Irrigation and Flood Protection Rehabilitation Project (Loan 1259-VIE[SF]) in Viet Nam

Transcription

1 Project Performance Audit Report PPA:VIE Irrigation and Flood Protection Rehabilitation Project (Loan 1259-VIE[SF]) in Viet Nam September 2005 Operations Evaluation Department Asian Development Bank

2 CURRENCY EQUIVALENTS Currency Unit dong (D) At Appraisal At Project Completion At Operations Evaluation (August 1993) (December 2001) (April 2005) D1,000 = $ $ $ $1.00 = D10,600 D15,104 D15,830 ABBREVIATIONS ADB Asian Development Bank ADTA advisory technical assistance BME benefit monitoring and evaluation CPO Central Project Office DDMFC Department of Dike Management and Flood Control DWR Department of Water Resources EA executing agency EIRR economic internal rate of return ha hectare IMC irrigation management company ISF irrigation service fee km kilometer kwh kilowatt-hour m meter m 3 cubic meter MARD Ministry of Agriculture and Rural Development NNAIC North Nghe An Irrigation Company O&M operation and maintenance OEM operations evaluation mission PCR project completion report PIM participatory irrigation management PPAR project performance audit report PPTA project preparatory technical assistance SCIC Song Chu Irrigation Company SDR special drawing rights SPO subproject office TA technical assistance VRM Viet Nam Resident Mission of ADB VSL value of statistical life WUA/C water user association/cooperative WUO water user organization (i) (ii) NOTES The fiscal year (FY) of the Government ends on 31 December. In this report, "$" refers to US dollars. Director General, Operations Evaluation Department : Bruce Murray Director, Operations Evaluation Division 1 : R. Keith Leonard Evaluation Team Leader : Toshio Kondo Operations Evaluation Department, PE-666

3 CONTENTS Page BASIC DATA EXECUTIVE SUMMARY MAP iii v ix I. BACKGROUND 1 A. Rationale, Purpose, and Outputs 1 B. Cost, Financing, and Executing Arrangements 1 C. Completion and Self-Evaluation 1 D. Operations Evaluation 2 II. PLANNING AND IMPLEMENTATION PERFORMANCE 2 A. Formulation and Design 2 B. Cost and Scheduling 3 C. Consultants Performance, Procurement, and Construction 3 D. Organization and Management 4 III. ACHIEVEMENT OF PROJECT PURPOSES 5 A. Operational Performance 5 B. Performance of Operating Entities 8 C. Economic Reevaluation 8 D. Sustainability 9 IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 9 A. Socioeconomic and Poverty Reduction Impacts 9 B. Environmental Impact 10 C. Impact on Institutions and Policy 11 V. OVERALL ASSESSMENT 11 A. Relevance 11 B. Efficacy 12 C. Efficiency 12 D. Sustainability 13 E. Institutional Development and Other Impacts 13 F. Overall Project Rating 14 G. Assessment of ADB and Borrower Performance 14 Toshio Kondo, senior evaluation specialist (team leader), was responsible for the preparation of this report; conducted document reviews and key informant interviews; and guided fieldwork undertaken by Jonathan Cook, Tran van Phuc, and Bui Quoc Tuan (staff consultants). This report observed the guidelines formally adopted by the operations evaluation department on avoiding conflict of interest in independent evaluations. To the knowledge of the operations evaluation department management, there were no conflicts of interest of the people preparing, reviewing, or approving this report.

4 ii VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 14 A. Key Issues for the Future 14 B. Lessons Identified 16 C. Follow-Up Actions 17 APPENDIXES 1. Project-Related Data and Statistics Irrigation and Dike Infrastructure Socioeconomics, Poverty, and Participatory Irrigation Management Crop Area Production and Yield Economic Reevaluation Other Statistics 59 SUPPLEMENTARY APPENDIX (available upon request) Floods Since 1900

5 BASIC DATA Irrigation and Flood Protection Rehabilitation Project (Loan 1259-VIE[SF]) Project Preparation/Institution Building TA No. TA Project Name Type Person-Months Amount Approval Date ($ 000) 1968 Operation and Maintenance ADTA 57 1, Oct 1993 Strengthening 2869 Operation and Maintenance ADTA Sep 1997 Development in the Irrigation Sector 3064 Strengthening of Resettlement Management Capacity in the Ministry of Agriculture and Rural Development ADTA Sep 1998 Key Project Data ($ million) As per ADB Loan Documents Actual Total Project Cost Foreign Currency Cost Local Currency Cost ADB Loan Amount/Utilization ADB Loan Amount/Cancellation Key Dates Expected Actual Fact-finding 7 26 Sep 1992 Appraisal 28 Feb 21 Mar 1993 Loan Negotiations 5 Oct 1993 Board Approval 26 Oct 1993 Loan Agreement 30 Oct 1993 Loan Effectiveness 28 Jan Mar 1994 Project Completion 30 Jun Jun 2001 Loan Closing 31 Dec Apr 2003 Months (Effectiveness to Completion) Economic Internal Rates of Return (%) Appraisal PCR 2 PPAR Overall Hanoi Song Chu North Nghe An Borrower Socialist Republic of Viet Nam Executing Agency Ministry of Water Resources 3 ADB = Asian Development Bank, ADTA = advisory technical assistance, PCR = project completion report, PPAR = project performance audit report, TA = technical assistance. 1 The loan was equivalent to special drawing rights (SDR) 54,370,000 at the time of approval. Net loan amount was equivalent to SDR49,011, at the time of loan closing. Total cancellations amounted to SDR5,358, Reflects case B analysis which did not consider the probable failure of the two irrigation systems. In comparison, case A benefits included avoided production losses caused by the possible failure of the two irrigation subprojects. Under case A, the overall economic internal rate of return was estimated at 37.4% at project completion (compared with 41.5% at appraisal), Song Chu at 7.3% (15.9% at appraisal), and North Nghe An at 9.5% (25.9% at appraisal). 3 Restructured in December 1995 to form the Ministry of Agriculture and Rural Development.

