Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: PAD2093
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT PAPER
ON A
Public Disclosure Authorized PROPOSED ADDITIONAL CREDIT AND RESTRUCTURING
IN THE AMOUNT OF SDR 18.3 MILLION (US$25 MILLION EQUIVALENT)
TO THE
LAO PEOPLE’S DEMOCRATIC REPUBLIC
FOR A
Public Disclosure Authorized MEKONG INTEGRATED WATER RESOURCES MANAGEMENT PROJECT PHASE 1
June 14, 2017
WATER GLOBAL PRACTICE EAST ASIA AND PACIFIC REGION
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Public Disclosure Authorized authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2017)
Currency Unit = US$ SDR0.72938 = US$1 US$1.37102 = SDR 1 Lao PDR KIP 8,255 = US$1
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AF Additional Financing CRPF Compensation and Resettlement Planning Framework DMH Department of Meteorology and Hydrology DOF Department of Fisheries DOI Department of Irrigation DWR Department of Water Resources EGPF Ethnic Groups Planning Framework ERR Economic Rate of Return ESMF Environmental and Social Management Framework FCZ Fisheries Conservation Zone FMCs Fisheries Management Committees FMP Fisheries Management Plan GDP Gross Domestic Product GNI Gross National Income GRS Grievance Redress Service HA Hectare ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IP Implementation Progress ISDS Integrated Safeguards Data Sheet ISO International Organization for Standardization IWRM Integrated Water Resources Management KDP Khammouane Development Project LAK Lao Kip
Lao PDR Lao People’s Democratic Republic LMB Lower Mekong Basin MAF Ministry of Agriculture and Forestry MDG Millennium Development Goal MEM Ministry of Energy and Mines M-IWRMP1 Mekong Integrated Water Resources Management Project Phase 1 MONRE Ministry of Natural Resource and Environment MRC Mekong River Commission MRCS Mekong River Commission Secretariat NA National Assembly NPV Net Present Value NREI National Resources and Environment Institute NRES Natural Resources and Environment Strategy NSEDP National Socio-Economic Development Plan O&M Operations and Maintenance PDO Project Development Objective RBCC River Basin Coordinating Committee RMF Results Monitoring Framework SDR Special Drawing Rights SOP Series of Projects US$ US Dollar WUA Water User Associations WB World Bank WBG World Bank Group XBF Xe Bang Fai River Basin XBH Xe Bang Hieng River Basin
Regional Vice President: Victoria Kwakwa Country Director: Ulrich Zachau Country Manager: Sally Burningham Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Sudipto Sarkar Task Team Leader: Greg Browder
LAO PEOPLE’S DEMOCRATIC REPUBLIC RESTRUCTURING AND ADDITIONAL FINANCING FOR MEKONG INTEGRATED WATER RESOURCES MANAGEMENT PROJECT PHASE 1
TABLE OF CONTENTS
Project Paper Data Sheet i Project Paper I. Introduction 1 II. Background and Rationale for Additional Financing 3 III. Proposed Changes 5 IV. Appraisal Summary 8
V. World Bank Grievance Redress 25
Annex 1: Results Monitoring Framework 26 Annex 2: Project Description 35 Annex 3: Economic Analysis 43 Annex 4: Revised Disbursement Categories 52 Annex 5: Project Map 53
ADDITIONAL FINANCING DATA SHEET Lao People's Democratic Republic Additional Financing for Mekong Integrated Water Resources Management (Lao PDR) (P159447) EAST ASIA AND PACIFIC GWA02
. Basic Information – Parent Parent Project ID: P104806 Original EA Category: B - Partial Assessment Current Closing Date: 31-Mar-2018 Basic Information – Additional Financing (AF) Additional Financing Project ID: P159447 Cost Overrun, Scale Up Type (from AUS): Regional Vice President: Victoria Kwakwa Proposed EA Category: B - Partial Assessment Expected Effectiveness Country Director: Ulrich Zachau 01-Sep-2017 Date: Senior Global Practice Guang Zhe Chen Expected Closing Date: 31-Mar-2021 Director: Practice Sudipto Sarkar Report No: PAD2093 Manager/Manager: Team Leader(s): Greg J. Browder Borrower Organization Name Contact Title Telephone Email Mekong River Commission Pham Tuan Phan CEO +856 21 263 263 [email protected] Deputy Director Lao PDR Ministry of Mr. Angkhansada General, External +856-20- [email protected] Finance Mouangkham Finance 55694219 m Department Ministry of Natural Mr. Virana Deputy Director +856-20- virana.sonnasinh@gmail. Resources and Sonnasinh Department of 55407582 com Environment Planning and Cooperation Project Financing Data - Parent (Mekong Integrated Water Resources Management-P104806) (in US$ Million) Key Dates Approval Effectiveness Original Revised Closing Project Ln/Cr/TF Status Signing Date Date Date Closing Date Date P104806 IDA-H6750 Effective 08-Mar-2012 19-Apr-2012 17-Aug-2012 31-Mar-2018 31-Mar-2018 P104806 IDA-H7620 Effective 08-Mar-2012 04-Apr-2012 17-Aug-2012 31-Mar-2018 31-Mar-2018
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P104806 TF-93258 Closed 09-Feb-2009 05-Mar-2009 05-Mar-2009 11-Dec-2011 11-Jun-2013 P104806 TF-94553 Closed 03-Aug-2009 02-Sep-2009 02-Sep-2009 31-Dec-2011 31-Dec-2011 P104806 TF-98965 Closed 17-Feb-2011 21-Apr-2011 21-Apr-2011 31-Mar-2012 31-Mar-2012 Disbursements Cancelle Disburse Undisbu % Project Ln/Cr/TF Status Currency Original Revised d d rsed Disbursed P104806 IDA-H6750 Effective US$ 18.00 18.00 0.00 15.48 1.40 85.99 P104806 IDA-H7620 Effective US$ 8.00 8.00 0.00 3.94 3.43 49.21 P104806 TF-93258 Closed US$ 0.92 0.87 0.05 0.87 0.00 100.00 P104806 TF-94553 Closed US$ 0.09 0.09 0.00 0.09 0.00 100.00 P104806 TF-98965 Closed US$ 0.12 0.12 0.00 0.12 0.00 100.00 Project Financing Data - Additional Financing Additional Financing for Mekong Integrated Water Resources Management (Lao PDR) (P159447) (in US$ Million) [ ] Loan [ ] Grant [ ] IDA Grant [X] Credit [ ] Guarantee [ ] Other Total Project Cost: 26.0 Total Bank Financing: 25.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount BORROWER/RECIPIENT 0.50 International Development Association (IDA) 25.00 LOCAL BENEFICIARIES 0.50 Total 26.00
Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Does the project require any policy waiver(s)? No
Team Composition
Bank Staff Name Role Title Unit Greg J. Browder Team Leader (ADM Lead Water Resource Management GWA02 Responsible) Specialist Khamphet Procurement Specialist (ADM Procurement Specialist GGO08 Chanvongnaraz Responsible) Siriphone Vanitsaveth Financial Management Financial Management Analyst GGO20 Specialist Daryl Fields Team Member Sr Water Resources Mgmt. Spec. GWA02
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Eileen Rose Burke Team Member Sr Water Resources Mgmt. Spec. GWA02 Juan Martinez Safeguards Specialist Sr Social Scientist GSU02 Peter William Safeguards Specialist Environmental Specialist GEN2B Crawford Thongkham Team Member Program Assistant EACLF Chanthavong Viengsompasong Team Member Water & Sanitation Spec. GWA02 Inthavong Extended Team Name Title Location Vansa Chatikavanij Water Resources Specialist Thailand Ashley Halls Fisheries Specialist United Kingdom Nigel Hayball Water Resources Specialist Australia Chusit Apirumanekul Water Resources Specialist Thailand Locations Country First Administrative Location Planned Actual Comments Division Lao People's Savannahkhet Khoueng X Democratic Savannakhet Republic Lao People's Khammouane Khoueng X Democratic Khammouane Republic Lao People's Champasak Khoueng Champasak X Democratic Republic Lao People's Attapu Khoueng Attapu X Democratic Republic Lao People's Viangchan Kampheng Nakhon X Democratic Viangchan Republic Institutional Data Parent ( Mekong Integrated Water Resources Management-P104806 ) Practice Area (Lead) Water Contributing Practice Areas N/A
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Additional Financing Additional Financing for Mekong Integrated Water Resources Management (Lao PDR) (P159447) Practice Area (Lead) Water Contributing Practice Areas N/A Consultants (Will be disclosed in the Monthly Operational Summary) Consultants Required? Consultants will be required
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I. Introduction
1. This Project Paper seeks the approval of the Executive Directors to provide an additional IDA Credit in the amount of SDR18.3 million (US$25 million) to the Lao People’s Democratic Republic (Lao PDR) for the Mekong Integrated Water Resources Management Project Phase 1 Project (P104806). Component 1 (Regional Water Resources Management) of the Project is implemented by the Mekong River Commission (MRC) under IDA Grant Agreement H7620, while Component 2 (National Water Resources Management) and Component 3 (River Basin and Aquatic Resources Management) are implemented by the Government of Lao PDR under IDA Grant Agreement H6750. The proposed Additional Financing (AF) would help finance costs associated with Components 2 and 3 of the Project, specifically i) for an expansion of scope of the existing Project; and ii) to cover funding shortfalls under the existing Project scope. The Additional Financing will allow the Lao PDR to improve water resource and fisheries management within its borders, through strengthened regulatory frameworks, institutional capacity, community participation and improved infrastructure. Concurrently, this Project Paper serves as a Project restructuring, for the purpose of revising the Project Development Objective (PDO), updating the overall Project Results Monitoring Framework (RMF), extending the closing date of the IDA Grant H6750, and a reallocation of the proceeds of the IDA Grant H7620 to MRC. IDA has received on May 30, 2017, a letter from MRC requesting the changes, as described in this paper.
2. Mekong Series of Projects: The Project was originally approved on February 8, 2012 and is currently scheduled to close on March 31, 2018. The Project is the first project in the Mekong Integrated Water Resources Management (IWRM) series of projects. The series also includes the Mekong IWRM Phase 2 Project in Vietnam (P124942) which was approved in December 2013, and the Mekong IWRM Phase 3 Project in Cambodia (P148647) which was approved in May 2016.
3. Country Context: The Lao PDR has a population of 6.5 million. With two thirds of its population living in rural areas, the Lao PDR is an agrarian economy with a low population density. Nevertheless, the country is urbanizing rapidly, with the urban population increasing by 40 percent between 2005 and 2015. The Lao economy has expanded strongly in recent years, largely based on its natural resources. Gross Domestic Product (GDP) growth averaged around eight percent a year since 2000 with Gross National Income (GNI) per capita reaching US$1,740 in 2015, making the Lao PDR a lower-middle income country. The country has met its Millennium Development Goal (MDG) of reducing extreme poverty to below 24 percent by 2015, and living conditions have improved significantly.
4. The prioritization of sustainable natural resources and green growth has been highlighted in the 10th Party Resolution (adopted by the Party Congress) and the 8th National Socio-Economic Development Plan (NSEDP) (2016-2020) which is an umbrella policy for the country’s development. The NSEDP promotes policies intended to put Lao PDR on a path to reduce poverty and promote shared prosperity in a sustainable manner based on green growth principles. The Project will directly support the following NSEDP outputs and their associated targets: i) environmental protection and sustainable natural resource management; ii) coping with disaster risk and climate change; iii) food security ensured and malnutrition reduced; and iv) regional cooperation and integration. The Project also will assist the Lao PDR advance with respect to the
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Sustainable Development Goal 6.4: increasing water use efficiency and reducing water stress and Goal 6.5: implementing integrated water resources management.
5. It has become apparent that while the development of natural resources will continue to be a key driver of economic growth without an improved system to sustainably manage the natural capital, the social and environmental costs will be irreparable and may soon outweigh the economic benefits of exploitation and impose irreversibility that reduce future opportunities. The yearly droughts and floods are also increasingly recognized by the Government as core challenges to the pressing priority to achieve higher levels of economic and social development, as is the threat of climate change.
6. Country Partnership Framework (CPF): The Lao CPF1 was developed to support the Government implement its policy priorities and it targets three focus areas for World Bank Group (WBG) engagement in Lao PDR, namely: i) supporting inclusive growth, ii) investing in people, and iii) protecting the environment. The work in all of these focus areas will be guided by a cross cutting theme of strengthening institutions to create a rules based environment. The Project helps protect the environment by improving water management and protecting aquatic habitats. The Project supports inclusive growth by promoting agricultural and fisheries development in rural areas. The Project also has a strong emphasis on strengthening water resource and environmental management institutions at the national and local levels. The Project is also in alignment with the WBG East-Asia and Pacific Strategy2 by addressing the themes of governance institutions, as well as climate change and disaster risk management. Through these activities the Project supports the World Bank Group’s twin goals of poverty reduction and boosting shared prosperity.
7. Sectoral Context: The Lao PDR is a land-linked country located almost entirely within the Mekong River Basin. The other countries with territory in the Basin are China, Myanmar, Thailand, Cambodia, and Vietnam. In 1995, the four lower Basin countries (Lao PDR, Thailand, Cambodia and Vietnam) established the Mekong River Commission, which helps to coordinate sustainable development in the Basin. The Lao PDR is a mountainous and water rich country with significant hydropower potential, for both domestic use and export to neighboring countries. In the central and southern part of the country, the Lao PDR has a number of fertile floodplains where the large tributaries from the mountainous zones meet the mainstream of the Mekong River. These floodplains have considerable potential for irrigated agriculture but are also subject to extensive flooding. The Lao PDR is attempting to develop its hydropower and agricultural potential in a sustainable manner that protects its rich fisheries, wetlands, and aquatic resources.
8. The current water management legal regime is founded on the 1996 Water Law, which was formulated before the advent of rapid hydropower development and the establishment of the Ministry of Natural Resources and Environment (MONRE) in 2011. Currently, each water-using sector—hydropower, agricultural, urban, etc.—manages water independently without an overall planning framework. The Government typically responds to floods and droughts on an ad-hoc basis and on an emergency manner instead of undertaking the necessary long-term measures. Preliminary river basin plans to create river basin committees have been attempted by MONRE, but without the supporting foundation this has proved difficult. The Lao PDR Government is now emphasizing
1 Report Number 110813-LA. 2See the following: http://www.worldbank.org/en/region/eap/overview#2 2
multi-sector water management based on a river basin management framework. The Ministry of Energy and Mines (MEM) has recently issued a “Policy on Sustainable Hydropower Development” which stresses the need to consider hydropower within a broader water resources management framework. The Lao PDR Government has recognized the need to update the legal and regulatory framework, and the National Assembly has approved an updated Water Law in May 2017.
