Updated Project Information Document (PID) Report No: AB530

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Updated Project Information Document () Report No: AB530 Project Name REPUBLIC OF YEMEN - Groundwater and Soil Conservation Project Region Middle East and North Africa Region Sector Irrigation and drainage (100%) Theme Water resource management (P); Other environment and natural resources management (P) Project P Borrower(s) REPUBLIC OF YEMEN Implementing Agency(ies) MINISTRY OF AGRICULTURE AND IRRGATION Groundwater & Soil Conservation Project Address: Ministry of Agriculture and Irrigation Contact Person: Mr. Abdul Malik Al Arashi, Deputy Minister, MAI Tel: Fax: Environment Category B (Partial Assessment) Date Prepared December 5, 2003 Auth Appr/Negs Date November 14, 2003 Bank Approval Date February 26, Country and Sector Background The dramatic nature of Yemen's water scarcity was well documented in the 1997 IDA report Yemen: Towards a Water Strategy (Report No YEM). This report identified four major challenges: (a) groundwater mining threatening sustainability of the resource (water tables dropping in some areas up to six meters a year); (b) growing shortage of water resources for Yemen's cities (the capital, Sana'a, receives water from the public system only once every four days); (c) inadequate access to safe water and sanitation (less than half of Yemen's population has access to safe drinking water and even fewer to safe sanitation); and (d) weak govemance and weak formal institutions in the sector (groundwater management decisions are taken by 100,000 individual well owners without Government regulation). In the 1997 report, IDA proposed an action agenda, including: (i) measures at the macro level (efficiency pricing for water, phasing out of diesel subsidies, national debate on water use and conservation, reorientation of public expenditures, action on qat); (ii) improved sector management (restructuring of the urban and rural water supply sectors, water conservation in agriculture and a regional approach to water planning); (iii) local level solutions (participatory approaches building on Yemen's tradition of community-based water management); and (iv) institutional development measures (adoption of a national water strategy, a water law, and capacity building for water institutions). Since 1997, discussion within Yemen on the above agenda culminated in the adoption of a National Water Strategy by the Council of Ministers in December This Strategy broadly endorses the agenda discussed in IDA's 1997 report. Since then, despite Yemen's generally weak governance structure, Government has made progress in implementing its strategy. Actions include:

2 2 (a) creation of a single water resource agency, the National Water Resources Authority (NWRA); (b) successive rises in the diesel price towards import parity; (c) elimination of credit subsidies for groundwater development; (d) restructuring of the urban water supply sector, and tariff increases (with IDA support under the ongoing Sana'a Water Supply and Sanitation Project, and further developed under the Urban Water and Sanitation APL); (e) adoption of a demand-driven approach to rural water supply (with IDA support under the ongoing Rural Water Supply and Sanitation Project); (f) adoption of a policy of cost recovery and hand-over of spate irrigation schemes to users (with IDA support under the ongoing Irrigation Improvement Project); (g) implementation of a water conservation program in agriculture and the creation of a mechanism to promote it (under the recently completed Land and Water Conservation Project (LWCP) and under the proposed Groundwater and Soil Conservation Project (GSCP); (h) a technical assistance program for dams to enhance the capacity of the General Directorate of Irrigation (GDI) and a completed dam inventory for Sana'a Basin (with IDA finance under the ongoing Southem Govemorates Rural Development Project); (i) creation in April 2003 of a new Ministry of Water and Environment (MWE) to unify Government's agencies dealing with water resources planning and management; () approval by Parliament of a Water Law in July 2002, signed into effect as Law #33 on August 31, 2002 by the President, followed by Cabinet Decrees declaring the basins of Sa'ada, Sana'a and Tai'iz as 'protected zones', under Article 49 of the Water Law; and (k) creation of a Sana'a Basin Commission (Decree # 263, 2002 of September 10, 2002) to deal with the critical problem of water supply to the capital. All of the above actions indicate Govemment's resolve to tackle the water problem, and all of them will contribute to improving the situation. The most intractable problem, however, remains the overdraft of groundwater which threatens the future of large parts of the rural economy. The challenge is enormous and many years of sustained commitment at all levels will be needed to achieve a measurable impact. It is mitigating this problem which is to be the object of the proposed project, along with improving efficiency of water use. The recent creation of MWE and the passage of the Water Law provide a new legal and institutional framework for tackling this problem. The Water Law provides for assignment and regulation of groundwater rights, defines the functions and authority of the NWRA in water management, and provides for the delegation of powers to decentralized management institutions for self-regulation and participatory management in the water sector. The Govemment is currently preparing the by-laws to detail the administrative requirements for implementation of the Law. The project will promote sustainable use of