6 iv Mission Data Type of Mission No. of Missions Person-Days Fact-Finding Appraisal Inception 1 21 Project Administration Review 4 77 Special Project Administration 7 91 Midterm Review 1 36 Project Completion 1 58 Operations Evaluation The Operations Evaluation Mission comprised Toshio Kondo, Senior Evaluation Specialist (Mission Leader); Jonathan Cook (international consultant); and Tran Van Phuc and Bui Quoc Tuan (domestic consultants).

7 EXECUTIVE SUMMARY Irrigation and flood protection infrastructure in northern Viet Nam was old and often dilapidated when the project was formulated in the early 1990s. The Hanoi dike and the two main irrigation schemes proposed for rehabilitation risked failure of major structures, which would cause significant economic and social disruption. Government policies at the time including the major economic renovation program, doi moi, initiated between 1986 and 1989 supported increased agricultural production. The Asian Development Bank s (ADB) 1993 interim operational strategy concentrated on four areas, including the rehabilitation and development of physical infrastructure, which became the main focus of the Project. The Project s objective was to rehabilitate 45 kilometers of the Hanoi dike and two irrigation systems (Song Chu and North Nghe An) with an irrigated area of 80,000 hectares (ha) in North Central region. The Project s purpose was to avoid loss of life and mitigate economic loss in case of flooding caused by dike failure. Project investment would result in sustained paddy (unhusked rice) production of 440,000 tons (t) on 80,000 ha for the Song Chu and North Nghe An irrigation schemes. Project objectives were not well defined, partly reflecting lack of detailed project preparation. Project cost was estimated at $96 million. In addition, grant-funded advisory technical assistance of $1.8 million was planned to strengthen operation and maintenance (O&M). The Project was executed by the Ministry of Water Resources, the predecessor of the Ministry of Agriculture and Rural Development. The Project was approved in October 1993 and completed in June The irrigation subprojects focused on restoring damaged infrastructure to its original state. The emergency irrigation rehabilitation was designed from an engineering perspective only, i.e., without assessment of institutional factors, in part due to the perceived need to complete the subprojects quickly without project preparatory technical assistance. Rehabilitation of the Hanoi dike improved it substantially and it is now well maintained. While dike rehabilitation had neutral to positive environmental impact, the environment is a key factor in the dike s performance and long-term stability. In particular, this relates to likely flood levels, and the level of construction that occurs in the floodplain. Both irrigation schemes were rehabilitated as planned. All rehabilitated structures are performing as expected with little deterioration. Crop yields increased over the project period by an average of 5% per year. Average spring paddy yields now exceed 6 tons per hectare (t/ha), up from around 4 t/ha in The Project has contributed to these gains, but only as one of many factors, which include improved land security, varieties, and input availability. Average household cash income is estimated to have increased by 145% over the project period, and 97% of respondents considered improved water supplies to be an important contributing factor. 1 The direct socioeconomic benefits of the Hanoi dike rehabilitation are threefold: (i) increased sense of security and well-being derived from a sound dike system, (ii) stimulation of investment due to improved flood security, and (iii) transport benefits resulting from concreted dike road systems. The main impacts of the irrigation systems are increased water supply at the headworks and distribution through secondary canals. This has allowed a significant increase in 1 Small-scale Operations Evaluation Mission (OEM) survey.

