ASIAN DEVELOPMENT BANK Operations Evaluation Department

PROJECT PERFORMANCE EVALUATION REPORT

IN

BANGLADESH

In this electronic file, the report is followed by Management’s response.

erformance Evaluation ReP port

Operations Evaluation Department

Project Number: 25312 Loan Number: 1381-BAN(SF) December 2007

BAN: Small-Scale Water Resources Development Sector Project

CURRENCY EQUIVALENTS

(as of 31 May 2007)

Currency Unit – Taka (Tk) Tk1.00 = $0.0145

$1.00 = Tk69.01

ABBREVIATIONS ADB – Asian Development Bank BME – benefit monitoring and evaluation DOC – Department of Cooperatives DR – drainage EA – executing agency EME – effect monitoring and evaluation EIRR – economic internal rate of return FCD – flood control and drainage FFYP – Fourth Five-Year Development Plan GOB – Government of Bangladesh GON – Government of the Netherlands ha – hectare IFAD – International Fund for Agricultural Development IWRMU – Integrated Water Resources Management Unit JFPR – Japan Fund for Poverty Reduction km – kilometer LGED – Local Government Engineering Department LLT – Livelihood Trust Fund MOU – memorandum of understanding NGO – nongovernment organization NWP – National Water Plan O&M – operation and maintenance OED – Operations Evaluation Department OEM – operations evaluation mission PCR – project completion report PMO – project management office SSWRDP-2 – Second Small-Scale Water Resources Development Sector Project SSWRDSP – Small-Scale Water Resources Development Sector Project TA – technical assistance WC – water conservation WMCA – water management cooperative association

NOTES

(i) The fiscal year (FY) of the Government of Bangladesh and its agencies ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2000 ends on 30 June 2000.

(ii) In this report, "$" refers to US dollars.

Key Words

bangladesh water resources, water resources development, beneficiary participation, small-scale water resources, water management cooperative associations, development evaluation, development effectiveness

Officer-in-Charge Director R.K. Leonard, Division 1, OED Team leader A. Anabo, Senior Evaluation Officer, Division 1, OED Team member O. Badiola, Senior Operations Evaluation Assistant, Division 1, OED

Operations Evaluation Department, PE-709

CONTENTS

Page

BASIC DATA iii

EXECUTIVE SUMMARY v

MAP ix

I. INTRODUCTION 1 A. Evaluation Purpose and Process 1 B. Expected Results 3

II. DESIGN AND IMPLEMENTATION 3 A. Formulation 3 B. Rationale 4 C. Cost, Financing, and Executing Arrangements 4 D. Procurement, Construction, and Scheduling 6 E. Design Changes 6 F. Outputs 7 G. Consultants 12 H. Loan Covenants 12 I. Policy Framework 12

III. PERFORMANCE ASSESSMENT 13

IV. OTHER ASSESSMENTS 18 A. Impact on Institutions and Policy 18 B. Socioeconomic Impact 18 C. Environmental Impact 19 D. Asian Development Bank Performance 19 E. Borrower and Executing Agency Performance 20 F. Technical Assistance 20

V. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 20 A. Issues 20 B. Lessons 22 C. Follow-Up Actions 23

The guidelines formally adopted by the Operations Evaluation Department (OED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. Peter Mawson and M.A. Quassem were engaged as consultants to assist in the preparation of this report. To the knowledge of the management of OED, there were no conflicts of interest of the persons preparing, reviewing, or approving this report.

APPENDIXES 1. Project Cost by Type of Expenditure 25 2. Summary of Infrastructure Completed 26 3. Households, Beneficiaries, and WMCA Membership of Sample Subprojects 27 4. Members’ Financial Position (Own Capital) from Sample WMCAs 28 5. Status of Microcredit: Sample Subprojects 29 6. Checklist of Sample Subprojects 30 7. Selected Sample Case Studies 31 8. Impact on Fisheries 37 9. Economic and Financial Reevaluation 38

Attachment: Management’s Response

BASIC DATA

Small-Scale Water Resources Development Sector Project (Loan 1381-BAN[SF])

Project Preparation/Institution Building TA No.

Grant/Technical Assistance Name

Type1 Person-Months

Amount Approval Date

1817 Small-Scale Water Resources Development

PPTA 37 $500,000 23 Dec 1992

2564 Beneficiary Participation and Project Management

ADTA(grant)

675 $6,800,000 2 May 1996

2564 Beneficiary Participation and Project Management (Supplementary)

ADTA(grant)

– $200,000 14 Feb 2001

Key Project Data ($ million)

Per ADB Loan Documents

Actual

Total Project Cost 66.0 51.2 Foreign Exchange Cost 16.5 23.3 ADB Loan Amount/Utilization 32.02 27.33

ADB Loan Amount/Cancellation 0.74

Amount of Cofinancing IFAD 10.4 8.8 Netherlands 6.8 5.9

Key Dates Expected Actual Appraisal 2–20 Apr 1995 Loan Negotiations 15–17 Aug 1995 Board Approval 26 Sep 1995 Loan Agreement 17 Oct 1995 Loan Effectivity 15 Jan 1996 8 Apr 1996 Completion 30 Jun 2002 30 Jun 2002 Loan Closing 31 Dec 2002 15 Jan 2003 Months (Effectiveness to Completion) 78 74 Borrower Government of Bangladesh Executing Agency Local Government Engineering Department Mission Data Type of Mission No. of Missions Person-Days Fact-Finding 1 110 Appraisal 1 94 Inception 1 20 Project Administration

Special Project Administration (SPA) 3 42 Review 2 29

1 ADTA = advisory technical assistance, PPTA = project preparatory technical assistance. 2 Equivalent to SDR21,085,000 at the time of loan approval. 3 Equivalent to SDR20,593,841 at the time of loan closing. 4 Equivalent to SDR491,159 at the time of loan cancellation.

iv

Midterm Review 1 42 Disbursement 1 8 Joint SPA 1 7 Joint Review 4 66

Project Completion Review 1 72 Operations Evaluation5 1 48

5 The Operations Evaluation Mission comprised Agnes Anabo, Senior Evaluation Officer (Mission Leader), Peter

Mawson (international consultant), and M.A. Quassem (domestic consultant).

EXECUTIVE SUMMARY

In December 1992, the Asian Development Bank (ADB) approved project preparatory technical assistance (TA) to the Government of Bangladesh for the formulation of the Small-Scale Water Resources Development Sector Project. A loan amounting to $32.0 million was approved in September 1995 to finance the Project, whose expected outcome was a sustainable increase in agricultural production and income for smallholder farms in the subproject areas, which in turn was expected to have an impact on poverty reduction. These areas are located in western Bangladesh (where the standard of living was much lower than that in the eastern half). This outcome was to be achieved through the project’s three outputs: (i) Part A: Beneficiary Participation and Water Management Association Development, (ii) Part B: Development of Small-Scale Water Control Systems, and (iii) Part C: Institutional Support for Small-Scale Water Resources Development. Advisory TA1 provided by the Government of the Netherlands (GON) was administered by ADB. The TA was expected to help the Local Government Engineering Department (LGED), the executing agency, implement the Project with beneficiary participation in the subprojects and to build the capacity of LGED staff and water management cooperative associations (WMCAs). In addition to the GON, the International Fund for Agricultural Development was also to cofinance the Project.

Almost 5 years after the project’s completion (June 2002), the Operations Evaluation

Department fielded an operations evaluation mission (OEM) to Bangladesh from 20 May to 4 June 2007 to evaluate the Project in terms of its relevance, effectiveness, efficiency, sustainability, and other impacts. The OEM visited 22 of 267 subprojects that had been handed over to WMCAs, selected in consultation with LGED.

The Project was completed on 30 June 2002 as expected at appraisal. At that time, a

total of 280 subprojects had been carried out, 273 of which were completed and operating. These subprojects were mainly a combination of flood control and drainage (FCD) (58%), drainage (17%), and water conservation (WC) (16%). The other subprojects were either (i) a combination of drainage and WC, (ii) a combination of drainage and irrigation structures, or (iii) command area development. At the time of project completion, seven subprojects had not been completed due to various reasons including objections from stakeholders, legal complications, and faulty design. At the time of evaluation, 267 subprojects had been handed over to WMCAs, with the remaining 13 subprojects being fine-tuned. Total actual project cost amounted to $51.2 million, 29% lower than anticipated at the time of appraisal. The lower than expected aggregate actual project cost can be traced to the lower than anticipated expenditures for training, service vehicles, and equipment (which did not have a significant impact on the Project’s outcomes).

A WMCA was established for each of the subprojects. In general, the beneficiaries of

subprojects were moderately to highly motivated and interested in the WMCAs, except in two sample subprojects (Kumarer Beel FCD and Dighapatia FCD subprojects). Such interest could be traced partly to their sense of ownership, which in turn was to some extent a result of the beneficiaries’ involvement in planning, implementation, and operation and maintenance (O&M).

The Project is rated successful. The Project was (i) highly relevant to the Government’s

and ADB’s objectives and strategies at the time of appraisal and operations evaluation, (ii) effective in achieving its outcome of increasing agricultural production in the subproject areas,

1 TA 2564-BAN: Beneficiary Participation and Project Management. This TA was attached to Loan 1381-BAN(SF):

Small-Scale Water Resources Development Sector Project. On 2 May 1996, the Government of the Netherlands (GON) provided $6.8 million. A supplementary amount of $0.2 million was given by the GON on 14 February 2001.

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and (iii) efficient in terms of resource utilization. In the sample subprojects, the intensification of agricultural production has increased the demand for farm labor—generating more employment for the poor and landless. Better household incomes make it easier for poor households to take advantage of education, health, and other social services in their villages. In addition, the Project has helped improve the access of the rural poor to credit through the microcredit program of the WMCAs. Another important result of the Project is the institutionalization of beneficiary participation in small-scale water projects. The Project has had no significant adverse environmental impacts. The TA was successful, as it was able to assist LGED in completing 273 subprojects, 267 of which have been turned over to their respective WMCAs. More importantly, the TA developed a process for beneficiary participation, which LGED has adopted as an integral part of the subproject cycle.

At this point, sustainability is the key issue facing the subprojects. Long-term

sustainability is contingent on a number of factors: (i) no severe flooding disasters; based on the estimates prepared by LGED, the

damage caused by the August 2007 floods to 73 of the 280 subprojects valued at around $880,000 was relatively small compared with the entire project cost; the Government (through LGED’s Integrated Water Resources Management Unit [IWRMU]) has a system in place to support subprojects that are damaged by major floods.

(ii) a more sustainable arrangement for training and O&M purposes, such as a revolving fund, instead of utilizing funds from the Second Small-Scale Water Resources Development Sector Project;

(iii) long-term monitoring by LGED to ensure that infrastructure is being properly maintained and that beneficiaries have the skills required to maintain it;

(iv) long-term government support for the rehabilitation of subprojects after abnormal damage due to flooding, etc.;

(v) long-term support from associated agencies and departments responsible for providing technical services and support;

(vi) greater participation of beneficiaries in the funding of local, small-scale infrastructure maintenance; and

(vii) continued prevalence of a common goal among the various stakeholders. This Project has demonstrated that, in general, the best WMCAs have the following

characteristics: (i) subprojects having direct and tangible benefits, (ii) good and strong WMCA leadership, and (iii) support from proactive LGED and project staff. The OEM also noted that the WMCAs with good income-generating activities are better positioned to conduct O&M activities. However, some WMCAs have the tendency to focus more on income-generating activities than O&M activities.

Sustainability is likely, but to help ensure the sustainability of the Project’s benefits, a

number of follow-up actions are suggested: (i) Throughout the OEM’s subproject visits, the need for training was apparent from

discussions with members of the WMCAs. WMCA members can be trained initially by utilizing funds from the Second Small-Scale Water Resources Development Sector Project. However, a more sustainable training program needs to be put in place by the IWRMU as soon as possible.

(ii) By 2008, training specifically for the WMCAs of handed-over subprojects should be included in regular training programs of the Department of Agricultural

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Extension, Department of Fisheries, Department of Environment, and Department of Cooperatives.

(iii) LGED needs to continue undertaking long-term monitoring of and support for the maintenance of the physical infrastructure of completed subprojects. To ensure this, the IWRMU should be provided with adequate support and training.

R. Keith Leonard Officer-in-Charge Operations Evaluation Department

B a y o f B e n g a l

Ganges R.

Padma R.

Meghna R

.

Jamu

na R

.

Pu

ssu

r R

.

Kushiyara R.

Brahmaputra R.

Dhaka Metropolitan Area

Project Area

National Capital

Subproject Visited

River

District Boundary

Division Boundary

International Boundary

Boundaries are not necessarily authoritative.

B A N G L A D E S H

SMALL-SCALE WATER RESOURCESDEVELOPMENT SECTOR PROJECT

(as implemented)

Kilometers

0 25 50 75

N

07-3684 RM

89 00'Eo

89 00'Eo

91 45'Eo

91 45'Eo

22 00'No 22 00'No

25 30'No25 30'No

DHAKA

R A J S H A H I

S Y L H E T

D H A K A

K H U L N A

C H I T TA G O N G

B A R I S A L

INDIA

INDIA

M Y A N M A R

Bhola

Noakhali

Feni

Narail

Bandarban

Rangamati

Khagrachari

Patuakhali

Barguna

BagerhatSatkhira

Lakshmipur

ChandpurShariatpur

Madaripur

Gopalganj

Meherpur

Chuadanga

Jhenaidah

Magura

Manikganj

Dhaka

ComillaFaridpur

Rajbari

Pabna

Kushtia

AshuganjNarshingdi

Moulvibazar

Habiganj

Sunamganj

Kishoreganj

Narayanganj

Natore

Mymensingh

Tangail

Sirajganj

Netrokona

Nawabganj

Joypurhat

BograJamalpur

Sherpur

Naogaon

Dinajpur

Gaibandha

Panchagarh

ThakurgaonNilphamari

Rangpur

Lalmonirhat

Kurigram

Jessore

Pirojpur

Munshiganj

Gazipur

Chittagong

Cox's Bazar

Barisal

Khulna

Sylhet

Rajshahi

I. INTRODUCTION

A. Evaluation Purpose and Process

1. The Asian Development Bank’s (ADB) Small-Scale Water Resources Development Sector Project1 was approved in September 1995 to assist the Government of Bangladesh (GOB) in increasing productivity in the agriculture sector. Almost 5 years after the Project’s completion (June 2002), the Operations Evaluation Department (OED) fielded an operations evaluation mission (OEM) to Bangladesh from 19 May to 4 June 2007 to evaluate the Project in terms of its relevance, effectiveness, efficiency, sustainability, and other impacts. The OEM visited 222 of 2673 subprojects that had been handed over to water management cooperative associations (WMCAs). 2. The sample subprojects were selected by the OEM, in consultation with the executing agency (EA), the Local Government Engineering Department (LGED). The selection was based on the following criteria:

(i) All types of subprojects (command area development, drainage [DR], flood control and drainage [FCD], and water conservation [WC]) were represented.

(ii) As much as possible, the sample subprojects—selected from the performance distribution of all subprojects—represented each of the four categories of the existing grading system of the Integrated Water Resources Management Unit (IWRMU) of LGED (Table 1). This system is based on a combination of (a) the amount of capital raised by the subproject, and (b) the amount of funds raised and used for operation and maintenance (O&M) purposes. 4 There are four categories: A = well functioning, B = moderately functioning, C = poorly functioning, and D = very poorly functioning.

(iii) Given the limited time of the OEM in the field, the location of the subprojects was another criterion. Nevertheless, the OEM opted to visit subprojects in districts across most of the project area in order to have a more rounded picture of the Project’s impact (instead of concentrating on only a few districts and thereby saving on travel time).

1 ADB. 1995. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People’s Republic of Bangladesh for the Small-Scale Water Resources Development Sector Project. Manila. 2 These subprojects were located in the following districts in western Bangladesh: (i) Chuadanga, (ii) Jessore,

(iii) Khulna, (iv) Gopalgonj, (v) Rajbari, (vi) Faridpur, (vii) Bogra, (viii) Rangpur, (ix) Nilphamari, (x) Dinajpur, (xi) Chapai Nawabganj, and (xii) Rajshahi.

3 Based on ADB’s project completion report, 280 subprojects had been carried out at the time of project completion. Of the 280, 273 had been completed and were operating while 7 had not completed due to various reasons including objections from stakeholders, legal complications, and faulty design. At the time of evaluation, 267 subprojects had been handed over to WMCAs. The remaining 13 subprojects were being fine tuned.

4 The grading system is based on the ability of the WMCAs to raise financial resources, on the assumption that being able to raise sufficient financial resources implies that O&M is being implemented and the system is therefore providing the intended benefits through improved water management and control. However, this fails to take account of significant labor contributions from WMCA members or of any other nonfinancial factors that also often contribute significantly to WMCA and subproject success.

