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Box 2 Stakeholder Perception of Drainage Boards First Phase of Organizing Dbs Doqument of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 28920 PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED CREDIT IN THE AMOUNT OF SDR 10.2 MILLION (US$15 MILLION EQUIVALENT ) TO ALBANIA FOR A Public Disclosure Authorized WATER RESOURCE MANAGEMENT PROJECT April 22,2004 Environmentally and Socially Sustainable Development Sector Unit South East Europe Country Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World I Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 1,2004) Currency Unit = ALL (Albanian Lek) ALL107 = US$1 US$ = SDR 1.47 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy DBS Drainage Boards DoWM Department ofWater Management ECA Europe and Central Asia EMP Environmental Management Plan EIRR Economic internal rate of return EU European Union FWUA(s) Federation ofWater User Association(s) GIS Geographic information system GPRS Growth and Poverty Reduction Strategy paper ICB International Competitive Bidding IDA International Development Association IDL Irrigation and Drainage Law IRP Irrigation Rehabilitation Project (the first project) O&M Operation and Maintenance MoAF Ministry ofAgriculture and Food MoE Ministry of Environment MoTAT Ministry of Territorial Adjustment and Tourism NGO(s) non-governmental organization(s) NWC National Water Committee NUWUA National Union ofWUAs M&E Monitoring and evaluation MM(s) man month( s) MTEF mid-term expenditure framework PMR project management report PMU Project Management Unit PRSC Poverty Reduction Strategy Credit RBA River Basin Authority REA Regional Environment Agency SIDRP Second Irrigation and Drainage Rehabilitation Project (the second project) SOE statement ofexpenditures ToR(s) Terms ofReference TS Technical Secretariat ofthe National Water Committee "s) Water User Association(s) WE@) Water Enterprise(s) WRL Water Resource Law WRM Water Resource Management Vice President: Shigeo Katsu Country ManagedDirector: Orsalia Kalantzopoulos Sector Manager: Joseph Goldberg Task Team Leader: Tom Konishi FOR OFFICIAL USE ONLY ALBANIA WATER RESOURCE MANAGEMENT PROJECT CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................... 1 1. Country and sector issues.................................................................................................... 1 2 . Rationale for Bank involvement ......................... ;............................................................... 4 3 . Higher level objectives to which the project contributes .................................................... 5 B. PROJECT DESCRIPTION ................................................................................................... 5 1. Lending instrument ............................................................................................................. 5 2 . Project development objective and key indicators .............................................................. 6 3 . Project components ............................................................................................................. 7 4 . Lessons learned and reflected in the project design.......................................................... 13 5 . Alternatives considered and reasons for rejection ............................................................ 14 C. IMPLEMENTATION .......................................................................................................... 16 1. Donor Coordination .......................................................................................................... 16 2 . Institutional and implementation arrangements ................................................................ 16 3 . Monitoring and evaluation of outcomes/results ................................................................ 18 ... 4 . Sustainability ..................................................................................................................... 20 5 . Critical risks and possible controversial aspects ............................................................... 21 6 . Loadcredit conditions and covenants ............................................................................... 22 D. APPRAISAL SUMMARY ................................................................................................... 23 1. Economic and financial analyses ...................................................................................... 23 2 . Technical ........................................................................................................................... 25 3 . Fiduciary ........................................................................................................................... 25 4 . Social................................................................................................................................. 27 5 . Environment ...................................................................................................................... 30 6 . Safeguard policies ...........1 ................................................................................................. 32 7 . Policy Exceptions and Readiness ...................................................................................... 32 1 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Annex 1: Country and Sector or Program Background ........................................................ 33 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................ 41 Annex 3: Results Framework and Monitoring ....................................................................... 42 Annex 4: Detailed Project Description..................................................................................... 45 Annex 4: Attachment 1 ............................................................................................................ 54 Annex 4: Attachment 2 ............................................................................................................ 59 Annex 5: Project Costs .............................................................................................................. 62 Annex 6: Key Policy and Institutional Reforms Supported by the Project.......................... 63 Annex 7: Financial Management and Disbursement Arrangements .................................... 67 Annex 8: Procurement Arrangements ..................................................................................... 71 Annex 9: Economic and Financial Analysis ............................................................................ 77 Annex 10: Safeguard Policy Issues............................................................................................ 86 Annex 11: Overview ofthe Water Resource Management Sector ........................................ 88 Annex 12: Legal Framework .................................................................................................... 96 Annex 13: Project Preparation and Supervision .................................................................. 100 Annex 14: Documents in the Project File .............................................................................. 101 Annex 15: Statement of Loans and Credits ........................................................................... 102 Annex 16: Country At A Glance.............................................................................................. 104 Maps: IBRD # 33249 A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues Agriculture. While the importance ofagriculture to the Albanian economy has recently decreased in light of the emerging construction and service sectors, agriculture still consistently accounts for over 30 percent of GDP, and generated over 50 percent of the country’s employment from 1998 to 2003. Agricultural growth is a key objective of the Albanian Government, because of its clear economic and social advantages. Early in the reform process, land li-om state farms and cooperatives was privatized and distributed, creating about 400,000 very small family farms (averaging about 1.2 hectares). Other reforms included price reform, trade liberalization and privatization ofago-industrial enterprises. After a period of adjustment, including the turmoil of 1997, agricultural production increased substantially due mainly to the emergence of private farming, the development of domestic markets, and gradual investment in ago-industries. The private sector now dominates agricultural production, agro- processing, and marketing. Water Resource Management (see Annex 11 for details). With annual rainfall of 800 to 2,000 mm, Albania is endowed with ample fresh water resources (over 10,000 cubic meters per capita per year). Following principles established in the socialist era, ground water is reserved for drinking water, and surface water is used for irrigation, industrial uses, and hydropower (five large hydropower dams have been constructed on the Drini and Mat Rivers, both major rivers). Irrigation is currently the largest user ofsurface water. While Albania has not yet experienced serious
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