II. Background and Rationale for Additional Financing
9. Project Performance: Progress to achieving the Project Development Objective (PDO) and Project Implementation Progress (IP) have been rated as moderately satisfactory over the last twelve months. The IP for Components 2 and 3, which are executed by the Lao PDR through the Ministry of Natural Resources and Environment and the Ministry of Agriculture and Forestry, have been rated as satisfactory over the last twelve months. The IP for Component 1, which is executed by the MRC, is rated as moderately satisfactory. The Project is in compliance with all loan covenants and there are no outstanding audit or reporting requirements. A mid-term review was completed in March 2016, which identified the need for additional financing in order to meet the Project’s development objectives, as well the opportunity to expand the Project scope to increase the development impact.
10. Project Financial Status: As of March 20, 2017 disbursement under the IDA Grant IDA- H6750 to the Lao PDR stood at US$15.48 million with an undisbursed balance of US$1.4 million. All sub-components under Components 2 and 3 have fully utilized their original allocation, with the exception of Component 3.2 (Fisheries Management). Disbursements under the IDA Grant IDA- H7620 to the MRC stood at US$3.94 million with an undisbursed balance of US$3.43 million
11. Rationale for Additional Financing: The AF will finance costs associated with Components 2 and 3 of the Project, specifically: i) for an expansion of scope of the existing Project; and ii) to cover funding shortfalls under the existing Project scope.
12. Funding Shortfall: The current Project budget gap of approximately US$6 million has been generated by a combination of factors. The Lao PDR tax regime changed during implementation and increased project costs; originally there was no tax on World Bank financed contracts, but this has been modified to include a five percent tax on works and 25 percent tax on services. The SDR has depreciated by approximately seven percent against the US dollar since Project approval. The costs of some large contracts, particularly those associated with works, were significantly higher than originally estimated due to rapid escalation of construction costs. Finally, anticipated donor funding for some activities, in particular water quality equipment, did not materialize.
13. Expansion of Scope to Support Lao PDR Water Resource Management: In 2011, the Lao PDR established the Ministry of Natural Resources and Environment (MONRE) – the first time natural resources management was consolidated under a single ministry. Components 2 and 3 of the Project focused on helping MONRE develop the preliminary building blocks for integrated water resources management, including support for a new water law; improving water quality, hydrological, and meteorological monitoring; and developing water resources modelling capacity. The AF will help MONRE expand these preliminary efforts and integrate them into a functional water resources management system that will meet the country’s urgent need to manage water in a
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sustainable manner that promotes green growth. It is expected that an amended Law on Water Resources will be passed in 2017, which will provide MONRE with the legal authority to take a more proactive and authoritative role in management of the nation’s water and related resources.
14. Integration of Hydropower into IWRM: Hydropower power planning and regulation is managed through the Ministry of Energy and Mines (MEM). The World Bank Group (WBG) is actively supporting sustainable hydropower in the Lao PDR, primarily through Hydro-Mining Technical Assistance Project and IFC’s Sustainable Hydropower Program3. There is growing recognition within the Lao PDR that hydropower needs to be more fully incorporated into a water resource management regime that also takes into account other users including agriculture, flood risk management, fisheries, and the environment. The Project presents an important opportunity to incorporate hydropower into a more comprehensive water resource management framework, including river basin management (Component 3.1.1) and water resources modelling (Component 3.3).
15. Strengthening capacity to cope with climate change and disaster risk management: With climate change, the Mekong region is forecasted to have increased temperatures and a more varied hydrology, making the need to monitor and understand changes in hydrology even more critical. USAID (2015) 4 estimated that the Lao PDR could face significant economic losses from lost production and damaged infrastructure in rural areas due to climate change impacts from floods and droughts. The AF provides the Government with the opportunity to increase its capacity to understand and plan for the increased water variability expected because of climate change, through water resource monitoring, modelling and analysis, and new planning processes.
16. Alignment with the Mekong Integrated Water Resources Management (IWRM) series of projects: The Mekong IWRM program was originally designed in 2012 to include three national projects in simultaneous implementation, with the MRC facilitating support for specific bilateral transboundary projects. Due to a variety of factors, the Vietnam IWRM project and the Cambodia IWRM project were both delayed and are now in the early stages of implementation. Extending the closing date of Lao PDR IWRM Project and providing additional financing will help restore the synchronicity of the regional program.
17. Decentralization of MRC Functions: The MRC is an international river basin commission established in 1995, whose member states include the Lao PDR, Thailand, Cambodia, and Vietnam. The MRC has recently completed a fundamental reorganization including downsizing, and decentralization of functions such as hydro-meteorological, water quality, and fisheries monitoring to the member countries. As such, the member states need to build up their overall technical capacity to take over these transferred responsibilities and the Mekong IWRM Series of Projects is helping Lao PDR, Cambodia, and Vietnam build up their capacity to do that. The AF will provide
3 The “Lao PDR Hydro-Mining Technical Assistance Project” (P109736) was approved in 2010 for an amount of US$10.54 million (US$8 million IDA grant and US$2.54 million Australian grant), and was provided with additional financing of US$17.8 million in 2014 (US$8.9 million IDA grant and US$8.9 million IDA credit). The IFC Sustainable Hydropower program started in 2012 and is primarily funded through Japanese (US$1million) and Australian (AUD 6 million) grants. Program activities have been concentrated in the Lao PDR, and recently expanded into Myanmar. 4 Talberth, John and Katie Reytar. “Climate Change in the Lower Mekong Basin: An Analysis of Economic Values at Risk.” USAID. 2015. 4
additional support to the Lao PDR to address significant capacity gaps as it takes up these new responsibilities.
III. Proposed Changes
18. Revised Project Development Objective: The current PDO is “to establish key examples of integrated water resource management practices in the Lower Mekong Basin at the regional, national, and sub-national levels, thus contributing to more sustainable river basin development in the lower Mekong.” The revised PDO is to “to improve water resource and fisheries management in selected areas of the Lower Mekong Basin.” The rationale for the change in the PDO is that the goal is to “improve” rather than “establish examples” of water management. The revised PDO also takes into account the important role of fisheries management in the Project.
19. Component 1 Regional Water Resources Management: This component is implemented by the MRC through an US$8 million IDA grant to: i) support the MRC in facilitating IWRM dialogue between the Lao PDR, Cambodia, Thailand, and Vietnam, and implementing pilot activities that address urgent IWRM transboundary issues; ii) support the MRC in assessing and establishing an approach for environmental impact risk and disaster risk assessment in the Lower Mekong Basin (LMB); iii) support the MRC in facilitating dialogue on and communication of IWRM principles to different stakeholders including inter alia: governments, private sector, civil society, and local communities; and iv) support the MRC in, inter alia: (a) implementing Component 3 of the Project and facilitating the implementation of Components 2 and 3 of the Project to maintain the coherence and consistency of activities in the LMB; and (b) the preparation of the second stage of the Program. No additional financing is requested for this component as adequate resources remain for planned activities. Since all three components of the Project share the same PDO and Project description, it will be necessary to amend the Financing Agreement with MRC to ensure consistency, and also to accommodate the updated Results Framework and a minor reallocation between disbursement categories under the IDA Grant H7620. The results monitoring indicators for this component have also been refined and are presented in Annex 1.
20. Changes to Components 2 and 3: The Financing Agreement with Lao PDR will be amended and re-stated with revised component description as per below. As mentioned above, the same revised component description will be incorporated in the Financing Agreement with MRC, through a proposed amendment. The closing date for the Project (namely the original IDA Grant and the Additional Credit to Lao PDR) will also be extended by three years to March 31, 2021. Annex 2 contains a more detailed description of the components, including progress to date for each component under the Project and future activities to be carried with the additional financing.
21. Component 2: National Water Resources Management: Strengthen the institutional and technical capacity for Integrated Water Resources Management through the following sub- components:
2.1 Water Law and Regulation: Improving the legal and regulatory regime on water resources, through, inter alia, revisions of existing legislation on water resources and development of priority implementing regulations for water resources management.
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2.2 Water Quality and Aquatic Eco-System Monitoring: Improving water quality management through, inter alia, the establishment of a national water quality laboratory, undertaking water quality and eco-system health monitoring, and the dissemination of water quality information to improve water resources management.
2.3 Water Resources Analytics: Improving analytical capacity for water resources management, through, inter alia: (a) developing computer modelling systems and undertaking water resources assessment studies in priority river basins; (b) developing GIS-based computer decision support systems in priority river basins to support water resources planning and management activities; (c) establishing a national water resources information system; and (d) the construction of a national water information center.
2.4 Hydrological and Meteorological Services: Improving the collection, analysis, and dissemination of hydrological and meteorological information, through, inter alia: (a) the construction of hydro-met observation stations; (b) the construction of an early warning center and provincial office buildings; and (c) facilitating information dissemination for improved water resources management.
2.5 Project Management Support: Support MONRE in the monitoring, administration, and oversight of Parts 2 and 3 of the Project.
22. Component 3: River Basin and Aquatic Resources Management: Improving the management of key river basins, providing sustainable irrigation and floodplain infrastructure, and improving aquatic resources management through the following subcomponents:
3.1.1 River Basin Management: Supporting river basin management, through, inter alia: (i) preparing river basin management plans, including integrated flood plain plans in priority river basins; (ii) implementing priority management actions and undertaking pilot projects under the river basin management plans; and (iii) improving the capacity of MONRE water resources management agencies.
3.1.2 Sustainable Irrigation and Flood Management: Supporting sustainable irrigation and flood management, through, inter alia: (i) Upgrading existing irrigation schemes and flood gates in the Recipient’s Xebangfai and Xebanghiang river basins; (ii) providing technical assistance to water user associations; supporting the adoption of system of rice intensification practices; and (iii) improving the capacity of the Ministry of Agriculture and Forestry (MAF) irrigation agencies.
3.2 Fisheries Management: Improving the management of critical habitats for aquatic resources in the Recipient’s provinces of Champasak, Sekong and Attapu through, inter alia: (a) establishing community-based fisheries management organizations; (b) developing and implementing local fishery management plans; (c) supporting alternative livelihood activities for reduced reliance on capture fisheries; (d) constructing small-scale village level infrastructure; and (e) improving the capacity of MAF’s fishery agencies.
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23. Summary of Parent and Additional Allocations: A summary of the allocations under the Project and the AF for each sub-component are presented in the table below.
Component 2 and 3 Costs (US$) Additional Component Name Parent Project Total Amount Financing Activities Executed by Mekong River Commission Component 1: Regional Water Resources Management 1. Regional Water Resources 8,000,000 0 8,000,000 Management Activities executed by Lao PDR Component 2: National Water Resources Management 2.1 Water Law and Regulation 626,000 300,000 926,000 2.2 Water Quality and Eco-system 1,239,000 2,500,000 3,739,000 Monitoring 2.3 Water Resources Analytics 592,000 4,000,000 4,592,000 2.4 Hydrological and Meteorological 1,870,000 3,300,000 5,170,000 Services 2.5 Project Management Support 1,393,000 900,000 2,293,000 Component 2 Sub-Total 5,720,000 11,000,000 16,720,000 Component 3: River Basin and Aquatic Resource Management 3.1.1 River Basin Management 2,079,000 7,000,000 9,079,000 3.1.2 Sustainable Irrigation and Flood 5,289,000 5,000,000 10,289,000 Management 3.2 Fisheries Management 4,912,000 2,000,000 6,912,000 Component 2 Sub-Total 12,280,000 14,000,000 26,280,000 Total – Component 2 and 3 18,000,000 25,000,000 43,000,000
24. Project Beneficiaries and Key Results: The Project focused on developing the building blocks for water resources management, promoting sustainable irrigation and flood control infrastructure, and introducing community fisheries management to the Lao PDR. The AF will further develop the building blocks for water resources and create an integrated national water resources management systems; support the further expansion of irrigation and flood control infrastructure; and allow for the completion of the community fishery management activities. Key results to-date and final targets are related to water resources management are presented below:
The draft amended Law on Water Resources is ready to submit to the National Assembly. Additional financing will help formulate and apply key implementing regulations based on the amended Law on Water Resources; A new water quality laboratory has been constructed but is not yet fully functional, and preliminary water quality monitoring has commenced. Additional financing will establish
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a state-of-the art national water quality laboratory and support a nation-wide water quality and aquatic eco-system monitoring program; Water resources modelling packages have been improved in four river basins. Additional financing will help develop comprehensive water resources modelling packages for ten priority river basins covering approximately three-quarters of the country, and undertake water resource assessment to determine water availability under different climatic conditions; Increase hydro-met coverage from 25 stations under the Project to 60 stations with additional financing; and Preliminary framework basin plans have been developed in two river basins. Additional financing will help develop comprehensive river basin management plans in four priority river basins accordance with the revised Law on Water Resources, and support the operation of River Basin Coordinating Committees.
25. These activities will result in a functional national level water resources management system under the auspices of MONRE that will allow the country to sustainably develop and manage its hydropower, irrigation, and water supply resources while protecting the environment and reducing flood and drought risks associated with climate change. Key results to-date and final targets are related to agricultural and fisheries development are presented below:
Increase the number of rehabilitated irrigation schemes from 40 under the Project to 59 schemes with additional financing, with an increase in area from 5,415 ha to 7,815 ha. The number of beneficiaries is expected to increase from 31,007 to 44,032 people. The Project will also pilot a new approach to rehabilitation that will allow for the diversification of crops beyond traditional rice cultivation; The areas with improved flood control infrastructure equipped with fish passage facilities will increase from 11,148 ha under the Project to 14,500 ha with additional financing, and the number beneficiaries will increase from 17,779 people to 32,511 people; and Fisheries management committees (FMCs) have been established in all 15 targeted areas in the south of the Lao PDR. Additional financing will allow for the completion of community fishery activities under the Project which benefit approximately 50,000 primarily rural and poor people in southern Laos, including some indigenous people.
26. Results Monitoring Framework: The proposed revised Results Monitoring Framework (RMF) is presented in Annex 1. The revision will a) more precisely define the original indicators for the overall Parent Project, b) reflect the expanded scope of Components 2 and 3 of the Project
IV. Appraisal Summary
Summary of Proposed Changes Component 1 of the Project is implemented by the Mekong River Commission (MRC) under IDA Grant Agreement H7620 (US$8 million), while Components 2 and 3 are implemented by the Government of Lao PDR under IDA Grant Agreement H6750 (US$18 million). The proposed
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Additional Financing of US$25 million would help finance the costs associated with cost overruns for Components 2 and 3 under the existing scope, as well as expand the scope of these components to increase the development impact. The Additional Financing would support the scale of national level activities under Component 2, including formulating regulations; expanding water quality, hydrological, and meteorological monitoring; and improving water resource modeling capacity. The Additional Financing for Component 3 would support improved river basin planning; finance the rehabilitation of an additional 19 small-scale irrigation systems and 5 flood gates in Khammouane and Savannakhet provinces; and provide additional resources for community fisheries management in the southern part of the Lao PDR. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ X ] No [ ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ X ] No [ ] Reallocation between Disbursement Categories Yes [ X ] No [ ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ X ] No [ ] Change in Financial Management Yes [ X ] No [ ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results PHHHDO Project’s Development Objectives Original PDO To establish key examples of integrated water resources management practices in the lower Mekong Basin at the regional, national and subnational levels, thus contributing to more sustainable river basin management in the lower Mekong.