2

Table 1: Grading System of the Integrated Water Resources Management Unit Category Description A = Capital increased by Tk50,000 or above A = Fund raised at least 50% of contribution

and utilization at least 50% of collection B = Capital increased by Tk10,000 or above but below Tk50,000

B = Fund raised at least 50% of contribution and utilization below 50% but at least 30% of collection

C = Capital increased by Tk1,000 or above but below Tk10,000

C = Fund raised below 50% of contribution and utilization less then 50% but at least 20% of collection

D = Capital increased by below Tk1,000 D = Fund raised below 50% of contribution and utilization below 20% of collection

Source: Integrated Water Resources Management Unit of the Local Government Engineering Department. 3. The OEM prepared this report in accordance with OED guidelines.5 This evaluation draws upon a review of project documents as well as the follow-on project6 documents; other relevant studies; and discussions with ADB staff, concerned officials of government agencies, and WMCAs. It incorporates the results of the OEM's field visits to sample subprojects, which involved visual inspections of subproject facilities and discussions with officers7 and members of WMCAs as well as upazila8 and district officers9 of LGED. A copy of the draft evaluation report was shared with the South Asia Regional Department and the GOB through the Ministry of Finance, and the EA. Their views were incorporated where relevant. 4. The project completion report (PCR), which was circulated to the Board of Directors in July 2004, assessed the Project as highly relevant, efficacious (i.e., effective), efficient, likely sustainable, and with significant institutional and other development impacts. Overall, the PCR rated the Project as successful. The PCR assessed the project design as highly relevant to the GOB’s and ADB’s objective of reducing poverty. The Project was also relevant to ADB’s operational strategy for the agriculture sector. It was efficacious (i.e., effective), as it achieved its long-term objective of increasing productivity in agriculture through a combination of reduced waterlogging during the monsoon season and improved irrigation during the dry season. The financial internal rates of return that the PCR calculated for 15 selected subprojects ranged from 23.2% to 38.6%. This compared favorably with the appraisal estimates, which ranged from 9.8% to 30.7%. The sustainability of the Project was believed to be further strengthened when the subprojects would be fully developed. 5. Advisory technical assistance (TA)10 provided by the Government of the Netherlands (GON) was administered by ADB. The TA was expected to help LGED implement the Project with beneficiary participation in the subprojects and to build the capacity of LGED staff and of WMCAs. The PCR rated the TA “satisfactory” (i.e., successful). Paragraph 36 of the PCR states, “Although the TA was instrumental in the successful implementation of the Project,

5 ADB. 2006. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila. 6 ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People’s Republic of Bangladesh for the Second Small-Scale Water Resources Development Sector Project. Manila.

7 Chairman, vice-chairman, secretary, and treasurer. 8 Subdistrict. 9 Engineers, community organizers, socioeconomists, sociologists, and agricultural facilitators. 10 TA 2564-BAN: Beneficiary Participation and Project Management. This TA was attached to Loan 1381-BAN(SF):

Small-Scale Water Resources Development Sector Project. On 2 May 1996, the GON provided $6.8 million. A supplementary amount of $0.2 million was given on 14 February 2001.

3

strengthening of LGED was less than expected as manifested from the provision of a similar TA under the Second Small-Scale Water Resources Sector Improvement Project.” B. Expected Results

6. The Project’s expected outcome was a sustainable increase in agricultural production and income for smallholder farms in the subproject areas, which are located in western Bangladesh11 (where the standard of living was much lower than that in the eastern half). This was to be achieved through the Project’s three outputs: (i) Part A: Beneficiary Participation and Water Management Association Development, (ii) Part B: Development of Small-Scale Water Control Systems, and (iii) Part C: Institutional Support for Small-Scale Water Resources Development. The subprojects were to be selected based on the number of poor farmers to be benefited (more than 50% of the beneficiary farmers should be small or marginal farmers12). The Project was to support the establishment of sustainable O&M systems through beneficiary participation. Water management associations were to be formed in each of the subprojects and were to be involved in the identification, design, implementation, and O&M of their respective subprojects. Cropping intensity was expected to increase from 164% to 175%, with an incremental cropped area of 15,000 hectares (ha). Higher crop productivity was to be achieved through the Project’s removal of the constraints imposed by inadequate flood protection, waterlogging, and limited irrigation. The Project was expected to generate employment opportunities equivalent to 3.7 million person-days per annum as a result of the implementation phase and the increase in agricultural production. In the long term, the Project was expected to contribute to sustained agricultural growth and poverty reduction.

II. DESIGN AND IMPLEMENTATION

A. Formulation

7. In December 1992, ADB approved preparatory TA,13 which prepared detailed feasibility studies of 11 sample subprojects scattered throughout the western region of Bangladesh. Based on the results, a fact-finding mission visited the country in October/November 1994. This was followed by a joint appraisal mission (ADB, the International Fund for Agricultural Development [IFAD], and the GON) in April 1995. These missions examined the technical and economic viability of the Project, assessed its environmental and social implications, and discussed relevant policy issues with concerned Bangladesh government agencies. Although the GOB initially requested nationwide coverage for the Project, this request was eventually reduced to half, i.e., the western half, which was covered by the feasibility study. 8. The policy environment within the water resources sector was conducive to rapid expansion of minor irrigation and sustainability of projects through beneficiary participation. A review of the technical capacity of LGED at the national, district, and upazila levels showed that the subprojects could be formulated, appraised, and implemented in a timely fashion at acceptable technical standards. These, plus capacity-building TA (footnote 10) together with the loan supported a sector-type approach. At the time of appraisal, LGED had been successfully

11 This was stated in para. 32 of the report and recommendation of the President. The project framework (now called

the design and monitoring framework) was less specific in its outcome (purpose). 12 Small-scale and marginal farmers are classified by their cultivable landholdings. Small-scale farmers hold less than

1.0 ha of cultivable land, and marginal farmers, less than 0.25 ha. 13 ADB. 1992. Technical Assistance to the People’s Republic of Bangladesh for the Small-Scale Water Resources

Development Project. Manila.

4

implementing many rural development projects, including in small-scale water resources development. The foregoing considerations justified the sector lending modality of the Project. 9. Development partners, specifically IFAD and the GON, participated from the formulation stage. IFAD participated during the loan fact-finding and appraisal missions, and the GON14 during the appraisal mission.15

B. Rationale

10. Bangladesh has one of the lowest per capita incomes 16 in Asia. Although an improvement from 1991,17 around 49.8% of the population lived below the poverty line in 2000. The country is still largely rural, with more than 50% of its labor force employed in the agriculture sector, which has historically accounted for the largest share of the country’s gross domestic product. Nonetheless, as the country develops, the relative contribution of the agriculture sector to the economy is gradually declining as other sectors such as manufacturing, trade, and services gain more importance. From 28.7% in 1990, the agriculture sector’s share of gross domestic product declined to 21.1% in 2005. 11. The productivity of land and labor is constrained by droughts during the dry season and floods during the monsoon season. The GOB, aware of these constraints and the potential for increasing agricultural production, highlighted in the Fourth Five-Year Development Plan (FFYP, FY 1991–1995) the need for improving and upgrading minor irrigation schemes, with small-scale flood control and drainage schemes as necessary components. The FFYP also emphasized the creation of an appropriate institutional framework for planning, investment, and O&M of water resources development schemes on a self-sustained basis. Priority was given to cost-effective and quick gestation investments to rehabilitate and upgrade existing water resources infrastructure. 12. The Project is in the western half of the country, with the western area defined as the area west of the Jamuna, Padma, and Lower Meghna rivers. Until the completion of the Jamuna Bridge, communications between these areas and the major centers of Dhaka and Chittagong were inhibited by the rivers. 13. At the time of evaluation, the rationale for this Project remained sound, given the still relatively high dependence of the Bangladesh economy on agriculture, and the incidence of poverty particularly in the rural areas. C. Cost, Financing, and Executing Arrangements

14. At the time of appraisal, total project cost was expected to reach $66.0 million, of which $16.5 million was in foreign currency. ADB was to finance around 49% of the entire project cost through a $32.0 million loan from its Special Funds resources. IFAD was expected to jointly cofinance the Project by contributing $10.4 million, while the GON was to provide a TA grant of $6.8 million for beneficiary participation and project management (which was to be administered

14 The GON was contacted for possible joint financing only during the loan fact-finding mission. 15 Given the cofinancing, OED approached both IFAD and the GON regarding the conduct of a joint evaluation.

However, neither was willing/able to consider this. 16 In 1995, the per capita gross national product of Bangladesh was around $325, compared with India’s $391.

In 2004, the per capita gross national income of Bangladesh was $440 compared with India’s $620. 17 In 1991, 51.6% of the population had income of less than US$1 per day. Source: ADB. 2006. Key Indicators 2006:

Measuring Policy Effectiveness in Health and Education. Manila.

5

by ADB). IFAD was to finance 25% of the same components as ADB, while the GOB was to contribute $13.3 million equivalent in local currency, and the beneficiaries around $3.5 million equivalent in the form of land and cash contributions. 15. Total actual project cost amounted to $51.2 million, 28.8% lower than anticipated at the time of appraisal (Appendix 1). Foreign currency costs accounted for almost 46% of the entire project cost, compared with the 25% expected share at the time of approval. The lower than expected aggregate actual project cost can be traced to the lower than anticipated expenditures for training, service vehicles, and equipment. Training activities during the first few years of project implementation were minimal due to the late fielding18 of consultants (who were to support this activity), and the length of time needed to organize training activities (including the preparation of training materials and other logistical requirements). A smaller quantity of construction equipment than expected was procured, resulting in actual service vehicles and equipment cost lower than budgeted. At the time of appraisal, 7.2% of the entire project cost was allocated for benefit monitoring. However, at project completion, the actual cost incurred for benefit monitoring amounted to only $175,000, less than 0.5% of the total project cost, despite all benefit monitoring and evaluation (BME) activities being carried out generally as planned. Other expenses incurred for BME purposes (such as the annual effect monitoring and evaluation [EME] reports, which were largely prepared by the TA consultants) were recorded under the TA grant of the GON. 16. The substantially lower than expected costs of the above activities were partly offset by the higher than expected outlay for civil works (including land acquisition), which accounted for 70.3% of the total actual project cost. In spite of the smaller number of completed subprojects (280 versus 400 planned at appraisal), civil works expenditures went up by 10%. This can be attributed to the higher than estimated subproject unit costs. 17. Of the $32.0 million ADB loan, $27.3 million was disbursed (with $699,000 eventually cancelled). IFAD’s contribution amounted to $8.8 million; the GON’s, $5.9 million; the GOB’s, $8.5 million; and the beneficiaries, $0.7 million. 18. The Project was implemented generally as planned, with LGED as the EA. A project management office (PMO) coordinated and directed the activities related to project implementation. The PMO, which was headed by a senior executive engineer of LGED, who functioned as the full-time project director, had the full authority to execute the Project and liaise with ADB. The PMO was supported by consultants from the attached TA and a design cell staffed with senior experts directly contracted by LGED. Although there were initial difficulties with monitoring, coordination, and quality control, these were overcome, and the PMO performed its role satisfactorily. In addition, at the request of the midterm review mission, LGED agreed to avoid frequent transfer of project staff, which helped ensure relatively smooth implementation. At the time of the OEM, some of the PMO staff were still with LGED. The Project Steering Committee, which was composed of representatives from 13 government agencies,19 provided policy guidelines (in addition to reviewing and monitoring the Project). This Committee, although expected to meet regularly (para. 42), met only five times as needed,

18 Signing of the TA (which was to finance the recruitment of consultants) letter of agreement was delayed, resulting

in a corresponding delay in the recruitment of consultants. 19 (i) Ministry of Water Resources, (ii) Bangladesh Water Development Board, (iii) Water Resources Planning

Organization, (iv) Ministry of Agriculture, (v) Department of Agricultural Extension, (vi) NGO Affairs Bureau, (vii) Department of Women’s Affairs, (viii) Bangladesh Rural Development Board, (ix) Department of Fisheries, (x) Department of Environment, (xi) Economic Relations Division, (xii) Implementation Monitoring and Evaluation Division, and (xiii) Planning Commission.

6

since most of the issues arising during implementation were already addressed at the PMO level. Coordination and cooperation among a number of government agencies, although attained, were not easy. D. Procurement, Construction, and Scheduling

19. A large number of contractors (at least 400 contract packages20) had to be contracted, resulting in delays. Around 200 small, district-based contractors were initially shortlisted. Each year, these contractors had the opportunity to bid on new subprojects within their respective districts. The average time elapsed from the invitation of bids to the awarding of contracts was around 2.5 months, mainly because of the large number of tenders that had to be processed at the central level. After the 2001 elections, the change in government resulted in the cancellation or delay of some contracts due to the political affiliation of contractors. Some weaknesses were noted in the engagement of some contractors, initially including the awarding of contracts to inexperienced contractors. This had an impact on the quality of some of the structures during the first part of the Project. Stronger oversight through the attached TA was put in place to bring construction quality to an acceptable level. The oversight consisted of four quality control engineers, whose tasks included (i) visiting construction sites at critical times during the construction phase, and (ii) signing off on final bills to certify that the construction quality was acceptable. With a few exceptions, the performance of the contractors was generally satisfactory. As assessed by the PCR, the performance of the suppliers, as well as the quality of the goods supplied, was satisfactory. 20. The Project was completed by 30 June 2002 as envisioned at appraisal. The loan was closed on 15 January 2003, only a few days after the expected closing date of 31 December 2002. The original schedule was ambitious, considering the amount of work required to (i) develop the capacity and experience within LGED to implement this type of work,21 (ii) develop systems that promoted beneficiary participation, and (iii) establish functional and sustainable WMCAs. Initial delays were also experienced with regard to training (para. 15). Nonetheless, the Project was completed as scheduled. E. Design Changes

21. Originally, the use of participatory rural appraisals was not envisaged. However, during project inception, these were introduced to provide for a degree of independence in assessing selected social and environmental parameters. Staff were recruited from the five nongovernment organizations (NGOs) originally contracted, and these personnel were trained jointly by the advisory TA staff and a training institute in Comilla. 22. Under the original project concept, LGED executive engineers, who head each district office, were expected to prepare subproject appraisal reports, including a socioeconomic study and summary initial environment examination for review by the PMO. However, this was impractical, considering the range of investment activities in different sectors being managed by executive engineers, which leave them with very little time for the preparation of the subproject appraisal reports. The analysis required to determine subproject feasibility necessitated some technical skills. A formidable amount of training would have been required to equip the 37 executive engineers and 220 upazila engineers for this task. Considering that each of these 20 One subproject could have more than one contract package. However, under the follow-on project, there is only

one contract package for each subproject. 21 This was the first small-scale water resources development project to be implemented by LGED using the

participatory approach and WMCAs.

7

engineers was to handle only a relatively limited number of subprojects over more than 5 years, the impact of the proposed training was expected to be limited. Thus, the PMO contracted six local consultants to prepare the subproject appraisal reports. F. Outputs

23. The Project had three components: (i) Development of Small-Scale Water Control Systems, (ii) Institutional Support for Small-Scale Water Resources Development, and (iii) Beneficiary Participation and Water Management Association Development.

1. Development of Small-Scale Water Control Systems

a. Infrastructure Facilities

24. At appraisal, a total of 400 subprojects were expected to be undertaken. At project completion, 280 had been carried out, with a total of 273 subprojects completed and operating. 22 The original target of 400 subprojects was on the high side, considering the magnitude of the work involved (i.e., building the capability of LGED, developing systems that promote beneficiary participation, establishing functional and sustainable local institutions, and ensuring the maintenance of a poverty focus during implementation). The completed subprojects were mainly a combination of FCD (58%), DR (17%), and WC (16%). The other subprojects were either (i) a combination of DR and WC, (ii) a combination of DR and irrigation structures, or (iii) command area development. Actual civil works were distributed over 37 districts in western Bangladesh, with Barisal accounting for the largest share of 6.8%, followed by Faridpur (4.6%) and Pirojpur (4.3%). Eighteen (or 95%) of the structures in Barisal were for FCD. On the whole, civil works involved largely the installation of regulators, which accounted for more than 60% of the total cost (Appendix 2).

Baranurpur Drainage and Water Conservation Subproject

Purba Mohanpur Flood Control and Drainage Subproject

25. The sample subprojects involved the construction of embankments, flushing sluices, and regulators, and the reexcavation of canals, among others. The quality of work was generally good. Reexcavation and maintenance works carried out by the labor contracting societies were often of better quality than that seen in many cases done by general contractors.

22 As of the time of the OEM, 13 more subprojects (out of 280) were being fine tuned prior to turnover to the

respective WMCAs so that the latter could reap the anticipated benefits.

