Project Performance Audit Report

PPA:VIE 25019

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

September 2005

Operations Evaluation Department

Asian Development Bank

CURRENCY EQUIVALENTS Currency Unit dong (D) At Appraisal (August 1993) $0.0943 D10,600 At Project Completion (December 2001) $0.0662 D15,104 ABBREVIATIONS ADB ADTA BME CPO DDMFC DWR EA EIRR ha IMC ISF km kWh m m3 MARD NNAIC O&M OEM PCR PIM PPAR PPTA SCIC SDR SPO TA VRM VSL WUA/C WUO Asian Development Bank advisory technical assistance benefit monitoring and evaluation Central Project Office Department of Dike Management and Flood Control Department of Water Resources executing agency economic internal rate of return hectare irrigation management company irrigation service fee kilometer kilowatt-hour meter cubic meter Ministry of Agriculture and Rural Development North Nghe An Irrigation Company operation and maintenance operations evaluation mission project completion report participatory irrigation management project performance audit report project preparatory technical assistance Song Chu Irrigation Company special drawing rights subproject office technical assistance Viet Nam Resident Mission of ADB value of statistical life water user association/cooperative water user organization NOTES (i) (ii) The fiscal year (FY) of the Government ends on 31 December. In this report, "$" refers to US dollars. : : : Bruce Murray R. Keith Leonard Toshio Kondo At Operations Evaluation (April 2005) $0.06317 D15,830

D1,000 $1.00

= =

Director General, Operations Evaluation Department Director, Operations Evaluation Division 1 Evaluation Team Leader

Operations Evaluation Department, PE-666

CONTENTS Page BASIC DATA EXECUTIVE SUMMARY MAP I. BACKGROUND A. Rationale, Formulation, Purpose, and Outputs B. Cost, Financing, and Executing Arrangements C. Completion and Self-Evaluation D. OED Evaluation PLANNING AND IMPLEMENTATION PERFORMANCE A. Formulation and Design B. Cost and Scheduling C. Consultants Performance, Procurement, and Construction D. Organization and Management ACHIEVEMENT OF PROJECT PURPOSES A. Operational Performance B. Performance of Operating Entities C. Economic Reevaluation D. Sustainability ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS A. Socioeconomic and Poverty Reduction Impacts B. Environmental Impact C. Impact on Institutions and Policy OVERALL ASSESSMENT A. Relevance B. Efficacy C. Efficiency D. Sustainability E. Institutional Development and Other Impacts F. Overall Project Rating G. Assessment of ADB and Borrower Performance iii v ix 1 1 1 1 2 2 2 3 3 4 5 5 8 8 9 9 9 10 11 11 11 12 12 13 13 14 14

II.

III.

IV.

V.

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.

ii

VI.

ISSUES, LESSONS, AND FOLLOW-UP ACTIONS A. Key Issues for the Future B. Lessons Identified C. Follow-Up Actions

14 14 16 17

APPENDIXES 1. Project-Related Data and Statistics 2. Irrigation and Dike Infrastructure 3. Socioeconomics, Poverty, and Participatory Irrigation Management 4. Crop Area Production and Yield 5. Economic Reevaluation 6. Other Statistics

18 21 30 34 38 59

SUPPLEMENTARY APPENDIX (available upon request) Floods Since 1900

Attachment(s):

Management Response on the Project Performance Audit Report for the Irrigation and Flood Protection Rehabilitation Project (Loan 1259-VIE[SF])

BASIC DATA Irrigation and Flood Protection Rehabilitation Project (Loan 1259-VIE[SF])
Project Preparation/Institution Building TA No. 1968 2869 TA Project Name Operation and Maintenance Strengthening Operation and Maintenance Development in the Irrigation Sector Strengthening of Resettlement Management Capacity in the Ministry of Agriculture and Rural Development Type ADTA ADTA Person-Months 57 33 Amount ($000) 1,800 150 Approval Date 26 Oct 1993 16 Sep 1997

3064

ADTA

12

150

4 Sep 1998

Key Project Data ($ million) Total Project Cost Foreign Currency Cost Local Currency Cost ADB Loan Amount/Utilization1 ADB Loan Amount/Cancellation1 Key Dates Fact-finding Appraisal Loan Negotiations Board Approval Loan Agreement Loan Effectiveness Project Completion Loan Closing Months (Effectiveness to Completion) Economic Internal Rates of Return (%) Overall Hanoi Song Chu North Nghe An Borrower Executing Agency

As per ADB Loan Documents 95.6 37.5 58.1 76.5

Actual 87.5 29.5 58.0 66.2 7.1 Actual 726 Sep 1992 28 Feb21 Mar 1993 5 Oct 1993 26 Oct 1993 30 Oct 1993 28 Mar 1994 30 Jun 2001 8 Apr 2003 87 PCR2 36.8 62.6 6.4 8.4 PPAR 22.7 35.7 12.9 11.8

Expected

28 Jan 1994 30 Jun 1998 31 Dec 1998 53 Appraisal 39.9 53.5 13.9 22.0

Socialist Republic of Viet Nam Ministry of Water Resources3

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 SDR49,011,502.92 at the time of loan closing. Total cancellations amounted to SDR5,358,497. 2 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.

iv

Mission Data Type of Mission Fact-Finding Appraisal Inception Project Administration Review Special Project Administration Midterm Review Project Completion Operations Evaluation4

No. of Missions 1 1 1 4 7 1 1 1

Person-Days 120 169 21 77 91 36 58 52

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).

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 Banks (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 Projects 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 Projects 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 2001. 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 dikes 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 1994. 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.

vi the areas fully irrigated, though less than anticipated at appraisal. The Projectsupported by a tertiary canal upgrading programhas 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 needsalmost all the road length has been rebuilt or is likely to be rebuilt in the near futureresulting in waste of resources. Rehabilitation of the two core irrigation subprojects was relevant at the time of design, in accordance with the Governments Third Five-Year Plan (19911995), 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 1993. However, it achieved its purposethe Hanoi dike rehabilitation increased Hanois 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 peoples 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 Projects focus on urgent physical rehabilitation.

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

I. A.

BACKGROUND

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 timeincluding the major economic renovation program, doi moi, initiated between 1986 and 1989supported increased agricultural production. The Asian Development Banks (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 Projects 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 Projects 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 1994. 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 Projects self
1

ADB. 1993. 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 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. ADB. 1993. 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).

2 assessment was conducted by Mekong Department in September 2003 and the ADB PCR was published in July 2004. 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 AprilMay 2005. 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. A. PLANNING AND IMPLEMENTATION PERFORMANCE

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 1993. 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 10person, 3-week appraisal mission in March 1993. 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 MARDs belief in the urgency of rehabilitation combined with ADBs 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 component5 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 2.

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.

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 19996 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 consultants 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 relief4 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

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. 1997. 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.)

4 were handed over by 401 Company/SPO to the Hanoi Sub-Department of Dyke Management in June 2005. 12. 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 MARDto whom they had traditionally reportedresulting 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 peoples 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 clusterswith offices every kilometer along the dike, constructed under the Projectappears 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 2001. The reports provide substantial information on the Project and its

5 performance. BME closely followed design and met ADB requirements. However, a number of criticisms can be made: (i) 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. A. ACHIEVEMENT OF PROJECT PURPOSES

(ii)

(iii) (iv)

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 1:150 250 year flood8 in 1971, which reached 14.13 m at the Long Bien bridge with a flow of 38,700 cubic meters (m3) 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 m3 Hoa Binh reservoir upstream of Hanoi in 1989 has reduced the potential flood height by an estimated 1.21.4 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 m3 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 costsincluding salaries for the 151 km of dike managed by Hanoi DDMFC including 37 km of Red River right bank dike rehabilitated by the Projectwere 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.

A flood level likely to be reached with a return interval of between 150 and 250 years.

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 dikes 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 12 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 irrigateddrought-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 Ans irrigable area is currently 29,500 ha. North Nghe An Irrigation Company (NNAIC) classifies 19,744 ha as fully irrigatedan increase from the final BME report estimate of 18,763 ha in 2001. 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 upgradedin 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 2001. 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 (05001700), D950/kWh peak (17002200), and D240/kWh off-peak (22000500). 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%.

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. 24. 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 1994. 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).
Yield (tons/ha)

Figure 1: Trends in Crop Yields in Project Districts (19942004)

7 6 5 4 3 2 1 0 94 95 96 97 98 99 00 01 02 03 04 SC spring paddy SC summer paddy SC maize NNA spring paddy NNA summer paddy NNA maize

SC = Song Chu, NNA = North Nghe An. Source: Government Statistics Office.

25. OEM confirmed the PCRs 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. 26. Technical Assistance

Three TAs were conducted fully or partly under the Project: (i) 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 groups12 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.

(ii)

12

Janaiah, A. 2004. Poverty Reduction Impact of Public Spending on Large-Scale Irrigation Systems in Viet Nam. ADB: Hanoi.

8 (iii) TA 3064-VIE13 Strengthening of Resettlement Management Capacity in the Ministry of Agriculture and Rural Development strengthened CPOs 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 peoples 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 floodplaindamage 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 Hanois 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 peoples 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 standardsand 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 NNAICs 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
ADB. 1998. 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. 2002. Project Completion Report on the Red River Delta Water Resources Sector Project to the Socialist Republic of Viet Nam. Manila.
13

9 and poor maintenance. However, there have been no dike breaches in Hanoi since before 1945. 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 5. 30. 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. A. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

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

10 with full tertiary canal rehabilitation. The effect was due to a combination of canal upgrading and participatory management, which improved water flow to the canal tails. Women are often responsible for manual water lifting. The Project, supported by the tertiary canal upgrading program, has greatly reduced the time required for this task, releasing time for other incomeearning, household or leisure activities. Benefits have been highlighted by the absence of many men who leave their villages to undertake off-farm work in the irrigation season, returning for harvest. Aspects relating to household income and poverty reduction under the Project are discussed in Appendix 3. 33. Hanoi dike rehabilitation had little direct impact on poverty reduction, given Hanois relative affluence. However, many rural workers visit Hanoi on a seasonal or long-term basis for construction or other jobs and they have benefited from the economic activity induced by greater security from flooding following dike rehabilitation. While Viet Nams lowland irrigation areas are not among the poorest, poverty levels on the six PIM pilot areas exceeded 30% in the mid1990s, but have now fallen to an average of 5% in Song Chu and 10% in North Nghe An. 34. The Hanoi dike component required substantial resettlement, involving 1,616 households affected, 307 households relocated, and compensation of D25.6 billion. Resettlement was assisted by TA 3064-VIE Strengthening of Resettlement Management Capacity (footnote 13) and was generally completed satisfactorily, despite frequent long delays in relocating resettlers and addressing grievances. Some cases are pending settlement in the Thuong Cat area north of Thanh Long bridge. In this area, owners of houses built on the main dike have yet to be relocated, since they are not satisfied with the compensation offered. Resettlement issues were discussed in detail in Appendix 8 of the PCR, which concluded that the activity was mainly completed satisfactorily despite problems such as the lack of a resettlement action plan at project inception, which delayed implementation. Resettlers interviewed by OEM were satisfied with the program, while one resident who lived just outside the resettled area, expressed regret at not having been resettled. B. Environmental Impact

35. Overall, the environmental impact of the Project has been neutral. Activities focused on upgrading existing structures and few significant new works were constructed. The irrigation systems were restored to approximately their design diversion volumes, and irrigation methods were not changed significantly. Water is consequently wasted (though in many cases it is reused downstream or pumped from drainage channels), less water is available for river flow, while the tail-end canals and areas are undersupplied by gravity, requiring expensive pumping by cooperatives or irrigation companies. Despite the relative inefficiency of watering, no particular downstream issues were encountered, such as salinization or changes to the coastal or estuarine environments. New or replacement irrigation structures were constructed from concrete, and were less aesthetically attractive than the French masonry structures. 36. The key environmental problem on the irrigation schemes is the use of Song Chus canals as a convenient rubbish disposal system. This is particularly severe where canals pass through villages. Where no alternative disposal options exist, it is perhaps not surprising that villagers use an apparently simple disposal option, since rubbish either sinks or is carried downstream to the next village, commune, or district, thus removing part of the problem from view. The problem is much less significant in North Nghe An. 37. The Hanoi dike rehabilitation cleaned up the dike substantially. It is now an attractive, well-maintained structure. Encroachment onto the dike and its berms has been largely

11 eliminated, though the building setback is 5 m from the access road on top of the bermboth inside and outsiderather than from the dike toe. Current setback is inadequate, but would be difficult or impossible to change at this stage. While dike rehabilitation was neutral to positive in environmental impact, the environment is a key factor in the dikes performance and long-term stabilitylikely flood levels, siltation rates in Red River, and the level of construction that occurs in the floodplain. C. Impact on Institutions and Policy

38. The Project and associated TAs impact on institutions and policy has been significant, but less than anticipated. However, the contributions to resettlement policy made by TA 3064 (Strengthening of Resettlement Management Capacity footnote 13) and the Project were notable. The irrigation management TAs, though successful within their pilot areas, did not result in the adoption of PIM on other canals. However, 2004/05 has seen a rapid increase in the level of PIM activity and it is now planned that all provinces will introduce PIM at the secondary canal level of large schemes by around 2010. CPO has become the implementing agency for MARDs larger projects and implemented the Project effectively. However, it continues to have an engineering bias, and lacks capacity in system management, use of consultants, and sociocultural and economic assessment. The Project failed to enhance CPOs capacity in these areas, which would have helped it respond more effectively to financing agency agendas. MARD has recently confirmed CPOs role in managing foreign assistance funded water resources projects. However, the provinces are expected to implement future ADB irrigation projects, with CPO focusing on major procurement. V. A. Relevance OVERALL ASSESSMENT

39. The Project is assessed as relevant.15 The Hanoi Dike rehabilitation component is classified as relevant, since peoples safety, particularly in a major city such as Hanoi, must be paramount. The technical solution for the Hanoi dike rehabilitation has become a model for dike systems on many other rivers. Hanoi dike road has become a key component of the Hanoi transport network. The Project contributed to this, but did not adequately plan for road needs, with almost all the road length rebuilt or likely to be rebuilt in the near future, resulting in wasted resources. Rehabilitation of the two core irrigation subprojects was relevant at the time of design, according to the Governments Third Five-Year Plan (19911995), which emphasized expansion of irrigated agricultural production. Rehabilitation of water resources and flood protection infrastructure was supported by the World Banks 1996 Water Resources Sector Review, though specific schemes are not identified and by ADBs 1993 interim operational strategy. However, relevance at the time was reduced by the focus on main system works, without formally addressing constraints to irrigation and drainage in the lower sections of the schemes. 40. By completion in 2001, the Project remained relevant to national economic goals such as the maintenance of rapid Gross Domestic Product growth. The irrigation schemes were also relevant to ADBs geographic concentration on the central region. North central coast is Viet Nams poorest coastal region, with high rural poverty ratios (Appendix 6, Table A6.1) and is falling further behind other regions, according to ADBs Country Strategy and Program Update 20052006. Overall, the Project is rated as relevant although it did not directly address key

15

Using a four category system of highly relevant, relevant, partly relevant, or irrelevant.

12 constraints to efficient water distribution and failed to meet desired gains in the fully irrigated area. B. Efficacy

41. The Project is assessed as efficacious.16 In general, the Project achieved its purpose. The Hanoi dike rehabilitation increased the citys security, and is likely to prevent dike breaches with consequent damage and loss of life, in almost all flood conditions. The relief wells have not been entirely effective, with only half achieving their goal of reducing pressure under the dike. However, most sand boils that used to occur during floods have been cured. Although PCR considered MARDs resources to be limited, Hanoi and Ha Tay peoples committees are responsible for dike O&M. They are continuing to upgrade the dike with their own and central government resources and are considered to be able to manage the dike effectivelyparticularly through the dike clusters that manage and monitor each kilometer of dike, based in offices built under the Project. 42. The purpose of the irrigation subprojects was to provide reliable and increased irrigation water to the two schemes, resulting in sustained paddy production of 440,000 t annually (RRP para. 28) In practice, paddy production increased to 730,000 t (according to irrigation company data) or by an average of 3.8% per year, compared with 1.2% per year outside the scheme in the same districts. Interviews with 12 commune peoples committees indicated that (i) the proportion of gravity irrigation in 2004 had risen to 80% compared with 55% in 1996, (ii) the time required to take water in SCIC had declined by 38%, and (iii) water could be supplied to 89% of canal tails compared with 60% in 1996. The proportion of manual irrigation has declined greatly, liberating time for other income- and non-income-generating activities. In 36 household interviews, 97% of respondents considered that improved irrigation water supply had led to increased household income. Other factors included improved seeds (56%), integrated new technologies (33%), and off-farm income (6%). According to the survey, household cash incomes in 2004 averaged D15 million in Song Chu and D13 million in North Nghe An, an average increase in real terms of 145% since before the Project. All respondents except one considered that their family income had increased. Average cash income per capita in 2004 was D3.1 million in Song Chu and D2.0 million in North Nghe An. While the lining of tertiary canals under local budget has also contributed to these gains, the subprojects are rated as efficacious against the rather vague purpose level objectives set during project formulation. 43. The irrigation extension subprojects were not inspected by OEM. However, discussion with the provincial Department of Agriculture in Quang Tri indicates that satisfactory performance has been achieved. For example, the rubber dam on the Nam Thach Han scheme has led to the provision of about 30 million m3 of irrigation water annually. As a result, the third crop rice area increased from 4,500 ha to 5,000 ha with stable yield while, prior to rehabilitation, an average of 1,250 ha had limited yields and up to 3,000 ha could be lost to drought. Annual maintenance cost was reported to have declined by about 35%. C. Efficiency

44. The Project is assessed as efficient.17 Given the context at the time of early implementation, implementation efficiency was satisfactory. All targets were met, despite delays due to lack of familiarity with ADB procedures. Although final loan closing was delayed by more
16 17

Using a four category system of highly efficacious, efficacious, less efficacious, or inefficacious. Using a four category system of highly efficient, efficient, less efficient, or inefficient.

13 than 4 years, the overall delay for core subproject construction was only 18 months. For the irrigation schemes, the construction period was limited to 2 months a year to minimize disruption to cropping. Meeting this target was a major achievement, but prevented realization of canal rehabilitation targets in the early years. Economic efficiency, assessed through the subprojects EIRR, is rated efficient. 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 for floods of 12 m or less, and making allowance for reduction in deaths. Actual EIRR could be higher due to induced investment inside the dike and time saving benefits by Hanoi residents due to road upgrading. The core irrigation projects are estimated to average 11.8% EIRR, higher than at PCR, due to 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). D. Sustainability

45. Overall, project sustainability is assessed as likely.18 The Hanoi dike subproject is likely to be sustainable as the dike is too important to Hanoi for the peoples 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, IMCs, irrigation enterprises/clusters, agricultural cooperatives, irrigation groups, and farmers are trying to maintain and develop their irrigation infrastructureevidenced by the ongoing rehabilitation of secondary and tertiary canals. The likely sustainability rating will be underpinned through the introduction of PIM, and engendering ownership among farmers and residents, thus reducing the problem of destruction of irrigation assets. E. Institutional Development and Other Impacts

46. Overall institutional, socioeconomic, and environmental impacts are considered to have been moderate.19 The Projects institutional impact has been limited, due to its emphasis on urgent physical rehabilitation. It supported the establishment of CPO, which, despite making a significant contribution to project implementation, still has limited capacity and capability in the non-engineering aspects of irrigation project design and implementation. In future, CPOs role will change as implementation becomes more decentralized. The resettlement TA had positive institutional outcomes, in relation to resettlement approaches and decentralization of responsibility. The irrigation management TAs demonstrated that PIM could work, and lead to improved O&M and a significant rise in irrigation efficiency. To date, the system has not been widely replicated, though this may change in the future with MARDs promotion of PIM. Many irrigation companies are preparing PIM action programs for 20062010 (Appendix 3). 47. Environmental impact has generally been neutral. While Song Chus rubbish disposal problem cannot be directly attributed to the Project, this is one aspect that requires management attention and new, innovative approaches. Initially, North Nghe Ans successful systems should be studied. Socioeconomic impact has been universally positive. While it is not possible to fully segregate the factors that have led to increasing crop yields, it is clear that farmers consider the improved availability and reliability of irrigation water to be one of the key factors. One aspect of particular note has been the increase in the extent of gravity irrigation (though less than
18 19

Using a four category system of most likely, likely, less likely, or unlikely. Using a four category system of substantial, significant, moderate, or negligible.

