Document of The World Bank

Report No: 35591

IMPLEMENTATION COMPLETION REPORT(CPL-42320 TF-29191)

ON A

LOAN

IN THE AMOUNT OF US$51.0 MILLION

TO THE STATE OF BAHIA

FEDERATIVE REPUBLIC OF BRAZIL

FOR A

BAHIA WATER RESOUCES MANAGEMENT PROJECT

June 28, 2006

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 24, 2006)

Currency Unit = Real (R$) R$1.00 = US$ 0.4652

US$ 1.00 = R$2.1498

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMSA, O&M Administration, Operation and

Maintenance PEACS Programa de Educação Ambiental e Comunicação Social

(Environmental Education and Social Communication Program) APL Adaptable Program Loan PGE Procuradoria Geral do Estado (General State Controller)

CAS Country Assistance Strategy PGRH Projeto de Gerenciamento de Recursos Hídricos

CERB Companhia de Engenharia Rural da Bahia PHRD Japan Policy and Human Resource Development Fund

CIRH Conselho Institucional de Recursos Hídricos

PIU Project Implementation Unit

CONAMA Conselho Nacional do Meio Ambiente PSB Painel de Segurança de Barragens CONERH Conselho Estadual de Recursos Hídricos

(State Water Resource Council) PSR Project Status Report

COMUA Comissão de Usuários de Água (Water Users Commissions)

QAG Quality Assurance Group

CRA Centro de Recursos Ambientais RAA Região Administrativa da Água CRNs Natural Resources Houses RCC Rolling Concrete Technology DDF Departamento de Desenvolvimento

Florestal SEAGRI Secretaria de Agricultura, Irrigação e Reforma Agrária

DO Development Objective DSC Dam Safety Committee SEINFRA Secretaria de Infra-estrutura EMBASA Empresa Baiana de Águas e Saneametno

S.A. SEPLAN Secretaria de Planejamento

EOP End of Project SG State Government

FERHBA Fundo Estadual de Recursos Hídricos da Bahia

SIR Superintendência de Irrigação

FERH Fundo Estadual de Recursos Hídricos SOE Statement of Expenditure

GIS Geographic Information System SRH Superintendência de Recursos Hídricos do Estado da Bahia

ICR Implementation Completion Report SRHSH Secretaria de Recursos Hídricos, Saneamento e Habitação

IBGE Instituto Brasileiro de Geografia e Estatística

TA Technical Assistance

IERR Internal Economic Rate of Return TTL Task Team Leader

IP Implementation Progress UGP Unidade de Gerenciamento do Projecto (Project Coordination Unit)

NBF Not-Bank financed WAR Water Administrative Region

NPV Net Present Value WRMP Water Resources Management Plan

NGO Non-Governmental Organization WRM Water Resources Management

O&M Operation and Maintenance WUA Water Users Association

PAD Project Appraisal Document

Vice President: Pamela CoxCountry Director John BriscoeSector Manager Abel Mejia

Task Team Leader/Task Manager: Musa S.C. Asad

BRAZILBahia Water Resources Management Project

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 55. Major Factors Affecting Implementation and Outcome 176. Sustainability 197. Bank and Borrower Performance 218. Lessons Learned 249. Partner Comments 2710. Additional Information 28Annex 1. Key Performance Indicators/Log Frame Matrix 29Annex 2. Project Costs and Financing 35Annex 3. Economic Costs and Benefits 37Annex 4. Bank Inputs 42Annex 5. Ratings for Achievement of Objectives/Outputs of Components 44Annex 6. Ratings of Bank and Borrower Performance 45Annex 7. List of Supporting Documents 46Annex Borrower's ICR 47

Project ID: P035728 Project Name: Bahia Water Resources Management Project

Team Leader: Musa S. C. Asad TL Unit: LCSENICR Type: Core ICR Report Date: June 29, 2006

1. Project DataName: Bahia Water Resources Management Project L/C/TF Number: CPL-42320; TF-29191

Country/Department: BRAZIL Region: Latin America and the Caribbean Region

Sector/subsector: Water supply (66%); Sub-national government administration (17%); Other social services (17%)

Theme: Water resource management (P); Rural services and infrastructure (P); Other urban development (P); Environmental policies and institutions (S); Participation and civic engagement (S)

KEY DATES Original Revised/ActualPCD: 04/25/1996 Effective: 03/03/1998

Appraisal: 04/30/1997 MTR: 06/05/2000Approval: 09/11/1997 Closing: 09/30/2005

Borrower/Implementing Agency: STATE OF BAHIA/SRHSHOther Partners:

STAFF Current At AppraisalVice President: Pamela Cox Shahid Javed BurkiCountry Director: John Briscoe Stefan AlberSector Manager: Abel Mejia William PartridgeTeam Leader at ICR: Musa S.C. Asad Peter Wittenberg and Luiz Gabriel AzevedoICR Primary Author: Samuel Taffesse and Carolina

Hammond with inputs from Daniel Gross and Larry Simpson

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The project had four major objectives: “(a) to provide reliable and sustainable access to water for potable, municipal, industrial and irrigation uses in the Priority River Basins; (b) to promote participatory management and rational use of water resources; (c) to develop a sustainable system of administration, operation and maintenance for rural water supply and irrigation infrastructure; and (d) to establish and promote replicable models of integrated water resource management systems in the Priority River Basins.”1

Although the PAD2

identified the above four distinct objectives, they all were directed at supporting the effort of the Government of Bahia in improving its water resource management in the State.

General Background:

3.1.2 The incidence of rural poverty in Bahia was (and still is) one of the highest in Brazil: Bahia has the largest number of poor households in Northeast Brazil. Scarcity of water aggravates and perpetuates rural poverty by limiting the production of poor farmers to vagaries of undependable rainfall, lack of clean water for human consumption and by taxing the poor, especially women extra labor and time for fetching water. As indicated in the PAD, data from 1995 showed that less than 10% of the rural population had access to safe water and only 25% had proper residential sanitation facilities prior to the project. Only 11% of the 1,466.000 ha of irrigable land was under irrigation. The State along with the Municipal and Federal Government assisted the inhabitants of this semi-arid Northeast region with: (i) the delivery of water by trucks (carros pipa); (ii) civil work programs to ensure employment for the drought-affected populations; and (iii) the Cesta Básica (Food supplement) Program. The State also supported small-scale rural community water supply systems in the semi-arid region through Produzir – a Community Driven Development Program (Bank-funded project).3 Nonetheless, chronic water problems persisted which demanded immediate resolution not only for human consumption but also to address poverty in the semi-arid Bahia.

3.1.3 Bahia suffered from deficient Water Resource Management (WRM) system: While the coastal zone, where rainfall is high and reliable, has abundant water, the majority of the State lies within the Northeast Drought Polygon and is subject to annual and cyclical droughts. The shortage of water was complicated by poor water resource management. The lack of sustainable recovery of operation and maintenance (O&M) costs for water resources infrastructure meant a continued deterioration of the system, aggravating the water problem. There was a need for effective water management to optimize the allocation and use of water resources throughout the State, to mitigate water conflicts stemming from competing uses and relieve water scarcities affecting the semi-arid rural areas. Cognizant of these weaknesses, in 1995, the State Government (SG) began to prepare a comprehensive water resource management plan to resolve its complex water problems, under the Department of Water Resources, Sanitation and Housing (SRHSH). As a result, the State upgraded the Water Resources Coordination within the SRHSH to a Water Resources Directorate (Superintendencia de Recursos Hidrícos -- SRH). The SRH was given responsibility for water resources planning and management, including technical studies,

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inventory, and registry of water users, issuance of water permits, hydrologic and meteorological monitoring and maintainenance of a hydrologic database. In addition, the State committed to the decentralization of water resource management.

3.1.4 Institutional Weakness and Lack of Inter-Sectoral Coordination contributed to the deficient WRM: SRH lacked legal and political authority to coordinate the various water-related agencies and their respective water programs. It was believed that decentralization was fundamental to promoting efficiency, stakeholder involvement (creating a sense of beneficiary ownership) and ensuring sustainable O&M cost recovery. To overcome this problem the SG planned to introduce an inter-sectoral approach to water resource management, which was also in line with the Bank’s Water Resource Management Policy Paper of 1993.

3.1.5 Improving the reliability of water supply, infrastructure works was deemed necessary: Given that the Northeast suffered from drought and is characterized by intermittent rainfall, construction of dams and reservoirs to store and distribute water was deemed necessary. The infrastructure work was planned to attend the demand of different users to maximize the return from the construction investment. In addition, the project planned to rehabilitate some structures that were in derelict condition due to poor management and maintenance.

3.1.6 Therefore, an integrated approach of WRM was believed to lead to a more efficient and sustainable use of the State’s water resource and infrastructures.

3.2 Revised Objective:

3.2.1 The objectives of the project remained the same throughout the project implementation due to their relevance to improving WRM in the State of Bahia.

3.3 Original Components:Component 1: Water resource management (US$30 million or 35.0% of total project cost)

3.3.1. This component was aimed at providing technical and financial resources to strengthen the State, basin and user-level institutions to manage water resources in a rational and efficient manner. Activities under this component included:

a) Strengthening of the Borrower’s institutions which are involved in Project implementation activities, and of Water Users Associations (WUAs), with emphasis on those in the priority river basins, to manage water resources in a sustainable and efficient manner through the provision of technical assistance, training programs and equipment.

b) Institutional reorganization of SRH to appropriately manage the Borrower’s water resources, focusing initially on the priority river basins, through, inter alia: (i) enhancement and stabilization of water supplies; (ii) coordination of the administration, operation and maintenance of water resources infrastructure; (iii) promotion of sound environmental strategies for water resource management, including water quality standards; and (iv) encouragement of efficient water usage, through allocation and enforcement of water

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rights, provision of support aiming at resolving conflicts on water use and management issues, implementation of cost-recovery mechanisms, collection of tariffs, execution of water users’ education programs; and provision of technical assistance, training and equipment.

c) Provision of technical assistance, training and equipment to enable water users to participate in WRM and administer, operate and maintain water resources infrastructure.

d) Development of a strong public information and user education program to ensure stakeholder involvement in water resource management and conservation.

Component 2: Infrastructure Investments in the Priority River Basins (US$55 million or 65% of total project cost)

3.3.2 This component was aimed at financing infrastructure investments (subprojects) in the Itapicuru and Paraguaçu River Basins, including resettlement programs for the Ponto Novo, Bandeira de Melo and Pindobaçu subprojects.

3.3.3 More specifically this component aimed to finance the construction and rehabilitation of reservoir and water resources distribution infrastructures in the Itapicuru and Paraguaçu River Basins. The selection of investments was based on well-defined economic, technical, and environmental criteria, as well as on social and environmental assessments. All infrastructure investments were expected to be consistent with the basin's WRM Plan. To identify the project's infrastructure investments, the component was expected to evaluate proposals from the standpoint of their economic and financial sustainability, technical merit, and social and environmental impacts. During the first year of the project, the component aimed to support the construction of water infrastructure for the Ponto Novo system, as well as the Tucano groundwater and canal systems.

3.4 Revised Components:

3.4.1 There were no revisions to the components of the project. However, there were three amendments to the Loan Agreement. The first amendment (April 27, 1999) increased the disbursement percentage financed by the Bank for Category 1 “Goods” from 75% to 100% of foreign expenditures, while maintaining the percentage of local expenditures at 75%.

3.4.2 The second amendment (December 10, 2002) extended the closing date of the project for 2 years, from December 31, 2002 to December 31, 2004. The third amendment (December 20, 2004) extended the closing date for additional nine months, from December 31, 2004 to September 30, 2005, bringing cumulative extensions to 33 months. The extension was granted to allow the full completion of activities and works that were delayed by a range of factors including a strike in one of the agencies responsible for the works.