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Change in Project's Development Objectives PHHCPDO Explanation: The rationale for the change in the PDO is that the goal is to “improve” rather than “establish examples” of water management. The revised PDO also takes into account the important role of fisheries management in the Project. Proposed New PDO - Additional Financing (AF) The Project Development Objective is to improve water resource and fisheries management in selected areas of the Lower Mekong Basin. Change in Results Framework PHHCRF Explanation: The PDO indicators have been revised to take into account the evolution of the Project since its approval in 2012; to reflect the expanded scope of the Project; and also to incorporate new World Bank core indicators. In its basic structure, the RMF did not change fundamentally, but rather was updated and refined. The following changes have been made in the Results Monitoring Framework which is presented in Annex 1.
PDO Indicator 1: Joint Action Plan for addressing a priority transboundary integrated water resources management issues in the Mekong Basin. The indicator was changed to focus on the preparation of the plan, as there is insufficient time or resources to actually implement the plan under Component 1. Rather the three national IWRM projects in the Lao PDR, Cambodia, and Vietnam will support the start-up phase of implementing the Actions Plans. The three core transboundary projects are presented in the RMF.
PDO Indicator 2: Number of water resource management instruments applied by MONRE in priority basins located in the Lao PDR. The number of instruments was increased from 2 to 8 based on the scale up of the Project under additional financing. The specific instruments are also identified in the RMF.
PDO Indicator 3: Number of new or upgraded DMH hydromet stations that produce information that is applied for water resources management. This was upgraded from an intermediate indicator and the focus placed on using the information for water resources management. The indicator was changed from number of basins to stations.
PDO Indicator 4: (Core) Area provided with irrigation and drainage services (ha). This is now a core indicator and the exact definition must be used. The target area has increased due to the expansion of scope.
PDO Indicator 5: Number of functional Fisheries Management Committees (FMC). This was upgraded from an intermediate indicator to reflect the importance of fisheries management in the PDO. In addition, the indicator was changed from villages to FMCs which are constituted based on the sub-district level (Khum Ban).
Component 1 Intermediate Indicators
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Intermediate Indicator 1: Number of Joint Issues Paper prepared and endorsed for identified priority transboundary IWRM issues in the Mekong Basin. The original indicator referred to a “proposal”, however it was deemed more appropriate to focus on agreement on issues for the three core transboundary projects.
Intermediate Indicator 2: Number of communication products produced and disseminated by the MRCS related to IWRM. The original indicator focused on workshops, however it was deemed more appropriate to focus on communication products to reflect the importance of promoting IWRM principles under Component 1.
Component 2 Intermediate Indicators
Intermediate Indicator 3: Submission of the revised Water Law to the National Assembly. This indicator remains unchanged.
Intermediate Indicator 4: Number of sites in priority river basins where NREI conducts water quality monitoring and information is applied for river basin management. This indicator was changed from basins to sites for more precision, and more emphasis was put on the application of the information.
Intermediate Indicator 5: Number of priority river basins where MONRE has applied water resource model packages. This indicator remains unchanged, and the target is still 10 river basins. The Project has insufficient resources to undertaking modelling in 10 basins, but with additional financing this is an achievable goal.
Component 3 Intermediate Indicators
Intermediate Indicator 6: Number of functioning River Basin Coordinating Committees (RBCC). This indicator remains unchanged, however the target has increased from two to three basins.
Intermediate Indicator 7: Number of regulations piloted at the basin level. This is a new indicator to reflect the importance of implementing regulations based on the amended Law of Water Resources under additional financing.
Intermediate Indicator 8: Area provided with improved flood protection (ha). This indicator was originally combined with target area for irrigation and drainage. However, since irrigation is a now a core indicator which is pre-defined, improved flood protection remains a separate indicator. The target has also been increased to reflect the additional financing.
Intermediate Indicator 9 (Core): Farmers reached with agricultural assets or services. This is a new corporate core indicator which is included in the revised RMF. The term farmers is used to encompass both farmers and fishers, as there is no separate indicator for fishers.
Intermediate Indicator 10: Number of functioning Irrigation Water User Associations. This is a new indicator emphasizing the importance of institutional development for sustainability of irrigation schemes.
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Intermediate Indicator 11 (Core): Number of people engaged in the formulation of Fisheries Management Plans (Citizen Engagement). This is a new corporate core indicator reflecting the importance of citizen engagement in IDA operations.
Intermediate Indicator 12: Number of villages receiving livelihood support under the Fisheries component. This indicator was originally combined with the formulation of Fishery Management Committees. However, it was deemed more appropriate it make it a standalone indicator as they are different activities.
Intermediate Indicator 13: Number of new or rehabilitated, functioning fishery hatcheries. This indicator remains unchanged, however the definition clarifies that the hatchery must be functional and producing fingerlings. Compliance Covenants - Additional Financing for Mekong Integrated Water Resources Management (Lao PDR) - P159447) Name Recurrent Due Date Frequency Institutional Arrangements (FA, Schedule 2, X CONTINUOUS Section I.A) Description of Covenant: For the purposes of ensuring the efficient and effective carrying out Parts 2 and 3 of the Project, the Recipient shall maintain, at all times during the implementation of Parts 2 and 3 the Project, Project implementation structures within MONRE and MAF with functions and resources satisfactory to the Association, and with staff in adequate numbers and with qualifications, experience and terms of reference satisfactory to the Association. Name Recurrent Due Date Frequency Project Operational Manual (FA, Schedule 2, X CONTINUOUS Section I.B) Description of Covenant: The Recipient shall ensure that Parts 2 and 3 of the Project is carried out in accordance with the arrangements and procedures set out in the Project Operational Manual (“POM”) (provided, however, that in the event of any conflict between the arrangements and procedures set out in the POM and the provisions of this Agreement, the provisions of this Agreement shall prevail) and shall not amend, abrogate or waive any provision of the POM unless the Association has provided its prior no-objection thereof in writing. Name Recurrent Due Date Frequency Annual Work Plans and Budgets (FA, X Yearly-October Schedule 2, Section I.C) 31 Description of Covenant: The Recipient shall ensure that the Association is furnished, not later than October 31 of each fiscal year of the Recipient during the implementation of Parts 2 and 3 of the Project (or such later date as the Association may agree) for the Association’s no-objection, a consolidated Annual Work Plan and Budget (“AWPB”) containing all Project activities and
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Eligible Expenditures proposed to be included in Parts 2 and 3 of the Project in the Recipient’s following fiscal year, including the Association’s and the Recipient’s respective shares in the cost of the AWPB. Name Recurrent Due Date Frequency
Environmental and Social Safeguards (FA, X CONTINUOUS Schedule 2, Section I.E) Description of Covenant: The Recipient shall ensure that Parts 2 and 3 of the Project is carried out in accordance with the Environmental and Social Management Framework, the Ethnic Group Planning Framework and the Compensation and Resettlement Policy Framework. Name Recurrent Due Date Frequency
Mid-term Review (FA, Schedule 2, Section 31-December II.A.2) 2019 Description of Covenant: The Recipient shall carry out jointly with the Association a midterm review to assess the status of the Project, as measured against the performance indicators. Name Recurrent Due Date Frequency
Cooperation with MRC (FA, Schedule 2, X CONTINUOUS Section V.1) Description of Covenant: The Recipient shall fully cooperate on a timely basis with the MRC in its role in coordinating and facilitating the implementation of the Project to maintain the coherence and consistency of the activities under the Project. Name Recurrent Due Date Frequency
Processing of Dams (FA, Schedule 2, Section X CONTINUOUS V.2) Description of Covenant: Eligible Expenditures shall not, under any circumstances, include any expenditure related to the Processing of a Dam in the mainstream Mekong. Risk PHHHRISKS Risk Category Rating (H, S, M, L) 1. Political and Governance Moderate 2. Macroeconomic Moderate 3. Sector Strategies and Policies Substantial 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Substantial Sustainability 6. Fiduciary Substantial 7. Environment and Social Moderate
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8. Stakeholders Substantial 9. Other OVERALL Substantial Finance Loan Closing Date - Additional Financing (Additional Financing for Mekong Integrated Water Resources Management (Lao PDR) - P159447) Source of Funds Proposed Additional Financing Loan Closing Date International Development 31-Mar-2021 Association (IDA) Loan Closing Date(s) - Parent (Mekong Integrated Water Resources PHHCLCD Management - P104806) Explanation: There will be an amended and restated Financing Agreement with the Lao PDR for Components 2 and 3. In order to provide flexibility in the use of funds both the existing Lao PDR Grant (IDA- H6750) and the additional financing IDA Credit will have the same closing date as the Project, March 31 2021. Status Original Current Proposed Closing Previous Closing Ln/Cr/TF Closing Closing Date Date(s) Date Date IDA- 31-Mar- 31-Mar- Effective 31-Mar-2021 31-Mar-2018 H6750 2018 2018 IDA- 31-Mar- 31-Mar- Effective 31-Mar-2018 31-Mar-2018 H7620 2018 2018 11-Dec- 11-Jun- 11-Dec-2012, 11-Jun- TF-93258 Closed 2011 2013 2013, 23-Dec-2013 31-Dec- 31-Dec- 31-Dec-2011, 15-Jun- TF-94553 Closed 2011 2011 2012 31-Mar- 31-Mar- 31-Mar-2012, 24-Aug- TF-98965 Closed 2012 2012 2012
Change in Disbursement Arrangements Explanation: The current Financing Agreement (IDA-H6750) has three disbursement categories: Category 1 for Component 2; Category 2 for Component 3, and Category 3 for sub-grants under Component 3.2 (Fisheries Management). For Category 3, it was deemed more feasible to have the Project directly procure and supply items needed to support the alternative livelihoods initiative, including items such as seeds, small equipment, and construction materials. To-date there have been no
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disbursements under Category 3. Under the amended and restated Financing Agreement, Categories 1 and 2 will be maintained to ensure consistency in financial reporting. The amount under Category 3 will be reduced to zero, and the original amount of SDR144,000 will be transferred to Category 2.
Since Component 2 contains MONRE executed activities, and Component 3 contains both MONRE and MAF executed activities, implementation experience has shown that it would be more efficient to merge under one Disbursement Category. This arrangement facilitates the internal reallocation of funds between MONRE implemented subcomponents if necessary. Therefore, the amended and restated Financing Agreement will also include a new Category 4 which covers both Component 2 and Component 3, and will include the full additional financing amount of US$25 million, SDR equivalent.
There will be no changes in the disbursement categories for the IDA grant H7620 (Component 1). Change in Disbursement Estimates (including all sources of Financing) Explanation: The disbursement estimates include actual disbursements to the Project from 2012 to 2017, and for both the MRC grant (IDA-H7620) and the Lao PDR grant (IDA-H6750). The additional financing is expected to become available in late 2017, and the disbursement forecast for the total Project is extended to the closing date of March 31, 2021. There is a projected disbursement lag in FY18 while the Project undertakes the necessary procurement activities for the additional financing. Expected Disbursements (in US$ Million) (including all Sources of Financing) Fiscal 2012 2013 2014 2015 2016 2017 2018 20 2020 2021 Year 19 Annual 0.00 2.50 1.00 4.50 5.00 7.00 4.00 8.0 8.00 11.00 0 Cumula 0.00 2.50 3.50 8.00 13.00 20.00 24.00 32. 40.00 51.00 tive 00 Allocations - Additional Financing (Additional Financing for Mekong
Integrated Water Resources Management (Lao PDR) - P159447) Disbursement %(Type Source Category of Allocation Currency Total) of Fund Expenditure Proposed Proposed Goods, works, consultants services, Training and IDA US$ Workshops, 25,000,000.00 100.00 and Incremental Operating Costs.
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Total: 25,000,000.00 Reallocation between Disbursement Categories PHHRBDC Explanation: Under IDA-H6750, as noted above, the amount under Category 3 will be reduced to zero, and original amount of SDR144,000 will be transferred to Category 2.
Under IDA-H7620 (MRC Component), there will be a reallocation between Category 1 and Category 2. The amount in Category 1, which covers works, goods, incremental costs, workshops, and training, will be increased and the amount in Category 2, which covers consulting services, will be deceased. The reallocation between the two categories is SDR1,312,000 (US$ 2,007,360 equivalent) and represents approximately 25 percent of the total credit amount. The reason for the change is that much of the originally envisioned consulting services in Category 2, has been done by national government agency staff and the MRC Secretariat staff, thus reducing consultant costs. In addition, the training and workshop costs, as well as the incremental operating costs to cover travel needs, have been higher than originally envisioned. Expenditure % Financing %% Source Original Revised Categories Original Revised Goods (G), Works (W), Consulting Services (CS), Training and Workshops (TW) Incremental Operating Costs (IOC) G, W, CS, TW IDA-H6750 XDR IOC under 3,760,000.00 3,760,000.00 100.00 100.00 Part 2 G W CS TW IOC Under IDA-H6750 Parts 7,896,000.00 8,040,000.00 100.00 100.00 3.1,3.2ai&ii 3.2b,c
Sub-grants IDA-H6750 Under Part 144,000.00 0.00 100.00 100.00 3.2aiii Designated IDA-H6750 0.00 0.00 0.00 0.00 Account Total: 11,800,000.00 11,800,000.00 GD, W, IOC, IDA-H7620 XDR 1,075,000.00 2,387,000.00 100.00 100.00 TW Part 1 CS Under IDA-H7620 3,700,000.00 2,388,000.00 100.00 100.00 Part 1 MGT Fee IDA-H7620 525,000.00 525,000.00 100.00 100.00 under Part 1 IDA-H7620 Designated 0.00 0.00 0.00 0.00
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Account Total: 5,300,000.00 5,300,000.00 Components Change to Components and Cost Explanation: The additional financing will be used to cover cost over-runs and increase the scope of Components 2 and 3. The details by sub-component are provided in Annex 2 of the Project Paper. The name of Component 3 was changed to indicate that the focus is on the river basin and not just the floodplain. Proposed Current Component Current Cost Proposed Component Action Name (US$M) Cost (US$M) Name Regional Water Regional Water Resources 8.00 8.00 No Change Resources Management Management National Water National Water Resources 6.01 16.72 Revised Resources Management Management River Basin Improved Floodplain and Aquatic and Aquatic Resources 12.58 26.28 Revised Resources Management Management Total: 26.59 51.00 Other Change(s) Implementing Agency Name Type Action Ministry of Natural Resources Implementing Agency No Change and Environment Change in Institutional Arrangements Explanation: Under the Project, the Department of Water Resources provided overall Project management, under the supervision of MONRE's Department of Planning and Department of Finance. However, moving forward, MONRE has decided to consolidate Project management functions for externally financed projects in the Department of Planning with support from the Department of Finance. Therefore, MONRE’s Department of Planning will be responsible for overall Project management of Components 2 and 3.1.1. The implementation of the respective subcomponents will be managed by the Department of Water Resources, the Natural Resources and Environment Institute (NREI), and the Department of Meteorology and Hydrology (DMH). The Ministry of Agriculture and Forestry (MAF) will be responsible for implementing Component 3.1.2 through the Department of Irrigation, and Component 3.2 through the Department of Livestock and Fisheries. These
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arrangements have been reflected in the revised Project Operations Manual. Change in Financial Management Explanation: Under the Project, the Department of Water Resources (DWR) of MONRE was responsible for the overall financial management of the Project. However, moving forward, the Department of Finance (DOF) under MONRE, will be responsible for the overall Project financial management and disbursement. The financial management team supporting the DWR will move to provide the same support to the DOF. The Bank has conducted a financial management assessment of the proposed modified arrangements and has found them to be satisfactory. The team of financial management consultants, currently working for the Project, will continue to work on the Project. The change is merely the location of work and department responsible from DWR to DOF; internal controls, procedures and systems will largely remain the same, with relevant approval authorization changes reflected in an updated Financial Management manual. Interim Financial Report (IFR) reporting formats will remain the same except for the frequency of reporting from quarterly to half yearly. Auditing arrangements will remain unchanged.