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26. The beneficiaries find the structures useful. Planning and design of the projects have generally been good except in a few cases (5%). For instance, the OEM observed in the Purba Mohanpur FCD subproject (Sadar Upazila in Dinajpur District) that an additional gate had been added to the regulator, 3 years after the initial construction. At the time of subproject planning, the beneficiaries pointed out the need for a bigger regulator than the planners opted for, resulting in the need for fine tuning the subproject.23 27. The subprojects have generated both direct and indirect benefits. Direct benefits included improvements in small-scale water resources management such as flood control and relief from drainage congestion resulting in increased crop production and opportunities for fish culture. Indirect benefits were derived mainly from microcredit activities, which included fruit tree plantations, poultry raising, kitchen gardening, and livestock rearing and fattening. The subprojects also generated employment opportunities for the poor, and in some cases, water transportation. Through better control of flooding, drainage, and other aspects of water management in the subproject areas, the Project has established safe conditions for increased investment by households in both agricultural and nonagricultural activities. Beneficiaries are generally convinced and sometimes enthusiastic about subproject benefits. Even where the WMCAs are weak or not functioning properly, local people still manage to derive benefits from the infrastructure.24

b. Operation and Maintenance

28. Nineteen of the 22 sample subprojects visited by the OEM have active O&M subcommittees that are responsible for organizing O&M according to the decisions of the WMCA management committees. 29. During the initial 2 years after handing over a subproject to a WMCA, a joint walk through the subproject was conducted by LGED field staff and the WMCA to identify routine and major maintenance works. An O&M cost estimate was made on this basis. While the beneficiaries (WMCAs) are fully responsible for routine maintenance, the cost of major maintenance is divided between the Government and the WMCA. Cost sharing by beneficiaries has varied. For the cost of maintaining the embankment and other works less than or equal to Tk100,000, a WMCA normally contributes 10%; for those more than Tk100,000, 5%. For reexcavation of canals, the WMCA has to share 50% of the total cost. The WMCA’s contribution for the maintenance works come in the form of cash or community labor equivalent to the required cash.25 Beneficiaries contribute by either working with the community or providing hired labor. LGED sets aside a fund for annual major maintenance works for subprojects that have

23 According to subproject beneficiaries, 3 years of crops have been lost in the interim because of the regulator’s

insufficient capacity. 24 The risk in these cases is that, if the infrastructure is not properly maintained by the WMCA, the benefits of the

subproject will decline over time. 25 Under the follow-on project, the beneficiaries are required to deposit (in a bank account) a sum equivalent to the

cost of 1 year of O&M prior to construction of the subproject infrastructure. This amount is intended to cover the subproject’s O&M cost for the first year. The contribution was set at 3% of the value of the earthworks, and 1.5% of the value of concrete structures. This requirement is an indicator of the beneficiaries’ interest in the subproject and their capability to address future O&M needs.

9

been handed over. LGED provides these funds to different subprojects based on the fulfillment of certain criteria.26

30. O&M of the sample subprojects was found to be satisfactory except in three cases: In the Charolkathi Beel FCD subproject, a section of the reexcavated canal was not maintained properly. In the Moranadi WC subproject, the outfall of the flushing sluice was not maintained properly and is used for fishing—which is detrimental to the structure. The O&M of the Dighapati FCD subproject is poor due to disputes among the households and the consequent nonfunctioning of the WMCA. 2. Institutional Support for Small-Scale Water Resources Development 31. The Project provided support to LGED’s project management capabilities in small-scale water resources development at the national, district, and upazila levels. Various training programs were conducted, including those related to subproject preparation, institutional development, engineering training, and postsubproject activities (such as EME, gender awareness, and O&M). A list of the major training and institutional strengthening activities carried out under the Project can be found in Appendix 1 of the PCR.27 Forty-six senior LGED staff (for a total of 650 person-days) went on a study tour to learn more about participatory planning and participatory water resources development. A large number of the trained staff are still with the organization. In addition to LGED staff at all levels, NGO staff, construction contractors, and selected members of local government agencies benefited from the extensive training provided under the Project. Apart from these training programs, consulting services, study tours, selected studies, and a review of the bylaws, LGED also provided institutional support to WMCAs. Vehicles and equipment purchased under the Project are still useful.

3. Beneficiary Participation and Water Management Association Development 32. The WMCAs established for each subproject were formed under the Cooperative Society Act of Bangladesh28 and follow the Cooperative Society’s rules for institutional structure, management, maintenance of accounts and records, and annual auditing of accounts. 33. Usually, the general members of the WMCAs include both subproject beneficiaries and nonbeneficiaries.29 WMCAs ranged from 53 to 1,804 members, with an average of 381. Of 22 WMCAs30 visited by the OEM, 10 had membership above 100% of the beneficiary households (because nonbeneficiaries also join the WMCA, and some beneficiary households have more than one member); 5 had between 80% and 100%; 5, between 60% and less than 80%; and 2,

26 These criteria include the following: (i) the subproject must have been turned over to the WMCA, (ii) the WMCA

must mobilize at least 30% of its initial contribution (towards the investment cost of the subproject) for purposes of O&M, and (iii) the WMCA is willing to pay 10% for the first Tk100,000 and 5% of the remaining cost of the total repair/rehabilitation. If funds are not adequate to cover all requests from the qualified WMCAs, LGED prioritizes its assistance based on the WMCA’s good track record in terms of routine maintenance and sustainable institutional advancements.

27 ADB. 2004. Project Completion Report on the Small-Scale Water Resources Development Sector Project in Bangladesh. Manila.

28 WMCAs are formed under the Co-operative Society Act and its rules and regulations. In particular, Rule 2(2) was amended in 2001 to include a definition under which water management associations may be established as cooperative societies, the members of which are beneficiaries of water resources projects.

29 As of March 2006, the total number of members of the 280 WMCAs had reached 106,653, around 75% of whom were male.

30 These subprojects had a total membership of 10,299, around 69% of whom were male.

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between 40% and less than 60%.31 The male to female ratio of the members of WMCAs varied widely, ranging from 14% to 65% (Appendix 3). 34. Under the cooperative system in Bangladesh, microcredit programs are established in the WMCAs. A microcredit system that is a hybrid of the original cooperative system,32 together with some changes considered essential by the Project Team, was established. Under the Project, the capital base for each WMCA microcredit program is made up of the proceeds from the sale of shares and the accumulated savings of individual members with the WMCA. In general, the members of WMCAs must purchase at least one share in the cooperative. 33 Normally, the value of one share is Tk10, although this could also be as high as Tk100.34 On top of this, each member is required to contribute each month to a savings account, usually Tk10 but up to Tk100, depending on the WMCA by-law. Collection rates of WMCAs visited by the OEM are generally high, but not 100% in all subprojects. The funds generated from monthly savings and purchase of shares are used to provide microcredit loans to members, with an interest rate of up to 15%. 35. Some WMCAs also have access to the Japan Fund for Poverty Reduction (JFPR), funds from which are also lent to members. In August 2001, ADB approved a JFPR grant 35 amounting to $900,000 for the GOB. LGED was the EA for this grant, while LGED’s district and upazila offices, together with the WMCAs, were the implementing agencies. The Livelihood Improvement for the Poor Project (the Grant), which was implemented together with the follow-on project36 in the areas with completed subprojects under the Project, aimed at (i) reducing rural poverty in selected subproject areas through livelihood improvement activities by the poor farmers of well-established and well-functioning WMCAs, and (ii) strengthening the capacities of WMCAs, through self-governance, to manage the poverty-focused activities of the poor. The Grant had two components: (i) livelihood improvement activities by the poor, and (ii) strengthening the capacity of the WMCAs for managing livelihood activities. The livelihood improvement component had three subcomponents: (i) productive microinfrastructure, (ii) livelihood support, and (iii) skills development. Based on the implementation completion memorandum37 for this Grant, a total of 102 person-months of consulting inputs were required by the Grant. The performance of the consultants was rated highly satisfactory. The Grant was closed on 30 June 2006. Overall, it is expected that the impact assessment will rate the Grant as “generally satisfactory.” The Grant has encouraged (i) the poor members, and (ii) competition among WMCAs to upgrade themselves in order to qualify for the JFPR funds. The number of loan applications has increased, indicating a rising awareness among the members. 31 One (Moranadi WC) of the two WMCAs with membership less than 60% of the benefited households has restricted

the number of members by increasing the required amount of initial savings deposit. In effect, new members have to contribute a savings amount equivalent to the existing savings of current members, rather than starting their savings accounts from zero. The other one (Kumarer Beel) is practically defunct.

32 Based on the original cooperative system, the capital base for the microcredit program originated mainly as loans to a cooperative from the Cooperative Bank, which in turn received funds from the Bangladesh Bank.

33 In most WMCAs, the maximum number of shares one can buy is limited to between 10 and 100, although four of the subprojects visited allow shareholdings up to the legally allowed maximum of 20% of total share capital per member (Appendixes 4 and 5). In at least two cases, the provision for allowing up to 20% of capital to be held by any individual has been used by the WMCAs to expand their capital base and thus the funds available for microcredit programs or WMCA commercial activities.

34 In four WMCAs, savings per share is Tk20; in two, Tk50; and in one, Tk100. 35 ADB. 2001. Reduce Rural Poverty Through Livelihood Improvement Activities by the Poor Members of Water

Management Cooperative Associations. Manila. 36 See footnote 6. 37 ADB. 2006. BAN: Livelihood Improvement for the Poor through Water Management Cooperative Associations.

Manila.

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36. Each WMCA is managed by a management committee. As per cooperative society rules, WMCAs hold elections every 3 years and regular annual general meetings during which the completed annual audit is presented. The functions of the management committee include (i) organizing the beneficiaries of the subprojects, including their participation and sharing in the O&M activities of the infrastructure, (ii) helping their members in income-generation activities through microcredit programs, and (iii) facilitating training of their members. Nineteen of the 22 subprojects have an active management committee, which functions regularly.38

37. The active WMCAs have various functional subcommittees such as the O&M, agricultural, microcredit/loan, and women’s subcommittees. Some of the WMCAs have village committees for closer connectivity with the beneficiaries. Eleven of the 19 active WMCAs have paid employees. The rest of the WMCAs operate through voluntary service. A table summarizing the features of each of the sample subprojects is presented in Appendix 6. 38. The Project provided extensive training to the beneficiaries, which included training on subproject implementation, relevant cooperative rules, making WMCAs work, basic management training, various livelihood activities (such as seasonal vegetable and seed production, integrated farm management, and poultry development), and O&M. The beneficiaries were also trained in fish production techniques, and pond fish culture and fingerling production. These training programs were highly appreciated by the beneficiaries. However since the end of project implementation, the availability of training programs for WMCAs has become limited. 39. The Midterm Review Mission of the Second Small-Scale Water Resources Development Sector Project (SSWRDP-2) recommended support for training for the completed Project, since substantial funds were available. However, at the time of OEM, this had not yet materialized due to lack of coordination between the IWRMU and the management of SSWRDP-2. The issue was thoroughly discussed with LGED staff and in the wrap-up meeting. IWRMU is expected to prepare a proposed training program for discussion with SSWRDP-2’s management. 40. In general, the beneficiaries of the subprojects visited are moderately to highly motivated and interested in WMCAs, except in two (Kumarer Beel FCD and Dighapatia FCD subprojects). Such interest can be partly traced to their sense of ownership, which in turn was to some extent a result of the beneficiaries’ involvement in their respective subprojects from planning to implementation and to O&M.39 In most meetings of the OEM with the WMCAs, around 80%–100% of the management committee members were present. In Haridhara WC subproject in a remote area of Domer Upazila in the Nilphamari district, all the WMCA members (104 male, 79 female, and 19 children) were present. The beneficiaries believe that the subproject has brought stability to production conditions and has increased food production and employment for the poor. The Moranadi WC subproject, which is described in more detail in Appendix 7, had appeared in LGED’s project records as virtually nonperforming and had been practically abandoned by project management. The OEM found this subproject, in fact, to have a WMCA

38 One subproject (Ramkrishnapur DR Subproject) does not have a Management Committee; and, two (Kumarer Beel

FCD and Dighapatia FCD subprojects) are practically defunct. The non-functioning WMCAs are discussed in Appendix 7.

39 Para. 5 of the back-to-office report of the OEM for the Special Evaluation Study on Institutional Arrangements in Rural Development Projects stated that “…among the various factors contributing to the positive result, the most interesting one was a policy of cash contribution from beneficiaries before physical construction as a pre-condition for subproject approval. This is a laudable innovation as so far many ADB-financed rural development projects failed to collect operation and maintenance (O&M) fees from beneficiaries, and failed to ensure funding sources for O&M after project completion…”

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that was operating quite strongly and effectively. In the Ramkrishnapur DR subproject (Appendix 7), the WMCA president was not available 40 along with the records, and the management committee was not functioning. Nevertheless, members of the WMCA had kept the association alive and were trying to reorganize it with the support of the Department of Cooperatives (DOC) and LGED officials. G. Consultants

41. The consultants for this Project were engaged under the attached TA (footnote 10). The recruitment process followed ADB’s Guidelines on the Use of Consultants. The number of consultants was increased as a result of the need to monitor the construction quality of the project infrastructure, and to prepare subproject feasibility and design studies (the consultants for which were recruited through a regular tender process, without any major issues). This required an increase in the number of domestic consultants from 12 to 18. As a result, the TA financed a total of 841.5 person-months of consulting services, almost 35% more than anticipated. The performance of the consultants was satisfactory. H. Loan Covenants

42. All of the loan covenants except two (which were partly met) were complied with. The Project Steering Committee was to meet “quarterly during the first year, semiannually from the second year to provide overall coordination, and whenever an issue requiring interministerial coordination arises.” However, the Committee met only every other year from 1995 up to 1999. These meetings were followed by another in late 2000 and one in 2002. Issues arising during implementation were normally resolved at the PMO level. The other covenant, which was partly met, related to the funding of recurrent maintenance costs of each subproject. The practice of WMCAs with regard to maintenance funding was not fully consistent with this covenant. While WMCAs finance the entire recurrent maintenance costs of structures, they cover only half of the cost of earthworks. The other half is shouldered by LGED. Nonetheless, this is a big step forward, with beneficiaries responsible for O&M costs being a new concept in Bangladesh that was introduced by the Project. I. Policy Framework

43. The GOB’s strategy, policies, and plans for developing the water resources sector were documented in the National Water Plan (NWP), the FFYP, and the Flood Action Plan. The NWP, prepared by the Water Resources Planning Organization in 1983–1987 and updated in 1988–1991, examined the long-term development perspectives for the country’s water resources sector. The NWP set out sector goals and guidelines to effectively manage water resources, and adopted the principles of integrated water resources management with emphasis on stakeholder participation, strategic planning, decentralization, sound management of social and environmental issues, sustainable O&M through management transfer to WMCAs, and improved governance of sector organizations. The FFYP, which was the GOB’s national development plan, gave priority to cost-effective, quick-gestation investments to rehabilitate and upgrade existing water resources infrastructure. The Flood Action Plan was initiated after the severe floods of 1987 and 1988 to form a long-term comprehensive flood management plan. These developments supported the Project and the participatory approach that was adopted during implementation.

40 The president was in jail due to reasons unrelated to the WMCA.

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44. Guidelines for participatory water management were also finalized—stipulating procedures and arrangements to implement sector interventions with water management association empowerment. The National Water Management Plan, which was also finalized in 2004 by the Water Resources Planning Organization, provided for a framework for short-, medium-, and long-term strategies and programs.41 The short-term focus is on institutional development and an enabling environment, along with critically urgent investment programs.