3.5 Quality at Entry:3.5.1 As observed by QAG, the project was ready for implementation after effectiveness and the

components of the project were well aligned to the achievement of the project objectives.

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The main components related to institutional development and the investments proposed for the completion of a dam, resettlement and the irrigation development subcomponents were ready for implementation.

3.5.2 The project design addressed the main problems the State of Bahia faced in the semi-arid region. The State Government’s Multi-annual Plan for the 1996–1999 included, among others, modernizing public administration; improving the life of the neediest and most vulnerable population; ensuring access to better quality basic social services; and sustainable development with environmental preservation and the improvement of the standard of living in cities and rural areas. Thus the project design reflected the Governement’s priorities. In addition, the Government formulated a new water law and established the SRH, actions that were critical for the implementation of this project.

3.5.3 The project design also reflected the 1993 Bank’s water strategy and the CAS for Brazil. The project design identified most of the relevant risks the project might face and staff of Project Coordination Unit (UGP) were trained in Bank procedures before project effectiveness. Project preparation was supported by several studies, which, among others, identified priority areas for intervention. To ensure that the project implementation started from acceptable and satisfactory base, the project team put in place effectiveness conditions, out of which the most important was the establishment of inter-institutional council to overcome the lack of coordination among agencies involved in WRM in Bahia.

Thus, the design at entry is rated Satisfactory.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:Project overall impact and outcomes

4.1.1 The overall outcome of the Project is rated as satisfactory since all the relevant project objectives were achieved. As noted in detail below, the project managed to bring a positive change in the life of a large section of the population in the pilot basin region, effectively addressed poverty, revitalized the rural economy, modernized and transformed the main water agency (SRH) and improved the institutional capacity of other agencies involved in water sector, contributed to health improvement, piloted and perfected a model that can be replicated in other river basins in the State of Bahia.

4.1.2 A total of 95,430 inhabitants of rural Bahia directly benefited from the provision of dependable supply of water for human consumption and irrigation agriculture and from other activities initiated by the project. An estimated 1.7 million people are believed to have benefited indirectly from the project. In the pilot areas in which this project was active, several small towns saw their economy revitalized due to the catalytic role the project played. As a result, there are signs of labor shortages that have reduced emigration as opportunity in the region is expanded. A total of 2,600 new jobs were created directly within the irrigation district alone and 3,900 jobs indirectly. The average monthly income of the population in the area has now reached 91.7% of the minimum monthly salary in

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Bahia, a very high level income compared to other similar regions in the State. The Municipal Seat of Ponto Novo, for example, has nearly doubled in population.

4.1.3 The life of 87 farming families, who opted for resettlement in irrigated agricultural land, was completely transformed through a provision of comprehensive packages that includes provision of irrigated land, modern houses with electricity, agricultural technical advice, marketing support, provision of training in O&M, supply of dependable and safe water and other amenities. These beneficiary farmers are now managers of their farms responsible for O&M and have transformed from subsistence producers to high value product farmers for market. Although the improvement in income was not systematically captured to show the economic status of these new farmers, it was witnessed during a field observation that there is a complete transformation in the living standard of these farmers – from farmers living in dire poverty to producers to market and consumers of high value items. The proxy indicators show the following: 11 families have washing machines, 58 bought freezer, 51 have color televisions of which 41 operate with satellite dishes, 13 families use cellular phones, among others, which testify to the transformation this project managed to bring about in the life of poor farmers in Ponto Novo.

4.1.4 These resettled irrigation farmers are now investing in their farms by extending their irrigation farms from two to five hectares --- the project provided these beneficiary farmers with five hectares of land with two hectares irrigated. The support included technical advice in production of high value products, establishment of Irrigation District headquarters, Association Headquarters, Health Post, and expanded day-care center and recreation area of very high quality public amenities unheard of in the region. In addition to the reduced burden on women from fetching water, the project undertook a targeted gender intervention. In Ponto Novo, for example, the project supported the production and marketing of flower to nearby markets that is fully operated and managed by women.

4.1.5 Additional impacts include the reduction in the incidence of water-borne disease due to the improved supply and increased coverage of clean water provision. Diarrhea, for example, reduced from 69 cases in 1999 to 17 in 2005 (a 75% reduction) in the project pilot area.

4.1.6 The outcome of the project could have been easily rated as highly satisfactory if it were not for the reluctance of the State to implement water charges schemes. The projected target of benefiting 2,000 small irrigation farmers was not achieved due to change in the Government’s strategy that opted to auction irrigation land to small commercial farmers. The slow implementation pace the project showed in 1999 and 2000 was another factor for not rating the project outcome as highly satisfactory.

Achievements of objectives

4.1.7 The project had four specific objectives and has successfully met the target set for these objectives. The achievements of these specific objectives are better assessed through evaluating the progress made in each of the specific objective of the project.

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A. Provide reliable and sustainable access to water for potable, municipal, industrial and irrigation uses in priority river basins of the State of Bahia, Brazil, primarily in areas with high concentration of poor rural households.

4.1.8 The project operated in three river basins; namely Itapicuru, Paraguaçu and Verde-Jacaré. Although these basins were priority areas, the project as designed was planned to intervene in the Itapicuru basin but managed to be operational in the three basins.

4.1.9 Before this project, 43,364 inhabitants in the Itapicuru River Basin had access to potable water but the reliability was of low order given the lack of storage and the dependence of the system on rainfed runoff in the semi-arid Northeast Brazil. Through the construction of two well conceived dams and one major groundwater distribution system, the project improved dependability and access to water both for human use and for irrigation agriculture. The project managed to provide a reliable clean water for 84,449 inhabitants (benefiting more than 41,000 additional beneficiaries or an increase of 95%) and higher than the target of 81,508 (104% of the original target) in seven municipalities and 51 districts. The total supply of water was increased from 58.75 to 196 litters/second (a 233% increase) through the construction of a dam at Ponto Novo and the tapping of the Tucano sedimentary aquifer that allowed storing and managing the flow including the collection of runoff from the upper basin. As part of provision of potable water, the project increased the capacity of clean water treatment facilities that are planned to satisfy the demand for potable water for the next 20 years. Also, as part of the development of the Ponto Novo dam, waste management plans were developed and implemented. The project brought a total of 2,645 ha of land under irrigation (compared to the appraisal estimate of 1600 ha, as shown in Annex 1).

4.1.10 There were 87 families (out of a total of 200 resettled families) who opted for small irrigation plots rather than self-resettlement or cash compensation, occupying a total of some 500 ha. and who are now thriving (see above). The irrigation perimeter was expanded in a second phase to include an additional 2,000 ha that were auctioned off to some 62 farmers on long-term leases. While the decision to lease irrigated land to larger-scale farmers benefited fewer farmers, it will probably result in significant job creation

4 in the area as well as consolidating Ponto Novo’s status as a hub for fruit and

vegetable production. An additional 42 five-hectare lots were reserved for additional resettled families displaced by the Phase II expansion. Farmers involved in the Phase II expansion began production as the project closed so it is too early to assess the outcome of this phase of Ponto Novo Irrigation.

4.1.11 The Ponto Novo reservoir was also opened up for recreational use, with project funding, with the establishment of two waterside recreational centers on the shore of the reservoir. Furthermore the two reservoirs in the Itapicuru basin are operated using modern technology (decision support system) to optimize releases and to minimize shortages along the demand spectrum.

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B. Promote participatory management and rational use of water resources in the State of Bahia.

4.1.12 The project supported the establishment of regulatory and institutional frameworks to formulate and implement efficient and sustainable water resource management policies and plans that promoted participation by: (i) strengthening seven State institutions, and three basin-level organizations, and 63 local water-user Organizations; (ii) introducing mechanisms to promote efficient resource use and allocation, including user rights; (iii) installing a hydrometerological monitoring and information network; and (iv) conducting 170 public education events regarding rational water resource use and management. Towards the achievement of this objective, the project supported the creation of 10 decentralized water resource management offices across the State. The implementation of the resettlement plan was fully participatory with each family’s preference taken as the final choice. The project fully informed the displaced families on the potential benefit of the project and consulted them on alternatives.

4.1.13 The construction of the dams in strategically selected sites rationalized water use by integrating the different activities from provision of water for human use to irrigated agriculture, while at the same time satisfying the ecological need in the basin. However, the introduction of tariffs and taxes to promote the rational use of water remained contentious and delayed since the government was concerned that such a measure would have negative political consequences. However, the project defined two types of charges: (i) bulk water charge on the use of water from reservoirs operated by SRH; and (ii) charge for use of natural flowing and groundwater water from the State’s river basins. Law No. 8194/02 created the State Water Resource Fund (Fundo Estadual de Recursos Hídricos da Bahia – FERHBA). However, the Fund has not become operational to date. Water use charges for potable and industrial water delivered from storage facilities under operation of the SRH have been agreed to and endorsed by the Governor

5. These charges

are planned to be implemented in 2006 and the proceeds will fund the operation and maintenance of selected facilities as well as contribute to FERHBA.

C. Develop sustainable administration, operation and maintenance systems for rural water supply and irrigation infrastructure

4.1.14 To administer O&M, the project established users’ organizations and irrigation district. O&M of common canals is done by irrigation districts. The project trained farmers in operating micro-sprinkler systems in their farm. Farmers are fully responsible for the cost and labor of O&M within their individual plots. In addition, sufficient human resources within municipalities are trained and organized both for O&M and to administer the water supply system. The project supported the establishment of cost recovery mechanisms based on the user pays principle. Although, at this point, the full O&M costs of the Ponto Novo system are not covered by users (it accounts for 30% of the O&M costs), after awarding new irrigation areas to larger farmers it is expected that the full O&M cost in the

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irrigation district will be borne by users. Since sustainable administration requires improving institutional capacity both in terms of human resource and establishment of a system, the project supported system establishments and provided relevant TA and training to all relevant bodies. The project also supported construction of offices for the Ponto Novo Water District, and facilities for the local water users association.

D. Develop a model to be used for the rest of the River Basins within Bahia.

4.1.15 The project supported the development of several small models, guidelines, norms and procedures in resettlement and dam construction. The project also supported the development of theoretical and information system based models that can be replicated at state level. The Ponto Novo dam construction and the associated resettlement works are the principal outcome that could serve as a model in other projects and in scaling-up this operation

6. The project also managed to develop an integrated system of on-farm and

other supporting activities to support poor rural farmers. This approach although aimed at ensuring that resettled families receive a lasting compensation and fully developed their irrigated land into viable farms – a methodology that can be equally applicable for rural development. The project also developed decision-making model, ModSimLS, supported through the Geographic Information System (GIS). The model has been applied to the Itapicuru and Paraguaçu basins. Other instruments such as environmental education and dam construction design and specifications are standards that the project developed. The resettlement and dams construction models adapted under this project are now considered a ‘best practice’ by environmentalists and social scientists working in the region.

Overall Project Relevance

4.1.16 Relevance: The main relevance of the project is that it contributed to the development of a rational system of resource allocation in an environment of scarcity. While not fully achieved, the project made significant contributions to the development of an institutional and regulatory framework that provides better mechanisms for allocation of water resources. The project is relevant to the socio-economic development of the State of Bahia and to the Brazilian Government. It is highly relevant to the rural poor of Bahia who live in semi-arid region whose development efforts was frustrated with lack of reliable water supply both for human use and irrigated agriculture. The project is consistent both with the CAS during the project preparation (Report No. 16582-BR) that emphasized poverty alleviation, efficient resource allocation, environmentally sustainable development and lending directly to Brazilian States; and with the current CAS 2004-2007 (Report No. 27043-BR) that has as one of its pillars “a more sustainable Brazil” that will help in reducing poverty through, inter alia, “enhanced and more equitable access to urban and rural basic services such as water supply and sanitation, better water quality and water resource management…”

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4.1.17 Efficiency: The cost-benefit analysis done as part of this ICR (see Annex 3 for detail) on construction works (Ponto Novo and Tucano) reveals that in irrigation the economic internal rate of return for Ponto Novo was estimated at 30.3%, fairly close to the appraisal

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estimate of 32.3% but still a respectful high return. In water supply for human use, the returns were 22.4% for Ponto Novo (compared to the appraisal estimate of 24%) and for Tucano 45.8% (compared to PAD’s 32.8%). In irrigation, the project supported the establishment of a sprinkler irrigation that has now evolved into drip irrigation that has contributed to the efficient water utilization. As the tariff system that is now put in place becomes operational, farmers will be faced with added economic incentive to be more efficient in their water use.