8 vi the areas fully irrigated, though less than anticipated at appraisal. The Project supported by a tertiary canal upgrading program has reduced time spent on manual water lifting and released time for other activities. The Project is assessed as relevant. The technical solution for Hanoi dike rehabilitation has become a model for dike systems on many other rivers. The Project contributed to this but did not adequately plan for road needs almost all the road length has been rebuilt or is likely to be rebuilt in the near future resulting in waste of resources. Rehabilitation of the two core irrigation subprojects was relevant at the time of design, in accordance with the Government s Third Five-Year Plan ( ), which placed emphasis on expanding irrigated agricultural production. The Project would have been more relevant if it had taken a broader and participatory approach to irrigation development, even under the urgent project preparation situation in However, it achieved its purpose the Hanoi dike rehabilitation increased Hanoi s security and is likely to prevent future dike breaches and ensuing damage and loss of life, in almost all flood conditions. The purpose of the irrigation subprojects was to provide reliable and increased irrigation water to the two schemes, and achieve sustained paddy production of 440,000 t per year. This target has been substantially exceeded, with production from the schemes reaching about 730,000 t in 2004 based on irrigation company data. Household cash income in 2004 averaged D15 million in Song Chu and D13 million in North Nghe An, an average increase of 145% in real terms over the project period. In addition to project investments, the lining of tertiary canals under local budget has made a significant contribution to improved water management and scheme performance. The Project is assessed as efficacious. Efficiency of implementation was satisfactory. All targets were met, despite delays due to lack of familiarity with ADB procedures and the limited construction period dictated by the irrigation calendar. Economic internal rate of return (EIRR) for the Hanoi dike subproject is estimated at around 35% (based on updated appraisal estimates of damage, but assuming that no break in the dike would have occurred during floods of 12 meters or less, and making allowance for reduction in deaths). This level does not include benefits resulting from induced investment inside the dike or time savings by Hanoi residents due to road upgrading. EIRR for the core irrigation subprojects is estimated at around 12%. EIRR is higher than estimated by the project completion report due to the inclusion of labor savings resulting from the Project, reduced O&M costs, and post-project investment in tertiary canal upgrading (also taken into account in economic assessment). Overall, the Project is rated efficient. The Hanoi dike subproject is expected to be sustainable as the dike is too important to Hanoi for the people s committees to allow it to deteriorate and threaten its integrity. However, further support is needed to clean up and maintain the northern Ha Tay section, and care is required in the further development of the Red River floodplain. The irrigation schemes have some problems because of the loss of tertiary gates and underfunded maintenance on unrehabilitated secondary canals. However, irrigation management companies, irrigation enterprises/clusters, agricultural cooperatives, irrigation groups, and farmers are trying to maintain their irrigation infrastructure. The rapid expansion of the rehabilitated secondary and tertiary canal network under local budget is notable. Overall, project sustainability is rated as likely. Institutional impact has been moderate due to the Project s focus on urgent physical rehabilitation.

9 vii Overall the Project is rated successful. This is higher than the project completion report rating of partly successful mainly to improved irrigation scheme economic performance, based on O&M time and cost savings identified in post-completion surveys. Key issues for the future include (i) the need for improved environmental management on irrigation schemes, and (ii) defining systems to extend participatory irrigation management (PIM). The irrigation schemes main environmental problem is the use of canals as a convenient rubbish disposal system. This is particularly severe where canals pass through villages without alternative disposal options. Regular rubbish removal by irrigation companies encourages villagers to continue to dispose of their rubbish in the canal. The Song Chu Irrigation Company is aware of the problem and is seeking ways to address it. Following a long assessment period, the Government is now moving to promote PIM. Ways need to be found to manage secondary or intercommune tertiary level canals as integrated hydraulic systems rather than on the current political (commune boundary) basis. The main lesson that can be drawn from the project experience is the desirability of a holistic approach to irrigation scheme upgrading and development. This would assess the need for lower level irrigation and drainage system upgrading as well as headworks and main system work often financed by multilateral lending institutions. Thus, the approach should define lowerlevel requirements at the outset and outline a program to address the most critical constraints. This would allow irrigation scheme upgrading to proceed in an ordered and participatory manner, rather than the ad hoc, top-down approach dictated by the project design. This study suggests that (i) rehabilitation of secondary structures should be completed by the irrigation management companies, (ii) guidelines for tertiary canal upgrading should be developed, (iii) systems should be defined to encourage ownership of irrigation assets by farmers/villagers and thus reduce theft of gates, and (iv) PIM on hydraulic boundaries should be extended to all canals. Bruce Murray Director General Operations Evaluation Department

10 ix o o E E VIET NAM IRRIGATION AND FLOOD PROTECTION REHABILITATION PROJECT Project Area National Capital (as implemented) City/Town National Road Other Road PEOPLE'S REPUBLIC OF CHINA River International Boundary Boundaries are not necessarily authoritative. Ha Giang Cao Bang So n o N Lai Chau So ng g Th ao o Song L Lao Cai Bac Kan Ch ay o N Tuyen Quang ng So Vinh Phuc Red Riv er D a Son La u Ca Thai Nguyen Phu Tho Lang Son ng So Yen Bai Bac Giang Uong Bi HANOI Hai Duong Hoa Binh So ng D ay Hai Phong Thai Binh HANOI DYKE REHABILITATION AND PROTECTED AREA INCLUDING SUBPROJECT EXTENSION ng So Ninh Binh a M LAO PEOPLE'S DEMOCRATIC REPUBLIC SONG CHU IRRIGATION REHABILITATION SUBPROJECT Thanh Hoa Son g o E NORTH NGHE AN IRRIGATION REHABILITATION SUBPROJECT Ca Dien Chau 110 o00'e 105o00'E PEOPLE'S REPUBLIC OF CHINA G u l f o f To n k i n Vinh HANOI Ha Tinh Hai Phong 20o00'N 20o00'N Gulf of Tonkin LAO PEOPLE'S DEMOCRATIC REPUBLIC 18 o00 N Vinh PROJECT LOCATION QUANG BINH PROJECT EXTENSION RAO NAN IRRIGATION REHABILITATION SUBPROJECT QUANG TRI PROJECT EXTENSION BAU NHUM, KHE MAY, AND NAM THACH HAN IRRIGATION REHABILITATION SUBPROJECT Dong Hoi Da Nang Quy Nhon N 18 o00 N Dong Ha CAMBODIA Nha Trang 0 Da Lat Gulf of Thailand Ho Chi Minh City Vung Tau 10o00'N Hue Kilometers 10o00'N Da Nang South China Sea 105o00'E 110 o00'e Hoi An o E HR