14 planned), which has reduced irrigation labor inputs and released time for other activities. Increasingly, irrigated cropping is seen as a source of subsistence, with cash earned through livestock, fish farming, handicrafts, small business, or off-farm work. F. 48. G. Overall Project Rating The Project is rated as successful based on the assessments in paras. 41 to 49.20 Assessment of ADB and Borrower Performance

49. ADBs performance is assessed as satisfactory.21 However, some deficiencies are noted: (i) lack of response to EAs request for capacity building assistance to apply the systems required by ADB, (ii) failure to allow loan savings to be spent on extending the upgrading of the irrigation systems,22 and (iii) limited pre-investment assessment of the 1999 flood-damaged irrigation scheme rehabilitation. 50. Performance by government agencies at all levels is assessed as satisfactory. CPO and SPO performance in relation to tendering and construction supervision was generally adequate. The relief wells were an exception, with inappropriate prequalification of some contractors, and inadequate supervision of construction and well development under some contracts, leading to ineffective well operation. The EAs complex and time-consuming review and approval procedures exacerbated implementation delays. CPOs capacity was strengthened under the Project in a number of areas (e.g., resettlement), which has benefited other projects. However, the Projects lessons have yet to be adopted in areas such as taking a holistic approach to irrigation scheme development and involving farmers in scheme design, construction, and operation. Nonetheless, MARDs promotion of PIM since 2004 is a positive outcome, largely attributable to the Project and subsequent project-related activities such as the PIM workshops held in 2004. Some problems were experienced in the relationships between MARD, CPO, and the SPOs. The responsibilities of MARD and CPO were unclear, with SPOs often reporting directly to MARD, leading to coordination problems. VI. A. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

Key Issues for the Future 1. Environmental Management on Irrigation Schemes

51. Environmental management on the Song Chu scheme is poor, in relation to the use of canals for waste disposal. SCICs current policy of identifying key locations, removing rubbish from the canal, and disposing of the rubbish to landfillusing their own resources or on contractis not an appropriate long-term solution. The removal of rubbish in this way encourages villagers to continue to use the canal as a dumping site. SCIC is aware of this issue and is seeking ways to address it. In practice, a multi-pronged approach is considered necessary, which might include:

20

Based on a four category system of highly successful, successful, partly successful, or unsuccessful. The PCR rated the Project partly successful under the assessment of relevant, less efficacious, efficient, less likely sustainability, and moderate environmental, sociocultural, and other impacts. 21 Using a four category system of highly satisfactory, satisfactory, less than satisfactory, or unsatisfactory. 22 This decision may also have been influenced by the Ministry of Finances requirements to limit foreign currency borrowings.

15 (i) (ii) working with Thanh Hoa province to create new well-designed landfill sites and a commune collection system; promoting the establishment of a recycling industry (as in northern Nghe An province), possibly including plastic bag recycling/extruding/pelleting cooperatives and composting enterprises; working with districts and communes to develop regulations prohibiting waste disposal in canals, and establishing a penalty system for such disposal; conducting a public awareness campaign about the regulations and littering in general; introducing a bonus system (similar to the North Nghe An approach) within the SCIC system for irrigation enterprises and canal workers to work with their communities to keep canals clean; introducing annual clean up Song Chu days with participation from schools and communities; and establishing a well-publicized clean village competition with prizes for clean villages and canals.

(iii) (iv) (v)

(vi) (vii)

52. A study could be undertaken or commissioned by SCIC in collaboration with Thanh Hoa province peoples committee to assess these and other options, and develop a 5-year program to eliminate rubbish from the Song Chu irrigation system. While North Nghe An still considers that it has a rubbish problem, it is much less than Song Chus. Thus, a useful beginning could be evaluation of North Nghe Ans program and analysis of its relevance to Song Chu. Other aspects of pollution which need to be addressed are (i) use of canals and canal banks by livestock; (ii) cleaning of vehicles in areas that drain into canals; and (iii) the poorly maintained dredging unit in the North Nghe An main canal, which is releasing diesel and oil into the irrigation system. The Song Chu north primary canal needs to be maintained at a particularly high level of hygiene as it supplies around 70% of Thanh Hoa Citys water. 2. Participatory Irrigation Management

53. Following a long assessment period, dating from Decision 126/1998 of the Minister of Agriculture and Rural Development, the Government is now moving to promote PIM. Based on their experience under the Project, both SCIC and NNAIC now support PIM. The key issue now is to define how to implement PIM. The main benefits of PIM include (i) improved maintenance responsibility, (ii) improved water management and distribution, and (iii) reduced IMC management costs. The problems facing its introduction at the secondary or inter-commune tertiary level relate to the need to manage each canal as an integrated hydraulic system. This will require the establishment of WUOs from several communes and agricultural service cooperatives, resulting in some loss of power and control by the communes and cooperatives and a need to share ISFs with another organization. Since the farmers own the cooperatives, the problem should not be insuperable, but a major education and awareness raising campaign will be needed. These demarcation problems would also be overcome if farmers owned the entire scheme, and it is desirable that such a solution is attempted. Under this option, the farmers would own and direct the irrigation company, which would subcontract secondary canal O&M to WUOs. PIM will need to be carefully managed to avoid capture by more articulate groups and decision making that is overly influenced by groups with limited legitimacy. It requires mechanisms to facilitate active involvement of stakeholders, including women. A TA planned to promote PIM under the Second Red River Basin Sector Project23 will provide an opportunity to
23

ADB. 1998. Technical Assistance to the Socialist Republic of Viet Nam for the Second Red River Basin Water Resources Sector Project. Manila. (TA 3050-VIE, for $600,000, approved on 22 July 1998.)

16 analyze gender roles and develop structures and operating protocols that maximize equity and deepen the involvement of women in irrigation management. 3. Canal Upgrading Program

54. The canal upgrading program achieved on both schemes subsequent to the Project has been impressive, particularly on North Nghe An. The program should be continued and extended to the non-rehabilitated parts of secondary canals, since there is currently a disconnect between upgraded sections and the new concrete-lined tertiary canal network. Drainage systems need to be assessed and, where necessary, upgraded. System upgrading is a necessary component of successful PIM introduction. Ways must be found to apply part of the ISF to secondary and drainage system upgrading, as well as the tertiary system, and to apply the 40% subsidy available under the governments canal and ditch stabilization program. 55. Most tertiary canal upgrading has involved concrete lining, which is perceived as having several benefits by irrigators. However, while concrete lining is beneficial in sandy soils, a wellconstructed and maintained earth canal can be equally efficient in suitable soils. Moreover, concreting is expensive and should thus be applied to canals or canal sections where it is most beneficial, not used as a panacea. MARD could initially undertake a study of the costs and benefits of lined and compacted earth canals, and develop a set of criteria and guidelines to help communes and systems define the optimal development approach for their tertiary and secondary canal upgrading programs. A comparison of positive and negative features of concrete and earth canals is in Appendix 2, section E. B. Lessons Identified

56. The main lesson that can be drawn from project experience is the desirability of taking a holistic approach to irrigation scheme upgrading and development. This lesson is similar to that observed by the Red River Delta Water Resources Sector Project PCR (footnote 14) and is being applied in ongoing ADB and World Bank irrigation projects. Such an approach would assess the need for lower level irrigation and drainage system upgrading as well as the headworks and main system work often financed by multilateral lending institutions. Thus, the approach should define lower level 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 and top-down approach dictated by the project design. Other lessons include: (i) (ii) Adequate setting and collecting of ISFs provides a major contribution to effective scheme operation, maintenance, and development. A firm approach must be taken from the start in relation to canal damage, illegal use, and canal rubbish disposalperhaps by establishing contracts with participating communes, developing commune regulations, and establishing appropriate incentive systems. BME should provide useful data to irrigation system management.24 This requires the evaluation system to be defined in consultation with potential data users, and reports to be translated and made widely available. This should make evaluation outputs more useful to local stakeholders and increase the prospects for the evaluation to continue after the end of the Project.

(iii)

24

ADB no longer uses BME for the reasons outlined in this study. Its successor, the project performance management system, is expected to be much more integrated into management decision-making.

17 (iv) Secondary data can provide useful information for evaluation, particularly to facilitate comparison between project investments and control areas. Viet Nams system for collecting and processing rural statistics is now reliable and evaluation should maximize the use of such data. This could reduce the need for survey data collection and improve the coverage and statistical reliability of evaluation outputs. Schemes should be mapped adequately. System maps were not readily available in Song Chu or North Nghe An. Maps are an essential part of project planning and management, and should be available readily in the IMCs, irrigation enterprises, and clusters. Projects now have the capacity to develop sophisticated mapping systems to allow geographic information system development and maps to be prepared at the range of scales required by management. Project-related documents should be stored permanently in an accessible location. This has been difficult, given the limited storage space available. However, cheap data storage now means that all records can be stored permanently in on-site systems, and backed up off-site. Construction of assets such as relief wells must be accompanied by adequate and enforceable land use planning to ensure long-term access for O&M.

(v)

(vi)

(vii)

C.

Follow-Up Actions

57. A number of issues raised invite follow-up action by the Government to promote the further achievement of project benefits and their sustainability. Suggested actions were discussed and agreed in principle during OEM.
Suggested Action A. Complete rehabilitation of secondary structures. Institutions Suggested Monitoring Responsible Timing SCIC/NNAIC by 2010 MARD/DWR/ ADB (MKAE/VRM) ADB (MKAE/VRM) MARD/ADB (MKAE/VRM) MARD/DWR/ ADB (MKAE/VRM)

B. Prepare and distribute guidelines for tertiary canal upgrading. C. Define systems to encourage ownership of irrigation assets by farmers/villagers, and thus reduce theft of gates. Develop design for theft-resistant gate. D. Extend PIM on hydraulic boundaries to all canals.

MARD SCIC

end 2007 end 2006

SCIC/NNAIC

by 2010

ADB = Asian Development Bank, DWR = Department of Water Resources, MARD = Ministry of Agriculture and Rural Development, MKAE = Agriculture, Environment and Natural Resources Division of the Asian Development Banks Mekong Department, NNAIC = North Nghe An Irrigation Company, PIM = Participatory Irrigation Management, SCIC = Song Chu Irrigation Company, VRM = Asian Development Bank Viet Nam Resident Mission.

18

Appendix 1

PROJECT-RELATED DATA AND STATISTICS Table A1.1: Cost Breakdown by Project Component ($ million)
Cost Civil Works Materials Equipment Survey, Investigation, and Design Consultant Services Land Acquisition Administration Tax and Duties Service Charge Total
not available. Source: ADB PCR.

Appraisal Estimate 68.2 13.9 1.1 1.7 3.1 1.1 2.2 1.7 2.6 95.6

Actual 66.1 6.2 1.0 3.6 3.0 4.8 1.4 1.3 87.4

Table A1.2: Actual Cost Breakdown by Project Component (D billion)

1994 A. Hanoi Dyke 1. Foreign Civil Works Material/Equipment Survey/Design Subtotal (A1) 2. Local Civil Works Material/equipment Survey/Design Incremental Operating Land Acquisition Other Subtotal (A2) B. Song Chu 1. Foreign Civil Works Material Equipment Survey/Design Subtotal (B1) Civil Works Material Survey/Design Incremental Operating Land Acquisition Other Subtotal (B2) 3.7 0.6 4.3 7.2 2.2 0.7 1995 2.7 0.6 3.2 7.5 1996 2.2 0.3 0.2 2.7 7.4 0.4 1.9 0.3 1.1 0.1 11.3 7.1 2.4 0.0 0.5 10.0 17.5 4.6 3.4 0.3 1.1 0.9 27.8 4.2 0.0 0.0 4.3 11.8 2.2 0.3 0.1 14.4 1997 11.1 0.8 0.2 12.1 26.8 0.8 0.2 10.1 37.9 8.4 1998 6.9 7.7 14.6 21.3 14.9 1.9 0.4 13.3 0.1 51.9 16.3 2.3 0.2 18.7 40.3 4.4 1.2 0.3 0.4 0.8 47.3 10.7 0.0 0.1 10.8 30.4 0.0 1.9 0.2 1.1 33.7 1999 18.9 0.5 0.5 19.9 55.5 1.4 0.3 23.7 1.7 82.7 11.9 1.8 0.1 13.8 35.7 3.5 1.0 0.4 0.4 0.4 41.4 13.4 2000 25.0 0.2 25.2 62.8 0.3 0.3 2.4 65.7 6.0 2001 11.7 0.4 12.2 33.0 0.5 0.4 7.9 2.2 44.0 2.1 1.0 0.1 3.1 6.5 0.1 0.1 0.3 7.0 1.0 1.0 0.0 2.0 4.0 0.3 0.1 0.1 4.6 Total 82.2 9.8 2.1 94.2 221.6 17.5 7.6 2.0 56.1 6.5 311.2 55.2 7.9 2.0 1.2 66.2 148.3 15.2 7.5 1.7 2.1 3.5 178.3 47.6 0.2 2.0 1.4 51.2 128.5 0.3 9.4 1.0 2.4 141.6

10.1 2.1 1.0 0.3 0.2 3.7 4.2 1.9 0.3 0.2

7.5 1.3 0.5 0.7 2.4 2.7 0.9 0.9

2. Local

0.0 8.4 22.8 0.3 0.2 0.1 0.6 24.1 7.1 0.1 0.6 7.8 16.1 0.3 1.2 0.1 0.3 17.9

0.1 6.1 18.7 0.2 0.4 0.0 0.4 19.7 9.0

6.5 1.8 0.3 0.2 2.4 3.5 0.3

4.5 0.4 0.7 0.1 1.1 3.4 0.6 0.0 4.1

C. North Nghe An 1. Foreign Civil Works Material Equipment Survey/Design Subtotal (C1) 2. Local Civil Works Material Survey/Design Incremental Operating Land Acquisition Subtotal (C2)

0.4 13.7 33.2 2.1 0.1 0.5 35.9

0.0 9.1 26.0 0.8 0.1 0.3 27.2

3.8

Appendix 1

19
Total

1994 D. Quang Tri Quang Binh 1. Foreign Civil Works Material Equipment Survey/Design Subtotal (D1) 2. Local Civil Works Material Survey/Design Incremental Operating Subtotal (D2) E. CPO 1. Foreign Equipment Survey/Design Consulting Services Service Charge Subtotal (E1) Survey/Design Consulting Services Incremental Operating Subtotal (E2) 0.4

1995

1996

1997

1998

1999

2000

2001

38.2 9.0 0.4 1.4 49.0 98.8 17.4 5.7 0.8 122.7 1.1 0.4 3.8 0.2 5.5 0.5 0.7 0.3 1.5 4.3 0.5 3.0 0.5 0.2 3.8 12.2 13.5 0.9 2.1 0.0 0.7 0.3 17 30 0.4 8.9 0.7 10.0 0.5 1.6 0.3 2.3 13.6 2.4 0.8 0.7 0.7 8.9 27.0 36.8 4.6 0.4 8.0 0.8 2.3 1.6 1.3 56 83 0.2 5.1 1.1 6.5 0.9 0.1 1.0 26.6 0.1 1.0 0.8 1.1 5.1 34.8 65.7 0.3 2.3 0.6 10.5 0.9 0.7 81 116 5.3 2.5 7.8 0.9 0.1 1.0 33.9 9.9 0.3 2.5 5.3 51.9 92.0 19.3 5.0 1.0 14.7 0.9 1.0 134 186 0.1 2.9 4.5 7.5 0.1 0.5 0.2 0.9 44.2 1.8 0.5 1.1 4.5 2.9 54.9 124.4 3.5 4.7 0.9 24.6 0.5 2.3 161 216 0.0 0.7 5.8 6.5 0.1 0.1 0.3 0.5 78.2 9.0 0.4 1.8 5.8 0.7 95.9 206.3 17.4 7.1 1.5 0.3 0.1 3.1 236 332

13.8 1.5 1.4 0.4 17.1 41.1 2.9 2.0 0.7 46.6 0.4 0.2 3.8 3.6 8.0 0.2 0.7 0.9 28.7 1.5 3.8 1.0 3.6 3.8 42.4 84.6 2.9 3.1 1.2 8.1 0.7 2.5 103 145

52.0 10.4 1.8 1.8 66.0 139.9 20.3 7.7 1.5 169.3 2.6 0.7 30.6 18.2 52.2 1.4 5.4 1.3 8.1 237.1 26.1 10.6 7.3 18.2 30.6 329.9 638.2 52.9 0.4 33.6 6.2 60.6 5.4 11.2 808 1,138

0.4

2. Local

F. Total Costs 1. Foreign Civil Works Material Equipment Survey/Design Service Charge Consulting Services Subtotal (F1) 2. Local Civil works Material/Equipment Equipment Survey/Design Incremental Operating Land Acquisition Consulting Services Other Subtotal (F2) Total

7.7 1.0 1.1 1.1

10.8 14.9 4.1 1.3 0.2

20 31

CPO = Central Project Office, D = Vietnamese Dong. Source: ADB PCR files.

20

Appendix 1

Table A1.3: Relief Well Contracts and Well Effectiveness

Contract Number and Length 1. From km 48+000 to km 52.5 2. From km 72+500 to km 73+500 3. From km 81+500 to km 82+500 4. From km 48+000 to km 53+000 5. From km 72+000 to km 72+500 6. From km 74+000 to km 75+000 7. From km 80+500 to km 82+000 8. At km 44 9. At km 82
km = kilometer. Source: BME Final Report.

Number of Wells 31 36 25 24 15 39 30 17 7

Built 31 36 25 24 15 39 30 9 7

Effective 7 26 25 12 5 11 14 0 9

Percent Effective 23 72 100 50 33 28 47 0 100

Table A1.4: Revenue and Costs of Song Chu and North Nghe An Irrigation Companies (D million)
1996 A. Fee Collection 1. SCIC 2. NNAIC B. O&M costs 1. SCIC 2. NNAIC B. Other costs 1. SCIC 2. NNAIC Margin 3. SCIC 4. NNAIC 11,340 9,920 11,314 10,594 12,999 13,675 13,352 15,412 5,666 6,586 7,352 6,831 7,627 7,506 17,388 18,551 19,594 20,803 29,640 33,910 35,634 10,324 11,463 12,432 13,645 12,214 12,357 12,152 1998 1999 2000 2001 2002 2003 2004

14,824 18,680 18,440 4,292 1,141 1,091 4,488 1,878 242 4,458 1,782 188

D = Vietnamese Dong, NNAIC = North Nghe An Irrigation Company, O&M = operation and maintenance, SCIC = Song Chu Irrigation Company. Source: SCIC and NNAIC.

Appendix 2

21

IRRIGATION AND DIKE INFRASTRUCTURE A. Hanoi Dike

1. Rehabilitation of 45 kilometers (km) of Hanoi main dike (km 40 to km 85), plus an extension of 16 km (km 85 to km 101). 2. All dike rehabilitation items under the Project were generally completed as designed. (i) (ii) Quality of rehabilitation was generally acceptable. All revetments have been covered by several meters of deposited silt, which are now vegetated. Revetments have provided substantial protection, as they were constructed in erosion prone areas. However, to some degree, the erosion problem has moved downstream, with major protection works completed and ongoing using local funds. Since completion in June 2001, the Red River water level at Hanoi has not reached a critical level and the practical effectiveness of the dike cannot be evaluated. However, operations evaluation mission (OEM) surveys and interviews with implementation, construction, and management offices, including Central Project Office, subproject office (SPO) 401, Department of Dike Management and Flood Control (DDMFC) of the Ministry of Agriculture and Rural Development, Hanoi DDFMC as well as interviews with people living close to the dike lead a number of conclusions, outlined below. Design

(iii)

1. 3.