4.1.18 Efficacy: As described above all the specific objectives of the project were successfully achieved. The project initially planned to construct one dam but finally managed to construct three and became a model for replicating in the construction of a fourth dam. As noted above, most of the major targets established during appraisal were successfully achieved and in most cases surpassed the target (see Annex 1).

4.2 Outputs by components:Component 1: Water resource management (US$19.3 million or 64% of the appraisal estimate). Satisfactory

4.2.1 This component provided technical and financial resources to strengthen the State’s institutions and water user’s organizations to efficiently manage water resources in the State of Bahia. It also financed training and technical assistance to enable administration, operation and maintenance of water infrastructure in the three priority basins. The component achieved the following main outputs: (i) strengthened several institutions; (ii) improved coordination of water resource management activities; (iii) established a decentralized water resource management; (iv) established a model for water rights administration system; and (v) implemented an integrated hydro-meteorological information system for priority river basins. Table 1 provides a summary of main achievments of this component -- details are given in Annex 1.

Table 1. Component 1: Programmed and Executed Targets

Planned activity Unit Planned

Revised (2002) Executed

Additional association of resettled irrigators number 1 4 4

Increase in the number of water use rights granted number 6500 6500 7258

Water user associations created number 1 3 4 Creation of Water Administrative Regions number 10 10 10

Establishment of rainfall measurement stations number 70 70 120

Deployment of river flow measurement stations (automatic and conventional) number 37 55 77

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4.2.2 Under this component, the project supported SRH in: (i) revising the water legislation, which established its organizational structure, defined its mandate and provided its administrative and financial autonomy; (ii) preparing the legislation of the SWM Plan; (iii) establishing a database, administrative and institutional dissemination systems, and WRM information system; (iv) hiring of 47 regular professional staff and establishing of a roster of highly-qualified consultant team to assist with planning and monitoring of works and operations and maintenance of dams and water resource management; and (v) modernizing SRH through the purchase of computer programs, vehicles and field monitoring, measurement and control equipment.

4.2.3 The creation and strengthening of 10 Water Administrative Regions (WARs), 100% of appraisal estimate, each corresponding to major watersheds,

8 and covering most of the State of Bahia, subsequently transformed into the “Natural Resource Houses (CRNs)”, that facilitated the integration and coordination of activities at municipalities’ level, were implemented under this component. The project also supported the establishment of Water Users Associations (WUAs) in areas where there were no associations. In Ponto Novo, for example, four WUAs were established (compared to one WUA planned during appraisal, as given in Annex 1).

4.2.4 The approach taken by this project was participatory, involving the beneficiaries (direct and indirect users and the public sector) and provided legal support to councils, water basins committees, water resources users Associations. As part of the preparation of the legislature, institutional arrangements were defined and are now operational.

4.2.5 In technical support to the establishment of an improved WRM, an information system was implemented that included the installation, operation and maintenance of the first State hydro-meteorological network, database, Geographical Information System (GIS) and systems to support decision making including decision support systems for reservoir operation and water rights issuance. These allowed SRH to monitor more efficiently the processes of granting water use rights and operation of reservoirs. The main specific activities accomplished included: (i) the installation of hydro-meteorological system in 209 stations; (ii) establishment of GIS that is supporting the analysis, processing and systematizing of hydrologic information; (iii) implementation of monitoring system of surface water resources in the Itapicuru, Verde/Jacaré and Alto Paraguaçu river basins; and (iv) cadastres of water infrastructure users and granting of water user rights.

4.2.6 In training activities and information dissemination, 4720 people were trained in themes related to WRM that included: (i) ground water development; (ii) two environmental education and social communication programs aimed at children and adolescents; (iii) technical courses in dam O&M, and TA to irrigators and resettled farmers. A total of 330 training events were carried out by multipliers and a total of 236,000 publications were disseminated.

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Component 2: Infrastructure Investments in the Priority River Basins (US$66.0 million or 120% of the appraisal estimate). Satisfactory

4.2.7 The infrastructure component financed the construction of dams, rehabilitation of reservoir and water resources distribution infrastructure in the three river basins – Itapicuru, Paraguaçu and Verde-Jacaré, priority areas with the most critical need for water infrastructure. While in the case of the first two basins the project financed infrastructural works, in Verde-Jacaré the support was limited to studies for future intervention. The initial investment selection especially in Itapicuru basin was based on well-defined economic, technical, and environmental criteria as well as on social and environmental impact assessments. All infrastructure investments were consistent with the basin's WRM Plan (WRMP). The following table summarizes the initial plan, the revised targets and actual execution under this component.

Table 2. Structural Component – Programmed and Executed Targets

Planned activity Unit Programmed Revised (2002) Executed

Feasibility studies for dam construction dam 0 5 5

Environmental studies for dam construction dam 1 6 6

Dam construction dam 1 3 3 Studies of water supply system document 2 2 2 Construction of water supply system Km 114 355 496 Irrigation projects Project 1 1 1 Construction of irrigation system hectare 1,600 2,540 2,540 Rehabilitation and O&M of existing water structures dam 1 5 5

Other interventions - Electrification Kw 0 13.8 13.8

4.2.8 However, the selection of Bandeira de Melo (construction work to be completed in April 2006) and Pindobaçu (completed in March 2005) took relatively more time and some observers question the economic significance of these two dams. The State and UGP justified the construction work of the Pindobaçu dam on the need to regulate the water flow of Ponto Novo and to provide a future reliable water supply to the City of Jacobina. How much additional regulation needed above Ponto Novo may not have been a clear priority. However, the need to supply additional reliable water to the growing population of Jacobina was clearly needed. The justification given for the Bandeira de Melo dam was related to the provision of water for irrigated agriculture and dependable water supply to surrounding small towns. However, the hierarchy of this priority when compared to other river basins of the States may be questionable.

4.2.9 Specific activities carried out under this component included:

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Ponto Novo Systemi construction of a dam with reservoir capacity of approximately 40m3 million of water; ii installation of the irrigation system for 2,540 hectares;iii implementation of water supply system to the towns of Ponto Novo, Filadélfia and Caldeirão Grande and the locality of Jacaré, directly benefiting 51,000 inhabitants;iv resettled 213 families (863 people) out of which 87 families opted for small irrigation plots rather than self-resettlement or cash compensation v implemented electrification program with an installed capacity of 13.8Kw;

4.2.10 Tucano Project- This work installed water infrastructure, extended water supply services to the Northeast municipal headquarters of Cansanção and Quijingue and to more than 29 localities. The infrastructure work included upgrading the service to localities in the municipality of Euclides da Cunha, benefiting 33,400 inhabitants. These works increased water supply by a volume of 100 l/s.

4.2.11 In addition to what was planned during appraisal, the project constructed the Pindobaçu dam, that will improve the water supply by 1.59 m3/s; the Bandeira de Melo dam, which is under construction with a capacity to supply 18.83 m3/s water upon completion;

4.2.12 In rehabilitation of existing water infrastructures the project elaborated five O&M manuals for water infrastructure, rehabilitated two dams and conducted five feasibility studies that elaborated five dam projects, and conducted five environmental assessments and two resettlement studies as part of these dams’ feasibility studies.

4.2.13 Recuperation of riparian forests was planned to compensate for ecological and environmental impact of the construction of the dams. The project supported: (i) the replanting of 134 ha of riparian forests with the planting of 120,000 seedlings; (ii) constructed 8 plant nurseries for future environment improvement of the region; (iii) established 41 sampling points to monitor water quality that resulted in 274 analyses carried out in five reservoirs and 4,271 analyses in the additional 44 monitoring points in the Itapicuru, Paraguaçu and Verde/Jacaré river basins.

4.2.14 Table 1, above, shows that all original targets under this component were fully met or exceeded during the implementation of the project.

4.3 Net Present Value/Economic rate of return:

4.3.1 Using the Minimum Impact Approach,9 the PAD evaluated the economic feasibility of the

water resource management component and the traditional benefit-cost methodology for the infrastructure component. In addition, the PAD conducted estimates of internal economic rates (IERR) for two infrastructure sub-projects (Ponto Novo and Tucano). This ICR conducted the same exercise to allow comparison.

4.3.2 The ex-post evaluation of the water resource management component found out that the

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annual flow of benefit reached US$19.4 million, close to the ex-ante estimation of US$20.6 million. Annual cost of the management of water resources, on average was US$2.48 million, close to the ex-ante evaluation of US$2.5 million. Thus the ex-post benefit-cost ratio stood at 7.88, which is slightly lower than the appraisal estimate of 8.24 percent.

4.3.3 The Internal Economic Rate of Return (IERR) of infrastructure project was estimated at 26.4%, less than the appraisal estimate of 29.5% but significantly higher the 12% discount rate thereby justifying the investment made. The financial rate of return resulted in a rate of return of 23.5% slightly lower than the 27.3% estimated during appraisal.

4.3.4 The ex-post evaluation also conducted cost-benefit analysis for two subprojects following the methodology adapted by the PAD. For Ponto Novo, the ex-post net present value was estimated at US$48 million with an IERR of 28.5%. The IERR was divided between irrigation and water supply (See Table 3). For Ponto Novo both IERRs were less than the appraisal estimate but at 30.3% for irrigation and at 22.4% for water supply, the investment was highly justifiable. In case of Tucano the irrigation benefit has yet to start to accrue, since infrastructure work was completed in December 2005. However, for the water supply, Tucano shows almost double IERR (191% of the appraisal estimate) at 45.8%, again justifying the investment.

Table 3. Internal Economic Rate of Return–IERRBenefit ex ante (PAD p. 29) Ex post

Ponto Novo Ponto Novo TucanoIrrigation 32.2% 30.3% -Water Supply 24.0% 22.4% 45.8%

4.4 Financial rate of return:4.4.1 The appraisal estimated a financial rate of return of 27.3% for infrastructure projects with

net financial benefits of US$31 million. Evaluation made as part of this ICR estimated the financial rate of return at 23.5% with an estimated net financial benefit of US$25.6 million. The ex-post evaluation also estimated the fiscal gain at US$14 million, higher than the appraisal estimate of US$10 million. The lower than expected water tariff revenue was componsated for by higher income tax and other related revenues. (see Annex 3 for assumptions and details of the ex-post analysis).

4.5 Institutional development impact:4.5.1 The project supported the strengthening and consolidation of water agencies and the

definition of the rules and regulation of the State’s water policy including elaborating main instruments of the policy. This project transformed the SRH into a capable institution with appropriate staff mix of qualified professionals to discharge its institutional responsibilities. SRH as the institution responsible for water resource management has developed its management capacity and has put in place a system to involve all relevant stakeholders both at state and local level. In addition to SRH, the project supported the definition of the overall institutional responsibility in water resources, and aligned tasks with the appropriate agencies (state, regional or local). In general the rule of the game has

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become transparent and supports efficient and sustainable development and use of the water resources of the State.