11 I. BACKGROUND A. Rationale, Formulation, Purpose, and Outputs 1. Irrigation and flood protection infrastructure in northern Viet Nam was old and often dilapidated when the project was formulated in the early 1990s. The Hanoi dike and the two main irrigation schemes proposed for rehabilitation risked major structural failure, which would cause significant economic and social disruption and, for Hanoi dike, loss of life. Government policies at the time including the major economic renovation program, doi moi, initiated between 1986 and 1989 supported increased agricultural production. The Asian Development Bank s (ADB) 1993 interim operational strategy concentrated on four areas, including the rehabilitation and development of physical infrastructure, which became the main focus of the Project. 2. The Project s objective was to rehabilitate 45 kilometers (km) of the Hanoi dike and two irrigation systems (Song Chu and North Nghe An) with an irrigated area of 80,000 hectares (ha) in North Central region. The Project s purpose was not specified but, for the Hanoi dike, it was to avoid loss of life and mitigate economic loss in case of flooding caused by dike failure. For the Song Chu and North Nghe An irrigation schemes, project investment was intended to sustain agricultural production and other economic activities of the population (Report and Recommendation of the President [RRP] para. 28). 1 It was expected that the Project would result in sustained paddy (unhusked rice) production of 440,000 tons (t) on 80,000 ha compared with a pre-project level of 370,000 t. Project objectives were not well defined, partly reflecting lack of detailed project preparation. 2 Cost savings under the Project were applied to extending the Hanoi dike rehabilitation by 16 km, and rehabilitating four small to medium irrigation schemes damaged by severe floods in 1999 in Quang Binh and Quang Tri provinces. B. Cost, Financing, and Executing Arrangements 3. Project cost was budgeted at $96 million of which $31 million was for Hanoi dike civil works, the main project investment (Appendix 1, Table A1.1). The ADB loan of $76.5 million would cover foreign exchange costs of $38 million and part of local costs. In addition, grantfunded advisory technical assistance (ADTA) of $1.8 million was planned to strengthen irrigation operation and maintenance (O&M). 3 The Project was executed by the Ministry of Water Resources, the predecessor of the Ministry of Agriculture and Rural Development (MARD), through its Central Project Office (CPO) established for the purpose, and three sub-project offices (SPOs) responsible for monitoring and construction supervision of the three main components. The loan was approved in October 1993 and became effective in March C. Completion and Self-Evaluation 4. The Project was completed in June 2001, 3 years behind schedule. A project completion report (PCR) was prepared by the Loan Consultants in November 2001, providing information drawn from the final benefit monitoring and evaluation (BME) report. The Project s self 1 ADB Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the Socialist Republic of Viet Nam for the Irrigation and Flood Protection Rehabilitation Project. Manila 2 The Project was prepared without a project preparation technical assistance (PPTA) on the assumption that the Executing Agency (EA) was ready to undertake the Project. 3 ADB Technical Assistance to the Socialist Republic of Viet Nam for Operation and Maintenance Strengthening. Manila. (TA 1968-VIE, for $1.8 million, approved on 26 October 1993).

12 2 assessment was conducted by Mekong Department in September 2003 and the ADB PCR was published in July The PCR concluded that the Hanoi dike subproject was highly successful, whereas the irrigation subprojects were less successful due to the partial approach to rehabilitation adopted. The PCR was comprehensive and analytical, Overall, the Project was rated partly successful. D. OED Evaluation 5. This project performance audit report (PPAR) presents the findings of an operations evaluation mission (OEM) that visited Viet Nam April May It is based on a review of the PCR, Report and Recommendation of the President, BME reports, project records, discussions with farmers and farmers leaders, as well as discussions with implementing agencies,, ADB staff, and relevant government agencies. The PPAR assesses the Project's efficiency and effectiveness in achieving its objectives and generating sustainable benefits. This report incorporates comments received from reviewers on an earlier draft. II. PLANNING AND IMPLEMENTATION PERFORMANCE A. Formulation and Design 6. Formulation was based on French consultants studies of the irrigation schemes, followed by local engineers feasibility studies. Preliminary work on the Hanoi dike was undertaken by Australian consultants in 1992 and early The irrigation subprojects focused on restoring damaged infrastructure to its original design operating performance. The engineering assessments were considered adequate for design. The loan project was designed by a 10- person, 3-week appraisal mission in March The lack of a project preparatory technical assistance (PPTA) may have limited a holistic design approach. As stated in PCR (para. 77), the largely engineering approach was partly due to the perceived need to complete the subprojects quickly and failed to address key constraints facing irrigators. The lack of a PPTA reflected MARD s belief in the urgency of rehabilitation combined with ADB s wish to be the first multilateral agency to commence a project in Viet Nam following the resumption of lending. 7. Engineering design was mainly undertaken by Hydraulic Engineering Consultants, apart from the Bai Thuong Diversion and design of treatment for the Hanoi dike foundation, which were undertaken by international consultants. In other areas, technical design was generally straightforward, since it focused on rehabilitating existing infrastructure. In some cases, innovative solutions were developed, such as the bypass tunnel in the North Nghe An main canal, which improved maintainability and provided increased irrigation water supply. 4 A significant design issue was the failure to develop access roads along the canals, preventing vehicle access to many sections of primary and secondary canals. Design of the Hanoi dike was sound, and has led to a significantly stronger dike with less encroachment than before the Project. However, the relief well component 5 was poorly planned, as design failed to allow for a permanent water discharge solution. Inadequate provision was made for the access needed for relief well monitoring. A discussion of subproject design, construction and O&M is in Appendix However, once the new canal had been built, it was found that the original French tunnel was in reasonable condition, and probably could have been operated for many years with minor work. This highlights the problem of inadequate study prior to project approval. Pressure relief wells, designed to reduce under-dike pressure and prevent sand boils and piping.