III. PERFORMANCE ASSESSMENT

45. Overall Assessment. The Project is rated successful. It was (i) highly relevant at the time of appraisal and evaluation to the Government’s and ADB’s objectives and strategies, (ii) effective in achieving its objective of increasing agricultural production in the subproject areas, (iii) efficient in terms of resource utilization, and (iv) likely sustainable in terms of subproject benefits. 46. Relevance. The Project is rated “highly relevant.” At the time of appraisal, the Project was consistent with the Government’s national development plan (FFYP). The FFYP’s investment plan for flood control and water resources was prepared based on the NWP, which was in turn prepared during 1983–1987, and updated during 1988–1991. The project design was sound, since the Government had given first priority to the expansion of minor irrigation in the NWP, because minor irrigation was expected to (i) be technically feasible using local resources, (ii) generate benefits quickly, and (iii) contribute directly to equity. Rehabilitation and upgrading of water control systems also received high priority, because such investments were expected to have a short gestation period and produce high investment returns. The FFYP emphasized that the supplementary use of minor irrigation in combination with effective flood control and drainage would enable farmers to crop high-yielding varieties and reduce the risk of crop failure from flooding or drought at the beginning and the end of the monsoon season. O&M of water resources schemes had usually been a problem in the past. To overcome these problems, the Government increasingly emphasized the need for active participation of local governments and beneficiaries in the development of small-scale water control schemes at all stages of the development process. This was well considered by the Project, as it introduced the concept of beneficiary participation in small-scale water resources development. Farmers, through their respective WMCAs, participated in all stages from subproject identification, contributed to infrastructure costs, and were responsible for recurring maintenance costs of the structures. The microcredit activities of the WMCAs generated income for the members and also generated funds for maintenance purposes. The Project was also consistent with ADB’s operational strategy for Bangladesh, which then focused on poverty reduction. This was also in line with the Government’s development objectives. The Project was also in line with ADB’s strategy for the agriculture sector, which placed greater focus on enhanced access of the poor to growth through a number of ways, including (i) increasing foodgrain production through the extension of irrigated dry season cultivation by minor irrigation, (ii) expanding and improving agricultural support services, and (iii) improving the policy environment and upgrading institutional capability. Thus, the Project was "highly relevant" at the time of appraisal. 47. The Project’s relevance was sustained until the time of evaluation. Fully consistent with the Millennium Development Goals, Bangladesh's national poverty reduction strategy aimed to

41 Short-term refers to 5 years, medium-term to 10 years, and long-term to 25 years.

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reduce the number of poor people to half by 2015,42 and to achieve substantial improvement in most aspects of human development. ADB’s overarching objective, which is poverty reduction, is also in line with the Government’s strategy. In spite of the shortfall in the number of completed subprojects (280 versus 400), total beneficiary households were estimated at 142,541 (763,600 people) compared with the 140,000 farm families (750,000) expected at the time of appraisal to benefit from the Project. Thus, this Project—the expected outcome and impact of which has been to contribute to sustained agricultural growth and poverty reduction, respectively—is still highly relevant to both the Government’s and ADB’s present strategies. 48. Effectiveness. The Project is rated “effective.” It achieved its outcome of increasing agricultural production in the subproject areas. In 2004, aggregating for all subprojects, cereal production was 242,371 tons above the combined preproject level,43 about the same level of production as in the previous year (Table 2). This figure compares favorably with the appraisal estimate of a 50,000-ton increase in foodcrop production. This is equivalent to an increase in output of about 1.5 tons per ha per year for every hectare cultivated in the subproject areas,44 compared with a per hectare incremental production of 0.33 ton at the time of appraisal. The data also show significant increases in noncereal production compared with the preproject situation, and observations from the subprojects visited by the OEM support this conclusion. However, because of the diverse nature of these crops, direct year-to-year comparisons are not possible without a detailed analysis of crop patterns, for which data are not available.45 Overall, the Project has produced a significant increase in rice production in major crop seasons and an increase in noncereal production (although the exact amount of this increase is unclear). While agricultural production in Bangladesh is sensitive to annual seasonal variations in crop production, the Project has led to increased rice output, because it has helped farmers with timely plantation and switching to high-yielding varieties—which require greater water management and control and more inputs than other lower yielding varieties—by making them safer and reducing risks for farmers. The Project supported beneficiary farmers in maintaining and improving soil productivity, crop diversification, and integrated pest management for sustainable crop production.46

42 With regard to the eradication of extreme poverty and hunger, there are two global targets: to halve, between 1990

and 2015, the (i) proportion of people whose income is less than one dollar a day; and (ii) proportion of people who suffer from hunger. The targets for Bangladesh are to reduce the proportion of people (i) below one dollar a day (purchasing power parity) from 58.8% in 1991 to 29.4% by 2015, and (ii) in extreme poverty from 28% in 1991 to 14% by 2015.

43 See Annual Effect Monitoring and Evaluation Report for 2004–2005, IWRMU. 44 Not all cultivated land is planted to rice, although a high proportion is at least for one season of the year. 45 By summing production of all noncereal crops together, the data are mixing the output of crops such as sugarcane

with yields around 40 tons/ha or more with the output of crops such as pulses with yields of around 1 ton/ha. A switch from one to the other causes a “fall” in noncereal output.

46 The analysis compares the “with subproject” situation and the situation in the subproject area if the subproject had not been implemented, which in general means a continuation of the preproject situation. It may be observed that the present crop yields reported in the subproject areas are generally similar to or higher than the national averages. More importantly, because of the nature of the terrain and the seasonal pattern of flooding in Bangladesh, the ability to control the level of flooding (either by retaining water in higher areas prone to early drainage or by excluding water in low-lying areas subject to excessive flood levels) almost always result in improvements in average crop yields and production. Conversely, these same areas have difficulty producing consistent crops from year to year if they have no means of controlling water. Thus, if there are areas near SSWRDSP subprojects where agriculture is performing similarly, it likely implies that these are not “without subproject” areas but rather areas that have benefited from other, similar projects. Unfortunately, time did not permit the OEM to investigate this observation more fully and in greater detail.

15

Season CerealsNon-

cerealsb CerealsNon-

cerealsb CerealsNon-

cerealsb

Winter 22,217 114,143 102,131 140,573 158,674 107,413Premonsoon 14,865 28,825 35,697 43,651 35,730 30,593Monsoon 49,576 18,516 104,976 33,903 47,967 20,891Total 86,658 161,484 242,804 218,127 242,371 158,897

Table 2: Increase in Production,a 2002–2004

2002 20042003(amount in tons)

a From preproject levels. b Noncereals are a diverse group of crops, and amounts should therefore be treated as

indicative only. Source: Integrated Water Resources Management Unit, Local Government Engineering

Department. 49. By reducing flooded areas and flood depth in many areas, the Project was expected to reduce the natural migration of fish during the breeding season and to lead to some loss of production from the floodplain fishery. At the same time, an increase in fish culture production was expected as a consequence of the improved control of water during the flood season. Compared with production before the Project, the total output of fish increased, by 1,572 tons in 2003 and 2,072 tons in 2004 (Appendix 8). In fact, there was a small reported net increase in floodplain fish production together with a much larger increase in culture fisheries.47 A small number of subprojects have had relatively large increases in culture fish production—offsetting losses in other areas. For the whole Project, there was an increase of about 5,600 in the number of those cultivating fish, and a small overall increase in those depending on floodplain fisheries. The impact of the Project on the livelihood of fish producers is difficult to assess because of the lack of reliable baseline data. For those successfully cultivating fish—e.g., the farmers in Bagchar-Badurgacha, who have successfully adopted shrimp production into their cropping pattern—there have been significant income benefits. The situation is much less clear for traditional fisher families, where gains have been experienced by some and losses by others. It is likely that traditional fisher families (who are almost always among the poor in any community) have benefited most where they have been able to participate in fish culture activities. 50. In addition to increased crop production, these subprojects have generated tangible benefits for the WMCAs such as opportunities for tree plantation, poultry raising, kitchen gardening, livestock rearing and fattening, and employment opportunities for the poor. An indirect benefit is the availability of microcredit. By securing management of flooding, drainage, and other aspects of water management in the subproject areas, the Project has established safe conditions for increased investment by households in both agricultural and nonagricultural activities. As a result, WMCA management committees and members attest to an improvement in their income and standard of living. This could be further supported by the increase in the net income for average cropping pattern per ha of land for 2003 and 2004 (compared to the preProject levels) as estimated by the OEM for the sample subprojects (Appendix 9).

47 Because of the lack of reliable preproject baseline data on fish production, these figures should be treated as

indicative only.

16

51. Overall, the beneficiaries are convinced and enthusiastic about the subproject benefits. Thus, the Project is rated “effective.”48

52. Efficiency. The OEM’s findings confirmed the PCR’s assessment that the Project was “efficient” in terms of resource utilization. 49 Relatively small amounts of investment were required by each of the subprojects. Subproject costs50 ranged from a low of Tk123,223 for the Parkulihar Paikpara DR subproject to a high of Tk23,964,604 for the Kabai FCD subproject. These investments have generated significant benefits for the subproject areas. Subproject implementation has resulted in increased cropping intensity—of over 100% in some instances—and greater production of higher yielding crop varieties. The resulting increases in production have been translated into increased incomes and higher standards of living for the beneficiaries. 53. The economic internal rates of return (EIRRs) of the 22 sample subprojects visited by the OEM were recalculated.51 The EIRRs estimated in the subproject feasibility studies were recalculated with costs and benefits updated to 2006 prices. PostProject EIRRs were based on crop area, production, and yield data sets for 2003 and 2004 from the EME reports of 2004 and 2005,52 respectively. The 2004 data from the 2005 report were the most recent comprehensive data available for the Project, as this was the last year when an EME report was produced. Recalculated EIRRs based on the 2005 EME ranged from negative (Baranurpur) to 182% (Ershalmari), compared with the recalculated feasibility study EIRRs ranging from a low of 12.8% to a high of 135.4%. A comparison of the subproject EIRRs at the time of the feasibility study and after the Project is made in Appendix 9. 54. In all but four53 of the subprojects visited by the OEM, the postProject EIRR is higher than the recalculated preProject EIRR for at least one of the two data sets. Benefits reported in 2003 and 2004 for these subprojects were higher than those anticipated for the with-project scenarios in the feasibility studies. For the 22 sample subprojects, the median investment per hectare estimated in the feasibility studies was Tk9,900 ($247 at the time the Project was prepared), and the average investment was Tk12,500 ($313) per ha. Investment per hectare ranged from a low of Tk1,724 ($29) for the Mitain-Naldanga FCD subproject to Tk32,675 ($556) for the Agrani Command Area Development subproject.54

55. All of the sample WMCAs are operating, albeit in varying degrees. The OEM visited 22 of the 273 operating subprojects and found most to be sound technically and relatively well maintained. The quality of work was generally good. Reexcavation and maintenance work

48 Although, overall, the Project was rated “effective,” there was significant variation among the subprojects and

between subsectors. The Project would have been rated highly effective if outcomes had been high more consistently across subprojects and subsectors.

49 With the exception of one subproject for which EIRRs could not be calculated, the recalculated EIRRs were all above 12% (Appendix 9, para. 7 and Table A9.1).

50 This is based on the costs of all the 280 subprojects. 51 The calculation of the EIRRs was based only on the direct infrastructure costs and direct benefits for each

subproject, as in the preProject feasibility studies. If TA costs were assigned to subprojects on a cost per hectare basis, the impact on EIRRs would not affect the overall conclusion regarding the efficiency of the Project.

52 These Reports were prepared annually by the IWRMU of LGED from 2002–2003 up to 2004–2005. 53 Recalculation of the feasibility study EIRRs for the four subprojects was not possible, because the original

feasibility studies for these subprojects are missing and therefore no preProject data were available. 54 The Agrani CAD subproject was the only command area development subproject implemented under this Project.

It was therefore more complex (and more expensive) than most of the other subprojects. US dollar equivalents are based on the exchange rate prevailing at the time of project completion.

17

carried out by the labor contracting societies55 were observed to be of better quality than that, in some cases, done by general contractors.

56. Sustainability. The subproject site visits suggested that the Project is “likely to be sustainable.” The WMCAs are generally sustainable, taking into consideration the (i) transparent and tangible benefits of the subprojects, which are appreciated by the beneficiaries; (ii) usefulness of the WMCAs for the beneficiaries; (iii) generally positive response of beneficiaries to the subprojects; (iv) commitment of the LGED management and WMCA leaders; (v) institutional arrangements of LGED for the management and maintenance of subprojects of this type; and (vi) WMCAs’ survival for the past 5 years. 57. O&M of 19 of 22 subprojects has been found good. All the WMCAs participate in O&M activities—the minimum being to keep the subproject running. Beneficiary contributions to O&M may be in cash, kind, or labor. Labor contributions constitute a significant portion of WMCA contributions to the cost of O&M, since much of the work required, especially for maintenance of embankments and canals, is manual (such as greasing and painting of sluices, repairing rain cuts and small damage to embankments, resetting protective blocks). Emergency works are done with LGED funds. 58. In some cases, fine tuning of the subprojects is necessary. The Mission observed that although the Midterm Review Mission for SSWRDP-2 recommended that funds available under SSWRDP-2 could be used for this work—which was agreed upon among the funding agencies—at the time of the OEM, the fine tuning works had still not been carried out. 59. At the time of OEM,56 LGED was in the process of establishing the Livelihood Trust Fund (LLT), a “successor” of the JFPR project (see para. 35). Of the total JFPR budget of US$1.05 million, almost $500,000 was given as small loans to the Project’s WMCAs. As planned under the JFPR project, the repayment of these small loans will form the seed money for the LLT. The objective of the LLT is to extend JFPR support for WMCAs. The LLT is expected to help ensure the WMCAs’ sustainability, which in turn is hoped to translate to the sustainability of the subprojects. The anticipated availability of additional resources as a result of the LLT will hopefully increase the WMCAs’ ability to channel some of their funds for the O&M of their respective subprojects. 60. In August 2007, Bangladesh was once again hit by large floods (although relatively less than the floods in 1998 and 2004). Based on the draft estimate prepared by LGED, the damage caused by the 2007 floods to 73 (out of 280) subprojects was valued at around $880,000. This represents around 1.7% of the total project cost. Aside from being relatively small in relation to the entire Project, the Government (through LGED’s IWRMU) has a system in place to support subprojects that are damaged by major floods.

55 Labor contracting parties are based on the concept of creating employment and income generating opportunities

for the landless/poor in the subproject area by developing the capability of these vulnerable persons through technical and social training.

56 As of October 2007, the IWRMU has drafted the Memorandum of Association and Rules and Regulations of the Proposed Livelihood Trust Fund.

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IV. OTHER ASSESSMENTS

A. Impact on Institutions and Policy

61. The Project on the whole was responsible for the institutionalization of beneficiary participation in small-scale water projects. As this was the first project to use this approach in water resource schemes, the training, guidance provided by the consultants, and hands-on experience collectively honed the skills of concerned LGED staff. These made the project staff better prepared for the implementation of the follow-on project.57 Interagency cooperation was also promoted through workshops (such as those on reviewing WMCA activities) and interaction among the staff of the involved government agencies. This Project highlights the importance and benefits to be achieved from a successful bottom-up approach with extensive institutional support. The latter helped build LGED’s present capacity at all levels to implement small-scale water resources development activities with the participation of beneficiaries. B. Socioeconomic Impact

62. Both landowners and the landless have benefited from the Project. In the sample subprojects, the intensification of agricultural production increased the demand for farm labor and thereby generated more employment for the poor and landless. Better household incomes make it easier for poor households to take advantage of education, health, and other social services in their villages. In addition, the Project helped improve the access of the rural poor to credit through the microcredit program of the WMCAs, which supported income-generating activities. 63. The Project did not involve resettlement of people. A total of around 61 ha of land (compared with the estimate of 399 ha) in 24 subprojects was acquired for infrastructure purposes. Land acquisition was reduced as much as possible by aligning the infrastructure on public land wherever possible. When this was not possible, people were persuaded to allow their land to be used. The Government acquired land as a last resort. Where land was not acquired, embankment footprints were constrained, resulting in excessively steep side slopes. This also affected quality in some subprojects, since the embankment had to be constructed without sufficient setback. 64. Project implementation had a negative impact on floodplain fisheries, although this was often offset by positive impacts on culture fisheries. To help alleviate the plight of affected people engaged in floodplain fisheries, LGED signed a memorandum of understanding (MOU) with the Ministry of Land in October 2002 to ensure user rights to water bodies within the subproject area of the affected people. The MOU helps ensure that the beneficiaries have priority access to these water bodies after paying standard fees to the Ministry of Land. In addition, training was provided to poor fisher folk to increase the possibility of accessing alternative income-generating activities. Fisheries-related training included, among others, pond fish culture and fingerling production and improved fish production techniques. 65. Women accounted for around 31% of the total members of the WMCAs in the sample subprojects. The participation of women in the WMCAs’ women’s subcommittees and in income-generating activities funded through the WMCA microcredit programs and the Livelihood Improvement for the Poor Project has resulted in higher self-esteem among these

57 As of the time of the OEM, the follow-on project was under implementation. As of this writing, the project

preparatory technical assistance for a possible third project was being processed.