4.5.2 SRH was established by Law 6.855/95 to manage water resources of the State. During the life of the project two main restructuring of SRH were conducted by the Government. The January 2002 law reorganized SRH with the aim to strengthen the institution and to make it compatible to the increased role SRH undertook and made the following provisions:

made SRH the agency responsible for managing the State Water Resource Fund (Fundo i.Estadual de Recursos Hídricos – FERH) and also specified the purpose and activities for which the fund can be utilized (from the collected water charges the Fund will retain 15% -- out of which 7.5% of the charges will be transferred to the SRH to cover the management fees of the Fund -- and will deposit 85% into the account of the respective river basin, or aquifer, where the charges originate). The law also specified the sources for water revenues: (a) charges for the use of the waters under State domain; (b) royalties for the exploitation of the natural resources or financial compensation; and (c) donations and others eventual resources; authorized the collection of charges for water under the State domain; ii.created within SRH management responsibility for coordinating the management, iii.operations and financial administration;specified the composition of CONERH (State Water Resource Council – Conselho iv.Estadual de Recursos Hidricos) that included: (a) public agencies -- SEAGRI (Secretary of Agriculture, Irrigation and Agricultural Reform), SEINFRA (Secretary of Infrastructure), SEPLAN (Secretary of Planning), PGE (General State Controller – Procuradoria Geral do Estado), and Director General of SRH; (b) representative of the Union of Bahia’s Municipalities; and (c) four representatives of the users of water from sanitation, hydroelectric generation, irrigation and industry sectors.

4.5.3 In June 2005, the SRH organizational structure was revised in line with the new responsibilities for decentralization, among others, for O&M of water infrastructure in the State. This second restructuring further consolidated the 2002 legislation by creating specific sectors and forming three Directorates for: (i) Regulation; (ii) Regional management; and (iii) Engineering. These two laws not only further strengthened SRH by clearly defining responsibilities and establishing specialized departments but also provided the legal bases for this structure.

4.5.4 It is testimony to the institutional transformation the SRH has achieved that it become the first and only Brazilian State water agency to be certified by ISO 9001:2000, which is the most commonly used international standard that provides a framework for a quality management system. At the outset of the project, Bahia had a fairly mediocre water rights administration system. With the support of the project, the State has developed what is now considered the most efficient and effective water rights administration system in Brazil.

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4.5.5 The project supported the integration of SRH’s activities into a holistic institutional task that includes implementation of dam construction, establishing water distribution networks, resettlement of affected people; and recognized and attended the different demand for water for: ecological, agricultural, human use, including recreational needs. On the supply side, SRH has compiled data on surface and groundwater resource balance within the State. In groundwater, SRH not only conducted a preliminary survey of the potential, risks and vulnerability of aquifers in the State but also designed and developed the Tucano water supply system. On the demand side, SRH worked with all the relevant stakeholders and responsible agencies for agriculture, urban and rural water supply system. Such a comprehensive and holistic approach to water was made possible due to the improved institutional capacity and knowledge base created in the management of water resource that this project supported SRH in the last eight years.

4.5.6 SRH has organized an excellent database on the water resource of the State and an Integrated Hydro-metrological Information System that support the decision-making process. The database at the disposal of SRH include data derived from the monitoring of rivers and reservoirs water levels, hydro-meteorological and hydro-chemical analysis, quality of water, cartography of Municipalities with administrative regions of water and basins; socio-economic data of water users, etc., deployed using various software systems, including GIS and other systems to manipulate the data. The project also supported the implementation of an information system of water resource that included installation, operation and maintenance of primary hydrometric networks across the State that provides data on river flows, reservoir levels, rainfall and other hydrological data on a real time basis. The project supported the development of a decision-making model called ModSimLS, that was applied to the Itapicuru and Paraguacu sub-basins and was found to be successful in supporting SRH’s activities. The overall impact of the establishment of these monitoring networks and information system is an improvement in the efficiency of the organizations involved in WRM both in terms of time required to arrive at decisions and to provide timely interventions since the system has the capacity to provide early warnings, such as high flow levels in rivers or a sudden drop in water level of reservoirs.

4.5.7 The project supported the revision of the water law that, among others, defined the roles and responsibilities of the agencies involved in water management. Thus, the project supported the strengthening of the 10 Water Administrative Regions that cover almost all watersheds of the State and integrating the activities at local level that will support a decentralized decision-making process with the participation of water users.

4.5.8 The project was cognizant of the fact that an improved water resource management in the State of Bahia can not be achieved by strengthening SRH alone but equally important was strengthening and supporting relevant agencies at all levels. Accordingly, the project supported the strengthening and consolidation of water users associations (through the provision of office, computers and office equipment, better and reliable information, training in handling their accounts, O&M of their irrigation infrastructure and TA in adopting high value products) commission of water users, consortia of water users and five hydrographic river basin committees. Data from the project office indicate that in areas

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where the project provided potable water, in seven municipalities and 51 districts, the management and monitoring of water resource was modernized. These institutions now have better trained professionals in administration, operation and maintenance of water infrastructure.

4.5.9 The project also supported the development of other instruments such as environmental education and dam construction design and specifications. The project established a Dam Safety Committee (DSC) composed of high level professionals in the field. This committee provided the necessary supervision in the implementation of dams from design to the different phases of construction. The need for establishing such a body was proved to be the right choice since this committee provided valuable input in improving design and construction of the dams during the implementation of this project. The positive experience with the DSC is reflected by the fact that the State has expanded its work to dams not financed by the Bank and that the Government continues to work closely with the SRH following the closing of the World Bank loan agreement. Additionally, the SRH and other institutions have adapted new systems, not necessarily developed by this project, but through lessons learned from other similar endeavors, such as the Living Springs (Nascentes Vivas) initiative – a program based on positive experience in the State of Minas Gerais, pursued the mobilization of water users in various activities to preserve riparian vegetation to improve water quality and control erosion, among others.

4.5.10 Strengthening the institutional capacity in WRM was one of the aims of this project. To achieve this aim, the project envisaged to pilot and develop a model that was planned to be replicated in other river basins in the State. In fact, using the model and lessons learned through this project, the SRH has under implementation a similar dam project financed by the Government on its own.

4.5.11 Thus, this project transformed the institutional capacity of the State of Bahia in the management of water resource thereby addressing one of the rationale for this project. The project transformed SRH from a department into a semi-autonomous organization, improved the information and knowledge base on the water sector, established new bodies or organizations to consolidate and support the implementation of infrastructure and WRM, brought about an integrated approach to WRM with the participation of all relevant stakeholders, aligned activities of the different institutions to their role defined by law and developed models and systems replicable to other basins. Therefore, the institutional impact of the project is rated Substantial.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:5.1.1 Brazil experienced a financial problem during the implementation of this project that

resulted in the devaluation of the Brazilian Real. The Loan was not reduced following the depreciation of the Real and therefore in terms of local currency the effective financial resources available were higher. This allowed the SRH to undertake additional dam construction as an addendum to the original plan to construct only one dam.

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5.1.2 The 2004 strike in one of the executing agencies (CERB) disrupted the pace of implementation. The strike effectively shut down all technical and administrative activities at the Pindobaçu and Bandeira de Melo dams for several months, severely slowing down disbursements. Additionally, there were demonstrations and protests against resettlement agreements from Dam-affected People’s Movement (Movimentos dos Atingidos por Barragens), closing access to the dams’ construction camp several times. The Tucano Rural Water Supply System construction was delayed due to problems encountered in the quality of the water from the drilled main well. The Foreign Commerce Department of the Federal Government imposed import restrictions on the purchase of new equipment from foreign suppliers in November 1998 that also delayed the modernization of the hydro-meteorological system.

5.2 Factors generally subject to government control:5.2.1 The lag in project implementation was due to, among others, the work load on the small

project management team and delays by the authorities to redress this observed weakness. There was also a delay in finalizing the improved water law including the reorganization of SRH and establishment of FERH but, most importantly, the State failed to implement the bulk water tariff that was necessary to provide sufficient resources to cover the cost of administration and operation of the water agencies. Due to priority differences, compliance with and implementation of agreed actions by associated agencies responsible for project execution was, at times, substantially delayed. The use of other State agencies in the actual execution of works was originally necessary due the initial lack of capacity within the SRH. This situation was being addressed at the close of the project. The modifications that were brought about due to the changes in the legal arrangement had substantial impact on inter-institutional relations between relevant water agencies throughout project execution period.

5.2.2 Initially, given the commitment the government showed to the project, the six month delay between the Board approval and effectiveness of the project was the full responsibility of the Government. The transfer of federal dams within the boundaries of Bahia to the State government took a long time and, in the process, delayed the much needed rehabilitation work (or at least the studies of the feasibility) of these dams. While the project supported the decentralization of SRH (Natural Resource Houses – CRN), these offices were not initially adequately staffed with appropriate manpower. In addition, coordination with State environmental agencies of the Departamento de Desenvolvimento Florestal (DDF) and the Centro de Recursos Ambientais (CRA) did not mature.

5.2.3 The State government has shown commitment to the project throughout project implementation but with some delays in taking bold political decisions. The government should also have set strong early priorities to ensure the follow-up to this project was implemented without a break.

5.3 Factors generally subject to implementing agency control:5.3.1 The most critical stage in project implementation happened during 2000–2001 when

disbursements fell sharply due to lack of proper planning. The main problems were inadequate staffing of SRH and the UGP, as well as poor coordination among project

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executing agencies. PSR sequence # 8 stated that although implementation of the Ponto Novo irrigation system was the responsibility of SIR/SEAGRI, SRH nevertheless should have been more assertive in following-up and taking steps to speed-up the process. Streamlining disbursement and weakness in coordinating the implementation of the project were some of the factors that the project coordinating unit (UGP within SRH) showed early in project implementation.

5.4 Costs and financing:5.4.1 The project disbursed the full Loan amount of US$51 million and utilized the full project

cost (US$85 million). During the implementation of this project, the Brazilian Real was devalued, thus, on average, during the project life, the exchange rate was almost US$1 to R$2, unlike the prevailing exchange rate during appraisal – US$1 to R$1.05. This implies that in terms of the Brazilian Real, the Loan was almost double of the original amount. However, using the Bank's Development Data Platform (http://ddp.worldbank.org/ddp/home.do) this ICR made an estimate of price increase using the GDP deflator. Between 1998 (project effectiveness year) and 2005, the price level rose by 79 percent, while comparable exercise using the consumer price index shows a 74% rise for the same period. Taking the rise in the general price level, it is clear that most of the windfall from the devaluation was lost to inflation.

5.4.2 The cost composition indicate that the institutional component used only 64% of the initial cost allocation while the Infrastructure component cost stood at 120% of the appraisal estimate (see Table 4 below). It is the determination of this ICR that in essence the cost of institutional development was not much different from the PAD estimate since the cost elements of institutional component are not traded and thus were not affected by the devaluation but only by the rise in the overall price level.

5.4.3 The increase in the infrastructure cost is also justified by additional activities the project financed primarily the cost of additional dams construction. Thus, the project team’s decision not to reduce the total Loan amount is justified on the above grounds and due to the fact that the project was extended for a total of 33 months. In addition, the project was designed as the first step to a serious of interventions in the Bahia water sector with this project entrusted to develop the model that will be transferred to other river basins in the State.

Table 4. Project Costs By Components (in US$ million equivalent)Project Component

Appraisal Actual/Latest %of Appraisal

Institutional 30.0 19.3 64Infrastructure 55.0 66.0 120TOTAL 85.0 85.3 100.3

5.4.4 The Government contributed a little bit more than the PAD estimate (100.6% of appraisal) to the overall cost of the project. Considering these resources were denominated in US$ for comparison purpose, it is evident that in terms of Brazilian Real the Government contribution was much higher, demonstrating its commitment to the project and its

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objectives. In addition, the beneficiaries (farmers, municipalities, water users and other executing agencies) invested as part of the implementation of this project but their contribution was not accounted for, as it was not included in the PAD .

