Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. P-6727-BD MEMORANDUMAND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENTASSOCIATION TO THE Public Disclosure Authorized EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 78.4 MILLION TO THE PEOPLE'S REPUBLIC OF BANGLADESH Public Disclosure Authorized FOR A RIVER BANK PROTECTION PROJECT NOVEMBER 13, 1995 Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY AND EQUIVALENT UNITS (April 1995) Bangladesh Taka 1 US$0.0248 US$1 Tk 40.25 WEIGHTS AND MEASURES I meter (i) = 1.1 yards (yd) I kilometcr (kin) = 0.61 mile (mi) 1 hectare (ha) = 2.47 acres (ac) ABBREVIATIONS AND ACRONYMS BRE - Brahmaputra Right Embankment BWDB - Bangladesh Water Development Board CAS - Country Assistance Strategy Cr. - Credit CY - Calendar Year ERR - Economic Rate of Return FAP - Flood Action Plan GDP - Gross Domestic Product GOB - Government of Bangladesh ICB - International Competitive Bidding NCB - National Competitive Bidding NGO - Non-Government Organization NPV - Net Present Value NW`P - National Water Plan O&M - Operations and Maintenance PCR - Project Completion Report PPAR - Project Performance Audit Report R-AC - Regional Accounting Center RAP - Resettlement Action Plan SDR - Special Drawing Right WARPO - Water Resources Planning Organization GOB FISCAL YEAR July I - June 30 GLOSSARY Grovne - A rigid structure built out from the shore to stop erosion by deflecting the current. Minor Irrigation - Irrigation using mechanical pumps typically in units of 50 ha or less. Monsoon - Period of annual rains starting in June and ending in October. Project Proforma - An internal Government document required to obtain authorization for the inclusion of a project in the investment budget. Revetment - A facing of stone or concrete to protect an embankment from erosion. FOR OFFICIAL USE ONLY BANGLADESH RIVER BANK PROTECTION PROJECT MEMORANDUM OF TRE PRESIDENT Credit and Proiect Summars Borrower: People's Republic of Bangladesh. ImnlementingAgency: BangladeshWater DevelopmentBoard. Beneficiarv: Not Applicable. Poverty: Not specifically focused, but flooding and river bank erosion disproportionately affect the poor who have minimal assets to buffer flood losses or involuntary relocation. Many of the poorest are former erosion victims. Amount: SDR 78.4 million (US$121.9 million equivalent). Terms: Standard, with 40 years maturity. CommitmentFee: 0.5% on undisbursedcredit balances, beginning 60 days after signing, less any waiver. Financing Plan: See ScheduleA. EconomicRate of Return: The beneficiaries of the project would be the estimated 2-3 million people living in the area of potential disaster caused by the Brahmaputra breaching its right bank at Mathurapara-Sariakandito flow down the Bangali river channel. About 125,500 urban people will be protected from severe property loss, impoverishment and physical displacementcaused by river bank erosion or chronic floodingat Sirajganj and Sariakandi. Flooding of the approaches to the Jamuna Bridge would disrupt local trade. The project would protect agricultural productionover an area of about 100,000 ha from annual flooding and control erosion at Sirajganj which is essential for the security of the Jamuna Bridge. Property losses prevented in the first five- year period would include 16,400 houses and shops, 75 factories, at least 9,000 traditional dwellings and considerable public infrastructure. The economic rate of return (ERR) for the project is 39%, and 45% and 35% respectively for the Sirajganj and Sariakandi-Mathuraparasubprojects. The ERR does not include the national water planningor BWDB institutionbuilding component. Staff Appraisal Report: Report No. 15090-BD. Maps: IBRD No. 27505: River Bank ProtectionProject. IBRD No. 27506. SimulatedArea Flooded by Merger of Brahmaputraand Bangali Rivers at Sariakandi. Project IdentificationNumber: BD-PA-9545. I This documenthas a restricteddistribution and maybe usedby recipientsonly in the performanceof their official duties. Its contentsmay not otherwisebe disclosedwiihout World Bank authorization. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TOTHE PEOPLE'S REPUBLIC OF BANGLADESH FOR A RIVER BANK PROTECTION PROJECT 1. I submit for your approval the following mcmorandumand recommendationon a proposed development credit to the Pcople's Republic of Bangladesh for SDR 78.4 million, the equivalent of US$121.9 million, on standard IDA terms with a maturity of 40 years. This credit will help finance river bank protection to stop the Brahmaputra from disastrously breaching its right bank and flooding the hinterland, secure the Jamuna Bridge and two towns through erosion protection works, and assist water sector institutional development. Sectorand Proicct Background 2. Land and Water Scctor. Bangladesh,one of the poorest countries of the world, occupies the floodplains and delta formed by the confluenceof the Ganges and BrahmaputraRivers at the head of the Bay of Bengal. Consequently,the country's agricultural and economicdevelopment is constrained by monsoon floods, salinity, tidal inundation, cyclones, river bank erosion and continuous meandering of the major rivers. The severity of some major floods and cyclones often attains disaster proportions as in the 1988 flood and 1991 cyclone. Agriculture is still the mainstay of the economy and accounts for about 36% of GDP and about 60% of employment. Processed and unprocessed agricultural products account for about 32% of exports. Despite vulnerability to flood damage, the country's foodgrain productionrose from 9.9 million tons in 1961/62to over 19 million tons in 1993/94. About two-thirds of this increase came from dry season cropping facilitated by the Government of Bangladesh's (GOB) successful policies of introducing and expanding the use of small pumps, tubewells, high-yieldingrice varieties and fertilizers and by policy reforms in the late 1980s liberalizing trade in minor irrigation equipment and fcrtilizer. About one-third of the net cultivable area is now irrigated and, for the first time in recent memory, Bangladeshis now self-sufficientin rice production in years of normal weather. Nevertheless,Bangladesh still has to import wheat and other food products. Continuedrapid population growth (reduced somewhatto 2.0% per annum)means that Bangladeshmust continue substantialefforts to accelerate agricultural growth. 3. Sector Issues. Given the success with minor irrigation, the principal land and water sector issues relate to the formulation of long-term policies and investmentswhich will: (a) ensure equitable access to water for all users; (b) foster further agricultural growth by encouragingmore minor irrigation by private farmers using abundantgroundwater resources; (c) enable viable and environmentallybenign public and private sector investment in flood control and drainage works; (d) not exceed the implementationand maintenancecapacity of the BangladeshWater DevelopmentBoard (BWDB); and (e) enable stakeholders,other agencies, non-governmentorganizations (NGOs) and the private sector to participate in water sector planning, implementation,and operation and maintenance. As a result of GOB and donor conccrns arising from the severe floods in 1988, the World Bank prepared the Flood Action Plan (FAP) Study program in 1989 and has since served as the program's coordinator. The FAP is a five-year program consisting of: (a) routine studies to formiulatea portfolio of structural and non- structural investment projects to mitigate major flood hazards; (b) studies to formulate a river bank erosion control program for the Brahmaputra and Meghna Rivers; (c) various pilot projects to test innovative concepts of flood and river bank erosion control; and (d) various supporting studies to investigate social, environmentaland disaster managementissues arising from project proposals. The final report of FAP, "Bangladesh Water and Flood Management Strategy" (August 1995), now recognizes that flood managementhas to be seen witlhinthe context of year round water management and development, and that many of thic earlier technical solutions for flood control have significant problems. In consequence, GOB is planning a more integrated approach to water and flood 2 management with particular attention being paid to environmental impacts, particularly fisheries, peoples' participation in project planning, implementation, operation and maintenance (O&M), and institutionalstrengthening. At the same time, the FAP report recognizesthat major institutionalreforms are needed to improve water sector planning, implementationcapacity, and maintenance of completed works. The FAP will be conmpletedin December 1995, and its functions will be integrated within the Water Resources Planning Organization (WARPO) which will require substantial strengthening to become a fully effectivenational water planning organization. 4. Brahmanutra Rivcr BankErosion Impacts. River bank erosion is a persistenthazard faced by land owners and cultivators of land adjacent to the meandering major rivers. Such erosion leads to the landward collapse of the river bank over stretches of several hundred meters at a time. On the Brahmaputra River, erosion rates vary greatly from year to year, averaging