19

women, who are now able to contribute more to family incomes. In addition, women are more visible in their respective communities, as they now contribute in terms of the WMCAs’ activities. The management committee of each WMCA had 3–4 women members as required by the Project. One of the subprojects visited was even chaired by a woman. This has enabled a number of women to actively participate in the overall management of and decision-making process in their respective WMCAs. Twelve of the 22 WMCAs visited by the OEM have women’s subcommittees mainly to focus on the participation of women in WMCA activities. Women take part substantially in income-generating activities through the microcredit program. Many women were trained in cooperatives, income-generating skills, and environmental awareness. C. Environmental Impact

66. Under the Project, an environmental monitoring program was established. Three regional and eight greater district laboratories were set up in Bangladesh for monitoring any changes in the water quality in 11 selected subprojects. Several parameters were monitored to assess water quality, including the pH, nitrate, and arsenic levels for groundwater, and pH, dissolved oxygen, and calcium chloride hardness for surface water. Laboratory technicians were trained in the use of the laboratory equipment. Based on the last and most recent EME report (2004–2005), water quality improvement has so far been generally observed.58 In addition, the subprojects designed fish-friendly structures and adopted an improved system for sluice gate operation to facilitate fish migration during critical periods. The Project assisted LGED in the preparation of an initial environmental examination and an environmental management plan for each subproject. The Project had no significant adverse environmental impacts. D. Asian Development Bank Performance

67. Since appraisal, ADB conducted 14 missions,59 including the project completion review mission. ADB was able to give timely advice to the Government. Project administration was delegated to the Bangladesh Resident Mission effective 1 October 2001, with 1 year and 3 months left before project completion. Project implementation was consistently rated satisfactory from the start till completion. During the last 2 years of the Project’s implementation,60 ADB fielded two missions a year to join IFAD and the GON in reviewing project progress. A midterm review was undertaken as scheduled, 3 years after loan effectiveness. This midterm review was very responsive to the needs of the Project, as it resulted in the introduction of steps that helped remedy the problems encountered during implementation. These include the establishment of a stronger oversight mechanism for monitoring construction quality, and observing a more realistic timeframe in terms of preparing and implementing the remaining subprojects. Overall, the performance of ADB was satisfactory.

58 The 2004-2005 EME report showed that, of the 11 sampled subprojects, 4 recorded an increase in nitrate levels.

This could be due to an increase in the use of fertilizer in some subprojects. Also, due to the inadequacy of laboratory reagents and consumable chemicals, the use of old kits/reagents for testing may have led to unreliable results.

59 Para. 42 of the PCR states that “ADB fielded 16 review missions during project implementation…” 60 Para. 55 of the RRP states that “…Project progress will be evaluated semiannually by a joint review mission

comprising the Bank, IFAD, and the Government of Netherlands, and during a midterm review, which is scheduled three years after loan effectiveness…”

20

E. Borrower and Executing Agency Performance

68. The performance of the Borrower was satisfactory. The Government was highly committed to the Project as shown by the high priority that it placed on the development of small-scale water resources. The progress of the Project was monitored through the Project Steering Committee, which was headed by the Secretary of the Local Government Division. The provision of counterpart funds was satisfactory. LGED, as the EA, performed satisfactorily as well. The EA was committed to the success of the Project as demonstrated by the recommendations that it forwarded to the ADB midterm review mission. LGED pointed out that the focus on achieving physical progress resulted in compromises, considering the insufficient time given for establishing local stakeholder institutions. Coordination and cooperation among a number of government agencies was a challenge, but was done relatively well. Considering the establishment of WMCAs under the Project, LGED helped institutionalize beneficiary participation, most importantly in the aspect of O&M. LGED has not had a problem with regard to staff quality and continuity. Most of those trained under the Project are still with the organization. Most of the consultants who worked for the Project are also still engaged under the follow-on project. F. Technical Assistance

69. The TA aimed to improve the capacity of LGED in carrying out activities related to beneficiary participation and project management. The TA was successful, as it was able to assist LGED in completing 273 subprojects—267 of which have been turned over to their respective WMCAs. More importantly, the TA developed a process for beneficiary participation, which LGED has adopted as an integral part of a subproject cycle. The TA has made effective contributions towards enhancing LGED’s institutional capability to mobilize beneficiaries. The design of the TA was appropriate, given the increased importance of social mobilization and beneficiary participation, and LGED’s lack of experience in social mobilization. A capacity-building program was designed and conducted, involving more than 132,000 days of training for IWRMU and PMO staff, LGED field staff, WMCA and labor contracting societies, partner agencies, and NGO representatives. The TA conducted a number of training programs including training related to subproject preparation, engineering, and income-generating activities such as vegetable production and duck farming. The TA likewise provided some capacity building in social safeguards, through the preparation of guidelines and on-the-job training for environmental assessment, including mitigation plans, compensation plans, and monitoring plans. Most of the LGED staff trained under the Project are still with the organization. A BME system was also set up, which resulted in EME reports for three successive fiscal years (FY2003–2005). The database set up for purposes of this BME has been continuously maintained under the follow-on project. The OEM benefited from this database.61

V. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Issues

70. Sustainability into the future is the key issue facing the subprojects. The long-term sustainability of these subprojects is contingent on a number of factors:

61 The TA would have been rated “highly successful” if the systems to ensure the sustainability of capacity

development and strengthening of the WMCAs, especially with regard to O&M, had been more securely established.

21

(i) No severe flooding disasters. Bangladesh experiences normal floods almost every year. However, the occurrence of severe floods could adversely affect the subprojects.

(ii) A long-term training program (or access to appropriate training) to increase

technical, management, production, and financial knowledge and skills. With project completion, training became limited. The importance of training cannot be overstated. This is an area where continuous support is needed, especially with the turnover of management committee members, i.e., the people who run the WMCAs, the effective operation of which will determine the future of the subprojects. Also, WMCAs have new members from time to time who (like the old ones) are very interested in receiving training in various areas, particularly income-generating activities. At least the permanent LGED staff who work as upazila community organizers, facilitators, and socioeconomists need to undergo meaningful training in assisting and facilitating the activities of the WMCAs. These latter training activities could be more participatory and based on case studies, rather than classroom lectures.

(iii) Long-term monitoring by LGED to ensure that infrastructure is being

properly maintained and that beneficiaries have the skills required to maintain it. Infrastructure facilities need to be in good shape so that they can deliver the benefits expected from them. This highlights the need for WMCAs to take the maintenance issue seriously. As of the time of evaluation, O&M of all the sample subprojects, except three, was good (para. 57). LGED needs to continue undertaking the long-term monitoring of and supporting the maintenance of the physical infrastructure of completed subprojects. Thus, capacity development and strengthening within LGED are important. However, monitoring is not a sufficient condition to ensure proper maintenance. This has to go hand in hand with the emergence of people with the proper skills to do the job and the funds to finance the job.

(iv) Long-term government support for the rehabilitation of subprojects after

abnormal damage due to flooding, etc. WMCAs usually have funds for normal O&M that come from contributions of their members. However, abnormal repairs, which require large amounts, cannot be met by the WMCA concerned. This is where these WMCAs need the Government. The OEM was advised that LGED now sets aside a certain amount for funding such repairs. However, this amount is allocated to different projects each year according to requirements. The availability and adequacy of this fund needs to be ensured over the long term.

(v) Long-term support from associated agencies and departments responsible

for providing technical services and support. Since this Project involved different activities under various government agencies, the continued support of these agencies is crucial to the sustained operations of the subprojects.

(vi) Greater participation of beneficiaries in the funding of local, small-scale

infrastructure development and maintenance. Most of the beneficiaries of irrigation/water resources projects are farmers and landless people who can hardly afford to pay for capital investments. Thus, previous irrigation projects’ O&M cost, as well as capital investment, have been entirely covered by the GOB. This Project was innovative in terms of the relatively large contributions from

22

beneficiaries. Though this lending modality has helped instill a sense of ownership among the beneficiaries, perhaps a better approach to ensure sustainability, such as the use of a revolving fund arrangement to cover training and O&M requirements, may be explored as a step towards this.

(vii) A common goal among various stakeholders. LGED and other government

agencies involved, and, more importantly, the WMCAs should remain focused on their common objective of properly maintaining the subproject infrastructure so as to sustain the benefits derived from these facilities.

B. Lessons

71. The Project’s experience points to a number of lessons with regard to WMCAs, among which are the following:

(i) In general, the best WMCAs have the following characteristics: (a) subprojects have direct and tangible benefits, (b) good and strong WMCA leadership, supported by (c) proactive LGED and project staff.

(ii) WMCAs with good income-generating activities are in a better position to perform good O&M activities. However, some WMCAs have the tendency to focus more on income-generating activities than on O&M activities, notably WMCAs where the leadership lies with entrepreneurs rather than with farmers.

(iii) All landowners had a positive view about WMCAs. For those with large holdings, the WMCA facilitates O&M activities. Smallholders and the poor see WMCAs as a good source of microcredit (no matter how limited the availability of funds)—very often cheaper than funds available from NGO microcredit programs.

(iv) Lack of training in handed-over subprojects may undermine sustainability. (v) WMCAs are capable of organizing and implementing routine O&M, but they need

the assistance of LGED for major maintenance works. (vi) Experience in the first phase of the Project demonstrated that the combination of

skill acquisition and confidence from training, and support with microcredit facilities may work as a useful package to sustain WMCAs and their activities.

(vii) A large number of training activities makes smooth delivery of training challenging. A good monitoring system has to be in place to ensure timely delivery of relevant training. Involvement of partner agencies such as DOC may need to be maximized.

(viii) Successful project implementation requires good relationships and constructive interaction with local government, Department of Agricultural Extension, Department of Fisheries, Ministry of Land, DOC, and other agencies. The Project developed good coordination mechanisms and thus obtained inputs and support from a range of agencies for project beneficiaries. It is important to note that LGED is an integral part of the Local Government Administration, which contributed to the ability of LGED to work effectively with the other support agencies.

(ix) Procedures for land acquisition should be clear. Experience shows that the provision of land as a demonstration of public support for a subproject is not an effective argument for encouraging private individuals to allow the use of their lands for public purposes. The landowners are, too often, not the beneficiaries. In addition, since land is scarce, existing infrastructure should be used for more than one purpose (to the extent practicable). In cases, where land is not acquired

23

(but privately owned), the land should be used only if the WMCA can provide a plan showing how the individuals providing the land will be compensated.62

(x) LGED’s current subproject operating performance grading system focuses on the revenue-generating capability of a WMCA, including the ability to generate and use funds for O&M purposes. The present system does not seem to reflect a relatively accurate picture of the real condition of the subproject facilities and should not be treated as an overall assessment of the status of the WMCAs. Using the IWRMU’s grading system, around 44% of all the subprojects are at least moderately functioning, while the remaining 56% are at best poorly functioning. Based on each of the WMCA’s activities/operations 63 and on observations in the field, the OEM rated each of the subprojects visited using a four-category rating system, 64 with active WMCAs having well-maintained infrastructure receiving a highly successful rating, and inactive or defunct WMCAs with poorly maintained infrastructure getting an unsuccessful rating. Of the 22 subprojects visited, around 77% were at least successful, while 23% were at best partly successful. A comparison of the OEM’s ratings with IWRMU’s highlights the inability of the latter’s grading system to capture some factors that are not solely based on the WMCAs’ capability to raise financial resources.65

72. In addition, project experience shows that beneficiary participation is a viable approach to planning, implementation, O&M, and overall management of small-scale water subprojects under the following conditions: (i) subprojects are small; (ii) benefits are tangible and transparent; (iii) the subproject is conceived and initiated by the beneficiaries; (iv) beneficiaries are involved in all stages of the project cycle; (v) LGED field staff are willing to support the WMCA and are proactive; and (vi) LGED top management is supportive of its field staff. C. Follow-Up Actions

73. Throughout the OEM’s subproject visits, the need for training was apparent from the discussions with members of the WMCAs. To minimize the need for training of the management committee members of WMCAs, LGED may consider requesting DOC to revise the system of electing the members of the management committees so that a number of the members are retained every time an election is held. 66 This will help ensure the continuity of WMCA management and operations and the possibility of the retained members to transfer their management expertise to the newly elected members. In addition, as recommended by the Midterm Review Mission for SSWRDP-2, the fine tuning of selected subprojects and the conduct of follow-on training for WMCAs under the first Project need to be carried out using funds from SSWRDP-2. There needs to be a continuous training program for the management committee members on cooperative management to enable them to properly manage their

62 Experience of the Project with regard to land acquisition was a basis in formulating procedures for land acquisition

under the follow-on project. 63 These include, among others, the existence of a management committee and subcommittees that meet regularly,

holding of annual general meetings, collection of savings and contributions to the WMCA, repayment of microcredit, O&M activities, and income-generating activities.

64 Highly successful, successful, partly successful, and unsuccessful. 65 LGED has now commissioned an O&M study that will look into the system presently used to rate the O&M status of

subprojects, among others. This study is also aimed at improving knowledge and understanding of the actual O&M needs (and costs) of the different types of small-scale water resources subprojects, and the capacity and dynamics of the beneficiaries to address these needs.

66 The project preparatory TA for the Participatory Small-Scale Water Resources Project (Phase III of the Project) will assess the option of amending the existing regulations to introduce greater continuity by having, for example, only half of the committee members open for election.

24

respective WMCAs. Also, recurrent training on selected income-generating and O&M activities is essential. This will help ensure the sustainability of WMCAs and the subprojects. The OEM had discussions with LGED, particularly with the IWRMU and the team administering the SSWRDP-2, about possible courses of action to address training. While WMCA members can be trained initially by utilizing SSWRDP-2 funds, a more sustainable arrangement, such as a revolving fund for training and O&M purposes, may need to be explored as soon as possible. 74. LGED, through the IWRMU, needs to continue undertaking the long-term maintenance monitoring of physical infrastructure constructed under the Project. This will help ensure the facilities’ continued operation. In addition, LGED has to make sure that the WMCAs have the appropriate skills to perform proper maintenance of the infrastructure. This will require close coordination with the IWRMU, which will be responsible for the training program. The creation of all revenue budget posts and the development of feedback mechanisms to maximize the use of the management information system database (and respond to evolving needs of WMCAs) as soon as possible will facilitate the fulfillment of the IWRMU’s role. 75. The GOB, through LGED, should continue to support WMCAs to undertake major maintenance work when it is required. WMCAs are not in a position to finance the costs of major repairs resulting from severe floods. However, it is also important to have clear up-front indications of the cost of routine, annual maintenance activities and contributions to be made by WMCAs. Overreliance on LGED for “major” repairs could lead to a tendency for more routine works to be included in emergency activities. 76. By 2008, training specifically for the WMCAs of handed-over subprojects should be included in regular training programs of the Department of Agricultural Extension, the Department of Fisheries, the Department of Environment, and DOC. This will help in strengthening the income-generation as well as management capacities of the WMCAs.

Appendix 1 25

PROJECT COST BY TYPE OF EXPENDITURE

Appraisal Actual Appraisal ActualCivil Works including Land Acquisition 32,707 35,975 10.0 49.6 70.3Vehicles and Equipment 4,480 1,721 (61.6) 6.8 3.4Training 6,386 3,332 (47.8) 9.7 6.5Surveys and Investigation 536 326 (39.2) 0.8 0.6Benefit Monitoring 4,737 175 (96.3) 7.2 0.3Incremental Operating Cost 383 2,558 567.9 0.6 5.0Service Charges 915 671 (26.7) 1.4 1.3TA Grant from GON 6,917 5,886 (14.9) 10.5 11.5CDVAT for Vehicles and Equipment 8,906 556 (93.8) 13.5 1.1 Total 65,967 51,200 (22.4) 100.0 100.0

Type of ExpenditureAmount ($'000) %

Change% Share to Total

CDVAT = customs duty and value-added tax, GON = Government of the Netherlands, TA = technical assistance. Sources: ADB Loan Financial Information System; ADB Project Completion Report.

Appendix 2 26

SUMMARY OF INFRASTRUCTURE COMPLETED

Type Subprojects

(No.) Share (%) Command Area Development 1 0.4 Drainage 48 17.1 Drainage and Irrigation 2 0.7 Drainage and Water Conservation 21 7.5 Flood Control and Drainage 162 57.9 Water Conservation 46 16.4 Total 280 100.0

Type Length (km)

Amount (Tk

million) A. Embankment 381.7 1. Drainage and water retention 2.64 0.7 2. Flood control drainage improvement 863.03 354.9 3. Flood control drainage and irrigation 79.91 26.1 Number B. Regulators 1,077.1 1. Flood control 370 668.4 2. Drainage improvement 14 17.3 3. Water conservation 214 373.6 4. Command area development 14 17.7 Length (km) C. Khal (Canal) Reexcavation 247.3 1. Flood control 314.48 65.0 2. Drainage improvement 313.03 58.9 3. Water conservation 533.78 122.9 4. Command area development 0.59 0.5 Total 1,706.0 Source of Basic Data: Local Government Engineering Department.