5.4.5 Disbursement was formally revised to account for the lag and extension of the closing date. It is the observation of this ICR the initial disbursement estimate was optimistic. For FY 1998, for example, the PAD projected a disbursement of almost US$13 million; i.e. with the project becoming effective in March 1998, it meant within three months, the project estimated very unrealistic disbursement. Probably that ambitious disbursement target was responsible for the early Bank mission reports commenting on SRH performance as slow in implementing the project notwithstanding the fact that in three-month period after effectiveness the project disbursed close to US$3 million – a good achievement compared to other similar projects and taking into consideration the fact that works in infrastructure require detailed design works before starting construction.

6. Sustainability

6.1 Rationale for sustainability rating:

6.1.1 The project outcome is technically and financially resilient and the investments made will continue to operate and provide services. The institutional structure created has become part of the Secretariat of Environment and there is a general consensus on the arrangements established. In addition to the executing agencies’ professionals, SRH staff supervised and monitored each work throughout the process and the Dam Safety Committee provided further additional supervision. Farmers have become market oriented producers; municipalities are administering their water systems; settlers have further improved their dwellings and consolidated their gains. Income generation activities, such as flower production and marketing, would ensure that gains by women have the economic incentive to participate in the project. The participatory culture championed by SRH would contribute in the future active involvement of the beneficiaries.

6.1.2 The water supply system established is expected to attend the demand within the impacted basins for the next 20 years (taking in to account the historical river flows, rain, population dynamic and other related socio-economic improvements) with 95% of certainty. The project supported the government in establishing a high level dam committee to inspect and supervise the construction of the dams. Throughout the construction phase, this high level committee monitored the works and requested areas for improvement to ensure the technical resilience of the dams. This committee continues to provide ongoing support to the operation and maintenance of these facilities as well as oversight from a safety standpoint.

6.1.3 The project supplied five hectares of land for those who opted for irrigated agriculture with two hectares fully integrated with sprinkler irrigation. However, individual farmers have expanded their farms and it is also observed that they even want to expand beyond the five hectares of land they were provided. They are well trained and are effectively responsible for the O&M within their perimeters both for the cost and technical handling of the

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irrigation infrastructure. The flow of income that these farmers are generating by producing high value products and the additional gains they made by cutting out the middle man would contribute to financial sustainability of their systems. This gain in income serving as an incentive would allow farmers to pay for the O&M of their irrigation districts. In fact, auctioning of additional irrigation farms to medium and large farmers will guarantee that the future O&M of the irrigation districts and associated TA costs will be covered by farmers.

6.1.4 Although the government was slow to enact the water charges, the creation of FERH is the sign that the State finally will generate sufficient resources to finance operation and administration cost of the water sector infrastructure maintenance and management. The decentralization of the institutional setup will also contribute to the future sustainability of the system by increasingly transferring the responsibility of direct management to the localities.

6.1.5 It is evident from the government actions that it is slowly moving towards water tariff system to finance the cost of operation and maintenance including management cost of the water agencies. The State took slow but measured steps to reach this level of institutional structure formation and there is no evidence to suggest that the reforms achieved will be reversed.

6.1.6 Thus, given the durability of the works done, the continuous flows of income that the project results will continue to generate into the foreseeable future, the observed farmers’ interest to invest in their farms and considering the Government commitment to replicate the models developed through this project to other river basins, sustainability of the project is therefore rated Likely.

6.2 Transition arrangement to regular operations:

6.2.1 There is no need for a special transition arrangement since the activities initiated through this project are part of SRH legislated responsibilities. Thus, as a government entity, it has its annual budget to continue operating.

6.2.2 The Government's existing strategy is to expand the tested and perfected methodologies through the support of this project to other basins in the State. The Government wrote to the Bank Country Director expressing its interest for a follow-up project. To support the Government’s plan and as a response to the Government's request, the Bank has initiated the preparation of a follow-up project for which PHRD fund has already been approved by the Japanese authorities.

7. Bank and Borrower Performance

Bank7.1 Lending:7.1.1 As 1999 QAG review observed, the project design was sound in terms of water

management and institutional development components. The main components related to institutional development and infrastructure investments proposed for the completion of a dam, resettlement and the irrigation development subcomponents were ready for

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implementation.

7.1.2 Project design reflected the Bank’s 1993 Policy Statement on water resource development. The decision to lend directly to Brazilian states was well aligned with the CAS and the Federal Government’s strategy. The project was comprehensive but the choice it made to focus on priority areas permitted the design to consider addressing the issues of poverty, decentralization, improvement of infrastructure and reliability of water supply, beneficiary participation, irrigation agriculture, water supply and sanitation, environmental rehabilitation, and a host of other activities within a limited geographic area.

7.1.3 The project design was sound in ensuring that both the soft (institutional) and hard (infrastructure) components were used to achieve a sustainable management of the water resource of the state. This is still the strategy of the Bank, the State of Bahia and the Brazilian government. Thus, the Bank's lending performance is rated Satisfactory.

7.2 Supervision:

7.2.1 The project team closely monitored project implementation, involved experienced staff in water resource management, provided the necessary support and sought solutions to problems. Throughout implementation, the team reports indicated that the Bank supervision was focused on the development objective of the project and always advised the counterpart team to focus on the same.

7.2.2 Overall, supervision missions were adequately staffed and project team members’ composition was maintained to the extent possible. The ex-TTL for the project continued to provide support even after the transfer of the task management responsibility to a new TTL (the project had three TTLs during the full implementation years of the project). The continuity of the project team with the involvement of experienced senior staff in WRM, environmental analysis and social issues ensured that the project was implemented per the Loan Agreement.

7.2.3 The project also benefited from the decentralized structure of the Bank. The Sector Leader was actively involved in supporting project implementation by conducting short supervision missions and a number of meetings in the Bank’s Brasilia office with representatives of the State to address relevant issues. Field-based team members frequently visited the SRH office for short but focused supervision missions as need arose. Mostly, these field staff combined their missions with the supervision of the Federal Water Resouce Management Project (PROAGUA – a Bank financed project that was also implemented by SRH through the same PIU).

10 The TTL and other project team members made a frequent visits to the

PIU and sites while traveling in the country, thus providing close support to the SRH during project implementation.

7.2.4 The Bank team was instrumental in improved efficiency and technical advances made during the implementation of the project. Originally, for example, the Ponto Novo dam was designed to be built using construction of earth dam. However, the Bank mission in consultation with the dam safety committee convinced the Borrower to opt for the Rolling

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Concrete (RCC) technology. The State heeded the advise and revised the design and adapted the RCC, saving close to Brazilian Real 11 million in the process compared to the cost estimate for the earth dam. In addition to cost saved by using technology, the work was completed within less time and provided 10% more water volume for the same wet perimeter due to the fact that the RCC does not have a lower spillway. Prior to this project, there was only one dam that used the RCC technology. Now, it has become the preferred familiar technology in the State of Bahia.

7.2.5 Starting with the Mid-Term Review of the project, the Bank supervision mission ensured that the balance of focus between the two main components was maintained and that appropriate focus on the DO was maintained by SRH and government authorities. It was also QAG’s foundation that the focus on development impact was satisfactory. To help monitor the progress towards the achievement of the DO and the implementation of each component, the team insisted on the establishment of a function Monitoring and Evaluation system and revised indicators to determine advances in project implementation, as cited above and demonstrated in Annex 1.

7.2.6 The Bank team played a proactive role in timely identification of problems and provided appropriate and effective advice to advance project implementation momentum. The team ensured that the SRH was properly staffed to adequately implement the project; incorporated experiences and best practices from other projects; changed the financing parameters when the State budget reduction seemed to affect disbursement; advised and insisted on the cancellation of a contract with a Consortium when it failed to implement the required task satisfactorily and extended closing date and revised disbursement of the project. In general, the Bank team provided appropriate follow-up to the implementation of agreed actions but in some cases the issues were dragged for some time probably due to overestimation of the leverage the project could use in enforcing the implementation of agreements and legal agreements.

7.2.7 The ratings of the team on project implementation progress and associated fiduciary issues were credible. When implementation was not progressing satisfactorily, the team rated the IP Unsatisfactory and when SRH failed to implement agreed environmental safeguards, the team threatened to withhold project funds in case default was issued. The environmental safeguard was rated "Unsatisfactory" in the respective PSR. Making this same observation, QAG concluded that the supervision aspects of environment as being professional and thorough and rated it Highly Satisfactory. The same observation is also applicable to the supervision of the resettlement aspects of the project. While on balance reporting was credible, sometimes it was repetitive across the different Aide Memoires and PSRs.

7.3 Overall Bank performance:7.3.1 Overall Bank performance is therefore rated Satisfactory.

Borrower7.4 Preparation:7.4.1 The Government was conscious of the fact that limited access to safe and reliable water

posed a strong limitation to the socio-economic development of the State. To address the

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problem, the State Government formed SRH in 1995 as a Directorate in the Secretariat of Water Resource, Sanitation and Housing. The SRH was given responsibility for water resource planning and management, including technical studies, inventory and registry of water users, issuance of water permits, hydrologic and metrological monitoring and maintaining a hydrologic database. Further, the State committed itself to decentralization to a watershed level by dividing the State into 10 Water Administration Regions (Regiões Administrativas da Água – RAA) that will also serve as a forum for water users and their associations to dialogue with SRH. In addition, the State approved the water law, formulated a State Water Resource Management Strategy, invested over US$6 million to prepare a Water Resources Master Plan, initiated a water rights administration program and allocated sufficient resources for the preparation of the project including a request for PHRD Grant from the Japanese Government.

7.4.2 The Government expressed its goal and preparedness for the support of the Bank through a Bahia Water Sector Policy Letter in August 1997. The State Government was a proactive interlocutor to the Bank and provided high-level professionals to coordinate the preparation of the project. As QAG observed the State Government put in place the appropriate laws and regulations for a comprehensive and integrated water resource development.

7.4.3 The Borrower performance in the preparation of this project is rated Highly Satisfactory.

7.5 Government implementation performance:7.5.1 The Government remained true to its commitment and closely supported the implementation

of the project. Although during the implementation of this project the Brazilian economy suffered from financial crunch, the Government made the full counterpart contribution. The State Government was always ready and available to discuss issues in the implementation of the project and played active role in proposing solutions to problems and in most cases implemented agreed action albeit with a delay.

7.5.2 However, in implementing follow-up reforms (such as the implementation of bulk water charges) to further deepen the changes in management and financing of the water sector, the Government took more time than was expected by the Bank team. The Government should have asserted stronger and timely direction to all executing agencies to improve their coordination during project implementation. The State delayed substantially the acceptable staffing of the SRH to undertake its increasing role in the management of the water sector. However, this was effectively resolved after a change in State administration.

7.5.3 On balance the Government's implementation performance is rated Moderately Satisfactory.

7.6 Implementing Agency:7.6.1 Under the overall direction of the SRH Superintendancy, project implementation was

coordinated by a Project Management Unit (Unidade de Gerenciamento do Projecto – UGP) in collaboration with the Bank supervision team(s). Initially, the SRH did not fully confirm with environmental safeguards and showed some delays in resettling farmers. One of the activities to be coordinated and implemented by SRH was maintaining a baseline using the socio-economic study of the beneficiaries conducted during the preparation of the

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project. The SRH was expected to update these data through periodic surveys. This task was not always smoothly implemented, although it was completed as part of the final evaluation of the project conducted by SRH. In disbursing resources to the executing agencies, SRH was not agile enough to quickly affect the transfer of funds as PSR sequence # 6 observed.

