Reevaluation of the Tan An Integrated Agricultural Project

8/3/2019 Reevaluation of the Tan An Integrated Agricultural Project

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SST VIE 95008L-207-VIE(SF)

ASIAN DEVELOPMENT BANKPost-Evaluation O ffice

C

REEVALUATION OF THE

TAN AN INTEGRATED AGRICULTURAL PROJECT

IN

SOCIALIST REPUBLIC

OF

VIET NAM

U

June 1995


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CURRENCY EQUIVALENTSAt AppraIsal (November 1974)

Currency Unitong (VN$)VN$1.000.00149$1.00N$670At Project C ompletion (October 1987)Currency Unitong (D)Dl .000.01 25$1.0080.0At Po stevaluation (July 1989)Currency Unitong (D)D1.000.00026$1.003,900At Reevaluation (February 1995)Currency Unitong (D)01.000.00009$1.0011,000ABBREVIATIONS

EIRRconomic Internal Rate of R eturnMW Rinistry of W ater ResourcesO&Mperation and MaintenancePCRroject Completion R eportPPARroject Performance A udit ReportREMeevaluation M issionVBAiet Nam B ank for Ag ricultureWEIGHTS AND MEASUREShaectarekmilometertonst/haons per hectareNOTES(i ) The fiscal year of the Government ends on 31 December.(ii) In this R eport, "$" refers to US dollars.IE - 29


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Page(ii)(iii)

1222444555555781010

1 112121414141516

TABLE OF C ONTENTS

BASIC PROJECT DATAMAP: Tan An Integrated Agricultural Project

HIGHLIGHTSBACKGROUNDA.mportance and Location of the Mekong DeltaB.he Project

Ill.OSTEVALUATION RESULTSA . Project Facilities - Dikes, Sluice Gates, and Pumping StationsB . Agricultural ProductionC. Economic EvaluationD. Socioeconomic and Sociocultural ImpactE . Environmental Impact

IV.EEVA LUATION FINDINGSA . Basis and Method of ReevaluationB . Project's Impact on IrrigationC. Impact on Water Quality and Flood ControlD. Agricultural ProductionE . Economic AnalysisF. Socioeconomic ImpactsG. Environmental ImpactsH. Sustainability

V.EY ISSUESVI .ONCLUSIONSA.veral l A ssessmentB,essons LearnedC.ollow-Up ActionsAPPENDIXES


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Person-days339017

335303030

( i i )BASIC PROJECT DATATan An Integrated Agricultural Project - Loan No. 207-VIE(SF)

PROJECT PREPARATION/INSTITUTION BUILDING:TA No.A Project Name Type Person-monthsmountpproval Date99-VIEan An IrrigationPTA80,000Dec 1973243-PHIinh Dinh, GoOTA55,0004 Aug 1978Cong, Tan AnKEY PROJECT DATA ($mn):Total Project CostForeign Currency CostBank Loan Amount/UtilizationBank Loan Amount/CancellationKEY DATES:Fact FindingAppraisalLoan NegotiationsBoard ApprovalLoan AgreementLoan SuspensionLoan ReactivationLoan EffectivityProject CompletionLoan ClosingMonths (Effectivity to Completion)

As per BankLoan Documents

12.705.607.40

Expected

26 April 1975July 198030 June 1981

64

Actual12.026.067.370.03

Actual22 August-i September 1973

24 September-9 October 197413-14 November 197410 December 197427 December 1974

26 April197519 October 197825 June 1979October 1987

20 March 1987101KEY PERFORMANCE INDICATORS (%): AppraisalCRPAREMEconomic Internal Rate of Return4.37.5.3.5Financial Internal Rate of Return------------------------not calculated----BORROWER:overnment of the Socialist Republic of VietnamEXECUTING AGENCY:MISSION DATA:Type of MissionFact-Findi ng/PreappraisalAppraisal/Loan NegotiationsProject Administration

- Inception (including TA5)- Review (including TA5)- Project Completion

PostevaluationReevaluation

Ministry of Water Resources

No. of Missions126111


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1 032N

TAN AN

I

,iiTAN HIEP(Out ot Work)

TIEN GIANGPROVINCE

Structure shouldbe excured

Hydrological andMeteorological StationBao Dinh Mouth

(iii)1 0620E0626E

VIETNAMTAN AN INTEGRATED AGRIC ULTURAL PROJECTProject Layout and S tructures(as completed)

0\\- -1032NCAN QUAN .-R A C H G O C /)NA\ONG AN PROVINCE\//IANTHONEWCANAL_HAN HAU No. 1Funded by Local Governn*ntFunctioning)

KHAN HAU No. 2(Functioning)NI-tAN HAUCu CHICHIh.2 0Functioning)IOutoV(NoncI/ U Ct-Il No 1 O'- -PLAIN OF REEDS/ (OutotWork)-'-"I-AN HUONGIFunctioning Partly)- ---- -TANHIE

YNoSluice andNavigational Lock

10021ropoaed Intake Sanlinity intrusionSometimes indry seas.MY TIlO 0KilometersL EGEND: Area Excluded During 1984Revision of Scopeater Quality Station0umping S tationAluice---- RoadMain and Branch Canals-.Main Drains-ertia ry CanalsRiver/Creek- - - - Protection Dyke- - - - - Provincial Boundary(Boundaries not necessarily authoritative) 102 iN1 0626E

95-1235 HR


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I. HIGHLIGHTSA.ackground1. Objectives and Scope. With the overall objective of minimizing risks anduncertainties in farm production and strengthening the production base of the agriculture sector,the Project was designed to solve the problems of recurrent flooding, salinity intrusion, sluggishsurface drainage, and seasonal shortages of fresh water. The Project aimed at increasing thecropping intensity and yield of 8,200 hectares (ha) of farm land in the Tan An area. The maininfrastructure facilities to be provided by the Project included: flood protection dikes and sluices,main and subsidiary drains, electric pump stations with auxiliary facilities, improvement of freshwater creeks, gravity irrigation canal network, large intake sluice with navigation lock, and accessroads.2. Project History. The Project was appraised in October 1974, approved inDecember 1974, and was suspended in April 1975. It was reactivated in October 1978 and aftera review and some changes in the scope in 1982, it was completed in October 1987. A ProjectCompletion R eport (PCR ) was prepared in 1987 and a Project Performance Audit Report (PP AR )in 1989.3ostevaluation Findings. The postevaluation concluded that the construction ofdikes and the improvements to creeks and water supply channels had been useful. Whileagricultural production has increased, the contribution of the Project is limited because of thedoubtful operational viability and the decrease in utilization of the pumping stations and gravitydelivery systems improved under the Project. The Project was rated as partly successful,because the estimated economic internal rate of return (EIRR) was 7 percent.B.eevaluation Findings4. Socioeconomic Findings. The reevaluated EIRR is estimated to be 6.5 percentcompared with 14.3 percent at appraisal, 30 percent at reactivation in 1978, 18 percent in thePCR in 1987 and 7 percent in PP A R in 1989. The lower EIR R at reevaluation compared with theestimates at appraisal and in the PCR is attributed to: (i) only a part of the benefits can beattributed to the Project; (ii) the capacities of the major structures such as the canals and thepumping stations are not being fully utilized; (iii) the farmers are incurring additional costs onsmall mobile pumps and on-farm development; (iv) the increment to paddy production has beendelayed; and (v) the economic prices of paddy have fallen. However, appraisal targets forintensity of cropping and yield of paddy have been exceeded largely because of considerableprivate and public investments, free market-oriented macroeconomic policies, and introductionof short-duration, high yielding varieties. As a result, poverty within the Project area has declinedand farm households now own better dwellings and more consumer durables than before. Atappraisal, it was envisaged that the Project would increase farm incomes from $265 to $675 perha at full development. As a result of increases in yield as well as cropping intensity, the currentfarm incomes are believed to have increased. However, because of a series of devaluations, theshift from a controlled to a market-determined system of farm prices, and the lack of time seriesdata on price indexes, the Reevaluation Mission (REM) was unable to determine the extent ofchange in farm incomes since appraisal.5. Sustainability. Despite the need to repair, replace, and maintain the canals,sluice gates and pumping stations, the Project has triggered considerable private and localgovernment investment and interest in developing complementary activities such as canals,


