Documentof The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized MTCR)EI CIHF GOPY Report, No.: 10850-CH Type: (SAR1) Ti tle: IRRIGATION DEVELOPMENT PR(JECT ReportNo. 10350-CH Author: WITTNDEREG, P E>-xt. ::3l,18"2 Ioroom: I60(05 Dept., :I,A4AG
STAFF APPRAISAL.REPORT
Public Disclosure Authorized CHILE
IRRIGATIONDEVELOPMENT PROJECT
OCTOBER26, 1992 Public Disclosure Authorized Public Disclosure Authorized
Country Department IV Agriculture Operations Division Latin America and the Caribbean Regional Office
Thisdocunnent has a restricteddistribution and may be usedby recipientsonly in the performanceof their offlicialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization.| CURRENCY UNIT
Peso (Ch$)
EXCHANGE RATE (as of June 23, 1992)
US$1.00 = CH$345
FISCAL YEAR
January 1 - December 31
WEIGHTS AND MEASURES
The metric system has been used throughout the report.
ABBREVIATIONS
A list of abbreviations used in the report is shown in Annex 12. FOR OMCIL USE ONLY
CHILE
IRRIGATION DEVELOPMENTPROJECT
Table of Contents
I. LOAN AND PROJECT SUMHARY ...... *.. . i
II. TH SECTORCONTEXT ...... A. Agriculture in the Econinth.omy.. 1 B. The Irrigation Subsector a . . . . . L
III. DEVELOPMENTALPOTENTIAL AND CONST%AINTS ...... 5 A* Potential . . . 5 ...... * *. 5 B. Irrigation Water Management ...... 5 C. Investment Policy 6 D. Agricultural Development 7 E. Environmental Constraints ...... 7
IV. BANK INVOLVEMENT AND LESSONS LEARNED ...... 10 A. Bankwide Lending for Irrigatio-iand Drainage ...... 10 B. Lending to Agriculture in LAC ...... 1 1 . . . . LL C. Bank Involvement in Chile . . . 1 ...... * 1L
V. PROPOSED STRATEGY, DESIGN, AND RATIONALE FOR BANK INVOLVEMNET . . ll A. Government Strategy in Irrigation ...... ll B. Rationale for Bank Involvement ...... 12 C. Project Design and Strategy ...... 13
VY. THE PROJECT o * ...... 3 . . . . . 13 A. Project Objectives ...... 1 . . . 13 B. Project Components ...... 14 C. Detailed Project Features ...... 14
VTI. PROJECT COSTS AND FINANCING ...... 19 A. Costs ...... @- *0-*@e...... Lg B. Financing ...... * ...... * 19 C. Disbursements ...... -...... 19 D. Procurement ...... * * . ..* ...... 20 e. Cost Recovery ...... *. * ...... 22 F. Environmental Screening ...... 23 G. Rural Women ...... *...... 24
VIII. PROJECT ORGANIZATION ...... 25 A. Project Coordination ...... 25 B. Accounts and Audits ...... 26 C. Monitoring and Evaluation ...... 26
This report is based on the findings of an appraisal mission which visited Chile In March 1992, comprising Messrs. Hagerstrom (Mission Leader), Wittenberg, Tobelem (Bank), Floto (FAO/CP) and Carroll (Consultant). Peer reviewers were Messrs. Ruivivar and Kramer (LALAG). Messrs. Ping-Cheung Loh, Mark Wilson, and Peter Wittenberg are the Department Director, Division Chief, and Task Manager, respectively, for the operation.
iThsdocument has a restricted distribution and may be used by recipients only in the performance | of their officialduties. Its contents may not otherwise be disclosedwithout World Bank authorization. Table of Contents (Continued)
IX. BENEFITS, ECONOMIC ANALYSIS, ENVIRONMENTAL IMPACT AND RISKS . . . 27 A. Benefits ...... 27 B. Economic Analysis ...... 27 C. Environmental ImpRe- ...... 27 D. Project Risks ...... 28
X. SUMMARYOF AGREEMENTSTO BE REACHED AND RECONNENDATION ...... 28
ANNEXES:
1. List of che 100 Poorest Rurul Municipalities in Chile 2. Criteria for FeasibilityStudies Financed by the Government 3. InstitutionalDevelopment 4. AgriculturalDevelopment 5. RegularizingWater Titles 6. Summary Project Cost Tables 7. Executive Summary of the Sectoral EnvironmentalAssessment 8. Key Performance Indicators 9. Allocation of Loan Proceeds 10. Loan DisbursementSchedule 11. List of Documents Available in the Project File 12. Abbreviations
HAP: IBRD 23006 CHILE
IRRIGATIONDEVELOPMENT PROJECT
X. LOAN AND PROJECT SUMMARY
Borrower: Republic of Chile
Loan Amount: US$45.0 million equivalen.
Terms: Scventeen years, including five years of grace, with level payments of principal, at the Bank's standard variable interest rate.
Proiect Objectives: The project would aim to improve the operation and efficiency of existing and future irrigationschemes and enhance the welfare of small farmers. It would also improve the allocationand sustainabilityof investmentsand strengthen the capacity of user groups and small farmers to exploit better irrigated agriculture.
Proiect Description: The project would: (a) invest in rehabilitationand modernizationof exiating irrigation schemes and in the constructionof new small and medium-size schemes; (b) support small farmers in agriculturaldevelopment to complement irrigation investment;and (c) regularize water titles and strengthenthe managerial capacity of user groups.
Benefits: The main project benefits would include: (a) expansion of the irrigated area benefitingmostly small farmers in marginal rainfed areas; (b) enhanced environmentand efficiency in water allocation resulting from improved conservationand management of water resources; and (c) greater water security leading to improved yields, better quality output and increased investment in high-valueexport crops.
Risks: The main risks relate to prcject management capacity and cost recovery. Both the size and complexityof the proposed project appear to be within the capacity of the public agencies involved. However, because there has been no new public investmentin irrigation for about fifteen years their ability to coordinate and implement such a project remains untested. To minimize this risk an institutionalskills gap analysis was undertaken and mitigating measures have been developed. On cost recovery, given the poor results worldwide in developing effective cost recovery of irrigation investments and the poor performance in Chile of recovering loans from other sectors, the commitmentof government to cost recovery is a concern. However, the overall risk of non-collectionwould be substantially mitigated by having the Treasury collect the resources concomitantlywith property taxes, for which the collection rate is about 99X. - ii -
Estimated Costs Olt Local Foreign Total -US$ million------
I. Irrigation Infrastructure A. Civil Works 54.6 38.9 93.5 B. InstitutionalDevelopment 1.5 0.8 2.3
II. AgriculturalDevelopment A. Adaptive Research 2.8 0.0 2.8 B. Technology Transfer 1.3 0.4 1.7 C. Extension 3.6 0.1 3.7 D. InstitutionalDevelopment 0.5 0.2 0.7
III. StrengtheningUser Groups A. Training 0.9 0.0 0.9 B. Water Rights Titling 1.3 0.0 1.3
Total Baseline Costs b/ 66.5 40.4 106.9 Physical Contingencies£/ 0.1 0.1 0.2 Price Contingencies 7.1 4.5 11.6 Total Project Costs 73.7 45.0 118.7
Financing Plan: IBRD -- 45.0 45.0 Government of Chile 73.Z7 - 7L3. Total 73.7 45.0 118.7
Estimated IBRD Disbursements:
IBRD FY 1993 ' 1994 1995 1996 1997 1998 1999 ------US$ million ------
Annual 7.0 7.0 10.0 8.0 8.0 3.0 2.0 Cumulative 7.0 14.0 24.0 32.0 40.0 43.0 45.0
Economic Rate of Return: Estimated at no less than 12Z, based on criteria for selection of individual sub-projects.
MAP: IBRD No. 23006
AI Valun rounded. ki Inckbn teax nwunt to US19.7 nilln. gI Not ppied to civi works.resch nd exteneion. / Inlnuds initi dpoit In the pcal accountof US*2.0rriion equivalent. II. THE SECTORCONTEXT
A. ARriculture in the Economy
2.01 Though Chile is andowedwith a great diversity of natural resources, agriculturewas 1 ng regarded as an inconsequential,stagnant sector. Beginning in the mid-1960s, however, agriculturebegan to respond to policy reforms with an extended period of growth, only briefly interruptedby the turmoil of the early 1970s and macroeconomic imbalances in the early 1980s. Grow-thhas acceleratedto a rate of 51 2er annum since 1985, rural-urbanmigration has been stemmed, and agriculturehas become a dynamic and increasinglvvital sector in the economy. Currently, agriculture, including forestry and fisheries, generates about 10% of GDP, employs 19X of the labor force, and accounts for over one-third of the value of merchandise exnorts.
2.02 Recent growth is attributed largely to sustained liberalizationof the economy, macroeconomic stability, and fiscal stringency leading to a realistic exchange rate, particularlysince 19S5. Trade reforms and deregulationof factor markets have been complementedby sectoral measures to diminish the role of government in favor of private sector initiatives. With a relatively small domestic market, exports have provided most of .hze5 -rth, led by fresh fruit, forest, and fish products. The value of agricultureand forest exports relative to net value of production inc eaead from less than 5Z in 1965 to 20Z in 1982 and over 80% during 1988-90,while the share of total foreign exchange earnings from agriculture,forestry, and fisheries rose from 81 in 1965 and 61 in 1973 to an average of 351 during 1988-90. Import-competingcrops have also responded to improved incentives and productivitygains have helped to lower the share of food in total imports from 201 in 1965 to 4Z in 1988-90.
B. The Irritation Subsector
BackIaround and Development
2.03 About 35Z of the cropped area is dependent on irrigation, including all fruit orchards, which produced almost US$800 million in foreign exchange during 1990. The command area totals some 1.8 million ha, with about 1.2 million ha irrigated on a regular basis. Field crops, including cereals, maize, potatoes, and sugarbeet account for over 40Z of the regularly irrigatnd area, followed by pastures at 301, fruit trees at around 20Z, and vegetables ar less than 10Z. The areas with less reliable water supplies are planted mostly in low-yield cereals and pastures. In the dry North, drip irrigation is ?,acticed in 131 of the irrigated area by modern commercial farmers who produce fresh fruit for export. Sprinkler irrigation systems are used in the southern regions of the country. Together, however, such advanced systems account for less than 5Z of the total irrigated area, with the remaining distributionand applicationsystems being almost entirely gravity based.
2.04 The private sector has traditionallydominated irrigation development in Chile. From colonial times to 1915, private investmentwas responsible for developing irrigation capability on about one million hectares, mostly run-of-riversystems with unlined canals providing seasonal -2-
water. Subsequentlytprivate initiativewaned as the subdivisionof landholdingsincreased the complexityof coordinatingimplementation and financing. Irrigation investmentcame to a standstill even for on-farm works du. .nL .he agrarian reform period of 1965-1973. In the 1980s, however, pr. As' on-farm investmentbegan anew in response to general improvementsin economic incentives, greater land security, and e governmentprogram to subsiaize private investment in irrigation. Most of this investmentwas by commercial farmers attemptingto reach levels of water security and management required to produce fresh fruit for export. As a result, plantings of new fruit orchards, largely developedwith advanced irrigationmethods, increased from less than 6,000 ha a year in 1985 to over 10,000 ha a year in 1989.
2.05 The public sector, on the other hand, constructedmore than 60 major irrigationworks benefiting some 600,000 ha over a period of 40 years ending in 1970. Studies indicate that many of these schemes were not completed or fully utilized and resulted in low rsturns. Furthermore,less than 3Z of the costs of such works were recovered from the beneficiaries, despite laws calling for full cost recovery,with much of this subsidy going to a relativelysmall number of large farmers.'/ Subsequently,under the military regime public investmentin irrigationdeclined drastically,from an annual average of US$55.4 million in 1965-70 to US$5.0 million in 1981-89 and US$1.6 million in 1990. Consequently,no new important irrigation infrastructurehas been developed in the last 15 years. This cecline was associatedwith general fiscal stringencyand the desire on the part of the military regime (1973-1990)to promote again the predominant role of the private sector in irrigationdevelopment. To that end, policies were enacted to transfer ownership and operation and maintenance (O&M) of schemes to the users, recognize water rights as a transferableprivate asset, require up-front financial contributionsby beneficiariesof at least half the costs of public investments,and reimburse partially the costs of private small-scale investments.
Legal and InstitutionalFramework
2.06 Water Rights. The Water Code (Law 1122) specifies that all water resources are national property, but recognizes the right of individuals and entities to use them in line with the tenets of the Code. A water right involves the use and possession of water; it is a private asset that can be isolated and mortgaged by itself independentlyof the land. Consequently,the allocation of water among iterested parties is left to market forces, with water users free to buy and sell water rights, subject to the Civil Code. Laws dealing with water contaminationalso regulate the use of water. These include Law 3133, enacted in 1916, which calls for the neutralizationof industrialresidues and prohibits discharge of any effluent containingharmful substances into bodies of water used for drinking or irrigation,and, more recently, Law 3557, enacted in 1981, which establishednorms for protecting water for the benefit of agricultureand public health.
/ Seefor example,Nathaniel Wolilman, The Water Resources of Chile,Resources for the FutureInc, Johns Hopkins Pres, 196s. -3-
2.07 User Organization. The Water Code recognizes several levels of user organizations. The most basic are water communities,vhich consist of two or more holders of water rights using a common irrigation or drainage system. Public deeds identify their members, specify their rights and the bylaws of community operation and management, including administrativeand legal aspects to ensure reasonabledistribution of water and operation and maintenance of common works. All matters of interest are resolved in a general assembly,which also elects a board. Irrieationassociations function like water communities,b-t have a legal status that enables the members to take out loans collectively. River authoritiesare second-tierorganizations of water users of a common natural stream and include individuals,public entities, irrigationassociations, water communities,and other entities. Establishment of a river authority requires a public deed signed by all interested parties. Finally, the Confederationof Canal Operators of Chile (CCC) is a leg-1ty recognizedassociation of water user organizationswhich reprasentsmost sf the national canal system.
2.08 Public Institutions. The Ministry of Public Works (MOP) has long been the predominant public institutioninvolved in irrigation. Its Directorate of Irrigation (DR) is responsible for studies, design, and supervising constructionof public investmentsand the ope:ation of public irrigation infrastructure. The General Dt.-uctorateof Water (DGA), a)Jo in the MOP, has overall responsibilityfor wate developmentplannirg and the development and exploitationof natural water resources. It collects scientific data on water resources,maintains records of water rights, and adjudicatesconflicts among water uw rs. Irrigated areas also benefit from the activities of public agencies that provide agriculturalservices. These include the Institute of AgriculturalResearch (INIA),which conducts agriculturaland livestock research. Although a public institution,it is expected to function as a private entity (corporaci6nde derecho Privado) and currently derives about 33Z of its income from the sale of products and services. In addition, the Institute for AgriculturalDevelopment (INDAP) provides technical assistanceand credit to small producers. INDAP targets the estimated 252,000 farm families throughoutthe country with less than 12 BIHV',and currently reaches about 27,000 of them. It is expanding coverage with the assistance of the Governmentand the recently approved Bank-financed Small Farmer Services Project (Ln. 3473-CH) and expects to reach between 65,000 and 80,000 farmerswithin the next five years.
2.09 In an attempt to respond to longstandingproblems in realizing the full benefits to public investmentand in coordinatingconstruction and complementaryactivities, the National IrrigationCommission (CNR) was created in 1975 (Law 1172). Its Council is the main deliberativebody for irrigation policy and is chaired by the Minister of Economy and includes the Ministers of Finance, Public Works, Agriculture, and Planning. However, there has been no public investmentin irrigationduring the last 15 years; consequently,the main task of CNR's Technical Secretariat (SEICNR) has been the implementation
BasicInrigated Heotare, equivalent to onehectare of Irrigatedland in the fertleMaipo River Valley near Santiago. -4-
of the IrrigationDevelopment Law 18450 (para 2.11). Additionally,the SE/CNR has carried out some water resource and agriculturalsurveys and river basin studies, and has evaluated some of the investmentprojects identifiedin these studies.
2.10 Public Investment:Law 1123. Constructionof irrigation and drainage works with public funds is governed by IrrigationLaw 1123 of 1981. It stipulatesthat final design can only proceed if beneficiariesrepresenting at least 332 of the land or water rights involved approve of the proposed project. A project can only be consideredfor constructionif the price of the land plus the cost of the proposed works is less than or equal to, the commercialvalue of similar irrigated land in the same region, unless authorizedby the President of the Republic. For construction,beneficiaries representingat least 502 of the newly availablewater rights must accept the project and commit themselvesto reimburse the State under terms and conditions agreed during negotiations. The State reserves the right to allocate the uncommittedwater by competitivebidding after completion of construction. Once constructed,the governmentoperates and maintains the facilities for up to four years. Thereafter,water user organizationsassume full responsibilityfor undertaking and fully funding O&M. In cases of public safety, the State retains ownership and operates the works, the costs of which are fully charged to the water users.
2.11 Private Investment:Law 18450. In October 1985, the Irrigation Development Law 18450 (LFR) was promulgated to encourage private investmentin irrigationand drainage works. LFR stipulatesthat the State may reimburse up to 752 of private investmentin constructionand rehabilitationof irrigation and drainage works and related pumping equipment that increase the irrigated area, improve water availabilityin an area of short supply, or reclaim poorly drained or waterlogged land for agriculturalproduction. The cost of eligible works cannot exceed UF 12,0001 (approximatelyUS$250,000). Funds are allocated on a competitivebasis by CNR, which offers about US$1 million every 45-60 days. Proposed projects are ranked with priority given to those with higher beneficiary contributions,lower cost, and larger area benefited. The subsidy is paid once works have been completed and certified by CNR. After initial delays, demand has increased substantially. Through six years of operation total investmentunder the program has reached US$66 million, and in the process bidding competitionhas brought the level of subsidy down from 622 of investmentcosts in 1987 to 422 in 1991. The LFR is due to expire in October 1993. Failure to extend LFR would reduce incentivesfor large farmers to invest in on-farm works, but most investmentby user groups, as well as on-farm works for small farmers, cou]d be channeled through Law 1123.
UF - Unidadde Fomento (Development UnlQ, an accounting unK that retainsIts real value through daily adjustments In relationto the Shllean Peso. - 5 -
III. DEVELOPMENTALPOTENTIAL AND CONSTRAINTS
A. Potential
3.01 The principtl technical constraintto 8reater and more intensive land use for agriculture in Chile is the lack of irrigation;yet less than one-third of the country's irrigationpotential is currently being fully exploited, including undeveloped areas and those within existing schemes. Estimates of potentially irrigable lands vary widely. Studies made in the early 1960s indicated a potential of around 2.5 million ha; however with the availabilityof new technology and surveys, sophisticatedirrigat4on methods, and expansion of the irrigation frontier in the south, current estimates are closer to 3.5 million ha. Works required to develop new sources of irrigation water vary. In the northern river basins, technical solutions mostly involve multiannual storage dams. In the Center (Regions IV, V and Metropolitan Santiago), the Aconcagua valley suffers from water shortages during dry years; technical solutionswould involve a combinationof a rational use of ground and surface water and the constructionof storage dams. Farmers in the Metropolitan area face increasingcompetition for availablewater resources from industry and urban centers. A study of the Maipo River basin would be required to draw a clear plan for water development,including multipurpose projects. Farther south, water supply is less critical, but some areas would benefit from irrigationto develop their full potential. Technical solutions would be mostly river-diversionstructures, but some areas would benefit from water transfer between basins.