Change in Procurement
Explanation: Procurement for the Project will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011 and revised in July 2014; and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011 and revised in July 2014, and the provisions stipulated in the Legal Agreements. The World Bank’s on-line tool, Systematic Tracking of Exchanges in Procurement (STEP) for procurement exchanges including review of procurement plans and prior review contracts will be used. Harmonized National Competitive Bidding and Request for Quotations documents will be used where appropriate. The Procurement plan and all invitations to bid, bidding documents, bid opening records, award, will be posted on MONRE website.
The Department of Water Resources (DWR), the Natural Resources and Environment Institute (NREI), and the Department of Meteorology and Hydrology (DMH) in MONRE will take the lead on procurement of the sub-components under their responsibility. MONRE, through its Department of Planning and Cooperation (DPC), will work with these implementing departments and oversee all project-related procurement activities including carrying out the following tasks: i) review work plans and prepare a consolidated procurement plan, ii) prepare progress reports and (iii) provide overall coordination and technical support for procurement activities.
The World Bank carried out assessment of MONRE’s procurement capacity under the Project. Overall, MONRE has experience in carrying out procurement based on World Bank procurement guidelines, having implemented a number of World Bank-financed projects. MONRE has agreed to assign sufficient staff to work on procurement under the Project, and also contract a consultant to strengthen its capacity and provide training. A procurement plan for the Additional Financing
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has been prepared and has been agreed with MONRE. The overall procurement risk is considered substantial.
For Component 3 implemented by MAF, the Department of Irrigation and the Department of Livestock and Fisheries will undertake the procurement. The World Bank carried out assessment of MAFs’ procurement capacity under the Project. Overall, MAF has experience in carrying out procurement based on World Bank procurement guidelines, having implemented a number of World Bank-financed projects. MAF has agreed to assign sufficient staff to work on procurement under the Project, and also contract a consultant to strengthen its capacity and provide training. A procurement plan for the Additional Financing has been prepared and has been agreed with MAF. The overall procurement risk is considered substantial.
Change in Implementation Schedule Explanation: The Project closing date will be extended by three years to March 31, 2021 as the Project will need sufficient time to design, procure, and implement the proposed new activities. Appraisal Summary Economic and Financial Analysis PHHASEFA Explanation: Quantitative economic analysis has been undertaken for activities supported in sub-component 3.1.2 “Irrigation Management”, as the benefits from rehabilitation of 19 irrigation schemes can be quantified, and details are summarized in this section and in Annex 3. For the remaining elements of the AF, qualitative economic analysis is provided in Annex 3, in line with the World Bank’s 2014 Guidance Note “Investment Project Financing Economic Analysis.”
Rationale for public financing: The AF is supporting a variety of “technical and legal” activities to enable the Government to better manage its water resources. With strong economic growth in the Lao PDR since 2000, greater strain is being placed on the water resources of the country. The Lao PDR plans to more than triple its existing irrigation capacity by 2030, and installed hydropower production is planned to more than quadruple in the same time period. With new and planned development, and threats from natural disasters and climate change, the need to manage water use is becoming of increasing importance to maintaining sustainable growth of the country. The Additional Financing is helping the Government to clarify the rules of the game for water management, to bring different water users together to engage in planning processes, to better measure and monitor water users, and to help certain water users improve their water use efficiency. The long-documented failure of the free market to manage and regulate natural resources provides justification for use of public funding for the AF activities.
Irrigation investments under Component 3.1.2: There are approximately 4,000 small and medium- sized low-land irrigation schemes in the Lao PDR covering around 190,000 hectares (ha). Most of these schemes are located along rivers, and rely on pumps to lift water from the river into the irrigation area. In the late 1990s, the Lao PDR imported a large number of pumps to support these small-scale pump irrigation schemes, most of which are now not fully operational due to age and
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maintenance short-falls.
The Lao PDR Government has prioritized irrigation development in the agriculturally important Khammouane and Savannakhet provinces. During the period 2008-2016, the World Bank-financed Khammouane Development Project (KDP) rehabilitated 37 small pumping irrigation schemes in the Xe Bang Hieng (XBH) Basin covering 4,081 ha; the Mekong 1 Project has rehabilitated 44 pumping schemes covering 3,326 ha in the lower XBH Basin.
Under Mekong 1 AF, the Government has opted to continue the irrigation rehabilitation process in Khammouane province and has selected an additional of 19 pump irrigation schemes, covering a total of 2,400 ha. These schemes were selected to become pilots for agricultural diversification and commercialization in the future. The MAF has thus modified its strategy for rehabilitation to include not only the pump stations and main canals, but also secondary canals, to allow more flexibility for water control and to promote diversification beyond rice cultivation. The estimated Economic Rate of Return (ERR) is estimated at 35 percent, which is well above the acceptable discount rate. Sensitivity tests show a robust ERR even under an increased cost scenario and a reduced yield scenario. Each scheme will also receive technical assistance for the strengthening Water Users Associations. Technical Analysis PHHASTA Explanation: Under the Project there are six different components implemented by MONRE. The water law and river basin management components are implemented by the Department of Water Resources. The water quality and water resource analytics components are implemented by the Natural Resources and Environment Institute (NREI). The hydro-met component is implemented by the Department of Meteorology (DMH). Under the Project, each subcomponent has independently implemented its’ activities but there has only been limited integration. With additional financing these components will be expanded and the specialized MONRE entities will continue to implement their respective components. However, in order to ensure more coordination and integration across the sub-components and create a functional national level integrated water resources management system, a consulting firm will also be contracted to provide technical assistance that cuts across the different MONRE components.
Under Component 3.1.2 (Irrigation) the Department of Irrigation under MAF focused on partial rehabilitation of irrigation schemes, including renovating the pumping station headworks and lining the main canal. This level of upgrading however does not provide a high level of water control and is thus only suitable for flood based rice cultivation. Under the additional financing, a new approach will be taken which involves full rehabilitation of the scheme, including lining and gates throughout the scheme. This will allow for better water control, and the opportunity for farmers to diversify into other, higher value, crops that do not utilize flood irrigation.
Component 3.2 (Fisheries Management), due to a variety of factors, experienced a slow start-up and is lagging behind other components in terms of disbursement. The Department of Livestock and Fisheries (DLF), however has made the necessary adjustments and is now accelerating implementation and the component is currently rated as moderately satisfactory. Nevertheless, development and implementation of community fisheries management plans (FMP), as well as the
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establishment of fish hatcheries, is technically challenging and will be closely monitored and supported by the Bank team. Social Analysis PHHASSA Explanation: Component 2 of the Project focuses on technical assistance to build up the capacity of MONRE technical agencies. The social dimensions of the Project are primarily associated with Component 3 through the river basin component (3.1.1), the sustainable irrigation and flood control component (3.1.1), and the fisheries management component 3.2. The Project also has important gender and ethnic minority dimensions.
A Compensation and Resettlement Policy Framework (CRPF) was prepared for the Project in 2012, and has been slightly modified during the preparation phase for Additional Financing to reflect the revised Project scope and changes in the Lao PDR institutional framework. To-date there has been no land acquisition, either voluntary or involuntary, and additional financing activities are not expected to generate significant, if any, land acquisition requirements. The Environmental and Social Management Framework (ESMF) includes a negative list of activities, including: i) a prohibition on any activity requiring the relocation, and/or structural demolition of any houses or business; and iii) land acquisition that affects more 40 households.
An Ethnic Groups Planning Framework (EGPF) was prepared for the Project in 2012, and has been slightly modified during the preparation phase for additional financing to reflect the revised Project scope and changes in the Lao PDR institutional framework. The EGPF is being applied to all components that include ethnic minority beneficiaries as explained below. The Project is not expected to have any negative impacts on ethnic minorities.
During the course of Project implementation, it became apparent that it was necessary to have specific guidelines to help structure the implementation of small-scale rural infrastructure, alternative livelihoods, and fisheries management activities. Guidelines were necessary to help properly structure and document the community engagement process including with ethnic minorities, and also to have clear rules for which types of works were eligible, procurement processes, and reporting.
In 2016 the following documents were prepared by the Project and reviewed by the Bank: i) Rural Infrastructure Guidelines for the river basin planning component (Component 3.1.1); ii) Rural Infrastructure Guidelines for Fisheries Management (Component 3.2); and iii) Alternative Livelihoods Support Activities (Component 3.2). In addition, the Project has prepared a “Fisheries Co-Management Guidelines” which guide the preparation of fishery management plans. These Guidelines have been translated into the Lao language, and used as training and reference materials for Project implementers and beneficiaries; all of these guidelines are consistent with the requirements of the social and environmental safeguards instruments.
River Basin Component (3.1.1): This component focuses on participatory river basin planning and management and emphasizes stakeholder consultations combined with analysis to help make informed decisions about water resources management. Key stakeholders include national, provincial, and district level Government officials; key water users such as farmers and businesses;
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national and international non-Governmental organizations (NGO); the general public, including ethnic minorities and women. Extensive consultations have been held under the Project and this will continue. The component also finances small scale rural infrastructure works such rural water supply systems, flood refugee centers, etc. The selection of the works are done in a participatory manner following the Guidelines, and the works are done by the communities themselves with the Project supplying the materials.
Irrigation and Drainage Component (3.1.2): Forty irrigation schemes have been rehabilitated under the Project and another nineteen will be upgraded with the additional financing. These are small schemes with an average of around 150 ha. The schemes were selected based on demand from the communities, and the actual work is done primarily by the communities themselves with the Project supplying the materials and technical assistance. As part of the rehabilitation process, the Department of Irrigation works with the community to develop Water User Associations (WUAs) which are responsible for operation and maintenance of the system. The selection of WUA officers is done in a participatory manner.
Fisheries Component (3.2): This component focuses on establishing fisheries management committees (FMCs) which are responsible for preparing and enforcing, with assistance from the Department of Livestock and Fisheries, fisheries management plans (FMPs). The FMP are intended to help the communities manage their fisheries in a sustainable manner for the long term benefit of the community. The principles and procedures for a FMP conform with the World Bank’s safeguard principles related to resource access restriction. The objective of any potential access restrictions is to improve sustainable yield of local fisheries and thus benefits the entire community. Under the Fisheries component the Project also provides support for alternative livelihood activities in order to provide more diverse sources of income and rural infrastructure in order to improve the quality of life and economic opportunities.
Ethnic Minorities: Only one of the 40 irrigation schemes under the Project had ethnic minorities; in this one rehabilitation project, the Makong community (composed of 68 households) is the project beneficiary, participated in the Project design, and directly implemented the Project. The fisheries component is targeting 15 Kum Bans (KBs), which are clusters of villages. The number of villages in each KB ranges from 3 to 14, and village size typically ranges from 100-150 households per village. Seven of the KBs do not have ethnic minority groups; the other eight KBs have varying degrees of ethnic minorities with variations between villages within a KB. Activities under this component will follow the general procedures under the EMPF, and the Project will utilize the Guidelines to ensure that if there are ethnic minority groups there will be documented, free, prior and informed consultation with the aim of benefiting ethnic minorities under the Project. In the unlikely event there are any adverse impacts, an Ethnic Action Plan will be developed to avoid, minimize, mitigate, or compensate for any adverse effects.
Gender Issues: Under the irrigation component women are: (i) specifically consulted and their concerns addressed; (ii) provided training on new agriculture technology to improve their income and living standards, and (iii) given the opportunity to represent the community groups meetings, planning and implementation. The Lao Women’s Union has also taken part in providing support for the training of women in the target area. There is also a quota for women’s participation in Water User Associations (WUAs) which requires at least one woman in each association. Women
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also participated either as laborers or by providing food and drinking water during the actual rehabilitation and improvement of the irrigation canals. Hence, the Project yielded positive impact in terms of generating food security, asset ownership and well-being of rural farm households.
Under the fisheries component, activities have included women and ethnic groups in the all of the 15 Kum Ban (117 villages). Women are involved in the fisheries sector in the following ways: i) women do not fish from boats, but do fish in the swamps and along river banks using scoop nets; ii) women take a lead role in the marketing and processing of fish in all communities; and iii) women are involved in small-scale (backyard) aquaculture. Special attention has been paid to the active participation of women in consultation meetings and membership of the Fishery Management Committees (FMC), with approximately 15 percent female membership.