7.6.2 Notwithstanding the above limitations but considering the long list of tasks the SRH was responsible for, the number or executing agencies it has to coordinate, the number of contracts it has to administer and initially the small number of staff that the unit had to support project implementation, the performance SRH in coordinating project implementation is rated Satisfactory.

7.7 Overall Borrower performance:7.7.1 The overall performance of the Borrower is rated Satisfactory.

8. Lessons Learned

8.1 Reforms such as the implementation of water rights administration systems and water charges systems take considerable time and effort to build consensus and political support. Political support at the highest level is a critical element in implementing reforms in the water sector and consensus building is another critical element in a sector where almost all people have a say. Therefore, projects that aim to bring reforms in the water sector need to account for such ardous process of consensus-building and recognize and build political support for reforms. In this case, reforms moved relatively well when there was a political support at the highest level and suffered delays as political priorities shifted.

8.2 Prioritizing, sequencing and focusing on selected watersheds are essential for ensuing a higher project impact. The fact that three basins were selected and that the project concentrated most of its interventions in the Itapicuru basin proved to be the right choice. Rather than spreading efforts thin, the State chose to focus on the selected river basins that resulted in the observed impacts of the project in the priority area.

8.3 It is fundamental in the construction of dams that the selection of appropriate sites within a river basin should have as its objective the maximizing of benefits while minimizing risks. The success of Ponto Novo is partially explained by the comprehensive multi-criteria study conducted early in project preparation. Planning and site selection for dams should be based on mutliple evaluation criteria and diverse water uses so as to maximize benefits. The approach should include its multiple uses and should be exploited to maximize the sum of all additional benefits – such as integrating and attending the different water demands by multiple users for various purposes. The project was able to attend the water demand of several small towns and rural communities and irrigation farmers, including leisure demand.

8.4 An integrated approach to rural development in water scarce semi-arid region should center on improving the availability of reliable water resource for the different users. The main impediment in improving living standards in the semi-arid region of Bahia was and still is the reliable access to water, whether it is to diversify farm products, to improve health conditions

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or reduce the burden of water collection. The fact that the State of Bahia centered its intervention in the selected priority areas anchored on water resource but with multi-faceted support made it possible to observe improvement in the living standards of the population and the dynamism created in these localities.

8.5 The demand for water is beyond social and economic needs, in that it includes the recreational and ecological aspects and, therefore, a project with an aim of integrated water resource management has to cater to satisfy these multiple demands. While the primary aim of the construction of dams was to alleviate the seasonality of water availability in the selected basins and to provide safe water for human consumption, the project quickly realized that once the dam was built there was a pent-up demand for the recreational value of water. In addition, the overall demand for water needs to take into account for ecological demand to satisfy the environmental needs.

8.6 Resettlement can be an effective instrument for poverty alleviation if it is participatory and the support is comprehensive. The resettlement of farmers to irrigated land involved a comprehensive package that included training, on-farm development, electrification, improved housing construction, provision of sanitation service, social services such as kindergarten, access roads, in addition to the provision of reliable source of water both for irrigation and human consumption. Due to this integrated approach, these resettled farmers may not be classified as poor farmers at this juncture -- certainly not extreme poor as they were before the project. An additional lesson related to resettlement is that the existence of pilot to demonstrate to the potential settlers is an important ingredient to garner the confidence of settlers and for them to make an informed decision. In countries where several government promises fail to materialize, using a demonstration pilot is imperative.

8.7 Contracting or outsourcing some activities (such as operation of networks, monitoring of water, rehabilitation and maintenance of dams) is cost-effective and efficient since it reduces the public sectors burden and allows the Government to focus on its normative roles.

8.8 Successful piloting would create its own incentive to replicate the experience in other places. The success of dam construction modeled through this project provided the incentive for the Government to apply the same strategy in other basins without the Bank’s financial assistance. In addition, due to the success of the pilot and the related models developed, the Government is planning to extend the experience of this project to cover all basins in the State through support from the Bank.

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9. Partner Comments

(a) Borrower/implementing agency:

(b) Cofinanciers:There were no cofinanciers to this project.

(c) Other partners (NGOs/private sector):

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10. Additional Information

Footnotes

1. Loan Agreement dated December 4, 1997.2. The World Bank. 1997. Bahia Water Resources Management Project. Project Appraisal Document. Report # 17003-BR3. LN 4623-BR- Rural Poverty Reduction Project - Bahia 4. As evidenced in other irrigation projects in Brazil such as the Jaiba and the Formoso projects financed by the Bank and the perimeters around the Petrolina-Juazeiro area.5. Water Supply and Sanitation (WSS) to urban areas is provided primarily by EMBASA, the State’s WSS company, that has implemented water charges since the late 60’s.6. The relatively high cost of the Phase I irrigation district at Ponto Novo, built to accommodate families resettled from the reservoir basin, was a matter of some concern for the State. The project included land preparation, fencing, road improvements, housing, a potable water system, and the irrigation works as well as rebuilding a community church, a primary school and farmer association activities. In addition, farmers were given intensive training in irrigated agriculture. The result was that farmers’ incomes rose by several multiples, new jobs were generated and more taxes were collected. The heavy investment in human capital and infrastructure should be the object of a careful economic analysis to determine whether such investments generate net positive returns in income, job creation and tax revenues.7. The World Bank. 2003. A More Equitable, Sustainable, and Competitive Brazil – Country Assistance Strategy 2004-2007. 8. These WAR were not necessarily structured following a single watershed although some of them correspond to a single watershed. 9. The use of the Minimum Impact Approach was justified by the PAD by stating that the approach was applied to evaluate economic feasibility of project’s water resource management component (Cumming et. al., 1996 and Mexico Water Resource Project, 1996). See PAD p. 27. 10. Brazil: Federal Water Resources Management Project (PROAGUA). Loan # 4310-BR.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

IMPACT INDICATORS

Unit of Measureme

nt

Baseline Planned (EOP)

Actual Actual/ Planned (%)

OBSERVATIONS

Direct beneficiaries inhabitants 46,370 95,431Indirect beneficiaries inhabitants 1,70654

21,656,317

Families resettled by the project:

agricultural area

urban area

families

families

NA*

NA*100

151

63Population who benefited from the water supply system in Ponto Novo (surface spring)

inhabitants 20,850 40,930 51,026 125

Population who benefited from the water supply system in Tucano (underground spring)

inhabitants 22,514 40,578 33,423 82 The main aqueduct was constructed with capacity to serve the needs of the planned 2nd phase of the project (PGRH II).

Increase in the availability of surface water (Ponto Novo and Pindobaçu)

m3/s -- 4.5 6.59 146 The Bandeira de Melo Dam, with a regulation capacity of which will regulate the river with a volume of flow of, is under construction. Work was begun with loan proceeds and will be finalized with State resources

Increase in the availability of distributed treated water - Ponto Novo

l/s 58.75 71.82 96.00 134 The system was expanded in the Master Plan (Projeto Executivo)

Increase in the supply of water from groundwater – Tucano

l/s -- 60.00 100.00 167 The State Government executed with own resources a spare water well in order to guarantee the supply

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system, expanding water supply.

Localities supplied with treated water in 5 municipalities – Ponto Novo System

unit 4.0 16.00 50.00 313

Localities supplied with treated water in 4 municipalities – Tucano System

cities7 29 29 100

Estimate agricultural production value in the district of Ponto Novo in 2005

Brazilian Real

-- NA* 1,367,180.0

Water availability for permanent irrigation

l/s -- NA 2,586

Number of jobs created directly

unit -- 1600 2,600 163 Employment generated through the Irrigation project

Number of jobs created indirectly

unit -- 3200 3,900 122 Employment generated through the Irrigation project

Increase in price of land in the municipality of Ponto Novo

Brazilian Real /ha

356.00 NA 1,000.00 Source: Empresa Baiana de Desenvolvimento Agrícola and Banco do Brasil

Irrigation system implemented – Ponto Novo

ha -- 1600 2645 159 The project of 1500 ha to be implemented in Pindobaçu was not executed due to water contamination concerns upstream Ponto Novo.

Number of families who benefited from the creation of sanitation facilities

unit -- NA 141

Regularized land titles

Number of lots

Area

Unit

ha

--

--

NA

NA

141

705

Land title is provisional. State prohibits land donation

Output Indicators:

OUTPUT Unit of Baseline Planned (EOP)

Actual Actual/ OBSERVATIONS

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INDICATORS Measurement Planned (%)

Infrastructure ComponentSupply systemPonto Novo Dam l/seg 58.75 71.82 96.00 134Tucano groundwater based water supply system

l/seg 0 60.00 100.00 167

Originating from Ponto Novo System

Km 114.37 162.04 303.06 187

Originating from Tucano System

Km -- 193.00 193.00 100

Expansion of the electric distribution network

Km -- NA* 34.00

Energy provided Kw -- NA* 13.80Irrigated Agriculturefor small farmers in Ponto Novo

ha NA* NA* 730.00

for large-scale farmers in Ponto Novo

ha NA* NA* 1789.56

for small farmers in Pindobaçu

ha NA* NA* 126.00

Expansion of the distribution canal

Km -- NA* 19.00

Environmental achievements Construction of seedling nurseries

unit -- NA* 8.00

Planting of seedling

unit -- NA* 120,000

Properties and rural producers prepared to plant of seedling

ha -- NA* 509

Monitoring in the 3 river basins --Itapicuru, Paraguaçu and Verde/Jacaré

monitored locations

unit -- 65 44 67.69 Number of locations was defined during a field trip, after project start

analyses carried out

unit -- NA* 4271

Monitoring in 5 Monitoring of reservoirs was not

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reservoirs anticipatedlocations monitored

unit -- NA* 41

analyses carried out

unit -- NA* 274

Construction of buildings in Ponto Novo, Pindobaçu and Vila de Almescega and Vila Banderia de MeloHouses unit -- NA* 217schools/day care centers

unit -- NA* 2

Churches unit -- NA* 1community center unit -- NA* 1water treatment plant – WTP

unit -- NA* 2

sewage treatment plant – STP

unit -- NA* 2

Recreational areas unit -- NA* 3Families resettled in Ponto Novo, Pindobaçu and Bandeira de Melo

unit -- NA* 214

Regularization of river flow

Km -- 60 60 100

Number of dams constructed (Ponto Novo and Pindobaçu)

unit -- 1 2 200 The Bandeira de Melo dam is under construction. Work was begun with loan proceeds and will be finalized with the States resources.

Number of dams maintained and with small rehabilitation works executed

unit -- NA* 5

Number of dams under operation

-- 1 5 500Initial forecast was for the Ponto Novo dam.

Preparation of infrastructure O&M Manual

unit -- 1 1 100

Water Resources Management ComponentNew agencies organizedAssociations of resettled irrigators

unit -- NA* 3

Water users Associations

unit -- 1 4 End of project data taken from Loan Agreement page 8

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Water users commissions

unit -- NA* 63

Water users consortium

unit -- NA* 1

Water basin committees

unit -- NA* 4 Itapicuru, Paraguaçu, Salitre and Bacias do Leste.

Ponto Novo Irrigation District

unit -- NA* 1

Training: multipliers with formal education

unit -- NA* 1281

multipliers with non-formal education

unit -- NA* 1158

Public managers unit -- NA* 210Elaboration of SRH’s Strategic Plan

unit -- 0 1

Creation of Water Administrative Regions and implementation of Natural Resources Houses

unit -- 10 10 100 In some basins, the services of SRH were transferred to the nearest Natural Resources House.