13 3 B. Cost and Scheduling 8. Actual project cost was $87.5 million, $8.1 million less than the appraisal estimate (Appendix 1, Table A1.1). Of the loan amount of $76.5 million, potential savings of $15.9 million were identified in 1999, which were used to extend the Hanoi dike rehabilitation from km 86 to km 101 ($9 million) and conduct emergency repairs to irrigation systems damaged by floods in in Quang Binh and Quang Tri provinces ($6 million). North Nghe An main canal lining was extended from the planned 6 km to 22 km and substantial work was undertaken on the Bau Ru sluice and associated drainage works. A follow-on technical assistance (TA) project for O&M development was provided in 1997 to help apply ADTA results. 7 Cost savings were due to (i) overestimation of costs at appraisal; (ii) devaluation of the dong, which reduced the dollar equivalent of local costs; and (iii) overestimation of contingencies and service charges. Cost savings were mainly in the areas of materials ($7.7 million) and administration ($0.8 million). Land acquisition costs were nearly $5 million compared with the $1.1 million appraisal estimate, due to greater than anticipated resettlement needs relating to the Hanoi dike. An opportunity to apply loan savings ($7.1 million) to extend rehabilitation of main and secondary canals was not approved because some MARD staff believed lower level canal upgrading was local authorities responsibility and should not be funded from multilateral agency loans. 9. The Project was completed in June 2001, 3 years later than expected. Loan closing was delayed until April 2003 to enable the executing agency (EA) to liquidate advances to the imprest account. Delays were initially caused by unfamiliarity with ADB procedures of the new CPO and three SPOs. Other delays were caused by (i) the short period available each year for construction, due to the need to avoid disruption to cropping patterns; (ii) lengthy procedures for land acquisition, resettlement, and compensation; (iii) flooding in 1999 also caused construction delays; and (iv) lack of a resettlement plan for Hanoi dike. Land acquisition and resettlement were complicated where canals ran through communes and villages. This prevented construction of adequate access roads along the Song Chu main canal and secondary canals on both schemes. C. Consultants Performance, Procurement, and Construction 10. Most of the international consultants performed well under the loan and TAs. However, one international loan consultant proved to be too inexperienced to make much contribution to the Project. One local consultant was criticized by the implementing agency in relation to supervision of the pressure relief well contracts. However, the consultant s performance was adequate, as the problem was mainly due to contractors lack of capacity to meet technical requirements for tubewell construction and development. CPO reports that its relationship with consultants was generally positive. 11. Most contractors performed satisfactorily. However, several contractors for construction of Hanoi dike relief wells lacked the necessary experience and, as a result, many wells were ineffective. Only half the contractors met targets for under-dike pressure relief 4 out of 10 contracts achieved less than 30% efficiency in terms of drawdown in upstream monitoring wells (Appendix 1, Table A1.3). The problem appears to have resulted mainly from ineffective development of the wells but it may be possible to further develop some wells. The relief wells 6 7 The 1,600 ha Rao Nam system in Quang Binh province and the Bau Nhum, Khe May, and Nam Thach Han systems in Quang Tri province with a total area of 17,000 ha. ADB Small-Scale Technical Assistance to the Socialist Republic of Viet Nam for the Operation and Maintenance Development in the Irrigation Sector. Manila. (TA 2869-VIE, for $150,000, approved on 16 September 1997.)

14 4 were handed over by 401 Company/SPO to the Hanoi Sub-Department of Dyke Management in June For the irrigation schemes, the short period for implementing the headworks and canal lining (with around 60 days of empty canals each year) limited the work that could be accomplished and delayed project completion. Given this tight annual time constraint, the appraisal design was highly ambitious and, overall, both supervisors and contractors performed well. Importation of equipment and materials by the contractor for Bai Thuong weir was complicated and time-consuming, leading to about 6 months delay. Technical problems were experienced with the flow control gate designed to channel water through the silt-flushing gate at the Do Luong Weir (the diversion structure on the Ma River for the North Nghe An scheme). D. Organization and Management 13. The Project was the first ADB project implemented by Viet Nam and Ministry of Water Resources/MARD since the resumption of lending. The concept of establishing a CPO had merit, as it should have promoted expertise development, inter-project support, continuity, and lesson transfer. However, in practice, CPO had an engineering focus and limited resources. Difficulties arose with the interposition of CPO between the SPOs and MARD to whom they had traditionally reported resulting in lack of clarity in reporting and responsibility. The irrigation schemes are managed by their irrigation management companies (IMCs), fully funded by irrigation service fees. The IMCs remain traditional top-down government institutions, although they have increased their consultative aspect through regular meetings with farmer organizations. At the field level, management is through irrigation enterprises (Song Chu) and clusters (North Nghe An). All farmers interviewed by OEM considered irrigation service to be good or moderate, compared with 53% before the Project (Appendix 3). However, further improvement in water management is required to reduce operational and conveyance losses, and improve service to the tail-end of canals and irrigation schemes. The planned transfer of at least tertiary canal management to water users organizations (WUOs) under current MARD policies should have a positive impact. 14. Hanoi dike management is the responsibility of Hanoi city and Ha Tay province people s committees. Management and O&M are generally satisfactory in Hanoi city but Ha Tay has fewer resources and is not managing the dike to a high standard. The provinces are making major commitments to improve the dike from their own, national and development assistance resources. The operation of dike management clusters with offices every kilometer along the dike, constructed under the Project appears to be effective in both dry and flood seasons. 15. Limited technology transfer occurred under the Project. The main new technology related to the Hanoi dike relief wells, which had not been used previously in Viet Nam. The system is one of the largest in the world. While Vietnamese engineers are now familiar with the technology, it has not yet been used elsewhere in the country. Other new techniques introduced under the Project include concrete road construction on the dike crest, the use of gabions (rockfilled wire cages) for dike protection, and devolution of responsibility for resettlement to local government. The planned use of roller compacted concrete in the Bai Thuong weir was new in Viet Nam but was not used in the end by the contractor who preferred conventional concreting techniques. This was unfortunate since roller compacted concrete is cheaper and quicker to lay. 16. BME was reasonably comprehensive, with surveys conducted in 1995, 1997, 1998, and a final report in late The reports provide substantial information on the Project and its