3.02 The most pressifigproblem, common to all regions in the country, is poor management of existirg resources, as reflectedby water use efficiencies. These efficienciesare highest in northern areas where irrigation is required throughoutthe year, water is scarce, and modern irrigatingmethods are practiced. In contrast, in the Central Valley near the Santiago basin efficiencyhas been estimated at 24Z and application -ficiency less than 601, with losses during non-irrigationhours estimated at .4Z. While part of the conveyance and distributionlosses and most field losses return to the water source and are used downstream,such losses do increase risks among end users in any particular scheme, and thereby lower their productivity. These inefficiencieshelp to account for the fact that only 1.2 million ha out of the 1.8 million ha of irrigable land under command have reasonably secure water supply (defined as 852 water security, i.e., on average, three years out of twenty flows fall below the required quantity).
B. irrigationWater Management
3.03 The poor state of irrigation infrastructureand inadequate management limit the potential of the subsector by underminingthe efficient use of available water resources. At the farm level, farmers growing high-value crops for export utilize sophist'ated and highly efficient on-farm irrigation methods, but the vast majority i..etraditional surface methods and overall field efficiency is low. At the scheme level, a number of the conveyance networks are in need of rehabilitationand improvementdue to earthquake and flood damage and a lack of adequate maintenance, caused in part by the failure to adjust institutionalarrangements and adapt distribution -6- networksfollowing the agrarianreform. River diversionstructures are mostly temporary,have to be rebuiltor repairedevary year, and are often adaptedto river flows durilngthe irrigationseason. Main conveyancecanals are not extensivelylined, often run along steephl'lsides, and need slope protection to avoid damageduring the rainy season. In some areas,key structureswere damagedduring the 1985 earthquakeand are in dangerof collapsing.Secondary and tertiarycanals are usuallyunlined and the numberof controlstructures is generallyinsufficient. Finally, in many areasmajor changesin land tenureduring 1965-75 were not accompaniedby adjustmentsin water distributionsystems.
3.04 Changesin land tenurealso had major effectson the allocationof water rightsand organizationof water users. As a result,irrigation systems that formerlybelonged to one large holdingand were run by one landlordare now in the hands of many (up to hundreds)of farmerswith no centralauthority or management.The numberof water user organizationshas increased significantly.There are about 850 water communitiesand 172 irrigation associationsregistered with the DGA. However,those establishedprior to 1981 are not obligatedto registerwith DGA and accordingto the ConfeJeration of Canal Operators,the numberof water users'organizations in the countryis actuallyabout 4,000. As many as 2,000 lack the necessarylegal instruments to carry out properlytheir functions. Moreover,many user organizations, regardlessof their legal status,lack propermanagerial capacity to operate and maintainthe irrigationworks under their responsibility.These orge-nizationalweaknesses are aggravatedby the lack of legallyrecognized water rightsof a large proportionof mostly small farmers. These physical and institutionalconstraints together undermine the imprcvedefficiencies that might be gainedfrom freelytransferable water rights. C. InvestmentPolicy 3.05 While the policiesof the militaryregime resulted in increased participationby users in operationand maintenanceand greateron-farm investmentby commercialfarmers, investment, the rehabilitationand modernizationof headworks,and conveyanceand distributionsystems have been largelyneglected. Consequently,almost a third of the area with irrigation infrastructurestill receiveswater on an intermittentbasis and incentives for efficientwater resourceuse have been underminedby deterioratingworks, improperand outdateddesign, and inadequateO&M. The weaknessof policy reformsis due largelyto the failureto recognizefinancial, technical, and institutionalconstraints that preventthe privatesector from assumingits role. While large commercialfarmers are able to prepare,construct, and financetheir own on-farmworks, the abilityof small farmersto do so is limited. Thus, those that neededthe assistancethe most had difficultyin applyingfor tendersand competingwith larger,more progressivefarmers. For largerinvestments--such as bringingnew areasunder irrigationo, rehabilitatingand modernizingcommonly-held headworks and conveyanceand distributionsystems--these constraints are exacerbatedby organizational weakness. Moreover,because investments normally take 3-5 years to complete, and full agriculturaldevelopment is only reachedin 4-8 years for high-value crops,farmers were largelyunable to provideex ante financing,as required by the militarygovernment. - 7 -
D. AericulturalDevelopment
3.06 Agriculture in general, but irrigated agriculture in particular, in Chile is characterizedby a dualistic system in which a small, but dynamic, group of entrepreneurialfarmers co-exist alongside small traditional farmers. While these groups are far from homogeneous,they do have distinct characteristicsand developmentpotential. Commercial farmers apply modern irrigationand production technologies. These operations includes small holdings (up to 10 ha) dedicated to high-valuecrops (e.g., berries, flowers, early vegetables); export-orientedfruit orchards (40 ha and above); and medium (over 50 ha) and large holdings (over 200 ha) under intensive crop (maize, sugarbeet, oilseeds) and livestockproduction (dairy and confined fattening operations). Commercial farmers either participate in the INIA technology transfer program on a fee-payingbasis, or hire their own technical assistance directly from private firms. The large majority of irrigation farmers, however, belong to the traditional type, who either acquired their Amall holdings privately or have obtained their farms during the land reform process. In either case, they have been unable to develop their land into a covrmercialoperation due to lack of technical and financial support, and poor irrigation infrastructure. With low levels of technology their farming operations are labor intensive. Production is oriented towards self-sufficiencyin foodstuffsand extensive cropping of cereals. Often they keep a small area under pasture for their livestock,mainly goats and sheep.
3.07 There has been little generationand transfer of technology to small farmers using irrigation. Much of the past emolution towards improved water distributionsystems was stimulated by private suppliers of hardware Qrd installationpackages; as water becomes scarcer in the north and around Santiago, these advanced irrigationsystems are likely to spread more widely among commercial farmers. For the rest, however, future developmentwould be linked to rehabilitatingand redesigninggravity distributionsystems, which are unlikely to be of interest to private industry. INIA research in irrigationand drainage, however, was only initiated eight years ago and has been operating at a low level of intensity,with only 4? of the INIA budget. Moreover, future developmentwould require technologiesappropriate for farmers of limited capital and skills resources, but only recently has INIA's research mandate included farmers below 12 BIH. Consequently,lacking adequate technology to transfer, INDAP support in irrigated areas has been minimal.
E. EnvironmentalConstraints
Water Oualitv
3.08 Water quality constrains the availabilityof water resources suitable for use in crop produc_ionand limits the development of irrigation in areas where lower river flows would increase the concentrationof contaminants. There are six identifiablesources of water contaminations natural (chemicaland physical),mining (chemical),domestic sewerage (biological),industrial (chemical),solid waste (chemicaland biological), and agricultural (chemicaland biological). The responsibilityfor oversight and coordinationof policies for the use, development,and conservationof -8-
water resources is vested in DGA. DGA practices the minimum-flow-requirements approach to ensuring that water use rights granted are consistent with basic standards of environmental quality. However, DGA does not have the level of resources required to ensure that all the controls, authorizations, and sanctions for i.nfringement are actually carried out by the various municipal and central government agencies charged with these roles. While the implementation of standards for drinking water has been quite effective, these standards are not applied in the case of quality of irrigation water. The DGA and the municipalities have virtually no resources to monitor quality of irrigation water in the hundreds of systems scattered over an area of 450,000 kmn2.
3.09 The potential for agricultural contamination in Chile is greatest in irrigated areas, particularly between Regions I and IV where surface water dilution is limited, which is the result of the use of potentially contaminating agro-chemicals. However, the limited information available suggests that contamination from this source is not significant. Individual cases of mismanagement could affect local water supplies, but the strict requirements of importers of Chilean produce acts as a brake on widespread abuse. While there is potential risk of nitrification of aquifers used for urban water supply, this is minor compared with the problems created by domestic sewage. For example, a study of pesticides in the Aconcagua Valley, ono of the most intensive agricultural areas in the country, found only insignificant traces of residues in downstream water bodi2s. Due to the steep courses of most Chilean rivers, aeration reduces nitrification and BODIW accumulation in surface iPaters. However, the problem could be potentially significant in the lakes of the Center-South (Regions VII and VIII) where tourism and commercial fisheries would be at risk. But in this area, irrigation is likely to remain an insignificant source of contamination.
3.10 In contrast, water contamination from other sources does negatively affect irrigation agriculture. The most infamous case involves the lIaipo and Hapocho Rivers, which flow through Santiago and are used for disposing of that city's untreated sewage. Downstream flows are used for irrigating about 57,000 ha, of which about 15,000 ha are planted with vegetables for the Santiago market. Evidence has long suggested that high levels of typhoid and gastro-intestinal ailments found in Santiago are related to the consumption of uncooked vegetables from this area.5 1 This situation has received greater focus after the appearance of cholera in April 1991. A variety of corrective measures are being pursued, including chlorinating canals and prohibiting the growing and sale of certain vegetables. The problem, however, is symptomatic of a larger conflict between urban and rural areas of land and water in the Maipo Valley. The Government is initiating studies aimed at long-term, basin-wide solutions and the project would provide financing for specific investments identified in this area.
r SBlochemicaloxygen demand; a measureof the organicstength of sewage. Af Asrepouted in Wastow&terIrrinatlon InDevelocina Countries, World Bank Technical Paper No. 51, IBRD, 1986. -9-
Draina2e and Salinization
3.11 Chile is characterizedby slopes and soils that allow natural evacuation of excess waters, though drainage problems can be found in a few low-lying areas scattered throughoutthe country. To date little research has been done on this issue. However, if irrigationis to expand in the center of the country (Regions V and VI and the MetropolitanArea) there will be a need for greater research, focusing on small farmers using gravity irriSation. The project would support the establishmentof a new line of research by INIA in this area (para 6s.15). In contrast, problems with salinity are more pervasive. In the far north (Regions I and II) vixtually all irrigated areas confront salinity problems due to the natural condition of soil and water. While natural conditionsare more favorable in the north (Regions III and IV), the problem has been aggravatedover the past decade in the Copiap6 valley by the expansion of drip irrigationto about 4,500 ha of table grapes. Most of this area is irrigatedwith groundwaterand about 302 is seriously affected by salinity,with another 402 moderately affected. This is an area developed by the most advanced farmers in the country, however, and they are currently seeking private high-lsvel expertise. Control has been achieved in some areas by washing with accelerated drip irrigation,but it is costly.
3.12 A further aspect is the potential threat of saline intrusion in coastal aquifers. This is most likely to occur in areas where summer storage for hydroelectricityor consumptiveuse of water for irrigationreduce flows in the vicinity of river mouths or estuaries to the point that ground water recharge is insufficientto prevent an irreversibleadvance of seawater. There has been no indicationthat this process is underway in the north and center of the country, where such intrusion could cause problems in the quality of water available to the increasingpopulation at beach resorts and other coastal towns. Nevertheless,the prospect cannot be ignored in view of incrrased demands likely of water resources for irrigationand for industrial and mining production. There is only limited information on the behavioral characteristics of aquifers (coastal or inland) to provide a basis for estimating the probability of saline intrusion and design of remedial or preventivemeasures. The project would ensure that investmentsproposed for such areas would have to address this issue as part of the process of environmentalscreening and assessment (para 7.19).
Dearadation of Watersheds
3.13 While not a consequence of irrigation,watershed degradation does have an impact on irrigated agriculturethrough its effect on soil degradation,increased flood damage, siltationof reservoirsand irrigation canals. In Chile, as in all countries,it is asserted that the process of erosion and fertility decline is occurring at an acceleratedscale because of overcropping,overgrazing, baring and removal of vegetative cover for fuelwood and timber. According to Ministry of Agriculture estimates, about 11.6 million hectares (or 152 of the total land in the country) are severely eroded. However, no detailed assessments are available as to how much of this damage is in fact attributableto economic activity, as opposed to a geological process. The country's on-going reforestationprogram, which - 10 -
covers some 1.4 million hectares of plantations,occupies part of this area. Whatever the cause, the negative impact cf degradation on irrigationwould have to be recognized in the formulationof investmentsto be financed by the project.
IV. BANK INVOLVEMENTAND LESSONS LEARNED
A. Bankwide Lending for Irrigationand Drainage
4..01 Irrigationand drainage projects account for about one-third of Bank lending to agriculture;however, there is a growing concern about the quality of irrigationprojects being supported by the Bank. Recurring issues include the effectivenessof large-scale,public sector, gravity irrigation systems versus alternativeforms of largely private-sectorirrigation development; the frequealcyof projects not being completed, especiallyunder program or time-slice approaches;the low level of cost recovery; poor preparation and design of schemes; substandardconstruction quality; and the role of major commodity price shifts. Although Bank-supportedinvestments in irrigation and drainage have been generallybeneficial, the overall operationalperformance has been poorer than expected and the sustainability of many investmentsis uncertain. The physical infrastructurehas often deterioratedleading in some cases to long-term declines in production and low efficiency in water use. InadequateO&M funding and institutionaland organizationalproblems have contributedto this shortfall in performance. Borrowers often disengaged too early from projects, leaving irrigationand drainage systems incompleteand land developmentunfinished, with complementaryservices inadequateor seriously delayed.6'In addition, some Bank-financedprojects suffer from: underestimatedcosts frequently due to lack of sufficientlyadvanced engineeringdesign at appraisal;cost overruns due to delays in completingengineering designs, preparing tender documents, and evaluating bids; slower-than-estimatedcivil works constructionand equipment delivery times; and lower-than-estimatedwater use efficiencies.'/
4.02 Finally, the cost-recoveryrecord in Bank-financedirrigation projects has not been good. In most cases, no capital costs were recovered and in two-thirdsof the projects reviewed the covenant requiring that cost recovery fully satisfy O&M funding had not been met, with the proportion of O&M costs recovered generally reaching only a range of 152 to 45Z. The three main reasons for non-compliancehave been unreliablewater supply due to poor O&M, the often heavy burden of direct and indirect taxes already imposed by governments on the farming sector, and lack of government commitment to recover costs.-
§/ EvaluationResults for 1989, Operations Evaluation Department (OED). yI AnnualReview of EvaluationResuls for 1989- Agricultureand Rural Development. OED. WorldBank Lending CondItionalIty: A Reviewof CostRecovery In IrrigationProjects, OED, OPS No. 6283, June 1, 1986. - 11 -
B. Lending to Agriculture in LAC
4.03 From recent experience of lending to agriculture in the Latin America and the Caribbean Region, several factors have been identifiedas contributingto poor project performance: lack of a supportivepolicy environment;inadequate counterpart funding;weak implementinginstitutions in the sector; overly complex design; and technical shortcomingsin preparing and appraisingprojects. The institutionalweaknesses suggest that the size and complexityshould be largely determinedby the demonstratedimplementing and funding capacity, and commitmentof the agencies involved. For irrigation projects specificallythe failure to involve adequatelyproposed beneficiaries in project design and implementationis also seen as a major cause of unsatisfactoryperformance. The result is overly-optimisticassumptions about production and productivity increases from planned investments.
C. Bank Involvement in Chile
4.04 The current lending portfolio in Chile, which includes 15 projects and US$1.3 billion in commitments,is dominated by infrastructure-oriented projects followed by lines of credit. The Chilean experiencehighlights the direct, positive relationshipbetween sound macroeconomicperformance and sector-specificdevelopment efforts. This sustained,solid performance,also attributableto a generally strong institutionalframework and a skilled civil service, has been maintained during the recent political transition.
4.05 The Bank has made nine agriculturalloans to Chile in the past four decades, totalling some US$260 million, eight of which were primarily credit operations. During the 1970s these loans focused on modernizing and expanding agriculturalinfrastructure with the objective of increasingfood production;more recently lending has been for specific programs in support of small farmers and poverty alleviation. From the two loans that have been evaluated by OED, the most directly relevant lesson is the need for flexibility in project design to be responsiveto shifting economic circumstancesand policies. The most recent loan in the sector, the Small Farmer Services Project (Ln. 3473-CH) was approved by the Board on May 21, 1992.
V. PROPOSED STRATEGY. DESIGN. AND RATIONALE FOR BANK INVOLVEMERT
A. Government Strateav in Irrigation
5.01 The Governmenthas decided to increase investment in the irrigation subsector in order to sustain agriculturaland export growth, increase the productive capacity of small farmers in poor rural areas, and protect significant existing investments in irrigationinfrastructure. Toward this end, the Governmenthas taken several actions to initiate the constructionof several new large-scaleirrigation schemes as well as new small-scale schemes to benefit small farmers. 12 -
5.02 Under the program for new large-scaleschemes, the Government is completing the Pencahue Canal, originally financed by the Inter-American Development Bank (IDB), which will incorporate 12,400 ha of newly irrigated land by 1994 at an estimated cost of US$30.5 million. It is also preparing to initiate constructionof a dam on the Huasco River to improve the irrigation of some 11,400 ha planted mostly in table grapes and incorporateanother 1,200 ha of land, estimated to cost US$38 million. Further, it is preparing for external financing a larger-scalework, Canal Laja Diguillin, which would improve irrigation for 14,000 ha and incorporatean additional 49,300 ha by 1997 at a cost of US$143.0 million. Interest in the latter has been expressed by the Overseas Economic CooperationFund of Japan (OECP). The policy of the government for recovering the cost of these l1rge-scale investmentsincludes: (a) investment cost repayable over 25 years with a 4 year grace period: (b) indexation of costs using the wholesale price of wheat in Santiago,with a 61 annual rate of interest; (c) for projects with a financial internal rate of return (FRR) lower than 15%, subsidies equivalent to the amount required to reduce costs in order to achieve a 151 FRR.
5.03 To promote the constructionof new small-scaleschemes benefiting small farmers, the Government is attempting to enhance small farmer participation in the LFR. To this end, an agreement has been signed by INDAP and FOSIS (the Government-runSocial Solidarity Investment Fund financed by bilateral donors) to finance feasibilitystudies and investmentsmade by user organizationswith at least two-thirdsmembership by small farmers. Subsidies are channelled directly through the LFR without using the competitive system for allocating funds. The INDAP-FOSISprogram effectivelysubsidizes 85Z of investment costst 751 from LFR and an additional 10% grant from FOSIS. Moreover, FOSIS also provides grants to cover the cost of required feasibility studies, which usually represent an additional 10% of investment cost.
5.04 For rehabilitationand modernizationand new small and medium-sized schemes not covered by the two above-mentionedprograms, potential demand for investmentby user groups is estimated to have reached US$500 million. The Government has requested Bank assistance in formulating and financing a programmaticapproach for responding to this demand. The intent is to address constraints on public and private institutions, efficiency, equity, environmentaland public savings considerationsin the selection and financing of potential investments,as well as the desire to support agriculturaldevelopment for small farmers.
B. Rationale for Bank Involvement
5.05 The proposed project is consistentwith the Bank lending strategy in Chile and the desire of the Government to: (a) ease bottlenecks to private investment and export expansion; (b) alleviate poverty in rural areas; (c) promote environmentally-soundinvestments; and (d) improve the institutionalcapacity of the public sector. It is also consistentwith the 1990 World Bank Agricultural Sector Review, which emphasized the need for the public sector to play a more catalytic role in promoting private sector participation in rehabilitationand modernization and selected expansion of the irrigated area. Bank involvementwould facilitate strengtheningof the role and capabilitiesof the private sector, improve the allocation of public - 13 -
investment, and provide support for improved natural resource management and environmentalimpact assessment in the subsector. Finally, Bank financing would allow for greater flexibility in setting terms for cost recovery.
C. Project Design and Strategy
5.06 The strategy for promoting improved irrigationmanagement and development and the design of the proposed project incorporate lessons learned from projects in Chile and the LAC region as well as to the more general lessons from wider Bank lending in irrigation. These relate particularlyto the need to improve the operationalperformance and the sustainabilityof irrigation projects. The proposed project would be the first Bank-financed irrigation investment in Chile. It is designed to support beneficiary participationin irrigation development as a means of avoiding many of the pitfalls associated with large-scalepublic irrigation schemes. The Confederationof Canal Operators (CCC) has been consulted in project design and played an active role in project preparation,as have local water user organizations. During implementation,farmer approval would be required for proposed investments as well as for the proposed institutionalstrengthening programs of their user organizations.