Appendix 3 27

HOUSEHOLDS, BENEFICIARIES, AND WMCA MEMBERSHIP OF SAMPLE SUBPROJECTS

WMCA Membershipa

Subproject Total

Households Beneficiary Households Men Women Total

% of Total HH

% of Beneficiary

HH Nabaganga FCD 746 448 495 914 1409 189 315 Ichali WC 683 683 361 215 576 84 84 Bagchar-Badurgacha FCD 359 359 328 154 482 134 134 Jabusha Beel FCD 1,090 1,090 619 97 716 66 66 Kaikubunia-Chinguria FCD 278 341 222 94 316 114 93 Ramkrishnapur (Drainage) 587 490 333 57 390 66 80 Mitain-Naldanga (FCD) 531 435 483 99 582 110 134 Ershalmari WC 323 313 210 108 318 98 102 Baranurpur WC 317 305 216 127 343 108 112 Barahar FCD 1,010 810 476 197 673 67 83 Lohagara Khal FCD 1,284 1,234 665 221 886 69 72 Moranadi WC 824 445 128 64 192 23 43b Nakdaha-Alaikumari WC 400 318 136 54 190 48 60 Haridhara WC 591 363 231 84 315 53 87 Charolkathi Beel FCD 182 152 162 76 238 131 157 Purba Mohanpur FCD 542 461 216 107 323 60 70 Agrani CAD 2,000 1,379 736 206 942 47 68 Dudhai Bhanpur WC 755 264 284 50 334 44 127 Bankeshor-Nebutala

Drainage and WC 780 239 241 40 281 36 118

Rampur FCD 400 100 270 69 339 85 339 Kumarer Beel FCD 750 380 137 15 152 20 40 Dighapatia FCD 357 219 204 98 302 85 138

CAD = command area development, FCD = flood control and drainage, HH = household, WC = water conservation, WMCA = water management cooperative association. a Assumes one member per household. However, in some WMCAs, households may have more than one member. Some

WMCAs also have members from nonbeneficiary households. b According to the President of the Management Committee of this WMCA, membership has been deliberately restricted,

because the WMCA is unable to provide microcredit to its present members. Sources: Local Government Engineering Department; Operations Evaluation Mission.

Appendix 4

28

MEMBERS’ FINANCIAL POSITION (OWN CAPITAL) FROM SAMPLE WMCAs (Tk)

Benefits

Subproject Shares Savings Total

Capital Capital/ Member Dividend Interest

Nabaganga FCD 2,058,100 1,565,781 3,731,282 2,648 20% 6% Ichali WC 27,890 218,870 246,760 428 Bagchar-Badurgacha FCD 50,000 388,340 653,687 1,356 Jabusha Beel FCD 138,720 177,840 372,360 520 Kaikubunia-Chinguria FCD 31,160 128,360 159,520 505 Ramkrishnapur (Drainage) 38,990 47,245 86,235 221 Mitain-Naldanga (FCD) 45,730 155,210 200,940 345 Ershalmari WC 20,630 140,650 161,280 507 yes Baranurpur WC 22,530 191,115 213,645 623 Barahar FCD 31,780 217,080 248,860 372 Lohagara Khal FCD 117,020 108,463 225,483 255 Moranadi WC 45,520 103,380 148,900 776 Nakdaha-Alaikumari WC 42,400 61,600 104,000 547 Haridhara WC 37,510 71,385 108,895 346 yes Charolkathi Beel FCD 55,070 86,310 141,380 594 Purba Mohanpur FCD 4,660 72,020 72,680 225 Agrani CAD 63,750 367,350 431,100 Dudhai Bhanpur WC 97,450 125,638 223,088 668 Bankeshor-Nebutala

Drainage&WC 11,090 52,350 63,440 226 48%

Rampur FCD 71,030 650,018 721,048 2,127 150% 10% Kumarer Beel FCD 4,390 14,060 18,450 121 Dighapatia FCD 12,760 71,320 84,080 278 CAD = command area development, FCD = flood control and drainage, WC = water conservation. Sources: Local Government Engineering Department; Operations Evaluation Mission.

STATUS OF MICROCREDIT: SAMPLE SUBPROJECTS

CAD = command area development, D&WC = draina nd water conservation, FCD = flood control and drainage, JFPR = Japan Funds for Poverty Reduction, No. = number, Tk = taka, WC = water conservation, WMCA = water management cooperative association.

ge a

WMCA Shares Micro-Credit (WMCA Funds)

JFPR Funds

Subproject Tk/Share Maximum/ Member

Savings/ Member/ Month

(Tk)

Total Loans

Disbursed Total

Value (Tk) Repayment

(Tk)

Loans (No.)

Funds Disbursed

(Tk) Repayment

(Tk) Nabaganga FCD 10 20% of

total Min. 80 3,605 29,201,000 24,507,243 – – –

Ichali WC 10 100 10 710 671,951 547,450 30 140,300 128,100 Bagchar-Badurgacha FCD 50 10 10 537 705,750 610,320 n/a 610,320 549,490 Jabusha Beel FCD 20 500 10 88 414,500 295,430 – – – Kaikubunia-Chinguria FCD 10 10 100 96 258,000 186,840 – – – Ramkrishnapur (Drainage) WMCA Management Committee defunct. No data available. Records with President, who is not available. Mitain-Naldanga (FCD) 10 10 10 61 144,000 57,000 44 212,500 129,040 Ershalmari WC 10 100 10 55 110,000 116,416 65 315,000 127,515 Baranurpur WC 10 100 10 150 460,000 447,300 64 284,000 180,580 Barahar FCD 10 100 10 410 703,900 530,319 n/aa n/a n/a Lohagara Khal FCD 20 100 10 74 436,150 458,371 – – – Moranadi WC 20 100 20 60 80,000 n/a

– 48,000 48,000 Nakdaha-Alaikumari WC 100 1 10 No microcredit program Haridhara WC 20 2,500 10 54 51,400 45,650 28 100,000 100,000 Charolkathi Beel FCD 10 Did not

limit 10 235 371,500 258,000 – – –

Purba Mohanpur FCD 10 500 10 72 158,400 73,340 n/a 103,000 – Agrani CAD 50 20 100 942 2,829,750 1,898,750 – – – Dudhai Bhanpur WC 10 100 10 62 234,000b n/a

63 220,200 158,026 Bankeshor-Nebutala D&WC

10 10 10 32 125,500 85,500 – – –

Rampur FCD 10 20% of total

20 376 1,476,918 992,385 64 346,800 249,560

Kumarer Beel FCD WMCA Management Committee defunct. No up-to-date data available. Dighapatia FCD 10 20% of

total 10 46 88,500 55,120 – – –

Sources: Local Government Engineering Department; Operations Evaluation Mission. Appendix 5

29

30 Appendix 6

Subpro Rat

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Agrani CABagcharFCDBankeshoDR&WCBarahar FBaranurpuCharolkaDighapatDudhai BhErshalmHaridharIchali WJabushaKumarer BeLohagaraMitain-NMoranadi WNabagaNakdaha-Purba MRamkrishRampurTripalli FCD

D 1 1 1 1 1 1 1 1 1 1 1 1 47 1 1 1 1 1 1 1 S-Badurgacha

1 1 1 1 1 1 0 0 1 1 1 1 134 1 1.1 1 1 1 1 1 HSr-Nebutala

1 1 1 1 1 1 0 0 1 1 0 0 36 0 0.1 1 1 1 1 0 PSCD 1 1 1 1 1 1 0 0 1 1 1 1 66 1 0.6 1 1 1 1 1 Sr WC 1 1 1 1 1 1 0 0 1 1 1 1 110 1 0.6 1 1 1 1 1 S

thi Beel FCD 1 1 1 1 1 1 1 1 1 1 0 1 127 1 1.5 1 1 1 1 0 Sia FCD 1 1 1 1 0 0 1 1 0 0/1 85 0 0.2 0/1 0/1 0/1 0/1 0 PS

anpur WC 1 1 1 1 1 1 1 1 1 1 1 44 1 0.4 1 1 1 0 0 PSari Khal WC 1 1 1 1 1 1 0 0 1 1 1 1 98 1 0.4 1 1 1 1 1 Sa WC 1 1 1 1 1 1 1 1 1 1 0 1 53 1 0.2 1 1 1 1 0 SC 1 1 1 1 1 1 1 1 1 1 0 1 84 1 1.2 1 1 1 1 1 S Beel FCD 1 1 1 1 1 1 1 1 1 1 1 1 66 0 0.14 1 1 1 1 1 S

el FCD US Khal FCD 1 1 1 1 1 1 1 1 1 1 69 0.1 1 1 1 1 S

aldanga FCD 1 1 1 1 1 1 1 1 1 1 1 1 110 1 0.12 1 1 1 1 1 HSC 1 1 1 1 1 1 1 1 1 1 1 1 23 0 1 1 1 1 1 S

nga FCD 1 1 1 1 1 1 0 0 1 1 1 1 189 0 2.6 1 1 1 1 1 SAlaikumari WC 1 1 1 1 1 1 0 0 1 1 0 1 60 0 0 1 1 0/1 0 S

ohanpur FCD 1 1 1 1 1 1 1 1 1 1 0 1 60 1 0.2 1 1 1 1 0 Snapur DR 0 0 0 0 0 0 0 0 0 0 0 0 66 0 0.06 0 1 1 1 1 S

FCD 1 1 1 1 1 1 0 0 1 1 1 1 85 1 1.3 1 1 1 1 1 HSa 1 1 1 1 1 1 1 1 1 1 0 1 91 0.26 1 US

AGM = annual general meeting, CAD = command area development, DR = drainage, FCD = flood control and drainage, HH = household, HS = highly successful, JFPR = Japan Fund for Poverty Reduction, MC = management committee, O&M = operation and maintenance, PS = partly successful, S = successful, US = unsuccessful, WC = water conservation, WMCA = water management cooperative association. a Also known as the Kaikubunia-Chinguri Flood Control and Drainage Subproject. Notes: (i) The above criteria were drawn up by the Operations Evaluation Mission. These criteria gave the OEM an indication of the WMCAs' operations in terms of

organization, record keeping, activities of leaders and members, contributions to the WMCA, and repayment of loans, among others. (ii) A score of 1 means yes; 0 means no. The higher the total score of a subproject, the better. A high score indicates a generally successful WMCA. Source: Operations Evaluation Mission.

Appendix 7

31

SELECTED SAMPLE CASE STUDIES A. Introduction 1. The Operations Evaluation Mission (OEM) visited 22 subprojects (out of the 267 subprojects handed over to water management cooperative associations [WMCAs]) in 12 districts. The OEM observed the subproject facilities, their usefulness, operation and maintenance (O&M), institutional aspects of the WMCAs, and the latter’s participation in O&M of the subprojects facilities, and income-generating activities. The OEM met with the management committee members of the WMCAs and upazila (subdistrict) and district officers of the Local Government Engineering Department (LGED). In many subprojects, the WMCAs organized meetings of their general members with the OEM. Substantial data were collected from the management information system being maintained by the Integrated Water Resources Management Unit with the assistance of the follow-on project, the Second Small-Scale Water Resources Development Sector Project. This appendix discusses some of the subprojects visited by the OEM in detail. B. Ramkrishnapur Drainage (DR) Subproject: “Where there are benefits, the WMCA

does not die.” 2. Located in Gopalganj in Moksedpur Upazila, this DR subproject involved the re-excavation of 8.05 kilometers (km) of canal, which facilitated irrigation, fish culture, water transportation, and its use for livestock. This subproject covered a gross area of 920 hectares (ha) at a cost of Tk2,781,000. The benefits have been very impressive—evident and convincing. 3. The management committee of the WMCA had been elected in May 2002, but had been defunct for 2.5 years due to the absence of its president (who was facing criminal charges due to activities not related to the WMCA) and its secretary (who had moved out of the country). All records were with the president and could not be retrieved despite efforts by the leading members of the WMCA. The WMCA could not continue its official function without the book of accounts and other records. This made the management committee dysfunctional and the WMCA defunct. 4. Despite these setbacks, some leading members of the WMCA had kept the WMCA alive with the support and cooperation of LGED and district-level Department of Cooperatives (DOC) officials. Their meeting with the OEM was well attended, including a few women. These concerned members held informal meetings and worked on behalf of the management committee. Their main focus had been to look after the O&M of the subproject facilities to keep them from deteriorating and to ensure their sustainability. Other activities had been kept on hold. This concerned group had been in constant communication with LGED and DOC. Recently, an ad hoc committee was formed, tasked to organize the activities as per the WMCA’s constitution and to reacquire the records from the previous president through legal action. LGED and DOC officials were supporting and helping the ad hoc committee.

Appendix 7 32

C. Kumarer Beel Flood Control and Drainage (FCD) Subproject: “Where benefits are doubtful, the WMCA does not work.” 5. Located in Sadar Upazila in Chapai Nawabganj District, this FCD subproject involved the resectioning of a 2.15-km embankment, the 0.37-km khal reexcavation, and construction of a 1-vent regulator encompassing a gross area of 380 ha at a cost of Tk2,097,080. Although the OEM had initially set an appointment with the WMCA, nobody came to the said meeting. Executing agency staff informed the OEM that the sluice had been constructed outside the subproject area upstream. There is a big FCD project of the Bangladesh Water Development Board north of this subproject. It appears that the subproject was not well conceived, and benefits from it were not very visible or convincing to the anticipated beneficiaries. Thus, the anticipated beneficiaries in general were not enthusiastic about the structure. Although the WMCA had been formed more than 8.5 years previously, it never flourished as an active WMCA, except maybe in the early year(s). There is no possibility of rejuvenating the WMCA of this subproject.

Kumarer Beel Flood Control and Drainage Subproject.

D. Dighapatia FCD Subproject: “Where benefits are doubtful, the WMCA does not work.” 6. Located in Sadar Upazila in Natore District, this FCD subproject involved khal reexcavation of 2.18 km and construction of two 1-vent regulators encompassing a gross area of 376 ha for Tk3,191,970. Only 5 persons including the president of the 9-year old WMCA were present at the meeting with the OEM. From an enthusiastic start, the discussion gradually diminished after the planning and design defects of the subproject started to come out. The subproject lets flood water from an area excluded from the subproject pass through this subproject. The subproject beneficiaries were divided on this issue. The design floor level of one of the regulators is higher than required and obstructs drainage. The subproject infrastructure is slow to drain out all the flood water. The outlet channel of one regulator lies on the land of a private owner, who grants access subject to the owner’s private interests, resulting in drainage obstruction. All these had impeded the expected benefits. With drainage still being a problem in some areas, a good number of beneficiaries were unhappy with the subproject leading to a loss of interest in the WMCA activities. The WMCA management committee was found to be ineffective. Despite the demand among the population to remodel the subproject, LGED was insisting on the revitalization and reorganization of the WMCA. Internal disunity within the WMCA hampered them from exercising any form of initiative. Remodelling the subproject, in addition to increased efforts from everyone involved, is necessary to revitalize this WMCA. E. Moranadi Water Conservation (WC) Subproject: “A withering WMCA blossoms again.”

7. The socioeconomist of the Small-Scale Water Resources Development Sector Project initially believed that the Moranadi subproject was not worth seeing, since it was in a very bad

Appendix 7

33

situation. The WMCA did not work. LGED had graded it as a “D” subproject, which means it was functioning very poorly.

8. The Moranadi Subproject is located in Pirganj Upazila in Rangpur District, a remote and very poor area in the north of Bangladesh. The subproject involved 3.5 km of khal reexcavation, one 2-vent water resources structure, and the restoration of a culvert at a total cost of Tk2,489,343. 9. The subproject’s original plan included gates in the water resources structure, to which the local beneficiaries had opposing views. The fish cultivators wanted the gates, but the crop farmers opposed them. The dispute was resolved in favor of the farmers, who represented the majority. Moranadi Water Conservation Subproject

10. The subproject brought huge benefits to the local population. From a one crop yield that was often damaged as a result of the drainage problem, three crops were now harvested. New employment, as a result, had been generated. 11. The meeting with the Mission was well attended (27 male and 20 female participants). The WMCA seemed quite active. Both the president and the secretary were holding office for their second terms. An elected management committee held regular meetings and maintained books of accounts and other records. The accounts were audited every year. Their membership was only 43% of the beneficiary households. The president told the Mission that many beneficiaries wanted to be members of the WMCA, but because they could not grant microcredit to all those who wanted it, membership was kept limited. Each member had to purchase at least one share costing Tk20 and to deposit Tk20 per month as savings. 12. The WMCA extended microcredit at 15% interest from the fund generated by the savings of members and the sale of shares. Nine to ten percent of the 15% interest was spent for WMCA operating expenditures and the rest (5–6%) distributed among the members as dividends. Usually, the members bought new shares with the dividend money. 13. The WMCA had a number of subcommittees: O&M, agriculture, fishery, and women’s subcommittees. The O&M subcommittee took active part in the maintenance works and shared O&M costs as per LGED rules. They collected rice (30–35 kg rough rice per ha) which was sold in markets to generate O&M funds. Every member was to give 7 days of free labor per year either personally or by hiring another individual. Regular maintenance work included silt clearing, water hyacinth cleaning, and canal maintenance. In 2005–06, the WMCA had shared voluntary labor worth Tk80,000. 14. After the visit, the OEM believed that this Subproject should be categorized as at least a “B”, i.e., a moderately functioning subproject. F. Nabaganga Khal FCD WMCA: Story of Microcredit Success and Inadequate O&M 15. Located in Sadar Upazila in Chuadanga District, this FCD subproject with a gross area of 703 ha included the reexcavation of 3.46 km of canal and the construction of three pipe sluices and one regulator. The total subproject cost was Tk6,182,795.