15 5 performance. BME closely followed design and met ADB requirements. However, a number of criticisms can be made: (i) (ii) (iii) (iv) BME reports only considered performance within the irrigation schemes measuring before and after rather than the with and without project performance required for economic assessment. Benchmarking against control/non-project areas was not attempted. BME should provide valuable information to project management as well as assist in project evaluation. However, reports were not translated into Vietnamese and were thus of little use to management. There was limited monitoring of the Hanoi dike subproject, restricting the potential to reassess the impact of rehabilitation at completion or postevaluation. There has been little ongoing recording of information on the dike or irrigation systems. III. ACHIEVEMENT OF PROJECT PURPOSES A. Operational Performance 1. Hanoi Dike 17. Since the start of the main Hanoi dike works, there have been two significant floods in the Red River: 1996 (12.34 meter [m]) and 2001 (12.01 m). These floods were lower than the 1: year flood 8 in 1971, which reached m at the Long Bien bridge with a flow of 38,700 cubic meters (m 3 ) per second at Son Tay, upstream of Hanoi. This flood caused problems in the Duong River (which exits the Red River just north of Hanoi) and extensive flooding in the midsections of the Day and Duong/Thai Binh river systems. However, no flood since 1945 has caused significant problems for Hanoi and failures reported by the RRP (para. 33) appear to refer to problems such as sand boils or bank slips, rather than breaches of the dike. No floods have tested the dike since rehabilitation. Most sand boils have been cured, though problems remain in some areas and continuous monitoring is required in flood seasons. 18. The completion of the 9.5 billion m 3 Hoa Binh reservoir upstream of Hanoi in 1989 has reduced the potential flood height by an estimated m. However, this has been partly offset by urban development in the floodplain, which has reduced its impact to around 0.6 m. The dam has also reduced silt load in the Red River system, which causes accelerated erosion in some areas, thus increasing the value of project protection works. Son La dam (under construction) with storage of 27 billion m 3 will further reduce flood risk. 19. Hanoi dike O&M is the responsibility of the Hanoi and Ha Tay Departments of Dike Management and Flood Control (DDMFC). Total O&M costs including salaries for the 151 km of dike managed by Hanoi DDMFC including 37 km of Red River right bank dike rehabilitated by the Project were reported at about D10 billion per year. Capital construction costs are around dong (D) 60 billion per year. Ha Tay Dike Management Department reports that 140 dragons (steel gabion cages) were stolen from Xam Thuy and An Canh revetments, causing concern for revetment stability. To date, Ha Tay province has not provided a maintenance budget for the Hanoi dike. 8 A flood level likely to be reached with a return interval of between 150 and 250 years.