5.07 Purther, to ensure that investmentsdo not actually subsidize and promote inadequate O&M practiced by private users, agreementswould be made with beneficiariesspecifying standards for O&M and remedies for non-compliance. There is little or no discriminatorytaxation of agriculture, and O&M is largely in the hands of user groups. However, government commitmentwould be required to set overall parameters for cost recovery and implement a creditable system for collection.
5.08 Finally, the project has been designed to include components for agriculturaldevelopment and institutionaldevelopment of water user associationsto avoid neglecting these complementaryactivities. To ensure the completion of on-farm works, private investmentswould be supported through the LFR, which has proven to be an effective instrument. Extension services would be provided by INDAP under a successful ongoing public program targeted to small farmers and supported by increaced public investment in irrigation research.
VI. THE PROJECT
A. Proiect Obiectives
6.01 The Irrigation Development Project (Programa de Obras de Riego y Drenaje Medianas y Menores - PROMM) would aim to improve the operation and efficiency of existing irrigation schemes aad the futur' developmentof the subsector by: (i) strengtheningthe capabilitiesof u6er groups and small farmers; (ii) improving the allocation and sustainabilityof investment in irrigation;and (iii) enhancing the welfare of small farmers, particularly in poor areas. - 14 -
B. Proiect Components
6.02 PROMM would include: (a) investmentin rehabilitationand modernizationof existing irrigationschemes and in the constructionof new small and medium-size schemes; (b) technical support to small farmers for agriculturaldevelopment to complement irrigationinvestment; and (c) support for regularizingwater titles and strengtheningthe technical and administrativecapacity of user groups.
C. Detailed Prolect Features
Irrieation Infrastructure(USS106.8 million. 90S of total cost)
6.03 Under this component,PRONM would finance on-farm works, rehabilitationand modernizationof existing schemes and the constructionof new small and medium-size irrigationschemes under the provisionsof both Law 1123 and Law 18450 (paras. 2.10-2.11). Also included would be required engineering studies, design and constructionsupervision, environmental impact assessments,and institutionalstrengthening of the IrrigationDepartment of MOP and the Executive Secretariat of the CNR, the agencies responsible for implementingthe component.
6.04 Civil Works. Investmentsunder Law 1123 would include: (a) routine rehabilitationprojects to carry out deferred maintenance and repairs of main structuresto avoid further deterioration,improve water distributionand eliminate losses; typical works would include improvementor repair of (i) headworks such as diversion structures, or seasonal storage facilities; (ii) main water conveyancestructures, predominantly siphons, tunnels and aqueducts, (iii) control and water distributionstructures in the secondary and tertiary networks, and (iv) farm outlets; (b) emergency rehabilitationincluding repairs of main structureson the verge of collapse, where interruptionof the water supply would result in the loss of production; works would include repairs of major structuresin the main conveyance system, mostly rehabilitationof tunnels, siphons and aqueducts;and (c) new small and medium-scaleworks involving the constructionof headworks, and conveyance, distributionand drainage networks.
6.05 To be eligible for financing under Law 1123, investmentswould have to have at least a 122 economic rate of return (ERR) based on MIDEPLAN methodology (para 9.02), be screened for potential environmentalimpacts, and, as required, have environmentalimpact assessments (EIA) (para 7.19). The allocationof investmentresources among eligible sub-projectswould be based on a system that includes both efficiencyand equity considerations. Cohorts would be ranked by the net benefit-investmentretio derived from the net benefit stream used for estimatingthe internal rate of return. To enhance the achievement of equity objectives,up to 30Z of total investmentfunds could be used to finance eligible sub-projectstargeted to the 100 poorest rural municipalities (Annex 1), regardlessof their ranking and as long as they meet the minimum economic and environmentalstandards. - 15 -
6.06 Public investment in irrigation worldwida is full of "white elephants" that appeared viable on paper but failed largely in implementation because there was little or no participation of beneficiaries in project design, implementation and financing. Without such beneficiary participation, particularly on the financing side, economic assumptions regarding expected benefits from proposed investments do not have to meet the test of the market. Cost recovery that relies solely on indirect recovery by taxing expected incremental benefits also suffers from this weakness, because the farmer bears little risk if a costly investment fails to achieve its objectives. To avoid this, PROMMwould require both direct and indirect cost recovery measures that would fully recover the capital costs of the investments to be financed (paras 7.14-7.18).
6.07 This component would also finance engineering studies and designs. Construction supervision and environmental impact assessments required for investments would be identified during implementation. Furthermore, it would help finance feasibility studies to be undertaken during implementation, with resources allocated to potential investments based on a points system that would inter alia favor socially-oriented investments with beneficiary support (Annex 2). Access to such funds would require the written approval of at least one-third of the intended beneficiaries.
6.08 Investments under the ongoing Irrigation Development Law 18450 (para 2.11) would be financed for those areas benefiting from public investments under PROMMto ensure that the production potential of these projects is fully realized. Actual works would vary widely depending on the needs of farmers and the conditions of their on-farm infrastructure; but in principle, works include construction or repairs of on-farm canal structures, construction of wells and their respective pumping equipment, and on-farm sprinkler or drip irrigation systems. PRONM, however, would not finance investments under the INDAP-FOSIS subsidized irrigation program for small-farmers (para 5.03).
6.09 Institutional Develoment. An institutional capacity analysis was carried out as part of project preparation to determine the ability to implement the proposed program (Annex 3). As a result, institutional capacity gaps have been identified against program tasks. In the case of MOP, while it has not constructed any new public irrigation works in about 15 years, it has experience in implementing large infrastructure works in other sectors. In addition, SE/CNR has been successfully implementing the LFR since 1986. Thus, the implementing capacity for the proposed program is by and large in place. The major gaps found are limited to a lack of coordinating experience at the inter-institutional level--the inter-institutional distribution of functional responsibilities--and the need for more resources due to the increased activities proposed!'. For DR/MOPthis would require: the modernization of managerial and communications systems with basic hardware, such as a system of 20 personal computers to link the divisions of the DR and 10 regional offices; field and video equipment for communicating with regional offices and
V/ Thisincreau has been stimatedat 40% In MOP/DR; 10% in CNR;5% in INiA;3% In INDAP; and thecreation of a new coordinationunit In MAO for Irrigation-related actiities. - 16 -
beneficiaries;and a plotter for upgrading engineering and design actiiities. To facilitate field travel, a fleet of three small pickup trucks would be financed. Some 10 consultantmonths of technical expertisewould be available for assisting in design and construction. Inputs for the SE/CNR would include about 180 months of local consultantsfor studies and processing of LFR tenders under the PROMM.
6.10 Pilot Studv. Finally, a study on cost recovery mechanisms for irrigation projects would be carried out in order to review the current system and to explore alternativesthat would make greater use of financial and water rights markets, as well as legislationgoverning private concessions for infrastructure. Subject to Bank approval, pilot investmentsusing promising alternativescould be financed under the project. This study would be initiatedno later than June 1993 by the DR and the Ministry of Finance.
Aaricultural Development (USS9.4million. 7.92 of total cost)
6.11 For the full benefit of investmentsin common headworks and distributionsystems to be realized,many small farmers will require complementarytechnical assistance from INDAP. However, irrigation-related technology for small farmers, particularlythose located outside the Central Valley, is lacking and increased irrigation oriented adaptive research in many of the sub-project areas will be required. Further, after about 15 years of inactivity in the agriculturaldevelopment of irrigation schemes, the Ministry of Agriculture needs to strengthen its human and support resources to participate effectively in the project (Annex 4).
6.12 Adaptive Research. The PROMS would expand existing research lines and would initiate new specific lines of adaptive research in the areas where irrigation investmentsare likely to be concentratedin the Central Zone (Regions V and VI and the MetropolitanArea), in the Central-SouthZone (Regions VII and VIII) and limited adaptive research in the North Zone (Regions I to IV) and the South Zone (Regions IX and X). Out of about US$2.8 million earmarked for PROMCi-relatedadaptive research, INIA has been allocated US$0.7 million. The remaining US$2.1 million would either derive from the Science and Technology Development Fund (FONDEF) through a December 1992 bidding, or would be made available through annual provisions of funds by the Government. INIA and/or other public or private institutionsspecialized in agriculturalresearch would be selected to undertake these agricultural research activities. It would be MAG's responsibilityto ensure that these activities are carried out in accordancewith the overall adaptive research objectives of PROMM in coordinationwith INIA activities in adaptive research and technology transfer, and in a man.er satisfactoryto the Bank.
6.13 Transfer of Technoloav. As a complement to its research work, INIA is also responsible for the initial diWfusion of improved technologies. In this context, INIA operates demonstrationcenters (CATTs) that serve as a basis for technology transfer to small-scalefarmers in homogeneous geographicalareas. With IDB support, INIA has already established 25 CATTs and will expand them to 55 by 1995. CATT programs include demonstrationplots in the fields of lead farmers, field days and discussion groups. PROM would support the establishmentof some 28 irrigation focussed CATTs (CATT-R) to - 17 - coverproduction technology under irrigatedconditions at an estimatedcost of US$1.7million. Most of the technologyto be transferredwo-ld be based on existingknowledge with resultsfrom the adaptiveresearch to be fed into the programas they becomeavailable. In additionto providingdirect assistance to participatingfarmers, the CATT-Rwould train both INDAP staff and the extensionworkers employed by privatecompanies that provideextension servicesto small farmers. 6.14 A draft agreementbetween MAG and INIA to carry out part of the adaptiveresearch and the whole technologytransfer program was reviewedat negotiations;signing the agreementwould be a conditionof effectiveness. Duringnegotiations. assurances were obtainedthat the Governmentwould provideadequate counterpart funds to financerequired adaptive research and technologytransfer activities, over five years of projectlife, covering topicsend in specificareas to be mutuallyagreed between the Bank and the Governmentduring implementation, through the yearlyPOAs. 6.15 Extension. The extensionsupport to be providedby INDAPwould reach an estimated14,000 small farmersduring the five years of project implementation,at an estimatedcost of about US$4.1million. This would includethe financingof seven additionaltechnical assistance coordinators for irrigation(US$1.5 m4ilion for incrementalrecurrent costs and vehicles), and consultingservices for expandedextension services (US$2.6 million). Aareementwas reacheddurinf nexotiations, that adequatecounterpart funds would be providedto carry out these activities. 6.16 A draft agreementbetween MAG and INDAP to carry out extension serviceswas reachedprior to Board presentation;signing the agreementwould a conditionof effectiveness. 6.17 InstitutionalDevelopment. The capacityanalysis indicated, and preparationconfirmed, that the Ministryof Agriculture,specifically the officeof the Undersecretaryof Agriculture(SSA), lacks capacityto participatealong with the MOP and the CNR in planningthe developmentof irrigationor to coordinateeffectively the activitiesof INDAP and INIA. To help fill this void, the HAG has recentlycreated the Committeefor Irrigated Agriculture(CAR), which would coordinatethe agriculturaldevelopment activities.The CAR will be chairedby the Undersecretaryof HAG and would includethe directorof INDAP,the "residentof INIA, the directorof the Agricultureand LivestockService (SAG) and the directorof MAG's Divisionof Studiesand Budget(DEP). The PROMMwould supportthe CAR by establishinga technicalsupport unit (UAR) staffedby three professionalswith individual expertisein the planning,development and evaluationof irrigationprojects, assistedby about 26 monthsof short-termconsultants for specific assignments.Other inputswould includetwo vehiclesand officeequipment, and incrementaloperating expenses. Costs are estimatedat US$800,000.At the mid-termreview, the functioningof the UAR would be reviewedto determine the appropriatenessof incorporatingits tasks as regulargovernment positions. Agreedterms of referencefor these positionswould be a condition of effectiveness. - 18 -
6.18 INDAP would also require institutionalstrei,thening to implement effectively project activitiesin irrigation. It would do this by recruiting, training and providing operational support for six specialized irrigation field staff as rechnical assistance coordinators,a new position in the INDAP structure. The latter would be responsible for supervisingthe performance of contracted irrigationextensionists as well as ensuring effective integration and feedback between INIA and the extension services. As with extension, agreementwas reached at negotiationsthat these activitieswould be supported through adequate counterpart contributions.
StrengtheningUser Groups (USg2.5million. 2.1Z of total costs)
6.19 ReaularizinRWater Titles. The Government has launched an effort to regularizewater rights on a nationwide basis, through the General Directorate for Water (DGA) (Annex 5). To enhance the returns to investment under PROMM, the Governmentwould complete the regularizationof water use rights in those areas where most of the rehabilitationand new projects would be executed. This would include: (a) completion of the surveys of water users and the inventory of related irrigation infrastructurein the Limari basin, Section I (right bank) and Section III of the Maipo River basin, Cautin River basin and Coastal River basins, and; (b) regularizationof water rights in the Limari, Choapa-Quilimari,Maipo, Maule, Cautin and Coastal River basins. This would require contract surveys in selected areas, computer hardware and software to improve the efficiency of user surveys and DGA supervision,and the regularizationof titles in selected areas for small farmers. User surveys and legal inscriptionsare carried out by specialized firms included in the MOP consultantregistry.
6.20 User Groups. To improve operation and maintenance in general and the irrigationschemes rehabilitatedand constructedunder the program in particular, some 450 water users organizationswould need to be trained. The training would be implementedby the DGA and the IrrigationOperations Division (DE) of DR. It would center on: (a) administrativeaspects, mainly personnel management (work organizationand labor relations) and financing and accounting (budgeting,management of accounts and financial transactions, accounting systems, organizationof collection of water charges and supply and control of inputs) by DE; (b) technicalmatters related to system operation (irrigationprogramming, water distribution,monitoring and control) and system maintenance (maintenanceprogramming and implementation,contractual procedures) by DE; (c) proceduralmatters, such as water rights, protection of water rights, suspension of water supply and norms related to constitution, regularizationand relocation of water rights and changes in diversion structuresby DGA; and (d) organizationalaspects concerningpreparation and implementationof meetings, report preparation,etc. by DE. Assurances were obtained at negotiationsthat both the regularizationof water titles and the training of user groups would be financed totally by counterpart funds. -19-
VII. PROJECT COSTS AND IINANCING
A. Costs
7.01 Project costs, including taxes and duties, are estimated at US$118.7 million equivalent. Of this about US$45.0 million (38%) represents foreign exchange costs. Duties and taxes amount to US$19.7 million. Physical contingencieshave been estimated at US$0.2 million based on 5% contingencies on all components except civil works, research and extension. Price contingenciesof US$11.6 million are based on Bank-projectedprice increases of about 3.7% annually during the life of the project (summary project cost tables are presented in Annex 6).
B. Financiag
7.02 A Bank loan of US$45.0 million equivalent is proposed to finance 45Z of eligible project costs net of taxes and duties. Bank financing, on a net of taxes and duties basis, would cover 100% of foreign exchange expenditures. The Bank would finance 41% of total public expenditureson civil works, including studies and engineeringand design (US$43.0 million). It would also finance 100% of technical assistance to MOP, MAG, CNR and UC (US$2.0 million). Adaptive research (US$2.8million), technology transfer (US$1.7 million) and extension services, including required institutional strengthening (US$4.1million) would be carried out entirely with counterpart funds. Activities to st:engthen user groups, costing about US$2.5 million, would be also financed entirely through counterpart funds. Finally, the governmentwould finance 100% of incrementalrecurrent costs for the project coordinatingunit and for the UAR (US$300,000).
C. Disbursements
7.03 Loan proceeds are expected to be fully disbursed by June 30, 1999, a period of about seven years, the standard disbursementprofile for Bank-financedprojects in Chile. Up to US$4.5 million in eligible project expenditureswould be financed retroactivelyto April 1, 1992, to maintain momentum gained during preparation and to permit the initiation of works during the off-season for agriculture.
7.04 To expedite implementation,the Government would establish a special account in the Central Bank in US dollars to cover expenditures eligible for Bank financing under the project. The Bank would initially deposit up to US$2 million into the account, equivalent to an estimated four months of average disbursements. Disbursementswould be made on the basis of Statements of Expenditure (SOE) for all expenses except those covered by contracts requiring prior review by the Bank. Disbursementsfor contracts requiring prior review would be fully documented. Relevant documentationin support of SOEs would not be submitted to the Bank, but would be retained by the executing agencies. Copies of such documents and disbursement applicationswould be supplied to the project coordinatingunit (para 8.01) by the executing agencies and would be made available to Bank supervision - 20 - missions. The specialaccount would be replenishedthrough normal reimbursementof projectexpenditures.
D. Procurement
7.05 The Inter-MinisterialCommittee (CDS) (para8.01) would be responsiblefor monitoringall procurementactivities and for ensuring compliancewith Bank ProcurementGuidelines. Since thereare no specific procurementlaws in Chile,the biddingdocuments for both internationaland localprocurement agreed with the Bank will regulatethe biddingprocedures. Procurementwould be undertaken by the three implementing agencies, all three of which have satisfactoryprocurement capabilities and experience.For investmentunder Law 1123,MOP has submittedto the Bank the first draftof referencebidding documents for works and the selectionprocedures for consultingservices. The Bank carriedout a preliminaryreview of these documentsand found them generallyacceptable. A finalversion, incorporating Bank comments,was preparedand reviewedduring ne2otiations. 7.06 CivilWorks. InternationalCompetitive Bidding (ICB) among prequtlifiedbidders would be used for all civilworks contractsin excessof US$4.0million; thus approximately33? of civilworks to be contractedthrough MOP. Contractsfor civil works estimatedto cost betweenUS$300,000 and US$4.0million would be awardedon the basisof Local CompetitiveBidding (LCB)procedures acceptable to the Bank, subjectto an aggregatelimit of US$55.0million. Civilworks contractsfor less than US$300,000would be procuredon the basis of a minimumof three quotationsfrom qualifiedfirms, subjectto an aggregatelimit of US$19.1million. In all casesLCB procedures would be open to foreignbidders.
7.07 Investmentsunder Law 18450by privategroups and individuals,for rehabilitationand modernizationof schemes,and for on-farmdevelopment would generallybe small in scale (para2.11), dispersed throughout the countryand time-sliced.Since they would consistmainly of civilworks, it would be thus unlikelyto attractforeign competition and would be tenderedon the basis of normalprocedures of the beneficiaries.
7.08 Services. Preparationof studiesand designs,institutional strengthening,technical assistance and trainingactivities, amounting to about US$12.3million, would be carriedout by nationaland foreign consultants,hired followingBank guidelinesfor the use of consultants. 7.09 Reviewof Procurement.Prior reviewby the Bank would be required for all procurem6ntdocuments pertaining to ICB contractsand for the first LCB contractfor works, irrespectiveof its amountas well as all LCB contractscosting US$1,000,000 and above. The remainingworks contractswould be reviewedby the Bank on a post-awardsample basis.
7.10 Becauseof the natureof the sub-projectsto be financedunder this loan, it would be difficultto estimatethe precisenumber and value of contractsthat would fall above the prior reviewthreshold. Of the available data on possiblesub-projects, roughly 55X would be subjectto prior review. - 21 -
7.11 The Bank would review all documentationfor consulting services included in the project. For conaultant contracts of individual assignment. costing US$35,000 or less, the Bank would review the correspondingterms of reference before contractingand condJct a selectivepost-review of contract documents during supervision.