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2mobile pumps, on-farm development, use of high yielding and short-duration varieties andmodern inputs and practices. Thus, the benefits of the Project are considered sustainable.6roject's Classification. The Project has partially achieved its objectives ofcontrolling floods as well as salinity and acidity intrusion. However, the objective of improvingsurface drainage has not been achieved. The design of the Project based on delivering irrigationby gravity was not appropriate. However, the Project has brought fresh water and developedcreeks. The area covered by the Project has achieved and even exceeded its paddy productiontargets. However, only a part of this increase can be attributed to the Project. Considering itsmixed performance and the reestimated EIRR of 6.5 percent, the Project is rated as partlysuccessful.7essons Learned. The Reevaluation Study noted several lessons. First, a gravity-based distribution system to irrigate a generally flat land, as in the Project area, is inappropriateand costly. Second, local personnel with experience and knowledge about the topography andconditions in the area should be given the opportunity to participate in the design of the project.Third, beneficiaries should participate in the design, implementation, and operation andmaintenance (O&M) and should be organized into groups and provided with requisite training.Fourth, irrigation works should be comprehensive and cover the measures required up to theend-use. And finally, the monitoring of environment impacts should be built into the design ofprojects.

II. BACKGROUNDA.mportance and Location of the Mekong Delta8. Until 1963, Viet Nam was a surplus producer of rice. About 75 percent of its totalrice production was from the Mekong Delta, which covers 16 provinces, and 3.75 million ha andis bounded by the Mekong River and its tributaries. With the substantial decline in riceproduction after 1963 because of the deteriorating security situation in the country, the MekongDelta became the focus of the Government's efforts at regaining rice self-sufficiency. Thus, theGovernment implemented a series of pioneer water resource development projects in the regionto redress such problems as frequent flooding, salinity intrusion, sluggish surface drainage,shortage of irrigation water, and lack of proper access for farms, which were identified as thereasons obstructing the growth of rice production in the Mekong Delta region.B.he Project1.roject Genesis9. In 1972, the Government engaged a consulting firm from the Republic of Koreato survey the possibilities for irrigation and flood control in the Mekong Delta. Based on thissurvey emerged the concept of a phased irrigation development plan for the area between theVam Co Tay River and the My Tho River. However, following the Government's request for aloan on the basis of that report, the Bank concluded that further in-depth study was needed. On4 December 1973, the Bank approved a project preparatory technical assistance (TA) for $80,000for a feasibility study of the Tan An Irrigation Project (TA 99-VIE approved in December 1973).The Bank-financed consultants conducted field investigations in May-July 1974 and submittedtheir final report in September 1974. An Appraisal Mission visited Vietnam from 24 Septemberto 9 October 1974 and the Tan An Integrated Agricultural Project was subsequently approvedby the Bank in December 1974.


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32bjectives and Scope10. The Project's main objectives were to minimize the risks and uncertainties in farmproduction and to strengthen the production base of the agricultural sector. Specifically, theProject was designed to solve the problems of recurrent flooding and salinity intrusion, sluggish

surface drainage, and seasonal shortage of freshwater and was aimed at increasing the croppingintensity and yield on about 8,200 ha of farm land in the Tan An area.11. The components of the Project included: (I) a 25.5 kilometer (km) long, 2.5 meter(m) high protection dike with five sluices to permit drainage; (ii) 145 km of main drains and 370km of subsidiary drains; (iii) seven electric pumping stations with auxiliary facilities; (iv)improvements to freshwater creeks; (v) gravity irrigation and drainage network; (vi) large intakesluice (with navigation lock) at the main freshwater intake river; and (vii) 47 km of all-weather and514 km of dry-weather roads. The other components included the establishment of a ProjectOffice, the construction of a pilot demonstration farm facility, and consulting services.12. Upon reactivation in 1978, the physical scope of the Project was left essentiallyunchanged from that at appraisal. But in 1982, the Government informed the Bank that itconsidered the Project was overdesigned. In 1984, the scope of the Project was modified to (i)exclude an area of 600 ha on the western boundary; (ii) omit the major sluice and navigationlock on the Bao Dinh channel; (iii) increase the number of sluice gates from five to six; (iv)reduce the designed command from 8,200 ha to 6,300 ha; and (v) delete the establishment ofdemonstration farms and the recruitment of the design consultant.

3.xecuting Agencies13. The Executing Agency originally assigned to the Project was the DirectorateGeneral of Irrigation of the Ministry of Agriculture. Upon reactivation in 1978, the Ministry ofWater Resources (MWR) was assigned as the new Executing Agency. A new Project Office wasalso established by the MWR with staff from the Provincial Water Resources Service andProvincial Agriculture Service. The new Project Office was given the full responsibility for day-to-day coordination and implementation of the Project for liaison between MWR and otherconcerned agencies and political subdivisions, and for O&M.

4.inancing Arrangements14. At appraisal, the total cost of the Project was estimated at $12.7 million, of which$5.6 million were foreign costs and $7.1 million equivalent were local costs. The Bank was tofinance all foreign costs and about 25 percent of local costs through a loan for $7.4 million.'The suspension and subsequent reactivation of the Project did not result in any change in thetotal amount of the loan from the Bank. However, significant modifications were made in theallocation of loan proceeds. The major revisions included: (i) cancellation of the allocation forfixed equipment (e.g., pumps, motors, switchgear, and electrical supplies) and pilotdemonstration farm; (ii) doubling of the allocations for imported construction and O&M materialsand equipment; and (iii) substantial reductions in allocations for consultants, mapping, andtraining costs.

Loan No. 207-VIE(SF), approved on 10 December 1974.