16 6 20. The Hanoi dike has now become a major thoroughfare between Thang Long Bridge in the north and Vinh Tuy in the south. 9 The Project made a major contribution to the development of this road, through sealing the gravel surface and widening the road by several meters by replacing the earth top dike with a masonry wall. Removal of buildings, construction of interior and exterior access roads on the berm, and reshaping of the dike profile improved the dike s appearance as well as security. However, development has occurred over much of the lower dike, to within 5 m of the access road on the berm shoulder. This reduces the risk of toe erosion and wave impacts, but limits maintenance access and may prevent identification and correction of problems such as termite damage. 2. Irrigation Schemes 21. Both irrigation schemes were rehabilitated as planned. The Song Chu scheme extends to around 42,000 ha irrigated out of a gross command area of 70,000 ha. 10 The scheme reconstructed its diversion weir, main canal, primary (north and south) canals, and generally 1 2 km at the head of secondary canals serving over 500 ha. Minor secondary and tertiary canals and the drainage system were not upgraded. In 2001, BME reported 68% fully irrigated and 32% partly irrigated drought-affected gravity irrigation and pumped irrigation from drainage channels and watercourses. The rainfed cropping area within the irrigation scheme was reduced from 7% of the irrigable area to zero. By 2004, the fully irrigated proportion had reached 75%, according to the Song Chu Irrigation Company (SCIC). In 2001, around 70% of the tertiary system had been upgraded through concrete lining. 22. North Nghe An s irrigable area is currently 29,500 ha. North Nghe An Irrigation Company (NNAIC) classifies 19,744 ha as fully irrigated an increase from the final BME report estimate of 18,763 ha in A rehabilitation program similar to the Song Chu scheme was undertaken in North Nghe An, with a greater proportion by length (60%) of major canals upgraded in part because there are fewer canals serving over 500 ha. While the Project did not undertake tertiary canal upgrading, the province and NNAIC have made a major effort to help communes upgrade their tertiary canals. NNAIC estimates that around 90% of tertiary canals have been upgraded, compared with 60% in This has facilitated improved water management. However there is now a significant disconnect between the rehabilitated parts of the main system and the tertiary system, as many of the smaller secondaries and unrehabilitated parts of major secondaries are in poor condition. 23. All rehabilitated structures are performing approximately as expected. However, operational performance of the two schemes is less than anticipated at appraisal due to (i) partial upgrading of each system, and (ii) adoption of continuous irrigation in many areas for much of the year. In each scheme, the irrigation company and communes operate a complex network of pumping stations, mainly electric powered. Despite the significant electricity subsidy, 11 the cost of owning and operating pumping stations is substantial and adds around D400,000/ha/year to farmers irrigation costs. Irrigation companies are trying to extend rehabilitation of their canal networks and communes are expanding the lined tertiary network, which should make it possible 9 An Overseas Economic Cooperation Fund design for the Urban Infrastructure Development Project (1998) indicates that the dike road should become a major connector between Thang Long bridge and the new Thanh Tri bridge (under construction) on Ring Road 3. Total cost of the five subprojects was estimated at $56 million. 10 PCR and BME estimated irrigable area at 50,933 ha. In practice, the area controlled by SCIC is now around 42,000 ha, due to the exclusion of 3,000 ha which has passed on to local authorities, and significant loss of irrigation land to urban development in the project area. 11 Electricity for irrigation pumping is charged at an average of D600 per kilowatt-hour (kwh) day rate ( ), D950/kWh peak ( ), and D240/kWh off-peak ( ). Other economic sectors and domestic sectors pay D860, D1,430, and D480 for day, peak and off-peak electricity, suggesting a subsidy of 30% 50%.

17 7 to at least maintain and probably improve the schemes operational performance over time. There has been little deterioration in the four years since most construction was completed. Figure 1: Trends in Crop Yields in Project Districts ( ) Crop yields have increased rapidly over the project period (Figure 1) by an average of 5% per year. Spring paddy yields now exceed 6 t/ha, up from around 4 t/ha in Summer paddy production has reached almost 5 t/ha and maize between 3 t/ha (North Nghe An) and 4.7 t/ha (Song Chu). Crop yields are generally higher in Song Chu than North Nghe An. The Project has contributed to these impressive yield gains, among other factors, including improved land security, improved varieties, and input availability (Appendix 4). SC spring paddy NNA spring paddy 1 SC summer paddy NNA summer paddy SC maize NNA maize SC = Song Chu, NNA = North Nghe An. Source: Government Statistics Office. 25. OEM confirmed the PCR s conclusions on the emergency flood rehabilitation subprojects: (i) 60% increase in cropping but high cost of pump operation on Roa Nan; (ii) doubled cropping intensity but low construction quality and significant drainage constraints on Bau Nhum; (iii) high investment cost ($4,000/ha) and use of funds for office building construction on Khe May; and (iv) doubled cropping intensity on Nam Thach Han, although works did not relate to flood damage repair. 3. Technical Assistance 26. Three TAs were conducted fully or partly under the Project: Yield (tons/ha) (i) (ii) TA 1968-VIE Operation and Maintenance Strengthening (footnote 3) supported effective and sustained water resources development and management, including the introduction of the concept of secondary (or inter-commune tertiary) canal and water management by farmer groups on a hydraulic boundary basis. Only one water user group (on canal B6/9 in Song Chu) was established under the TA but systems were developed which will assist in defining management systems based on hydraulic (rather than administrative) boundaries in future. The TA completion report considered the TA successful, though lack of replication limited its impact. OEM confirms this rating. Small-scale TA 2869 Operation and Maintenance Development in the Irrigation Sector (footnote 7), successfully strengthened water users participation in irrigation management at four locations within the Song Chu and North Nghe An schemes. Assessment of the performance of farms operating within the water user groups 12 suggests that farm performance was significantly improved by a combination of participatory irrigation management (PIM) and tertiary canal upgrading. Further discussion of PIM development in Viet Nam is in Appendix 3. OEM rates the TA successful. 12 Janaiah, A Poverty Reduction Impact of Public Spending on Large-Scale Irrigation Systems in Viet Nam. ADB: Hanoi.