Summarv of Proposed Procurement Arrantements 1i (USS million equivalent)
ICB LCB Other _/ NBFc/ Total
1. Woc^s: Infrastructured/ 25.0 55.0 19.1 e/ 99.1 (10.3) (22.7) (7.9) (40.9)
2. Consultancies: Engineering Studies 5.0 5.0 (2.1) (2.1) Technical Assistance 2.0 2.0 (2.0) (2.0)
3. Goods: Equipment and Vehicles 0.8 0.8
4. AgriculturalDevelopment: Adaptive Research 2.8 2.8 Technology Transfer 1.7 1.7 Extension Services 4.1 4.1
5. RegularizingWater Rights Titles and Training to Strengthen 2.5 2.5 User Groups
6. Training and Publications 0.4 0.4
7. IncrementalRecurrent Costs 0.3 0.3
Total 25.0 55.0 26.1 12.6 118.7 (10.3) (22.7) (12.0) (45.0)
(a) Totals include taxes and contingencies. Amounts in parenthesesshow allocationfrom loan proceeds. Values rounded. (b) "Other" Includes private investment procurement, local shopping and consulting services. (c) Not Bank-financed procurement. (d) Kstlmated distribution, actual distributionwould be defined during Implementation. (e) About 701 of this amount would be for private investments. - 22 -
E. Cost Recovery
7.12 O.eration and Maintenance. User groups are responsible for O&M in most irrigation schemes in Chile and collect charges from users to cover the full cost of these activities. For investmentsunder Law 1123, in order to ensure against providing perverse incentives for poor O&M, standards for operation and maintenance would be defined and in some cases provisionwould be required for collecting and retaining disaster funds. These standards would form an integral part of the agreement io be signed between the water users and the State regarding the constructionand financing of the project. For new works, responsibilityfor O&M would be transferredto the user group following the transition period stipulated in Law 1123.
7.13 Investment. Capital costs would be recovered both directly and indirectly. Direct cost recovery would be based on the cost of investment, net of taxes, estimated after final design has been completed. This amount would be divided by the total number of water rights (acclones) of the project and beneficiarieswould pay in proportion to their share of water rights. Grace and repayment periods would be negotiated on a project by project basis, not exceeding four years grace and 25 years repayment. Repayment would be indexed by either the UP or the wholesale price of wheat at the election of the farmer. However, to encourage farmers to choose the UF, the rate of interest offered to those farmers who choose the wheat index would be at least 1.5Z higher than that for the UF index. The rate of interest would be determined by the Council of the CNR, but in no case could it be less than that for long-term paper emitted by the Central Bank. The Council would also establish the level of payments during the grace period. Pre-paymentwould be encouraged by a discount to be set by the Council.
7.14 The level of direct cost recovery would be negotiated with the beneficiariesfor each individual investment. It vould be between 100 to 50X of the cost of investment,net of taxes. If the investment benefited small farmers in marginal areas (as defined in para 6.05), the level of direct cost racovery could be below 50Z, subject to Bank approval. Within each sub-project,commercial farmers would be required to pay a minimum of 50% and small farmers (less than 12 BIH), a minimum of 252. For omall household plots and farmers in extreme poverty (minifundistas),direct cost recovery could be reduced below 252 subject to Government and Bank agreement.
7.15 Negotiationpackages with users, including direct cost recovery proposals, for proposed investmentsunder Law 1123 would have to be reviewed by the Bank and approved subsequent to negotiationswith beneficiaries. If the overall level of direct cost recovery differs more than 151 from that proposed, the change would have to be justified and agreed by the Bank before the agreement could be signed with the beneficiaries. Major divergence would suggest that assumptionsused in internal rate of return calculationswere overly-optimisticand that the net incrementalbenefit-cost ratio was incorrect. Consequently,the ERR would have to be recalculatedand the sub-project ranked again (para 6.05).
7.16 For the market to ration demand effectively,beneficiaries must believe that government will recover its investment costs. Unfortunately, - 23 -
Bank experience in the housing sector in Chile indicates that public ministries in Chile, as elsewhere, are simply not credible collectors. In this case, however, the risk of non-complianceon direct capital cost recovery would be minimized by having the Treasury collect the debt along with the property tax, for which the collection rate is about 99x.
7.17 Costs would also be recovered indirectly through taxes on incremental gross agriculturaloutput (the va-_e-added tax rate is currently 18x) and through the property tax set at 2Z of assessed value. The combination of direct and indirect cost recovery should ensure full cost recovery for all investments.
F. EnvironmentalScreening
7.18 Under the proposed project, all sub-projectseligible for finuncingwould be subject to an environmentalimpact assessment to detect current and potential environmentalproblems and recommend appropriate changes in design or mitigating measures. Such assessmentswould have to comply with the correspondinglegislation and the Bank's regulationsincluded in its EnvironmentalGuidelines for Irrigation and Drainage Projects. The procedures for screening, classifying,assessing and monitoring environmentalimpacts would be as follows:
(a) Initial sub-projectproposals submitted to the CDS must include a preliminary statement (PES) on possible environmentalimplications based on agreed environmentalcriteria and an assessment of viable options for meeting objectives;
(b) Sub-projectsapproved by CDS for feasibilitystudy must include an environmentalprofile to enable classificationaccording to potential environmentalimpact: "A" requiring a full-scale EIA; "B" requiring further environmentalstudy (ES) of specific aspects; or "C" requiring no further environmental studies;
(c) Profiles would be submitted for comment to the environmentalunits in MOP and HAG and to NGOs concernedwith the issues;
(d) Observationsfrom these entities (point c) would be submitted to the project coordinatingunit (UC), which would be responsible for revision of the profiles, in associationwith the prime authors of profiles. The revised profiles, together with a report on the external consultation,would be submitted to CDS which would reject or accept the environmentalclassification (point b);
(e) With an "A" or "B" classificationthe CDS would request DR, SE/CNR or UAR/MAG to contract the necessary studies to assess environmentalimpacts or provide recommendationsfor mitigating measures;
(f) These studies would be taken into account by the CDS in determining the adequacy of sub-projectdesign and measures to mitigate impacts. The CDS would then be responsiblefor ensuring - 24 -
that environmentalimpacts are monitored and recommended mitigatingmeasures are implemented.This would involvelocal affectedgroups and the user organizationwith theirparticipation and responsibilitiesclearly spelled out in the investment packagesand (8) the CDS would submitthe investmentproposal package to MIDEPLAN, which has the finalauthority in determiningthat environmental procedures have been adequately followed by these agencies as a prerequisiteto approvalof publicfinancing. 7.19 The projectwould complementthe 1992-94program of the NationalCommission on the Environment(CONAMA), which seeks to: (a) provide training in all branches of the government,including MOP and MAG; (b) support preparationof data bases,surveys, special studies; (c) providetechnical assistance;(d) strengthenthe institutionalarrangements for better coordinationon environmentalissues; and (e) provideequipment to assemble, process# analyze and disseminate informationon the environment. PRONMIwould bolsterthis effortby providingfunds for specialistassistance when required for environmentalscreening and assessmentof proposedinvestments. In addition,limited training activities have also been included:(a) an initial two-weekworkshop for eight staffmembers from DR and DGA, to focus on ,well-kn-vpotential issues; and (b) a final one-weekworkshop for MOPstaff to reviewand fine-tunethe materialsdeveloped during the periodof environmentalprocedures testing. 7.20 A summaryof the SectoralEnvironmental Assessment is presentedin Annex 7. A draftversion of this summarywas circulatedto numerous local non-governmentalorganizations (NGOs) involved in environmental issuesand rural developmentin Chile,who were invitedto participatein a meetingunder the auspicesof MIDEPLANto discussand commenton the issues raised. C. RuralWomen
7.21 Women'sparticipation in the economicallyactive rural population increaseddramatically in the 1980s,and there is a strongassociation between rural povertyalleviation and women'swork in agriculturalproduction and processing.Evidence suggests that women are earningan increasingproportion of the familyincome and in a growingnumber of cases are now the principal breadwinners.It is estimatedconservatively that some 152 of poor rural householdsin Chile are headedby women. However,until now, economic planners,legislators and rural developmentagencies have tendedto reinforce women'sdomestic role ratherthan their economicpotential. A re-orientation of the IMDAP extensionprogram to supportbetter the needs of rural women would be carriedout under the recently-approvedSmall FarmerServices Project (Ln. 3473-CH)and would directlybenefit women involvedin irrigated agriculture. 7.22 Women are guaranteedequality under the law by the Chilean Constitutionand there is no legal discriminationagainst women in the Water Code as regardsthe ownershipof water rightsand participationin user - 25 -
organizations. However, to help alleviate non-legal barriers to their participation in user organizations,the diagnosis of the institutional support required for such associationswould have to review the particular needs of women and, if required, propose measures to encourage their active participation. To ensure compliance,these diagnoses and proposed measures would have to be submitted to the National Women's Service (SERNAM) for comment.
VIII. PROJECT ORGANIZATION
A. Prolect Coordinatiog
8.01 The Council of the CNR has given permanent status to the ad hoc preparation group, the Inter-MinisterialCo-mittee (CDS), comprised of the Undersecretariesof MOP and MAG and the executive secretary of the CNR, delegating to it all responsibilitiesand decisions related to the implementationof the project. The CDS would determine policy and exercise general supervision over the Annual Work Program (POA) and implementationof associated activities. The POA for 1992 was reviewed and agreed during negotiations. Agreement was also reached during negotiationsthat POAs for each succeeding year would have to be presented to the Bank for approval by November 15 of each preceding year and carried out thereafter. It would review annual operating programs and semi-annualreports and would make proposals for modifications,as necessary. In addition, the CDS would arbitrate issues of an inter-institutionalnature or which may not be the responsibilityof a particular executing agency. It would meet a minimum of six times a year or whenever necessary. The CDS would be supported by a small coordinatingunit (UC) to provide technical backup and assist the CDS in its decisions. The executive coordinator of the UC would report directly to the CDS and participate in its meetings, acting as its secretary and liaising directly with the Bank. The coordinatorwould be assisted by a senior staff member of a complementaryprofession and support staff. The UC would also require a vehicle for field travel, three computers, comunication and office equipment, 10 months of specialist consultants,seven months of evaluation consultants, as well as operating and travel expenses. Assurances were obtained from the Government that the UC is satisfactorilystaffed and operating.
8.02 The UC would: (a) implement and coordinate the agreements of the CDS; (b) arrange for the preparation of project proposals, their review and the preparation of the annual investmentprograms; (c) prepare project background informationso that the CDS can set annual implementationprograms; (d) promote the efficient coordinationof PROMM components among the various implementingagencies; (e) monitor program implementationand provide periodic reports to the CDS; (f) recommendmeasures to resolve divergencesof project components from the program; and, (g) monitor the use of program funds.
8.03 Public investmentunder Law 1123 would be implementedthrough the DR of MOP, which would be responsiblefor procuring and supervising construction. Investment initiativeswould be gathered at the regional level by the Regional Irrigation Directoratesand the Regional Secretariat of the Ministry of Agriculture,which would prepare and submit correspondingproject
* * i n . I inufffh IM Nli I _I I 111 a _1IIE1I11I1 . - - 26 -
profiles to the UC. The UC would analyze and prioritize the proposed project ideas according to agreed selection criteria (see Annex 2) and then submit them to the CDS for a decision on whether financing for feaslbilitystudies is warranted. The feasibilitystudies would be carried out by private consulting firms and be supervised by DR with assistance from the UC. After completion of correspondingfeasibility studies, the UC would again analyze and rank those projects that meet the minimum economic criteria and environmental standards, and submit them to the CDS for final approval of those eligible for final design and construction. The list of selected projects would be discussed with the Bank during the Annual Reviews and would then be integrated into the following year's constructionprogram. These reviews would be held in May-June, three months before the Government discussionson their annual budget.
B. Accounts and Audits
8.04 Executing agencies would maintain separate accounts to record their expendituresunder the project using an agreed plan of project accounts. A plan of accounts was reviewed at neactiations. As a condition of effectiveness,for each respective component of the project each implementing agency and the UC would have to istablishan accounting procedure acceptable to the Bank. Each executing agency will maintain records of expendituresand will send copies of those records to the Project Coordinating (UC), which will consolidate such records. Statements of Expenditures (SOEs) will be prepared by the implementingagencies coordinatedby the UC. These SOEs will be signed by the authorized representativesof the respective implementingagency. Copies of supporting documentationfor reimbursementrequests provided to the executing agencies would be maintained by the UC and made available to visiting Bank missions and independentauditors, who at their discretion would make direct visits to the executing agencies for the purposes of the overall audit. Project accounts, including the special account, and SOEs would be audited annually by independentauditors acceptable to the Bank following terms of reference approved by the Bank.
C. Monitorina a-adEvaluation
8.05 As described in Annex 3, the basic tool for monitoring would be the POA, an instrument that integratesall PROMM management functions into one single tool: programming,budgeting, work organizationand distributionof tasks, personnel management and monitoring and evaluation. The UC would coordinate the annual developmentof the POA to be approved by the CDS and the Bank. It would have the responsibilityfor issuing, not later than three months after the end of each respective period, semi-annualreports on progress of implementationof the various components,which would be submitted to the CDS, and through it to the Bank. If implementationprogress is not satisfactoryfor any of the components,the UC would propose remedial action to be adopted by CDS in agreement with the Bank. Annual reviews with Bank participationwould be used for setting investment plans and establishing requirementsfor complementaryservices. Performancewould also be reviewed during these missions. A set of key performance indicators is presented in Annex 8. A mid-term review would be held in November 1994 to: (a) assess progress in implementationmeasured by performance objectives; (b) verify the - 27 -
continued validity of the design assumption in light of implementation experience;and (c) undertake necessary adjustments in project objectives, design, and implementationarrangements. This review would be based on a mid-term evaluation to be carried out by independent consultantscontracted by UC at least two months prior to the meeting.
8.06 Ex-post evaluation of rehabilitatedand new projects, and of the program to transfer the O&M responsibilitiesof these works to beneficiaries, would require studies of physical performance of the irrigation systems and the socioeconomic impact of the investment. These evaluationswould be contracted out to consulting firms or university research centers. A preliminary evaluationwould be carried out during the third year of the project and presented to the mid-term review meeting. The terms of reference of the study would be prepared by UC and agreed with .DS and the Bank.
IX. BENEFITS. ECONOMICANALYSI!, ENVIRONMENTALIMPACT AND ISKS
A. Benefits
9.01 The main project benefits would include: (a) expansion of the irrigated area benefiting mostly small farmers in marginal rainfed areas; (b) enhanced environment and efficiency in water allocation resulting from improved conservationand management of water resources; and (c) greater water security leading to higher yields, better quality output, and increased investment in higher-valueexport crops.
B. Economic Analysis
9.02 An overall economic rate of return has not been calculated due to the programmaticnature of the project. However, the project would have a major impact on the quality of life of a significantproportion of the low-income,small-farmer rural population of Chile. A 12S rate of return is the minimum required for public investment;however, most projects are likely to have substantiallyhigher returns. Most potential investmentscurrently under review have estimated ERRs above 20x. For the economic analysis of public investmentsthe criteria and assumptionsused by the Ministry of Planning (MIDEPLAN)have been applied. The main assumptions include a shadow price for unskilled labor estimated at 0.66 of the market wage rate and semi-skilledlabor at 0.73, with the market wage for skilled labor reflecting its opportunity cost. Border prices were used for all tradeables produced by the projects based on the projection estimates of MIDEPLAN and main agriculturalexporting firms, which are lower than comparable Bank projections for wheat, maize and rice. For inputs and machinery, a conversion factor of 0.9 was used except for urea and superphosphate,for which MIDEPLAN has defined a product-specificconversion factor of 0.95.
C. Environmental Impact
9.03 The project would implement procedures for screening and assessing environmentalimpacts of public investment in irrigation,which would formalize the participationof affected groups in project design and - 28 - implementation.The selectionprocess and cost recoveryrequirements would help curb excessdemand for irrigationand ensurethe viabilityand sustainabilityof investments.Rehabilitation of works and the strengthening of user groupsin operationand maintenancewould improvewater use efficiency and conservation.Support for researchwould also enhanceefforts to deal with environmentalproblems such as salinity. Thus, the projectwould help to minimizeadverse impacts of irrigationdevelopment on the environment. D. ProiectRisks 9.04 Both the size and complexityof the proposedproject appear to be within the capacityof the publicagencies involved. However,because there has been no public investmentin irrigationin the past 15 years their ability to coordinateand implementthe projectremains untested. To minimizeany risk an institutionalskills gap analysiswas undertakento identifyand recommendactions to strengthenweaknesses. Chile has a supportivepolicy environmentand a stronginstitutional framework. The Bank has had positive experienceswith MOP as an executingagency in other sectors. As for extensionservices, under the ongoingBank-financed project, INDAP has proven to be effectivein deliveringtechnical assistance to small farmers;moreover the expectedincrement of farmersto be servicedin irrigatedareas is small comparedto INDAP'8 overallprogram. Since 1986,the CNR has been implementingthe IrrigationDevelopment Law. Althoughadministrative bottleneckshave been reported,most of the problemshave been identifiedand are currentlybeing resolvedso as to streamlineexisting procedures and requirements.The CDS, which has provento be effectiveduring preparation, will increasethe effectivenessof coordinationand Bank missionswould be scheduledto participatein formulatingand reviewingannual operational plans. In addition,to avoid delaysin implementation,full feasibility studiesfor first-yearinvestments were completedprior to Board presentation.
9.05 Given the poor recordof capitalcost recoveryin irrigation worldwideas well as currentdifficulties faced by publicinstitutions in Chile in recoveringloans, government commitment to cost recoveryis a risk. While a covenantcould be framedto substantiatethe currentwillingness of the governmentto recovercapital costs of irrigationinvestment, large portionsof the recoverywould likelyoccur after loan closing. However,the overallrisk of non-collectionwould be substantiallymitigated by havingthe Treasurycollect the resourcesconcomitantly with propertytaxes, for which the collectionrate is about 99X.
X. SUMHARYOF AGREEMNTSREACHED AND RECOMMDATION 10.01 The followingagreements were obtainedprior to negotiations:
(a) a draft agreementwith INIA to carry out adaptiveresearch and technologytransfer (par& 6.14); (b) finalversions of referencebidding documents, incorporating Bank comments(para 7.05); - 29 -
(c) a capital cost recovery mechanism (para 7.13); and
(d) a plan for accounts and audits (para 8.04).
10.02 During negotiations,assurances were obtained that:
(a) adaptive irrigation research and technology transfer activities would be adequately financed through counterpart funds (para 6.14);
(b) extension services for small farmers in areas receiving irrigation investmentsunder the project would be provided by INDAP through adequate counterpartcontributions (para 6.15) as would the required institutionalstrengthening for irrigation activities (para 6.18);
(c) both the regularizationof water titles and the training of user groups would be financed totally with counterpart funds (para 6.20); and
sd) a satisfactoryAnnual Work Plan (POA) for 1993 and for subsequent years would be required by November 15 of the preceding year (para 8.01).
10.03 The Government submitted the following documents for Bank's review and agreement:
(a) a POA for 1992 satisfactoryto the Bank (para 8.01);
(b) full feasibility studies for first-year investments (para 9.04).
Cc) a draft agreementvith INDAP to carry out extension services (para 6.16); and
(d) a letter confirming the project coordinatingunit (UC) satisfactorilystaffed and operating (para 8.01).
10.04 The followingwould be conditions of effectiveness:
(a) signed agreement with INIA to carry out adaptive research and technology transfer (para 6.14), and with INDAP to carry out extension services (para 6.16);
Sb) agreed terms of reference for the technical support unit (UAR) (para 6.17); and
(c) each agency and the UC has established an accounting procedure acceptable to the Bank (para 8.04).