3 3 groundwater within this framework. 2. Objectives The Groundwater and Soil Conservation Project (GSCP) is designed to address the critical groundwater problem in Yemen. The problem of unsustainable groundwater extraction has been caused by the rapid spread of groundwater irrigation, combined with dwindling rates of recharge. The root cause is weak management framework ill adapted to ensuring sustainable extraction levels, efficient water use, and watersheds protection. Yemen is a predominantly rural country with 64 percent of its total population of 18.4 million living in rural areas. Irrigated agriculture remains the main economic activity and source of income and employment in rural areas. The depletion of groundwater directly impacts poverty, employment, and social order and the protection of the groundwater resource and of the watersheds that replenish the resource is of paramount importance. The objective of the proposed project is to conserve water in farming areas, especially groundwater, improve recharge and protect watersheds by: (i) improving water use efficiency and increasing farmer returns to water, so creating the conditions that would allow farmers to reduce pumping of groundwater from aquifers towards sustainable levels; (ii) increasing surface and groundwater availability through watershed management and groundwater recharge by supporting the rehabilitation of small to medium spate irrigation schemes, bank protection works, water harvesting structures, and the rehabilitation of terraces and other soil and water conservation investments; and (iii) supporting a groundwater management framework and institutions that will have the incentive and capacity to manage local water resources in a sustainable manner. The project builds on the positive and negative lessons of the recently closed Land and Water Conservation Project (LWCP, 2000) and on recent institutional and legislative changes by Government. It will scale up (from eleven governorates to fifteen) the successful groundwater efficiency improvement components of the predecessor project and add further measures to improve the water balance. 3. Rationale for Bank's Involvement For a number of years, IDA has been Yemen's principal partner in the water sector. At the policy level, IDA has been the principal external adviser on strategy, law and institutional development. This has included advice on both the 1998 National Water Strategy and on the 2003 Water Law, and had resulted in analytical outputs such as the 1997 Yemen: Towards a Water Strategy (Report No YEM) and the 1999 Yemen: An Agricultural Strategy (Report No YEM). IDA has also taken the lead in donor coordination in the sector. At the project level, IDA has financed many water supply and irrigation projects, including LWCP. The portfolio and future lending program include a range of investments in water in support of the management framework Government has put in place. Thus, IDA possesses strong comparative advantage in supporting the project, linking the strategic level with implementation of the strategy. IDA also possesses expertise in the complex social, technical and institutional issues regarding groundwater and soil conservation and participatory natural resource management that are raised by the project.