A number of issues were identified in relation to dike rehabilitation design: (i) Two access roads were constructed in the berm elevation on each side of the dike, which have increased dike stability, improved access, and facilitated maintenance. The roads had a negative impact on management of encroachment for housing construction on the dike because authorities have permitted building construction to within 5 meters (m) of the roads. The berm top is thus considered to be the dike foot, and many houses have been built on the berm slope. The 2 m high retaining wall, constructed at km 89 to km 90 (extension section), is too high to assure the dikes stability at high flood levels. No provision was made for bank protection revetments to be used for loading and unloading boats. Many concrete blocks have been broken to make boat attachments. Provision for water drainage is inadequate along the dike top and slopes. Many relief wells are located in the gardens of people living close to the dike. In recent years, many houses have been constructed in these areas. Some wells are now inside houses, which can clog or break the drainage line of the wells and make monitoring and operation of the wells more difficult. The SPO reports that low relief well efficiency was due to failure to adopt appropriate technical criteria for different soil conditions. However, it is also likely that many wells were poorly constructed or developed. The relief well system has not been handed over by construction management (SPO401) to operation management (Hanoi DDMFC). A 3-day (28 March1 April 2005) training course on operation and maintenance (O&M) of relief wells and under-dike water pressure testing systems was completed by 12 staff from Hanoi

(ii) (iii)

(iv) (v)

(vi)

(vii)

22

Appendix 2

DDMFC. The trainers were experienced specialists from Hanoi Water Resources University. Handover of the 205 wells is expected in August 2005. 2. Operation and Maintenance

4. The departments of dike management and transportation (for the road system) are responsible for dike maintenance. Annual O&M funds for 151 km of Hanoi dike include dong (D) 2 billion from central government, D7 billionD8 billion from Hanoi Peoples Committee, and a limited amount from districts. O&M cost for the 61 km section rehabilitated by the Project cannot be identified. However, maintenance costs have fallen substantially due to the Project, with less need for public labor and reduced cash cost for dike repair. Issues include: (i) encroachment onto the dike for storage and processing of wood and bamboo as well as for cultivation or storage of construction materials, which is evident in some parts of Dan Phuong district (Ha Tay province), Tu Liem district (Hanoi), and Hanoi city; many concrete drainage ditches of dike are damaged; most drainage ditches on the dike slopes are clogged by soil and grass; monitoring and maintenance of relief wells is difficult because many wells are located in private gardens; cracks between old and newly constructed parts of asphalt pavement on the crest of the dike at Tu Lien quarter (Tay Ho district); severe cracking between retaining wall and yard upstream of Thuy Phuong bank protection at the Pagoda, due to inadequate pressure relief/drainage; and breakdown of dike areas at road crossings where heavy trucks access sand loading areas.

(ii) (iii) (iv) (v) (vi) (vii)

B.

Song Chu Irrigation System

5. Song Chu Irrigation System is one of the biggest systems in Viet Nam, located to the south of the Ma river basin in Thanh Hoa province. The system comprises: (i) (ii) (iii) (iv) 1. provision of irrigation water to 50,000 hectares (ha); domestic and industrial water supply with discharge of 1.25 cubic meters per second (m3/s); electricity generation with installed capacity of 960 kilowattsBan Thach hydropower plant; and water transportation from Bai Thuong to Thanh Hoa city. Main Structures

6. Construction commenced on 28 October 1994 and was completed on 31 December 2000, including the following main components: Headworks: (i) Bai Thuong weir: Clean concrete covered reinforced concrete (ii) Sand flushing sluice: Rectangular cross-section and reinforced concrete (iii) Intake gate and navigation lock: Canal system: (i) Main canal: 19.3 km (ii) North canal of 54 km (45 km upgraded), South canal of 37 km (30 km upgraded)

Appendix 2

23

(iii)

(iv) (v) 2.

Secondary canals: 61 canals totaling 230 km were resectioned under the Project and 122 km were lined, mainly in the head of these canals. Some secondary canals have been lined using provincial funds. Tertiary canals: total length 320 km not upgraded under the Project. 307 structures on north and south canals and 960 on secondary canals rehabilitated or replaced under the Project. Design

7. Design was generally satisfactory for headworks, main canal, north and south canals, and heads of the secondary canals. All components are in good condition, and generally meet their design specifications. (i) Some lengths of secondary canal were not lined, leading to higher maintenance needs, which have not been met2.3 km of the main canal, 9.2 km of the north canal, 6.7 km of the south canal, and half the secondary canals are unlined. Road access to canals and structures for operation, monitoring, and maintenance is limiteda 4 m wide road with gravel surface was planned for the main canal right bank, and 1.5 to 2.5 m roads for the north and south canals but construction was not completed. There is no road on either side of the main earth canal from km 0+500 to km 2+850. Inspection of the main, north, and south canals can only be undertaken by motorbike and access for staff and equipment for maintenance is limited. Design was not planned to meet demands of the local community (such as aquaculture and domestic water supply). No rubbish and waste removal system at regulated gates. Construction

(ii)

(iii) (iv) 3.

8. No serious faults have been identified during more than 4 years operation. Stone-facing wall protection on both sides of the weir is in good condition. However some problems are evident: (i) Some small cracks appeared just after handoverfrom dam upstream to downstream (at dam top and 3 m from top in all seven gate piers) and at the top of the earth retaining wall. The cracks were repaired by enlarging them and injecting them with a bonding material. They have not deteriorated and the weir is stable. Inadequate compaction of earth in many sections of canal banks, especially where sluices were installed on secondary and tertiary canals, is causing collapse and water leakage around the sluices. Collapsed concrete facing plates in some parts of the canals (e.g., km 5 on main canal and 200 m upstream of Nghiem regulator on north canal). Collapse of brick or stone walls of some secondary canals (e.g., secondary canal in Thieu Minh commune).

(ii)

(iii) (iv)

24 4. 9.

Appendix 2

Operation

A number of problems relating to O&M were identified during OEM site inspections: Weir and Headworks (i) Automatic measurement of open and close height of gates has not worked since 2002. (ii) Automatic shutoff for gate overload has not worked since 2002. (iii) Automatic water level height recorder accuracy is considered inadequate by Song Chu Irrigation Company (SCIC). Sensors were prone to damage and expensive to replace. System has not worked since 2004 due to sensor problems. (iv) Navigation locks have not operated, since transport from Bai Thuong to Thanh Hoa is now mainly by road. (v) Sand flushing has not been undertaken since the water level required for this procedure has not been reached since completion. Canals (vi) Most structures on canals are in good condition, but many tertiary sluice gates have been stolen (reportedly by people with drug problems) while others have been removed for safekeeping. (vii) Automatic overload shutoff of the gates of Phong Lac regulated sluice was broken. (viii) Freeflow offtake sluices exist on some secondary and many tertiary canals. (ix) Widespread illegal digging through the bank and installation of pipes to take water from the canals for aquaculture or domestic needs. In Toan Thanh village (Thieu Toan commune), this caused a 20 m break on north canal in 2001. In village 5 (Xuan Khanh commune), the canal has been dug in many places to install pipes in eight aquaculture farms. In other cases, SCIC authorized the pipes and construction. (x) Floating fish cages in some areas cause flow clogging and water contamination. (xi) Lack of gates in some small sluices that offtake water from large to smaller canals and many small sluices on secondary and tertiary canals. SCIC said some gates have been removed for safekeeping but staff of clusters, districts, communes, and farmers said that steel parts of a lot of gates were stolen. The lack of gates prevents effective regulation of irrigation system. (xii) Damage to canal banks by buffalos and cows grazing freely on canal banks and buffalo bathing. (xiii) Water leakage on many parts of canals, especially secondary and tertiary canals. 5. Maintenance and Repair

10. The amount of earth used to maintain the system has declined significantly after rehabilitation (20002004) as shown in Table A2.1. The amount of concrete and stone used for repair has increased since the pre-project period (19921995). There is a need to: (i) (ii) (iii) introduce methods for desilting canals that do not break concrete plates facing bank slopes. form and compact the earth from dredging canals or transport it away from canal banks. repair even small damage on a timely basis.

Appendix 2

25

Table A2.1: Maintenance and Repair of Song Chu System, Before and After Project Earth Cut and Fill (000 m3) Before Project 1992 1993 1994 1995 After Project 2000 2001 2002 2003 2004 921 1,080 1,150 971 87 233 222 214 235 Amount of Stone (m3) 1,240 1,760 1,357 2,400 819 455 406 65 744 Amount of Concrete (m3) 25 70 230 450 941 748 1,844 1,103 1,392 Budget (D billion) 2.4 2.8 3.0 2.9 3.0 2.5 3.5 3.9 3.8

D = dong, m3 = cubic meter. Source: Song Chu Irrigation Company.

6. 11.

Rubbish and Water Contamination

Waste disposal in canals and water contamination are significant issues. (i) (ii) (iii) (iv) (v) Rubbish is found along the main, north, and south canals. Bathing and washing, as well as other forms of contamination (such as dead animals), pollute many canals. Rubbish concentrates upstream of regulators. Secondary canals face severe rubbish and water contamination, particularly where canals pass through villages. Water quality for drinking water supply is low in Thanh Hoa city, requiring substantial treatment at the water supply plant.

C.

North Nghe An Irrigation System

12. North Nghe An irrigation system covers 31,000 ha and supplies water for domestic use to Do Luong, Yen Thanh, Dien Chau, and Quynh Luu districts in Nghe An province. Its principal specifications are as follows: (i) (ii) (iii) (iv) Irrigation coefficient: 0.70 liters per second per hectare (l/s/ha) Drainage coefficient: 4.7 l/s/ha System efficiency coefficient: 0.65 Headworks and main canal: (a) Do Luong weir - length 316 m (b) Sediment discharge gate 21 m (c) Sand preventing (flow direction) gate 21 m (d) Regulated Mu Ba sluice at: km1 800 on main canal; design sluice discharge 31.7 m3/s (e) Main canal headrace canal discharge: Design: 31.7 m3/s (maximum 37.7 m3/s) (f) Total length: 55.9 km. Lined 25 km

26 (ii)

Appendix 2

Secondary and lower level canals: 98 canals, of which 9 were rehabilitated under the project as indicated in Table A2.2, Tertiary: 329 canals, length: 392 km, not under the Project. In recent years these canals have been partially lined by local funds. Sluices: 139, aqueducts: 16, siphons: 31. Design

Table A2.2 Canals Rehabilitated Under the Project

Canal Irrigated Area (ha) 4,300 3,210 2,500 550 1,020 1,400 2,000 660 1,000 16,640 Total Length (km) 20.0 15.0 14.1 5.0 5.2 5.0 6.6 4.8 7.6 83.3 Lined Length (km) 2.0 8.6 7.6 2.2 2.0 2.0 4.0 3.2 6.5 38.1

(iii)

(iv)

N2 N8 N13 N14 N1 N18A N20 N24 N26 Total

ha = hectare, km = kilometer. Source: North Nghe An Irrigation Company.

1.

13. The design is generally sound for headworks, main canal, tunnels, structures on the canal, and heads of the secondary canals. a. (i) Weir and headwork

(ii)

(iii)

Sedimentation upstream of the weir on the Ca River is a major problem. The complex is now in normal operation but the massive sedimentation process upstream of the weir has not been solved. OEM observed a large island of river deposits in front of the main canal intake that threatens to obstruct water flow into the canal. Do Luong headwork station management said that sedimentation decreases 3040% of discharge into the main canal. North Nghe An Irrigation Company (NNAIC) issues contracts to dredge 8,000 cubic meter (m3) of sediment in the headworks area every year. One dredging vessel works year-round in the head section of 1.8 km (between Mu Ba regulator and the offtake). The sand flushing direction gate has not operated since its completion date in 1999, according to the head of Do Luong Station. River heights have reportedly been too low for effective gate operation. Operation and gate effectiveness will need to be assessed during the next major river flow. The automatic water level height recording system is not working. b. Canals

(i)

(ii) (iii)

(iv) (v)

The remaining 31 km of the main canal is unlined or lined on one slope only; almost the entire length of secondary canals is unlined; about 7580% of on-farm canals have been lined supported by local budget. Lack of continuous maintenance of road along the main canal. Many small offtake sluices of tertiary and on-farm canals were designed without gates. Farmers close the canals by either using bags of earth, grass, or by filling with earth. All structures on canals are in good condition. Automatic height recording system is not working.

Appendix 2

27

2.

Construction

14. The construction quality of all items (headwork, canals, and structures) is acceptable. No serious faults have occurred during more than 4 years operation. However there is evidence of: (i) inadequate compaction of earth in many sections of canal bank, especially where sluices are installed on secondary and tertiary canals, causing collapse and water leakage around these sluices; (ii) sliding at some places of inner and outer slopes of main canal and secondary canals; and (iii) erosion in earth canal sections. 3. Operation

15. No problems have occurred during operation with headwork and regulators on the main and secondary canals. However, a number of problems are evident: (i) Freeflow through sluices on some secondary and many tertiary canals. (ii) Illegal digging of banks and installation of pipes to take water from the canals for aquaculture ponds still occurs in some secondary canals, although less than in the Song Chu system. (iii) No gates on some offtakes from main canals to tertiary canals and on many small sluices on secondary and tertiary canals preventing effective regulation of irrigation. NNAIC reports that some gates are removed for safekeeping but staff of clusters, districts, communes, and farmers said that the steel parts of many gates were stolen, (iv) Damage to canal banks by buffalos and cows grazing freely on canal banks and buffalo bathing. (v) Water leakage on many parts of canals, especially secondary and tertiary canals. (vi) Encroachment on some canal banks by locals for cultivation. 4. Maintenance and Repair

16. The volume of sediment dredging has decreased by about 50% after rehabilitation 27,000 m3 in 2004, of which 8,000 m3 was from the headworks area. Before rehabilitation, the amount of dredge material for the whole system was approximately 50,000 m3 per year. Problems include: (i) Many gates are missing and freeflow is common; (ii) There is a need to dump and compact the earth from dredging canals or transport it away from canal banks; and (iii) Deterioration due to even small damages must be repaired. (iv) NNA has few rubbish problems. There is little rubbish on canal banks along most canals (main, secondary, and smaller), even in sections passing through villages. (v) Water in the main and secondary canals is clean compared to Song Chu. (vi) NNAIC has worked well with district and commune authorities on keeping canals clean. This experience needs to be built on, by Song Chu and other irrigation systems. D. Conclusions and Recommendations

17. The main conclusions and recommendations arising from OEMs visits to project facilities are summarized in Table A2.3 below:

28

Appendix 2

Table A2.3 Conclusions and Recommendations Relating to System O&M

Conclusions and Recommendations 1. General (i) The three subprojects were completed and are used effectively. (ii) After 4 years operation, the main components of the systems are evaluated as acceptable. (iii) Project documents must be stored in a location accessible to all relevant stakeholders (central project office, subproject offices and irrigation companies). (iv) During design and implementation of the irrigation systems, attention was paid only to the main items such as headworks, main canals, and structures on main canals. Auxiliary itemsimportant for long-term system operation such as management access roads, outer earth banks of the main canals, secondary canals, and structures on smaller canalswere not paid adequate attention or given sufficient investment. (v) Investment is required to improve access and complete upgrading of secondary and tertiary canal systems, and the drainage network. (vi) Local authorities should seek funding to finish all uncompleted items of these systems. (vii) Decentralization is required so that communes or water user organizations can take responsibility for managing secondary canals according to hydraulic boundaries. Irrigation companies and other provincial agencies should help at the startnot only with organization but also with technical and management aspectsto promote the organizations survival and growth. Devolution of management responsibility must be real and not nominal. (viii) Monitoring of the physical quality of all civil works and other aspects of these systems should be carried out regularly by specific staff, and the data analyzed and stored to support operation and management. (ix) Even small system faults must be repaired quickly. (x) A provincial level awareness campaign is needed for people, including school children (in addition to current regulations), on the care and protection of water resource works. 2. Irrigation System (i) Eliminate or greatly reduce rubbish problems in Song Chu in cooperation with the PPC, DARD, DPCs, and Commune Peoples Committees. NNAIC lessons and experience can be learned and applied. (ii) Repair damaged offtakes. (iii) Move away from freeflow to regulated flow, initially by assessing canal capacities to accommodate higher water volumes associated with regulated flow. (iv) Fix water leaks and landslides on all canals. (v) Define system for developing and managing private offtakes from canals (e.g., aquaculture and domestic use). Define payment levels for construction and O&M. (vi) Eliminate gate theft in cooperation with commune and villages authorities. (vii) Solve problem of free grazing on canal banks. (viii) Solve the problem of encroachment of secondary canals for housing or cultivation (NNAIC) (ix) Estimate water demands for non-irrigation use of people living close to the canals to establish an adequate response plan and guidelines. 3. Sustainable Development of the Irrigation Systems (i) Improve decentralization and establish regulations appropriate to project villages and communes to (i) foster community ownership, and (ii) participate and contribute to the defense and O&M of the works. The farmers water user organization should become a social organization, with activities based on the enterprise law of state. Water supply contracts would be signed between this organization, the irrigation company, and users. (ii) Mobilize resources (central, provincial, district, commune, village) as soon as possible to (a) rehabilitate all offtake sluices; (b) fix operational problems such as canal freeflow, leakage, and collapse of canal walls; and (c) improve on-farm systems and access roads and ensure the system can be controlled from the headwork to the gates of on-farm canals. (iii) Establish a detailed defence solution for irrigation schemes, based on community participation. 4. Hanoi Dike (i) Relief wells must be assessed and transferred to the operating agency (HDDMFC) as soon as possible. (ii) Land use rights and access to areas where wells are located must be resolved as soon as possible. (iii) Monitoring of the wells must be carried out regularly by specific staff and the data should be stored in a database for operation and management. (iv) There must be cooperation between dike, road transport, and transport/tourism sectors on system operation and protection, e.g., where tourist operators use revetments for landing. DPC = District Peoples Committees, DARD = Department of Agriculture and Rural Development, HDDMFC = Hanol Department of Dike Management and Flood Control, NNAIC = North Nghe An Irrigation Company, O&M = operations and maintenance, PPC = Provincial Peoples Committee.

Appendix 2

29

E.

Pros and Cons of Concrete-Lined Irrigation Canals

18. Most tertiary canal upgrading has involved concrete lining, which irrigators perceive to have several benefits: (i) reduced conveyance losses, provided special designs are applied, generally requiring the use of geo-membranes (the concrete panel system currently in use does not reduce seepage losses significantly); (ii) improved irrigation water conveyance; and (iii) improved irrigation under certain conditions. While concrete lining has advantages in some soils, a well constructed and maintained earth canal can be equally efficient in suitable soils. Moreover, concreting is expensive and should be applied to canals or sections where it is most beneficial, and not used as a panacea. Table A2.4 summarizes some positive and negative aspects of earth and concrete lined canals. Key positive factors for each system are in bold. Table A2.4: Summary of Main Features of Earth and Concrete-Lined Irrigation Canals
Factor Compacted Earth Design Relatively simple. Construction Low cost, simple. Adequate compaction required. Concrete May require detailed and higher cost survey. Higher cost. May require contractor from outside village. Higher standard of compaction required. May be cheaper where there is a right-of-way issue, especially where land is expensive. Damage Risk of piping and slumping. Should eliminate risk of piping and slumping. Maintenance Easy to maintain, reshape, and desilt Canal bed and banks/walls stabilized. mechanically (if tractor available). Less maintenance required as long as well constructed. Desilting normally manual. Need to cut vegetation periodically Less labor for cleaning Voluntary labor often needed for cleaning Can almost eliminate need for voluntary labor Water Can be slow, particularly if high weed growth Fast to tail end sections due to reduced delivery present. roughness and less filling time (in case of rotational supplies). Higher proportion of silt deposited in canal, Faster water speed promotes movement of leading to increased desilting need. sediment to paddies. Water High in sandy soils or if compaction Low if well constructed and maintained (but losses inadequate. not for current designs). Reduced risk of waterlogging adjacent land. Space Canal is wide, particularly compared with Space can be liberated by lining, particularly if requirement vertical-sided lined canal. vertical sided. Elevation Elevation/water depth may be difficult to Easier to design for higher elevation and maintain, so high areas may require scoop maintain command levels. lifting to waterhigh areas can be reached, Need for scoop lifting should be reduced. even with earth canals. Access Same as earth for V-section. Easy tracks on dike embankment often trafficable by two-wheel tractors and Less easy with vertical walled canal. bicycles. Crossings Easy for people, livestock, bicycles, and Bridge/culvert required for crossing. for people, tractors to cross. Canal can be damaged by machinery crossing. livestock, May be expensive, depending on elevation, machinery compared with ground level. Livestock Cause damage to canal. Cannot easily cross vertical-walled canals. Water retention in canal can be beneficial for livestock watering.
Sources: OEM, Robert Hill. 2000. How Well Does Your Irrigation Canal Hold Water? Utah State University.