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45. Project Benefits

15. It was envisaged that full development of the agricultural potential of the Projectwould be achieved in 1986; six years after its completion in 1980. Paddy yields were expectedto increase from 2.5 metric ton per hectare (t/ha) to 4.25 t/ha, resulting in an annual incrementalproduction of paddy of 46,000 t and of soybean of 1,200 t. The Project was expected to benefitabout 8,000 farmers, cultivating about 8,200 ha of land, whose average farm income at the timeof $245/ha was projected to increase to $675/ha, i.e., 2.75 times higher "with" the Project than"without" the Project. About 714,500 person-days of additional employment opportunities wereexpected to be generated because of the intensified multiple cropping of paddy made possibleby the Project.

6. Rate of Return16. At appraisal in 1974, the EIRR was estimated to be 14.3 percent. Based on theresults of sensitivity tests, even under a combination of adverse circumstances, the EIRR did notdrop below 10 percent, and the Project was considered economically justified.

Ill. POSTEVALUATION RESULTS17. The Project was completed in October 1987 and the PCR was prepared inDecember 1987. The PPAR was circulated in December 1989. The main findings of the PCRand the PPAR are summarized in the subsequent paragraphs.A.roject Facilities - Dikes, Sluice Gates, and Pumping Stations18. The PPAR indicated that the dikes constructed have protected the Project areaagainst flooding with acidic water from upstream, and salt water intrusion from downstream.However, the operation of the sluice gates was not very successful. In several places, the designof the sluice gates precluded their frequent operations and in others, led to their earlydeterioration. The PPAR noted that maintenance and repairs were neglected. By the time ofPostevaluation Mission in July 1989, only five of the eight pumping stations had been installed.However, even those five pumps needed maintenance and repairs and were grosslyunderutilized. On the other hand, other specific works funded under the Project such asdeepening the fresh water creeks, and constructing new channels and intake basins made morefresh water available for irrigation. Furthermore, the PPAR noted that the backstopping of run-oftwater by the sluice gates had raised the water table and water salinity had been reduced.B.gricultural Production19. The PPAR noted that the availability of irrigation has enabled the cultivation of asecond crop of paddy on 6,300 ha, as well as subsidiary crops on 1,500 ha, and this isincreasing further. The cropping intensity had increased from 140 percent to 230 percent andyields increased from a range of 2.3-3.1 t/ha in 1978 to 3.4-4.3 t/ha in 1988-1989. The PPAR,however, concurred with the findings in the PCR that the pumping stations and the gravitydelivery systems have only partially contributed to these improvements. The major contributoryfactors have been the large number of privately-owned and operated small pumps, the rapidadoption of high yielding varieties throughout the Mekong Delta, the privatization of landownership, and the free markets for farm produce.


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5C.conomic Evaluation20. At appraisal in 1974, the Project was expected to yield an EIRR of 14.3 percent,which was recalculated to be 30 percent at reactivation in 1978. In the PCR, the reestimatedEIRR was 18 percent in 1987, while the estimate in the PPAR was 7 percent. The reasons theestimated EIRR was lower in the PPAR than in the PCR were that the PPAR attributed substantialincreases in production to factors independent of the Project, the reduced usefulness of the mostcostly components of the Project, that is the pumping stations and the gravity delivery system,and incurring of additional costs by the farmers. However, both the PCR and the PPAR, alludedto the difficultly of estimating costs and benefits of the Project and cautioned against using theestimated EIRRs as a basis for evaluating the success or failure of the Project. The PPAR ratedthe Project as partly successful.D.ocioeconomic and Sociocultural Impact21. The PCR estimated that while the paddy yields have increased from 2.5 t/ha to3.7 t/ha, the incremental production was only about 25,000 t compared with the estimates atappraisal and at reactivation of 46,000 t. The real constraint to increased paddy production, thePCR concluded, was the limited availability of urea. Neither the PCR nor the PPAR, however,provided any information about the distribution of benefits among the rural families.E.nvironmental Impact22. The PCR observed that the Project did not generate any adverse effects on theenvironment and appeared to have had a positive impact on the Project area. However, thePPAR noted that recirculating water, which has leached soils and may have become saline oracidic, may have a detrimental impact on the environment in the Project area . Also, theincrease in the use of mobile pumps to convey water from any accessible water source hasincreased the danger of deterioration of soil quality in the long run. Both the PCR and the PPARstressed the need to monitor periodically the soil and water quality.

IV. REEVALUATION FINDINGSA.asis and Method of Reevaluation23. The Project was originally formulated in 1974. Besides making several changesin the components of the Project subsequently, the country itself has moved from a centralizedto a market-oriented economy beginning in 1986 under its economic reform program, "doi moi".The Bank decided to reevaluate the Project to determine what impact some of thesemacroeconomic policies are having on the outcome and sustainability of the Project. The Bankengaged a local consultant to conduct a socioeconomic study of the impact on the Project. Thisreevaluation takes into account the findings of this study; the observations of the REM, whichvisited Viet Nam in March 1995; and the views of the farmers and officials in the agenciesconcerned.B.roject's Impact on Irrigation1.roject Facilities24.uring the dry season, saline water coming into the Vam Co lay River throughthe tidal wave action from the South China Sea was observed to intrude into the northern side


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6of the area covered by the Project. At the same time, acidic water from the Plain of Reeds usedto intrude into the western side of the area. The area was also affected adversely during the wetseason by flooding from the Mekong River and its tributaries. In the absence of fresh watersupplies, the Project area had limited irrigation. In this context, under the Project, dikes andsluice gates were provided on the western and northern sides to prevent the intrusion of acidicand saline water during the dry season, and to facilitate drainage as well as to control floodingduring the wet season. In addition, by deepening and enlarging the Bao Dinh Canal from theMy Tho River and installing pumping stations and constructing the main and some secondarycanals, the Project has helped augment the supply of irrigable water and its distribution withinthe Project area.

2.ther Irrigation Development25. During 1979-1994, a number of small and medium irrigation development worksincluding canals were constructed and financed by individual farmers and local governments inthe area. In addition, a large number of small and mobile irrigation pumps, estimated at about50 in each village in the Long An Province and 200 in the Tien Giang Province, or a total ofabout 2,000 units, are being operated in the Project area. These small pumps draw water fromany available source, such as the main, secondary and even tertiary canals, creeks, ponds,rivers, and reservoirs. A few large canals, e.g., the Quan Tho Canal running from the Tan Gienthrough the entire western part of the area and up to the Babeo Canal in the northwest regionhave been constructed by the local government. In short, many other irrigation developmentactivities have been undertaken in the Project area, independent of and in conjunction with theinvestments under the Project.

3.stimates of Area Irrigated by the Project26. Compared with the target at appraisal in 1974 of irrigating 8,200 ha, which wasreduced to 6,300 ha in 1982, the PCR estimated in 1987 that only about 2,000 ha were irrigatedby the facilities provided under the Project. The PPAR, however, noted in 1989 that only 1,100ha of second crops and 600 ha of third crops were being irrigated by the pumps installed andthe canals constructed under the Project. Estimating the area irrigated exclusively by thefacilities provided under the Project is extremely difficult. According to the REM, the total areairrigated under the Project is estimated to be 4,800 ha in Tien Giang and 2,000 ha in Long Anor a total of about 6,800 ha (see Appendix 1). Compared with the 3,100 ha irrigated in 1982, theincremental area irrigated by the Project is estimated to be 3,700 ha. Because of the concurrentand complementary investments by the private sector in irrigation in the area in addition to theirrigation facilities provided under the Project, it is difficult to segregate the area irrigated by theinvestment under the Project. In REM's view, about 40 percent of the total irrigated area can beattributed to the investment under the Project.