4 4 4. Description The proposed project would consist of the following components: A. Modernization and Improvement of Groundwater Irrigation Systems (Base cost US$14.03 million) This component would provide for the supply and installation of buried PVC pipes and overground galvanized iron (GI) pipes to improve water conveyance and distribution efficiency and reduce conveyance losses from existing tubewells to and on existing farns. It would also provide localized on-farm irrigation systems (drip, bubbler or sprinkler) for a part of the project area to further reduce on-farn water losses. Specifically, this component would involve: (a) improvement of groundwater conveyance efficiency for irrigation on about 27,000 ha; and (b) improvement of on-farm irrigation efficiency by introduction of localized on-farmn irrigation systems on about 1,400 ha. The physical investments would form part of a farm management plan that would also include improvements in on-farm soil and water management and in crop husbandry through establishment of a post-installation IAS. B. Water Harvesting, Groundwater Rechar2e and Soil Conservation (Base cost US$10.82 million) This component would provide gabion baskets and other materials for the selective improvement of traditional spate schemes within identified wadis to improve spate conveyance and diversion efficiency, including wadi bank protection for villages. It would also involve rehabilitation of terraces to conserve soils from water erosion and water harvesting structures to recharge the groundwater. This would specifically involve: (a) Small and medium-scale spate irrigation improvement and rehabilitation: (i) small spate scheme irrigation improvement and rehabilitation (510 ha); (ii) medium spate scheme irrigation improvement and rehabilitation (1050 ha); (iii) construction or rehabilitation of canal structures (about 130 structures benefiting about 1,200 ha); and (iv) construction or rehabilitation of wadi bank protection works (at about 105 locations benefiting about 700 ha). (b) Water harvesting and soil conservation works: (i) rehabilitation of existing terrace walls and water harvesting structures in the uplands (550 ha); (ii) wadi bank protection (440 ha);

5 5 (iii) soil conservation and erosion control structures (180 ha); and (iv) on-farm water storage (165,000 cubic meters) and open pits for recharge (630,000 m3). C. Proiect Implementation, Monitoring & Evaluation and Institutional Strengthenin2 of Water Institutions (Base cost US$14.81 million) This component would provide project implementation support, monitoring and evaluation activities, and institutional and capacity-building support in the form of training, and facilities to institutions involved in the project. The components are: (a) capacity building for public institutions (equipment, vehicles, materials, technical assistance, training, project management cost, incremental operating costs) for project implementation, for resource monitoring and for project monitoring and evaluation, for the following institutions: (i) the project coordination unit (PCU) within MAI; (ii) field units (FUs) within 10 MAI provincial offices for implementation of physical works; (iii) central MAI units (GDI, CWMU) responsible for supervising water and irrigation monitoring under the project; (iv) NWRA for water resource monitoring; and (v) MWE for monitoring progress and policy formulation in integrated resource management. (b) capacity building and technical assistance for local communities in project areas: (i) establishment of LAS within 10 MAM provincial offices for advising on on-farm water, soil and crop management; and (ii) capacity building and support for local water users groups (WUGs) and associations for community based water monitoring and management. 5. Financing Source (Total ( US$m)) BORROWER ($6.78) IDA ($36.50) LOCAL COMMUNITIES ($5.36) Total Project Cost: $ Implementation The Ministry of Agriculture and Irrigation (MAI) would be the executing agency due to its successful records of the previous LWCP and several earlier IDA-funded agricultural and irrigation projects implemented in the last three decades. It has competent staff and is capable of executing the project, including fiduciary responsibilities. Some technical assistance and capacity building components for MWE and NWRA would be implemented by the PCU in close consultation with the agencies.

