PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE. AFRICA General water, sanitation and flood protection sector (40%); General Sector

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Tana Beles Integrated Water Resources Development Report No.: AB3547 Region AFRICA General water, sanitation and flood protection sector (40%); General Sector agriculture, fishing and forestry sector (25%); Sub-national government administration (20%); Crops (10%); Animal Production (5%) Project ID P Borrower(s) Federal Democratic Republic of Ethiopia Implementing Agency Federal Ministry of Water Resources, Government of Ethiopia Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared March 19, 2008 Date of Appraisal Authorization February 04, 2008 Date of Board Approval May 29, 2008 Country and Sector Background Ethiopia is one of the most populous countries in Sub-Saharan Africa with 76.5m people. It is also one of the poorest, with a per capita GDP (US$ 240) that is about a fifth of even the Sub-Saharan Africa (SSA) average. Although the country has significant human and natural resources and good potential for development, poverty is widespread and often directly linked to environmental and natural resource degradation. Agriculture accounts for 40-45% of the GDP, most of the exports, and perhaps about 85 of the employment, primarily in the form of subsistence small-holder (generally less than half a hectare) cultivation (95% of the agricultural output), mostly under rainfed conditions (10mha, often in degraded watersheds), with very little area currently irrigated (around 0.25 mha). Ethiopia has Africa s largest livestock population (80m, primarily cattle, sheep, and goats). Climate risks are significant, with frequent droughts and floods taking a toll on the economy, resulting in tragic loss of life and livelihoods, and inducing risk-averse disincentives to much-needed investment. The Ethiopian economy has done well in recent years, with GDP growing by 11.4% last year (buoyed by good agricultural performance recovering from the 2002 drought), poverty headcounts reducing from 44% in 1999/00 to 39% in the last 2004/05 survey. There have been important recent gains, especially on human development indicators, transport, the investment climate, small town development, and the fight against food insecurity. Pro-poor spending as a share of the budget has risen from 41% in 1997/98 to 62% in 2005/06. The Country Economic Memorandum 2006 (CEM) on Growth and Governance finds that important progress has been achieved in the past decade, largely driven by improved institutions, including at the regional and local levels, which have been able to deliver a scaling-up of services and infrastructure. However, significant challenges remain to meet the Millennium Development Goals (MDGs), especially in halving poverty by 2015, particularly considering that the recent progress is from a very low base and the Ethiopian economy remains highly vulnerable to climate shocks. While access to basic education and health care has improved significantly in recent years, access to other basic services remains poor. Only 22% of the population has access to safe water and only 13% have access to adequate sanitation services. Only about 22 percent of the population lives in electrified areas (i.e., areas with some form of electricity supply for residences and businesses) and only 6% of the population have electricity connections. Percapita electricity consumption of 36 kwh/year is one of the lowest in the world (world average is 2,500 1