Monitoring instruments installations: SRH’s hydro-meteorological network complements other agencies, representing 36% of the existing networksrainfall measurement stations(automatic and conventional)

unit -- 70 120 171.5Covering 64% of the state with 92% automated

river flow measurement stations (automatic and conventional)

unit -- 37 77 208.1 Covering 66% of the state with 60% automated

evaporation measurement stations (automatic and conventional)

unit -- 25 12 48 Covering 47% of the state and 100% automated

Provide SRH with simulation models for measuring quality and quantity of water

unit -- NA* 13

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Tariff, water charges & users rightElaboration of water charges

unit -- 1 1 100 Amount defined and in R$/m²

Coverage of O&M costs for the Ponto Novo irrigation district through tariff payments from farmers

% -- 100% 30% 30 Large-scale farmer’s lots are not yet operational and they will provide sustainability of the project. Pindobaçu irrigation system is in the implementation stage.

Development of studies for water use tariff charges for the State

Unit -- 1 3 300

Increase in the number of water use rights granted (outorgas)

Unit 547 6500 7258 111.66 End of project estimate from implementation manual: 1300 water use rights granted (outorgas) per year (vol. B page 41)

Strengthening of the water resources sector legal framework through the preparation of:Laws unit 2 NA* 5Decrees unit 1 NA* 2Preparation of the municipal legislation for water use (number of laws)

-- 5 2 40 SRH participated providing technical assistance to the city halls.

Elaboration of a social and economic database

unit -- 3 2 66.67

Development of decision support system models

unit -- 1 2 200

Water resources State plan

unit -- 1 1 100

Projects to subsidize the inclusion of underground waters in the water resources management policy in the State

Unit -- 1 3 300

NA* - Not Applicable – No baseline survey was carried at the beginning of the project.

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1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionInstitutional Development 30.0 19.3 64.3Infrastructural Development 55.0 66.0 120.0

Total Project Costs 85.0 85.3 100.4

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category

Procurement Method

Total Cost, Including

Contingencies

ICB NCB Other N.B.F.1 1. Works 21.52 13.81 2.152 37.48 (12.86) (7.61) (1.19) (21.66) 2. Goods 12.15 0.65 13.82 14.18 (9.14) (0.49) (1.04) (10.67) 3. Consultant Services 17.783 17.78 (16.00) (0.00) (16.00) 4. Training 2.55 0.00 2.55 (2.29) (0.00) (2.29) 5. Miscellaneous 2.494

(0.00) 2.49

(0.00) 6. Recurrent Costs Personnel Services Operating Costs

4.62 (0.38)5

5.90 (0.00)

5.90 (0.00) 4.62

(0.38) Total 33.67 14.46 28.48 8.39 85.00 (22.00) (8.10) (20.90) (0.00) (51.00)

1. NBF = Not-Bank financed2. National shopping for works and goods3. Includes consultant services (individuals and firms) and technical assistance to public entities involved in implementation

and to beneficiaries. Services should be procured in accordance with World Bank Guidelines for the Selection and Employment of Consultants (January 1997).

4. Includes resettlement indemnization fund and land purchases5. Recurrent costs (travel, office maintenance and supplies) for Project Management Unit.

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category

ICB Procurement

NCB Method1

Other2

N.B.F.

Total Cost

1. Works 37.39 16.73 0.00 0.00 54.11 (15.06) (8.49) (0.00) (0.00) (23.55) 2. Goods 7.66 0.00 0.00 0.00 7.66 (5.89) (0.00) (0.00) (0.00) (5.89) 3. Consultant Services 0.00 0.00 13.45 0.00 13.45 (0.00) (0.00) (20.70) (0.00) (20.70) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.58) (0.00) (0.00) (0..58) 5. Miscellaneous 0.00

(0.00) 0.00

(0.00) 0.00

(0.27) 0.00

(0.00) 0.00

(0.27) 6. Miscellaneous 0.00

(0.00) 0.00

(0.00) 0.00

(0.00) 0.00

(0.00) 0.00

(0.00) Total 45.05 16.73 13.45 0.00 75.23 (20.95) (9.07) (20.75) (0.00) (51.00)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Appraisal Estimate(*) Actual/Latest Estimate Percentage of Appraisal Component

Bank Government Bank Government Bank Government

Institutional 18,000 12,000 15,920 3,354 88% 28% Infrastructure 33,000 22,000 35,160 30,842 107% 140%

TOTAL 51,000 34,000 51,080 34,196 100% 100.60%

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Annex 3. Economic Costs and Benefits

The economic and cost benefit analysis, done as part of this ICR, utilized the same methodology applied during appraisal so that a clear comparison between the PAD estimate and actual results could be made. Thus, the Water Resource Management Component was evaluated using the Minimum Impact Approach.1The Infrastructure Component, on the other hand, was evaluated using the traditional cost-benefit analysis. (See Annex 5 of the PAD on the details of appraisal estimates).

Water Resource Management Component

The ex-post evaluation of the water resource management component found out that the annual flow of benefit reached US$19.4 million, close to the ex-ante estimation of US$20.6 million. Annual cost of the management of water resources, on average was US$2.48 million, close to the ex-ante evaluation of US$2.5 million. Thus the ex-post benefit-cost ratio stood at 7.88, which is slightly lower than the appraisal estimate of 8.24 percent.

According to the analysis done during Appraisal following the Minimum Impact Approach, the annualized cost of water resource management was set at 0.3% of the social value (it was assumed social and economic values to be equivalent). The evaluation done as part of this ICR found that the total economic impact of the project is valued at US$838 million. This indicates that, given the total economic value accrued as a result of the project, an annual cost of US$2.514 million (i.e. 0.3% of $838 million) in water resource management was justified. The actual annual cost at US$2.48 million was slightly lower than the justified amount indicating an efficiency gain.

Following the evaluation done during appraisal, Table 3.1 shows the comparison of the ex-ante estimation (see PAD p. 27) and actual estimate. The table reveals that using economic criteria established during appraisal for evaluating the investment made, the expenditure made in the Water Resource Management component was justified.

Table 3.1 Summary of comparative analysis of appraisal and actual estimateAppraisal estimate Actual Estimate

Economic values $898.0 million $838.0 millionAnnual Impact $20.6 million $19.4 millionAnnualized cost $2.5 million $2.48 millionMinimum impact 0.3% 0.3%Benefit-cost ratio 8.24 7.88

Infrastructure Component

In evaluating infrastructure component the project utilized the traditional cost-benefit analysis. For agricultural products average farm-gate prices over the last three years during harvest season (2002-2004) were used. Nominal prices were corrected by subtracting value-added taxes—or other service levies—included in the total value. The opportunity cost used was the same as that of the ex-ante evaluation, i.e., 12%, and the time horizon considered for all subprojects was 25

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years. Farm hired labor wage were fixed at the effective the minimum wage (Brazilian Real 300). Table 3.2 gives the main assumptions utilized in evaluating the infrastructure component.

Table 3.2 Economic Analysis Main Assumption, Benefits and Direct BeneficiariesMain Assumptions

Discount rate 12% Time horizon 25 years Growth in real price of outputs Constant Real exchange rate Constant Input prices Constant; last quarter of 2004 Output prices Constant average; 2002-2004

Benefits Increased horticultural, crops and forage

production Increased water supply at lower cost

Direct Beneficiaries Irrigation 2.600 farm families in Ponto Novo (Unlike the

PAD estimate of 397 farm families) Water Supply 51.000 population of Ponto Novo e Tucano.

The only difference of Table 3.2 from the appraisal estimate is the price used and the number of beneficiary families (397 through irrigation and 4015 from water supply for the ex-ante analysis).

The Internal Economic Rate of Return (IERR) done as part of this ICR was estimated at 26.4%, less than the appraisal estimate of 29.5% but 245% of the discount rate that justifies the investment made. The financial rate of return resulted in a rate of return of 23.5% slightly lower than the 27.3% estimated during appraisal. The analysis also estimated the fiscal gain that represented US$14 million, higher than the $10 million estimated during appraisal. Although, the fiscal impact analysis showed that the cost was higher than was originally planned, the return also increased accordingly. The additional cost is also a result of extended investment made in Ponto Novo in resettlement and on-farm and off-farm support provided to producers. Table 3.3 summarizes the aggregate flows and internal rate of return for the infrastructure projects.

Table 3.3 Aggregate Flows and Internal Rate of Return (in million US$)

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Present Value of Flows

Economic analysis Financial analysis

Fiscal impact NPV Taxes

ex-ante ex-post Ex-ante ex-post ex-ante ex-post Benefits 132.041 140.908 97.398 104.051 24.797 45.788 Costs 64.137 79.068 65.861 78.495 14.691 32.278 Net Benefits 67.094 61.840 31.537 25.556 10.006 13.510 IERR 29,5% 26,4% 27,3% 23,5% 25,8% 26,7%

In addition a detail cost-benefit analysis for the Ponto Novo and Tucano subprojects was conducted. The Ponto Novo subproject included both irrigation and water supply works while for Tucano dam water supply system was only considered.

The evaluation of the Ponto Novo Irrigation Project, investment benefits were calculated after aggregating results of four farm models, representing four principal types of irrigated farms in the region. The net benefits calculation took in to account quantifiable benefits attributable to the project, using the same approach as that of the ex ante evaluation.

Table 3.4 summarizes the finding of the IERR. For both Ponto Novo and Tucano the ex-post IERR justifies the investment made in both infrastructures. However, the return for irrigation was lower than the appraisal estimate but still at a much higher level of 30.3% compared to the discount rate of 12 percent. For Tucano, on the other hand, the return for water supply at 45.8% was the biggest return among all investments.

Table 3.4. Internal Economic Rate of Return of selected subprojects–IRERBenefit ex ante ex post

Ponto Novo TucanoPonto NovoTucanoIrrigation 32.2% 20.1%30.3%-Water Supply 24.0% 32.8%22.4%45.8%

Additional Impacts

Efficiency and increase in the volume of water supplied

Due to improved infrastructure development the project financed, loss of useful and useable water has been improved significantly. The introduction of improved irrigation equipment coupled with the necessary training meant farmers are now using water more efficiently. In addition, the reliability of water availability and the projection that it will satisfy the demand for the next 20 years imply, the region might attract additional investment in different sector of the local economy. Not only the project supported the reliability of water availability but also the provision of clean water that will have a huge impact, such as in improved health, less time lost due to health problem, reduced time in fetching water, etc., that was not accounted in the calculation of the economic cost-benefit analysis.

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Employment and income generation

The Ponto Novo subproject resulted in a real change in the region’s agricultural economy. Actual estimate shows that due to the Ponto Novo project, agricultural production increased to 60,000 tons per year, generating gross revenue of approximately R$30 million, using the average price of 2002-2004. Farmers also diversified their production to high value products such as squash, pepper, cabbage, tomato, banana, mango, and guava.

With the irrigation system in full operation, the economy of nearby municipalities, especially that of Ponto Novo and Filadélfia, will create 2,600 direct and 3,900 indirect jobs, distributed among the various services that support production, agro-industries, and marketing.

With further consolidation of the Ponto Novo irrigation system and the inclusion of small-and medium-scale producers, additional gains are expected from economy of scale and the verticalization of production, through the establishment of associations and firms responsible for input-output marketing, agricultural products processing, and related agro-industry development.

Impact of Resettlement on Families

With an irrigated area of 252 hectares, of which 100% is used for the production of vegetables, fruits, and legumes, the Ponto Novo Irrigation Project is having a clear, direct impact on the production, income, and employment.

The project’s implementation promoted significant socioeconomic changes in the region, facilitating the creation of 22,750 daily wages for rural workers in the period from August 2003 to August 2004, which has raised the salary level (now slightly higher than that paid by the region’s commercial sector).

These impacts had a major multiplying effect on the regional economy, through a considerable increase in the demand for consumer goods and services, which was reflected in the increased number of commercial establishments, and increased demand for labor and income levels and consequently decreasing the rural exodus.