30

Appendix 3

SOCIOECONOMICS, POVERTY, AND PARTICIPATORY IRRIGATION MANAGEMENT A. Household Rapid Appraisal Survey

1. A rapid appraisal survey was conducted of 23 households in Song Chu (SC) and 13 in North Nghe An (NNA). While not a statistical sample, the results provided useful information on attitudes as well as data on costs and prices for economic analysis. Household (hh) size was smaller in SC than in NNA (total 5.1:7.0 persons/hh)1 and there were fewer adults in the household (2.2:2.7 adults/hh). Farm size on both schemes was similar (0.337:0.343 hectare [ha]). All farmers interviewed planted their entire area to paddy in both summer/autumn and winter/spring seasons. Maize was grown by (65%:31%) of farmers. Some farmers in the SC sample also grew sweet potatoes and sugar cane. 2. Participation in the Project (through payment of paddy for tertiary system upgrading) was (91%:77%). Paddy contribution to the Project averaged (170:0 kilograms per hectare per year [kg/ha/yr]) for an average of (4:N/A years). 3. Irrigation labor demand declined due to the Project (and tertiary canal lining). Pump/scoop irrigation before the Project was required on (29%:31% of the farm area), while the proportion declined to (7%:3%) after the Project. Irrigation reliability was assessed through the number of winter/spring irrigations missed (1.3:0.5). NNA was more reliable than SC with (48%:69%) receiving 100% of their water allocation. Irrigation fees to the irrigation management company were higher for SC than NNA (446:419 kg paddy/ha/yr), but slightly lower in relation to payment to the cooperative (74:79 kg/ha/yr). 4. Irrigation service was rated good by (64%:54% of farmers), an increase from (0%:8%) before the Project. No farmers rated irrigation service as poor after the Project, compared with (43%:54%) before. 5. All respondents (except one in NNA who did not respond) supported the concept of water user organizations or water user groups attached to the cooperative, suggesting considerable enthusiasm for increased involvement in irrigation management. Almost all respondents cited improved irrigation water management as their reason. B. Commune Rapid Appraisal Survey

6. In addition to the household survey, commune/cooperative leaderships were interviewed in six communes each in SC and NNA. Construction quality was rated good by (16%:66%) of communes and acceptable by the rest. 7. Pre-project, full gravity irrigation extended to (45%:43% of irrigated area). By 2004, these areas had increased to (79%:81%) or by an average of 82%. Time consumed for taking water by farmers had declined on SC from 65 to 41 hours per watering. NNA data was not available. In 1996, (44%:75% of canal tails) received water. By 2004, the proportion had rose to (83%:94%), an increase of (88%:25%), probably reflecting the shorter canals in NNA. For all communes combined, 33% had no problems with damaged structure while 67% had moderate problems. In relation to management capacity, 42% of communes considered that system planning and management was sound while a higher proportion (50%) considered that cooperatives managed water well. No commune assessed management capacity at any level as bad. All SC communes reported the garbage situation as bad compared with 33% of NNA communes.
1

Results are presented in brackets (SC:NNA units) in this Appendix, unless otherwise stated.

Appendix 3

31

C.

Poverty

8. Household cash income in the SC and NNA household survey samples averaged (D15.4:12.9 million/hh). Per capita income showed more variation (D3.0:1.8 million/person) due to the greater household size in NNA. Upper quartile income averaged (D4.8:3.1 million/person/year) and lower quartile (D1.5 million:D1.1 million), suggesting a reasonably equitable distribution of income, particularly when subsistence income is taken into account. Expenditure on major assets since 1996 reflected these patterns (D55 million:D39 million), indicating that a lower proportion of household income was used for consumption in NNA. Motorbike ownership was (70%:54% of hh), representing a significant proportion of household assets for these households. 9. Almost all respondents indicated that their real income had increased since 1996 (100%:92% of sample). Estimated increase in real terms was (118%:176%), suggesting that NNA was catching up with SC. Respondents were asked to define the reasons for their increase in income. Those reporting improved irrigation first or equal first were (96%:100%), new seeds (48%:69%), integrated new technologies (43%:15%), and off-farm income (9%:0%). Irrigation and new seeds were thus dominant. The low relative importance of off-farm income was surprising though a further (17%:0%) of respondents rated it second or lower in importance. The commune survey indicated a higher level of off-farm work with (56:49 off-farm workers/100 hh). 10. In common with other communes in the project provinces, water users organizations (WUOs) in participatory irrigation management (PIM) communes have experienced a rapid decline in poverty over the past decade. Poverty in 1998 was (26%:N/A) as reported by commune leaders, declining to (20%:23%) in 2002, and (12%:11%) in 2004. D. PIM in SC and NNA Irrigation Schemes

11. Four water users associations/cooperatives (WUA/C) were established under project technical assistance (TA): B8A and B6-9 (SC) and N4B and N6 (NNA). In parallel, a PIM model has been adopted by one agricultural cooperative in each scheme: Thieu Do ASC (SC) and Nam Thanh ASC (NNA). All six have been successful in improving irrigation management. However, the four WUA/Cs have not proved able to develop a firm operating basis, and only one has built up any assets. Two of the WUA/Cs and both ASCs are classified as very active and efficient while the remaining two WUA/Cs are active but at a low level. Table A4.1: Poverty Levels in Participatory Irrigation Management (PIM) Communes (%) WUA/C Thanh Hoa B8A WUA B6/9 WUC Thieu Do Coop Nghe An N4/B WUC N6 WUC Nam Thanh Coop <1997 >30.0 >30.0 >30.0 >30.0 >30.0 >30.0 19982000 21.0 7.0 14.0 22.0 22.0 20.0 20022003 15.0 5.0 12.0 16.0 17.0 15.0 2004 5.0 4.5 na 11.0 14.0 3.7

na = not available, WUA = water users association, WUA/C = water users associations/cooperatives, WUC = water users cooperative. Source: Special Evaluation Study team survey updated by Operations Evaluation Mission 2005.

32

Appendix 3

E.

Participatory Irrigation Management in Viet Nam 1. Background

12. Since the development of large irrigation schemes in Viet Nam under the French regime during the early to mid-20th century, irrigation schemes have been managed by government agencies, most recently the Irrigation Management Companies (IMCs). Since 1975, the concept of involving farmers in the planning, construction, management, operation, and maintenance of the schemes (PIM) has gained currency. 13. Two TA grants were awarded under the Project to help define the systems needed to introduce participation into irrigation management. The TAs were successful in introducing PIM systems into a small number of secondary and intercommune tertiary canals within the Song Chu and North Nghe An systems. Both IMCs supported the idea and introduced a further canal to the system using their own resources. 14. The Ministry of Agriculture and Rural Development (MARD) was an enthusiastic supporter of PIM, encouraged by the Asian Development Bank (ADB) and the World Bank. Following the second TA, the Minister of Agriculture and Rural Development circulated a document 1959/BNN-QLN (May 1998) on strengthening, consolidating, and renovating grassroots irrigation management organizations. This emphasized that, to expand the pilot systems to other provinces and areas, provincial authorities should focus on establishing grassroots irrigation management models (cooperative, association) suited to the local situation, with a strengthened role for farmers in irrigation management. However, in practice, little happened, apart from the establishment of Viet Nam PIM Network (VNPIM), the local affiliate of the International Network on Participatory Irrigation Management, which helps expand PIM to new areas and schemes. 2. Current Status

15. A workshop on Participatory Irrigation ManagementPathways for Progress in Viet Nam was held in Ha Long City, Quang Ninh province from 30 March to 2 April 2004, supported by ADB, Danida, International Network on Participatory Irrigation Management, and World Bank. Following this workshop a number of documents have been produced and circulated, and meetings held (Table A4.2). 16. Following the activity over the past 12 months, appropriate national level structures and legislation is in place to support widespread adoption of PIM. Discussion between ADBs operations evaluation mission and the management of the Song Chu Irrigation Company and North Nghe An Irrigation Company indicates that both organizations are keen to expand PIM to more of their schemes and possibly to the secondary canal level. Provided this change is adequately resourced, it will have the potential to improve water management and maintenance significantly. However, issues remain relating to management of hydraulic structures on hydraulic boundaries, rather than current political (commune) boundaries. This will require sharing of power and financial resources between the agricultural service cooperatives (which are commune-based) and the new WUOs, which may operate across two or more communes. Since the farmers will own both organizations, it should not be an insuperable problem, though care will be required to ensure that (i) resource allocation correctly reflects responsibilities, (ii) funds are not siphoned off for non-irrigation use, and (iii) conflict and competition between the cooperatives and WUOs are avoided.

Appendix 3

33

Table A4.2: List of PIM Documents Prepared by MARD

Document 10 November 1998 Resolution 06 by Political Bureau 8 December 1998 Decision 126/1998/BNNTCCB 4 April 2001 Ordinance on Exploitation and Protection of Hydraulic Works 18 March 2002 Resolution 15 by CPC 28 November 2003 Decree 143/ND-CP Content Policies encouraging farmers participation in investment and irrigation system management. Establishing VNPIM.

Stipulating the form of WUOs.

02 December 2004 Decision 100/QD-TL 20 December 2004 Circular 75/2004/TT-BNN 30 December 2004 Framework Strategy 20 January 2005

Applying improved technologies and water-saving technology in construction and management of irrigation and drainage systems, and development of WUOs and water management of farmers. Providing detail of the 2001 Ordinance, and specifying that provincial peoples committees would establish action plans to introduce PIM, set up regulations on decentralization of irrigation schemes, and plans for irrigation management transfer. Establishing VNPIM (including full-time and part-time membership). Guidelines on establishment, strengthening, and development of WUOs. Framework Strategy on development of PIM, including roadmap (draft prepared at Ha Long city regional workshop). Meeting on Framework Strategy on Development of PIM and circular on guidelines for establishment, strengthening, and development of WUOs.

CPC = Central Party Committee, PIM = participatory irrigation management, VNPIM = Viet Nam Participatory Irrigation Management Network, WUO = water user organization. Source: MARD.

17. In the medium term, it should be possible to define a mechanism where the entire system from the headworks/main system to the tertiary and farm canals is managed by the farmers, though a hierarchical system of WUOs at different levels. In effect, this would mean that farmer within the scheme would take over the IMC from the province. Other stakeholders (e.g., urban water supply organizations and industrial users) would also need to be represented to ensure that their interests are represented in system management. 18. MARD is currently working to produce the remaining policy and legal documents defined in the roadmap, and assist provinces and irrigation systems to promote PIM. A major recent development has been the establishment of a PIM unit supported by MARD at Hanoi Water Resources University, which will act as a consultancy unit to assist IMCs and provinces to define and introduce PIM systems.

34

Appendix 4

CROP AREA, PRODUCTION AND YIELD 1. Benefit monitoring and evaluation provided a wealth of information on the project area and its agricultural production. However, it approached data collection on a before and after rather than with and without project basis. Thus, while yields increased rapidly in the project communes, many factors contributed to this increase, notably (i) allocation of land rights to farmers, (ii) improved seed and fertilizer quality and availability, (iii) improved access to financial resources through the Viet Nam Bank for Agriculture and Bank for Social Policy, and (iv) improved water quantity and reliability. To attempt to isolate project from non-project factors, it is necessary to identify control areas, which should not have received major government investment during or after the project period. This is less easy to do in Thanh Hoa and Nghe An than in the Red River Delta schemes where many of the irrigation schemes coincided closely with district boundaries and were virtually identical to non-project districts (except investment in a new pumping station and main system under the projects). 2. Under the Song Chu (SC) and North Nghe An (NNA) schemes, the control districts are less obvious but adequate controls can be identified. A more accurate control system can be defined on the basis of commune yield data, although it separates communes within project districts that lie inside and outside the project command area. 3. As stated in ADBs project completion report (para. 16), much of the increase predated the completion of project works and was also observed in non-project communes and districts. 4. A total of 10 districts in Thanh Hoa and 7 in Nghe An were analyzed for 19942004 (Thanh Hoa) and 2003 (Nghe An). In each case, three districts fully outside the project area were included, as follows: Thanh Hoa Province Hau Loc North of SC, in South Ma irrigation scheme Hoang Hoa North of SC, in South Ma irrigation scheme Tinh Gia South of SC, no major project investment, also valuable as a control for NNA scheme Nghe An Province Nghi Loc Coastal district partly in South Nghe An scheme Nam Dan Inland and adjacent to Nghi Loc, mainly in South Nghe An scheme Hung Nguyen Inland of Nam Dan, mainly in South Nghe An scheme 5. While the South Ma scheme received World Bank financing to upgrade the main canal, this work was only completed in 2002, meaning that comparison for the earlier years at least is relevant. Tinh Gia lies between the SC and NNA schemes and appears to have received little large-scale irrigation investment over the project period. South Nghe An is mainly a pumped scheme and has had its pumping stations and some canals upgraded. 6. Overall, crop production in the two provinces has made great progress over the last 10 years. In Thanh Hoa, winter paddy yields increased by an average of 7.2% per year (yr) from 2.4 tons per hectare (t/ha) in 1994 to 4.5 t/ha in 2004an increase of 89% over the period. Other changes for the total provinces are in Table A4.1 which highlights the rapid gains made over the period.

Appendix 4

35

Table A4.1 Yield Changes in Thanh Hoa and North Nghe An Project Districts
Yield 1994 (t/ha) A. Thanh Hoa 1. TH spring paddy 2. TH summer paddy 3. TH maize 4. TH sweet potatoes 5. TH peanuts B. North Nghe An 1. NNA spring paddy 2. NNA summer paddy 3. NNA maize 4. NNA sweet potatoes 5. NNA peanuts 4.6 2.6 2.9 6.1 0.8 3.9 3.0 1.8 6.1 0.8 Yield 2004 (t/ha) 6.5 5.0 4.6 7.3 1.9 6.3 4.6 3.9 7.2 2.1 Rate of Increase increase (%) (%/yr) 41 90 59 20 129 60 53 112 19 156 4.2 7.5 5.3 1.8 6.5 4.9 5.0 5.9 3.5 6.9

ha = hectare, NNA = North Nghe Ann, t = ton, TH = Thanh Hoa, yr = year. Source: Government Statistics Office.

7.

Average annual yields in project and non-project districts are summarized in Table A4.2: Table A4.2: Crop Yield Trends in Thanh Hoa and Nghe An
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Trend

A. Summer/Autumn Paddy 1. Thanh Hoa a. 7 project districts b. 3 non-project districts 2. Nghe An a. 4 project districts b. 3 non-project districts B. Spring Paddy 1. Thanh Hoa a. 7 project districts b. 3 non-project districts 2. Nghe An a. 4 project districts b. 3 non-project districts C. Maize 1. Thanh Hoa a 7 main project districts b. 3 non-project districts 2. Nghe An a. 4 project districts b. 3 non-project districts D. Sweet Potatoes 1. Thanh Hoa a. 7 main project districts b. 3 non-project districts 2. Nghe An a. 4 project districts b. 3 non-project districts E. Peanuts 1. Thanh Hoa a. 7 main project districts b. 3 non-project districts 2. Nghe An a. 4 project districts b. 3 non-project districts
Source: Government Statistics Office.

2.6 2.7 3.0 2.6

3.3 3.2 3.0 2.6

1.8 1.6 2.4 2.4

3.4 3.2 3.5 3.0

3.4 3.1 2.9 2.9

4.1 3.3 3.5 3.1

3.3 3.7 3.7 3.3

4.3 3.7 3.6 3.6

4.7 4.1 4.2 3.7

4.8 4.3 4.1 3.7

5.0 4.6 4.6 4.2

7.5% 6.7% 4.7% 5.0%

4.6 3.8 3.9 3.4

4.4 3.3 4.3 3.9

4.4 3.8 4.3 3.7

5.3 4.4 4.8 4.4

5.1 4.2 4.9 3.9

5.4 4.6 5.2 4.4

5.8 5.1 5.7 5.0

5.9 5.4 5.8 5.0

6.2 5.6 6.0 5.7

6.3 5.6 6.0 5.7

6.5 5.8 6.3 6.0

4.2% 5.7% 5.2% 5.9%

2.9 2.2 1.8 1.7

2.6 2.3 2.3 2.2

3.2 2.2 2.4 2.3

3.4 2.7 2.2 2.3

3.6 3.1 2.6 2.9

3.8 3.5 2.5 2.7

3.5 3.0 2.0 2.6

4.0 4.0 3.1 3.2

4.2 4.0 2.9 3.2

4.5 3.9 3.3 3.1

4.6 4.4 3.9 3.6

5.3% 7.6% 5.0% 6.2%

6.1 5.0 6.1 3.8

6.0 5.1 3.7 3.0

6.3 6.0 5.6 4.9

6.0 5.2 5.6 4.4

6.8 6.6 6.6 5.3

6.4 5.6 6.1 5.6

6.4 6.6 5.4 5.1

6.4 6.8 6.7 5.6

6.9 7.1 6.4 5.5

7.1 6.9 6.6 5.6

7.3 6.4 7.2 5.7

1.8% 3.2% 3.5% 4.8%

0.8 0.7 0.8 1.0

1.2 1.2 1.3 1.4

1.3 1.1 1.2 1.2

1.2 1.2 1.3 1.5

1.6 1.4 1.4 1.7

1.4 0.9 1.1 1.3

1.7 1.6 1.4 1.7

1.7 1.5 1.5 1.5

1.5 1.9 1.9 2.2

1.8 1.7 1.6 2.0

1.9 1.5 2.1 2.5

6.5% 7.1% 6.9% 7.5%

36 8.

Appendix 4

The trends are shown in Figure A4.1 Figure A4.1 Yield Trends for Major Crops in Thanh Hoa and Nghe An
Summer/Autumn Paddy Yields 6 5 7 6 5 tons/ha 4 3 2 1 0
Thanh Hoa project Thanh Hoa non-proj Nghe An project Nghe An non-proj

Spring Paddy Yields

tons/ha

4 3 2
Thanh Hoa project

1 0

Thanh Hoa non-proj Nghe An project Nghe An non-proj

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Maize Yields 5 4 tons/ha tons/ha 3 2 1 0

Thanh Hoa project Thanh Hoa non-proj Nghe An project Nghe An non-proj

Sweet Potato Yields 8 7 6 5 4 3 2 1 0

Thanh Hoa project Thanh Hoa non-proj Nghe An project Nghe An non-proj

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Peanut Yields 3 3 tons/ha 2 2 1 1 0

Thanh Hoa project Thanh Hoa non-proj Nghe An project Nghe An non-proj

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

9. A.

The main conclusions from the yield trends are explained below. Winter Paddy (i) No significant change in area for project or non-project districts of Thanh Hoa. (ii) Significant decline in area in Nghe An, averaging 5.6% per yr in project districts, about half of which was offset by yield increases.