2 kwh/yr). About 10% of the population, living in high-risk food-insecure areas, is dependent on food aid every year. Inflation was high, 18% during 2006/07, with associated increases in food prices. Imports have been growing faster than the exports, enlarging the trade deficit. However, public expenditure has been well managed in recent years and the fiscal deficit has reduced from 4.6 percent of GDP in 2005/06 to 3.6 percent of GDP in 2006/07 its lowest level since 2003/04. The Government of Ethiopia (GoE) s Plan for Accelerated Sustained Development to End Poverty (PASDEP) 1 seeks to build on and broaden the previous development strategy, which had focused on expanding support to smallholder agriculture, basic education, access to water and sanitation, primary health services, access to roads and electricity and safety nets for the poorest in all parts of the country. PASDEP complements this equity-oriented thrust by focusing public investment and policies to exploit comparative economic growth advantages located in different agro-ecological zones. PASDEP identifies the Tana and Beles zone as the first of five proposed growth zones in the country and envisions complementary investments in infrastructure, and appropriate levels of basic inputs and agricultural technology to increase productivity and facilitate market systems, particularly for high-value crops destined to local and foreign markets. PASDEP lays a multi-sector, integrated vision as a conceptual foundation for this plan, leading to the formation of growth poles 2 or centers to accelerate growth. The Water Resources Strategy of Ethiopia 3 also clearly demonstrates the need for investments in multipurpose water infrastructure in combination with the market infrastructure investments needed to fully leverage their growth potential. There are 12 basins in Ethiopia with Abbay (Blue Nile basin) being the largest with a basin area of about 200,000 sq km. Tana (catchment area 15,054 sq km) and Beles (14,200 sq km) form important sub-basins of Abbay basin. Given the endowments in these basins in terms of water, land, human resources and current ongoing/planned developments, these sub-basins offer tremendous opportunity to enhance growth underpinned by development of these endowments. These sub-basins have significant economic, environmental, and cultural assets which, if managed carefully, provide the resource base to realize an opportunity for accelerated economic growth. Lake Tana is a valuable resource, but is ecologically fragile. With significant water, land, livestock, forest, and fishery resources, rich cultural heritage and natural assets, relatively developed urban centers and dense settlements, good roads, and reasonable air connectivity, Lake Tana basin has potential for growth in multiple sectors with strong multiplier effects, particularly commercially-oriented smallholder agriculture, agro-industry, tourism, fisheries, livestock and energy and can serve as a stimulus to national economic growth and improved livelihoods for the sub-basin s 3 million residents. The Beles sub-basin also has productive land that is under-utilized. Development of large-scale irrigated agriculture (through private sector development) and stronger linkages between the two sub-basins could spur agro-processing opportunities in the Tana area through a large and consistent supply of agricultural inputs. Yet, new conflicts in resource use and new threats to Lake Tana basin resources are emerging as a result of several interlinked factors including growing population and livestock pressure on land and serious land degradation; increasing demand for energy; uncoordinated water resources development, inadequate policy framework and lack of a clear institutional responsibility for their management, inadequate knowledge base and absence of regulatory framework for the protection of the resources. The Tana and Beles sub-basins face a number of issues that need to be considered carefully in order to realizing their growth potential. Therefore, well-planned interventions in the Tana and Beles Sub-basins will bring substantial benefits; inaction, on the other hand, will likely result in significant environmental, social, and economic costs. 1 The PASDEP is Ethiopia s second poverty reduction strategy paper, covering the period A growth pole here means a geographical region such as a sub-basin rather than a single rural or urban center. 3 Ethiopia- Managing Water Resources to Maximize Sustainable Growth- A World Bank Water Resources Assistance Strategy for Ethiopia

3 The project seeks to pilot in the Tana-Beles area two new thrusts of GoE: (i) Development of a Growth Zone and (ii) Piloting implementation of a recent proclamation (No. 534/2007) to set up basin management organizations to improve holistic water resources planning and management. Objectives The Project Development Objective is to develop enabling institutions and investments for integrated planning, management, and development in the Tana and Beles Sub-basins to accelerate sustainable growth. The enabling support is for institutional strengthening, instruments and information tools for water planning/regulation, and investments in the Tana sub-basin on watershed and flood management. The institutions targeted include existing and evolving institutions for sub-basin and Basin management, existing regional bureaus, related federal agencies, and other evolving stakeholder entities and partners essential for shared-vision sustainable planning, management and growth-oriented development of the sub-basins. Project components The proposed components for the $70m TBIWRDP are: Component A. Sub-basin Resources Planning and Management Component B. Natural Resource Management Investments Component C. Growth-Oriented Investment Facilitation Component D. Project Management These components are further described below: A. Sub-basin Resources Planning and Management: This component aims to develop the enabling institutional infrastructure and capacity necessary for stimulating and managing sustainable investments in the Tana and Beles sub-basins. Two sub-components will be supported: Water Resource Information System Development: This includes support for a modern network of hydro-meteorological, groundwater, and environmental monitoring, associated hardware, software, and information systems, flood management information systems, special studies, as well as facilitation of the use of the system for pressing management and development problems in Lake Tana and the overall Tana and Beles sub-basins. Resource Planning and Management Capacity-building: This supports sub-basin offices for the Tana Sub-basin and the Beles Sub-basin, and its parent Abbay Basin Organization. In particular, support will be provided to the Sub-basin organizations to build an appropriate knowledge base, analytical capacity, and structured stakeholder consultation to develop shared vision sub-basin plans and management instruments to optimize social, environmental, and economic opportunities in the subbasin. B. Natural Resource Management Investments: This component aims to undertake critical investments to improve the natural resources management in the Tana sub-basin. Given the urgency for such investments in the Tana sub-basin and the early nature of engagement in the Beles sub-basin, this component is confined to investments solely in the Tana Sub-basin. Two sub-components will be supported: Watershed Development: This primary physical investment under the project includes support for sustainable watershed development investments covering about 80,000 ha in the Ribb, Gumara, and 3

