A Report to the Operations Evaluation Department Asian Development Bank For the Country Assistance Program Evaluation for Pakistan Evaluation of the Agriculture and Natural Resources Management Sector by Raymond Greer Syed A. Husaini Jagirdar July 2006 CURRENCY EQUIVALENTS Currency Unit — Pakistan rupee/s (PRe/PRs) At Appraisal At Project Completion At Operations Evaluation (date) (date) (date) PRe1.00 = $ $ $ $1.00 = PRs PRs PRs Note: The exchange rate of the Pakistan rupee is determined under a system of a managed float. ABBREVIATIONS ADB — Asian Development Bank ADF — Asian Development Fund ANR — agriculture and natural resources CSP — country strategy and program EIRR — economic internal rate of return GDP — gross domestic product ha — hectare IPM — integrated pest management IA — Implementing Agency IP — Inspection Panel OFWM — on farm water management JBIC — Japan Bank for International Cooperation MINFAL — Ministry of Fisheries, Agriculture and Livestock MTDF — Medium Term Development Framework NDP — National Drainage Program NGO — nongovernment organization OCR — ordinary capital resources O&M — operation and maintenance OED — Operations Evaluation Department PIDA — Provincial Irrigation and Drainage Authority PCR — project completion report PPAR — project performance audit report RDP — rural area development project RDF — rural development fund PRM — Pakistan Resident Mission SAPE — sector assistance program evaluation TA — technical assistance WAPDA — Water and Power Development Authority NOTE In this report, “$” refers to US dollars. CONTENTS EXECUTIVE SUMMARY iii I. INTRODUCTION 1 A. Scope and Objectives of the Evaluation 1 B. Evaluation Methodology 1 C. Report Content 2 II. BACKGROUND 2 A. Introduction 2 B. Land and Land Ownership 3 C. Agriculture and Related Public Sector Institutions 5 D. Legal and Regulatory Framework 6 E. Growth and Productivity Trends 7 F. Water Resources 11 G. Issues 14 III. STRATEGIES AND POLICIES 15 A. Government Strategies and Policies 15 B. ADB’s Country Strategies for the Sector 17 C. Assessment of ANR Strategies in Country Strategies 19 IV. DESCRIPTION OF ADB’S OPERATIONS 21 A. Public Sector Loans 21 B. Technical Assistance and Other Non-Lending Activities 24 C. The Influence of Strategy in Program Decisions 28 V. ANALYSIS OF PERFORMANCE OF ADB’S OPERATIONS 29 A. Corporate Sector Performance Rating 29 B. Rural Development Subsector Performance Assessment 30 C. Water Resources/Infrastructure Performance Assessment 37 D. Other Agriculture and Natural Resources Projects 51 E. Policy and Program Support 61 F. Overall Program Assessment 64 VI. CONCLUSIONS AND RECOMMENDATIONS 74 A. Conclusions and Lessons Identified 74 B. Corruption in Pakistan 78 C. Gender 80 D. Effectiveness of Project Preparatory Technical Assistance 80 E. Recommendations 81 ii APPENDIXES 1. Framework for Strategy Quality Assessment 86 2. Agriculture and Natural Resources Sector Strategies in ADB Country Strategies 91 3. List of Loans and Technical Assistance, 1985–2005 95 This report is a working paper for the Country Assistance Program Evaluation for Pakistan. OED Working Papers are an informal series to present the findings of work in progress in evaluation. They are circulated to encourage discussion and elicit comment. The views expressed in this report are those of the author(s) and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent. The Asian Development Bank does not guarantee the accuracy of the data included in this report and accepts no responsibility for any consequences of their use. Use of the term “country” does not imply any judgment by the author(s) or the Asian Development Bank as to the legal or other status of any territorial entity. EXECUTIVE SUMMARY This report, prepared for the Operations Evaluation Department (OED) of the Asian Development Bank (ADB), presents the findings of an evaluation of ADB’s operations in the agriculture and natural resources (ANR) sector in Pakistan for 1985–2005. The evaluation aims to provide an independent assessment of ADB’s assistance to the sector, its impact on the sector’s development, and on a wider scale, its impact on the country’s economic development and poverty alleviation program. It also seeks to identify lessons and areas where the Government, ADB, private sector, and other stakeholders and funding agencies can work together more effectively to promote the development of the sector and achieve the overarching goal of poverty reduction. This work will contribute to the Pakistan Country Assistance Program Evaluation, which will in due course support the formulation of a new Pakistan Country Strategy and Program (CSP) to be approved in 2006. ADB’s operations over the last 20 years (1985–2005) have been evaluated. For this purpose, the ANR sector has been divided into three categories: (i) rural development, (ii) water resources, and (iii) “other,” which includes agribusiness, forestry, conservation, livestock, and other activities. During this period, ADB has funded 43 loan projects with a total value of $2.723 billion and 77 technical assistance (TAs) valued at $52 million. Historically, agriculture has absorbed around 30% of ADB’s assistance to Pakistan, but in the last decade this has reduced as assistance to other sectors has increased, especially the social sectors. ADB’s strategies for development in Pakistan, as stated in ADB’s various operational strategy documents produced roughly every 5 years, were aligned with the Government’s strategies in their five-year development plans. However, the frequent changes of government administration over the period, and a lack of resources to achieve the planned outcomes meant that the achievement has been less than envisaged in the targets. ADB’s support to the sector has focused on supporting modernization, development of a market-led economy, and transition to farmer management of irrigation. Generally speaking, the pace of change envisaged has not been matched by Government’s speed, although good progress has been made. The effectiveness of ADB’s plans for the ANR sector as derived from the strategy plans was assessed against a set of 20 criteria using OED’s methodology. As shown in the table below, the ranking was low to moderate. It is evident that there has not been a lot of depth to the analysis and evaluation underpinning the program. Strategy has not been a powerful determinant of the formulation of the program, which has been more influenced by past actions and government’s future policy and funding plans. Rating Criteria Low Moderate High Analytical Rigor Balance Continuity Credibility Critical Mass Demonstrated Learning Efficiency Flexibility Impact/Results Innovation Needs-Based iv Rating Criteria Low Moderate High Partnerships Playing to ADB’s Strengths Political Awareness Responsive to Emerging Opportunities Results management Selectivity/Focus Sustainability Synergy Value-for-Money Overall, the performance of ADB’s operations in the ANR sector is rated as “successful” but bordering on “partly successful.” According to the evaluation of past and present projects, 51% are successful, 44% partly successful, and 5% unsuccessful. The performance of each of the three categories used by this evaluation was assessed based on performance ratings for project completion reports (PCRs) and project performance audit reports (PPARs) that were available and the evaluation team’s own evaluations. For the rural development group of projects, the majority were rated as partly successful. The main constraints were inefficient implementation caused by delays in startup, a lack of long term sustainability of the infrastructure and institutions developed, and lower economic performance. For the water resources group of projects, the conclusion is that overall performance has been successful, but there are serious issues concerning the commitment to the reform process and transition to farmer management of irrigation and drainage that will impact on sustainability and the durability of irrigation and drainage systems in the future. The “other” group of projects had a mixed performance, with projects for livestock and rural credit being rated as unsuccessful, while others were evaluated as having been successful or partly successful. Support for to this group by ADB has not been as consistent or coherent as for the other two categories (rural development and water resources). There has been a lack of continuity in maintaining support to the various subsectors on an ongoing basis. For all subsectors there is a need for greater integration between stakeholders to develop synergy and more sectoral analysis to underpin the rationale between strategies. The ANR sector is the productive sector of the economy and deserves ADB’s continuing support. Future funding and support should follow a roadmap developed from a coordinated strategic analysis and assistance plan closely linked to reforms and focused on subsectors where there is a commitment to the reform process, especially in the water resources and irrigation subsector. Overall the recommendations to ADB are: (i) Focus on fewer subsectors/areas and maintain a consistent commitment to provide support and policy dialogue over a longer planning horizon (i.e., 10 years), subject to performance reviews and Government requirements. (ii) Projects should be modeled on provincially-based projects and recognize that future projects have to accommodate the devolution