Citizen Engagement is a core element of the Project. Under the river basin management component (3.1.1), a wide variety of stakeholders at different levels will be engaged to inform the planning process, including political leaders, Government agencies, industry and agricultural groups, non- Governmental organizations, and the general public. In the irrigation component (3.1.2), village stakeholders are actively involved in the development and implementation of the rehabilitation projects. Finally, in the fisheries component (3.2), households and villages are actively involved in defining and implementing their fishery management plans, as well as selecting the priority rural infrastructure and alternative livelihood support under the component. Environmental Analysis Explanation: The Environmental screening category for the project is “Category B,” and this categorization remains unchanged with the Additional Financing. No additional safeguards are triggered. The Project’s overall safeguard implementation rating is considered moderately satisfactory as per latest Implementation Status and Results Report (ISR). The nature and general location of the works financed under additional financing remain unchanged under the Project. The key existing safeguard instruments: i) the Environmental and Social Management Framework (ESMF); ii) the Ethnic Groups Planning Framework (EGPF); and iii) the Compensation and Resettlement Planning Framework (CRPF) have been slightly revised to take into account the updated project design. Consultations on the Project’s additional financing and the revised safeguard documents were held in Vientiane (December 8, 2016) and in Khammouane Province (December 14, 2016). The updated safeguard documents were disclosed on the World Bank website on December 19, 2016, and were disclosed locally on the MONRE website in Lao and English languages on January 11, 2017. The Project Integrated Safeguards Data Sheet (ISDS) has been updated and disclosed on March 11, 2017, and the slightly revised safeguard documents were re-disclosed again on March 13, 2017 on the World Bank and MONRE websites. The Project is expected to have a positive impact on the Lao PDR’s environment and citizens. Under Component 2 and Component 3.1.1, sustainable management of water and related resources start with properly monitoring resources, employing analytical tools including modelling, and engaging in multi-stakeholder consultations to address competing objectives and improve planning and management. The Project laid a foundation for creating a modern functional water resources management system, and Additional Financing will provide further support for upgrading the Lao
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PDR’s technical capacity and institutional depth. The Project improves water quality and hydro- met monitoring, upgrades water resource models and undertakes water resource assessments in ten priority river basins, and develops river basin management plans in four of the priority basins. The irrigation and flood control component (3.1.2) and the fisheries management component (3.2) will also help promote environmental sustainability while improving the living standards of rural households. The rehabilitation of existing irrigation schemes will not increase consumptive water use, and are coupled with efforts to promote the “System of Rice Intensification” which aims at increasing the yields while reducing water use. The rehabilitation of flood gates includes a new and unique design which promotes the passage of fish between the rivers and the floodplains, thus minimizing the impacts of floodplain fragmentation while reducing flood risks. Fishery management plans will be developed and implemented in a participatory manner with local communities to help protect the long-term sustainability of fish stocks. Finally, the development of hatcheries will provide low cost fingerlings for aquaculture activities which will help relieve some of the pressure on capture fisheries and provide new sources of income for rural households. The experience to-date has demonstrated that the negative environmental impacts under the project have been minimal and easily manageable. An ESMF was prepared in 2012 and has guided the implementation of the Project; the ESMF was slightly modified during the preparation of the additional financing and will continue to guide safeguard implementation. There is a negative list of activities in the ESMF which prevents the Project from financing any activities with significant environmental and social impacts, and no Category A subprojects are allowed. All of the works constructed under the Project are relatively small and the environmental impacts managed either through a standard “Environmental Code of Practice” or a site specific Environmental Management Plan. The Project originally triggered OP7.50, Projects on International Waterways, and the upper riparian countries of China and Myanmar were notified on September 30, 2010 by the World Bank on behalf of the Lao PDR. The MRC approved the overall Mekong IWRM program, including the Phase 1 Project, in 2009. The Governments of China and Myanmar, and the MRC were notified of the proposed additional financing operation on December 15, 2016 by the World Bank on behalf of the Lao PDR. In the World Bank’s assessment, the proposed investments would not adversely affect the flow, quantity, and quality of the Mekong River’s waters. There have been no responses by the riparian countries to the notification letters, except for Myanmar which voiced its support for the Project in a letter dated February 6, 2017.
Risk Explanation: The overall risk for the Project will continue to be rated as Substantial, due to the four risk areas described below. “Stakeholder risk” is rated as substantial: due to the transboundary nature of the Project, there is a risk that events outside the Project could affect relationships of countries participating in the Series of Projects, thus affecting Project implementation. To mitigate this risk, the Project has been designed to provide mechanisms for technical dialogue between countries, and to establish new mechanisms for exchange. Further, the Project was designed in such a way that
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national level activities can be continued even if regional activities are not possible. The risk category of “institutional capacity for implementation” is also rated as substantial: given the large number of implementing partners for the project, there is a risk of slow implementation. However, given the good track-record of Project implementation to date and that a portion of the AF will fund capacity building, this risk is also partially mitigated. The risk category of “sector strategies and policies” is also rated as substantial, although the new Water Law was recently approved by the National Assembly in May 2017, formulation and implementation of supporting regulations will be a significant challenge. Finally, “fiduciary risk” is rated as substantial, due to the proposed changes in the implementation of procurement and FM. However, the World Bank plans to provide implementation support to the Project’s new FM and procurement teams in the transition period, to mitigate the risk to the Project.
27. Implementation Readiness: Components 2 and 3 of the Project had a relatively slow start- up phase, but there was an acceleration of disbursement as the Project management expertise expanded and the necessary planning and design work was undertaken. Disbursements in 2015 and 2016 averaged US$7 million per year. It is anticipated that with a solid foundation already in place, the Project can average over US$8 million of disbursements per year over the three-year extension period thus justifying an additional financing of US$25 million. The first year procurement plan, starting from late 2017, includes approximately 50 works contracts and 10 consulting firm contracts with a total combined cost of around US$15 million. Under the Additional Financing, Terns of Reference (TOR) for urgent consultancies have already been advanced, though a disbursement lag is expected in FY18 as the new activities are in early stages of implementation.
V. World Bank Grievance Redress
28. Communities and individuals who believe that they are adversely affected by a World Bank supported Project may submit complaints to existing Project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address Project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the WB's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
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Annex 1: Updated Results Monitoring Framework Indicator Status as of January 1, 2017
Project Additional Financing for Mekong Integrated Water Project Additional Financing Status: Approved Name: Resources Management (Lao PDR) (P159447) Stage: Team Requesting Greg J. Browder EACTF Created by: Greg J. Browder on 21-Aug-2016 Leader(s) Unit: Product Responsible IBRD/IDA GWA02 Modified by: Greg J. Browder on 30-May-2017 Line: Unit: Country: Lao PDR Approval FY: 2018 Financing Region: EAST ASIA AND PACIFIC Investment Project Financing Instrument: Parent Project Parent Project P104806 Mekong Integrated Water Resources Management (P104806) ID: Name:
. Project Development Objectives Original Project Development Objective - Parent: To establish key examples of integrated water resources management practices in the lower Mekong Basin at the regional, national and subnational levels, thus contributing to more sustainable river basin management in the lower Mekong. Proposed Project Development Objective - Additional Financing (AF): The Project Development Objective is to improve water resource and fisheries management in selected areas of the Lower Mekong Basin. Definition: Improved water resources management is achieved through enhanced planning (Indicators 1 and 2), more comprehensive monitoring (Indicator 3), and better infrastructure (Indicator 4). Improved fisheries management is achieved through functioning fishery management committees (Indicator 5). Results Core sector indicators are considered: Yes Results reporting level: Project Level
Project Development Objective Indicators
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Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate
1. Revised Joint Action Plan for Number Value 0.00 0.00 3.00 addressing a priority 01-May-2012 09-May-2017 31-Mar-2018 transboundary integrated water Date resources management issues Comment in the Mekong Basin. Definition The Joint Action Plans provide a guide for bilateral transboundary resource management. The three core transboundary projects are (a) Laos-Cambodia: Mekong Mainstream and Sekong Fisheries Management, (b) Cambodia-Vietnam: WRM in Sesan & Srepok Basins, and (c) Cambodia-Vietnam: WRM in Mekong Delta. Component 1 of the Project is linked to the three national IWRM projects which will help support the implementation the respective Joint Action Plans. The indicator refers to the formulation and approval of the Joint Action Plans by the respective countries. There is insufficient time and resources under Component 1 to actually implement the Joint Action Plans, and the actual implementation of the plans will be undertaken by the respective countries, with support from the national projects. Current Joint Issues Papers completed, and preparation of Action Plans underway.
2. Revised Number of water resource Number Value 0.00 2.00 8.00 management instruments 01-May-2012 04-May-2017 31-Mar-2021 applied by MONRE in priority Date basins located in the Lao PDR. Comment Definition A management instrument is defined as one of the following: i) River Basin Water Resources Assessment; ii) new or updated River Basin Plan; and iii) Groundwater and/or Wetland Management Plan in specific river basin. The instrument will be considered applied when it is approved by a River Basin Coordinating Committee (RBCC) and/or the Minister for MONRE. The target is to have at least five water resource assessment reports; two river basin plans; and one groundwater management plan by the end of the Project. The priority basins are identified in the Project Paper map. Current 2 Instruments under preparation: Framework basin plans have been prepared for XBH and XBF, and a River Basin Action Plan has been prepared for Nam Ngum basin. NSEDP Targets Outcome 3-Output 1: Environmental Protection and Sustainable Natural Resources Management
3. New Number of new or upgraded Number Value 0.00 20.00 50.00 DMH hydromet stations that 01-May-2012 09-May-2017 31-Mar-2021 produce information that is Date applied for water resources Comment
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management. Definition Hydromet stations include monitoring of hydrological parameters (water level and discharge) and meteorological parameters (rainfall, temperature, wind speed and etc). Near-real time hydromet information will be transferred to the central database at Department of Meteorology and Hydrology. The data must be published in an accessible manner and available to other agencies and the public. The Project is supporting 60 stations, but considering that there may be sitting difficulties and operational technical problems at some stations, the target is 50. Current Hydro-met equipment has been installed for 20 stations in Sedone and Sekong river basins and is fully operational with near-real time data transmission to the central database at DMH. Publication of data is in process. NSEDP Targets Outcome 3-Output 2: Prepare to Cope with Disaster Risk and Climate Change
4. Revised Area provided with Hectare(Ha) Value 0.00 5415.00 7815.00 new/improved irrigation or 01-May-2012 09-May-2017 31-Mar-2021 drainage services Date Comment Definition The Project area is the XBH and XBF basins. The goal is to rehabilitate 59 irrigation schemes covering 7,815 ha in total. Note that the irrigation areas and the improved flood management areas do not necessarily overlap but are located within the same basin. Improved irrigation services will be determined by increase in coverage and reliability of water supply. Current There are 40 rehabilitated irrigation schemes covering 5,415 ha. NSEDP Targets Outcome 2:Output 2-Food Security Ensured and Malnutrition Reduced
5. Revised Number of functional Fishery Number Value 0.00 0.00 10.00 Management Committees 01-May-2012 09-May-2017 31-Mar-2021 (FMC). Date Comment Definition Functioning FMC is defined as: (i) FMC officially recognized and registered as specified by Lao law; (ii) FMC fishery management plan approved by Department of Fishery and Livestock; (iii) boundaries of area under FMC responsibility physically demarcated; (iv) FMC budgeted and staffed according to plans; and (v) fishing regulations in FMC management plans are enforced. The Project will support 15 FMCs. Assuming a 2/3 success rate the goal is 10 fully functioning FMCs. Current 10 FMCs have been legally constituted, and development of fishery management plans are in progress. NSEDP Targets Outcome 2:Output 2-Food Security Ensured and Malnutrition Reduced
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Intermediate Results Indicators-Component 1 Corpor Status Indicator Name Unit of Measure Baseline Actual(Current) End Target ate
1. Revised Number of Joint Issues Paper Number Value 0.00 3.00 3.00 prepared and endorsed for 01-May-2012 09-May-2017 31-Mar-2018 identified priority Date transboundary IWRM issues in Comment the Mekong Basin. Definition Joint transboundary issues paper for each of the three transboundary projects that includes agreed-upon issues, information and data sharing needs, and coordination requirements. Endorsement is required by the respective National Mekong Committee working group. Current 3 Joint Issues Papers have been finalized and endorsed by the NMC working group and will published shortly.
2. Revised Number of communication Number Value 0.00 26.00 27.00 products produced and 01-May-2012 09-May-2017 31-Mar-2018 disseminated by the MRCS Date related to IWRM. Comment Definition Communication products include, but are not limited to: i) Publication of quarterly e- newsletter “Mekong Transboundary Dialogue” (10); ii) new communication platforms (MRC webpage, Facebook page, etc.) and new information materials (eg. brochures, leaflets, infographics, video clips, photo essays, etc.) (17). The end target is at least 27 products. Current 26 communication products prepared: Posters (2); Quarterly E-Newsletter (6); MRC Webpages (5); MRC 20th Anniversary Magazine Articles (2); On-Line News Channel (1); Facebook Page (1: 111 postings); Brochures (3); Videos (5); T-Shirts (1). Intermediate Results Indicators-Component 2
3. Revised Submission of the revised Number Value 0.00 1.00 1.00 Water Law to the National 01-May-2012 09-May-2017 31-Mar-2021 Assembly. Date Comment Definition The revised Water Law was first submitted to the National Assembly in 2013, and rejected. This indicator is for the second submittal to the National Assembly.
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Current Water Law submitted to and approved by NA in May 2017
4. Revised Number of sites in priority Number Value 0.00 0.00 15.00 river basins where NREI 01-May-2012 09-May-2017 31-Mar-2021 conducts water quality Date monitoring and information is Comment applied for river basin management. Definition Monitoring must include physical, chemical, and biological parameters and occur at least twice per year. The monitoring results must be published in an accessible manner and available to other agencies and the public. The NREI laboratory must be ISO accredited. The target is at least 15 sites in five river basins meeting these criteria. Current Current Value: Zero. Water quality monitoring are currently carried out four times per year at eleven sites spreading across three river basins: Xekong, Xechamphone wetland and Lower Nam Ngum. However, number of parameters limited as laboratory not fully functional yet, and information is not published.
5. Revised Number of priority river basins Number Value 0.00 0.00 7.00 where MONRE has applied 01-May-2012 09-May-2016 31-Mar-2021 water resource model Date packages. Comment Definition Water resource model package include: i) Rainfall-Runoff model; ii) Basin Simulation model and iii) Flood Hydraulic model. Model will be considered applied when it is used to support water resources assessment and/or basin planning activities. Project aims to develop ten basin modelling packages, but considering 2/3 success rate the target is set at seven basins. Current Current Value: Zero. NREI finished updating the rainfall-runoff (SWAT) and flood (ISIS) models in Xe Bang Fai, Xe Bang Hieng, Xedone and Xekong. HEC-RAS (flood) models were developed based on the existing ISIS models available in NREI for XBF, XBH, Xedone and Xekong. The basin simulation (IQQM) model is not updated yet due to license expiration. The modelling packages have not yet been applied to support WRM activities. Intermediate Results Indicators-Component 3
6. Revised Number of functioning River Number Value 0.00 0.00 3.00 Basin Coordinating 01-May-2012 09-May-2017 31-Mar-2021 Committees (RBCC). Date Comment Definition A functioning RBCC is defined as a Committee that: i) has a TOR approved/endorsed by Provincial Governments and/or MONRE; ii) has met at least 2 times; and iii) has made at least one formal written decision related to water
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resources management. Current Current Value 0: The Nam Ngum RBCC has been established by the provincial Government but does not meet the functionality criteria.
7. New Number of regulations piloted Number Value 0.00 0.00 2.00 at the basin level. Date 01-May-2012 30-May-2017 31-May-2021 Comment Definition Regulation refers to an implementing regulation promulgated under the revised Water Law. Implementation is defined as the application and monitoring of a specific regulation on a pilot basis in a basin. The target is at least two pilots. Current Current Value: 0. The implementing regulations have not been issued yet.
8. New Area provided with improved Hectare(Ha) Value 0.00 11148.00 14500.00 flood protection. Date 01-May-2012 30-May-2017 31-Mar-2021 Comment Definition The Project area is the XBH and XBF basins. The goal is to rehabilitate and 15 flood gates in total covering 14,500 ha. Note that the irrigation areas and the improved flood management areas do not necessarily overlap but are located within the same basin. Current Current Value: There are 10 flood gates with a total command area of 11,148 has
9. New Farmers reached with Number Value 0.00 48786.00 126500.00 agricultural assets or services Date 01-May-2012 30-May-2017 31-Mar-2021 Comment Definition This is a core indicator and the description cannot be edited. For this indicator, both fishers and farmers are taken into account. The total targeted beneficiaries is 126,543 people, of which 50,000 come from fishing communities and 76,543 come from farming communities. There is no double counting of beneficiaries as the farming and fishing communities are located in different areas.