4.easons for Shortfall in Performance27. There are several reasons for the shorttall between the expected and the realizedimpact of the Project on irrigation. First, the design was based on gravity distribution of waterwhich is unsuitable and expensive for the Mekong Delta where the Tan An Project is located.The topography within the area is mainly flat and level; consequently irrigation by gravitydistribution is neither effective nor cost-efficient. Second, because of poor maintenance andrepair (see Appendix 2), the pumps provided are not all in operating condition. They are old andrusty because of the salinity in the water and in the air. As a result, of the seven pumpingstations constructed under the Project (tour in Tien Giang and three in Long An), only four (onein Tien Giang [Tan Huang] and three in Long An) have been in operation for limited periods


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ranging from 200-300 hours per year. The pumping station at Tan Huang is only irrigating 80ha compared with its designed capacity of 800 ha. Third, because of poor maintenance andsedimentation, the canals (e.g., Bao Dinh Canal) carrying the pumped water have becomenarrow and shallow, which have reduced their water carrying capacity. This is aggravated furtherby conveyance losses from leaks and seepage. Consequently, the canals are unable to carrythe projected quantity of water to tail-end of the irrigation area. Fourth, while the Ong Dao Canalwas enlarged to bring more fresh water from the Bao Dinh River, the Ong Dao Bridge was notwidened which constricts the flow of water for irrigation in the Project area. Fifth, the exclusionof on-farm development, e.g., field channels and ditches, from the design, has also reduced thearea irrigated by the facilities provided under the Project.C.mpact on Water Quality and Flood Control28. Aside from preventing flood damage, the Project aimed at reducing the intrusionof saline water from the Vam Co Tay River in the north as well as the intrusion of acidic waterfrom the Plain of Reeds in the west. The impact of the Project in achieving these objectives issummarized below.

1 .mpact on Salinity29. As discussed earlier, because of tidal action, the Vam Co Tay River brings salinewater from the South China Sea into the Project area particularly during the dry season. Datain the table below indicate that the Project has contributed to a general reduction in salinity ofriver water entering the Project area. The construction of dikes and the Tan An sluice has helpeda reduction in saline water intrusion. Bringing in fresh water from the My Tho River in the southhas further helped to reduce salinity levels.Changes In SalInIty Level

Yearalinity level in gram s per liter of water(March)y Thoan An1978.01.41979.51.61985.01.21987.3.21990.9.9Source:easibility Study of Bacdong Project Inception Report1992 Sub Institute of Water Resources, Planningand Management, H o Chi M inh Ci ty .30. In addition to the above data, the level of salinity in the selected locations in theProject area declined from 10 grams per liter to less than 2 grams per liter. The reduction in thesalinity level was also confirmed by 70 percent of the beneficiary households interviewed in thesocioeconomic study. The available evidence, therefore, suggests that the Project has beensuccessful in reducing the level of salinity. The greater availability of fresh water through the BaoDinh River, deepened and enlarged under the Project, coupled with the reduction of salinity, hasstimulated the use of small mobile pumps for irrigation in the Project area. However, during thedry season, intrusion of saline water from the My Tho River, a tributary of the Mekong River inthe south, has been reported. It will be necessary to monitor the salinity level at the mouth ofthis river and to adopt measures to neutralize this new source of salinity intrusion in the future.


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82.roject's Impact on Acidity31. Acidity in the soils within the Project area has been caused by two sources. Thefirst, is the water intrusion from the Plain of Reeds in the west. The second, the soils within theProject area itself, particularly in the center of the area, are acidic and water passing through

these soils becomes acidic too. By constructing a dike around the western boundary of thearea, the REM considers the Project reduced the intrusion of acidic water in the area. Theavailable information on the ph of the soil, however, fails to confirm any such change becausethe level has remained constant, at about 4.0 to 4.5. Only 38 percent of the beneficiariesconfirmed that acidity has been reduced, which raises some doubts about the effectivity of theProject in reducing the acidity level.32. While the dikes constructed on the western side of the area have been effectivein preventing the intrusion of acidic water, the Project did not provide any mitigating measureto reduce the level of acidity originating from the soils within the area. Before the Project, theacidity was washed away naturally by flooding during the rainy season and draining the acidicwater into the Babeo Canal. After the construction of dikes provided and the ineffectiveoperations of the sluice gates (see Appendix 2), the natural flushing of acidity by flooding hasbeen impeded.

3.mpact on Flooding and Drainage33. The impact of the Project on reducing the frequency, duration, and intensity offlooding during the rainy season is widely recognized. The dikes, particularly in the north, havemade a significant impact in reducing the incidence of flooding in the area. However, duringheavy rains in 1984, 1991, and 1994, the heights of the dikes proved to be low to preventflooding. Therefore, the impact of the Project on flood protection, although positive, is onlypartial. In addition, under the Project, six sluice gates were provided to regulate the entry andexit of the water. During the rainy season, the sluice gates were supposed to drain out theexcess water and to bring in fresh water, and during dry season they were supposed to preventthe entry of saline and acidic water. However, these sluice gates, were not designed correctlyand were not maintained. First, the sluice gate at Tan An was constructed about eight metersbelow the surface and as a result, it cannot be opened and closed to both sides when required.Second, the sluice gates are manually operated, which makes opening and closing them verydifficult and cumbersome. Third, most of the gates can be opened on only one side whichmakes them difficult to operate in both directions to regulate flooding and facilitate drainage.Added to these design deficiencies is the problem of lack of maintenance and repair, resultingin rusting, corrosion, and chipping of parts of the gates. As a result, the sluice gates are usuallyclosed and seldom used to flush the acidity and salinity from the Project area. To summarize,while the Project has reduced substantially the incidence of flooding, its impact on surfacedrainage is debatable.D.gricultural Production1.hanges in Cropping Intensity and Diversification34. Despite the deficiencies in the design of the Project and the poor maintenanceof the structures, the improvements in the creeks, rivers, intake canals, and drainage coursesand the construction of the protection dike have played a crucial role in the growth of agriculturalproduction by providing access to fresh water for the farmers' mobile pumps in the Project area.The impact of the Project in improving irrigation was complemented by the improvements in theextension services and in the information available about the new agricultural technology