18 8 (iii) TA 3064-VIE 13 Strengthening of Resettlement Management Capacity in the Ministry of Agriculture and Rural Development strengthened CPO s resettlement management capacity, for both the Project and Red River Delta Water Resources Sector Project. 14 The TA made a significant contribution to the reasonably timely and effective resettlement of persons affected by the Hanoi dike rehabilitation. It also contributed to the establishment of effective resettlement systems within the Government and particularly to the decentralization of resettlement activities to the district level, with positive impacts on responsiveness and linkages. OEM rates the TA successful. B. Performance of Operating Entities 27. Several entities are involved in operating project facilities. Hanoi dike is operated by the DDMFCs of the Hanoi and Ha Tay people s committees. Dike inspection and discussions with the director of the departments suggested that management was generally adequate for dike needs. Maintenance and development budget is provided from central and provincial/city levels, which management considers adequate for O&M. BME considered that the dike was significantly better managed than prior to the Project, with a reduction in illegal activities. However, regulations and enforcement vary between districts. Problems continue with rapid urbanization of the floodplain damage to the dike from sand mining trucks and poor access to several relief wells, some of which are now inside houses. Considerable work has been undertaken on the dike since project completion, including a large road development program that has made the dike into one of Hanoi s main trunk routes with dual carriageway over much of its length. Overall, the dike is so important to Hanoi that continued management and operation at an adequate level is likely. 28. The main irrigation schemes are operated by IMCs. Most IMC revenues are from irrigation service fees (ISF) paid by irrigators and collected by the commune people s committees or agricultural service cooperatives. The ISF concept is well accepted (though the level is resented by farmers) and collection is close to 100% in project communes. The annual ISF for full irrigation is around D1 million/ha/year ($70/ha) a high level by international standards and covers the cost of operating and maintaining the irrigation schemes, though with a limited maintenance budget. Both SCIC and NNAIC have been profitable for the last 3 years, though NNAIC s margin was low in 2002/03 (Appendix 1, Table A1.4). O&M is adequate, although maintenance problems should be addressed more quickly. Both IMCs are improving system efficiency by continuing to rehabilitate secondary canal systems. C. Economic Reevaluation 29. Economic reevaluation was carried out following PCR methodology, which reflected appraisal methodology reasonably closely. For the Hanoi dike, PCR estimated the economic internal rate of return (EIRR) at 62.6%, compared with 53.5% at appraisal, with lower than expected construction costs more than compensating for a lower estimated cost of damage in the event of a dike breach. OEM considers that the likelihood of a breach would have been relatively low compared with appraisal estimates, even without dike rehabilitation. It is accepted by OEM that dike management was poor in the early 1990s, with uncontrolled encroachment 13 ADB Technical Assistance to the Socialist Republic of Viet Nam for Strengthening of Resettlement Management Capacity in the Ministry of Agriculture and Rural Development. Manila (TA-3064-VIE, for $150,000, approved on 4 September 1998). 14 ADB Project Completion Report on the Red River Delta Water Resources Sector Project to the Socialist Republic of Viet Nam. Manila.

19 9 and poor maintenance. However, there have been no dike breaches in Hanoi since before Reduced flood height due to upstream dam construction has further reduced flood risk. However, benefits did not include allowance for reduced loss of life, which (based on a value of statistical life of around $190,000 in Hanoi) might have doubled benefits. Other factors that improve dike economic performance include its development as a major Hanoi thoroughfare, with significant transport benefits. The rapid increase in the value of housing, and commercial/industrial investment further increase damage avoided values. Overall, it is considered unlikely that an uncontrollable dike breach would have occurred at a flood height less than about 12 m, reducing EIRR to around 40%. If critical flood height is taken as 13 m, and benefits from life savings are added, subproject EIRR would be around 35%, the level assumed for overall project assessment. Economic performance is analyzed in Appendix The irrigation schemes increased the fully irrigated area, though by less than appraisal estimates. Allocation of O&M cost savings and labor cost savings due to improved irrigation efficiency resulted in an increase in EIRR for Song Chu to 12.9% (PCR 6.4%), despite the lower irrigated area based on SCIC data. EIRR is estimated at 11.4% for the North Nghe An subproject, compared to 8.4% at PCR. D. Sustainability 31. A number of factors are promoting or restraining sustainability of the subproject outcomes. The main factors supporting sustainability include (i) ongoing improvements to the Hanoi City section of the Hanoi dike (such as new revetments and roadworks) and generally satisfactory maintenance of structures apart from the relief wells; (ii) high ISF levels sufficient to maintain the irrigation schemes at an adequate level; (iii) MARD is committed to introducing participatory management in all irrigation schemes; (iv) moderate to strong performance by most cooperatives and WUOs leading to an adequate level of tertiary and field system maintenance on most canals; (v) ongoing canal and ditch stabilization program with a farmer contribution of 60% an estimated 90% of the tertiary canals on North Nghe An and 60% on Song Chu have been concrete lined under this program; and (vi) commitment of provincial and district agriculture departments, commune leaders, and farmers to increase agricultural productivity, supported by a strong extension system. However, several factors are limiting sustainability: (i) limited maintenance of Ha Tay sections of the dike, continued encroachment, theft of dragons, and use of the dike for storing materials and other functions; (ii) rapid development in the Red River floodplain, leading to increased flood heights; (iii) theft of tertiary sluice gates in both irrigation schemes, preventing regulated water flow; and (iv) lack of ownership of the schemes demonstrated by many farmers and local residents, leading to misuse of irrigation infrastructure. IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS A. Socioeconomic and Poverty Reduction Impacts 32. The direct socioeconomic benefits of the Hanoi dike rehabilitation are threefold: (i) increased sense of security and well-being derived from a sound dike system, (ii) stimulation of investment due to improved flood security, and (iii) transport benefits resulting from concreted dike road systems. The main impacts of the irrigation systems are increased water supply at the headworks and distribution through secondary canals. This has allowed a significant increase in the areas fully irrigated, though less than anticipated at appraisal. The increased use of full gravity irrigation has reduced pumping costs, particularly in terms of labor needed to raise water into the field canals or onto the paddies. Based on work undertaken in a recent World Bank/ADB study (footnote 12), this amounted to up to 28% of family labor inputs for with-project schemes