Appendix 7 34

16. This was a very active and well-functioning WMCA led by a management committee headed by a woman. However, the moving force behind this WMCA was its founder president, who is a good entrepreneur. There were 746 households in the subproject, of which 448 were beneficiaries. The WMCA had various functional subcommittees, which included the O&M subcommittee. 17. The Nabaganga WMCA had a strong and efficient microcredit program that disbursed loans among its members. They had more than 1,400 members and accepted more than one member per household. Children of the WMCA members were also eligible to be enrolled as associate members but could not avail of loans. 18. Funds were generated from the shares (Tk10 per share) purchased and from compulsory savings (Tk80 per month per member) of the WMCA members. One member could buy a maximum of 20% of the total shares. Many members had 500 shares each. The members received a 20% dividend on their share money and savings—a relatively high rate of return—acting as an incentive for them to invest money in shares and savings. 19. The Nabaganga WMCA extended loans ranging from a few thousand taka to as high as Tk40,000. The total microcredit loans disbursed by this WMCA came to about Tk29.2 million, remarkably high for any WMCA. Loans were used for small income-generating activities such as fishing, cow fattening, agriculture, and small trading. The OEM visited one betel-leaf plantation that had been established using the WMCA’s microcredit funds. 20. The Nabaganga WMCA employed a good mechanism for running their microcredit activities. It had seven employees and was the only WMCA using a computer in its office. The members were grouped in 20s, with each group being managed by a leader. Group leaders were responsible for collecting loan installments and savings, promoting purchase of shares, and increasing membership. Each group leader received 25% of the interest collected by the WMCA from disbursed loans. 21. The microcredit activities of this WMCA were impressive. However, the maintenance of the FCD infrastructure was not at the same level—the regulator, sluices, and the canal outlet were not properly maintained, and the bed of the canal was full of bushes. Nabaganga WMCA seemed to act more as a microcredit organization than a WMCA with the primary objective of ensuring sustainable O&M of the subproject infrastructures. 22. This subproject demonstrates that leadership by a good entrepreneur creates increased opportunities for members to benefit from savings and buying shares, as well as availing of small loans. This is an aspect of the WMCA’s activities that can strengthen them. While it is important for WMCAs to consider microcredit activity as an important and crucial supporting activity to sustain their operations, it is imperative that they never lose sight of their prime objective of ensuring sustainable O&M activities—the demarcation line (often overlooked) that distinguishes a WMCA from a microcredit organization. Although it was probably not the primary intention of the Project to create effective microcredit organizations, this happened in this case. While the FCD and its O&M seemed to play a secondary role in this subproject, the latter’s positive impact on the livelihood of the members cannot be denied. G. Haridhara WC Subproject: “What good leadership can achieve.” 23. Another interesting case is the Haridhara WC subproject in Domer Upazila in Nilphamari District. The OEM attended a meeting that was well represented not only by the management

Appendix 7

35

committee members of the WMCA but also by a big gathering of beneficiaries composed by 104 men, 79 women, and 19 children. 24. The Haridhara WC subproject is in a remote area, far from the upazila headquarters, which used to suffer annual “monga.”1 Agricultural production had been restricted by the lack of water. 25. The Haridhara WC subproject undertook a resectioning of the embankment, khal reexcavation, and construction of water-retaining structures for irrigation costing Tk2,178,000. The subproject, with a gross area of 254 ha and 591 households, was providing benefits to 200 ha of land and 363 households. What was once an extremely poverty-stricken area was now a community with food, primary education for children, and sociocultural activities. 26. The WMCA had 315 members led by an active management committee and three village committees. The committees held regular monthly and weekly meetings. They disbursed small loans for income-generating activities that included running small shops, livestock rearing, van/rickshaw renting, and tree planting. The rate of loan repayment was good. The WMCA members expressed their need for training in cottage industries such as making hand fans and mats, and tailoring. 27. While all WMCAs had a subcommittee taking care of O&M activities, what made Haridhara WC different from the rest was the compulsory participation of each WMCA member—rich and poor—in O&M, which was done as an annual festival. Participation in O&M activities could be either in the form of voluntary work or through hired labor.2 The laborers were provided with light snacks, the cost of which was borne by the community. 28. This WMCA planned to develop 40 decimals3 of land, which they had purchased earlier, into a local market, initiating fishery, poultry, small trades, cow and goat fattening, and small-scale cottage industries, among others. 29. The generally positive attitude of the members played an important role in this WMCA. In spite of the remote and extremely poor subproject area, the people were confident of themselves, and consciously preserved unity and harmony among the community members. Although financial support from the Japan Fund for Poverty Reduction was available to the members for loan purposes, this WMCA opted not to avail of these funds the second time around as these were not sufficient to meet the total demand of the members and would have required selective lending. The WMCA did not opt for this process, as it could have undermined the harmony and unity among its members. 30. This subproject was conceived by the local people and initiated by one who had earlier been a facilitator and was now a socioeconomist working for LGED. At the local level, a young lady who was a teacher in the local community primary school, and earlier a nongovernment organization activist, was a key person in this WMCA. 31. The Haridhara WC subproject is a good example of what and how much can be achieved under good, proactive, and trained leadership, even in a remote and extremely poor area.

1 A local term meaning lack of food. 2 Members who could not or did not want to work personally could hire labor to work on their behalf. 3 A decimal is equivalent to 0.004 ha.

Appendix 7 36

H. Purba Mohanpur FCD and WC Subproject: Solution to local (technical) problems needs inputs from and knowledge of local people

32. The Purba Mohanpur FCD and WC subproject lies in Sadar Upazila in Dinajpur District in the northern part of Bangladesh. This is an example of a good subproject that brings many benefits to the people. Like all other good subprojects, it also had an active WMCA.

Purba Mohanpur Flood Control and Drainage and Water Conservation Subproject

33. At the time of the OEM, an additional regulator was under construction beside an existing two-vent regulator at the outfall of the Purba Mohanpur Khal. When the subproject was first planned for construction, the villagers pointed out, from their experience, the inadequate capacity of the proposed regulator to drain out the flood water from the subproject area quickly enough for the farmers to do timely postmonsoon cultivation. Without heeding the local people’s advice, the project planners went on with their own desk-plan and design, only to realize, after construction of the subproject, the legitimacy of the villagers’ concern. An additional regulator was consequently needed to fine-tune the subproject. 34. This highlights the need for a more consultative approach to addressing local (technical) problems and shows that inputs from and knowledge of the local residents, particularly the beneficiaries, should be carefully taken into consideration.

Appendix 8

37

IMPACT ON FISHERIES

Item 2002 2003 2004Change in number of Genuine fishers 268 12 82 Fish cultivators 2,053 5,098 5,604

Incremental production (tons) 1,712 1,572 2,072 Floodplain 893 236 138 Permanent water bodies 819 1,336 1,934

Perception of overall impact on livelihood (%)a

Fishers Improved 25.5 38.8 46.4 Deteriorated 23.4 24.7 16.7 N/A 51.1 36.5 36.9 Cultivators Improved 8.5 82.4 86.9 Deteriorated 4.3 16.5 13.1 N/A 87.2 1.2

N/A = not applicable. a These figures show the percentage of fishers/cultivators who believed that their livelihood either

improved or deteriorated as a result of the Project. Assumptions: (i) In case of overall increase in production, livelihood status of both the fishermen and farmers is

considered to have improved, even if production from floodplain or permanent water body decreases.

(ii) When total production as well as production from floodplain and permanent water body decrease, livelihood status of both the fishermen and farmers is considered to have deteriorated.

(iii) When total production decreased but floodplain production increased and permanent water body production decreased, livelihood status of the fisherman is considered to have improved and that of the farmer to have deteriorated. When the total production as well as floodplain production decreased but permanent water body production increased, livelihood status of the fisherman is considered to have deteriorated but that of the farmer to have improved.

Source of Basic Data: Integrated Water Resources Management Unit of the Local Government Engineering Department.

Appendix 9 38

ECONOMIC AND FINANCIAL REEVALUATION A. Economic Analysis 1. The economic internal rate of return (EIRR) for each of the 22 subprojects under the Small-Scale Water Resources Development Sector Project (SSWRDSP) visited by the Operations Evaluation Mission (OEM) was calculated based on postproject evaluation data and the EIRR in the subproject feasibility studies were also recalculated on the same basis. The results are in Table A9.1.

Table A9.1: Recalculated Subproject EIRR EIRR (%)

Subproject Feasibility

Study

Recalculated Feasibility

Study

2003 Monitoring

Data

2004 Monitoring

Data Nabaganga FCD 54.8 60.1 13.4 49.9 Ichali WC 49.1 49.4 72.4 65.2 Bagchar-Badurgacha FCD 19.8 16.1 61.9 62.2 Jabusha Beel FCD 21.9 22.8 34.4 26.2 Kaikubunia-Chinguri FCD 18.6 29.3 28.0 17.2 Ramkrishnapur DR 19.7 16.3 99.9 91.1 Mitain-Naldanga FCD 130.4 124.7 169.4 153.3 Ershalmari WC 44.0 55.2 169.7 182.7 Baranurpur WC b 43.5 135.4 n/a n/a Barahar FCD 43.5 33.4 42.3 50.3 Lohagara Khal FCD a 34.6 – 130.2 76.5 Moranadi WC 33.9 35.8 42.4 59.9 Nakdaha-Alaikumari WC 18.8 12.8 71.8 82.5 Haridhara WC a 64.9 – 20.1 57.7 Charolkathi Beel FCD 56.3 65.8 99.2 103.7 Purba Mohanpur FCD 38.8 45.5 113.9 81.1 Agrani CAD a 29.3 – 41.9 36.3 Dudhai Bhanpur WC 21.6 30.3 80.9 70.9 Bankeshor-Nebutala D&WC 27.6 31.8 88.8 70.2 Rampur FCD a 28.7 – 94.6 118.6 Kumarer Beel FCD 38.3 39.1 80.7 144.6 Dighapatia Beel FCD 23.8 29.3 124.9 102.7

CAD = command area development, D&WC = drainage and water construction, DR = drainage, EIRR = economic internal rate of return, FCD = flood control and drainage, n/a = not applicable, WC = water conservation. Notes: a For these four subprojects, the feasibility study EIRR is available from project reports, but the

subproject feasibility studies are not available, and it has therefore not been possible to recalculate the feasibility study EIRR.

b EIRR cannot be calculated from 2003 and 2004 monitoring data, as net benefits are negative. 2. The costs used in these estimations are the respective feasibility study cost estimates. These construction costs have been adjusted to 2006 prices by a factor of 43%, based on the Bangladesh construction cost index. 1 Subproject costs were predominantly local, with the foreign cost component of subprojects not exceeding about 25%, and in many cases less. The

1 This index is available only for the years to FY2004. Between FY1997 and FY2004, the index increased by 23.5%,

or about 3% per year. Staff of the Second Small-Scale Water Resources Development Sector Project advised that construction costs have increased rapidly in the last few years, although no data are available to indicate by exactly how much. To accommodate a higher rate of increase in the years since FY2004, an adjustment of 5% per year for the last 3 years has been added to the index, to give a total adjustment for the period since 1996 of 43%. For comparison, the nonfood index, for which the complete series is available, increased by 56% between 1996 and 2006.

Appendix 9 39

construction cost index accounts for changes in foreign costs at least to some extent, and their rate of increase has probably been less than the rate of increase in domestic costs. Altogether, by overestimating the changes in foreign costs, the single adjustment factor used may tend to overestimate to a small extent changes in costs during the period. This is unlikely to have had a significant effect on the overall results. 3. Import parity economic prices, based on international prices, have been estimated for rice,2 wheat, oilseeds, pulses, and sugar, and for phosphate and potassium fertilizers. Export parity prices have been estimated for urea and jute. Other input prices are adjusted by a standard conversion factor (SCF) of 0.90, and vegetable and potatoes by an SCF of 0.87. A shadow wage rate factor of 0.75 is used for unskilled labor.3 The analysis is in 2006 prices and Bangladesh taka. 4. Crop budgets used in the feasibility studies are not available. The analysis has therefore used a set of crop budgets, updated in 2006, from the Second Small-Scale Water Resources Development Sector Project (SSWRDP-2). These crop budgets reflect current cost and production relationships. For each subproject, yields for all crops in the respective cropping patterns are available from the feasibility reports for both the “with” and “without” project situations.4 These yields, together with the 2006 crop budgets, have been used to recalculate the feasibility study EIRRs. 5. To evaluate postproject EIRRs, two sets of monitoring data have been used. These are the crop area, production, and yield data sets for 2003 and 2004 from the effect monitoring and evaluation (EME) reports of 2004 and 2005, respectively. The EME reports provide data for all the subprojects implemented under the Project. The 2004 data, in the 2005 report, are the most recent comprehensive set of data available for the Project, as this was the last year in which an EME report was produced. 6. In some cases, there are significant variations between the data for 2003 and 2004 for a subproject. Such variations are not uncommon in Bangladesh, where crop production can be quite sensitive to year-by-year variations in seasonal weather conditions and to many other factors that can affect the planting, development, and harvesting of crops. To estimate the postproject EIRR for each subproject, the data for each of the 2 years have been used in turn as representing the “with project” production situation. This generates two postproject EIRRs for each of the 22 subprojects visited by the OEM. 7. For 10 of the 22 subprojects, the EIRRs for the 2 years are within 10% of each other. For each year’s data, only 2 subprojects have EIRRs less than 20%. For each year, one of these cases is Baranurpur subproject, for which, in both 2003 and 2004, the cropping intensity and the net project revenue were lower than in the preproject situation, resulting in negative EIRRs for both years.5 With 2003 data, 14 subprojects have EIRRs greater than 50%, and for 2004 data, 2 In Bangladesh, there is a wide range of rice types and varieties for different seasons and growing condition and

each commands a different price in the market. The import parity price has therefore been compared with HYV Boro to produce an adjustment factor of 1.15, which has then been applied to the financial prices for all other rice types to obtain their respective economic prices.

3 These follow Flood Plan Co-ordination Organisation Guidelines. 4 No feasibility studies were available for four of the subprojects visited: Lohagara Khal, Haridhara, Agrani, and

Rampur. In these cases, the feasibility study EIRR (which is available) could not be recalculated. 5 The 2002 EME data also reported a similar situation at Baranurpur, with cropping intensity below the preproject

level. However, when the OEM visited Baranurpur, WMCA members reported that the project had led to significant increases in production and incomes. The feasibility study could have overestimated the preproject situation in the subproject area.

Appendix 9 40

17 subprojects. These high EIRRs reflect the generally low per hectare investments that have been required under the Project. For the 22 sample subprojects, the median investment per hectare estimated in the feasibility studies was Tk9,900 ($247 at the time the Project was prepared) and the average investment was Tk12,500 per ha ($313). For these 22 subprojects, investment per hectare ranged from a low of Tk1,724 for the Mitain-Naldanga flood control and drainage subproject to Tk32,675 for the Agrani command area development subproject.6 8. The 2004 data (for the FY2004 crop year) are now 3 years old. So what has happened since then? There was no indication from the subprojects visited that agricultural production had declined in the last few years; rather, almost everywhere, the OEM’s attention was drawn to the improvement in production made possible by the subproject interventions, and to how much better production is now than it was before the Project. It is fair to say, therefore, that the data from 2003 and 2004 reflect postproject conditions and that, allowing for the inevitable annual variability, production in 2006 is not less than it was in 2003 or 2004 and is quite possibly better, as farmers have become accustomed to the more stable water management regime and adjust cropping patterns to take advantage of it. 9. At the time of project preparation, implementation was expected to lead to increases in cropping intensity and a shift in the cropping pattern to more profitable crops (e.g., from relatively low-yielding local, broadcast, or deepwater varieties of aus and aman rice to high yield varieties of aman and boro, and more vegetable and other higher value crops).7 The monitoring data available from the EME reports as well as the information obtained during the field visits by the OEM confirm that this is, in general, what occurred. 10. The analysis above compares the “with subproject” situation and the situation in the subproject area if the subproject had not been implemented, which in general means a continuation of the preproject situation. It is also valid to ask whether or not the current (2007) “with project” situation in each subproject area is significantly different from the current situation in surrounding areas. First, it may be observed that the present crop yields reported in the subproject areas are generally similar to or higher than the national averages for the same crops.8 Second, and more importantly, the nature of the terrain and the seasonal pattern of flooding in Bangladesh is such that in very many parts of the country, the ability to control the level of flooding (either by retaining water in higher areas prone to early drainage or by excluding water in low-lying areas subject to excessive flood levels) almost always results in improvements in average crop yields and production. Conversely, these same sorts of areas have difficulty producing consistent crops from year to year if they have no means of controlling water. Thus, if there are areas near to SSWRDSP subprojects where agriculture is performing similarly, it most probably implies that these are not “without project” areas, but rather areas that have benefited from other, similar projects.9 11. According to the 2005 EME report, fisheries are important in 110 of the Project’s subprojects. The impact of the Project has been mixed: In many cases, implementation has had a negative impact on floodplain fisheries, although this has often been offset by positive impacts on culture fisheries. Both the 2004 and 2005 EME reports record net increases in floodplain fisheries in some subprojects, but decreases in other subprojects, which largely offset the 6 Agrani was the only command area development subproject implemented under the SSWRDSP. It was therefore

more complex (and more expensive) than most other subprojects. 7 Aus is rice planted during March to May, aman is rice planted during June to September, and boro is rice planted

during January to February. 8 See Summary Crop Statistics from the 2005 Yearbook of the Bureau of Statistics. 9 Unfortunately, time did not permit the OEM to investigate this observation more fully and in greater detail.