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9packages from the Center of Agricultural Extension in the two subproject areas of Tan Gien andLong An. As a result, there have been: (i) changes in the cropping pattern from one to at leasttwo, but mostly three paddy crops in a year; (ii) rapid adoption of high-yielding and short-duration rice varieties; (iii) greater availability and use of inputs; and (iv) diversification of cropproduction.35. As a result of the Project, complemented by the use of privately-owned mobilepumps and by the improvements undertaken by the provincial governments, a third paddy cropwas cultivated on an area of 7,762 ha in 1994 compared with 2,579 ha in 1982, or an increaseof about 200 percent. Because about 75 percent of farmers in the Project area plant three cropsof paddy in a year (compared with about 55 percent outside the Project area), the change incropping pattern has increased the average cropping intensity in the Project area, from 180percent in 1982 to 260 percent in 1994 (see Appendix 1). The cropping intensity was estimatedto be 110 percent at appraisal, 140 percent in the PCR in 1987, and 230 percent in the PPARin 1989.36. Given the greater degree of certainty of receiving adequate irrigation water duringeach cropping season, the increase in information available about the rice technology packages,and the established market linkages for farm inputs and outputs, farmers rely mainly on paddyproduction as their major source of income. Some subsidiary crops have been produced insmall plots, mainly in the Tan Glen subproject area, and have been a source of supplementaryincome for farmers. The total cultivated area under subsidiary crops increased from 310 ha in1982 to 954 ha in 1994. However, this is only about 87 percent of the area under subsidiarycrops projected at appraisal and about 22 percent projected in the PCR. As the paddy yieldsand the cropping intensity levels approach the maximum attainable levels, more emphasis andeffort should be given to nonpaddy crops that are higher in value and which, in turn, will facilitateadditional increases in farmers' incomes.

2.mpact on Crop Production37. Agricultural productivity in the Project area during 1978 to 1994 has increasedsubstantially and has exceeded the estimates at appraisal by about 60 percent, despite thelimited utilization and operational shortcomings of the facilities provided under the Project.Paddy yields have increased steadily from an average of 3.0 t/ha in 1978 to the current averageof 4.8 t/ha, which, in turn, is about 20 percent higher than those being attained by farmersoutside the Project area. Similarly, the yields of subsidiary crops have increased by about 45percent. As a result of the interaction of higher cropping intensity and higher yields per ha, theincremental paddy production is estimated to be 58,000 tin 1994 compared with the projectionsat appraisal of 46,000 t at full development in 1986. However, because of the other independentinvestments in the area as well as complementary investments to the Project, only a part of theincrease can be attributed to the Project. It is, however, difficult to determine the increase thatis attributable to the Project alone. In REM's assessment, about 40 percent of the irrigation inthe area can be attributed to the Project. Based on this assumption, the Project has resulted inan incremental production of 23,000 t of paddy per year. The projections at appraisal that anincremental production of 1,200 t of soybean will also be achieved in 1986 have not been metyet, although on about 900 ha, there is a growing trend to plant vegetables and fruit trees. Toconclude, while the targets for cropping intensity, yield, and production for 1986 have been metand are being exceeded in 1994, only a part of this impact can be attributed to the effect of theProject.


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10E.conomic Analysis38. The REM encountered difficulties in obtaining data to conduct the economicanalysis for the reevaluation of the Project. The recalculation of the EIRR (Appendix 3), tomeasure the performance of the Project, followed the methodology used in the PCR and PPARexcept some adjustments were considered necessary to reflect recent observations anddevelopments on land use, agricultural productivity, prices, and exchange rates. Becauseseveral of the developments that have facilitated the increases in crop production did not resultsolely from the Project, the quantified benefits, in turn, cannot exclusively be attributed to theProject. Thus, the estimate of the EIRR in this reevaluation is as conjectural as in previousreports.39. The economic analysis also assumed that the pumping stations and the canalswill be maintained at current performance levels, which will require substantial expenditures formaintenance, repairs, and replacements. Moreover, because the "with" and the "without" Projectconditions resemble each other closely and more farmers in the area are now using mobilepump sets, the Project accounts for less of the incremental benefits than assumed in theprevious estimates.40. The liberalization of the exchange rate has resulted in a large devaluation of thelocal currency since the PPAR in 1989. As a consequence, the REM had to use a lower realvalue for local currency than was assumed in previous evaluations.41. Based on estimates of quantified benefits and costs, the reestimated EIRR is 6.5percent (see Appendix 3) which is comparable with that estimated during PPAR. Based onrecent experience, the assumptions about higher cropping intensity and yields have been offsetby the increase in costs. The reasons the estimated EIRR is lower than the estimate in the PCRand at reactivation, include: (i) only part of the benefits may be attributed to the Project; (ii) asubstantial reduction in the utilization of major facilities, such as the pumping stations and thegravity delivery system; (iii) the additional costs incurred by farmers in pumping water to theirfields; (iv) the delay in incremental paddy production and implementation of agriculturaldiversification; and (v) the decline in the economic price of paddy.F.ocioeconomic Impacts42. Approximately 21,600 farm households are currently residing within the area withan average landholding of 0.34 ha, compared with about 1 ha at the time of formulation of theProject in 1974. The substantial decline in the estimated average farm holding is attributed to:(i) rapid increases in farm population in the area because of the high annual population growthrate (about 2.5 percent), which alone over the past 20 years has resulted in a 75 percentincrease in population; (ii) the influx of farmers returning to their villages after the end of the warand the country's unification; and (iii) the Government's successful implementation of a landreform program that facilitated access to and ownership of surplus farm land by landlessfarmers.43. The competitive input and output price regime created under the liberalmacroeconomic policies such as freeing factor and product markets and allowing long-termleases for Government-owned land complemented the productivity improvements at the farm-level and had positive impact on farm incomes. For example, the opening up of the market foragricultural inputs to private suppliers has enabled the farmers to gain access to a readilyavailable supply of inputs such as seeds, fertilizers, and agrochemicals at competitive priceswhich, in turn, encouraged the use of these inputs. In addition, private sector involvement in the


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1 1- direct purchase of farm products expanded the markets for farmers and assured them a market-

