75967 Review of World Bank engagement in the Public Disclosure Authorized Irrigation and Drainage Sector in Azerbaijan Public Disclosure Authorized Public Disclosure Authorized February 2013 Public Disclosure Authorized © 2012 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000I Internet: www.worldbank.org This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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CURRENCY EQUIVALENTS $1.00 USD = AZN 0.78 (November 2012) Glossary AIOJSC Amelioration and Irrigation Open Joint Stock Company AZN Azerbaijani New Manat (currency) “the Bank” The World Bank CAS Country Assistance Strategy of The World Bank CSU Central Support Unit for WUA EECA Eastern Europe and Central Asia Department of The World Bank ET Evapo-transpiration FPP Farm Privatization Project GDP Gross Domestic Product GoA Government of Azerbaijan Ha Hectare I&D Irrigation and Drainage IDSMIP Irrigation Distribution System and Management Improvement Project IFAD International Fund for Agricultural Development IFI International Financial Institutions IIF Irrigation Improvement Fund IMA Irrigation Management Audit IMT Irrigation Management Transfer IPCC Inter-governmental Panel on Climate Change ISF Irrigation Service Fee ISP Irrigation Service Plan IWRM Integrated Water Resources Management Km2 Square kilometers LAI Law on Amelioration and Irrigation M3 cubic meters M&E Monitoring and Evaluation O&M Operations and Maintenance On-farm Level of former state or collective farm, which is now often the level of the WUA PIU Project Implementation Unit R&D Research and Development Raion District Government RID Raion Irrigation Departments RIDIP Rehabilitation and Completion of Irrigation and Drainage Infrastructure Project RSC Regional Support Centers RSU Raion Support Unit for WUA SAIC State Amelioration and Irrigation Committee SSB State Supervisory Body State Program State Program for Sustainable Development of Amelioration and Water Management for 2008 - 2015 t/ha Metric tons per hectare USD United States Dollars WTP Water Users Association Training Plan WUA Water Users Association(s) WUAP Water Users Association Development Support Project WSF Water Users Association Support Fund WUA Union Federation or network of Water Users Associations Contents Preface and acknowledgements Chapter 1: Introduction ............................................................................................................... 1 1.1 Agriculture Today and its Importance ...................................................................................... 1 1.2 Water, Irrigation and Drainage, and their Importance .............................................................. 3 1.3 Purpose of this Sector Review and Content of Chapters .......................................................... 4 Chapter 2: Framework for World Bank Corporate Priorities and Strategy for Irrigation and Drainage and Lessons Learned Internationally ................................................................. 6 2.1 Priorities and Strategy of The World Bank ............................................................................... 6 2.2 International Lessons Learned for Irrigation and Drainage ...................................................... 7 Chapter 3: Irrigation and Drainage in Azerbaijan ................................................................. 10 3.1 Current State of Irrigation and Drainage ................................................................................ 10 3.2 Rising Challenges, Needs and Opportunities.......................................................................... 12 3.3 Recent Initiatives .................................................................................................................... 13 3.4 State Program (SP) for Sustainable Development of Amelioration and Water Management for 2008-2015................................................................................................................................ 14 Chapter 4: Financing Irrigation and Drainage ........................................................................ 16 4.1 Current and Planned Expenditures on Irrigation and Drainage .............................................. 16 4.2 Financial Management by WUAs and Regional Irrigation Departments ............................... 17 Chapter 5: Evolution of Institutions in Irrigation and Drainage ........................................... 19 5.1 Evolution of Government Organizations for Irrigation and Drainage .................................... 19 5.2 WUA Legislation and Establishment in Azerbaijan ............................................................... 20 5.3 Key Challenges and Needs for Capacity Building of WUAs ................................................. 22 5.4 Support services needed by WUAs and how these could best be provided ........................... 24 Chapter 6: Climate Change and How it May Be Included Within the Bank’s Priorities for the Irrigation and Drainage Sector in Azerbaijan ................................................................... 27 6.1 Current views on Climate Change and Implications for Azerbaijan ...................................... 27 6.2 An Approach Toward Adapting Azerbaijan’s Irrigation & Drainage Sector to Climate Change .......................................................................................................................................... 29 Chapter 7: Priorities for Irrigation and Drainage in Azerbaijan .......................................... 31 7.1 Policy, Strategy, Legal and Institutional Reforms .................................................................. 31 7.2 Promoting Effective and Sustainable Investments in Irrigation and Drainage Systems ........ 34 7.3 Building Capacity for Management and Innovation in the Sector ......................................... 36 7.4 Summary ................................................................................................................................. 44 Conclusion ................................................................................................................................... 47 References .................................................................................................................................... 48 Annex 1: Text of the State Program for Sustainable Development of Amelioration and Water Management for 2008-2015 ............................................................................................ 49 List of Tables Table 1 Seasonal Recommended Irrigations and Irrigation Requirements for Main Crops ........... 1 Table 2 Wheat Yields in Various Raions (2009 data) .................................................................... 2 Table 3 Extent of salinity in irrigated areas .................................................................................... 4 Table 4 Selected recent and projected expenditures of AIOJSC from the State Budget .............. 17 Table 5 Irrigation Service Fees Collected by WUA ..................................................................... 18 Table 6 Irrigation Service Fee (ISF) payments: Actual versus needed ........................................ 18 Table 7 Pre-IDSMIP WUAs and Re-Registered WUAs under Amended LAI (January 2010) .. 22 Table 8 Training Sessions & Participants Organized by RSUs in Project Raions (2007-08) ..... 23 Table 9 Potential Elements of a Climate Change Adaptation Strategy for Azerbaijan ................ 43 Table 10 Recommendations in Sector Review ............................................................................. 44 List of Figures and Photographs Figure 1 Agriculture: Modest Role in GDP, Major Role in Employment ...................................... 2 Figure 2 I&D Expenditures by Source.......................................................................................... 16 Figure 3 Organizational Chart for AIOJSC .................................................................................. 20 Figure 4 Organization of Support System for WUA ...................................................................