6 6 Day to day coordination of implementation will be managed by a Project Coordination Unit (PCU). As several departments within MAI are involved, the PCU will report directly to the Deputy Minister of MAI. In the 15 govemorates covered by the project, 10 FUs under the Regional Agricultural Offices of the MAI will implement the physical investment and monitoring and evaluation (M&E) components. Both the PCU and the FUs will inherit staff and offices and equipment from the existing units of the MAI structure, which are being financed from the revolving fund established from beneficiary participation and cost sharing under the previous LWCP. The FUs have developed and maintained valuable skills and institutional capacity that will enable GSCP to get off to an early start. Of the FUs, seven will be successor units to existing regional implementation units established under LWCP, and three new FUs will be created in areas not covered by the previous project inside the Regional Agricultural Office of MAI. Within each of the FUs, the new "irrigation advisory service" (IAS) will be set up. Of the three new FUs, two are the result of cleavage of units under LWCP necessitated by the establishment of new administrative units while the third in Hadramaut is based on the Hadramaut Project Office which has considerable experience with implementing IDA-funded projects. Implementation of a partnership approach in the project The approach to groundwater conservation proposed by the project is to work on a partnership basis with public formal institutions and local informal or traditional institutions, with emphasis on decentralization to the local level and the responsibility of users to manage the resource sustainably, along with physical, technical and management support provided by the project. The experience of LWCP has led to the introduction of the partnership approach and the concept of user responsibility for resource management. The following innovations in project design are intended to apply this partnership approach: (a) Tripartite Agreements on Project Scope and Responsibilities. The farmer and the project will agree on a series of investments and management changes designed to save water. The farmer will commit himself to make his cash contribution and not to expand his irrigated area. Baseline information about the farm and water use would be included in the agreement to allow subsequent joint monitoring. The agreement will be validated by the user group to which the farmer belongs. (b) Irrigation Advisory Service. The FUs and the IAS will provide a full range of technical guidance to farmers on options available for saving water and increasing agriculture production. They will assist the farmer and the user group through regular visits to monitor achievements against the baselines established in the initial agreements. The IAS will also establish demonstration farms to demonstrate the merits of improved water, soil and crop management. (c) Broad Public Awareness Campaign. The PCU will coordinate the development of models for public awareness campaigns on water saving in agriculture and, in general, on the benefits available from joining the project partnership and WUAs. These campaigns will be conducted in the project area by the FUs and the IAS, with the help of NWRA staff where NWRA has a field presence. The terms of reference of the campaign has been prepared including the methodologies and types of media. (d) Intensive Monitoring and Evaluation. To help farmers, user groups and FUs characterize the current water resource and irrigation situation and monitor progress against baselines and targets, the project will set up on-farm monitoring programs including water measurement and irrigation pattems. The basic tool will be flow meters and pressure inducers on randomly selected wells

7 7 (coverage of about 10 percent) to measure the actually pumped water volume and pattems. Selected farmers will be required to cooperate as a contractual obligation. The information will be collected by the FUs and shared only among the user groups at the initial stage. As the consensus and support builds, the data will be shared with NWRA to measure changes in the aquifer level and in water quality. The information will also be used to establish the database for project M&E. NWRA will also conduct satellite imaging analysis for some selected sub-basins to monitor the changes of the irrigated areas and cropping patterns in coordination with the FUs. (e) Water User Groups. Under the proposed project, participating farmers would be required to be members of a local water user group (WUG). The objective of the groups will be: (i) to share information on water use, aquifer conditions and on ways to conserve water; (ii) to influence the size of the irrigated area and the volume of groundwater abstraction through the use of peer pressure within the group; and (iii) to cultivate the notion of the shared water resources and common interests for enhancing water conservation for future generations. Although the groups may have quite diverse status, they are referred to in the project preparation material as WUGs and that is the term that will be used in the rest of this report. 7. Sustainability Sustainability of the irrigation modernization and improvement component of the project would depend on the degree of ownership assumed by the farmers participating. It is assumed that financial interest, particularly through beneficiary involvement in investment and operation and maintenance costs in the project would lead to a higher degree of ownership. This in turn would lead to improved O&M of works and facilities provided under the project. The proposed project has been designed to include IAS to improve the performance of investments in terms of water saving and agriculture productivity increase and increase the sustainability of this component. Sustainability of the spate and the water harvesting component is also ensured by beneficiary participation in the cost and subsequent O&M of investments. It is also assumed that for all project interventions, once the participants see the benefits resulting from groundwater management and soil conservation, particularly the financial benefits, they would continue on that course even after project completion. Sustainability of the water savings in the form of a permaneritly reduced overdraft of groundwater to a steady state level is a tough challenge in most of the project area, but is obtainable in some areas. In the aquifers of the coastal, escarpment and western plateau regions, 6ver-pumping and saline water intrusion is still at the level that the intervention of the project through irrigation improvement, watershed management, and irrigation expansion control could bring the resource back into balance. In the highland aquifers, however, conditions have deteriorated considerably, and restoration of a permanent equivalence of recharge and abstraction volumes may not be feasible. However, in these zones any intervention to reduce over-abstraction and aquifer depletion would help prolong the life of aquifers and provide relief for the receding water tables in them. 8. Lessons learned from past operations in the country/sector General Considerations. Over thirty years of project experiences in Yemen, two general lessons for designing and implementing projects have consistently emerged. First, the receptivity of the local population is key to project success. For this reason, support under the proposed project would be on a demand-driven basis, and the project would work only in communities that can demonstrate some capacity to organize themselves for communal management efforts and where some trust between local communities and the Govemment exists. Second, simplicity of project design is key to project success as implementation problems increase when projects are more complicated. Specific lessons from past and present projects in the sector are discussed in the following paragraphs.