determined and often higher price for their output. Moreover, the new land tenure policy thatallows farmers to use state-owned land for a period of 50 years, on a renewable andtransferrable basis, has provided them with incentives to make long-term investments in farmingand to intensify land use.44. The general welfare of farmers residing in the area covered by the Project hasimproved. The socioeconomic survey conducted in the area in early 1995 indicated that theproportion of poor farm households has declined since 19791 and that the proportion of well-offfarm households has increased from 25 percent in 1979 to 33 percent in 1994. The study alsoindicated that a greater proportion (55 percent) of farmers within the Project area compared withthe nonbeneficiaries (40 percent), both within and outside the area, have improved the qualityof their houses, and increased their durable goods such as television sets, motorcycles, waterpumps, and barges (see Appendix 4). The study also indicated that while all the householdsin the area have benefited, the households with larger landholdings have benefited the most.The study revealed that households headed by women have not suffered any disadvantages inthe distribution of gains. For example, the yield of rice obtained by households headed bywomen varied between 4.5 t/ha to 4.8 t/ha compared with 4.2 t/ha to 5.0 t/ha for the otherhouseholds. Similarly, 75 percent of the households headed by women grew three crops of ricein a year compared with 72 percent of the other households. However, the households headedby women have shown less inclination to cultivate subsidiary crops and to participate in fish andlivestock production than those headed by men (see Appendix 5). Because of the small size ofthe sample and difficulty of segregating the impact of the Project from the total impact, specificconclusions cannot be inferred about the cause and effect relationships.G.nvironmental Impacts45 . The REM concurs with the PPAR that there is a possibility of water beingrecirculated, particularly during the drier periods when the outflow of drainage water from theProject area is minimal. Because this recirculated water may be highly acidic and/or saline, itsuse for irrigation could degrade the surface soils. The occurrence of this phenomenon, however,was not confirmed by the REM. Although, there are currently five monitoring substations alongthe border of the Project area, these mainly measure saline levels outside the Project area alongthe Baa Dinh River, the Babeo Canal, the Vam Co Tay River, and the Main Canal. Thus, thereis, a need to establish a regular monitoring scheme to measure the salinity and acidity levels ofthe return flows and the water quality within the Project area.46. Furthermore, with more farmers in the Project area applying large amounts ofagrochemicals, runoff may have detrimental effects on the general ecological balance in theProject areas. Also, there is a possibility for pest infestation arising from the unbroken sequenceof monocultural rice production. Therefore, more emphasis should be given in farmers'extension and training about appropriate crop protection measures, particularly integrated pestmanagement, to minimize the indiscriminate use of agrochemicals and protect the environment.47. In addition, some pollution of the Vam Co Tay River and the Bao Dinh River hasbeen observed as a result of the dumping of industrial and domestic wastes from the town ofTan An and the city of My Tho. Because these wastes will probably have an adverse impact onthe health and sanitation conditions of the farmers in the Project area, there is a need to monitor

The socioeconomic study did not quantify the decrease in proportion of poor farm households.


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12closely the water and soil quality as well as identify and establish mitigating measures that willprevent these negative impacts.H.ustainability48. The area covered by the Project has continued to develop. The facilities providedunder the Project such as dikes, canals, and, initially, the pumping stations have acted as acatalyst to both private and public investments. However, facilities such as dikes, sluice gates,and canals need substantial repair as well as replacement. The pumping stations also need tobe repaired or replaced by smaller pumps to bring the water to dispersed sites. Additional civilworks are needed to raise the height of dikes, replace the existing damaged and manuallyoperated sluice gates, dredge the main and the secondary canals, and construct farm ditchesand field channels.49. Paddy production with yields ranging from 4.0 to 6.0 t/ha per crop and theintensity of cropping reaching 260-290 percent, appear to have reached a plateau from whichfurther increases either in yield or intensity will be difficult to achieve except through the intensiveuse of fertilizer, pesticides, and water. Under these conditions, the diversification of farming bythe production of vegetables, fruit crops, and livestock, has the potential to increase the farmers'income further. However, despite the need for crop diversification, and the repair, maintenance,and replacement of the facilities provided under the Project, the Project is considered sustainablebecause its impact on agriculture production and incomes in the Project area has beenincorporated and owned by the Project population.

V. KEY ISSUES1.iversification of Agriculture

50. As mentioned earlier, both cropping intensity and yields have reached a plateau.Considering the intensive use of inputs required to raise the yields substantially in future and alsothe current average size of holding, which is less than 0.5 ha, diversifying into nonrice cashcrops such as vegetables and fruits and into animal production, is the key to raising ruralincomes and reducing poverty. However, agricultural diversification will require the provision ofspecific extension services; training for farmers; better control over irrigation water; and betteraccess to storage, credit, transport, and marketing services. The high value vegetable and fruitcrops are often perishable and require marketing skills, information, and techniques that paddyfarmers in the area presently do not have. The enhancement of the impact of the Project onrural incomes will require an integrated effort to provide the assistance necessary to encouragefarmers to diversify.

2.aintenance and Repair of Project Structures51. The main and secondary canals, dikes and sluice gates, provided under theProject need repairs or replacement with new ones. The canals have to be deepened, enlarged,and cleaned. The sluice gates need replacement with ones that are automatic and can beopened on both sides, while the height of the dikes needs to be raised. These repairs have notbeen carried out because of the lack of funds. The Government is collecting only about 20-25percent of the cost of O&M. A key issue in the future, is the need for the Government to raiseirrigation fees.


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1352. Linked to the issue of raising of irrigation fees, is the need to develop a schemeto distribute the responsibilities for O&M among the provincial irrigation offices and the farmers.Such a scheme, if properly devised and implemented, would substantially reduce theGovernment's expenditure on O&M and increase the farmers' participation in O&M activities.This would, however, require that farmers be organized into groups or associations and be giventhe responsibility for maintaining, improving and repairing secondary canals, on-farm channels,and ditches. Simultaneously, this should be complemented by a program aimed at improvingthe capacity of the farmer organizations to fulfill these obligations and strengthening therelationships between the farmer organizations and the provincial irrigation offices. The farmerswill need training in basic leadership and management, crop production, financial management,irrigation system management, and group dynamics to enhance their capabilities to undertakeO&M responsibilities.

3.he Future of Pumping Stations53. As mentioned earlier, of the seven pumping stations, only four are presently usedfor only 200-300 hours per year, a low rate of utilization when the minimum norm is usually about2,000 hours per year. One of the key issues that needs to be addressed is what should be donewith the pumping stations in the future. Should they be abandoned or repaired and used aslong as possible? It is recommended that a detailed case-by-case analysis be made of eachpumping station to evaluate the options and determine their economic and technical viability inthe future.

4.elivery of Credit54. The REM interviewed farmers and officials in the Viet Nam Bank for Agriculture(VBA) about the availability of credit. Based on those interviews, it appears that credit is readilyavailable for short-term crop production loans. However, the VBA has expressed seriousreservations about the adequacy of funds to meet the expected high demand for loans fordiversification purposes, for which the requirements are likely to be much larger and for longerperiods as in the case of fruit tree orchards which have longer gestation periods. In conjunctionwith the drive to promote diversification, the provision of adequate credit particularly for mediumand long term will be a key issue to enhance the impact of the Project in the future.

5.onitoring of Water and Soil Quality55. The Project has generally improved water quality by reducing salinity and acidity.However, as mentioned in paras. 30, 31, and 32, new sources of acidity and salinity in the soilshave been identified. The interruptions to natural drainage because of defective sluice gates isalso likely to add to these forebodings. While the sluice gates need to be replaced as suggestedin para. 33, it is necessary that the quality of water and soil be monitored regularly by preciseinstruments and analyzed. At present, most of the equipment is outmoded and located on theboundary of the Project area to check the quality of water entering the area. Consequently,information is lacking about the water and soil quality within the Project area. To achievediversification and implement remedial measures, the soil and water quality in the Project areaneeds to be monitored regularly, which is another key issue for future.