10.05 With the above assurances,the proposed project would be suitable for a Bank loan of US$45.0 million equivalent on standard Bank terms with 17 years' maturity and variable interest rate.
October 26, 1992 - 30 -
ANNEX1 Page 1 of 3
CHILE
IRRIGATION DEVELOPMENT PROJECT
List of the 100 Poorest Rural Municipalities
MUNICIPAL RANK REGION NUMBER PROVINCE MUNICIPALITY
1 IV Coquimbo 39 Limarf Punitaqui 2 IX Araucania 221 Cautin Galvarino 3 IV Coquimbo 36 Limarl Rio Hurtado 4 IV Coquimbo 43 Choapa Mincha 5 VIII Bio-Blo 191 Arauco Tirua 6 IV Coquimbo 30 Elqui La Higuera 7 X Los Lagos 240 Osorno S. Juan de la C. a IX Araucania 200 Malleco Lumaco 9 VIII Bio-Bio 158 Ruble Treguaco 10 IX Araucania 195 Malleco Lonquimay 11 IX Araucania 218 Cautin Pto. Saavedra 12 IX Araucania 197 Malleco Ercilla 13 IV Coquimbo 37 Limari Monte Patria 14 VIII Bio-Bio 168 Bio-Bio Santa Barbara 15 VIII Bio-Bio 190 Arauco Contulmo - 16 VII Maule 128 Talca Empedrado 17 IX Araucania 220 Cautin Nueva Imperial 18 X Los Lagos 260 Palena Chait5n 19 VI B. O'Higgins 109 Cardenal Caro Navidad 20 X Los Lagos 261 Palena Hualaihue 21 IX Araucania 209 Cautin Curarrehue 22 VIII Bio-Bio 150 Ruble El Carmen 23 VI B.O'Higgins 113 Cardenal Caro Paredones 24 VIII Bio-Bio 146 Ruble San Fabifn 25 IV Coquimbo 38 Limarf Combarbala 26 VIII Bio-Bio 182 Concepci6n Sinta Juana 27 VII Maule 118 Curic6 Sag. Familia 28 VIII Bio-Bio 149 Ruble San Ignacio 29 IX Araucania 219 Cautin Carahue 30 X Los Lagos 229 Valdivia Panguipulli 31 IX Araucania 201 Malleco Pur6n 32 VIII Bio-Bio 175 Bio-Bio Yumbel 33 IX Araucania 217 Cautln Teodoro Schmidt 34 VIII Bio-Bio 156 Ruble Portezuelo 35 X Los Lagos 263 Palena Palena 36 VI B. O'Higgins 100 Colchagua Placilla 37 X Los Lagos 233 Valdivia Lago Ranco 38 VII Maule 116 Curic6 Romeral - 31 - hmil 1 Page 2 of 3
MUNICIPAL RANR REGION NUMBER PRovINCE mUNICIPALITY
39 X Los Lagos 255 Chiloe Quinchao 40 VIII Bio-Bio 188 Arauco Los Alamos 41 IX Arascania 206 Cautin Vilcon 42 VII Maule 142 Cauquenes Pelluhue 43 VIII Bio-Bio 181 Concepci6n Hualqui 44 X Los Lagos 224 Valdivia Lanco 45 VII Maule 131 Talca Curepto 46 VI B. O'Higgins 104 Colchagua Lolol 47 IX Araucania 202 Malleco Los Sauces 48 VIII Bio-Bio 147 Ruble Coihueco 49 VIII Bio-Bio 172 Blo-Bio Nacimiento 50 X Los Lagos 243 Llanquihue Cochamo 51 IX Araucania 216 Cautin Tolt6n 52 X Los Lagos 259 Chilos Quell6n 53 V Valparaiso 45 Petorca Petorca 54 VII Maule 124 Talca Pelarco 55 VI B. O'Higgins 102 Colchagua Chepica 56 VIII Bio-Bio 170 Bio-Bio Mulchen 57 VIII Bio-Bio 173 Bio-Bio Laja 58 VII Maule 129 Talca Pencahue 59 VIII Bio-Bio 171 Bio-Bio Negrete 60 VIII Blo-Blo 161 Ruble Ninhue 61 IX Araucania 193 Malleco Renaico 62 VI B. O'Higgins 86 Cachapoal Olivar 63 VIII Bio-Bio 164 Bio-Blo Cabrero 64 X Los Lagos 225 Valdivia Los Lagos 65 VI B. O'Higgins 108 Cardenal Caro Pichilemu 66 VIII Bio-Bio 159 Ruble Cobquecura 67 X Los Lagos 223 Valdivia Mariquina 68 VIII Bio-Bio 157 Ruble Coelemu 69 VII Maule 126 Talca San Clemente 70 VI B. O'Higgins 87 Cachapoal Requinoa 71 VIII Bio-Bio 154 Ruble Quillon 72 VIII Blo-Blo 187 Arauco Curanilahue 73 VII Maule 122 Curic6 Rauco 74 X Los Lagos 245 Llanquihue Maullin 75 VI B. O'Higgins 83 Cachapoal Mostazal 76 X Los Lagos 244 Llanquihue Calbuco 77 VII Maule 125 Talca Rio Claro 78 VIII Bio-Bio 180 Concepci6n Florida 79 VI B. O'Higgins 110 Cardenal Caro Litueche 80 IV Coquimbo 42 Choapa Los Vilos 81 X Los Lagos 226 Valdivia Futrono 82 VII Maule 135 Linares Longavi 83 VI B. O'Higgins 99 Colchagua Chimbarongo 84 IV Coquimbo 40 Choapa Illapel 85 X Los Lagos 254 Chilo6 Curaco de Velez - 32 - ANNEX 1 Page 3 of 3
MUNICIPAL RANK REGION NUMBER PROVINCE MUNICIPALITY
86 VIII Bio-Bio 189 Arauco Caflete 87 VI B. O'Higgins 105 Colchagua Pumanque 88 VIII Blo-Blo 155 Ruble Ranquil 89 VIII Blo-Bio 167 Bio-Bio Quilleco 90 IX Araucania 208 Cautin Melipeuco 91 VII Maule 141 Cauquenes Chanco 92 IV Coquimbo 35 Limari Ovalle 93 VIII Bio-Bio 145 Ruble Riqu6n 94 VIII Bio-Bio 185 Arauco Lebu 95 XIII Metropolitana 290 Santiago Huechuraba 96 VIII Bio-Bio 162 Ruble San Nicol&e 97 X Los Lagos 231 Valdivia Paillaco 98 X Los Lagos 257 Chiloe Chonchi 99 VII Maule 119 Curic6 Hualafie 100 VI B. O'Higgins 85 Cachapoal Machall LHIE
IRRGATTON DEVELOP!MENT)PROJECT
Criteria for Allocating Funds for Feasibility Studies
Selection Criteria Weight (Z) [ Polnts [ Qualification Concepts 1. Local Interest 20 20 More than 502 of cost covered by beneficiariesor local and - Contributionto study costs provincialfunds 15 Bore than 302 of cost covered by beneficiaries or local and provincial funds 10 More than 10 of cost covered by beneficiaries or local and provincial funds 5 Less than 10 of cost covered by be- ,iciaries or local and provincial funds 0 No funds contributed 2. Environmental Aspects 10 - Possible limitations 10 No negative impacts foreseen 5 Only easily mitigated impacts foreseen 0 Major impacts foreseen w 3. EconomicAspects 10 Regions I to V R.M to IX X to XII - InvestmentCost I (US$Iha) 10 New works <2.000 <1.000 <400 Rehabilitation <500 <100 <50 6 New works <3.000 <2.000 <800 Rehabilitation C1.000 <500 <100 3 New works <4.000 <3.000 <1.200 Rehabilitation <2.000 1.l000 <500 0 New works >4.000 >3.000 >1.200 Rehabilitation >2.000 1.000 >500 4. Social Aspects 20 - Direct beneficiaries 10 More than 500 farms or familiesbenefited 6 More than 300 farms or famillesbenefited 3 More than 100 farms or familiesbenefited 0 Less than 100 farms or familiesbeaefited
- Beneficiariesper hectare 10 More than 1 0 beneficiariesper irrigatedhectare 6 More than 0.7 beneficiariesper irrigatedhectare 3 More than 0.5 beneficiariesper irrigatedhectare 0 Less than 0.5 beneficiaries per irrigatedhectare m X
0 IRHIGATION DEVELOPMENT PROJECT
Criteria for Ailocatin Funds for Feasibility Studies
Selection Criteria Weight (Z) Points |Qualification Concepts
5. Technical Aspects 10 - Status of available studies 5 Less than 5 years old with reliable data 3 More than 5 years old with reliable data I Insufficient data O No data available - Interference with existing infraestructure NoN interference foreseen 3 Only minor infrastructure affected I Affected infrastructure easily moved 0 Affects roads, basic services and towns 6. Legal Aspects 10 - Water rights 5 Existing rights held by beneficiaries or held by the state - Expropriations 5 No complex expropriations foreseen 7. Planning Aspects 20 - Sectors benefited 10 High state interest 6 Important group 3 Not important group 0 No interest - Regional priority 10 Major regional inm t 6 Moderate regional .pact 3 Low regional impact 0 No regional impact
t' 3 0 - 35 -
ANNEX 3 Page 1 of 9
CHILE
IRRIGATION DEVELOPMENT PROJECT
InstitutionalDevelopment
Backfround and Summary
1. An institutionalcapacity analysiswas carried out as part of the preparatorywork, to review the current capacity as compared with the proposed p-ogram requirements. As a result, institutionalcapacity gaps (ICGs) have been identified against program tasks in the whole proposed implementing institutionaluniverse. Although there has been no major constructionof public irrigationworks since the 19709, the Ministrv of Public Works (MOP) has long experience in implementinglarge infrastructureworks and the National Irrigation Commission (CNR) through its Executive Secretariat (SE) also has experience in implementingLaw 18450 since 1986. Other entities such as, the Institute for AgriculturalDevelonment (INDAP), and the Aaricultural Research Institute (INIA),which are under the Ministry of Agriculture (MAG), also have a long tradition of well-designedand successful delivery programs for creating a rural environmentconducive to agriculture development and progress. In other words, the implementinginstitutional universe for the proposed program is largely capable, at least in qualitative terms. This explains why major ICGs found as a result of the systematic institutional capacity analysis (ICA) carried out during the preparationprocess, are limited to a lack of organizationat the inter-institutionallevel--the inter-institutionaldistribution of functional responsibilities--andto. quantitativeconstraints logically due to the increased activities that would result from the proposed program implementationl/. Based on the above, a program of institutionaldevelopment (PSIDC)was envisaged,with inputs that would help to systematicallyaddress the identified ICGs. This annex describeswhat are the ICGs identified against program objectives and tasks, and the PSIDC inputs designed to address them, thus enhancing the institutionalcapacity up to levels that are necessary to ensure efficient implementation.
InstitutionalCapacity Analysis (ICA)
2. As part of the PROM!Ppreparation process, an ICA was systematically carried out to assess the capacity currcatly available in Chile to achieve the irrigation subsector's developmentobjectives. This assessmentwas carried out by every proposed implementingentity under the coordinationof the Executive Secretariat of CNR using a sectoral version of the Institutional Capacity Analysis and Development System (ICADS). First, the propoded
1/ This increasehas been estimatedat 40X in MOP/DR; 101 in CNR; 52 in INIA; 31 in INDAP; and the creation of a new coordination unit in SSA for irrigation-relatedactivities. - 36 -
ANNEX 3 Page 2 of 9
implementinginstitutional universe was identified,specific roles defined as well as the network of inter-institutionalrelationships necessary to carry out common or specific tasks. In addition, the way the relationshipsare going to function within this network has been described, as well as the legal and/or regulatory basis for them to work as described (an "Inter-institutional RelationshipMap" is shown in the attached chart). Secondly, involved entities' functions have been defined (Form A), the resources allocated to every one of them to achieve their assigned functions and objectives, quantified and described (Form B), and the way these allocated resourceswould be used was specified in work programs disaggregatedinto tasks (Form C) 21. Thirdly, against every task, capacity was assessed and ICGs were identified from five capacity elements viewpoints: (a) legislation,regulations and norms; (b) inter-institutionalrelationships; (c) internal organizationand management capacity; (d) personnel poliey and reward systems; and (e) managers', professionals',and beneficiaries'skills. Fourthly, and finally, ways and means to mitigate or eliminate identified ICGs were designed in the form of an ID strategy and inputs included into the PSIDC to be financed under the proposed PROMM.
Identified InstitutionalCavacitv Gavs
3. Within the implementinginstitutional universe, major capacity gaps are concentratedin the PROMM management-relatedfunctions, and among the beneficiariesthemselves, including their organizations. Indeed, despite the long tradition of MOP in infrastructureconstruction and of CNR in designing and approving sectoral policies and implementingthem, the GOC goal of transferringto the users most of the operation and maintenance functions and related activities,a key feature of PRONM, makes it important to upgrade the current institutionalcapacity for the irrigation subsector's institutional complex. This also applies to MAG includingINDAP, and INIA, where almost no past programs were specificallyaimed at generating and transferring appropriateirrigated agriculturetechnology. Finally, this is also true of the beneficiaries themselvesbecause they are going to be faced directly or through their organizations,with new responsibilities,namely the operation and maintenance of the irrigation infrastructure.
4. In summary, major identified ICGs include the following items: (a) general lack of adequate organization,in particular for distributing functions at the inter-institutionallevel, so as to avoid duplication thus ensuring a harmonious and cost-effectivepolicy implementation;(b) lack of management skills, adequate procedures and sufficient staffing for the coordinationfunctions both in the irrigation sectoral entities (MOP's DR and DGA, and CNR's Inter-MinisterialCommission (CDS) and SE), and in the agriculture entities (MAG, INDAP, and INIA); (c) lack of physical and financial capacity of them all, as a result of the substantial increase in activities that would result from PP.ONMimplementation; and (d) general and sometimes absolute lack of management,professional, technical skills among
2/ Forms A, B, and C can be seen in PSIDC's Working Paper (Project File). - 37 -
ANNEX 3 Page 3 of 9
the beneficiariesthemselves, at all levels of their organizations'personnel. All these ICGs would be systematicallyaddressed using PSIDC's inputs listed below.
InstitutionalStrenathenin.
5. PSIDC's inputs would help strengthen the main GOC institutional complexes responsible for PROMN implementation,namely MOP, CNR, and HAG; and beneficiaries,both at the individual and associative levels. These inputs would specificallyaddress: (a) the organizationcapacity gaps, both in the inter-institutionalsharing of responsibilitiesand within the involved entities themselves; (b) the lack of specific functions and related staff; (c) the lack of physical and financial capacity; and (d) the lack of relevant skills at all levels. PSIDC inputs include specialist assistance, training activities, equipment and vehicles, and recurrent costs. This is described below.
6. StrengtheninaCUR. Based on its legal charter!',CNR includes a Board of Ministers (Economy,Finance, Public Works, Agriculture,and Planning) and an Executive Secretariat (SE) structured into six departments,namely: Executive, Law 184501, Studies, Projects, Legal, and Administrationand Finance. In addition, CNR has created Regional Irrigation Committees to act on its behalf in the seven Regions where irrigation programs are or will be developed. To improve the analysis of technology transfer and address farmers' training needs (includingcredit-related training), and to deliver the correspondingservices more efficiently,INDAP would actively participate in these Regional Programs.
7. It was decided during the preparationand appraisal process, that CNR would be responsible for overall PROMH implementation,with the constructionpart of the program under the responsibilityof MOP, and the agriculturaldevelopment part under MAG. CNR has created the Inter-MinisterialCommission (CDS) to include the Subsecretariesof MOP, MAG, and its own Executive Secretary,which is entirely responsiblefor orchestratingand supervisingPROMM implementation. To enable CDS to perform this critical responsibilityand relevant functions, PROMM would provide financing for creating a strong coordinatingunit (UC) that would become the technical and operational arm of the CDS. At the highest level, CDS would play the role of a political board, ultimately approving annual operational programs (POAs) and monitoring/supervisionreports, prepared or consolidated by UC which would actually perform all technical tasks. The UC would be staffed with two professionals,and support staff.
3/ More details are found in the Annex 7 of the GOC's Project Document, prepared with FAO's assistance (ProjectFile).
4/ To implement private investments initiatives for irrigation and drainage infrastructureand activities. - 38 -
ANNEX 3 Page 4 of 9
8. Upgraded as described above, CDS/UC would then be responsiblefor coordinatingproject implementation. The first responsibilitywould be to make MOP, SSA, and SE/CNR define their respective POAs in an agreed format so as to facilitate coordinationand the approval process by both CDS and the Bank. The POA instrumentwould use a format that integrates all PROMS management functions into one single tool: programming,budgeting, work organizationand distributionof tasks, pirsonnel management and monitoring and evaluation. More specifically,UC would be responsible for: (a) implementingCDS' decisions; (b) reviewingproposed sub-projectsgenerated by both the public and private sectors; (c) ensuring adequate coordination between PROMM and implementingentities; (d) ensuring the monitoring and periodical evaluation of activities and related feed-back as appropriate;and (e) ensuring the correct financial administrationof PROMM-generatedfunds.
9. Strengthenin2MOP. MOP executing entities include the Irrigation Directorate (DR) and the General Directorate for Water(DGA). DR's role is to manage, generally through contractingout feasibility studies, including environmentalimpacts, designs and field surveys, as required by CDS. DR would then, directly contract constructionand rehabilitationworks as they are selected by CDS. DR, through its Operations Division (DE), would also be responsible for operation and maintenanceuntil the corresponding infrastructureis transferredto users' organizations. DGA's role is to resolve water use legal aspects in PROMH areas, and to ensure a sufficient transfer of operation and maintenance skills to water users. DR requires strengtheningthrough the financing of some equipment and vehicles, recurrent cost support, and for covering the cost of water users' training in operation and maintenance. Indeed, water users and their organizations'employees must be trained in managing the irrigation schemes' operation related to constructionor rehabilitationworks under the proposed program. Some 450 water users' organizationswould be trained by DE/DR and DGA. This would include: (a) administrativeskills, mainly personnel management (work organizationand labor relations) and financing and accounting (including budgeting; management of accounts, and financial transactions;accounting systems; and the organizationof water charges collection,and input supply and control); (b) technical skills related to scheme operation (including: irrigation programming,and water distribution;and monitoring and control), and system maintenance (includingmaintenance programming and implementation and contractualprocedures); (c) norms- and procedures-relatedskills (includingjudicial aspects such as water rights, and the protection of these rights; suspension of water supply And norms related to the constitution, regularization,and relocation of water rights, and changes in diversion structures);and (d) organizationalskills (including the preparation avd implementationof meetings, report writing, and other aspects)5'.
10. Under the proposed program, all sub-projectseligible for financing would he subject to such an assessment to detect current and potential
5/ See more details in the training sub-component annex (Annex 5) of the Project Working Paper (ProjectFile). - 39 -
ANNEX 3 Page 5 of 9
environmentalproblems. Such assessmentswould have to comply with the correspondinglegislation and the Bank's regulations included in its EnvironmentalGuidelines for Irrigation and Drainage Projects. Support would be provided in the form of specialist assistance. The corresponding financing has been included under the consultant category of PSIDC inputs allocated to the UC. In addition, limited training activities include: (a) initial two-week workshop for eight staff members from DR and DGA, to focus on well-known potential issues; and (b) a final one-week workshop for MOP's staff to review and fine-tune the materials developed during the period of environmentalprocedures testing.