4 Jamma sub-watersheds in the Lake Tana sub-basin. Activities will support livelihood improvement, natural resources management (soil and water conservation, reforestation, and agro-forestry), and associated institutional strengthening. Flood Management This supports community-based flood management and adaptation around the flood-prone areas around Lake Tana. Activities will help build the capacity of the Amhara region government as well as targeted communities around Lake Tana to better prepare for and respond to floods. In particular, improved flood forecasting information flow, community flood preparedness planning, training, and community infrastructure would be enhanced. C. Growth-Oriented Investment Facilitation: This component aims to support the institutional capacity and investment facilitation required for sustainable development of the Tana and Beles subbasins to realize the growth vision for the region. Two sub-components will be supported: Development Agency Support: This includes support to relevant existing and evolving government agencies to create an enabling environment for sustained growth in the Tana-Beles area. This will include support for improving the policy/regulatory framework and institutional capacity for effective public sector investment planning and management and critical private sector investment facilitation. Growth-oriented Investment Preparation: This includes support for the preparation of investments in the Tana and Beles sub-basins, including surveys, pre-feasibility and feasibility studies, environmental and social assessments, designs, implementation arrangements, and associated analytical work and stakeholder consultation to ensure that these investments (expected to be better identified through an ongoing Endowment and Growth study) are prepared with both growth and sustainability considerations. D. Project Management: This component aims to support overall project planning, coordination, management, quality oversight and technical supervision, effective procurement and financial management, as well as consolidated monitoring and reporting of project activities. Financing Source: ($m.) BORROWER/RECIPIENT/Project beneficiaries 17.6 International Development Association (IDA) 45.0 Bilateral Agencies (unidentified) 7.4 Total 70.0 Partnership Arrangements: The Government of Finland has earmarked Euro 5 million (about $7.4 million) towards development and management of watersheds around Lake Tana (Ribb, Gumara, and Jamma watersheds). This funding would be supplemental to IDA for this sub-component of Component B, and will focus on providing grant financing for the watershed development and associated monitoring activities. Implementation Arrangements: The primary implementation responsibility for this project is with the Ministry of Water Resources in the GoE. A National project coordination unit (NPCU) in the MoWR will facilitate and oversee project implementation under the oversight of a National Steering Committee. Regional Project Coordinators (RPCs) under the oversight of the Regional Cabinets (chaired by the Regional President) will help 4

5 synergize project activities among the various relevant participating regional line bureaus and agencies as well as participating Woredas (Districts) and Kebeles (Wards). Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [X] [ ] Physical Cultural Resources (OP/BP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [X] [ ] Projects in Disputed Areas (OP/BP 7.60) * [ ] [X] Projects on International Waterways (OP/BP 7.50) [X] [ ] Contact point: Contact: E. V. Jagannathan Title: Senior Water Resources Management Specialist Tel: Fax: Ejagannathan@worldbank.org Location: Addis Ababa, Ethiopia (IBRD) For more information contact: The InfoShop The World Bank 1818 H Street, NW, Washington, D.C Telephone: (202) ,Fax: (202) pic@worldbank.org Web: * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas 5

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