Appendix 4

37

(iii)

Rapid yield gains in Thanh Hoa, with lower gains and a lower base in Nghe An. Thanh Hoa yields were 76% higher than Nghe Ans in 2003.

B.

Spring Paddy (i) Overall, there were few trends in spring paddy area in either province. All districts were within the +/- 1% per yr range except Thanh Hoa city in the SC scheme (+4.5% per yr) and Quynh Luu in North Nghe An (+2.2% per yr). (ii) In aggregate, the seven project districts increased area by 1,240 ha (to 54,800 ha) over the period. (iii) Total production of spring paddy increased rapidly, by an average of 5.3% per yr in Thanh Hoa and a remarkable 7.1% per yr in Nghe An, due to rapid yield gains in both provinces, but particularly Nghe An, where yields are now higher than Thanh Hoa, despite being significantly lower in 1994. (iv) There were higher yields of spring/summer paddy in both provinces. Maize (i) Maize production has increased rapidly in both provinces, with areas in both provinces doubling from 1994 to 2004. Some project districts have expanded from a low base to become substantial producers, including Quang Xuon in Thanh Hoa and Quynh Luu in Nghe An. (ii) Rapid advances in maize yield, with increases close to or exceeding 100% over the period. Yields are about 300 kilograms/ha higher in Thanh Hoa than in Nghe An.

C.

38

Appendix 5

ECONOMIC REEVALUATION A. Introduction

1. Project economic performance was reestimated based on information contained in the Asian Development Banks (ADB) project completion report (PCR), the Governments project completion report, and benefit monitoring and evaluation (BME) reports. The methodology used at PCR is applied, through updating the PCR spreadsheets, which followed appraisal methodology reasonably closely. B. Hanoi Dike

2. Benefits from Hanoi Dike rehabilitation result from a reduced risk of dike breaches and resulting flood damage. The appraisal report stated that:
The Hanoi dike, a 45-km stretch along the right bank of the Red River, from Tien Tan in Ha Tay Province to Thanh Tri in Hanoi, provides critical protection against floods for this area. Since 1971, 76 failures have been reported in this section alone, including 50 cases of seepage and sand boils in the foundation and 21 cases of collapse and slips in the dike body. Nearly one-tenth of the Central Government's annual dike maintenance budget for the Red River delta is allocated to maintaining the Hanoi dike, which has less than 2 per cent of the delta's total dike length. The strenuous efforts of the Government and the people participating in repair and maintenance have prevented the Hanoi dike from failing in the recent past. However, changes in flood patterns and morphology have of late worsened the dike's inherent structural problems, making failure a distinct possibility. Based on available geotechnical information and past records of failures of the Hanoi dike, nine locations were identified as having serious risks: four were associated with riverbank erosion and five with weak and permeable foundations. It is estimated that when floodwaters exceed 10 m above mean sea level at Hanoi (once every 2.5 years), the dike has a 20 per cent probability of failure. If the water level exceeds 13 m (once in 59 years), the probability of dike failure is estimated to exceed 80 per cent.

3.

Table A5.1 includes the assumptions on which appraisal estimates are based: Table A5.1: Without Project Estimated Frequency of Dike Breaches

Height Frequency

(m) (years) Sect 1 Sect 2 Sect 3 5 1 6 1 7 1 8 1 9 1 2.9 4.1 5.3 35.0 25.0 19.0 10 3 8.0 7.2 12.6 13.0 14.0 8.0 11 6 8.6 9.5 13.2 12.0 11.0 8.0 12 16 7.3 7.4 8.6 14.0 13.0 12.0 13 59 3.9 3.9 4.0 26.0 26.0 25.0 14 143 0.9 1.0 0.9 111.0 104.0 106.0 15 286 0.4 0.4 0.4 286.0 286.0 286.0 Total 31.9 33.3 45.0 3.1 3.0 2.2 m = meter, Sect = Section, Sect 1 = Tien Tan km 4059, Sect 2 = West Lake km 5971, Sect 3 = Than Tri. Source: Project Preparation Consultants Report.

Cumulative Conditional Probability of Breach Up to Given Water Level (%) Sect 1 Sect 2 Sect 3 3 0 0 5 3 0 8 7 0 9 13 10 12 17 22 20 24 42 39 43 60 63 64 74 82 82 86 99 96 94 100 100 100

Probability of Break in Any Year (%)

Expected Period Between Breaches (years) Sect 1 Sect 2 Sect 3

Appendix 5

39

4. For a maximum 10 meter (m) river without project, an average of one break every 8 years would be expected in Section 3. In total, one break every 3.1 years is expected (Section 1) and every 2.2 years (Section 3). These probabilities substantially overestimate the potential for breaches, given Hanois flood history of Hanoi (Supplementary Appendix). 5. The probability of a breach in any section with project was estimated as shown in Table A5.2: Table A5.2: With Project Estimated Frequency of Dike Breaches
Height Frequency Cumulative Conditional Probability Up to Given Water Level (%) Sect 1 Sect 2 Sect 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 5 3 3 9 5 5 12 6 6 14 6 6 14 7 7 14 Probability of Break in Any Year (%) Expected Period Between Breaches (years) Sect 3 Sect 1 Sect 2 Sect 3

(m) (year) Sect 1 Sect 2 5 1 6 1 7 1 8 1 9 1 0.4 0.4 0.4 278.0 10 3 1.4 1.4 1.4 74.0 11 6 2.0 2.0 2.0 51.0 12 16 1.6 1.6 1.6 62.0 13 59 1.1 1.1 1.1 89.0 14 143 0.5 0.5 0.5 208.0 15 286 0.4 0.4 0.4 286.0 Total 7.3 7.3 7.3 13.8 m = meter, Sect = Section, Sect 1 = Tien Tan km 4059, Sect 2 = West Lake km 5971, Tri. Source: Appraisal Report files.

278.0 278.0 74.0 74.0 51.0 51.0 62.0 62.0 89.0 89.0 208.0 208.0 286.0 286.0 13.8 13.8 Sect 3 = Than

6. The probability of a breach has been reduced by a factor of 5, but still remains highly significantaround one breach every 14 years, an improbably high frequency. The anticipated reduction in potential for dike breaches was the main basis for the high economic benefits estimated by the appraisal report, with an economic internal return rate (EIRR) of 53%. 7. While the probability of breaching was discussed and agreed between the consultant and the Department of Dike Management and Flood Control, the likelihood of breaching at all flood levelswith and without the Projectwas significantly overestimated, for a number of reasons: (i) The appraisal report states that 76 failures were reported from 1971 to 1992, but these were minor failures resulting from sand boils or piping, rather than dike breaches. Thus, no dike breach failures were experienced during the 1:150 flood in 1971 or subsequently. The last break in the Hanoi dike was in 1915. Construction of Hoa Binh dam has resulted in a reduction in flood peaks of about 1.3 m, partly offset by urban development in the floodplain. The reduction in silt load can also increase scouring at the dike toe, though there has been substantial silt deposition on the revetments constructed under the Project. Upstream or left bank levees would breach before the Hanoi dike overtops, due to the higher design criteria applied to Hanoi Dike, with an additional 40 centimeters of freeboard. Extension of spillways from 100 m to 300 m will help handle extreme floods4 out of 69 have been constructed to date. The spillways allow for controlled flooding of sacrifice areas, giving rural populations time to protect their belongings and lives, rather than face the high water velocities of an uncontrolled breach. Total cost of the spillway program is estimated at around $10 million.

(ii)

(iii)

(iv)

40

Appendix 5

(v)

(vi)

The relatively poor condition of other dikes in the delta makes them more vulnerable to breach than the Hanoi dike. A survey undertaken under the project design found only 13% of northern dikes in good condition. A proposed survey under the 2nd Red River Basin Sector Project1 (ADB) should provide an updated figure. Hanoi can apply immense resources to protect the dike in a major flood. The 1971 flood was at the height of the war with the United States, so maintenance had been neglected and few resources were available to fight any breach (apart from the fact that the dike suffered heavy bomb damage). The city is now far better resourced, with a current capital works program for dike upgrading of D60 million per year.

8. While it is difficult to reestimate the probabilities of failure that would have resulted if the Project had not been undertaken, most risks would be associated with extreme flooding. There have been several floods >12 m since 1986 but none caused a breach. The operations evaluation mission (OEM) has therefore recalculated EIRR with various assumptions of minimum height at which breaching might occur. 9. With the Project, it is considered that Hanoi should be secure up to a 1 in 500 year flood. If proposed projects relating to spillway construction and the Day River diversion are undertaken, Hanoi should be fully secure once the Son La dam is completed (around 2010). Thus, the Project has caused significant savings in potential damage, though substantially less than predicted by the appraisal report or PCR. 10. Other factors, not accounted for at appraisal, are considered to be important contributors to the viability of the Project: (i) (ii) Savings in the lives that would be lost in an uncontrolled breach of the dike. Improved traffic capacity due to road sealing and widening. The road is a valuable asset for Hanoi and has resulted in substantial reductions in journey times for users of project roads and alternative routes, particularly during peak hours. While no detailed study has been carried out relating to traffic volumes or journey purpose, it is possible that the economic benefits of road construction would be as high as the potential damage reduction due to changed flood risk. Perceptions of reduced flood risk have almost certainly led to increased investment, and a consequent slowing of economic transfers to the south. The attractive masonry construction adds significantly to the civic pride of Hanoi residents, adding a positive if non-quantifiable benefit to the dike upgrading. Economic Reevaluation

(iii) (iv)

1.

11. PCR adopted appraisal methodology, updating values to 2002 levels and applying actual costs. The commencement of benefits was delayed until 2000. Operation and maintenance (O&M) costs were assumed to increase by dong (D) 12 billion per year ($0.8 million) compared with D4 billion per year at appraisal. It is not clear why either exercise assumed an increase in O&M costs, when a major benefit of the rehabilitation should have been (and was) a marked reduction in O&M cost. An average damage avoided benefit flow (in 2002 dong) of D679 billion ($44 million) plus the annual O&M cost savings generated an EIRR of 63%, compared with the 53% appraisal estimate. The increase was mainly due to reduced construction costs.
1

ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Socialist Republic of Viet Nam for the Second Red River Basin Sector Project. Manila.

Appendix 5

41

12. It is clear that the condition of the dike was poor and erosion was serious in the early 1990s. However, it is not evident that these problems were serious enough to lead to breaches. At worst, floods up to around 13 m would probably have resulted in piping and sand boil problems, which the Hanoi Department of Dike Management and Flood Control was experienced in dealing with. Economic reevaluation of the component is undertaken in a series of stages or sensitivity tests as follows: (i) Correction of PCRs miscalculation of potential losses from a break in Thanh Tri district. Average annual damage with Project increases to D195 billion from the assumed D148 billion. EIRR declines to 60% (the adjusted base case). No savings allocated 20002004 in recognition that no floods have occurred, which would have threatened the dike without the Project. EIRR declines to 26%. Application of O&M cost savings. There are no precise estimates available for the Hanoi dike O&M cost. Total O&M costs for the Hanoi Dike Management Company for 151 kilometers (km) of dike are approximately D11 billion ($700,000) per year. If half of this level is applied to the 37 km of Red River right bank dike, and cost savings due to the Project are estimated at 30%, cost without the Project can be estimated at around D8 billon per year, or a cost saving with Project of D2.5 million per year. This might increase to around D4 billion if the Ha Tay section of 24 km is included. If these savings replace the incremental costs of D12 billion per year assumed by PCR, EIRR increases to 62.3%.

(ii)

(iii)

13. Increase in the river level at which damage is avoided would reduce EIRR as shown in Table A5.3: Table A5.3: Reduction in EIRR with Increase in Minimum River Depth Causing Breach
Probability of break reduced to zero for flood of: Base case (adjusted) 9 meters 10 meters 11 meters 12 meters
EIRR = economic internal rate of return. Source: Calculated by OEM.

EIRR (%) 60.0 57.9 50.6 37.3 16.5

2.

Cost of Damage

14. A further factor influencing the level of avoided damages is Hanois development rate over the past 10 years. A major breach of the Hanoi dike in 2005 would have enormous economic consequences. Family and business assets have increased rapidly since the initial assessment was made, suggesting that the damage bill might be substantially higher than the updated appraisal estimates. However, damage (and loss of life) would largely be determined by the length of notice provided of an impending breach. BME argued that damage would be limited, since most residents and businesses are in high buildings, so people and valuable possessions could be moved to higher floors. Appraisal damage estimatesas updated and somewhat reduced by PCRare retained. 15. Other factors which are important in the Hanoi dikes economic assessment include savings due to avoided deaths and motor vehicle benefits (and costs) due to the dike road construction.

42

Appendix 5

3.

Avoided Deaths

16. The appraisal report and PCR do not attempt to value the cost of loss of life. However, deaths may cause economic loss comparable with property losses. No accurate information is available on the likely loss of life in the event of a breach of the Hanoi dike. However, feasibility studies undertaken for dike rehabilitation list damage and deaths from flooding and typhoons for 19711990. Damage over this period amounted to $343 million, while almost 4,000 lives were lost, suggesting property damage of around $86,000 per life lost. If this level is doubled to allow for the relatively low property damage due to lives lost at sea during typhoons, annualized property losses (estimated at D632 billion/year by PCR) would equate to around 225 lives per year. 17. A recent study2 used a contingent valuation methodology to assess the value of statistical life (VSL) based on peoples willingness to pay to avoid death due to landmines or unexploded ordinance in Thailand. This indicated a VSL in rural northeastern Thailand of $0.2$0.3 million. Other studies have indicated a VSL of between 137 and 195 times Gross Domestic Product per capita. The average of these estimates would provide a VSL of around $190,000 for Hanoi in 2005. This would suggest a value of lives saved of approximately $43 million per year, comparable with the saving in damage of around $40 million estimated by PCR. The analysis would suggest that the value of lives saved could be at least as high as the physical damage caused by a breach in the dike. While avoided death benefits appear high, they are calculated in relation to PCR estimates of potential damagelikely to be significantly overestimated. Further research would be necessary to define more accurate estimates of the likely value of avoided deaths. While such an exercise might be worthwhile in a detailed reevaluation of dike economics, it cannot be justified in relation to the general estimates of Appraisal Report, PCR, and Project Performance Audit Report. 4. Transport Benefits

18. No assessment has been made of the transport benefits resulting from dike rehabilitation and road construction to date. OEM attempted to evaluate them but it was not possible to obtain the before and after project traffic counts, and origin and destination surveys that would be required to complete the analysis. However, it is evident that the road is now economically valuable to Hanoi, both as a major thoroughfare and as a market and truck park. 5. Conclusion

19. If the factors listed in Section 1 above and the estimated avoided deaths in Section 3 are applied to the sensitivity analysis relating to minimum flood height at which damage is sustained, EIRR would change in relation to minimum breach height as shown in Table A5.4.

Barns, S. et al. 2003. Valuing the Risk of Death and Injury from Landmines in Thailand. University of Waikato. New Zealand.

Appendix 5

43

Table A5.4: Hanoi Dike EIRR at Various Levels of River Level at which Breaches Occur
Probability of break reduced to zero for flood of: Base case (adjusted) 9 meters 10 meters 11 meters 12 meters
EIRR = economic internal rate of return. Source: Calculated by OEM.

EIRR (%) 62.3 60.1 52.9 40.0 19.7

21. Overall, it is considered that subproject EIRR based on damage avoided might be 20 40%. If savings of life benefits are added, EIRR with no breach below a 12 m flood would be 35%, and this level is assumed in relation to the overall assessment of project performance. C. Irrigation Projects 1. Assumptions

22. Assumptions are included in the Tables A5.11 to A5.16. The main changes to the PCR assumptions are discussed in the following sections. 2. Capital Costs

23. PCR data from the Central Project Office is used. However, the level of farmer-funded tertiary and on-farm canal upgrading costs have increased from PCR level of D3 billion to D10 billion per year for Song Chu (but still far below the BME level of D25 billion). A level of D5 billion per year has been assumed for North Nghe An, which is reported by the North Nghe An Irrigation Company to have around 90% of its tertiary canals upgraded (compared with about 60% for Song Chu). Farmer canal upgrading costs include both the 60% farmer contribution and the 40% government subsidy under the canal and ditch stabilization program. 3. Irrigated Area a. Song Chu

24. It is surprising that there is still considerable uncertainty about the cultivated area of the Song Chu scheme. The report and recommendation of the President assumed a cultivable area of 50,000 ha and a without project cropping intensity of 192%. PCR adopted the BME conclusion that irrigated area had increased to 50,933 ha. While this may be correct, this significantly overstates the area actually supplied from the Song Chu scheme, which was estimated by Song Chu Irrigation Company (SCIC) during OEM as summarized in Table A5.5.

44

Appendix 5

Table A5.5: SCIC Cropping 1997 to 2006

(ha)
Year Winter-Spring Crop Full irrigation Partial irrigation Pumped Total Summer-Autumn Crop Full irrigation Partial irrigation Pumped Total Third Crop 1997 26,716 8,756 3,676 39,148 1998 27,738 8,066 3,607 39,411 1999 27,648 8,192 3,537 39,377 2000 28,534 7,387 3,468 39,389 2001 28,617 7,633 3,399 39,649 2002 29,045 7,669 2,921 39,635 2003 29,142 7,299 2,956 39,397 2004 31,380 7,275 2,947 41,601

27,655 7,139 3,676 38,470 14,300

27,876 7,372 3,607 38,855 14,850

28,228 7,007 3,537 38,772 15,000

29,269 6,184 3,468 38,921 14,900 93,210

29,492 6,229 3,399 39,120 15,300 94,069

28,350 7,792 2,862 39,004 15,300 93,939

29,246 7,793 2,851 39,890 15,700 94,987

30,039 7,015 2,857 39,911 15,850 97,362

Total 91,918 93,116 93,149 ha = hectare, SCIC = Song Chu Irrigation Company. Source: Song Chu Irrigation Company.

25. These data are assumed to represent the with project situation. The differences are most pronounced in Tho Xuan, Quang Xuong, and Trieu Son districts. The difference in Thanh Hoa may be due to urban expansion. However, the remaining differences require further analysis by SCIC, as they could not be resolved during OEM. Table A5.6: SCIC - Irrigated Areas by District SCIC (ha) 5,004 4,114 6,229 1,788 10,490 7,773 6,203 41,601 BME (ha) 6,433 10,600 3,000 12,400 11,000 7,500 50,933

Th Xuan Thieu Hoa Dong Son Thanh Hoa (city) Quang Xuong Trieu Son Nong Cong Total

BME = benefit monitoring and evaluation, ha = hectare, SCIC = Song Chu Irrigation Company. Source: Song Chu Irrigation Company.