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14VI. CONCLUSIONS

A.verall Assessment56. The actual performance of the Project compared with its designed objectives ofsolving the problems of recurrent flooding, salinity and acidity intrusion, and sluggish surfacedrainage, despite several changes in scope, components, and implementation arrangements,has not been very satisfactory. Of the total area irrigated under the Project, the extentattributable to the facilities provided under the Project is a fraction of the estimate of about 8,000ha at appraisal. The pumping stations are only partially used. The maintenance of canals hasnot been adequate. The design of the sluice gates provided under the Project was defective anddid not improve the drainage in the area. However, by bringing fresh water into the area, theProject has acted as a catalyst to investment in small mobile irrigation pumps and on-farmdevelopment, by the farmers, and has controlled the intrusion of saline water and, except inperiods of heavy floods, has reduced flooding in the area. As a result of the Project, and of thefarmers' as well as of the Government's parallel and complementary efforts, the Project's targetsfor crop yields and intensity of cropping have been exceeded. The Government's policies ofeconomic liberalization, although external to the Project, have also contributed to the increasein production. Considering the EIRR of about 6.5 percent, along with the sustainability ofbenefits, the deficiencies in design, and the poor condition of the facilities, the Project isclassified as "partly successful."tB.essons Learned1.roject Design57. The design of the irrigation facilities and distribution structures (such as main andsecondary canals) for irrigation by gravity flow was inappropriate and inefficient because theentire Mekong Delta where the Project is located has a generally flat topography. One lessonthat the implementation of the Project has reconfirmed is that the gravity irrigation distributionsystem is inappropriate for irrigating a generally level land. The local irrigation engineers whoknow the conditions in the area do not seem to have been consulted adequately during theformulation of the Project. Thus, a second lesson is that the Bank should seek the views of localexperts and take these views into consideration in the design of projects.

2.eneficiary Participation58. The farmers in the area who are the end-users of the facilities provided under theProject were also not involved in either the planning or the implementation of the Project. Thisresulted in inappropriate designs and sites for some of the main and secondary canals, and theirpoor maintenance. The lesson here is that the beneficiaries should be involved in the Projectas early as possible to make them shareholders and responsible for repair and maintenance.They should also be provided with authority to levy irrigation fees to fund the cost of O&M.However, the Bank is now aware of this issue and has included beneficiary participation as acomponent in the preparation and implementation of new irrigation projects.

However, staff in the Programs Department considers that the partly successful rating is toogenerous given the low EIRR and the marginal area irrigated under the Project.


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153.easures for Mitigating Environmental Impacts59. The design of a project should include the identification of possible adverse effectson the environment that may occur during and after implementation. This would require the

inclusion of mitigating measures for possible negative impacts, if any, emanating from the projectin the design so that these may be prevented and/or minimized. To monitor the impact ofprojects, a benchmark data base is needed to compare environmental conditions before andafter implementation of the project. This benchmark data base should be built into the designof the project.

4.eed for a Comprehensive Approach60. Yet another lesson that the experience with this Project has provided, is thatinvestment in irrigation, to be productive with minimal gestation period, should be designed witha comprehensive view beginning with the construction of main canals and other major works tothe laying of small channels and on-farm development works necessary to carry the water to thefields. An irrigation investment that only includes the major works is incomplete, and requiresconsiderable time, effort, and investment before the water can actually be used for irrigation andconverted into higher crop output. Therefore, the lesson is that the design of an irrigation projectshould cover the sequential interdependent activities required to provide water to the end-user.The financing for these other activities can be determined separately.C.ollow-up Actions61. To improve the viability of the Project, the following follow-up actions arerecommended:

( i) The Bank, in consultation with the Government should review the condition andpotential utility of all the seven pumping stations and devise an action plan fortheir rehabilitation, replacement, or even abandonment;

(ii) The physical condition and overall utility of the sluice gates need to be reviewedand assessed, possibly through a Bank-financed TA. Changes in the design andtechnology of the gates may also need to be considered for more efficientoperations and effective regulation of saline and floodwater in the area coveredby the Project.

(ii i) The water and soil quality at key points in the area should be regularly monitoredand remedial action taken to mitigate any deterioration detected in the quality ofthese two resources; and( iv) As a part of the Mekong Delta Development Plan or even independently, the Bankshould consider providing a supplementary loan to the two provinces to developfurther their irrigation systems. Both the human and the physical resources in the

Project area have the potential for further development with minimal incrementalinvestment. The close proximity of the area to the largest city in Viet Nam, theenterprise, experience and skill of its people, and its link with foreign markets,offer scope for further development. The declining size of land holding (0.34 haper family) makes it necessary that this potential be utilized for continuedsocioeconomic development of the Project area.


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16

APPENDIXES

Appendixitleage1ndicators of Agricultural Development, 1982 and 199472tatus and Condition of Actual Facilities Provided83conomic Analysis of the Project's Benefits and Costs94roportion of Households Exhibiting Increased Ownershipof Durable Goods and Household Appliances,1994 Relative to 1979 (Percent Increase)35elected Characteristics of Household Headed by Womenand by Men4


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17Appendix 1

INDICATORS O FAGRIC ULTURAL DEVELOPMENT, 1982 AND 1994

1982994Area Development (ha)Total Cultivated AreaFirst Crop, PaddySecond Crop, PaddyThird Crop, PaddyTotal Area Under PaddyTotal Area Under Subsidiary CropsTotal Cropped AreaCropping Intensity (percent)Total Irrigated

9,130,0808,207,4115,302,8032,579,76216,0989,9763105416,4080,930180593,100,800

Yield (ha)Paddy.1.8Subsidiary Crops0 .66. 3Note:rea estimates for 1994 were provided by the provincial irrigation office of Tan Gien andLong An. For 1982, estimates of area under paddy and subsidiary crops were made by the

REM based oi the available information.

(Reference in text: pages 6 and 9, paras. 26 and 35)


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18Appendix 2

STATUS AND CONDI11ON OF ACTUAL FACILITIES PROVIDED

Descriptionnituantityate of Lastature ofescription of CurrentRepairepairperating StatusFlood Protection DikesTan Glenm4.3994aise the height of dike.eight of the dike needsto be raised further.LongAnmMain Drain

Tan Glenm9.9o repairull of sedimentation. Hasundertaken yet.ecome narrow.Long Anm2.6991pgrade Can Dot Sluice.edimented and narrow.Excavate Ong Hu R iver.Subsidiary DrainTanGienmLong Anm7.1994

Electric Pump StationTan Gieno.o repairperating at low capacity.undertaken yet.Long Ano.995eplace corroded pipes.oor operating condition.Gravity Irrigation CanalTan Glenoor condition.LongAnIntake SluiceTan Glen994epair gatesifticult to operate.Long An985epair gates.ifficult to operate.