The number of beneficiaries for the Fisheries component is based on the population served by a functioning Fishery Management Committee (FMC) with Fishery Management Plans (FMCs). The Project will support 15 FMCs. Assuming a 2/3 success rate there will be 10 fully functioning FMCs, each with 1000 households on average, there will be 10,000 households. Assuming each household has 5 people, the total estimated beneficiaries are around 50,000
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people.
The number of beneficiaries for the Irrigation and Drainage component is based on the number of people living within the irrigation or flood gate command areas. DOI estimates the total benefited population in the irrigation area to be 44,032 and the total benefited population in the flood gate command areas to be 32,511. The total target benefited population is thus 76,543.
Current Current Value: 48,786. There are 40 rehabilitated irrigation schemes covering 5,415 has and benefiting 31,007 people. There are 10 flood gates with a total command area of 11,148 has benefiting 17,779 people.
9A. New Farmers reached with Number Value 0.00 24000.00 63000.00 agricultural assets or services - Female Sub Type Supplemental
10. New Number of functioning Number Value 0.00 40.00 59.00 Irrigation Water User 01-May-2012 30-May-2017 Associations Date 31-Mar-2021 Comment Definition A WUA is considered functional when it meets the following criteria: i) there is an established governing committee; ii) fees are collected; and iii) the fees are used to support the operation and maintenance of the irrigation scheme. For each rehabilitated irrigation scheme there should be one WUA, thus the target value is 59 WUAs. Current Current Value: 40. There are currently 40 functioning WUAs.
11. New Number of people engaged in Number Value 0.00 110.00 165.00 the formulation of Fisheries 01-May-2012 30-May-2017 31-Mar-2021 Management Plans (Citizen Date Engagement) Comment Definition Fishery Management Committee members engaged in the formulation and supervision of Fishery Management Plans. There are 15 FMCs under the Project, and each FMC has on average 11 people. The final target is 165 people, of which at least 15% are women. Current Current Value: 110 citizens. Ten FMCs have created with a total of 110 members, of which 18 are women (16%). 12. New Number of villages receiving Number Value 0.00 54.00 100.00
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livelihood support under the Date 01-May-2012 30-May-2017 31-Mar-2021 Fisheries component. Comment Definition The target is to have 100 villages receiving livelihood support. The village must be located in the jurisdiction of the Fishery Management Committee. Current Current Value: 54 villages
13. Revised Number of new or Number Value 0.00 0.00 4.00 rehabilitated, functioning 01-May-2012 10-May-2017 31-Mar-2021 fishery hatcheries Date Comment Definition A fully functioning hatchery is defined as a hatchery operating at 30% or more of its maximum fingerling production capacity. The target of 30% is based on the recognition hatchery production will scale up as the demand grows over time. The target is 4 hatcheries Current Construction for the rehabilitation of three hatcheries is on-going. The final design and Environmental Management Plan (EMP) for the new hatchery in Attapu province is underway. Indicators from Original PAD Marked for Deletion
Marked for Number of Fisheries Number Value 0.00 30.00 50.00 Deletion Management Committees 01-May-2012 09-May-2017 31-Mar-2018 functional Date Comment Reason This indicator is subsumed under PDO Indicator 5 which is more comprehensive: Number of functional Fishery Management Committees (FMC).
Marked for Number of Fisheries Number Value 0.00 30.00 50.00 Deletion Management committee in the 01-May-2012 09-May-2017 31-Mar-2018 target area established Date Comment Reason This indicator is subsumed under PDO Indicator 5 which is more comprehensive: Number of functional Fishery Management Committees (FMC).
Marked for Number of Flood Gates Number Value 0.00 10.00 10.00 Deletion rehabilitated and modified in Date 01-May-2012 26-Oct-2016 31-Mar-2018
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XBF and XBH for Comment environmental benefits Reason This indicator is related to indicator Intermediate Indicator 8: Area provided with improved flood protection. A change from number of gates to area protected was considered a better indicator.
Marked for Number of tributaries where Number Value 0.00 6.00 8.00 Deletion new hydromet stations are 01-May-2012 26-Oct-2016 31-Mar-2018 properly installed, operated Date data used, and shared with Comment other LMB countries Reason This indicator is related to PDO Indicator Number 3: Number of new or upgraded DMH hydromet stations that produce information that is applied for water resources management. A changed was made from tributaries to stations, and the objective of sharing data with the other Lower Mekong Basin Countries dropped from this indicator. The MRC- member countries do have protocols for data and information sharing through the MRC operated monitoring stations, however there is no agreement currently in place that requires all hydro-met information is shared among the member countries.
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Annex 2: Summary Description of Additional Financing for the Mekong Integrated Water Resources Management Project Phase 1: Components 2 and 3 for Lao PDR
1. This Annex provides a detailed description of activities completed under the Project as of April 2017, as well additional activities to be completed with additional financing.
2. Component 2: National Water Resources Management: Strengthen the institutional and technical capacity for Integrated Water Resources Management through the following sub- components:
3. Component 2.1: Water Law and Regulation: This component supports the strengthening of the existing Water Law (1996) and implementing regulations to provide the legal mandates for sustainable development and protection of Lao’s water resources. The previous Water Law was considered not to provide a workable IWRM based legal framework to support sustainable development. Without revision and updating, and the establishment of a legal basis for IWRM, the risk existed that Lao’s water resources would in the future become over-exploited and degraded. MONRE, via DWR, commenced a revision of the Water Law in 2013, supported by the World Bank Group (WBG), the Australian Government and the Government of Japan. Component 2.1 has contributed support to this process. DWR’s Legal Division is overseeing the implementation of this component. The revised Water Law was passed by the National Assembly in 2017 and is expected to serve as the foundation to support long-term sustainable development and protection of Lao’s water resources.
4. Component 2.1 Progress as of May 2017: The main activities have been the updating, consultation and submission to the Government of Lao of the revised Water Law. This included preparation and implementation of a stakeholder consultation plan to support these activities, including the submission of the revised Water Law to the National Assembly (NA). Workshops were held with MONRE departments and other Ministries, including MEM and MAF, and at the regional level across the whole country. The revised Water Law was first submitted to the Ministry of Justice (MoJ) and the NA in 2015. The comments made by the MoJ and the NA was addressed over 2015-2016 and the revised Water Law re-submitted to the MoJ in December 2016. The Lao PDR National Assembly approved the Water Law in May 2017.
5. Component 2.1 Activities to End of Project: The main activities are to support the development of implementing regulations to support the recently approved revised Water Law. This includes stakeholder consultations, at the central and provincial Government levels, to support the drafting of regulations, and training workshops to raise awareness of the key provisions of the Water Law and supporting regulations. DWR’s Legal Division is to work with DWR’s River Basin Planning Division to identify small pilot initiatives to trial implementation of the regulations (funded by C3.1.1).
6. Component 2.2 Support for Water Quality and Aquatic Ecosystem Monitoring: This subcomponent helps to build and enhance the capacity of the Natural Resources and Environment Institute (NREI), under the auspices of the MONRE, on water quality analysis and river health 35
monitoring, including biological monitoring. This subcomponent supports the construction and equipping of a newly-established National Environmental Laboratory of NREI, strengthening technical capacities of NREI staff on water quality analysis, and covering incremental costs for an expanded water quality monitoring program.
7. Component 2.2 Progress to May 2017: The National Environmental Laboratory building is completely constructed. Water quality analysis equipment, however, have not yet been transferred to Laboratory. Furniture and some other equipment (Gas Chromatography - GC and Ion Chromatography -IC) have not been purchased yet. Site surveys were conducted in 3 river basins (Xekong, Xechamphone wetland and Lower Nam Ngum) to select suitable sites for water quality monitoring activities. Water quality monitoring is currently carried out 4 times per year at 11 sites spreading across 3 river basins.
8. Component 2.2 Activities to End of Project: Water quality monitoring activities will be expanded to 21 sites by 2020 within 7 river basins (Xekong, Xechamphone wetland, Lower Nam Ngum, Upper Nam Ngum, Xe Bang Fai, Xe Bang Hien and Nam Ngiep). Laboratory furniture and laboratory equipment will be purchased in 2018 and transferred to the National Environmental Laboratory. Biological monitoring activities will also be set up and implemented in the same river basins.
9. Component 2.3 Water Resources Analytics: This subcomponent helps to build and enhance the capacity of the NREI, under the auspices of the MONRE, to undertake water resources analysis by developing computer modelling systems and undertaking water resources assessment studies in around ten priority river basins; developing GIS-based computer decision support systems in around four priority basins to support water resources planning and management activities; establishing a National Water Resources Information System; and the construction of a National Water Information Center building.
10. Component 2.3 Progress to May 2017: NREI finished updating the rainfall-runoff (SWAT) and flood (ISIS) models in Xe Bang Fai, Xe Bang Hieng, Xedone and Xekong basins. HEC-RAS (flood) models were developed based on the existing ISIS models available in NREI for the Xe Bang Fai, Xe Bang Hieng, Xedone and Xekong basins. The basin simulation (IQQM) model is not updated yet due to license expiration. A series of trainings and workshops have been carried out at national and provincial levels to introduce concepts of modelling and GIS for relevant agencies and other stakeholders at provincial level.
11. Component 2.3 Activities to End of Project: The existing basin simulation model (IQQM) of NREI will be replaced by SOURCE basin simulation model. Development of integrated water resources modelling systems consisting of rainfall-runoff (SWAT/HEC-HMS), basin simulation (SOURCE/HEC-ResSim), and flood (HEC-RAS) models will be carried out in the Xe Bang Fai, Xe Bang Hieng, Xekong, and Xedong in 2017-18. This modelling effort will be expanded into the other 6 priority river basins of the Lao PDR. Utilizing the updated modelling tools, water resource assessment reports will be formulated for all 10 priority basins.
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12. Fully functional GIS-based Decision Support Systems (DSS), composed of integrated water resources modelling, database and user interfaces, will be developed for Nam Ngum, Nam Ngiep, Xe Bang Fai and Xe Bang Hieng basins to support river basin planning efforts under Component 3.1.1. A National Water Resources Information System will be developed and a National Water Resources Information Center will be constructed. The Project will procure a consulting firm to provide support to MONRE for both Component 2.3 and 3.1.1 in order to provide assistance in the application of enhanced analytical tool to water resources management. The cost of constructing the new Center building will also be shared between the two components.
13. Component 2.4 Hydrological and Meteorological Services: This subcomponent aims to improve hydrological and meteorological information collection and dissemination by constructing and upgrading hydrological-meteorological stations with near-real time data transmission system. Hydro-meteorological network upgrading takes place in the following river basins: Xedone, Xekong, Nam Ngum, Nam Ngiep, Nam Khan, Nam Soung and Nam Ou. The component also finances the construction of the National Early Warning Center at Department of Meteorology and Hydrology (DMH) as well as the development of a central database at DMH for dissemination purposes. Rehabilitation of provincial offices in the southern part of the Lao PDR is also financed under the component.
14. Component 2.4 Progress to May 2017: The construction of the National Early Warning Center at DMH and renovation of provincial offices in Savannakhet have been completed. Twenty hydro-met stations in the Xedone and Xekong basins are now fully operational, with the provision of near-real time data transmission to DMH headquarters. River cross-section surveys, discharge measurements and rating curves (discharge and river stage relation) for the monitoring stations have also been completed. Monsoon forums have been organized 2 times per year (pre and post monsoon) to raise public awareness olders on hydro-met information services of DMH.
15. Component 2.4 Activities to End of Project: An additional five stations in the Xedone and Xekong basins will be constructed, as well as an additional 35 stations in the following northern river basins: Nam Ngum, Nam Ngiep, Nam Khan, Nam Suong and Nam Ou. In total, 60 hydro-met stations will be upgraded by 2020 under the Project. Existing Mekong river mainstream hydro-met stations, referred to as HYCOS stations, will be repaired and upgraded to ensure full functionality and transmission of data to both the Mekong River Commission and DMH. Discharge measurements and river cross-section surveys will be carried out at hydrological stations to develop rating curves at the new stations. Finally, monsoon forums (pre and post monsoon season) and workshops will be organized at the provincial level to raise public awareness and knowledge on DMH information services.
16. Component 2.5 Project Management: Support MONRE in the monitoring, administration, and oversight of Parts 2 and 3 of the Project. This includes contracting of specialized consultants to assist MONRE with procurement, financial management, safeguards, and monitoring and evaluation functions. It covers related to travel to Project sites to support implementation and incremental costs associated with Project management such office supplies.
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17. Component 3.1.1 River Basin Management: This component is to help strengthen MONRE’s understanding and capacity of integrated water resources management. It includes a range of activities at different scales to support sustainable development, and protection of aquatic habitats and livelihoods that are dependent on healthy river systems. At the basin level, the focus is on the Xe Bang Fai (XBF) and Xe Bang Hieng (XBH) river basins and on piloting a range of planning tools: river basin profiles, a flood management plan, a wetland management plan, a groundwater management and action plan, as well as supporting the establishment of two River Basin Coordination Committees and village based water-related infrastructure. At the national level the main activities are to support the finalization of the National Guidelines on River Basin Management and the National Guidelines on Groundwater Management.
18. Component 3.1.1 Progress to May 2017: The construction of the Khammouane Provincial Office of Natural Resources and Environment (PONRE) office has been fully completed, including access road, drainage and car parks, furniture and equipment has been purchased, and the office is now operational. Renovations of the Savannakhet PONRE office and 9 District Offices of Natural Resources and Environment (DONRE) offices, and related furniture and office equipment purchases, have been completed. The following small community investments have been completed: Khammouane Province – two village level water supply systems, one demarcation of flood demonstration management area; Savannakhet Province – construction of a wetland information centre, demarcation of the RAMSAR Xe Champhone Wetland core zone, three village level water supply systems, and groundwater water supply wells in 4 districts.
19. The following draft planning documents have been prepared: XBF and XBH River Basin Profile Reports, XBF Flood Management and Action Plan, Xe Champhone Wetland Management Plan, and Savannakhet Groundwater Management and Action Plan. Draft Terms of References for the XBF and XBH River Basin Coordination Committees have been prepared. Stakeholder consultation has commenced for all draft planning documents, and for the draft National Guidelines on River Basin Planning and the Guidelines on Groundwater Management (planning and drilling). Collection of information for preparing the Savannakhet Groundwater Profile Report has commenced.
20. Component 3.1.1 Activities to End of Project: The component will support the preparation of Water Resources Assessment Reports for the following 10 priority river basins of Lao, co-funded by C2.3: Nam Tha, Nam Ou, Nam Xam, Nam Ngum, Nam Yiep, Nam Theun/Kading, XBF, XBH, Xedone and Xekong. The component will also support the preparation of Nam Yiep, XBH and XBH river basin plans, updating of the Nam Ngum River Basin Management and Action Plan 2016-2020, and the establishment of respective River Basin Coordinating Committees. Support will be provided to finalize the National Guidelines on River Basin Planning and Management and the National Guidelines on Groundwater Management.