Appendix 5

45

Table A5.7: Song Chu Area and Yield by Class of Irrigationa

1997 A. Winter-Spring Crop 1. Full Irrigation Area (ha) Yield (t/ha) Production (t) 2. Partial Irrigation Area (ha) Yield (t/ha) Production (t) 3. Source Provision Area (ha) Yield (t/ha) Production (t) Average Yield (t/ha) B. Summer-Autumn Crop 1. Full Irrigation Area (ha) Yield (t/ha) Production (t) 2. Partial Irrigation Area (ha) Yield (t/ha) Production (t) 3. Source Provision Area (ha) Yield (t/ha) Production (t) Average Yield t/ha C. Third Crop Source Provision 1998 1999 2000 2001 2002 2003 2004 Mean 28,603 5.91 168,961 7,785 4.99 38,858 3,314 3.37 11,165 5.51

26,716 27,738 27,648 28,534 28,617 29,045 29,142 31,380 5.62 5.08 5.37 5.56 5.63 6.49 6.54 6.81 150,055 140,843 148,400 158,537 161,077 188,487 190,619 213,670 8,756 8,066 8,192 7,387 7,633 7,669 7,299 7275 4.65 4.23 4.59 4.80 4.85 5.56 5.63 5.81 40,695 34,131 37,616 35,428 37,014 42,675 41,071 42,236 3,676 3,607 3,537 3,468 3,399 2,921 2,956 2,947 3.18 2.99 3.19 3.29 3.32 3.64 3.67 3.87 11,677 10,767 11,271 11,400 11,289 10,641 10,861 11,411 5.17 4.71 5.01 5.21 5.28 6.10 6.16 6.43

27,655 3.22 89,063 7,139 3.05 21,781 3,676 2.25 8,258 3.10

27,876 28,228 29,269 29,492 28,350 29,246 30,039 3.26 3.91 4.81 4.33 4.66 4.78 4.99 90,969 110,234 140,876 127,733 132,030 139,735 149,953 7,372 7,007 6,184 6,229 7792 7,793 7,015 2.94 3.29 3.35 3.47 4.16 4.27 4.48 21,696 23,027 20,731 21,609 32,432 33,266 31,432 3,607 3,537 3,468 3,399 2,862 2,851 2,857 2.17 2.54 2.91 2.90 3.25 3.27 3.43 7,815 8,997 10,080 9,865 9,307 9,312 9,813 3.10 3.67 4.41 4.07 4.46 4.57 4.79

28,769 4.26 12,2574 7,066 3.64 25,747 3,282 2.80 9,181 4.02

Area (ha) Yield (t/ha) Production (t)

14,300 2.31 33,065

14,850 2.77 41,150

15,000 2.90 43,503

14,900 3.04 45,231

15,300 3.14 47,997

15,300 3.14 47,997

15,700 3.16 49,546

15,850 3.18 50,459

15,150 2.96 44,868

ha= hectare, t = ton. a Source provision is where water is provided only to the secondary canal level with no guarantee of supply to field canals, meaning that farmers may have to rely on pumping from supply or drainage canals. Source: Song Chu Irrigation Company.

46

Appendix 5

Table A5.8: Song Chu Area and Yield Inside and Outside System
1997 1998 1999 2000 2001 2002 2003 2004 Trend (%) Gain (t/ha)

A. Winter-Spring Crop 1. Inside System Area (ha) 35,471 35,804 35,839 35,921 36,250 39,637 Production (t) 188,102 178,780 191,524 198,220 202,205 244,665 Yield (t/ha) 5.30 4.99 5.34 5.52 5.58 6.17 2. Outside System Area (ha) 8,375 8,334 8,201 8,165 8,050 8,335 Production (t) 30,467 28,671 29,701 30,904 30,859 35,897 Yield (t/ha) 3.64 3.44 3.62 3.78 3.83 4.31 B. Summer-Autumn Crop 1. Inside System Area (ha) 34,793 35,248 35,235 35,453 35,721 39,105 Production (t) 118,474 120,350 142,256 147,891 151,758 181,899 Yield (t/ha) 3.41 3.41 4.04 4.17 4.25 4.65 2. Outside System Area (ha) 8,957 8,957 8,941 8,957 8,760 8,620 Production (t) 17,503 20,460 21,411 21,869 22,258 24,225 Yield (t/ha) 1.95 2.28 2.39 2.44 2.54 2.81 C. Third Crop 1. Inside System Area (ha) 14,300 14,850 15,000 14,900 15,300 15,300 Production (t) 33,065 41,150 43,503 45,231 47,997 47,997 Yield (t/ha) 2.31 2.77 2.90 3.04 3.14 3.14 2. Outside System Area (ha) 5,450 5,450 5,500 5,250 5,050 5,050 Production (t) 16,019 12,549 12,358 13,931 11,617 11,617 Yield (t/ha) 2.94 2.30 2.25 2.65 2.30 2.30 ha = hectare, t = ton. Source: Song Chu Irrigation Company.

39,399 245,198 6.22 8,304 36,371 4.38

39,181 253,682 6.47 8,188 37,337 4.56

1.8 5.4 3.6 (0.2) 3.9 4.0

1.17

0.92

38,803 184,443 4.75 8,454 23,943 2.83

38,825 193,076 4.97 8,432 25,097 2.98

1.9 7.8 5.8 (1.0) 4.5 5.6

1.57

1.02

15,700 49,546 3.16 5,150 11,927 2.32

15,850 50,459 3.18 5,150 12,011 2.33

1.3 5.2 3.8 (1.2) (3.1) (2.0)

0.87

(0.61)

Table A5.9: North Nghe An Area and Yield by Class of Irrigation

1997
A. Winter-Spring Crop 1. Full Irrigation Area (ha) Yield (t/ha) Production (t) 2. Partial Irrigation Area (ha) Yield (t/ha) Production (t) 3. Source Provision Area (ha) Yield (t/ha) Production (t) Average Yield t/ha B. Summer-Autumn Crop 1. Full Irrigation Area (ha) Yield (t/ha) Production (t) 2. Partial Irrigation Area (ha) Yield (t/ha) Production (t) 3. Source Provision Area (ha) Yield (t/ha) Production (t) Average Yield t/ha C. Third Crop Source provision Area (ha) Yield (t/ha) Production (t) 15,802 5.90 94,359 2,944 5.26 15,477 8,692 5.19 45,101 5.65 14,828 4.81 71,678 3,373 4.41 14,928 8,492 4.51 38,439 4.68

1998
15,882 5.88 94,638 2,960 5.21 15,325 8,737 5.05 44,048 5.58 14,904 4.82 73,030 3,390 4.42 15,064 8,535 4.52 38,811 4.73

1999
15,962 5.79 93,685 2,974 5.16 15,376 8,781 4.95 43,566 5.51 14,979 4.78 72,948 3,407 4.38 14,938 8,477 4.48 38,131 4.69

2000
15,995 5.86 94,758 2,980 4.96 15,521 8,799 4.91 43,607 5.54 15,009 4.34 65,446 3,413 4.08 14,119 8,595 4.26 36,758 4.31

2001
16,045 5.80 93,512 2,991 5.17 15,418 8,827 4.89 43,395 5.47 15,056 4.78 73,418 3,426 4.38 14,822 8,623 4.52 38,871 4.69

2002
16,100 5.82 94,222 3,004 5.23 15,646 8,845 4.93 43,819 5.50 15,075 4.75 73,076 3,423 4.39 14,911 8,643 4.55 39,210 4.69

2003
16,115 5.84 94,731 3,020 5.38 16,214 8,830 5.04 44,751 5.57 15,065 4.83 74,288 3,397 4.47 15,031 8,663 4.63 40,047 4.77

2004
16,129 5.92 96,239 3,030 5.45 16,466 8,822 5.16 45,889 5.67 15,078 5.13 78,602 3,420 4.52 15,370 8,697 4.70 40,778 4.95

Mean
16,004 5.91 94,518 2,988 5.25 15,680 8,792 5.04 44,272 5.56 14,999 4.85 72,811 3,406 4.37 14,898 8,591 4.53 38,881 4.69 5,512 2.55 14,065

5,266 5,567 4,802 4,751 5,895 5,919 5,940 5,957 2.26 2.18 2.40 2.51 2.61 2.66 2.72 2.80 12,094 12,374 11,753 12,100 15,516 15,828 16,144 16,711

ha = hectare, t = ton. Source: North Nghe An Irrigation Company.

Appendix 5

47

Table A5.10: North Nghe An Area and Yield Inside and Outside System
1997 A. Winter-Spring Crop 1. Inside System Area (ha) Production (t) Yield (t/ha) 2. Outside System Area (ha) Production (t) Yield (t/ha) B. Summer-Autumn Crop 1. Inside System Area (ha) Production (t) Yield (t/ha) 2. Outside System Area (ha) Production (t) Yield (t/ha) 1998 1999 2000 2001 2002 2003 2004 Trend (%) Gain (t/ha)

27,438 27,579 27,717 27,774 27,863 27,878 27,910 27,930 156,867 154,333 150,150 156,140 159,181 161,222 163,670 166,600 5.72 5.60 5.42 5.62 5.71 5.78 5.86 5.96 10,538 53,661 5.09 10,397 50,399 4.85 10,250 50,128 4.89 10,202 51,990 5.10 10,113 49,163 4.86 10,107 50,901 5.04 10,093 51,871 5.14 10,092 53,039 5.26

0.9

0.25

0.7

0.16

26,693 26,829 26,863 27,017 27,105 26,918 27,224 27,178 123,047 119,159 112,820 114,349 110,492 11,2178 116,823 118,435 4.61 4.44 4.20 4.23 4.08 4.17 4.29 4.36 11,860 48,101 4.06 11,724 50,367 4.30 11,690 46,718 4.00 11,536 46,001 3.99 11,448 44,432 3.88 11,420 45,246 3.96 11,412 46,372 4.06 11,390 46,985 4.13

0.2 (0.5) (0.7) (0.6) (0.8) (0.3)

(0.25)

0.07

C. Third Crop 1. Inside System Area (ha) 5,266 5,567 Production (t) 12,094 12,374 Yield (t/ha) 2.30 2.22 2. Outside System Area (ha) 3,839 4,106 Production (t) 8,003 8,247 Yield (t/ha) 2.08 2.01 ha = hectare, t = ton. Source: North Nghe An Irrigation Company.

4,802 11,753 2.45 3,970 8,584 2.16

4,751 10,347 2.18 3,898 7,909 2.03

5,895 12,043 2.04 4,490 8,622 1.92

58,95 12,453 2.11 4,504 9,335 2.07

5,904 12,866 2.18 4,574 10,060 2.20

5,956 13,264 2.23 4,579 10,623 2.32

(1.0)

(0.07)

1.2

0.24

D.

Paddy Price

Figure A5.1: Viet Nam Rice Export Price Comparative Trends 26. Viet Nam has been the worlds second largest 100% rice exporter over the past decade, behind Thailand Vn as percent of Thai 90% and marginally ahead of the price United States and India. Vn as percent of world Viet Nams annual exports price 80% have exceeded 3 million Linear (Vn as percent of world price) tons since 1996, with a 70% Linear (Vn as percent peak of 4.5 million tons in of Thai price) 1999 (Appendix 2, Table 60% A2.3). At the same time, 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Viet Nams relative prices have risen (erratically) from Vn = Viet Nam. around 70% of Thai price in Source: Food and Agriculture Organization Agristat database. 1994 to almost 90% in 2003a commendable achievement (Figure A5.1).

27. BME and PCR analysis was based on Bangkok rice price. However, since Viet Nam is a major rice exporter, it was considered preferable to base the OEM analysis on Viet Nams own

48

Appendix 5

rice export performance. This should more nearly reflect the actual economic farmgate value of paddy. Prices were similar in most years as shown in Table A5.11 below. However, prices derived from Viet Nam export data were significantly higher in 1998, 1999, and 2002. Table A5.11: Farmgate Economic Rice Price Estimates, Based on Vietnamese and Thai Export Prices
(2005D/kg) Basis OEM PCR 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Viet Nam 2,114 2,407 2,083 1,553 1,304 1,758 1,531 1,484 2,001 1,622 1,532 Bangkok 2,183 2,286 1,815 1,524 1,298 1,443 1,505 1,540

D = Vietnamese dong, kg = kilogram, OEM =Operations Evaluation Mission,, PCR = ADB Project Completion Report. Sources: Export values 19942003 from FAO Agristat data, 2004-07 from WB Commodity Price Projections.

E.

Results

28. Results of the economic analysis for Song Chu are included in Tables A5.12A5.14, and for North Nghe An in Tables A5.1517. Hanoi Dyke performance is assessed in Tables A5.18 A5.21. Table A5.12: Song Chu Subproject Investment Costs, Crop Areas and Incremental Benefits
Item A. Investment Costs Total Foreign Cost Total Local Cost Total Investment Cost Dollar Equivalent Total O&M Cost Savings Net Cost B. Economic Costs Foreign Cost (2002 D) Local Cost (2002 D) Total Investment cost Equivalent Cost in 2002 Incremental O&M Costs Total Economic Cost C. Land Use (Without Project) Full Irrigation Partial Irrigation Pumped Area Total Irrigated Unirrigated Total Irrigable Area Cropped Area Cropping Intensity (With Project) Full Irrigation Partial Irrigation Pumped Area Unirrigated Total Cropped Area Cropping Intensity Units (D billion) (D billion) (D billion) ($ million) (D billion) (D billion) (D billion) (D billion) (D billion) ($ million) (D billion) (D billion) ('000 ha) ('000 ha) ('000 ha) ('000 ha) ('000 ha) ('000 ha) ('000 ha) (%) 1994 3.7 6.5 10.2 0.9 10.2 6.1 11.1 17.2 1.1 17.2 26.1 9.0 4.0 39.1 2.9 42.0 87.8 209 1995 2.4 4.5 6.8 0.6 6.8 4.0 6.5 10.6 0.7 10.6 26.1 9.0 4.0 39.1 2.9 42.0 88.4 210 1996 10.0 27.8 37.8 3.4 (1.2) 36.7 15.1 37.4 52.5 3.4 (1.2) 51.3 26.1 9.0 4.0 39.1 2.9 42.0 89.7 214 1997 8.4 24.1 42.6 3.7 (2.3) 40.2 12.2 43.0 55.3 3.6 (2.3) 52.9 26.1 9.0 4.0 39.1 2.9 42.0 90.0 214 1998 18.7 47.3 76.1 5.7 (3.5) 72.6 23.3 66.4 89.7 5.8 (3.5) 86.2 26.1 9.0 4.0 39.1 2.9 42.0 90.2 215 1999 13.8 41.4 65.2 4.7 (3.5) 61.7 17.2 56.3 73.5 4.7 (3.5) 70.0 26.1 9.0 4.0 39.1 2.9 42.0 90.4 215 2000 6.1 19.7 35.8 2.5 (3.5) 32.3 6.8 31.5 38.4 2.5 (3.5) 34.9 26.1 9.0 4.0 39.1 2.9 42.0 90.7 216 2001 3.1 7.0 20.1 1.4 (3.5) 16.6 3.3 17.7 20.9 1.3 (3.5) 17.4 26.1 9.0 4.0 39.1 2.9 42.0 90.9 216 2002 2003 2004 2005 2006

10.0 0.7 (3.5) 6.5

10.0 0.6 (3.5) 6.5

10.0 0.6 (3.5) 6.5

10.0 0.6 (3.5) 6.5

10.0 0.6 (3.5) 6.5

10.0 10.0 0.6 (3.5) 6.5 26.1 9.0 4.0 39.1 2.9 42.0 91.2 217

9.5 9.5 0.6 (3.5) 6.0 26.1 9.0 4.0 39.1 2.9 42.0 91.4 218

9.5 9.5 0.6 (3.5) 6.0 26.1 9.0 4.0 39.1 2.9 42.0 91.6 218

9.5 9.5 0.6 (3.5) 6.0 26.1 9.0 4.0 39.1 2.9 42.0 91.6 218

9.5 9.5 0.6 (3.5) 6.0 26.1 9.0 4.0 39.1 2.9 42.0 91.6 218

('000 ha) ('000 ha) ('000 ha) ('000 ha) ('000 ha) (%)

26.1 9.0 4.0 2.9 87.8 209 39.1 38.5 10.2 87.8

26.1 9.0 4.0 2.9 88.4 210 39.1 38.5 10.8 88.4

26.5 8.9 3.8 2.9 89.7 214 39.1 38.5 12.1 89.7

26.7 8.8 3.7 2.9 91.9 219 39.1 38.5 12.3 90.0

27.7 8.1 3.6 2.6 93.1 222 39.1 38.5 12.5 90.2

27.6 8.2 3.5 2.6 93.1 222 39.1 38.5 12.8 90.4

28.5 7.4 3.5 2.6 93.2 222 39.1 38.5 13.0 90.7

28.6 7.6 3.4 2.4 94.1 224 39.1 38.5 13.3 90.9

29.0 7.7 2.9 2.4 93.9 224 39.1 38.5 13.5 91.2

29.1 7.3 3.0 2.6 95.0 226 39.1 38.5 13.8 91.4

31.4 7.3 2.9 0.4 97.4 232 39.1 38.5 14.0 91.6

31.4 7.3 2.9 0.4 97.4 232 39.1 38.5 14.0 91.6

31.4 7.3 2.9 0.4 97.4 232 39.1 38.5 14.0 91.6

D. Cropped Area (Without Project) Spring Rice ('000 ha) Summer Rice ('000 ha) OFC ('000 ha) Total ('000 ha)

Appendix 5

49
2005 41.6 39.9 15.9 97.4 2006 41.6 39.9 15.9 97.4

Item (With Project) Spring Rice Summer Rice OFC Total D. Crop Yields (Without Project) Winter/Spring Rice Summer/Autumn Rice Corn Vegetables Production Spring Rice Summer Rice Total Rice Production Total Value Production Costs Net Value of Production E. Crop Yields (With Project) Winter/Spring rice Summer/Autumn Rice Corn Vegetables Production Spring Rice Summer Rice Total Rice Production Total Value Total Costs

Units ('000 ha) ('000 ha) ('000 ha) ('000 ha)

1994 39.1 38.5 10.2 87.8

1995 39.1 38.5 10.8 88.4

1996 39.1 38.5 12.1 89.7

1997 39.1 38.5 14.3 91.9

1998 39.4 38.9 14.9 93.1

1999 39.4 38.8 15.0 93.1

2000 39.4 38.9 14.9 93.2

2001 39.6 39.1 15.3 94.1

2002 39.6 39.0 15.3 93.9

2003 39.4 39.9 15.7 95.0

2004 41.6 39.9 15.9 97.4

(t/ha) (t/ha) (t/ha) (t/ha) (t) ('000 t) ('000 t) ('000 t) (D billion) (D billion) (D billion) (t/ha) (t/ha) (t/ha) (t/ha) (t) ('000 t) ('000 t) ('000 t) (D billion) (D billion)

4.6 2.6 3.0 4.1 179.8 101.4 281.2 634.4 557.5 76.9 4.6 2.6 3.0 4.1 179.8 101.4 281.2 634.4 559.5 74.9 (2.0) 0.3

4.4 3.3 3.0 4.3 171.0 126.0 297.0 868.9 583.1 285.8 4.4 3.3 3.0 4.3 171.0 126.0 297.0 868.9 585.3 283.5 (2.2) 0.2

4.4 1.8 3.0 4.5 171.2 69.5 240.7 687.4 585.1 102.4 4.4 1.8 3.0 4.5 171.2 69.5 240.7 687.4 588.5 98.9 (3.5) 0.6

5.2 3.4 3.1 4.7 203.7 131.1 334.8 789.8 568.3 221.5 5.3 3.4 3.1 4.7 207.6 131.0 338.6 812.8 579.8 233.0 11.5 2.1

4.8 3.3 3.1 4.8 189.6 127.1 316.7 847.6 561.0 286.6 5.0 3.4 3.2 4.9 196.8 132.7 329.5 896.9 578.0 318.9 32.4 1.9

5.1 3.9 3.2 5.0 201.4 150.2 351.5 817.6 552.7 264.9 5.3 4.0 3.3 5.2 210.4 156.5 367.0 869.1 559.0 310.0 45.1 -0.5

5.3 4.0 3.2 5.2 208.2 154.0 362.2 648.8 558.0 90.8 5.5 4.2 3.4 5.4 217.4 162.4 379.7 693.7 564.1 129.7 38.9 1.0

5.4 4.0 3.2 5.2 210.5 155.9 366.4 567.9 555.3 12.6 5.6 4.2 3.4 5.4 221.2 166.2 387.4 614.7 564.9 49.8 37.2 1.8 35.4

6.0 4.5 3.2 5.2 233.8 171.4 405.2 806.4 572.5 233.9 6.2 4.7 3.4 5.4 244.7 181.4 426.1 861.5 580.5 281.0 47.1 1.0 46.1

6.0 4.6 3.2 5.2 235.8 175.3 411.1 724.7 547.5 177.2 6.2 4.8 3.4 5.4 245.2 189.6 434.8 780.5 559.6 220.9 43.7 2.0 41.7

6.3 4.8 3.2 5.2 245.6 183.8 429.4 733.6 562.6 171.1 6.5 5.0 3.4 5.4

6.3 4.8 3.2 5.2 245.6 183.8 429.4 950.3 563.3 386.9 6.5 5.0 3.4 5.4

6.3 4.8 3.2 5.2 245.6 183.8 429.4 786.7 563.3 223.5 6.5 5.0 3.4 5.4 269.4 198.5 467.8 866.5 589.7 276.8 53.3 53.3

269.4 269.4 198.5 198.5 467.8 467.8 809.5 1044.8 588.8 220.7 49.6 3.5 46.1 589.7 455.1 68.2 0.0 68.1

Net Value of Production (D billion) Incremental value Production (D billion) Additional Working Capital (D billion)

Total Incremental Benefit (D billion) (2.3) (2.4) (4.1) 9.5 30.4 45.6 37.9 D = Vietnamese dong, ha = hectare, O&M = operations and maintenance, OFC = other field crops. Source: OEM.