11. StrengtheninxMAG. It is the responsibilityof MAG to ensure that INDAP provides the necessary extension to small farmers in PROMM areas and that INIA and possibly other specializedagencies develop the applied research component under agreements to be entered into with them. The Committee for Irrigated Agriculture (CAR) has recently been created within the office of the Undersecretariatof Agriculture (SSA) to help perform these functions and the necessary coordinationof INDAP's and INIA's work programs. CAR, through its technical arm (UAR) would complement UC functions and activities for all irrigated agriculture-relatedmatters, and it would ultimately strengthen overall capacity to promote agriculture developmentin irrigated areas. The UAR would be staffed by three professionalsexperienced in planning and implementingagricultural aspects of irrigation schemes. INDAP would also be strengthenedunder PSIDC in order to undertake its new and increased role in providing extension for small farmers in irrigated areas.
Organization for Imglementation
12. As described above, UC would have the overall responsibilityfor coordination. To perform all management functions, UC would use the ICADS-based POA tool. It has been agreed at appraisal, that the POA for the first year of implementationwould be prepared and presented to the Bank during the negotiation process. An agreementhas also been reached about the POA format and content. The initial coordinationrequirement would be achieved through UC's request that DR, DGA, SSA, INDAP, and INIA prepare their respective POA for the first year, in the agreed format. UC would assist executing agencies to prepare their respective POAs, including coordination tasks of their own. UC would then consolidate them all in a single POA document to be approved by CDS and the Bank. POA Form A would offer a clear statement of what the yearly objectivewould be, the correspondinginformation presented in the perspective of what the particular component overall five- year objective is, and of what will have been already achieved at the time of the new programming cycle. Then, Form B would be used for all financial management functions from budgeting (strictlyrelated to achievingwhat is defined in Fo.-mA) to accounting and auditing. Finally, Form C would make it explicit who would do what to: (a) acquire the goods and services included in Forms B; (b) use them efficiently;and (c) ensure sustainabilityof the benefits obtained out of this efficient use of the acquired goods and/or services. Form C would also include specific columns for monitoring the work carried out during the referenceyear. At any time during implementation,the -40 -
Page 6 of 9 combinedinformation included in Forms A, B and C, may be used to carry out periodicevaluation work. The whole institutionaluniverse and responsibilitieswould be visualizedin an inter-institutionalrelationships map (chart),to make it clear to all involved,what are their respective tesponsibilitiesand how work programsare interconnected. - 41 -
Qll 3 Page 7 of 9
CHILE
IRRIGATIOWDVELOPMENT PROJECT
Project Coordinatium Unit
Detailed Cost Table US8)
TotaLsIncludIng ConttngencIoe * ---.. u------.u.um.u3a.umuu- --- 1992 1993 1994 1995 1996Total ...... 1. INVESTMENTCOSTS A. Consultancies Coordinator 17 53 55 57 59 242 Professional 15 47 48 50 52 212 Specialist 43 55 35 36 37 206 Evaluation 0 0 35 0 43 78 ...... Sub-Total 75 155 17 143 192 737 8. Equlpmnnt Office 5 0 0 0 0 5 Computing 21 0 12 0 0 33 Commuications 16 0 0 0 0 16 ...... Sub-Total 4 0 12 0 0 54 C. Pfck-Up (doublecabin) 14 0 0 0 0 14 ,...... Total INVESTNENTCOSTS 132 155 184 143 192 806 II.RECURRENT COSTS A. Operating Costs Offico Rental 6 7 7 7 7 35 Adinifstration 6 6 6 7 7 32 ...... Sub-Total 12 13 13 14 14 67 B. Travet 8 17 18 18 19 80 C. V.hie'tIOU 4 8 9 9 9 40 ...... Total RECURRENTCOSTS 25 38 40 41 43 187 su .. ------. Total 156 194 224 184 234 92 Value scaled by 1000.0 8/20/1992 11:02 - 42 -
ANNEX 3 Page 8 of 9
CHILE
IRRIGATIONDEVELOPMENT PROJECT
InstitutionalStrenftheninf - Ministry of Public Works
Detailed Cost Table (USS)
Quantity TotalsIncluding Contingencies 1992 1993 1994 1995 1996 Total 1992 1993 1994 1995 1996Total ...... I. INVESTMENTCOSTS A. Equipment 20 PC System 5 15 0 0 0 20 37 116 0 0 0 154 Field 1 2 0 0 0 3 32 67 0 0 0 99 Video 2 3 0 0 0 5 13 20 0 0 0 33 Coawunications - '- ' 0 11 0 0 0 11 Plotter - - - 0 28 0 0 0 28 Sub-Total 82 242 0 0 0 324 B. Vehicles 0 3 0 0 0 3 0 57 0 0 0 57 C. Consultancies - - - 24 24 25 26 27 127 0. Training ProjectEvaluation 0 1 1 1 1 4 0 8 S 9 9 35 EnviromnentalAssessment 2 1 1 0 0 4 16 8 9 0 0 33 User Organization 0 1 1 1 1 4 0 6 6 6 6 23 Engineering 0 2 ! 2 0 6 0 28 29 30 0 86 Engineering 0 1 1 0 0 2 0 8 9 0 0 17 Engineering 0 1 1 0 0 2 0 6 6 0 0 11 Construction 0 2 2 2 0 6 0 11 12 12 0 35 Construction 0 1 1 0 0 2 0 8 9 0 0 17 Budgeting 0 1 1 0 0 2 0 6 6 0 0 11 O&Z 0 1 1 0 0 2 0 8 9 0 0 17 ...... Sub-Total 16 97 101 57 15 286 Total INVESTMENTCOSTS 122 420 126 83 43 793 -- ats--- ====I'lsa5 a=w== Ba== Total 122 420 126 83 43 793 Unit CostsScaled by 1000.0- Valuesscaled by 1000.0 8/20/1992 11:01 - 43 -
ANNEX 3 Page 9 of 9
CHILE
IRRIGATIONDEVELOPMENT PROJECT
InstitutionalStrengthening - National Irrization Commission
Detailed Cost Table (USS)
TotalsIncluding Contingencies 1992 1993 1994 1995 1996Total ...... 1. INVESTMENTCOSTS .... _...... A. TechnicalAssistance 27 55 58 60 62 261 B. LocalConsultants 50 100 100 100 150 500 C. Publfcatfons 9 9 12 12 12 53 ...... TotalINVESTMENT COSTS 85 164 169 172 224 814 Total 85 164 169 172 224 814 Valuesscaled by 1000.0 8/20/1992 11:02 - 44 -
MMX 3 Chart I
PROORAMADE EJECUCIONOBRAS DE RIEGOY DRENAJE
MEDIANOSY MENORES
MARCOINSTITUCIONAL
CONSEJODE MINISTROS COMISIONUACIONAL DE RIEGO Ministrode Economifa(Presidente) Ninistrode Hacienda Ninistrode ObrasPublicas Ninistrode AgrMcuLtura Ministrode Planificacion y Cooperacfon I CONISIONDE DIRECCIONSUPERIOR PROGRANABANCO NUNDIAL Subsecretarfo de Obras Publ1cas Subsecretariode Agriculturs SecretaMroEjecutivo C.N.R.
UUIDADCOORDINADORA SECRETRIOEJECUTIVO COISION NACIONALDE RIEGO
ICOMRINAOOR EJECUTIVO| I ;~~~~~~~~~~~~~~ | .O.P. || C.N.R | INAGRI |
LEY 18.450
DERECHOS D.7.L. 1123 INVESTIGACION SECTOR Y DESARROLLO CAMPESINO - 45 -
ANNEX 4 Page 1 of 11
CHILE
IRRIGATION DEVELOPNENTPROJECT
The Agricultural Development Plan
A. Obiective
1. The main objective of the AgriculturalDevelopment Plan (ADP) is to improve the overall performance of irrigated agricultureby (a) promoting agriculturalintensification of smallholderproduction systems, particularly in areas benefitting from project investments;and (b) enhancing GOC's capacity to elaborate appropriatepolicies for the subsector, as well as to effectively integrate and coordinate both the availabilityand delivery of support services required by smallholder farmers in irrigated areas.
B. ADP Comuonents
2. In order to achieve the stated objectives of the ADP, a series of specific programs or componentswill be implemented. These include: (a) adaptive research; (b) technology transfer; (c) extension; (d) training of vater user organizations;(e) technical and financial assistance for on-farm infrastructure;and (f) strengtheningof agriculturalinstitutions.
3. The activities to be delivered under each of the ADP programs will be focused on irrigated agriculture,with particular emphasis on smallholder farming in poor rural areas. As well, all direct interventions(extension, training, and on-farm infrastructure)will be integratedwith the civil works component of the project and consequentlytargeted to sm&ll farmers located in irrigated areas either deve1,'pedor rehabilitatedunder the project.
C. DescriDtionof Individual Components
Adaptive Research
4. In spite the importance of irrigated agriculture in Chile, research aimed at developing imrprovedirrigation and drainage technologieshas been relatively limited, and almost non-existentin regards to the specific requirementsof smallholderproduction systems. The AgriculturalResearch Institute (INIA), the main organizationresponsible for agriculturalresearch in the country, has a professionalstaff of over 200, of which only eight are assigned to the Irrigation and Drainage Program (PRD). Similarly, an estimated 3.5S of INIA's 1990 budget was allocated to research in irrigation and drainage. Due to the lack of human and financial resources, PRD has been unable to initiate any research in drainage matters, concentratingexclusively in irrigation subjects. Furthermore,INIA's mandate until 1985 excluded farm - 46 -
ANNEX 4 Page 2 of 11
holdings of less than 12 BIH (Basic Irrigated Hectare, a unit developed during the Agrarian Reform to equate the productivepotential of land throughout the country) and only covered medium and large scale commercialsnterprises
5. In order to achieve the project's objectives, research activities in all aspects of irrigationand drainage should be increased. The PRONM will address, at least partially, the current restrictionsand limited output of INIA's PRD through INIA and possibly through other public and private institutions. The ADP would expand existing research lines and would initiate now specific lines of adsptive research in the areas where irrigation investmentsare likely to be concentratedin the Central Zone (Regions V and VI and the MetropolitanArea), and the Central-SouthZone (Regions VII and VIII), and limited adaptive research in the North Zone (Regions I to IV) and the South Zone (Regions IX and X) consistingof:
(a) development of basic irrigationparameters, such as crop threshold and response, irrigation schedules,and crop quality;
(b) development of improved irrigationsystems, including distribution structures, row spacing and land levelling techniques;
(c) identificationand management of soils with salinity problems;
(d) development of techniques in irrigationmanagement for horticultureand fruit crops;
(e) introductionon non-traditionalcrops under irrigation;
(f) evaluation of drainage technologies;and
(g) other required adaptive research approved by the Bank.
6. Adaptive research would be conducted over a five-year period and would require inter-alia,the recruitment of researchers,technicians and field workers, the constructionof buildings for laboratoriesand offices, and purchase of scientificfield and laboratoryequipment computers and office equipment. Vehicles would be needed for field work. Field and lab supplies would include farm inputs and farm machinery rental. TechnologvTransfer
7. In mid-1990,as a resultof a collaborativeagreement with the AgriculturalDevelopment Institute (INDAP) aimed at providingtechnological assistanceto small-scalefarmers, INIA establishedthe TechnologyTransfer Contres(CATT). The CATT is generallycomprised of 2 or 3 groups,each of about 15 smallfarmers.
8. Based on an initialdiagnosis of the area and the results availablefrom INIA'sresearch, each CATT preparesannual vorkplans which includeon-farm demonstration/validation plots, field days, and discussion groups. These activitiesare carriedout by an INIA staffmember, and are - 47 -
ANNEX 4 Page 3 of 11
designed to serve as instrumentsfor both direct and indirect transfer of technologies,as they also provide practical training to INDAP's field staff and contracted extensionists.At present, INIA/INDAP have established over 25 CATTs in different regions of the country. Unlike the Technology Transfer Groups (GT4), CATT activities are mainly focused on production systems (rather than commodity-specific),and predominantlyin dryland areas.
9. In the context of the PROMM, the project will provide the resources required by INIA to:
(a) establish a total of 28 irrigation-specificTechnology Transfer Centres (CATT-R),all of which would be located in regions where project financed civil work. will be constructed;tentatively, 4 of these CATT-R will be located in the Central Zone, 12 in the South-CentralZone, 4 in the North Zone and 8 in the South Zonel
(b) conduct 4 annual, on-station training courses on irrigation and drainage technology, each to be attended by an estimated 40 extensionistsand coordinatorsfrom INDAP; and
(c) organize a mass-media extension program, involving the broadcast of recommendationson irrigationmatters through radio stations reaching rural areas.
10. To establish and operate the 28 CATT-R, INIA will require an additional 6 professionals,as well as office space, vehicles, extension and training materials, and computers. It is expected that the technology transfer activities financed by PROMM during the 5 years of the project will provide direct assistance to an estimated 1,200 small-scalefarmers (participantsin the CATT-R), and training to approximately700 extension agents and other INDAP professionals.
Extension
11. With assistance from the Bank-financedSmall Farmer Services Project, INDAP is currently in the process of initiating an ambitious expansion plan that will increase the number of farmers assisted from about 30,000 to 85,000, placing greater emphasis on Integrated Technology Transfer programs (PTTI) for low-income smallholders.
12. In order to accommodatethe extension requirementsof PROMM, part of INDAP's expansion will be earmarked to provide specially-designedservices to irrigated smallholdingsin those areas where physical infrastructurewill be either rehabilitatedor developedwith PROMN financing. Given the programmaticnature of PROMM, the exact number and location of beneficiaries cannot be determined. However, based on the tentative list of irrigation projects to be financed, it is estimated that a total coverage of approximately14,000 farmers can be expected in the five years of the program. - 48 -
ANNEX 4 Page 4 of 11
13. The development of a special Technology Transfer Program focused on Irrigation Technologies (PTTR) will require a series of operational adjustments to INDAP's current methodologies,in particular to harmonize and integrate PTTR activities in areas where INDAP traditional (integratedand basic) extension programs are being implemented.
14. The resources required by INDAP to undertake the extension component of the ADP include:
(a) incorporationof two additional extensionists (specializedin irrigation technologies)to each of the private companies currently under contract with INDAP to provide extension activities in areas where PROMI will finance rehabilitationof existing irrigation schemes;
(b) within the same areas, the contracting of the required consulting firms to expand the coverage to all small-scalefarmers;
(c) establishmentof integrated extension systems, which incorporate crop production and irrigation technology transfer programs, in newly irrigated areas developed by the project (Cumcumen,Las Brisas); and
(d) recruitmentof, training, and operational support (officos, vehicles, etc.) for six specializedfield staff (Technical Assistance Coordinatorsin Irrigation,or CAT-Rs), a new position within the INDAP structure, that -wouldbe responsible for supervising the performanceof contracted irrigation extensionists,as well as ensuring an effective integration and feedback between INIA's activities (CATT-R) and the extension services.
On-farm Infrastructure
15. Recognizing that a considerableproportion of the country's irrigation infrastructurewas in urgent need of rehabilitationand/or improvement,Law 18450 was promulgated in 1985. The Law, "Ley de Fomento a la Inversion Privada en Obras de Riego y Drenaje" (LFR) was aimed at promoting private investment by providing the reimbursementof up to 75X of investments (maximum of US$250,000)made in constructionor rehabilitationof irrigation or drainage systems. Funds are allocated through a competitivebidding process, based on project costs, area benefitted,and proportion of total costs contributed by the beneficiaries.
16. During the first five years of the LFR, funds were largely allocated to medium and large-scaleagricultural enterprises, mainly due to the inability of small farmers to obtain the necessary financing for the non-subsidizedportion of the investment. This situation changed in 1990, when GOC introduced a series of modificationsto the law, which allowed the earmarking of funds for farmers who qualify for technical assistance from INDAP (i.e. owning less than 12 BIMs). - 49 -
Page 5 of 11
17. Although the bidding process and the allocation of funds is the responsibilityof the National Irrigation Commission (CNR), INDAP plays an important role in the implementationof the program. To fulfil this role, INDAP has established a specific unit in Santiago, the Subdepartmentof Irrigation (SDR), which coordinates all extension activities to small farmers, as well as the activities of the field-basedIrrigation Coordinators (CRs). Presently, the unit is staffed by a total of !5 professionals,including four in headquartersand li CRe.
18. At present, SDR's professionalstaff is inadequate to efficiently handle INDAP participationin LYR. As a result, the tasks performed by the unit are mainly administrative,with limited input in technicalmatters related to the projects being financed.
19. Moreover, for the full benefit of investment in common headworks and dLstributionsystems to be realized,many small farmers will require complementarytechnical assistance from INDA?. Consequently, SDR's staff structurewill be expanded with the recruitmentof seven professionals, ircluding six additional CAT-Rs (see para 14 (d) above) to be based in INDAP's xegional offices covering PROMS projects and a monitoring and evaluation specialist at INDAP headquarters.
ADP Coordination
2'). With the exception of the training program for water user .: t arlzations, all activities composing the ADP will be under the -c 7irnsibilityof MAG. The successful implementationof the different co4.ion?ntsof the AgriculturulDevelopment Plan will largely depend on establishingeffective mechanisms of coordinationand supervisionwithin HAG. This will not only involve coordinatingactivities within the ADP (research, tecnnology tiansfer, extension, on-farm infrastructure),but also with the various Agencies responsiblefor the implementationof other project components (CNR, MOP, DGA and DR).
21. The above described dual coordinatingrole will be charged to the Committee for Irrigated Agriculture (CAR) which has been recently created within the Ministry of Agriculture. The CAR through it executive secretariat (UAR), will not only be responsible for coordinationactivities during project implementation,but is envisaged to become a much-needed,permanent advisory body to the Subsecretaryof Agriculture in matters related to policies and developmewaof irrigated agriculturein the country.
22. The CAR is chaired by the Subsecretaryof Agriculture, and will include the Director of INDAP, the President of INIA, the Director of the Agriculture and Livestock Service (SAG), and the Director of MAG's Division of Studies and Budget (DEP).
23. The UAR will be an operationalunit primarily responsible for project-relatedduties, including supervisionand inter-institutional coordination, in particular with the project's CoordinatingUnit (UC). In addition, the UAR will provide technical input in the process of - 50 -
ANNEX 4 Page 6 of 11
identification,preparation, and negotiationof irrigationprojects financed by PROMM.
