Project Information Document (Pid) s38

PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB2332

Project Name / Tana Beles Integrated Water Resources Development Project - I
Region / AFRICA
Sector / General water, sanitation and flood protection sector (40%); General agriculture, fishing and forestry sector (20%); Irrigation and drainage (20%); Power (10%); Roads and highways (10%)
Project ID / P096323
Borrower(s) / MOFED, GOVERNMENT OF ETHIOPIA
Implementing Agency
Ministry of Finance and Economic Development, Federal Government of Ethiopia
Ethiopia
Federal Ministry of Water Resources
Ethiopia
Environment Category / [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / August 7, 2006
Estimated Date of Appraisal Authorization / April 30, 2007
Estimated Date of Board Approval / September 6, 2007

Key development issues and rationale for Bank involvement

Key Development Issues:

The Government of Ethiopia acknowledges (PASDEP[1]) that to promote economic growth, infrastructure investments will need to be conceived and developed within a strategic framework of regionally based growth poles that group together complementary investments where there is potential for accelerated growth. The Water Resources Strategy of Ethiopia 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.

This type of development around growth poles[2] is particularly appropriate in the Tana and Beles sub-basins of the Blue Nile. Lake Tana, given its significant water resources, rich cultural and natural assets, relatively developed urban centers, good road and air connectivity, and dense settlements has a potential for growth in multiple sectors with strong multiplier effects, particularly, commercially oriented smallholder agriculture, agro-industry and export, tourism, fisheries and energy and therefore can serve as a stimulus to national economic growth. The Beles sub-basin, given on-going hydro-power development also has exploitable water resources plus productive land that is currently under-utilized. Development of irrigated agriculture (through private sector development) and stronger linkages between the two sub-basins would be an additional source of growth and provide an impetus for take-off in agro-processing in the Tana area through a large and consistent supply of agricultural inputs. This approach is in line with the Agricultural Development Led Industrialization strategy which provides the ground for linking agricultural development with industrialization.

However, the constraints for realizing the growth potential include (i) limited use of modern technology in agriculture, fragmented land holdings and land degradation; (ii) limited public irrigation, energy generation and recurrent flooding; (iii) poor planning and managing of water resources for multi-sectoral and competing uses, coupled with inadequate knowledge of the Lake’s hydrology; (iv) weak product and financial markets (v) limited private sector capacity and public private partnerships; (vi) inadequate enabling infrastructure such as feeder roads, international airports, storages/irrigation structures; (vii) fragile ecology in the Tana area (a shallow lake/associated wetlands) with concerns of erosion in the highlands, water quality/biodiversity issues in the lakes environs, and recurrent droughts/floods; (viii) environment impact of Tana-Beles hydropower diversion; and (ix) lack of coordination among the regional/federal water sector institutions.

Rationale for Bank Involvement:

The overall objective of the Bank’s Interim Country Assistance Strategy for Ethiopia is to accelerate pro-poor growth, with a focus on the rural-urban linkage through commercialization, market driven agriculture and sustained growth in exports including greater emphasis on higher value supply chains for specific products and the importance of private-public partnerships. This is fully in line with the main objectives of the TBIWRDP.

Such potential investments in developing water resources are made possible by the historic breakthrough provided by the Nile Basin Initiative (NBI). The project would serve as a pilot for the proposed regional joint multi-purpose development proposed under the NBI framework, while deriving maximum benefits through such synergy. Given its involvement and support to the NBI, the Bank is uniquely placed to assist the country in developing the project and its participation is expected to leverage additional financing from the Government, other international donors, as well as the private sector. The main rationale for Bank’s involvement is its ability to manage the risks associated with financing the envisaged investments, as well as it access to expertise to provide technical assistance in building critically needed institutional capacity.

Proposed objective(s)

Based on the opportunities and growth scenario described above, the TBIWRDP will aim at achieving the enabling environment for improved development and management of land and water resources of the Tana and Beles sub-basins to contribute to accelerated growth and sustainable socio-economic development.[3] The PDO will be achieved through (i) physical investments of no regret nature (watershed and flood management); (ii) institutional arrangements for optimal development and sustainable management of land and water resources and for promoting economic linkages and private sector development; and, (iii) building synergies with relevant on-going and planned initiatives in the sub-basins and identifying critical investment gaps as necessary. Some of the key performance indicators can include (i) appropriate institutions for management of water resources in place and operational; (ii) increase in incomes of population in the identified watershed/flood plains (HH income of various strata of society); (iii) sustainable management of water resources of Lake Tana (water levels, water quality, siltation from catchment upstream) and preservation of bio-diversity around Lake Tana. More comprehensive performance indicators and a monitoring and evaluation framework will be developed to ensure that results are monitored adequately.

Preliminary description

The underlying principle of the program is that integrated planning and management of water and land resources when synergized with critical investments, institutional development, environment management, and the facilitation of private sector development, can provide an effective framework to promote economic growth. Three broad areas of interventions are envisaged: (i) institutional development for water management as well as to support related productive activities, (ii) identifying physical investments in water and land development to promote growth and complementary investments to unleash the region’s growth potential, (iii) creation of enabling environment for private sector participation. The range of interventions bears in mind that an integrated approach be adopted and that complementarities between sectors/projects (both on-going and planned) be explored and that the link of project interventions to a growth scenario be explicitly maintained.

The program seeks to realize the region’s potential as a growth pole building on the development of water resources and on private sector investment. Clearly, physical investments are envisaged in the long run. However, such investments must complement private sector initiative, which will evolve as the institutional/policy framework develops. The current inadequate information on the lake’s hydrology, inadequate experience in integrated water resources management, uncertainty regarding the growth, and inadequate institutional framework for promoting multi-sectoral growth suggests a long term process oriented program complemented with investment.