Table A5.13: Song Chu Financial Budgets for a Typical Farm (With and Without Project)
Without Project Spring Summer Maize Vegetables Rice Rice Total Farm Area Cropping Intensity (%) Cropped Area Farm Output a Farm Inputs Seed Fertilizer Agro-chemicals Other Costs Land Preparation Total Inputs ha ha D'000 D'000 D'000 D'000 D'000 D'000 D'000 93% 0.29 3,797 95 606 88 339 218 1,346 92% 0.28 2,781 91 565 86 333 215 1,290 15% 0.05 336 3 46 23 23 95 10% 0.03 175 With Project Farm Spring Summer Maize Vegetables Total Rice Rice 0.31 209% 99% 92% 21% 14% 0.65 0.31 0.28 0.07 0.04 7,088 4,170 2,908 516 271 189 101 1,245 644 174 93 709 360 471 232 2,788 1,431 4,300 2,739 142 4,158 83 34 50.4 91 566 86 333 215 1,291 1,617 5 79 33 33 149 367 Farm Total 0.31 226% 0.70 7,865 197 1,330 180 748 502 2,955 4,909 151 4,758 86 55.2

28 15 15 57

41 22 22 85 186

Net Farm Income D'000 2,451 1,491 241 118 b Interest D'000 Farm Income D'000 Family Labor pd/farm 35 34 8 5 Return/Day D'000 D = Vietnamese dong, ha = hectares, pd = person-day. a Excluding any cost for family labor. b Assuming short-term production loan for fertilizer and sprays at 10% interest. Source: OEM.

33

12

50

Appendix 5

Table A5.14: Song Chu Economic Internal Rate of Return

(constant 2002 D billion)
Total Incremental Net Cash Cost Benefit Flow 17.2 (2.3) (19.5) 10.6 (2.4) (13.0) 1.2 51.3 (4.1) (55.3) 2.3 52.9 9.5 (43.5) 3.5 86.2 30.4 (55.8) 3.5 70.0 45.6 (24.4) 3.5 34.9 37.9 3.0 3.5 17.4 35.4 18.0 3.5 6.5 46.1 39.6 3.5 6.0 41.7 35.7 3.5 6.0 46.1 40.1 3.5 6.0 68.1 62.1 3.5 6.0 53.3 47.3 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 31.5 3.5 28.0 50.3 22.3 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 31.5 3.5 28.0 50.3 22.3 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 31.5 3.5 28.0 50.3 22.3 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 3.5 (3.5) 50.3 53.8 EIRR 12.9% D = Vietnamese dong, EIRR = economic internal rate of return, O&M = operation and maintenance. Source: OEM. Calendar Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Investment Cost 17.2 10.6 52.5 55.3 89.7 73.5 38.4 20.9 10.0 9.5 9.5 9.5 Reduced O&M Cost

Appendix 5

51

Table A5.15: North Nghe An Investment Costs, Crop Areas and Incremental Benefits
1994 A. Investment costs Total Foreign Cost Total Local Cost Total Investment Cost Dollar Equivalent O&M Cost Savings Total Cost B. Economic Costs Foreign Cost (2002 D) Local Cost (2002 D) Total Investment Cost Equivalent Cost (2002 D) O&M Cost Savings D bil D bil D bil $ mil D bil D bil D bil D bil D bil $ mil D bil 2.4 3.8 6.2 0.6 6.2 4.0 6.6 10.6 0.7 1995 1.1 4.1 5.2 0.5 5.2 1.9 5.9 7.9 0.5 1996 1997 4.3 14.4 18.7 1.7 18.7 6.6 19.3 25.9 1.7 7.8 17.9 30.7 2.7 30.7 11.5 22.6 34.1 2.2 1998 10.8 33.7 49.5 3.7 49.5 13.7 39.0 52.7 3.4 1999 13.7 35.9 54.7 3.9 54.7 17.5 39.4 56.9 3.7 2000 9.1 27.2 41.2 2.9 41.2 10.4 28.8 39.2 2.5 2001 2.0 4.6 11.6 0.8 (0.8) 10.8 2.2 4.7 6.9 0.4 (0.8) 2002 2003 2004 2005 2006

5.0 0.3 (0.8) 4.2

5.0 0.3 (0.8) 4.2

5.0 0.3 (0.9) 4.1

5.0 0.3 (0.9) 4.1

5.0 0.3 (0.9) 4.1

(0.8)

(0.8)

(0.9)

(0.9)

(0.9)

Land UseWithout Project Total Irrigated '000 ha 21.9 21.9 23.0 23.0 23.0 23.0 23.0 23.0 23.0 Rainfed (Winter) '000 ha 7.6 7.6 6.8 7.1 7.1 7.1 7.1 6.9 6.8 Cropped Area '000 ha 49.6 50.0 50.9 51.7 52.6 52.6 52.6 52.4 52.1 Cropping Intensity % 168 169 171 172 175 175 175 175 175 With Project Total Irrigated '000 ha 21.9 21.9 23.0 24.1 26.1 28.1 30.1 29.9 29.8 Rainfed '000 ha 7.6 7.6 6.8 6.0 4.0 2.0 Cropped Area '000 ha 49.6 50.0 50.9 56.5 60.0 59.4 59.5 60.9 60.7 Cropping Intensity % 168 169 171 188 200 198 198 203 204 Cropped AreaWithout Project Spring Rice '000 ha 26.6 26.6 26.8 27.0 27.0 27.0 27.0 26.9 26.8 Summer Rice '000 ha 21.9 21.9 22.0 22.2 22.2 22.2 22.2 22.1 22.0 Other '000 ha 1.2 1.6 2.0 2.4 3.3 3.3 3.3 3.3 3.3 Total '000 ha 49.6 50.0 50.9 51.7 52.6 52.6 52.6 52.4 52.1 With Project Spring Rice '000 ha 27.8 26.6 26.8 27.4 27.6 27.7 27.8 27.9 27.9 Summer Rice '000 ha 27.0 21.9 22.0 26.7 26.8 26.9 27.0 27.1 26.9 Other '000 ha (5.2) 1.6 2.0 2.4 5.6 4.8 4.8 5.9 5.9 Total '000 ha 49.6 50.0 50.9 56.5 60.0 59.4 59.5 60.9 60.7 Without ProjectCrop Yields Spring Rice t/ha 3.9 4.3 4.3 4.8 4.9 4.9 5.0 5.0 5.1 Summer Rice t/ha 3.1 3.5 3.4 3.9 3.9 4.0 4.0 4.0 4.1 Corn t/ha 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 a Vegetables t/ha 6.6 6.7 6.8 6.9 7.0 7.1 7.2 7.3 7.3 Production (t) Spring rice '000 t 104.0 114.8 114.5 130.6 131.9 133.2 134.4 135.1 135.7 Summer Rice '000 t 68.7 75.8 75.7 86.3 87.1 88.0 88.8 89.2 89.7 Total Rice Production '000 t 172.7 190.6 190.2 216.9 219.0 221.1 223.2 224.3 225.4 Total Value D bil 358.7 525.4 496.5 477.0 552.6 486.1 372.3 318.6 422.4 Production Costs D bil 322.6 337.5 340.1 334.2 334.8 329.2 329.9 325.8 333.5 Net Value of Production D bil 36.1 187.9 156.3 142.7 217.8 156.9 42.5 (7.2) 88.9 With ProjectCrop Yields Spring Rice t/ha 3.9 4.3 4.3 4.8 4.9 5.1 5.2 5.3 5.4 Summer Rice t/ha 3.1 3.5 3.4 3.9 4.0 4.1 4.2 4.2 4.3 Corn t/ha 2.3 2.3 2.4 2.4 2.4 2.5 2.5 2.5 2.5 Vegetables t/ha 6.6 6.7 6.8 6.9 7.0 7.1 7.2 7.3 7.3 Production (t) Spring Rice '000 t 104.0 114.8 114.5 132.5 136.3 140.1 143.5 147.1 150.4 Summer Rice '000 t 68.7 75.8 75.7 103.6 106.5 109.1 112.2 115.0 116.7 Total Rice Production '000 t 172.7 190.6 190.2 236.1 242.8 249.2 255.7 262.1 267.0 Total Value D bil 358.7 525.4 496.5 517.6 628.4 556.6 434.8 389.5 517.1 Total Costs D bil 322.6 337.5 340.2 376.3 386.5 377.5 380.6 383.5 394.4 Net Value of Production D bil 36.1 187.9 156.3 141.3 241.9 179.2 54.2 6.0 122.7 Incremental Value Prod D bil 0.0 0.0 (1.4) 24.1 22.3 11.7 13.2 33.8 Additional Working Capital D bil 0.0 0.4 9.0 3.1 (0.8) 0.4 1.1 (27.6) Total Incremental Benefit D bil 0.0 (0.4) (10.5) 21.0 23.1 11.3 12.1 61.4 bil = billion, D = Vietnamese dong, ha = hectare, mil = million, O&M = operations and maintenance, t = ton. a Budgeted as sweet potatoes. Source: OEM.

23.0 23.0 23.0 6.6 6.5 6.5 51.9 51.7 51.7 175 175 175 19.5 10.1 29.6 19.7 9.8 29.5 19.7 9.8 29.5

26.7 21.9 3.3 51.9 27.9 27.2 5.9 61.0 5.1 4.1 2.3 7.3 136.3 90.1 226.4 372.9 318.7 54.2 5.5 4.4 2.5 7.3 153.7 120.5 274.2 467.0 378.2 88.8 34.7 34.7

26.5 21.8 3.3 51.7 27.9 27.2 6.0 61.1 5.2 4.1 2.3 7.3 136.9 90.5 227.4 363.6 323.9 39.6 5.6 4.5 2.5 7.3 157.0 122.7 279.7 461.5 388.0 73.4 33.8 33.8

26.5 21.8 3.3 51.7 27.9 27.2 6.0 61.1 5.2 4.1 2.3 7.3 136.9 90.5 227.4 480.9 325.8 155.1 5.6 4.5 2.5 7.3 157.0 122.7 279.7 605.2 389.6 215.6 60.5 60.5 157.0 122.7 279.7 499.1 389.6 109.5 38.7 38.7 136.9 90.5 227.4 394.7 323.8 70.9

52

Appendix 5

Table A5.16: North Nghe An Financial Budgets for a Typical Farm (With and Without Project)
Without Project Spring Summ- Maize VegeRice er Rice tables Total Farm Area Cropping Intensity (%) Cropped Area Farm Output a Farm Inputs Seed Fertilizer Agro-chemicals Other Costs ha ha D'000 D'000 D'000 D'000 D'000 117 3 0.36 0.30 0.01 3,125 2,064 40 116 528 110 306 95 433 91 252 1 17 11 0.03 247 7 44 With Project Farm Spring Summ- Maize VegeTotal Rice er Rice tables 0.31 228 93 91 4 15 0.71 0.29 0.28 0.01 0.05 5,476 2,648 2,070 54 349 218 1,022 201 557 92 525 88 243 90 510 85 237 1 20 10 62 Farm Total 0.31 223 0.69 5,121 192 1,118 173 480 1,964 3,157 129 3,028 124 24.5

Total Inputs D'000 Net Farm Income D'000 b Interest D'000 Farm Income D'000 Family Labor (person days) /farm Return/Day D'000 D = Vietnamese dong, ha = hectares. a Excluding any cost for family labor.
b

1,060 871 2,065 1,194

18 22

51 196

77

62

1,999 948 922 3,476 1,700 1,148 122 3,354 147 58 55 22.9

22 32

72 277

Assuming short-term production loan for fertilizer and sprays at 10% interest. Source: OEM.

Table A5.17: North Nghe An Economic Internal Rate of Return

(constant 2002 D billion)
Calendar Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Investment Cost 10.6 7.9 26.5 34.4 52.5 55.7 39.1 6.9 Reduction in O&M Cost Total Cost 10.6 7.9 26.5 34.4 52.5 55.7 39.1 6.1 (0.8) (0.8) (0.8) 22.0 (0.8) (0.8) (0.8) (0.8) 22.0 (0.8) (0.8) (0.8) (0.8) 22.0 (0.8) (0.8) (0.8) (0.8) 22.0 (0.8) (0.8) (0.8) Incremental Benefit Project Cashflow

(10.6) 0.0 (7.9) (0.4) (26.9) (9.3) (43.8) 20.1 (32.4) 18.7 (36.9) 11.0 (28.1) 0.8 11.1 5.0 0.8 33.2 34.0 0.8 37.3 38.1 0.8 42.1 42.9 22.8 0.8 60.5 38.5 0.8 38.6 39.4 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 22.8 0.8 32.9 10.9 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 22.8 0.8 32.9 10.9 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 22.8 0.8 32.9 10.9 0.8 32.9 33.7 0.8 32.9 33.7 0.8 32.9 33.7 EIRR 11.4% D = Vietnamese dong, EIRR = Economic Internal Rate of Return, O&M = operations and maintenance. Source: OEM.

Appendix 5

53

Table A5.18: Hanoi Dike Financial Investment Cost

(current D million)
1994 A. Investment Costs Foreign Exchange Costs Civil Works Material Equipment Survey/Design Consulting Service Total Foreign Cost Local Costs Civil Works Material Equipment Survey/Design Consulting Service Incremental Operating Land Acquisition Other Total Local Cost Total Investment Cost Dollar Equivalent 1995 1996 1997 1998 1999 2000 2001

D mil D mil D mil D mil D mil

3,727

2658 554

2,215 291 225 2,732

11,054 813 190 12,057

6,928 7,673

18,894 490 479

24,980

11,748

592 4,319 3212

219 25,200

438 12,187

14,600

19,863

D mil D mil D mil D mil D mil D mil D mil D mil D mil D mil $'000

7,235 2,170 723

7492

7,425 375 1,932 316 1,110 132 11,290 14,022 1,271

26,817

21,313 14,894 1,925 443 13,258 93 51,926 66,527 5,003

55,526

62,767

32,987

771 225 10,089 37,900 49,957 4,398

1,450 348 23,727 1,671 82,721 102,585 7,357

268 303 2,402 65,741 90,941 6,408

536 403 7,920 2,155 44,001 56,187 3,784

10,129 14,448 1,318

7492 10,703 970

B. Recurrent, Admin, O&M Other O&M D mil 361 629 Total O&M D mil 361 629 Total Cost D mil 14,809 11,332 D = Vietnamese dong, O&M = operations and maintenance. Source: OEM.

979 979 15,001

2,228 2,228 52,185

3,891 3,891 70,418

6,456 6,456 10,9041

8,730 8,730 99,670

10,134 10,134 66,322

Table A5.19: Hanoi Dike Economic Investment and O&M Cost

(constant 2002 D million)
Foreign Investment Cost Current Dollars MUV Index (2002 = 1.00) Cost in Constant 2002 $ Cost in Constant 2002 D Local Investment Cost Border Price Adjustment GDP Deflator Local Cost in Constant 2002 D Total Economic Investment Cost Equivalent Cost in 2002 $ Total Incremental O&M D mil $'000 $'000 D mil D mil D mil D mil D mil $ mil D mil 1994 4,319 394 1.19 468 7,247 10,129 10,129 100 17,321 24,568 1,585 1995 3,212 291 1.26 366 5,671 7,492 7,492 117 10,946 16,616 1,072 1996 2,732 248 1.19 296 4,586 11,290 11,290 127 15,176 19,762 1,275 1997 12,057 1,061 1.11 1,180 18,287 37,900 37,900 136 47,790 66,077 4,263 1998 14,600 1,098 1.07 1,174 18,204 51,926 51,926 148 60,160 78,363 5,056 (1,725) 1999 19,863 1,424 1.07 1,518 23,535 82,721 82,721 156 90,640 114,174 7,366 (2,684) 2000 25,200 1,776 1.04 1,853 28,716 65,741 65,741 161 69,659 98,375 6,347 2001 12,187 821 1.01 831 12,882 44,001 44,001 165 45,732 58,614 3,782 2002

1.00

171

(512) (1,067)

(3,511) (4,003)

Average Exchange Rate D'000/$ 10.96 11.03 11.03 11.36 13.30 13.94 14.19 14.85 15.50 D = Vietnamese dong, GDP = gross domestic product, MUV = manufacturing unit value, O&M = operation and maintenance. Sources: World Bank, Commodity Price Projections (July 2003) and ADB. Recent Conversion Factors for the Economic Analysis of Projects (Oct 1995) SCF = 1.00 (no adjustment in base case).

54

Appendix 5

Table A5.20: Total Damage from Floods

(D billion)
Flood Losses Losses Rural Agric Infra Commerce Recon- Total Probability Damage Probability Damage Level (m) N Hanoi S Hanoi Household Prod structure struction w/o Proj w/o w/Project With A. Tien Tan 9 348 133 30 361 29 9 909 10 266 348 239 53 640 51 9 1,606 11 266 480 305 53 788 63 9 1,965 12 365 480 359 53 902 72 9 2,240 13 688 867 578 116 1,600 128 9 3,985 0.0385 154 0.0113 45 14 807 900 790 118 1,873 150 9 4,649 0.0090 42 0.0048 22 15 807 913 790 118 1,883 151 9 4,671 0.0035 16 0.0035 16 Site Total 0.0510 212 0.0196 84 B. West Lake 9 266 10 365 11 688 12 807 13 999 14 1,069 15 1,131 Site Total C. Thanh Tri 9 10 11 12 13 14 15 Site Total 348 480 480 769 769 867 867 133 199 199 451 451 578 578 30 30 30 86 86 86 86 361 509 509 1,115 1,115 1,357 1,357 29 41 41 89 89 109 109 9 9 9 9 9 9 9 909 1,268 1,268 2,786 2,786 3,370 3,370 348 348 480 480 867 900 900 239 266 491 558 856 910 936 53 53 83 83 118 136 136 640 734 1,244 1,384 2,042 2,159 2,226 51 59 100 111 163 173 178 9 9 9 9 9 9 9 1,606 1,833 3,095 3,431 5,056 5,357 5,516

0.0385 0.0096 0.0035 0.0516

195 51 19 266

0.0113 0.0048 0.0035 0.0196

57 26 19 102

266 266 365 365

0.0404 0.0094 0.0035 0.0533 0.0520

113 32 12 156 211

0.0113 0.0048 0.0035 0.0196 0.0196

31 16 12 59 82 129

Total Net Annual Benefits D = Vietnamese Dong, m = meter, N = north, S = South, w/o = without. Source: OEM.