8 8 Land and Water Conservation Project (completed). This project experienced initial start-up delays, largely due to the complexity of its design. A major restructuring resulted in a much simpler project that successfully introduced efficient conveyance, distribution and micro-irrigation technologies through a decentralized structure and with cost sharing by beneficiaries. The LWCP demonstrated that it is possible to make significant water savings through improved irrigation technologies. Studies carried out under LWCP indicate water savings of 13 to 20 percent of pumped groundwater from improved piped-conveyance systems and of more than 30 percent from localized on-farm irrigation systems. The institutional strengthening under the water resource management component was instrumental in training large numbers of staff in water resources management. The main lessons noted in the Implementation Completion Report (ICR) for LWCP and incorporated into the proposed project are: (a) project design and implementation arrangements should be kept simple; (b) the challenge is to ensure that the saved water would reduce the aquifer depletion speed and not be used for further expansion of irrigation. Any successor project should incorporate measures to mobilize communal support to limit expansion together with the education, institutional capacity building, technology and monitoring tools needed to help both local people and the project to set benchmarks, and measure and control outcomes. The project will fully address this lesson by establishing intensive monitoring and evaluation programs by which information on project impacts will be shared with local communities to sensitize and trigger their actions for water conservation; (c) a successor project should take a broader approach to water saving than just physical investment in irrigation. It should cover all opportunities open to the farmer to save water or increase resources, including watershed management, rainwater harvesting and surface irrigation improvement. It should also extend the range of water saving opportunities on-farm to all aspects of water, soil and crop management. This finding provided the rationale for the establishment of the IAS under the proposed project; (d) the project should support the sector reform agenda, but not be too ambitious - a number of covenants under LWCP requiring licensing of drilling rigs, levying of fees on rigs etc proved unimplementable. The weight of a project is too little to force through difficult changes, and the timing of such major changes is unpredictable and not suited to the rhythm of a project. Instead, the country dialogue should promote these changes, and institutional development and capacity building should be provided in the project to implement policy changes introduced. This finding underscores the approach in the proposed project to support NWRA and MWE in implementing the recent policy reforms contained in the Water Law, but not to seek to promote difficult new reforms through a project vehicle, especially when the reforms have an impact well beyond the project scope (e.g., on qat or on diesel pricing); and (e) it is not realistic to expect that the integrated water resources management with all stakeholders participation can be introduced right away on a basin/sub-basin scale - but it should be piloted in areas with favorable conditions such as limited size of basin, capacity of public institutions and a demonstrated ability of local users to engage in collective action to mitigate local environmental problems. After intensive discussion between the mission and the IDA, the project is designed to scale up successful components of the LWCP with improvements, while a separate pilot program is to be proposed to provide support for community-based water management under the JSDF.