24. To undertake the above functions,the UAR vill be staffed by three professionalswith individualexpertise in planning, development,and evaluation of irrigationprojects, assisted by short-termconsultants for specific assignments. Based in MAG's headquarters,the UAR team will be required to travel frequently to project areas and INIA/INDAPregional offices. Supporting facilitiesfor the unit include two vehicles, office equipment,and computers. - 51 -
ANNEX4 Page 7 of 11
CHILE
IRRIGATION DEVELOPMENT PROJECT
Research
Detailed Cost Table (USS)
TotalsIncluding Contingencies U= _ = = ===_==,=a======,= 1992 1993 1994 1995 1996 Total 1. INVESTMENTCOSTS A. Research 71.0 90.0 120.0 228.0 221.0 730.0 B. FONDEF/GOC 213.0 270.0 360.0 594.0 663.0 2100.0 Total INVESTMENTCOSTS 284.0 360.0 480.0 822.0 884.0 2830.0 ======---======-- =w======u === .==-. = Total 284.0 360.0 480.0 822.0 884.0 2830.0 * Valuesscaled by 1000.0 10/16/199214:37 - 52 -
ANNEX 4 Page 8 of 11
CHILE
IRRIGATION DEVELOPMENTPROJECT
Technologu Transfer CATTs
Detailed Cost Table (USS)
Quantity TotalsIncluding Contingencies 1992 93-96Total 1992 1993 1994 1995 1996 Total ...... 1. INVESTMENTCOSTS
A. Pubtfcations - - 11 4 20 6 0 41 B. Adclnistration - - - 21 22 23 24 25 115 C. Offices - 20 21 0 0 0 41 D. EquIpment Office - - 4 3 1 0 0 9 Fiold 4 3 0 0 0 8 Computfng - - - 7 0 0 0 0 7 ...... Sub-Total 16 7 1 0 0 24 E. Pick-ups 6 0 6 83 0 0 0 0 83 TotalINVESTMENT COSTS 152 54 44 30 25 305 11. RECURRENTCOSTS ...... A. FieldSupplies - 15 16 16 17 18 82 B. Persomel Expenses - 33 34 35 36 38 175 C. VehicltoSM - - - 31 32 33 34 35 165 .General Expenses - - 4 4 4 5 5 22 E. Sataries Profel sonal 6 6 30 79 82 85 89 92 428 Technical 4 4 20 41 42 44 45 47 219 Sub-Total 120 125 12S 134 139 647 TotalRECURRENT COSTS 203 210 218 226 234 1091 -----w ---- naac-- ana== -"n*wsw U.#R Total 355 264 262 256 259 1396 Unit CostsScaled by 1000.0 Valuesscaled by 1000.0 8/20/1992 11:01 - 53 -
ANNEX4 Page 9 of 11
CHILE
IRRI¢ATION DEVELOPMENTPROJECT
Technology Transfer Trainint
Detailed Cost Table (USS)
TotalsIncluding Contingencies 1992 1993 1994 1995 1996 Total ,...... :. INVESTMENTCOSTS ...... A. Equipment FIeld I 0 0 0 0 1 B. Publications 24 25 26 27 28 132 C. RadioPrograms 20 21 22 23 24 110 D. Consultancy 1 2 1 2 1 8 ...... Total INVESTMENTCOSTS 47 49 49 52 53 250 II. RECURRENTCOSTS A. PersonnelExpenses 9 10 10 10 11 49 S. GeneralExpenses 2 2 2 2 2 11 e...... TotalRECURRENT COSTS 11 12 12 12 13 60 Total 58 60 61 65 66 310 *inmuuuuuumumumuuu.um333u333333333333333333-.-=3333=E-3UUs Valuesscaled by 1000.0 8/24/199210:37 - 54 -
ANINEX4 Page 10 of 11
CHILE
IRRIGATION DEVELOPNENTPROJECT
Institutional Strengtheninit
Ministry of A_riculture - Unit for IrrifatedAgricttlture
Detailed Cost Table (USS)
Quantity Totals Including Contingences C=72=coca=wz= _------*C3mmt------1o---u-1-- 1992 1993 1994 1995 1996 Total 1992 193 1994 1995 1996 Total ...... 1. INVESTMENTCOSTS ...... A. ConsuLtancfes Unit Chief 0 1 1 1 1 4 8 28 29 30 31 125 Agronomist/Economist 0 1 1 1 1 4 4 22 23 24 25 98 ProjectAnalyst 0 1 1 1 1 4 4 22 23 24 25 98 Specialists 2 8 8 6 2 26 21 89 92 72 25 298 Sub-Total 38 161 167 149 105 620 B. Equipment Office - - - - - 5 0 0 0 0 5 Coquting -7 0.0 0 0 7 Communications - - - - - 2 0 0 0 0 2 Sub-Total 15 0 0 0 0 15 C. Vehicles 1 1 0 0 0 2 14 14 0 0 0 28 Total INVESTMENTCOSTS 67 175 167 149 105 663 11. RECURRENTCOSTS ...... A. Operating Costs Office Rental - - - - 6 7 7 7 7 35 Adninistration - - - - 6 6 6 7 7 32 Sub-Total 12 13 13 14 14 67 C. Personnel Costs - - - 11 11 12 12 12 58 C. VehicletOL - - - - - 2 6 7 7 7 29 Total RECURRENTCOSTS 25 30 31 33 34 153 ------*m woan Szo - Total 92 205 198 182 139 816 Unit Costs Scaled by 1000.0- Values scaled by 1000.0 8/20/1992 11:01 - 55 -
ANNEX4 Page 11 of 11
CHILE
IRRIGATION DEVELOPMENTPROJECT
INDAP
Detailed Coat Table (USS)
Quantity TotalsIncluding Contingencies Ut=U u=Uu=a====-=u=u...... 3...... ==2===:i=c====g.= ...... =,...=_...==== 199293-96 Total 1992 1993 1994 1995 1996 TotaL ...... 1. INVESTMENTCOSTS ...... A. Equipment Office - 18 0 0 0 0 18 Comaunmcatfons - ' 11 0 0 0 0 11 Conputing - - 16 0 0 0 0 16 Sub-Total 45 0 0 0 0 45 B. Pfek-ups 6 0 6 77 0 0 0 0 77 C. Extension - - - 41 333 548 750 954 2625 Total INVESTMENTCOSTS 163 333 548 750 954 2747 iI.RECURRENT COSTS ...... A. Salaries TT Coordinator 6 6 30 97 101 104 108 112 523 irrigationCoordinator 6 6 30 97 101 104 108 112 523 Secretaries 3 3 13 13 13 14 14 15 69 Sub-Total 207 215 223 231 239 1115 B. OperatingCosts - - 16 17 18 18 19 88 C. PersonnelCosts - 12 13 13 14 14 66 0. OfficeRental - - 9 9 9 10 10 47 E. VehicleO& - - - 22 23 24 25 26 121 ...... TotalRECURRENT COSTS 267 277 287 297 308 1436 = azZs ==.aU *==-U u:=== O CR=== Total 429 609 834 1047 1262 4182 Unit CostsScaled by 1000.0- Valuesscaled by 1000.0 8/20/1992 11:02 - 56 -
ANNEX5 Page 1 of 4
CHILE
IRRIGATION DEVELOPHENTPROJECT
Rexularizint Water Titles
Bac kround
1. The Water Code (C6digo de Aguas DFL No. 1122 of 1981) establishes the norms, definitions and concepts governing the ownership and use of water. Water is a public good with the right to use granted to private parties in conformancewith the dispositionscontained in the Code. Water rights are considered to be private assets which can be sold or mortgaged separately from the land subject to the Civil Code. After the initial granting of rights, the State ceases to have the authority to allocate water rights with the distributionof water among users left up to the free market.
M. The Water Code distinguishesamong several types of water rights, including consumptive and non-consumptiverights, permanent and temporary, continual and alternating rights between parties. Consumptive rights allow the user to consume, whereas non-consumptiverequire that after it is used the water be returned to the source in the same state as it was received. Permanent rights allow the user to take a fixed proportion from a specific source. Temporary rights, on the other hand, are those that are available only after permanent rights have been satisfied. Continual rights allow the user to take the water uninterruptedlyon a twenty-fourhour basis, while discontinuousrights only allow for extraction from a source during a predeterminedperiod of time. Alternating rights are those that are distributed among two or more users during the same turn.
3. The State has retained some water rights including: (a) rights created by works constructedby the Irrigation Directorate (DR) of HOP that have not been transferredto the users; (b) reserves retained by the state for future constructionof works; (c) the 1,500 titles seized during the agrarian reform that have recently been reassigned; and, (d) rights held by hydroelectric firms in which the state has ownership or shares, now limited to one firm along the Maule River.
Creation of Water Use Riabts
4. Articles 140 and 147 of the Water Code govern the establishmentof a right to water. They require an applicationto the DGA specifying the water source, the volume and location of the extraction and type of right requested. The claim must be published and, if there is no counterclaim,the DGA recognizes the claim subject to the availabilityof water from the source. If a counterclaimis presented, DGA auctions off the right between the claimants. The State can participate in such auctions under the same conditions as the private parties. In additiontArticle 148 enables the President of the Republic, after informing the General Directorate of Water (DGA) to concede water rights directly in special circumstancesand when in the public interest. The powers of the State regardingwater rights are also found in - 57 -
ANNEX 5 Page 2 of 4
Law 1123 (the IrrigationLaw). Article 6 allows the DR to preside over the distributionof water rights created from the constructionof works by the State. TransitoryArticle 1 of this Law permits the DR to maintain water reserves under the control of the governmentfrom works constructedprior to the enacting of Law 1123 until such rights are conceded to the users by the DGA.
Water Riehts Titlina
5. Water rights are only consideredto be legally constituted if they are inscribedwith the local Recorder of Deeds (Conservadoresde Bienes RaXces-CBR). The number of claims to water that are not inscribed or regularized is unknown, but it is likely to be substantial. These would include water rights that have never been registered in the CBRs. There are estimated to be numerous rights in this category, especially among small farmers. They would also include water rights registered in the CBR prior to 1981 which have been transferredwithout proper documentation.
6. In order to register water rights that have not been legally recognized,the party must present to the CBR a document detailing the history of use or right and subsequenttranbjers. If the CBR rejects the application because it does not feel a right has been sufficientlydemonstrated, the party can appeal through the regular court. If the judge determines that the party is the legitimatesuccessor it can order the CBR to effect the inscription. If the court is unable to make a determinationit can refer the matter to the DGA.
7. The lack of regularizedwater titles is due in part to a lack of information regarding the legislationand the proceduresrequired for regularizingand constitutingwater rights, aprticulalrlyamong small farmers. The major constraint to regularizingwater titles particularly among small farmers, however, is likely to be the cost. The procedure can be quite expensive,with the average cost at around US$ 460, regardlessof the size of the title. The costs to the individualcan be even higher in those cases which require extensive informationabout other users of a watercourse and for which there is not a reliable cadastre.
The National Program for ReaularizintWater Titles (USS1.48Million)
8. DGA has an ongoing program to regularizewater rights for users throughout the country. It is felt that the regularizationof titles benefits not only the individualusers, but also the organizationsof users which are then better able to manage the allocation of water and the operation and maintenance of the common works. There are asscociated activities invloved: (1) cadastre of users; (2) registrationof titles; and (3) regularizationof rights and organizationof users.
9. Cadastre of Users. The task involves the recompilationof existing information,maps, and about the rights extracted from the registry of t:.: localCBR and other sourcesincluding new surveys. Mappingof existing irrigationand drainagenetworks is undertakenif required. The final cadastreincludes a plan with variable scale depending on the size of farms in - 58
ANNEX5 Page 3 of 4
the area of study. This plan shows the hydraulic network, access roads, derivations,dams, flow stations, coordinates,farms boundarieswith number from the National Tax Service (Serviciode Impuestos Internos) and the municipality of location. From this a Role of Users is developed for each canal showing the area irrigated and the source and quantity of water used, as well as indicating the status of individualwater rights and those of the assoeiation of irrigators.
10. These cadastre are undertaken by specializedprivate firms contracted by MOP and included in its Registry of Consultants. Staff of the DGA are responsiblefor procuring these contracts and supervising the work. The PROMNMwould support the implementationof this program in areas where the potential demand for investment,particularly by small farmers, would be greatest. These include the following river basins: Limari, Choapa, Aconcagua, Maipo, Maule and Cautin. Cadastre have already been completed in the Choapa and Maule, and in parts of the Aconcagua and Maipo. The total cost of the cadastre stage has been estimated at estimatedUS$712,000.
1. ComputerizedData Bank of Water Rights. The cadastre of "qers would also include the retrieval of background of transfers legally inscribed in the CBRs. To facilitate future processing and to ease the ability to transfer titles in the future, this large volume of scattered information needs to be centralizedand computerized. The Studies Department of DGA is working on perfecting the Banco de Datos del Catastro PGblico de Aguas (CPA).
12. RegularizinMof Water Titles. The final step of the process is to ensure that users have water use rights titles legally recognized and inscribed in the CBR. The work would be undertaken by specializedfirms inscribed in the Registry of Consultants. Firms would receive from the DGA user roles for each canal to be regularizedwhich include: (a) name of the user; (b) identificationof the property receiving the water; (c) irrigated area and irrigation turns; and, (d) background concerning the distributionof water from the canal among the users. The firms would be required to visit the area and meet with the users in order to verify informationand with the collaborationof the users provide data required to amend that held by the DGA with a view toward facilitatinglegal steps to constitutewater communities. After identifying those titles held by small farmers and requiring regularization,the firms would proceed with the legal process of inscribing them in the Water Title Registry of CBR. Total cost of these activities is estimated to be US$725,000 over five years. - 59 -
ARaNx 5 Page 4 of 4
CHILE
IRRIGATION DEVELOPMENTPROJECT
RegularizingTitles to Water Riehts
Detailed Cost Table (USS)
TotalsIncluding Contingencies Sus 1992 1993 1994 1995 1996 Total ...... 1. INVESTMENTCOSTS ...... A. UserCadastres 32 277 403 0 0 712 B. Regfstratlon Colputer Equlpment 44 0 0 0 0 4 C. Regularizatfon 107 222 35 239 124 725 ...... Total INVESTMENTCOSTS 183 499 437 239 124 1481 a------a------aa--=a ua=_ u 23= Total 183 499 437 239 124 1481 inUUU3UU3333UUU3Uua3uu3in=uu33u=a3=.u=amu.muuaua - Valuesscaled by 1000.07/20/1992 12:17
StrentthenintUser OraanizationsTrainign
Detailed Cost Table (USS)
Quantity TotalsIncluding Contingencies 1992 1993 1994 1995 1996Total 1992 1993 1994 1995 1996 Totat ...... 1. INVESTMENTCOSTS ...... A. Course PreparatIon - - - - 27 0 0 0 0 27 B. Trafning Courses. 0 10 16 20 10 56 0 176 293 379 197 1045 ...... Total INVESTMENTCOSTS 27 176 293 379 197 1072 a===== 3.33= 3ma333ss wa3= cancan ====a3 Total 27 176 293 379 197 1012 UnitCosts Scaled by 1000.0- Valuesscaled by 1000.08/20/1992 11:02 - 60 - ~~~~~ANNEX_5 -- - ~~~~~~Chart1
i"t~*. I..Il - 61 -
Page I of 3
CHILE
IRRIGATION DEVLOPMENTPROJECCT
Proiect Components bv Year
TotalsIncluding Contingencies Sus ...... 1992 1993 1994 1995 1996 Total A. Irrigatfon Infrastructure 1. CivilWorks 6.6 19.0 25.2 26.1 27.1 104.0 2. Inst. Strengthening 0.4 0.8 0.5 0.4 0.5 2.6 ...... ;; ...... Sub-Total 7.0 19.8 25.7 26.6 27.6 106.6 S. Agrfcultural Development 1. Research 0.3 0.4 0.5 0.8 0.9 2.8 2. Technology Transfer 0.4 0.3 0.3 0.3 0.3 1.7 3. Extension 0.4 0.6 0.8 1.0 1.3 4.2 4. Inst.Strengthening 0.1 0.2 0.2 0.2 0.1 0.8 ...... Sub-Total 1.2 1.5 1.8 2.4 2.6 9.5 C. StrengtheningUser Groups 1. Training 0.0 0.2 0.3 0.4 0.2 1.1 2. Water RightsTitling 0.2 0.5 0.4 0.2 0.1 1.4 ...... Sub-Total 0.2 0.7 0.7 0.6 0.3 2.5
...... Total PROJECTSCOSTS 8.4 21.9 28.3 29.5 30.5 118.7
...... 0 8.0...... / ...... Vatues Scaled by 1000000.08/20/1992 11:10 - 62 -
ANNEX6 Page 2 of 3
CHILE
IRRIGATION DEVELOPMENTPROJECT
Summarv of Accounts br Year
TotalsIncluding Contingencies SUs ...... 1992 1993 1994 1995 1996 Total 1. INVESTMENTCOSTS ...... A. Construction 6.6 19.0 25.2 26.1 27.1 104.0 . BuIldingt 0.0 0.0 0.0 0.0 0.0 0.0 C. Equipment 1. Field 0.0 0.1 0.0 0.0 0.0 0.1 2. Lab 0.0 0.0 0.0 0.0 0.0 0.0 3. Offfce 0. 0.0 0.0 0.0 0.0 0.1 4. Computing 0.1 0.1 0.0 0.0 0.0 0.3 ...... Sub-Total 0.2 0.2 0.r. 0.0 0.0 0.5 D. Vehicles 0.2 0.1 0.0 0.0 0.0 0.3 E. Technical Assistance 0.2 0.4 0.4 0.4 0.4 1.8 F. Research 0.3 0.4 0.5 0.8 0.9 2.8 G. Training 0.0 0.3 0.4 0.5 0.2 1.4 H. Publications 0.0 0.0 0.1 0.0 0.0 0.2 1.Local Consultants 0.3 0.9 1.1 1.1 1.2 4.6 ...... Total INVESTMENTCOSTS 7.9 21.4 27.7 28.9 29.9 115.7
11. RECURRENTCOSTS ...... A. Supplies 0.0 0.0 0.0 0.0 0.0 0.2 S. Persomel Expenses 0.1 0.1 0.1 0.1 0.1 0.4 C. Vehicle O&M 0.1 0.1 0.1 0.1 0.1 0.4 D. GeneralExpenses 0.0 0.0 0.0 0.0 0.0 0.2 E. Salaries 0.3 0.3 0.4 0.4 0.4 1.8 ...... TotalRECURRENT COSTS 0.5 0.6 0.6 0.6 0.6 2.9 Total PROJECTCOSTS 8.4 21.9 28.3 29.5 30.5 118.7 ...... VatuesScaled by 1000000.08/26/1992 16:22 CHILE Irrigation DeveLopmnt Project Sumary Account by Project Coiponent $us
Physical Price Inst. Technolo Inst. Water Contingencies Contingencies Civil Strength gy Extensio Strength Rights ...... Works MOP/CNR Research Transfer n (NAG) Training Tit:.rng Total X Amount X Amount 1. INVESTNENTCOSTS ._ .... _._...... A. Construction 93500 0 0 0 0 0 0 0 93500 B. 0 0 11 10535 Cuildings 0 0 0 40 0 0 0 0 C. Equipuent 40 0 0 4 1 1. Fietd 0 90 0 8 0 0 0 0 2. Lab 98 5 5 4 4 0 25 0 0 0 0 0 0 25 ? 'fice 5 1 6 1 0 60 0 8 27 7 0 0 102 5 5 3 3 i. i.uting 0 170 0 7 15 7 0 41 240 5 12 4 10 - caL 0 345 0 23 42 14 0 41 465 D. vehicLes 5 23 4 19 0 64 0 78 72 26 0 0 240 5 12 3 7 E. Technical Assistance 5 970 0 0 0 535 0 0 1510 5 76 11 165 F. Research 0 0 2830 0 0 0 0 0 2830 0 0 0 0 G. Training 0 250 0 100 0 0 890 0 1240 5 57 12 143 H. Publications 0 46 0 158 0 0 0 0 204 1 2 9 1 1. Local Consultants 0 19 500 0 112 2325 0 27 1260 4224 0 0 10 420 Total INVESTMENTCOSTS 93505 2175 2830 511 2439 575 917 1301 104254 0 170 11 11310 11. RECURRENTCOSTS
A. Supplies 0 58 0 75 0 58 0 0 191 3 6 S. Persomel Expenses 0 10 19 69 0 205 60 50 0 0 384 2 6 10 C. Vehicle O8M 0 38 34 0 150 110 25 0 0 319 1 3 10 32 D. General Expenses 0 0 0 30 122 0 0 0 152 0 0 10 15 E. Salaries 0 0 0 590 1016 0 0 0 1606 0 0 10 155 Total RECURRENTCOSTS 0 161 0 1050 1309 133 0 0 2653 1 15 10 259 Total BASELINECOSTS 93505 2336 2830 1561 3748 708 917 1301 106907 0 185 11 11569 Physical Contingencies 0 92 0 5 6 35 45 2 185 Price Contingencies 10536 172 0 140 429 73 110 ___ _ ...... ;..------110 11569 0 17 ------Total PROJECTCOSTS 104041 2600 2830 1706 4182 816 1072 1413 118661 0 202 10 11569 Taxes 18726 203 0 150 342 35 107 145 19708 0 16 Foreign Exchange 43284 981 0 294 189 221 ...... 0 0 44969 0 66 __...... _...... _...... _...... __ Values Scaled by 1000.0 8/24/1992 14:28
0|
0 - 64 -
ANNX 7 Page 1 of 4
CHILE
IRRIGATION DEVELOPMENTPROJECT
Environmental Aspects
Introduction
1. This text is the "Summary and Recommendations"updated as of March 3, 1992 of the sectoral environmentalassessment entitled "Environmental Aspects" and included in the preparationreport for the "Chile Irrigation Development Program" dated November 12, 1991, prepared by the FAO/World Bank CooperativeProgram. The report itself can be found in the project file.