21. The component will invest in sub-projects to trial the implementation of the regulations of the new Water Resources Law. These sub-projects are to be in line with actions under planning instruments being prepared under this component, including the Xe Bang Fai Flood Management
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and Action Plan, the Groundwater Management Plan of Savannakhet province, River Basin Plans of Xe Bang Hieng and Xe Done, and other river basins. Subprojects will include, but are not limited to, water conservancy for rural water services and livelihood improvement. MONRE has already identified a number of priority areas for possible investments, including Toumlam District of Saravan.
22. The component will finance the construction of the National Water Resources Information Center, co-funded by Component 2.3, to house MONRE-related units responsible for water resources management. Office renovations, including the purchase of furniture and office equipment, of PONRE and DONRE offices within the Nam Ngum and Nam Yiep river basins will be financed under the component.
23. Component 3.1.2: Sustainable Irrigation and Flood Management: The Component aims to improve and enhance existing water resources infrastructure in XBF and XBH river basins in order to improve local livelihoods through restoration, operation and maintenance of the original scope of the irrigation and flood protection infrastructure, and to yield environmental benefits such as reducing water usage, increasing return flows and facilitating fish migration onto the floodplain. The Sub-component comprises four major activities, including: (i) upgrading of floodgates; (ii) rehabilitation of village-based small irrigation schemes; (iii) provision of technical assistance including the establishment and training of farmer management groups (FMGs) for the upgraded floodgates and water users associations (WUAs) for the rehabilitated irrigation schemes, extension of agriculture techniques including the System for Rice Intensification (SRI), and promotion of Pest Management Plan (PMP); and (iv) support to sub-component management.
24. Component 3.1.2: Progress to May 2017: Ten floodgates were upgraded and 44 irrigation schemes were rehabilitated, benefiting 8,748 ha of flood protection area and 5,415 ha of irrigation command area respectively. Ten FMGs and 44 WUAs were established and trained for the upgraded floodgates and rehabilitated irrigation schemes. Various training and demonstration activities on agriculture techniques were organized, including demonstration of SRI with 45 households. Two Project offices in Khammouane and Savannakhet Provinces were constructed and renovated.
25. Component 3.1.2: Activities to End of Project: An additional 5 flood protection and drainage systems will be upgraded to benefit a total of 5,949 ha flood protection area, integrating options on updating of flood gates, protection of associated embankments and improvement of drainage channels, to promote multiple functions: flood protection, drainage management, agriculture production and environment services. An additional 19 village level irrigation schemes will be improved benefiting a total of 2,400 ha. dry season irrigation command area. Systematic approach will be adopted in irrigation improvement to ensure proper functioning of the overall system, with focus on improvement of headworks, main canals and prioritized field distribution systems and associated structures.
26. The component will continue to provide technical assistance including: (i) establishment and strengthening of 5 FMG for upgraded flood protection and drainage systems; (ii) establishment
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and strengthening of 19 WUAs for improved irrigation schemes; (iii) extension of agriculture techniques, especially scaling-up dissemination of System for Rice Intensification (SRI) at a total of 97 ha rice field area; and (iv) monitoring and study on the effectiveness of the installed fish passes, to better inform further investment and management. Dissemination of SRI will shift from current model of segmented small plots to a comparatively larger scale. One dissemination plot will be established in each of the 19 targeted irrigation schemes.
27. Component 3.2 Fisheries Management: The component provides support for improved management of aquatic resources in the Mainstream Mekong and the Xekong Rivers in southern Lao PDR. Improved management will be achieved by establishing effective community-based fisheries management in regionally significant habitats and by strengthening the capacity of stakeholders to co-manage resources through training activities and by the provision of equipment and infrastructure. Hatcheries will be renovated and built to supply fish for enhancing wild fisheries, and for small-scale aquaculture in the project area. Participating communities will also receive support for alternative livelihoods and rural infrastructure to reduce their reliance on capture fisheries, enhance their economic opportunities, and improve community welfare.
28. Component 3.2 Progress to May 2017: The component focuses on fisheries management at the “Kun Ban” (KB) level which is composed of a collection of villages, one level below a district. Thirteen, of the target of 15 KB management committees (FMCs) have been established, and their legal status formally registered. Management planning activities have begun with four FMCs including the identification of management measures such as fish conservation zones (FCZs) to conserve fish stocks. Alternative livelihood support has been delivered to priority households in six KBs, and more than 60 rural infrastructure projects, including renovation of school buildings, roads, bridges and villages offices have been funded in five of these KBs. All community planning and consultation activities for fisheries management, alternative livelihoods and rural infrastructure have included women and other vulnerable groups. Guidelines for establishing community-based fisheries management in Lao, and for supporting alternative livelihoods and rural infrastructure projects have been prepared aligned with WB safeguards. Capacity strengthening to support the co-management process has included training for DAFO and PAFO in these project guidelines and for fisheries surveys & monitoring methods; office renovation and equipment; and the procurement of motorcycles. Designs for the fish hatchery renovation and construction have been prepared.
29. Component 3.2 Activities to End of Project: The completion of the remaining key project activities under the component will be undertaken including: (i) completion and implementation of fisheries management plans in all 15 KBs; (ii) delivery of alternative livelihood support and rural infrastructure for a further 9 KBs; and (iii) the renovation/construction of four fish hatcheries to supply fingerings for wild stock enhancement and aquaculture in the project area. No new project activities are proposed, nor any extensions/expansions to existing activities. The following costs are to complete on-going tasks.
30. Project Contribution to the NSEDP: The following table summarized how the Project contributes to the NSEDP 2016-2020 outcomes and outputs:
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NSEDP Title Reference Outcome 3: Environmental Protection and Sustainable Natural Resources Management Output 1 Supporting Project Components: 2 (Natural Water Resources Management) and 3.1.1 (River Basin Management) Outcome 3: Prepare to Cope with Disaster Risk and Climate Change Output 2 Supporting Project Components: 2.4 (Hydro-Met), 3.1.1 (River Basin Management), and 3.1.2 (Irrigation and Drainage) Outcome 2: Food Security Ensured and Malnutrition Reduced Output 2 Supporting Project Components: 3.1.2 (Irrigation and Drainage); 3.2 (Fisheries) Outcome 1: Regional Cooperation and Integration Output 2 Supporting Project Components: 1 (Regional Water Resources Management)
31. Allocation of Costs Between Components Under Project and Additional Financing (US$): The table below shows the original allocation of costs by sub-components when the Project was approved in 2012. However, not all of the sub-components were able to complete their mid- term workplans as of March 2016 due to a shortage of funds which was estimated at US $6 million. The funding shortage was generated by a combination of factors. The Lao PDR tax regime changed during implementation and increased Project costs; originally there was no tax on World Bank financed contracts, but this has been modified to include a five percent tax on works and twenty- five percent tax on services. The SDR has depreciated by approximately seven percent against the US dollar since Project approval. The costs of some large contracts, particularly those associated with works, was significantly higher than originally estimated due to rapid escalation of construction. Finally, anticipated donor funding for some activities, in particular water quality equipment, did not materialize. The combination of these factors has resulted in an estimated financing gap of approximately US$6 million distributed as shown in the table below.
AF to Parent AF to Complete Total Component Name Project Expand Total AF Parent Project Allocation Scope Project Component 2: National Water Resources Management 2.1 Water Law and 626,000 0 300,000 300,000 926,000 Regulations 2.2 Water Quality and 1,239,000 800,000 1,700,000 2,500,000 3,739,000 Ecosystems 2.3 Water Resource 592,000 200,000 3,800,000 4,000,000 4,592,000 Analytics
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2.4 Meteorology and 1,870,000 1,300,000 2,000,000 3,300,000 5,170,000 Hydrology 2.5 Project Management 1,393,000 200,000 700,000 900,000 2,293,000 Component 1 Sub-Total 5,720,000 2,500,000 8,500,000 11,000,000 16,720,000 Component 3:River Basin and Aquatic Resource Management 3.1.1 River Basin 2,079,000 1,000,000 6,000,000 7,000,000 9,079,000 Management 3.1.2 Irrigation and 5,289,000 2,500,000 2,500,000 5,000,000 10,289,000 Drainage 3.2 Fishery Management 4,912,000 0 2,000,000 2,000,000 6,912,000 Component 2 Sub-Total 12,280,000 3,500,000 10,500,000 14,000,000 26,280,000 Total 18,000,000 6,000,000 19,000,000 25,000,000 43,000,000
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Annex 3: Economic Appraisal
1. Quantitative economic analysis has been undertaken for activities supported in sub- component 3.1.2 – Irrigation Management, as the benefits from rehabilitation of 19 irrigation schemes can be quantified. For the remaining elements of the additional financing, qualitative economic analysis is provided, in some cases through the provision of “with-Project” and “without- Project” scenarios, in line with the World Bank’s 2014 Guidance Note on “Investment Project Financing Economic Analysis.”
2. Rationale for Use of Public Funds: The rationale for use of public funds was provided in the main body of the Project paper, citing the well-established market failure related to the protection of natural resources. The World Bank is uniquely placed to provide assistance for the Project activities, given its experience in similar endeavors elsewhere in world, as well because of the value it brings in providing a regional approach. By facilitating water resource management beyond country borders in the Mekong region, returns on Project investments in the Mekong IWRM program are increased, as the countries have access to information on water availability and use outside their borders, as well as the opportunity to interact with their neighboring countries on pertinent water issues.
3. Sub-component 2.1- Water Law: The AF will be used to support the drafting and piloting of water resources regulations to comply with the new Water Law. The regulations are needed to delineate the policies and procedures that must be followed to uphold the new law. In the “without- Project” scenario, if no new regulations are put in place, confusion would result between existing regulations, which would no longer be legally valid, and the new law. If new water regulations based on the new law were to go unwritten, the specific procedures of collecting information on water use, for making water allocations, and for implementing and enforcing other aspects of the new Water Law could not be implemented. Without enactment of the new regulations, competing water demands would go unregulated and could eventually lead to water shortages, and water quality issues could not be dealt with. By creating regulations to plan, permit, monitor and regulate water use, the Government will have the framework needed to help ensure that water is used in a more optimal and sustainable manner.
4. Sub-component 2.2- Water Quality and Sub-Component 2.4- Hydro-meteorology: The AF is directed at building Government capacity to better monitor the quality and quantity of water in the country. In terms of water quality, the Project has already funded the construction of a new state of the art water quality laboratory, which is expected to receive international certification. The Additional Financing will provide equipment for the lab. In a without-Project scenario, the Government would lacks adequate lab facilities would be unable to enforce water quality regulations.
5. As for the AF investment in hydro-met equipment, improved hydro-meteorological information and weather forecasting are expected to help the Government and eventually its citizens better understand water availability and prepare for extreme weather events, limit their damage, and improve the basis for decision making for a range of water management and development. The need to monitor and understand changes in hydrology will be more critical with climate change For example, floods have profound consequences in Lao, and are expected to increase. One flood in
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2011 killed 34 people and affected 430,000 more. Two separate floods in 2013 contributed to over US$120 million in economic losses5. While the 25 new hydromet stations in Lao to be funded under the Additional Financing are not alone enough to prevent these types of losses, they are part of a greater effort to build capacity to better plan for and prepare for such disasters. The economic returns of such investments are typically robust. A recent survey of the benefit cost ratio of similar improvements to the hydromet networks in developing countries found that returns on such investments ranged from 2:1 to 5:16, providing economic justification for the investment.
6. Sub-Component 2.3 – Water Resource Modelling and 3.1.1 – River Basin Management: The AF will allow the Government to better understand various options for water management, through hydrological modelling, to work with water users to plan for projected changes in water availability, and to better understand the extent of potential flood events. The AF will allow water models to be developed in all ten priority river basins in the countries, with more in-depth modelling and decision support systems developed in four basins. These models will improve the Government’s ability to consider new requests for water licenses, to work with stakeholders to prepare river basin plans, to identify potential areas of future stress in the basin including climate change, and to identify new opportunities to better manage the basins. This planning activity will help the Government, citizens and private actors recognize and manage trade- offs in water use, helping to avoid future losses from flooding, droughts and competing water users.
7. Sub-Component 3.1.2- Irrigation: This analysis focus on the direct benefits generated from improvement of small scale pumping irrigation schemes. It presents the results from the World Bank funded Khammouane Development Project (KDP); analyzes the results from current financing of M-IWRMP 1; and estimates the results from the proposed AF of M-IWRMP 1.
8. Net Present Values (NPV) and Economic Rate of Return (ERR) are estimated for each case. Future revenues are estimated over a 20-year delivery period and are discounted by 12 percent. Both family and hired labor contribution are estimated at 50 person/day/ha.
9. Results from KDP
10. During 2008-2016, KDP rehabilitated 37 small pumping irrigation schemes in XBF River Basin, with a total investment of US$2,851,752, which improved a total of 4,081 ha irrigation command area (wet season). The average cost of irrigation infrastructure improvement was US$700 per ha. Major interventions include rehabilitation and replacement of pontoons, pumps, motors, pipes and irrigation canals. In addition, KDP also invested in capacity building of farmers and Water User Associations (WUAs) and in vehicles, consultancy, and buildings for WUAs.
11. Based on the Economic and Financial Analysis (EFA) included in the Implementation Completion and Results (ICR) report of KDP in September 2016, “with Project” paddy yield increased significantly in both the dry season and wet seasons. Gross benefits increased by LAK1.32 million per ha in the wet season and LAK1.67 million per ha in the dry season. Gross
5 Centre for Research on the Epidemiology of Disasters (CRED), EM-DAT Database. Country Profile for Lao. Accessed online on February 7, 2016. 6 World Meteorological Organization. Valuing Weather and Climate: Economic Assessment of Meteorological and Hydrological Services. 2015m 44
return to family labor reached around LAK100,000 per person per day in the dry season. The combined seasons ERR was estimated at 54 percent.
Analysis of current financing under M-IWRMP 1
12. During 2012-2016, Sub-component 3.1.2 of M-IWRMP 1 rehabilitated 44 small pumping irrigation schemes in XBF and XBH River Basins, which benefited a total of 5,415 ha irrigation command area (dry season), of which 3,326 ha are improved existing command area and 2,089 ha are restored command area. The major interventions are similar to what were implemented under KDP. In addition, forty-four WUAs were established and trained for the rehabilitated irrigation schemes. Forty farmers’ production groups were formulated. Various training and demonstration activities on agriculture techniques were organized, including demonstration of SRI at 45 households. Two Project offices in Khammouane and Savannakhet Provinces were constructed and renovated. Relevant office equipment and transportation tools were procured and Project staff and consultants were deployed. Total investment was US$4 million, of which US$3.4 million was for irrigation infrastructure improvement, and US$0.6 million was for institutional strengthening, agriculture extension and project management. The average cost of irrigation infrastructure improvement was US$629 per ha.
13. The DOI under the MAF, which was responsible for the implementation of the irrigation activities, conducted field surveys to 60 households in XBF and XBH River Basin in June 2016. The results showed that the majority of the improved irrigation areas are devoted to rice cultivation. The farm budget data of dry season paddy rice under “with” and “without” project conditions are quite similar to what were analyzed by the KDP ICR report, as the two projects adopted quite similar approaches and interventions within the same sub-basin during the same time period by the same Government Project team. The only difference between the approaches employed by the two Projects was that KDP targeted some pumping schemes in high land area, where irrigation is commonly practiced in both dry season and wet season for rice cultivation, resulting in yield increases in both seasons. The M-IWRMP1 mainly targeted pumping schemes located in the Mekong flood plains, where wet season irrigation is normally not practiced. In summary, benefits of M-IWRMP1 were mainly generated through yield increases of dry season rice, and reduction of electricity fees due to improved irrigation efficiency.