A multi-phased programming approach is proposed with a long term commitment by the Bank envisaged through consecutive projects. The TBIWRDP-I will address the initial phase. This phase will focus on:

• Setting up an institutional framework for integrated water resources planning and management in the Tana-Beles integrated sub-basin. The institutional framework will also include the development/strengthening of market institutions, reforms in extension and agricultural research, strengthening of legal and regulatory institutions, and other agencies to promote economic linkages and private sector development; and, institutions related to coordination of public investments such as roads, airports etc.

• Initiating activities in key areas of natural resource management such as watershed and flood management (flood preparedness and early warning of floods) in Tana sub-basin

• Promoting an enabling policy and institutional environment for private sector development and associated facilitation to enhance private sector participation.

• Planning/preparedness for major investments proposed to be made in the subsequent phase.

A second phase (as a follow-on project) will then focus on implementing the planned physical investments contributing to economic growth. Success in the development of an enabling environment for economic growth and proper management of the region’s key economic resource: water, will determine whether physical investments, to be carried out in the second phase of the program will contribute to accelerated growth.

The guiding principles of project implementation will be: (i) interventions should be bottom-up and demand driven based on local capacity; (ii) a strong private/public partnerships; (iii) participatory planning and development should be local; (iv) strong capacity building. A strong stakeholder consultation process is planned during project preparation.

A multi-phased programming approach is proposed with a long term commitment by the Bank envisaged through consecutive projects. The TBIWRDP-I will address the initial phase. This phase will focus on:

• Initiating activities in key areas of natural resource management such as watershed and flood management (flood preparedness and early warning of floods) in Tana sub-basin

• Promoting an enabling policy and institutional environment for private sector development and associated facilitation to enhance private sector participation.

• Planning/preparedness for major investments proposed to be made in the subsequent phase.

The project components/activities proposed are as below:

Component / Key Activities / Indicative Cost / Remarks /
(1) Institutional Development / (i) Constitution of Tana-Beles sub-basin organization for integrated water resources planning and management. The organization will carry out the following functions:
(a) integrated and coordinated multi-sectoral water resources planning;
(b) water use regulation and pricing;
(c) integrated approach towards environmental management;
(d) development of hydrological and other relevant information systems and hydrological assessment; will also include flood forecasting, warning and communication system
(e) project management and operationalizing the M&E framework
(ii) Complementary strengthening of existing water development agencies in the region and providing support to these agencies for infrastructure development (to be informed by the institutional study). / $ 5 million
(2) Watershed & Flood Management. / (i) Watershed Management in Ribb, Gumara and Jamma Watershed ( 30,000 ha): see comments on scope above
(a) capacity building ( agriculture, rural development and forestry sectors)
(b) Soil and Water Conservation measures (water harvesting, rain fed agriculture, crop diversification, and sustainable farming techniques.
(c) Improved grazing practices, reforestation/afforestation, community based energy alternatives
(d) R&D
(ii) Flood Management around Lake Tana:
(a) Flood Mitigation Planning: identification of flood risk and implementation of community based plans to delineating and mapping flood prone areas. Floodplain and land use management, small scale structures, communication and flood warning etc.
(b) Emergency Preparedness and response: strengthening existing capacity of the communities, reducing/preventing health hazards etc. / $ 15 million / (i) Will be linked to ongoing production safety net programs in common areas. Synergy with proposed sustainable Land Management Program will be developed.
(ii) The detailed preparation of these activities have already commenced under EN fast track program.
(3) Growth promotion and enabling environment ( policy reforms, institutions for growth, and capacity) / The activities to be included would be informed by the “Endowment and Growth Study” to be undertaken as part of project preparation. These may include activities such as:
a) support to key policy reforms that promote competition/competitiveness (regional features of constraints on e.g. access to land and capital, labor mobility, non-discretionary taxation, legal and regulatory framework, etc)
b) support to market institutions (e.g. information system, grades and standards, contract enforcement etc)
c) establishment of an Executive Business Promotion agency and exploring options for competitive and innovative funding which would provide matching investment funds (e.g. fisheries, agro-processing etc.)
d) support to agricultural research and extension systems to enable such systems to respond to the anticipated increased commercialization of agricultural producers. / $ 15 million / (i) Private sector
engagement is central to achieving growth; business promotion will therefore be a key area of intervention.
(ii) The project will also benefit from the PPIAF funded activities under the “Ethiopia Irrigation and Drainage Project”
(iii) Given that agricultural development (through medium/ large scale investment as well as transformation of smallholder agriculture) is a basis for growth, the program will support the development of institutions for dissemination of relevant agricultural technology as well as strengthening market linkages. This will be closely linked to the national Rural Capacity Building Project
(4) Analyses/ design for Phase II investments / Undertaking detailed technical studies (feasibility, designs, and environmental and social impact assessments on the proposed interventions) for Phase II investments. Will include (a) Ribb multi-purpose project ( for effective lake management and to provide multipurpose benefits such as hydropower, irrigation, and flood control) and (ii) critical communication system such as rural roads and other investments as recommended by the
“Endowment and Growth” study.” / $ 10 million / Selection of Ribb (possibility irrigation command of 20,000 ha; flood control in fogera plains in 3770 ha, and power generation possibility of around 10 MW apart from lake water management benefits) has been suggested as the Irrigation & Drainage project program plans to concentrate on non-storage schemes such as Upper Beles and Megech.

4. Choice of Instrument.