy kilogram 8.75 6.96 Corn kilogram 8.13 6.66 Mango plant 20 17.2 Jackfruit plant 20 17.2 Kalamansi plant 10 8.6 Cashew plant 15 12.9 Cacao plant 15 12.9 Coffee plant 15 12.9 Pineapple sucer 0.2 0.2 Coconut plant 10 8.6 2. Fertilizer Urea kilogram 3.99 6.42 Complex kilogram 4.38 8.72 Triple Sulphur Phosphate kilogram 2.19 7.17 3. Farmyard Manure metric ton 200 172 4. Draught Animals person-day 200 200 5. Labor person-day 100 100 B. Outputs Paddy metric ton 7,000 5,568 Corn metric ton 6,500 5,327 Mango metric ton 10,000 8,600 Jackfruit metric ton 8,000 6,880 Kalamansi metric ton 12,000 10,320 Cashew metric ton 8,500 7,310 Cacao metric ton 8,000 6,880 Coffee metric ton 10,000 8,600 Pineapple metric ton 4,000 3,440 Copra metric ton 6,000 5,160 Meat (Liveweight) kilogram 60 52
Source: Department of Agriculture and staff estimates. Table A9.3: Economic Internal Rates of Return
Item 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002-2020 A. Project Benefits (P million) 1. Gross Value of Incremental Production a. Crop Intensification and Diversification 6.22 25.33 49.49 86.65 125.37 145.03 145.03 145.03 145.03 145.03 b. Livestock Development 3.59 5.83 7.24 8.42 9.75 11.60 14.44 18.90 c. Fishery Support Services 1.66 1.66 1.66 3.33 3.33 3.33 3.33 3.33 3.33 3.33 d. Irrigation Development 8.10 11.47 13.63 44.16 45.74 54.97 72.67 82.50 e. Roads 16.47 62.48 131.45 229.30 361.78 361.78 361.78 361.78 361.78 Subtotal (A) 7.88 43.46 125.31 238.73 378.87 562.72 565.63 576.72 597.25 611.54 B. Project Costs (P million) 1. Project investments 107.02 330.17 325.13 490.15 538.81 586.81 563.02 2. Annual Operating Costs 8.60 25.75 29.85 51.35 54.42 61.08 56.98 56.98 56.98 56.98 56.98 56.98 3. Project Management and Administration 37.39 57.68 61.00 25.77 11.82 27.19 27.73 8.30
4. Incremental production costs 2.50 1.60 9.64 17.59 26.26 33.28 46.50 47.29 48.18 49.31 50.88 39 Subtotal (B) 153.01 416.09 417.58 576.91 622.64 701.34 681.01 111.77 104.27 105.16 106.29 107.85 C. Net Incremental Benefits (409.12) (416.09) (409.70) (533.45) (497.33) (462.61) (302.14) 450.95 461.36 471.56 490.97 503.69
Net Present Value EIRR at 12 percent (percent) (P million) Crop Intensification and Diversification 18 157 Livestock Development 6 (68) Fishery Support Services (2) (36) Irrigation Development 10 (151.7) Roads 16 307.6 Appendix 9,page7 Total 11
EIRR = economic internal rate of return. Source: Staff estimates.