RoadsAllweathermDryweatherm

(Reference in text: pages 6 and 8, paras. 27 and 32)


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19ppendix 3Page 1ECONOMIC ANALYSIS OF THE PROJECT'S BENEFITS AND COSTS

A.ssumptions Used1.eneral1. In the calculation of the economic internal rate of return (EIRR), the "with" and"without" Project scenario has been used to determine the net benefits and costs, which wereexpressed in 1994 constant prices using the World Bank's manufacturing unit value (MUV) index(January 1995). A standard conversion factor (SCF) of 0.90 was used to convert the price ofnontradeable factor inputs (e.g., seeds) to border prices, while the cost of labor (current marketrate of $1.48 per person-day) was valued by using a shadow wage rate of 0.60 to reflect theunderemployment rate of 40 percent. The economic value of fertilizers and agrochemicals (i.e.,pesticides, herbicides, etc.) was valued by multiplying their market prices by a SCF of 0.90.2. The calculated border prices for paddy (i.e., Thai rice, 5 percent broken) werebased on the Commodity Price Outlook of the World Bank, January 1995, from which theeconomic farmgate price was derived for valuing paddy production in the Project area. Theeconomic prices of subsidiary crops (i.e., cucumber and watermelon) were calculated bymultiplying their actual farmgate prices ($98/t and $90/t, respectively) by 0.90.3. A free market exchange rate of Dong 11,000 per $1 .00 was assumed in convertingthe benefits and the costs into dollars.

2.conomic Benefits4. Under the "with" Project situation, the total cropped area estimates for 1978-1981were derived from the Project Completion Report (PCR) and Project Performance Audit Report(PPAR), while the actual data were used for years 1982-1994. Under the Project, the paddycropped area in 1978 was estimated to be 10,060 ha, while area devoted to subsidiary cropswas 1 040 ha, or a total cropped area of 11,100 ha. The same area increased to 16,408 ha(paddy 16,098 ha, and subsidiary crops, 310 ha) in 1982 and increased further to 20,930 ha in1994. The total cropped area was assumed to remain at 1994 levels until the end of the Project.The estimates of total cropped area under the "without" Project situation followed the estimatespresented in the PCR and in the PPAR.

5. The paddy yields for 1978-1988, under the "with" and the "without" Projectsituations, were based on the estimates in the PCR and in the PPAR, while the estimates ofactual yields for 1989-1994 were based on the actual data obtained from farmers and informationprovided by the officials in the provincial irrigation offices in Tan Gien and Long An. The paddyyields were assumed to remain at 1994 levels until the end of the Project. The estimates ofyields of subsidiary crops were mainly based on information obtained from interviews withindividual farmers and from the provincial irrigation offices.

(Reference in text: page 10, paras. 38 and 41)


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20pendix3Page 26. The agricultural production attributable to the facilities provided under the Projectwas assumed to be a declining percentage of the total production in the area. In 1984, thecontribution of the Project facilities was assumed to be 90 per cent of the area's total production.This percentage contribution would decline by 5 per cent annually, until it reaches 40 per centin 1994, and would stay at that level until the end of the life of the Project.

3.osts7. The cost estimates for the Project were obtained from the PPAR and were adjustedto 1994 constant prices using the MUV of the World Bank. The cost of operation andmaintenance (O&M) was estimated at $5/ha, which was based on actual cost/ha incurred in 1994in the Project area. The projected O&M costs, starting in 1995, were assumed to increase at arate of 5 per cent of the previous period's cost to reflect the deterioration of the facilities and thehigher cost involved in operating them.B.conomic Analysis8. The recalculation of the EIRR, as a measure of the performance of the Project,followed the methodology used in the PCR and in the PPAR, except for some adjustments toreflect recent changes in land use, agricultural productivity, prices, and exchange rate. Asseveral of the developments which have facilitated increases in crop production did not resultsolely from the Project, the quantified benefits, in turn, cannot exclusively be attributed to theProject. In this regard, the Reevaluation Mission considers the EIRR as conjectural as inprevious reports.9. Based on estimates of quantified benefits and costs, the reestimated EIRR at thereevaluation of the Project is about 6.5 percent, which is somewhat lower than the estimate inthe PPAR. The reasons for the lower estimated EIRR, compared with the estimates in the PCRand in the PPAR are: (i) some increases in crop production have occurred independently of theProject; (ii) the substantial reduction in the utilization of the major components of the Project, i.e.,pumping stations and the gravity delivery system; (iii) the additional costs incurred by farmersin pumping water to their farms; (iv) the low economic price of paddy; and (v) the slow pace ofagricultural diversification.


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($/mt)C(S/rn)

inh City ($Imt)and handling (S/ni )

Exporter's margin (S/ni )Transport to Ho Chi Minh P art (S/mt)

Wholesaler's margin (S/ni)

Dealer 's maIin (S/mt)

ivalent price of paddy at mill d (S/nd)

farm ($/mt)

Table 1: Economic Prices of Paddy

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

144144434434434434434216216216216218287314287270357315315320320320332365365385365365365385267 236 647 645 655 670 685 338 287 261 243 245 308 330 289 278 357 310 305 302 302 302 291 320 320 320 320 286 286 28653 47 129129 131 134 137 68 57 52 49 49 62 66 58 56 7152616080605864646484575757

213 188 518 516 524 536 548 270 229 209 195 196 248 264 231 222 286 248 244 241 241 241 233 256 256 256 256 229 229 2291888888888888888888888888888888231 206 536 534 542 554 566 288 247 227 213 214 264 282 249 240 304 266 262 259 259 259 251 274 274 274 274 247 247 247851000000000000000000000000000000207 182 512 510 518 530 542 264 223 203 189 190 240 258 225 216 280 242 238 235 235 235 227 250 250 250 250 223 223 223

3202020202020202020202020202020202020202020202020202020202020184 159 489 487495 507 519 241 200 180 166 167 217 235 202 193 257 219 215 212 212 212 204 227 227 227 227 200 200 200 ,30303030303030303030303030303030303030303030303030303030303023 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 2314444444444444444444444444444441000000000000000000000000000000153 128 458 456 464 478 488 210 169 149 135 138 186 204 171 162 226 188 184 181 181 181 173 196 196 196 196 169 189 169971 288 287 292 300 307 133 1079485 86 117 128 108 102 142 119 116 114 114 114 109 123 123 123 123 106 106 106790 74 281 280 285 293 300 126 100 8789 110 121 1015 135 112 109 107 107 107 102 116 116 118 118 99 99 990.09 0.07 0.28 0.28 0.29 0.29 0.30 0.13 0.10 0.09 0.08 0.08 0.11 0.12 0.10 0.10 0.14 0.11 0.11 0.11 0.11 0.11 0.10 0.12 0.12 0.12 0.12 0.10 0.10 0.10o

C D


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Table 2: Detailed Breakdown of Project Costs

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 200706404051373232 1,196 11969024Nal1990conslmtpdces a 57.94 65.62 71.97 72.26 71.15 69.53 68.058.6 80.89 88.84 95.31 94.65 10000 102.23 10664 104,22 107.35 10899 11094 11381 11381 11381 122.53 122.53 122.53 122.53 122.53 13689 13689 136803.97 61.13 67.04 67.31 66.28 64.77 63.39 63.9075.35 82.76 88,78 88.17 93.15 95.23 9034 97.08 10000101.53 10334 10602 10802 10602 11414 114,14 11414 114,14 114.14 127.52 127.52 127.522869 4,695494364 1,445 1,4451350S'020)

Commodity Price Projectbns, 9 November1992.-0l>CD W

()


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