Appendix 5

55

Table A5.21: Economic Internal Rate of Return (EIRR)

(constant 2002 D billion)
Calendar Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Investment Capital Cost Reinv 24.6 16.6 19.8 66.1 78.4 114.2 98.4 79.9 58.6 Incremental O&M Total Cost 24.6 16.6 19.2 65.0 76.6 111.5 174.8 54.6 (4.0) (4.0) (4.0) 91.3 (4.0) (4.0) (4.0) (4.0) 91.3 (4.0) (4.0) (4.0) (4.0) 91.3 (4.0) (4.0) (4.0) (4.0) 91.3 (4.0) (4.0) (4.0) Incremental Benefit Project Cash Flow (24.5) (16.6) (19.2) (65.0) (76.6) (111.5) 84.2 204.3 262.9 262.9 262.9 167.6 262.9 262.9 262.9 262.9 167.6 262.9 262.9 262.9 262.9 167.6 262.9 262.9 262.9 262.9 167.6 262.9 262.9 262.9 35.7%

95.3

95.3

95.3

95.3

(0.5) (1.1) (1.7) (2.7) (3.5) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0)

258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 258.9 EIRR

D = Dong, O&M = operations and maintenance, Reinv = reinvestment. a 25% of civil works and equipment cost added every five years to cover major repairs Source: OEM.

56

Appendix 5

Table A5.22: Overall Economic Internal Rate of Return (EIRR)

(constant 2002 D billion)
Calendar Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Investment Cost 53.1 47.0 120.0 167.2 231.1 252.1 183.8 95.7 10.0 9.5 9.5 Capital Reinvestment Incremental O&M 0.0 0.0 (1.7) (3.4) (5.2) (6.2) (7.0) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (8.3) (4.3) (4.3) (4.3) (4.3) (4.3) Total Cost 53.1 47.0 118.4 163.8 225.9 245.9 256.7 87.4 1.7 1.2 1.2 119.3 (8.3) (8.3) (8.3) (8.3) 141.2 (8.3) (8.3) (8.3) (8.3) 141.2 (8.3) (8.3) (8.3) (4.3) 145.3 (4.3) (4.3) (4.3) Incremental Benefit (2.3) (2.4) (4.4) 0.3 50.0 61.9 307.7 304.9 366.1 338.9 305.3 387.3 350.5 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 341.8 EIRR Project Cashflow (55.4) (49.4) (122.8) (163.4) (175.9) (184.0) 51.0 217.4 364.4 337.7 304.2 268.0 358.8 350.1 350.1 350.1 200.6 350.1 350.1 350.1 350.1 200.6 350.1 350.1 350.1 346.1 196.6 346.1 346.1 346.1 22.7%

79.9

127.6 0.0 0.0 0.0 0.0 149.5 0.0 0.0 0.0 0.0 149.5 0.0 0.0 0.0 0.0 149.5

D = Vietnamese dong, O&M = operations and maintenance. Source: OEM.

Appendix 5

57

Table A5.23: Estimated Economic Prices for Internationally Traded Outputs

Item a Rice (export parity current $) Thailand Viet Nam MUV index (2002 = 1.00) Rice FOB Haiphong (2002 $) b Adjusted for Quality 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 321 315 367 388 321 285 267 205 222 218 213 251 209 214 267 285 244 273 227 192 168 224 191 186 220 183 1.19 1.26 1.19 1.11 1.07 1.07 1.04 1.01 1.00 1.08 1.15 1.19 1.16 254 335 340 271 292 242 200 170 224 205 214 251 209 229 302 306 244 263 218 180 153 201 184 193 226 188 3,548 4,675 4,746 3,778 4,079 3,381 2,791 2,366 3,123 2,859 2,988 3,505 2,910 71 93 95 76 82 68 56 47 62 57 60 70 58 3,477 4,581 4,651 3,702 3,998 3,313 2,735 2,319 3,060 2,802 2,928 3,435 2,852 240 240 240 240 240 240 240 240 240 240 240 240 240 30 30 30 30 30 30 30 30 30 30 30 30 30 40 40 40 40 40 40 40 40 40 40 40 40 40 3,167 4,271 4,341 3,392 3,688 3,003 2,425 2,009 2,750 2,492 2,618 3,125 2,542 2,059 2,776 2,822 2,205 2,397 1,952 1,576 1,306 1,788 1,620 1,702 2,031 1,652 30 30 30 30 30 30 30 30 30 30 30 30 30 2,029 2,746 2,792 2,175 2,367 1,922 1,546 1,276 1,758 1,590 1,672 2,001 1,622 2,200 2007 198 174 1.14 198 179 2,769 55 2,713 240 30 40 2,403 1,562 30 1,532

$/t $/t D/kg Losses and Exporter's Margin D/kg Ex-Haiphong Price D/kg Freight Project Area to Haiphong D/kg Milling Cost (net of bran value D25) D/kg Handling Charges within Project Area D/kg Ex-mill D/kg Conversion to Paddy 65% D/kg Storage, Handling, and Transport D/kg Economic Farmgate Price D/kg Financial Farmgate Price (from RRA) Maize (import parity) No 2 Yellow, Gulf Ports Shipping to Haiphong CIF Haiphong

109 109 109 109 108 98 91 97 99 98 97 84 82 30 30 30 30 30 30 30 30 30 30 30 30 30 139 139 139 139 138 128 121 127 129 128 127 114 112 2,155 2,155 2,155 2,155 2,139 1,982 1,874 1,965 2,002 1,982 1,970 1,768 1,734 Losses and Importer's Margin 43 43 43 43 43 40 37 39 40 40 39 35 35 Ex-Haiphong Price D/kg 2,198 2,198 2,198 2,198 2,182 2,022 1,911 2,005 2,042 2,021 2,010 1,804 1,769 Freight to Local Market (net) D/kg 240 240 240 240 240 240 240 240 240 240 240 241 242 Economic Farmgate Price D/kg 2,438 2,438 2,438 2,438 2,422 2,262 2,151 2,245 2,282 2,261 2,250 2,045 2,011 Farmgate Financial Price from RRA D/kg 2,306 CIF = cost insurance and freight, FOB = free on board, MUV = manufacturing unit value, No. = number, RRA = rapid rural appraisal. a Export values (19942003) from FAO Agristat data, 2004-07 from WB Commodity Price Projections.
b

2002$/t $/t $/t D/kg

88 30 118 1,822 36 1,858 243 2,101

Average markdown for lower quality of local sales = 10%. Source: World Bank. April 2005. Commodity Price Projections.

Table A5.24: Estimated Economic Prices for Internationally Traded Inputs

Item Urea FOB Europe (bagged) Shipping to Haiphong CIF Haiphong Local Handling and Transport Costs Economic Farmgate Price Triple Superphosphate (TSP) TSP (bulk Gulf) Estimated 44% Phosphate Bagged Shipping to Haiphong CIF Haiphong Local Handling and Transport Costs Economic Farmgate Price Potassium Chloride (KCl) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 $/t 2002$/t $/t $/t D/kg D/kg D/kg $/t $/t 2002$/t $/t $/t D/kg D/kg D/kg 148 212 205 146 103 78 104 101 104 125 169 172 131 96 73 100 100 97 30 30 30 30 30 30 30 30 30 178 242 235 176 133 108 134 131 134 2,759 3,751 3,643 2,728 2,063 1,671 2,075 2,031 2,073 300 300 300 300 300 300 300 300 300 3,059 4,051 3,943 3,028 2,363 1,971 2,375 2,331 2,373 2007

133 30 30 465 300 765

157 30 30 465 300 765

152 30 30 465 300 765

147 30 30 465 300 765

140 30 30 465 300 765

134 135 135 136 137 137 142 140 138 114 115 115 116 116 117 120 119 137 143 167 161 156 149 114 115 115 116 116 117 120 119 137 143 167 161 156 149 30 30 30 30 30 30 30 30 30 30 30 30 30 30 144 145 145 146 146 147 150 149 167 173 197 191 186 179 2,233 2,240 2,248 2,256 2,264 2,271 2,329 2,310 2,595 2,689 3,057 2,957 2,879 2,778 300 300 300 300 300 300 300 300 300 300 300 300 300 300 2,533 2,540 2,548 2,556 2,564 2,571 2,629 2,610 2,895 2,989 3,357 3,257 3,179 3,078

$/t 109 112 115 117 120 123 126 122 118 147 145 143 143 143 2002$/t 109 112 115 117 120 123 126 122 117 109 112 117 117 116 Shipping to Haiphong $/t 30 30 30 30 30 30 30 30 30 30 30 30 30 30 CIF Haiphong $/t 139 142 145 147 150 153 156 152 147 139 142 147 147 146 D/kg 2,157 2,200 2,243 2,286 2,329 2,372 2,415 2,356 2,279 2,151 2,198 2,283 2,279 2,259 Local Handling and Transport Costs D/kg 300 300 300 300 300 300 300 300 300 300 300 300 300 300 Economic Farmgate Price D/kg 2,457 2,500 2,543 2,586 2,629 2,672 2,715 2,656 2,579 2,451 2,498 2,583 2,579 2,559 CIF = cost insurance and freight, D = Vietnamese dong, FOB = free on board, kg = kilogram, t = ton. Source: World Bank. April 2005. Commodity Price Projections.

58

Appendix 5

Table A5.25: Summary of Economic Prices for Project Outputs and Inputs
Item Outputs Paddy Maize Potatoes Other Other Other Seed Paddy Maize Sweet Potatoes (retained) Other 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 D/kg D/kg D/kg D/kg D/kg D/kg D/kg D/kg D/kg D/kg 2,029 2,438 1,200 2,438 0 0 2,746 2,438 1,200 2,438 0 0 2,792 2,438 1,200 2,438 0 0 2,175 2,438 1,200 2,438 0 0 2,367 2,422 1,200 2,438 0 0 1,922 2,262 1,200 2,438 0 0 1,546 2,151 1,200 2,438 0 0 1,276 2,245 1,200 2,438 0 0 1,758 2,282 1,200 2,438 0 0 1,590 2,261 1,200 2,438 0 0 1,672 2,250 1,200 2,438 0 0 2,001 2,045 1,200 2,438 0 0 1,622 2,011 1,200 2,438 0 0 2007 1,532 2,101 1,200 2,438 0 0

4,057 5,493 5,584 4,350 4,734 3,845 3,092 2,552 3,516 3,180 3,343 4,002 3,245 3,064 4,875 4,875 4,875 4,875 4,844 4,524 4,303 4,489 4,564 4,523 4,499 4,090 4,021 4,202 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875 4,875

Fertilizer Urea D/kg 3,059 4,051 3,943 3,028 2,363 1,971 2,375 2,331 2,373 765 765 765 765 765 Phosphate D/kg 2,533 2,540 2,548 2,556 2,564 2,571 2,629 2,610 2,895 2,989 3,357 3,257 3,179 3,078 Potassium Chloride (KCl) D/kg 2,533 2,540 2,548 2,556 2,564 2,571 2,629 2,610 2,895 2,989 3,357 3,257 3,179 3,078 Organic D/kg 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Water Charges and Other Costs/Crop D'000/ha 251 251 251 251 251 251 251 251 251 251 251 251 251 251 Herbicide D'000/l 16 16 16 16 16 16 16 16 16 16 16 16 16 16 Fungicide D'000/l 200 200 200 200 200 200 200 200 200 200 200 200 200 200 Insecticide D'000/l 21 21 21 21 21 21 21 21 21 21 21 21 21 21 Cultivation D'000/ha 600 600 600 600 600 600 600 600 600 600 600 600 600 600 Labor D'000/day 20 20 20 20 20 20 20 20 20 20 20 27 27 27 Family D'000/day 15 15 15 15 15 15 15 15 15 15 15 15 15 15 D = Vietnamese dong, kg = kilogram, ha = hectare, l = liter. Source: World Bank, Commodity Price Projections, June 2003.

Appendix 6

59

OTHER STATISTICS Table A6.1: Average Poverty Levels by Region (% of households)

Region Northern Upland Central Highlands North Central Coast Viet Nam South Central Coast Mekong River Delta Red River Delta Southeast Rural 64 59 54 46 44 40 38 26 Urban 17 20 16 15 16 17 10 11

Source: Minot, N. and B. Baulch. 2002. The Spatial Distribution of Poverty in Vietnam and the Potential for Targeting. World Bank WPS 2829 (based on the Vietnam Living Standards Sample Survey).

Table A6.2: Viet Nam Paddy Production, Yield, and Apparent Consumption
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Trenda Area Harvested Production Yield (mil ha) (mil t) (t/ha) 6.6 23.5 3.57 2.0 3.1 6.8 25.0 3.69 2.0 3.1 7.0 26.4 3.77 3.0 4.6 7.1 27.5 3.88 3.6 5.5 7.4 29.1 3.96 3.7 5.7 7.7 31.4 4.10 4.5 6.9 7.7 32.5 4.24 3.5 5.3 7.5 7.5 7.4 7.4 1.2% 4.2% 3.0% 6.6% 32.1 34.4 34.5 35.5 4.29 4.59 4.63 4.80 3.7 5.7 3.2 5.0 3.8 5.9 4.1 6.5

Exports of Rice (mil t) Paddy Equivalent (mil t) Domestic Consumption Population Apparent Consumption

(mil t)

20.5

21.9 72.0

21.8 73.2

22.0 74.3

23.4 75.5

24.5 76.6

27.2 77.6

26.4 29.5 28.7 29.0 78.7 79.7 80.8 81.8

3.9% 1.4%

(million) 70.8 (kg/ person)

289

304

298

296

310

319

350

335

370

355

355

2.4%

ha = hectare, kg = kilogram, mil = million, t = ton. a Calculated using LOGEST -1 in Microsoft Excel. Sources: Food and Agriculture Organization for area, production, yield, and export data; Asian Development Bank (ADB) Developing Member Country (DMC) indicators database for population (2003/04 estimated).

60

Appendix 6

Table A6.3: Rice Export Quantity and Value for Major Exporters
Trenda (%) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Export Quantity (million t) Australia India Thailand United States Viet Nam Other World Export Value ($ billion) Australia India Thailand United States Viet Nam Other World Export Price ($/ton) Australia India Thailand United States Viet Nam Other World 0.6 0.9 4.9 2.8 2.0 6.8 18.0 0.5 4.9 6.2 3.1 2.0 5.8 22.5 0.6 2.5 5.5 2.6 3.0 5.6 19.7 0.7 2.4 5.6 2.3 3.6 6.5 21.0 0.6 5.0 6.5 3.1 3.7 9.9 28.8 0.7 1.9 6.8 2.7 4.5 8.7 25.3 0.6 1.5 6.1 2.7 3.5 9.1 23.6 0.6 2.2 7.7 2.6 3.7 10.0 26.8 0.3 5.1 7.3 3.3 3.2 8.4 27.6 0.1 3.4 8.4 3.8 3.8 8.0 27.5 (9.0) 5.8 5.1 2.1 6.6 4.8 4.3

0.2 0.4 1.6 1.0 0.4 2.7 6.3

0.2 1.4 2.0 1.0 0.5 2.4 7.5

0.2 0.9 2.0 1.0 0.9 2.7 7.7

0.3 0.9 2.2 0.9 0.9 2.6 7.8

0.2 1.5 2.1 1.2 1.0 3.5 9.6

0.3 0.7 2.0 0.9 1.0 3.0 7.9

0.2 0.7 1.6 0.8 0.7 2.5 6.5

0.2 0.7 1.6 0.7 0.6 3.2 7.0

0.1 1.2 1.6 0.8 0.7 2.4 6.8

0.1 0.9 1.8 1.0 0.7 2.5 7.1

(11.5) 2.2 (1.1) (2.4) 2.9 0.1 (0.4)

382 433 321 360 214 387 348

398 288 315 323 267 409 332

430 354 367 390 285 479 389

430 381 388 406 244 402 370

409 304 321 388 273 351 331

401 383 285 354 227 342 312

369 428 267 306 192 276 277

301 322 205 274 168 321 261

261 240 222 237 224 281 246

407 263 218 272 191 317 257

(2.8) (3.4) (5.9) (4.4) (3.5) (4.5) (4.6)

t = ton. a Calculated using LOGEST -1 in Microsoft Excel. Source: FAO database - http://faostat.fao.org/faostat/collections?subset=agriculture. .

MANAGEMENT RESPONSE ON THE PROJECT PERFORMANCE AUDIT REPORT FOR THE IRRIGATION AND FLOOD PROTECTION REHABILITATION PROJECT (Loan 1259-VIE[SF])

On 13 December 2005, the Director General, Operations Evaluation Department, received the following response from the Managing Director General on behalf of Management:

1. We find the OED Project Performance Audit Report (PPAR) evaluation objective in describing the implementation and outcomes of the Project. We appreciate that the report provides an insightful and balanced view of the Project. Although the project completion report (PCR) prepared in September 2003 rated the Project as partly successful, we support OEDs re-evaluation of the performance for an overall successful rating. This improvement in rating by OED was largely due to a reassessment of the economic returns from irrigation activities. 2. We note that the OED considers the Project to be relevant, efficacious, efficient and likely to be sustainable. It is considered relevant since the safety of the population in Hanoi was paramount, even though the original project did not fully account for the use of the dykes roads for transport, and that the project did not directly address efficient water distribution and failed to meet the desired gains in full irrigation areas. Similarly, the Project is rated as efficacious, both in terms of providing flood protection and improving irrigation efficiency and increasing incomes. OED also rates the project as efficient, with substantially higher recomputed EIRRs. The Project is considered to be sustainable given the importance placed on flood protection and generally satisfactory maintenance by Hanoi City, and high levels of commitment by farmers to irrigation, including high irrigation service fee collection and independent development of tertiary distribution facilities. 3. Other notable development impacts (both direct and indirect) include the improved security and well-being derived from the dyke system, stimulating investment due to flood protection, and improved transport network using the dyke road system. An increase in the water supply for irrigation has led to an increase in fully irrigated areas, although less than anticipated at appraisal. Reduced pumping costs for farmers due to improved hydraulic efficiency, and reduced labor for water lifting are additional benefits. Indirectly, poverty levels in the project area have reduced from 30% to 5-10% since the mid-1990s. 4. We note that the three supporting TAs1 have made a notable contribution to resettlement policy in Viet Nam, and have had considerable influence on the pilot testing of participatory irrigation management (PIM), which has been recently adopted by the Ministry of Agriculture and Rural Development (MARD)
1

TA 1968-VIE: Operation and Maintenance Strengthening TA 2869-VIE: Small Scale TA for Operation and Maintenance Development in the Irrigation Sector TA 3064-VIE Strengthening of Resettlement Management Capacity

as the model to be introduced at the secondary canal level in large schemes in all provinces by 2010. 5. The PPAR correctly points out that the Project was prepared and approved in 1993 without the benefit of a project preparation technical assistance, largely in response to considerable concerns related to the risk of failure of Hanois flood protection dyke and the need to rehabilitate the headworks and main canal systems of the Song Chu and North Nghe An irrigation systems. The PPAR criticizes the preparation of the project suggesting that there was a lack of a holistic approach to irrigation development, and a lack of definition of the project. In retrospect, and in the light of experience elsewhere over the last decade, we would agree with this observation. However, in the context of the perceived urgency of the works at the time, we consider that the decision to process the project as approved was appropriate given the engineering information available at the time and the concerns regarding the integrity of the dyke system protecting the nations capital from floods. The generally successful implementation of the project supports this decision. The fact that the rehabilitated dyke successfully protected the city from inundation during the 1996 and 2001 floods provides further support given the structural concerns and sand-boiling adjacent to the dyke observed at appraisal. Furthermore, the approval by ADB of the three supporting TA projects to assist in resettlement issues for the dyke and to improve irrigation operation and maintenance reflects an awareness of the need for a holistic approach to flood protection and irrigation development. 6. Many lessons have been learned through the implementation of the Project, and these have been presented in the PPAR in a constructive manner. Future projects will benefit from the lessons learned, and many similar lessons have already been incorporated into the design of ongoing and proposed projects. In particular, the observations relating to PIM, and how to improve it in future, the need for a holistic approach to irrigation (and flood control), as well as the observations that benefit monitoring and evaluation (BME) should support system management information, are relevant and well received. The appendices on physical infrastructure and PIM provide useful background information for future projects. With regard to follow-up, the actions proposed will be monitored in the context of ADBs future involvement in the irrigation sector.