2. The project was classifiedas an "A" because sub-projectsmay have the potential for causing adverse environmentalimpacts and, therefore, a esystemwas required for screening and classifyingthem to determine those that need environmentalassessment. A previous version of this summary (in Spanish) was circulated to numerous local nongovernmentalorganizations (NGOs) involved in environmental issues and rural developmentin Chile, who were invited to participate in a meetinp under the auspices of the Min.stry of Planning (MIDEPLAN)to discuss and comment on the issues raised. The summary was sent to the following NGOs: ConsultoriasProfesion&les Agraria Ltda. (AGRARIA),Comite Nacional de Pro Defensa de la Fauna y Flora (CODEFF),Centro de Investigaciony Planificaciondel Medio Ambient. (CIPMA), ',rupode InvestigacionesAgrarias (GIA), Instituto de Ecologia Politica (IEP). Instituto de Educacion Rural (IER), and Instituto de Promocion Agraria (INPROA);the meeting was attended by CODEFF, INPROA, IER and AGRARIA on December 3, 1991 in the office of MTEDEPLAN.
Summarv and Recommendations
3. In the development and operation of the irrigation sector, a number of environmentalissues have been identified, including problems in salinity, water-logging and water quality. Steps would be taken -withinthe project to ensure that these issues and all other potential environmentalissues are addressed in the course of feasibilityanalysis of individualinvestments through a process of environmentalscreening, assessment, monitoring and mitigation (see para 9). Support would also be given to greater research in the technical aspects of these issues. On the institutionalside, strengtheningof irrigationuser organizations(para 8), the rehabilitationof existing works, and cost recovery provisionsand requirementsfor beneficiary participationin sub-project design and implementationwould promote sustainable investmentswith greater efficiencyand conservationin water use, and reduce excess demand for irrigation.
4. The Water Manag2ment Context. It is recognized that many of the above aspects of irrigationdevelopment will be conditioned by the broader -65-
Page 2 of 4
issues of long-run intersectoralconflicts over the use of land and water determining the overall outcome of resource development in terms of efficiency, equity and sustainability. Under most scenarios of future development of water-using sectors in Chile, one may expect accelerating pressure on the resource and rising intersectoralconflicts. By the year 2050, the population is expected to increase from 13 million to 22 million, with about 18 million in urban centers, which will have important impiications for potable water supply and sewage treatment. There will be increased demands on water by industry, particularlymining in the north. The Irrigation Directorate (DR) and the Executive Secretariatof the National Irrigation Commission (SE/CNR) have studied projects which together, if actually constructed,could add 477,000 ha to the irrigated area. The continued expansion of all these sectors will call for major investments in treatment of discharges even to contain contaminationat current levels. On the issue of flow regulation, the prime area affected is the south-central zone where reservoir storage volume was increased 2401 between 1965 and 1990. This, combined with planned dams and interbasin transfer for irrigationwill constitute a major factor in managing the intensificationof multisectorwater use, and the allocation of physical supply.
5. InstitutionalCapacity. The agencies with direct decision-making autho:ity for irrigation developmentare the DR, the General Directorate for Water (DGA), the Ministry of Agriculture (HAG), SE/CNR and MIDEPLAN. Among these agencies the DR, DGA, HAG and SE/CNR are involved in the design and monitoring and evaluation (M&E) of public and private irrigation projects, and therefore must have a capacity to ensure that environmentalprocedures are used in the project cycle, including post-constructionM&E. MIDEPLAN has the final authority in determining that environmentalprocedures have been adequately followed by these agencies as a prerequisiteto approval of public financing. In addition, the DGA and CNR have broad mandates in the area of water resource policy and irrigation policy respectively. HAG has responsibilitiesin developmentof irrigated agticultureat the farm level. Thus, in all cases, their requirementsgo beyond a capacity to apply environmentalprocedures on a project-by-projectbasis, to include resource management within a river basin context.
6. Extensive activity is underway to strengthen the capacity of private and public entities whose mandates impinge on the environment. A project is being prepared for possible Bank financing to support the work of the recently created National EnvironmentalCommission (CONAMA) in training on environmentalimpact assessment (EIA), informationsystems and environmental procedures with central government and regional agencies. The Inter-American Devolopment Bank (IDB) has a loan to NIDEPLANto strengthen the public iavestment system, including EIA and a pre-investmentprogram for river basin management and development. Many bilateral agencies are also funding institutional support activities in various agencies and NGOs. In addition, NGOs have received extensive support from domestic industry and foundations and external NGOs. One can expect a significant increase in technical capacity within the country over the next two years. - 66 -
ANNEX 7 Page 3 of 4
7. StrengtheningEnvironmental Management in the Irrigation Sector. Irrigation users in general are not well-prepared to enter into intersectoral transactions. Capacity limitationsare most evident in the case of the water communities (comunidadesde agua), the canal associations (asociacionesde canalistas),and the river basin authorities (juntas de vigilancia). The lack of organizationof irrigationwater users in many river basins would appear to be the starting place for improving the capacity of the sector to deal with environmentalissues arising from intersectoralconflicts with long-term consequences. A number of steps should be considered including up-grading the management capacity of canal associationsand river basin authorities. The latter currently address mainly intra-sectoralirrigation matters, but they could be converted to management entities fully representativeof all users in the basin. These organizationswould also play a more active role in monitoring water quality.
8. In view of the overall support to environmentalmanagement (para.5), strengtheningof the executing agencies, the project would provide supplementaltraining in EIA for selected staff of the Studies Department of DR and that of the SE/CNR, as well as members of the agriculturaltechnical support unit (UAR) in HAG in order to ensure that staff are well versed in environmentalissues. This training will be based on EIA for the projects proposed for 1992/93 and will also focus on environmentalprocedures applied by DR, SE/CNR and MAG.
9. EnvironmentalReauirements of the Loan. Within the project cycle, six steps will be taken to assure environmentalprocedures are adequately taken into account in the design and selection of sub-projects(see attached chart):
(a) Sub-project proposals prepared at the regiona'llevel for submission to the InterministerialCommittee (CDS) will include an assessment of viable options for meeting objectives and a preliminary statement (PES) on possible environmentalimplications based on agreed environmentalcriteria.
(b) For all sub-projectsapproved by CDS for feasibilitystudy, an environmental profile will be prepared by DR, SE/CNR or UAR/MAGto classify sub-projectsaccording to their potential environmental impact: "A" requiring a full-scale EIA; "B" requiring further environmentalstudy (ES) of specific aspects; or "C" requiring no further environmentalstudies.
(c) Profiles will be submitted for comment to the environmentalunits in MOP and MAG and to NGOs concernedwith the issues.
(d) Observationsfrom these entities (point c) would be submitted to the project coordinatingunit (UC), which would be responsiblefor revision of the profiles, in associationwith the prime authors of profiles (DR, SE/CNR, and UAR/MAG). The revised profiles, together with a report on the external consultation,would be submitted to - 67-
ANNEX 7 Page 4 of 4
CDS which would reject or accept the environmentalclassification (point b).
(e) With an "A" or "B" classificationthe CDS would request DR, SE/CNR or UARIMAG to contract the necessary studies to assess environmentalimpacts or provide recommendationsfor mitigating measures.
(f) These studies would be taken into account by the CDS in determining the adequacy of sub-projectdesign and measures to mitigate impacts. The CDS would then be responsiblefor ensuring that environmentalimpacts are monitored and recommendedmitigating measures are implemented. For this it would involve local affected groups and the user organizationwith their participation and responsibilitiesclearly spelled out in the investment package.
(g) Subject to review by the Bank, the CDS would submit the investment proposal package to MIDEPLAN, which has the final authority in determining that environmentalprocedures have been adequately followed by these agencies as a prerequisiteto approval of public financing. IRRIGATIONDEVELOPMENT PROJECT
Flow of Declaim ad Anath f
Eft ,nua Scvmub ad Aaseamnt
*ECOINENATIONANDI I ADVISO LEVEL ANALYSISLEVEL DECISIONLEVEL
REGIOACTIC ITTEES | C N R D R N A GUC | (PROECT IDENTIFICATION) C D S
| PORTFOLIOOF SELECTPFROJECTS P E S - - - ~~~~PROPOSED I FORPOSSIBLE PROJECTS I INESTMENT
00
UTNA,SSS, ONGs ENVIRONMNTALFILE REVIPN AND OENT
i I I OFI | r PORTFOLIO CONFIRM . . i > ~~~~~~~ ~~SCREENED ENVIROMNTAL MC" PROJECTS CLASSIFICATION PROJECTS
EllVIROiillENTAL| PREPARETORs AND CONTRACT L_ . Lt-PACT . . . REQUIREDES OREIA POFCLASSIFED "A'" AND B" PROJECTS
PORTFOLIO |ISSE RECENDATION > OF PROJECTSWITN COMPLETEDES OR EIA REJECTTHE
MONITORINGAND EVALUATION EVALUATIONOF AUTHOIZE THEPROJECT ENVIRONENT ASPECTSF LIIIIi~~~J - 69-
CHIL~E
IRRIGATIONDEVELOPMENT PROJECT
KeyPwformonce IndleoZo
EXPECTED R ESULT (YEAR)
ACTIVITY UNIT 92 93 94 s9 96 TOTAL A. Clvi Works 1 Feasibility Studies (a) NewProjects ProJect 9 4 3 - 16 (b) RehabilitationlModernization Project 10 5 2 10 27 II. Desianand Construction (a) NewProjects Project 2 4 5 5 3 19 (b) RehabilStation/Modernization Project 4 12 9 2 8 35
B. Operationand Maintenance_ TrainingProgram- -Project 1 5 -_2 MA MA MA C. RBeularliznaProcedures for Til0os to WaterRhhtr bvDOAi CUSS'000) 180 500 44 240 120 1.480 D. AgriculturalDeveloDment Research(INIA) - Expand existing lines Lines 3 3 -Initiatenew Lines Lines22 Researchplots Plots 15 21 24 20 20 100 Technology Transfer (INIA) - Estabtish CATT-R Centers 3 7 S - Training courses Cmininm) Courses 2 2 2 2 2 10 - Newextensfonists trained Staff 53 35 35 35 158 Extension CINDAP)14 - Extensionists recruited Staff 53 88 123 158 140 140 - PTTRsestablished Programs 26 18 18 18 70 - Farmersin CATT-R Farmers 140 320 240 - 0 - Farmersin PTTRs(o000) Farmers 5.2 8.8 12.3 15.8 14.0 14.0 - Area Covered('000 ha) Hectares 17.3
E. Institutional Deveom2Mnt ACTIVITY DUE DATE CONDITIONALITY POAfor Calendar1993 ready by Nov. 15, Noveader 1991- PA Approval 1992mid subsequentPOAs on Nov. 15 of Novefber1995 each year therafter. PROMNImplementation Manual ready (final January1993 PA approvalfor foltowing year version). PROIMImplementation Manual dissemi- March1993 PA approval for following year nated in the sevenRegions In all entities involvedIn irpltementatfon. CDStUCstaff positions (3) reflected In 1996Budget None 1996budget for Instltutfonalizatfon, IDF installed andone position reflected In regularbudsets of RAGwMP. nd ______- 70 -
ANE 9
CHILE
IRRIGATION DEVELOPHENTPROJECT
Procurement Methods and Disbursements
IBRD Disbursements
Loan Allocated Percentageof Expenditures Categorv (USS million equivalent) to be financed
Civil Works and Studies 43.0 41Z of expenditures
TechnicalAssistance 2.0 1OOZof expenditures
TOTAL 45.0 - 71 -
ANNEU 0
CHILE
IRRIGATION DEVELOPMENTPROJECT
Estimated Schedule of Bank Disbursements (In US$ million)
Disbursement Cumulative Balance of FY/End of Semester Durint Semester Amount Loan
FY 1993 December 31, 1992 - - 45.0 June 30, 1993 7.0 7.0 38.0
FY 1994 December 31, 1993 2.0 9.0 36.0 June 30, 1994 5.0 14.0 31.0
FY 1995 December 31, 1994 5.0 19.0 26.0 Juna 30, 1995 5.0 24.0 21.0
FY 1996 December 31, 1995 4.0 28.0 17.0 June 30, 1996 4.0 32.0 13.0
FY 1997 December 31, 1996 4.0 36.0 9.0 June 30, 1997 4.0 40.0 5.0
FY 1998 December 31, 1997 2.0 42.0 3.0 June 30, 1998 1.0 43.0 2.0
FY 1999 December 31, 1999 1.0 44.0 1.0 June 30, 2000 1.0 45.0 0.0 - 72 -
CHILE
IRRIGATION DEVELOPMENTPROJECT
Technical File
List of Documents
1. IrrigationDevelopment Programmes PreparationReport (Volumes 1 and 2), FAO/CP, November 12, 1991.
2. IrrigationDevelopment Programme: Main Characteristicsof Irrigation Research and TechnologyTransfer Programmes in Chile, Working Paper, FAO/CP, Novqmber 12, 1991.
3. Informe Preliminarde las Comunas Rurales Pobres Localizadasentre la IV y X Region, Ministry of Agriculture,PNUD-FAO TCP/CHI/0051,Santiago Chile, October 1990.
4. Proyecto Investigaciony TransferenciaTecnologica en Riego y Drenaje, Instituto de InvestigacionesAgropecuarias (INIA),May 1992.
S. Programa para el Refuerzo Institucionaldel Ministerio de Agricultura Subsector Riego, November 1991.
6. Programa de Obras de Riego y Drenaje Medianas y Menores (PRONM)s Componente de Desarrollo Agropecuario,Tomas Cox, consultant,February 1992.
7. Participacionde los PequefhosAgricultores en los Beneficios de la Ley No. 18.450, Tomas Cox, consultant,March 1992.
8. Chile: Subsector de Riego, Analisis de Capacidad Institucional,March 1992.
9. Chile: Irrigation Development Project, EnvironmentalAspects (Sectoral EnvironmentalAssessment), Michael Nelson, consultant,March 1992.
10. Aspectos Ambientales del Manejo del Riego en Chile, Gonzalo Vargas Otte, consultant, September 1991.
11. Chilean Law 1122, 1123, and 18450. - 73 -
ANNEX-1 Page 1 of 3
CHILE
IIRRIGATIONDEVELOPMENT PROJECT
Abbreviations
BIN Basic Irrigated Hectare (Hect&rea de Riego BUsico)
BOD Biochemical Oxygen Demand
CAR Committee for IrrigatedAgriculture (Comite para Agricultura de Riego)
CATT Demonstration and Technology Transfer Centers (Centros de Ajuste y TransferenciaTecnol6gica)
CCC Confederationof Canal Operators of Chile (Confederaci6nde Canalistas de Chile)
CDS Inter-MinisterialCommittee (Comisi6n de Direcci6n Superior)
CUR National Irrigation Commission (Comisi6nNacional de Riego)
CONAMA National EnvironmentalProtection Commission (Comisi6nNacional do Medio Ambiente)
DE/DR Operations Division of the Directorate of Irrigation (Division de Explotaciones)
DEP/MAG Department for Studies and Budgeting for Agriculture (Departamentode Estudios y Planificaci6n)
DGA General Directorate of Water (Direcci6nGeneral de Aguas)
DR Directorate of Irrigation (Direcci6n de Riego)
ERR Economic Rate of Return
EIA EnvironmentalImpact Assessment (Evalusci6ndel Impacto Ambiental)
FmR Pinancial Rate of Return - 74 -
ANX 12 Page 2 of 3
FONDEF Science and Technology DevelopmentFund (Fondo de Fomento, Ciencia y Teonologia)
FOSIS Social Solidarity Investment Fund (Fondo de Solidaridad e Inversion Social)
CDP Gross Domestic Product (ProductoInterno Bruto)
IDB Inter-AmericanDevelopment Bank (Banco Interamericanode Desarrollo)
INDAP Institute for AgriculturalDevelopment (Instituto de Desarrollo Agropecuario)
INIA Institute for AgriculturalResearch (Institutode Investigaci6nAgropecuaria)
LYR Irrigation DevelopmentLaw 18450 (Ley de Fomento de Riego)
MAG Ministry of Agriculture (Ministeriode Agricultura)
MOP Ministry of Public Works (Ministeriode Obras PCablicas)
MIDEPLAN Ministry of Planning and Cooperation (Ministeriode Planificaci6ny Cooperaci6n)
OECF Overseas Economic CooperationFund of Japan
O&H Operation and Maintenance (Operaci6ny Mantenimiento)
PQA Annual Work Program (ProgramaOperativo Annual)
PROMM Chile Irrigation DevelopmentProject (Programa de Obras de Riego y Drenaje Medianas y Menores)
SAG Public Agriculture and Livestock Service (ServicioAgricola y Ganadero)
SEICNR Executive Secretariatof the National Irrigation Commission (SecretariaEjecutiva de CNR)
SERNAN National Women's Service (ServicioNacional de la Mujer) - 75 -
ANNEX 12 Page 3 of 3
SSA Underse¢retariatfor Agriculture (Subsecretariade Agricultura)
UAR Technical Support Unit for Irrigated Agriculture (Unidad de Apoyo al Riego)
UC Project CoordinatingUnit (Unidad Coordinadoradel Programa)
UF Development Unit (Unidad de Fomento) C H I L E
-..IES OVER 500.O INHABITA0TS: CENTRAL VALLEY * 50,000 - 100,000 0: PORTS L 1oo000 . 0000._ ADMINISTRATIVEREGION 300NDARIES * 300.000 A -'- INTERNATIONAL 0OUNDARIES
1 Agriculturol Zone Iota Co aW r e Region | ean Aoseal Mean An 'C' Ara Pa-ter Are-aias tlprtr Not ~~ ~ ~ 1 Production km ISOOsI000-5ha (050's) ha (000's)
Irrigated oases I 178 13 11 and river valleys Desert Z t 'n IQUIQUE 18.31 Iquuq.
LeoY.-1JJANTOFAGASTA
AnioTagasTDa \ 11 .*I
Irrigated river ll 120 195 13 0 j > valleys and oases, Arid c ( COPMPO itinerant sheep ond COPIAPO goats shee an
L.aoBerea , :, ,^ 3014.40 I 100 300' LA SERENA >\Iv
vegetables, III 93 2160 1050 t VAjPAAI i Fruits, wheat,~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ a VdALPARAraiC grapes. w Mediter-heat, "VIa li 13.9° - ' 367 maize, eilk, raneo.nS Mt. nhago sunflower, beef, S,0000 tM SNIG cattle, sheep, SRaNIG sugar, pulses, S-nF., do V ACAGUA forestry A LA VIce TALCA
Concep6no hilIon 13.0, 2; 1319
Cattle, milk, IV 102 2990 170 ' eo' sheep, forestry, Temperate T TEMUCO barley, oats, u potatoes, fruits, clediVi. 11. n 2507 sugorbeets, __ __ _ pulses, wheat
< QgSoerto Mon PUERTO MONTT
Sheep, cattle, V 248 185 1 forestry Humid
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