14. Yield increase of dry season rice was realized mainly through restoration of 2,089 ha of command area, where dry season cultivation was previous not possible; and also through improvement of the 3,326 ha existing command area, where average rice yield increased from 3.6 ton per ha to 4.5 ton per ha. At the improved pumping systems, the water withdrawal amount reduced by 20-30 percent; consequently, farmers’ electricity fees reduced by 25 percent. Strengthening of WUAs and agriculture extension contributed to the increase of yields and irrigation efficiency.
15. Based on the data and information collected from the M-IWRMP1 field surveys and validated by the data provided in the KDP ICR report, benefit from M-IWRMP1 current financing is estimated in Table 1. Gross profit increased by US$129 per ha per season, and gross return to family labor increased by US$2.6 per day. The average irrigation Operations and Maintenance (O&M) cost increased from US$30 per ha to US$40 per ha, and electricity fee reduced from US$75
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per ha to US$50 per ha. The ERR of M-IWRMP1 irrigation activities is estimated at 56 percent, which is similar to the KDP ICR results as well.
Table 1: Benefit of Dry Season Rice Cultivation under M-IWRMP1 Project (per ha) Items Unit Without Project With Project Gross Revenue Yield tons/ha 3.6 4.5 Price (Farmgate) US$/ton 308 308 Gross Revenue US$/ha 1,109 1,386 Cost Seeds US$/ha 18.5 33.3 Fertilizers US$/ha 120 170 Hired Labor US$/ha 308 308 Animal, Machines, Fuel, Oil US$/ha 125 125 Threshing US$/ha 78 97 Land tax US$/ha 4.3 4.3 Other costs (tools, pest control) US$/ha 33.4 97 Total Cost US$/ha 687.2 834.6 Gross Profit US$/ha 422 551 Return to Family Labor US$/day 8.4 11.0 Irrigation Cost O&M US$/ha 30 40 Electricity US$/ha 75 50 Net Profit US$/ha 317 461 Change in Net Profit US$/ha 145
Estimates for M-IWRMP1 AF
16. With additional financing, M-IWRMP1 proposes to continue to complete the current scope of irrigation improvement, and further upscale irrigation improvement in the XBF River Basin. A list of 19 village-based pumping irrigation schemes as shown in Table 2 have been identified for improvement during 2017-2020, covering a total of 2,400 ha dry season command area, mainly located in Nongbok, Xebangfai, Hinboun and Mahaxai Districts of Khammoune Province, with limited area in Xaybouly District of Savannakhet Province. Based on the experiences generated from KDP and current financing of M-IWRMP1, the planned investments cover the following three major areas: (i) improvement of the irrigation infrastructure system, including engineering survey and design; improvement of pump sets, irrigation canals and pipelines, as well as associated structures; and construction supervision; (ii) institutional and technical support to sustainable irrigation O&M and irrigated agriculture development, including establishment and strengthening of 19 Water Users’ Associations; and agriculture extension within the improved irrigation area, including dissemination of SRI at 97.35 ha paddy fields; and (iii) project management activities related to irrigation improvement.
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Table 2. Targeted Irrigation Schemes for AF
Command Area (ha) Number of Beneficiaries
No Irrigation Scheme District Before Project After Project HHS Population Female Wet Dry Wet Dry
Khammouane Province 1 Navangnoi Nongbok 160 125 160 130 78 428 222 2 Dongphakpheua 1 Nongbok 150 120 150 130 216 1,148 588 3 Navangthong Nongbok 150 140 150 150 120 570 317 4 Navangneua Nongbok 150 120 150 130 103 632 293 5 Saduneua Nongbok 150 100 150 120 146 730 350 6 Sadutai Nongbok 155 135 170 150 150 750 367 7 Phonsao-A Nongbok 160 140 160 150 92 591 279 8 Natai Nongbok 150 45 150 130 89 493 251 9 Yangkham Xebangfai 310 95 310 120 139 894 440 10 Hatkhamhieng 1 Xebangfai 220 100 220 130 95 485 245 11 Nong Hoi 1 Hinboun 120 65 120 100 139 739 368 12 Napho Hinboun 180 55 180 100 230 1,450 730 13 Donedou Hinboun 250 35 250 100 169 936 451 14 Mahaxaytai Mahaxai 200 80 200 120 108 542 274 Sub-total 2,505 1,355 2,520 1,760 1,874 10,388 5,175 Savannakhet Province
15 Kaengphosy 1 Xaybouly 250 50 250 150 108 522 263 16 Somsaat 1 Xaybouly 300 70 300 150 109 715 360 17 Nongheuathong 2 Xaybouly 170 50 170 120 81 501 251 18 Buakhai Xaybouly 150 70 150 120 141 584 290 19 Thakham Xaybouly 150 60 150 100 49 315 150 Sub-total 1,020 300 1,020 640 488 2,637 1,314 Total 3,525 1,655 3,540 2,400 2,362 13,025 6,489
17. The following benefits are expected from these activities:
(a) Incremental benefit from improvement of irrigation service and agriculture practices on existing irrigation area. Improvement of irrigation service and agricultural practices will increase agricultural productivity in both the wet season and dry seasons. For the 19 targeted irrigation schemes, existing irrigation area in the dry season is estimated at 1,655 ha, accounting for 69 percent of the total dry season command area.
(b) Incremental benefit from restoration of irrigation command area and application of good agricultural practices. Restoration of the irrigation area which has been lost due to deterioration of the infrastructure system, combined with application of good agriculture practices, will increase agricultural productivity in both wet dry seasons. For the 19 targeted irrigation schemes, the dry season irrigation area to be restored under the Project is estimated at 745 ha, counting for 31 percent of the total dry season command area.
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18. These interventions are expected to be implemented in XBF River Basin. Economic analysis for these activities was made based on the expected benefit of dry season rice cultivation under the following assumptions:
Dry season rice yield will increase from 3.6 ton per ha to 5.6 ton per ha. According to the results of M-IWRMP1 field surveys, current yield of dry season rice in the area targeted for the Additional Financing is 3.6 ton per ha. Based on the Agriculture Statistic Book published by the Ministry of Agriculture and Forestry of Lao PDR in 2016, average rice yield in Khammoune Province during 2013-2015 was 5.6 ton per ha. Considering the majority of the targeted area is located in Khammoune Province, it is expected that after Project implementation, average dry season rice yield in the area targeted for the Additional Financing will reach the current average level in Khammoune Province. Farm gate price of dry season rice remains as US$ 308 per ton. Irrigation O&M cost increases from US$30 per ha to US$40 per ha, due to increased irrigation infrastructure. Pumping electricity fee reduces from US$75 per ha to US$50 per ha, due to reduction in leakage and increase in water use efficiency, based on current experience. Fertilizer: As good agriculture practices (GAP) are expected to be introduced, chemical inputs will be reduced. However, the cost of fertilizer will increase from US$ 120 /ha/dry season to US$ 170/ha/dry season due to use of organic fertilizer. Pest control: Costs for pest control are included in the economic analysis as part of the category “other costs.”
19. Total investment is estimated at US$3.6 million; of which US$2.8 million is for irrigation infrastructure improvement, converting to about US$12,000 per ha; and US$0.8 million for other institutional, technical and management supporting interventions. The unit price for irrigation improvement is higher than KDP and the current financing, mainly considering the needs of agriculture commercialization and value-chain development, which require more reliable and flexible water service.
20. The farm budget cost inputs and returns to labor are summarized in Table 3. Gross profit is expected to increase by US$468 per ha per season, and gross return to family labor is expected to increase by US$9.4 per day. Both are higher than the estimated results from the current M-IWRM1 financing. The major reason for this difference is due to the increase of rice yield in the Project area, which is expected to reach the average level in Khammoune Province after Project implementation. Combining this information, the ERR of irrigation activities under M-IWRMP1 AF is estimated at 35 percent.
Table 3: Farm Budget of Dry Season Rice under M-IWRMP1 AF Items Unit Without Project With Project Gross Revenue Yield tons/ha 3.6 5.6 Price (Farmgate) US$/ton 308 308 Gross Revenue US$/ha 1,109 1,725
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Cost Seeds US$/ha 18.5 33.3 Fertilizers US$/ha 120 170 Hired Labor US$/ha 308 308 Animal, Machines, Fuel, Oil US$/ha 125 125 Threshing US$/ha 78 97 Land tax US$/ha 4.3 4.3 Other costs US$/ha 33.4 97 Total Cost US$/ha 687.2 834.6 Gross Profit US$/ha 422 890 Return to Family Labor US$/day 8.4 17.8 Irrigation Cost O&M US$/ha 30 40 Electricity US$/ha 75 50 Net Profit US$/ha 317 800 Change in Net Profit US$/ha 484
21. Sensitivity analysis was conducted to analyze the robustness of the results to variations in benefits and costs. The analysis was carried out for four scenarios: (1) costs increased by 20 percent; (2) benefits reduced by 20 percent; and (3) costs increased by 20 percent and benefits reduced by 20 percent; and (4) rice yield or price decrease by 16 percent The analysis shows that the Project remains economically viable across the range of scenarios, with the least favorable (scenario 4) having an internal rate of return of 17 percent (Table 4).
Table 4: Sensitivity Analysis Scenarios NPV (12%) NPV(10%) EIRR (%) Baseline 4,404,508 5,547,680 35 Scenario (1) increasing costs by 20% 3,833,010 4,955,605 29 Scenario (2) decreasing benefits by 2,952,109 3,846,069 28 20% Scenario (3) increasing costs by 20% 2,448,096 3,333,058 23 and decreasing benefits by 20% Scenario (4) decreasing rice yield or 960,385 1,512,559 17 price by 16%
22. With climate change, it is predicted (MRC, 2009) that more frequent extreme climate events may cause a loss of rice productivity in LMB in the range of 30-50 percent during a moderate flood year. However, the Project itself is proposed to enhance climate resilience of the agriculture system. While it is difficult to quantify the residual risks after Project implementation, the ERR calculation has introduced a 90 percent success rate for the incremental benefits. Further sensitivity analysis showed that when rice yield reduces by 16 percent or rice price declines by 16 percent, the ERR drops to 17 percent.
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23. The increased water use efficiency and reduced use of agro-chemicals would also induce indirect environmental regional benefits. However, in undertaking the economic analysis, only direct and quantifiable benefits are considered.
Conclusions
24. The previous KDP and the activity under current financing of M-IWRMP1 both showed promising results in improving small pumping irrigation schemes in the Mekong sub-basin through investment financing, deserving further up-scaling. The proposed Project is projected to have an economic internal rate of return of 35 percent. The EFA results of the AF proposal themselves also showed to be robust even under the most conservative scenarios. If costs increase by 20 percent and if benefits also decrease by 20 percent, the EIRR is expected to be 23 percent. It can therefore be concluded that the proposed irrigation activities are economically feasible.
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Table 5. ERR Analysis of Irrigation Investment
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Annex 4: Revised Disbursement Categories
1. Revised Disbursement Categories for IDA Grant H6750: The revised disbursement allocations for IDA Grant H6750 are presented below. The disbursement category for sub-grants under the Project has been removed and the amount of SDR 144,000 has been reallocated to Category 2. The disbursement allocations for both the Parent Project and Additional Financing through the IDA are presented below. Retroactive financing up to an amount of SDR 3,660,000 of the Additional Financing is authorized under Category 4 starting from March 1, 2017.
Amount of the Amount of the Percentage of Expenditures to Original Grant Additional Credit be Financed (inclusive of Allocated Allocated Taxes) Category (expressed in (expressed in SDR) SDR) (1) Goods, works, 3,760,000 100% consultants’ services, Training and Workshops, and Incremental Operating Costs, under Part 2 of Project
(2) Goods, works 8,040,000 100% consultants’ services, Training and Workshops, and Incremental Operating Costs, under Part 3 of Project
(3) Sub-grants under 0 Part 3.2 (a)(iii) of the Project (pro memoria)
(4) Goods, works, 18,300,000 100% consultants’ services, Training and Workshops, and Incremental Operating Costs, under the Parts 2 and 3 of the Project
TOTAL AMOUNT 11,800,000 18,300,000
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Annex 5: Project Map
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IBRD 42687 | JANUARY 2017 104º E This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any MEKONG RIVER BASIN other information shown on this map do not imply, on the part of Budget, Performance Review & Strategic Planning the World Bank Group, any judgment on the legal status of any General Services Printing & Multimedia territory, or any endorsement or acceptance of such boundaries.
CHINA LAO P.D.R. CHINA
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Gnot-Ou O 22º N u MYANMAR 22º N LAO VIETNAM Boun-Nua Phôngsali P.D.R. PHÔNGSALI VIETNAM THAILAND MYANMAR LOUANG Nam Ou Muang NAMTHA Khoa Louang Namtha Andaman CAMBODIA g m Xiangkho n a Sea o Nam Tha
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a a e Gulf of Muang u Nam Xam h m M O a BOKEO T Thailand Xai N am a m Ban Houayxay N N Xam Nua LOUANGPHRABANG Viangxai OUDÔMXAI HOUAPHAN 106º E 20º N Pakbeng Louangphrabang 0 50 100 Kilometers XAIGNABOURI Kham Nan Phokhoun XIANGKHOANG Phônsavan Xaignabouri Kasi Nam Nam Ngum Ngiep Vangviang XAISÔMBOUN Ban Nalé Xaisômboun Gulf of VIENTIANE Nam Ngum Nam Theun/ Reservoir Tonkin Muang Nam Cading Muang Pakxan m Cad g a ing n Phôn-Hông N o BOLIKHAMXAI ek N Khamkeut M am Paklay Mekong T he u 18º N Xanakham n 18º N VIENTIANE VIENTIANE PREFECTURE KHAMMOUANE Ban Na Phan Thakhek S e B Se Bang a n Fai g oy Fai Se N Xebangfai
Xéno SAVANNAKHÉT Xepon Savannakhét Phin THAILAND Se Bang Hieng eng Se Bang Hi Samouay 16º N g 16º N n SARAVAN o K
e one S D Saravan Se 102º E Khongxedon Se Done XÉKONG Xékong
LAO PEOPLE’S DEMOCRATIC REPUBLIC Pakxong MEKONG INTEGRATED WATER RESOURCES CHAMPASAK Se Kong Pakxé Attapu MANAGEMENT PROJECT – PHASE 1 Sanamxai Additional Financing ATTAPU Mekong
10 PRIORITY BASINS MAIN CITIES AND TOWNS Khong g MEKONG RIVER BASIN PROVINCE CAPTIALS n 14º N 14º N o K
e NATIONAL CAPITAL S PROVINCE BOUNDARIES CAMBODIA INTERNATIONAL BOUNDARIES 104º E 106º E