Appendix 9 41

increases. However, production in permanent water bodies (mostly culture fisheries) increased by over 2,000 tons compared with the preproject baseline. As a result of these changes, the incomes of traditional fisher families have tended to decline in most subprojects, while incomes of those involved in fish cultivation have tended to increase. 12. Among the 22 subprojects visited by the OEM, only 4 specifically included fisheries-related investments in the original subproject designs (excluding possible extension and training for fisher families living in the subproject areas). With the exception of Bagchar-Badurgacha, where improved methods of fish and prawn farming were adopted under the Project, changes in fish production have not been included in the economic reevaluation of the subprojects. The 2004 EME report (2003 data) lists the status of fisheries in 85 subprojects, of which 7 were visited by the OEM. In these seven subprojects, total fish production (floodplain and culture) had increased in five subprojects but declined in two compared with the preproject situation. The livelihood of fisher families and fish cultivators was assessed to have improved in four and six of the subprojects, respectively. 13. Sensitivity analysis of key variables shows that the recalculated EIRRs are not significantly affected in most cases. In general, EIRRs are more sensitive to changes in crop prices than to either input prices or subproject investment and O&M costs. With a 10% decrease in the prices of all crops, the EIRR for Nabaganga (with 2003 data) falls below 12%, and for Haridhara (2003 data), to only 12.9%. With 2004 data, all EIRRs remain above 12% (except Baranurpur). To test the impact of combinations of factors, the net crop revenues were also varied by ±10%. This could be caused by changes in crop prices, cropping patterns, cropping intensity or yields, or any combination of these factors. With a 10% reduction in 2003 net revenues, only Nabaganga, Haridhara, and Baranurpur have EIRRs below 12%; with the same change in 2004 data, only Baranurpur is below 12%. The changes are similar to the variation in crop prices only. In case the preproject situation had been underestimated, net revenues for the preproject (and “without project”) situation were increased by 10%; the effect is very similar to reducing the “with project” net revenues by 10%. Even if preproject net revenues are reduced by 10% and “with project” net revenues are reduced by 10%, only the same subprojects have EIRRs below 12% in each year, but with the addition of Kaikubunia-Chinguri with 2004 data. 14. For most of the 22 subprojects, the recalculated EIRRs are relatively high, and changes in key variables do not have a significant impact on them. It is only in the few cases where the recalculated EIRRs are less than 20% that they fall below the opportunity cost of capital in some instances when key variables change. However, there is no case where the subproject EIRRs calculated with 2003 and 2004 data both fall into this category. 15. By enhancing the control of flooding and drainage in the subproject areas, the Project has increased the production options available to beneficiary households and has had a direct and positive impact on cropping patterns, crop production, and household incomes. More dependable water management conditions reduce risk and allow households to invest more in crop production, take steps to diversify outputs, and to take advantage of market conditions. 16. The calculation of the EIRRs was based only on the direct infrastructure costs and direct benefits for each subproject, as in the preproject feasibility studies. Because of the high level of technical assistance (TA) applied during project implementation, an alternative approach would have been to apportion TA costs to each subproject in the recalculation. The cost of TA consultants (funded by the Government of the Netherlands) was $5.9 million—or about $35.6 per ha for each of the 165,588 ha included in the Project. This is equivalent to an increase in per hectare investment costs, for the 22 subprojects visited by the OEM, of between about 10%

Appendix 9 42

and 90%. However, a 90% increase in costs reduces the recalculated EIRRs to below 12% in only three instances, and for no subproject does it reduce EIRR below 12% for both the 2003 and 2004 data series. The inclusion of TA costs with subproject investment costs would not, therefore, change the overall conclusion regarding the efficiency of the Project. B. Financial Analysis 17. In the subproject feasibility studies, there is no direct assessment of the likely impact of the proposed subprojects on household incomes. For this evaluation, the net income per hectare for the average cropping pattern of each of the 22 subprojects has been estimated (in 2006 financial prices) against the feasibility study cropping patterns and those reported for 2003 and 2004 (see Table A9.1). These results are indicative only. The amounts in Table A9.2 are for a 1-ha landholding, but most landholders and water management cooperative association (WMCA) members in the subproject areas have much less land than this—about 44% have 0.2 ha or less and about 70% have 0.6 ha or less (see Table A9.3). Furthermore, there is likely to be significant variation in cropping pattern among landholders in each subproject area—i.e., some will have benefited more than others, and those who have benefited relatively more may vary from year to year, depending on which crops were planted, the weather conditions of each season, variations in market prices, and the skills of each farmer.

Table A9.2: Financial Net Income for Average Cropping Pattern for 1 Hectare

Subproject Feasibility

Study

2003 Monitoring

Data

2004 Monitoring

Data

2003 cf. Feasibility Study (%)

2004 cf. Feasibility

Study Nabaganga FCD 43,070 47,585 52,948 110 123 Ichali WC 34,818 111,272 91,492 320 263 Bagchar-Badurgacha FCD 2,065 54,585 56,004 2,643 2,712 Jabusha Beel FCD 11,185 33,005 26,715 295 239 Kaikubunia-Chinguri FCD 13,926 39,364 35,411 283 254 Ramkrishnapur DR 20,904 31,355 30,444 150 146 Mitain-Naldanga FCD 5,253 26,372 18,742 502 357 Ershalmari WC 20,485 84,527 87,366 413 426 Baranurpur WC 148,531 144,968 137,788 98 93 Barahar FCD 24,835 42,852 48,481 173 195 Lohagara Khal FCD 17,707 78,051 39,362 441 222 Moranadi WC 37,142 59,772 65,915 161 177 Nakdaha-Alaikumari WC 11,479 71,141 86,881 620 757 Haridhara WC 61,043 51,059 76,689 84 126 Charolkathi Beel FCD 27,021 51,250 49,468 190 183 Purba Mohanpur FCD 29,197 64,197 48,076 220 165 Agrani CAD 34,960 81,960 80,332 234 230 Dudhai Bhanpur WC 17,067 97,231 73,053 570 428 Bankeshor-Nebutala D&WC 43,020 87,087 69,834 202 162 Rampur FCD 29,304 81,487 110,064 278 376 Kumarer Beel FCD 29,825 57,317 117,168 192 393 Dighapatia Beel FCD 39,678 113,854 90,902 287 229

CAD = command area development, D&WC = drainage and water construction, DR = drainage, FCD = flood control and drainage, WC = water conservation.

Appendix 9 43

Table A9.3: Distribution of Landholdings in the 22 Subprojects (%)

Subproject 0–0.2 ha 0.21–0.6

ha 0.61–1.0

ha 1.01–2.0

ha > 2 ha Nabaganga FCD 21 41 23 14 1 Ichali WC 37 23 23 11 6 Bagchar-Badurgacha FCD 27 30 23 15 4 Jabusha Beel FCD 43 24 19 9 5 Kaikubunia-Chinguri FCD 36 22 22 12 7 Ramkrishnapur DR 42 26 16 10 6 Mitain-Naldanga FCD 70 20 6 3 1 Ershalmari WC 10 32 20 29 8 Baranurpur WC 32 26 23 15 5 Barahar FCD 56 12 14 13 6 Lohagara Khal FCDa Moranadi WC 60 25 9 5 1 Nakdaha-Alaikumari WC 40 24 19 12 5 Haridhara WCa Charolkathi Beel FCD 31 34 22 8 6 Purba Mohanpur FCD 46 21 14 9 9 Agrani CAD 42 24 17 11 6 Dudhai Bhanpur WCb 50 40 8 1 1 Bankeshor-Nebutala D&WC 66 13 9 1 2 Rampur FCDa 33 40 13 11 3 Kumarer Beel FCD 47 19 15 12 7 Dighapatia Beel FCD 83 4 6 6 2 Average 43.6 25.0 16.1 10.4 4.6

CAD = command area development, D&WC = drainage and water construction, DR = drainage, FCD = flood control and drainage, ha = hectare, IWRMU = Integrated Water Resources Management Unit, WC = water conservation. a Feasibility study not available from IWRMU. b Not available from IWRMU; approximate distribution from data collected during OEM field visits. Source: IWRMU.

18. In every case except two, net income per hectare was higher in both 2003 and 2004 than in the preproject situation—in many cases, very significantly higher. In the Haridhara subproject, net income was lower in 2003 than in the preproject situation, and the cropping intensity was also lower than in the preproject year. In Baranurpur, net income (and cropping intensity) was lower in both years than in the preproject situation, although it was already high then.10 19. On the other hand, the very high increases in Bagchar-Badurgacha are due to the successful change in the cropping pattern to include shrimp in the annual cropping pattern, which was a direct result of the subproject intervention. Almost the whole area is given over to shrimp production from February until July, and all landholders benefit. 20. Table A9.4 shows that subproject households, regardless of the size of their individual landholdings, should have experienced relatively significant increases in household agricultural income as a result of subproject implementation. In most of the subprojects visited by the OEM, this conclusion was confirmed by WMCA members, who were generally positive (in some cases enthusiastic) about the production benefits from their respective subprojects. Some of the improvements that WMCA members had experienced were simply price effects, but there was also a general consensus that increasing cropping intensity had become more possible and more secure. This was confirmed by an examination of cropping patterns, which showed a clear

10 Despite the numbers, WMCA members in Baranurpur told the OEM that both cropping intensities and incomes had

increased significantly since the completion of the subproject.

Appendix 9 44

shift to higher value crops, including the shift from relatively low-value (and -output) traditional varieties of rice to higher value transplanted and high-yielding varieties of aman and boro rice.

Table A9.4: Cropping Intensities

Subproject

Feasibility Study—Without Project

Feasibility Study—With

Project

2003 Monitoring

Data

2004 Monitoring

Data Nabaganga FCD 1.86 2.56 1.84 2.37 Ichali WC 2.01 2.57 2.39 2.24 Bagchar-Badurgacha FCD 0.72 1.09 1.68 1.67 Jabusha Beel FCD 1.56 2.19 1.74 1.58 Kaikubunia-Chinguri FCD 1.32 1.93 2.11 1.12 Ramkrishnapur DR 1.55 1.67 1.58 1.10 Mitain-Naldanga FCD 1.00 1.93 1.27 1.14 Ershalmari WC 1.79 1.79 1.68 2.27 Baranurpur WC 2.23 2.91 2.00 1.73 Barahar FCD 2.01 2.33 2.17 1.62 Lohagara Khal FCD 1.00 – 1.90 1.25 Moranadi WC 1.39 2.24 1.44 2.02 Nakdaha-Alaikumari WC 1.31 1.57 1.44 1.94 Haridhara WC 1.72 – 1.54 2.04 Charolkathi Beel FCD 1.35 1.79 1.57 1.62 Purba Mohanpur FCD 1.87 1.98 2.27 1.78 Agrani CAD 1.67 – 2.17 1.80 Dudhai Bhanpur WC 1.74 2.09 2.44 2.68 Bankeshor-Nebutala D&WC 2.26 2.26 2.64 2.68 Rampur FCD 1.33 – 2.20 2.92 Kumarer Beel FCD 1.56 1.76 1.80 2.98 Dighapatia Beel FCD 1.81 1.85 2.72 2.45 CAD = command area development, D&WC = drainage and water construction, DR = drainage, FCD = flood control and drainage, WC = water conservation.

21. In addition to the direct agricultural benefits accruing to landowning households, the intensification of agriculture in most subproject areas increased demand for farm labor and therefore the amount of employment available to those who did not own land and those with very small landholdings who had to supplement farm income with income from other sources.

MANAGEMENT RESPONSE TO THE PROJECT PERFORMANCE EVALUATION REPORT FOR THE SMALL-SCALE WATER RESOURCES DEVELOPMENT SECTOR

PROJECT IN BANGLADESH (Loan 1381-BAN[SF])

On 7 February 2008, the Officer-in-Charge, Operations Evaluation Department, received the following response from the Managing Director General on behalf of Management:

I. General Comments 1. We appreciate OED's Project Performance Evaluation Report (PPER) on the Small-Scale Water Resources Sector Development Project (SSWRDSP: Loan 1381-BAN). We are pleased with the overall Project rating of “successful” and concur with its effectiveness in increasing agricultural production in subproject areas. The Project also improved rural livelihoods and the access of the rural poor to microcredit facilities. 2. We note that the successful outcome of this first ADB financed project in the small-scale water resources sector in Bangladesh clearly paved the way for continued achievements under the SSWRDSP and has formed a firm basis for preparation of the third phase, "Participatory Small-Scale Water Resources Project" ([PSSWRP] under project preparatory technical assistance [PPTA] 7041 -BAN). 3. Sustainability. We note that the Project is "likely to be sustainable." The experience of SSWRDSP indicates that (i) increasing productivity and sustainability of Water Management Cooperative Associations (WMCAs) requires continued provision of support services, improved interagency coordination, and strengthened monitoring and evaluation processes to better identify and respond to evolving needs; and (ii) participatory development with full beneficiary engagement at critical stages (identification, planning, execution, and operation and maintenance) has direct implications for the sustainability of WMCAs. These experiences have been beneficial in formulating the PSSWRP and highlighted the need for further attention to these specific areas to enable greater sustainability of WMCAs. 4. The Integrated Water Resources Management Unit (IWRMU) was established within the Local Government and Engineering Department (LGED) under the Second Small Scale Water Resources Development Sector Project. The Unit's role is to provide continued support through internalizing and institutionalizing the subproject development process, which is considered pivotal for ensuring the WMCAs' overall sustainability. The need to further strengthen the IWRMU to catalyze its evolution as a sector champion capable to provide continued support to beneficiary communities is fully recognized and will form a key output of the PPTA for the PSSWRP. 5. Similarly, the PPER shows the linkage between sustainability of WMCAs and microcredit. We agree with the potential benefits of establishing a Livelihood Improvement Trust as a successor to the previous accompanying Japan Fund for Poverty Reduction-financed project for "Livelihood for the Poor through Water Management Cooperative Associations." In support of the PPER findings, the PPTA for PSSWRP will make recommendations for maximizing microcredit opportunities and investigate how the operational modalities of the Trust can enhance microcredit activities of the WMCAs.

II. Comments on Lessons and Follow-up Actions 6. We appreciate the PPER's lessons and recommendations. We note that the PSSWRP, which is under preparation, will incorporate the lessons and recommendations. 7. The Need for Training. We agree with the PPER suggestion that continued and recurrent training for the management committee members will help ensure the sustainability of WMCAs. We note that the role of the IWRMU is to provide long-term support in appropriate training to increase WMCA technical, management, production, and financial knowledge and skills. The PPTA for the PSSWRP will focus on key requirements for strengthening the role of the IWRMU and sustainability of WMCAs. 8. Long-term Monitoring and Support for Maintenance. We concur with the PPER suggestion that LGED needs to continue undertaking long-term monitoring to ensure maintenance of infrastructure and development of beneficiary skills. In order to ensure this, the IWRMU should be provided with adequate support and training. As mentioned earlier, the forthcoming PSSWRP will provide support for strengthening the responsiveness of the IWRMU. The requirements for maintenance will be reviewed under the PPTA for PSSWRP with clear recommendations for the level of contributions for various maintenance requirements. 9. Last but not least, we appreciate the good coordination and communication between OED and SARD, which have been advantageous in the formulation of PSSWRP. We welcome the sharing of information and incorporation of ideas from the successful outcome of SSWRDSP.