9 9 Sana'a Basin Water Management Project (approved by the Board on June 3, 2003, effectiveness due in last quarter of calendar 2003). This project will apply an integrated water management approach to the very water-scarce Sana'a basin and address the problem of rural-urban water transfer within the basin. The project is the first in Yemen to apply the basin planning approach and it will provide strategic lessons for other major basins. The principal lesson from project preparation is that basin planning will place extraordinary demands on Yemen's institutions, and that in the Yemeni context simpler approaches should be sought for addressing the groundwater challenge wherever possible. Specifically, in areas where resource use is almost entirely agricultural, and where urban and rural demands are not in conflict, the approach can be simplified. Taiz Pilot Water Supply and Sanitation Project (completed). This small project attempted to combine development of a new water source in the countryside for transfer to the city with a participatory approach to water resources management in the rural source area. According to the ICR, the project was under-designed and could not have achieved these objectives with the resources and in the time scale provided. Preliminary studies of the resource and of the stakeholders institutional set up were not carried out. The project area was one where a long history of rural-urban conflict over water made success in establishing a fair relationship between urban and rural demand virtually impossible. Nonetheless, the project did pilot a model of local water resource management. The most important lesson learned from the Taiz project reflected in the proposed project design is that project areas have to be selected to maximize chances of local cooperation and success. Within such high potential areas, the ICR lists the following essentials for community-based water management approaches, all of which have contributed to the design of the present project, particularly to the design of the EGMA pilot component: (a) (b) (c) (d) an initial proper understanding of the water resource balance and a realistic goal for moving towards sustainable management, together with a water resources management plan (including rules and incentives) for reaching the goal; upfront stakeholder analysis that identifies rights holders, other users, the existing organizational and institutional structure, including the dynamic and scope for change; early involvement of representative stakeholder institutions and the drafting of an institutional development plan for stakeholder groups; and an enabling framework for decentralized management that empowers communities to manage the resource. Irrigation Improvement Project (under implementation). This project became effective in January 2001 and aims to rehabilitate and improve large spate irrigation facilities. The project also aims to establish sustainable spate irrigation management systems through WUAs and decentralized management at the scheme level. The project is an APC, and Phase I focuses on Wadi Tuban in Lahej Govenorate and Wadi Zabid in Tihama area. The remaining areas would be covered by Phase II if the agreed milestones are passed. Relevant lessons learned from the preparation and first year of implementation of this project include: (i) the need to give adequate time for institution building, particularly for the participatory approach; (ii) the need to have M&E systems in place right at the start, and to have adequate baseline data; and (iii) the need to be very clear from the outset about cost sharing mechanisms. Although GSCP will work only with small community-managed spate schemes, where the challenge is very different, the lessons of the Irrigation Improvement Project have been valuable for GSCP's participatory approach and for the proposed monitoring and evaluation system.

10 10 9. Environment Aspects (including any public consultation) Issues: The Environmental Management Plan was prepared by the client using consultants and included consultation with beneficiaries in the project area. During preparation, the mission also carried out field visits and consultation meetings, in which the preliminary findings of the Environmental Management Plan were discussed with project beneficiaries in Dhamar, Taiz, Abyan, Aden, Sa'adah, and Hadramaut. The proposed project deals with conservation and is expected to have significant positive environmental impacts, particularly in terms of water and soil conservation, with only relatively minor negative impacts. All three components of the proposed project have been subjected to environmental assessment. The GSCP is in compliance with most Safeguard Policies, without the need for further specific measures under the project, i.e. with OP 4.04 Natural Habitats, OP 4.11 Cultural Property, OP 4.20 Indigenous people, 4.12 Involuntary Resettlement, 4.36 Forests, 4.37 Safety of Dams, 7.50 Projects on International Waterways, and 7.60 Projects in disputed areas. Two Safeguard Policies apply, although the issues are relatively modest. These are: OP 4.01 Environmental assessment and OP 4.09 Pest Management. Special provisions have been made under the proposed project under the GSCP Environmental Management Plan (EMP) to comply with these two Safeguard Policies. In all these cases, the Bank requirements are reinforced by corresponding Yemeni legislation as well. In addition to the Safeguard Policies, the GSCP EMP has identified other measures to minimize negative environmental impacts, and also actions to remedy certain existing environmental problems, and thus enhance project sustainability. 10. List of factual technical documents: Environmental Management Plan Social Assessment Report 11. Contact Point: Task Manager Satoru Ueda The World Bank 1818 H Street, NW Washington D.C Telephone: Fax: For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web:

11 11 Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.