The project made a substantial improvement in the standard of living of the resettled population. Considering these were extreme poor farmers, the result is nothing short of revolutionary. Such improvements were nearly nonexistent and these beneficiary farmers enjoy a standard of living that they could never have imagined.

Increased Women’s participation

In 2001, the Gender, Women and Development subproject was carried out in the four municipalities bordering the lake at the Ponto Novo Dam. In the project’s first phase, workshops were held to raise awareness about organizing women in the municipalities of Ponto Novo, Pindobaçu, Saúde, and Filadélfia. These workshops presented activities dealing with the subjects

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of Women’s Health, Women’s Rights, and the Value of Women, with the objective of bringing attention to water resource management.

The objective of this subproject was to promote participatory management of water and the creation of employment and income generating opportunities, in light of the importance of women in water administration. This subproject resulted in the creation of the Flower Project–Ponto Novo Resettlement and consolidating the activities of women artisans within their respective localities.

Enhanced involvement of users’ associations

The participation of civil society in water resource management began in February 1998, as part of mobilizing and organizing water users, resulting in the current model of organizing water users for the participatory integrated management of water resources.

In 1999, the Ponto Novo Resettled Irrigators’ Association was created, formed by persons resettled on irrigated lots in the Ponto Novo Resettlement–Phase I. This association’s aim is to organize and train users in carrying out irrigated agriculture that is compatible with the multiple uses of the Ponto Novo reservoir. The function of the organization is to discuss and prepare proposals dealing with water resource management and to establish partnerships with the State Management Agency. Poor farmers, who used to have no say in their life are now actively participating in all phases of decision making in their common irrigation perimeters. Farmers are showing maturity and are taking more responsibilities.

Footnotes:

1. The use of the Minimum Impact Approach was justified by the PAD by stating that the approach was applied to evaluate economic feasibility of project’s water resource management component (Cumming et. al., 1996 and Mexico Water Resource Project, 1996). See PAD p. 27. .

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation05/07/1996 3 WATER ENGINEER (1);

CONSULTANT/ENGIN. (1) SOCIAL ECONOMIST/FAO (1)

08/30/1996 1 WATER ENGINEER (1)11/06/1996 6 WATER ENGINEER (3);

SOCIAL ECONOMIST (1); ENGINEER (1); ECONOMIST(1)

01/19/1997 3 WATER ENGINEER (3)

Appraisal/Negotiation04/17/1997 6 WATER ENGINEER (3);

SOCIAL ECONOMIST (1); ENGINEER (1); ECONOMIST(1)

Supervision

10/14/1998 3 WATER RES ENGINEER (2); ANTHROPOLOGIST (1)

S S

03/30/1999 3 ENGINEER (2); ANTHROPOLOGIST (1)

S S

10/29/1999 1 ENGINEER (1) S S12/10/2000 3 WATER RES. ENGINEER (1);

ENV&SOCIAL SPECIALIST (1); PROGRAM ASSISTANT (1)

S S

03/19/2001 4 WATER RESOURCES CONSUL (2); TASK MANAGER (1); PROGRAM ASSISTANT (1)

U S

03/19/2001 5 SENIOR ANTHROPOLOGIST (1); WTR RES CONSULTANT (2); OPERATIONS ANALYST (1); TASK TEAM LEADER (1)

U S

03/15/2002 5 TASK MANAGER (1); SENIOR ANTHROPOLOGIST (1); SR WTR RES MAGNT CONS (2); OPERATIONS ANALYST (1)

S S

10/18/2002 3 WATER RES CONSULTANT (1); OPERATIONS ANALYST (1); TASK MANAGER (1)

S S

03/14/2003 4 TASK TEAM LEADER (1); WATER RES CONSULTANT (2); OPERATIONS ANALYST

S S

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(1)10/10/2003 4 TASK TEAM LEADER (1);

WATER RES CONSULTANT (2); OPERATIONS ANALYST (1)

S S

04/06/2004 6 WATER RESOURCES (1); IRRIGATION (1); SOCIAL/ENVIRON. (1); TASK TEAM LEADER (1); OPERATIONS ANALYST (1); PROGRAM ASSISTANT (1)

HS S

10/22/2004 5 TASK TEAM LEADER (1); OPERATIONS ANALYST (1); WATER RES CONSULTANT (3)

HS S

ICR3 SR. RESETTLEMENT

SPEC. (1); OPERATIONS OFFICER (1); WATER RES CONSULTANT (1)

S S

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation Not available* Not available*Appraisal/Negotiation 5.40* 211,754.60Supervision 161.61 509,445.85ICR 12** 45,000.00Total 179.01 766,200.45

* Data prior to 1998 not available due to the discontinuance of Fact System.** Estimate based on Work Program Agreement Deliverable Plan for FY 2006.

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Bahia: Water Sector Policy Letter, August 1997.

Governo do Estado da Bahia, Superintendência de Recursos Hídricos – SRH. 2005. Relatório Final De Avaliação Da Implementação E Do Impacto Do Projeto De Gerenciamento De Recursos Hídricos Do Estado Da Bahia. Minuta Preliminar.

Mission Aide Momoires and PSRs

Project Monitoring Reports and several UGP documents

The World Bank. 2003. A More Equitable, Sustainable, and Competitive Brazil.

Country Assistance Strategy 2004-2007.

The World Bank. 1993. Water Resouce Management – A World Bank Policy Paper.

The World Bank. 1997. Project Appraisal Document – for a Water Resouce Management Project. Report No. 17003-BR. August 20, 1997.

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Additional Annex 8. Borrower's ICR

INTRODUÇÃO

O Projeto de Gerenciamento de Recursos Hídricos da Bahia – PGRH foi concebido pelo Governo do Estado da Bahia como um dos instrumentos para promover o acesso seguro e sustentável à água para uso potável municipal e industrial e para irrigação em bacias hidrográficas prioritárias no Estado; promover o gerenciamento participativo e o uso racional de recursos hídricos; e desenvolver sistemas de administração, operação e manutenção sustentáveis para a infra-estrutura de oferta de água rural e de irrigação.

O Projeto foi financiado pelo Banco Mundial, por intermédio do Acordo de Empréstimo 4232-BR, assinado em 4 de dezembro de 1997, concedida efetividade em 03 de março de 1998 e com data de encerramento inicialmente prevista para 31 de dezembro de 2002.

O Acordo de Empréstimo 4232-BR foi aditado três vezes, uma para acatar modificação em relação ao percentual de financiamento da Categoria de Gasto Bens e duas para definir novas datas de encerramento, resultando seu encerramento em 30 de setembro de 2005.

O Projeto de Gerenciamento de Recursos Hídricos do Estado da Bahia envolveu recursos da ordem de US$ 85 milhões de dólares norte-americanos, sendo US$ 51 milhões financiados pelo Banco Mundial e US$ 34 milhões de contrapartida do Estado da Bahia, na qualidade de mutuário do empréstimo.

1. – OBJETIVOS DO PGRH

Os objetivos do Projeto, definidos na sua preparação e constantes do Project Appraisal Document Relatório No.17003-BR (PAD), de 20 de agosto de 1997, foram os seguintes:

A. Prover acesso seguro e sustentável à água para uso potável, municipal, industrial e irrigação em bacias hidrográficas prioritárias do Estado da Bahia, Brasil, principalmente em áreas com alta concentração de domicílios rurais pobres. B. Promover o gerenciamento participativo e o uso racional de recursos hídricos no Estado da Bahia. C. Desenvolver sistemas de administração, operação e manutenção (A, O&M) sustentáveis para infra-estrutura de oferta de água rural e de irrigação. D. Desenvolver um modelo a ser usado nas demais Bacias Hidrográficas na Bahia.

2. COMPONENTES DO PROJETO

2.1. Componentes Originais (de acordo com o texto do PAD No. 17003-BR, o qual não coincide, necessariamente, com o texto do Acordo de Empréstimo 4232-BR, que se encontra com menores detalhes)

Parte A: Gerenciamento de recursos hídricos1. Prover recursos técnicos e financeiros para fortalecer instituições Estaduais e Organizações de Usuários de Bacia e Locais para gerenciar efetivamente os recursos hídricos no Estado da Bahia, de maneira financeiramente e ambientalmente sustentável. 2. Desenvolver um programa forte de informação ao público e de participação de

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usuários para assegurar o envolvimento dos decisores no gerenciamento de recursos hídricos. 3. Estabelecer uma estrutura institucional e legal, com foco inicial dado às três bacias prioritárias, com as capacidades técnica, financeira e legal para: (i) aumentar e estabilizar a oferta hídrica na Bacia; (ii) coordenar a A, O&M da infra-estrutura; (iii) promover fortemente as questões ambientais e os padrões de qualidade de água; e (iv) induzir o uso eficiente da água, por meio da alocação e emissão de outorga de direitos de uso da água, mediação de conflitos, tarifas e programas de educação para os usuários. 4. Desenvolver e melhorar as associações de usuários de água (AUAs) para administrar, operar e manter a infra-estrutura hídrica nas três bacias prioritárias, por meio de assistência técnica e programas de treinamento.Parte B: Investimentos em infra-estrutura1. Na Bacia do rio Itapicuru, a bacia prioritária com a necessidade mais crítica por infra-estrutura hídrica, o projeto construiria e reabilitaria as infra-estruturas de reservação, transporte e distribuição. A seleção dos investimentos estaria baseada em critérios econômicos, técnicos e ambientais bem definidos, como também em avaliações de impacto social e ambiental. Todos os investimentos de infra-estrutura seriam consistentes com o Plano de Gerenciamento de Recursos Hídricos (GRH) da Bacia.

3. OBJETIVOS E PRODUTOS ALCANÇADOS

3.1 Metas Alcançadas

Para o monitoramento e a avaliação do PGRH foi proposto um conjunto de indicadores econômicos, sociais e ambientais, especialmente referentes aos recursos hídricos e o seu gerenciamento, aplicado a cada um dos seus componentes, como indicado no Anexo 6 do PAD. Os indicadores do componente de gerenciamento de recursos hídricos são qualitativos, enquanto a maior parte do componente infra-estrutura se baseia em uma avaliação quantitativa.

COMPONENTE DE GERENCIAMENTO DE RECURSOS HÍDRICOS

Plano de Ação Atividades Indicadores chave Previstos no PAD 17.003 – BR

Resultados atingidos

Sistema de gerenciamento de recursos hídricos

Estabelecimento e operação de:Arcabouço político;Comitês de Bacias:Associações de Usuários de Água

Aprovação da regulamentação da Lei da água;Funcionamento regular do arranjo institucionalConvocação regular das entidades de recursos hídricos

- Regulamentada a Lei 6.855/95-Nova Lei preparada e enviada para a apreciação da Assembléia Legislativa;- Arranjo institucional definido e funcionando até o encerramento do Projeto;-Organização, Implantação, Funcionamento e Apoio Jurídico de: Colegiados Centrais; Comitês de Bacias Hidrográficas; Associação de Usuários de Recursos Hídricos.

Estrutura institucional

Desenvolvimento Institucional da SRH;

Sistema de processamento de dados: equipamento, treinamento

- Ampliação de quadro funcional;- Implantado na SRH Sistemas:

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oficial de recursos hídricos

Descentralização por Regiões Administrativas da Água;Desenvolvimento institucional de entidades intervenientes;Articulação das entidades Federais e Estaduais;Modernização de instalações e laboratórios

e sistemas administrativos – técnico e gerencial.Escritórios das Regiões Administrativas da Água estabelecidas e trabalhando;Aquisição de infra-estrutura, equipamentos e veículos de apoio logístico;Acordos e contratos com as entidades estaduais e federais.Instalação de laboratórios e análises efetuadas.

documental, de divulgação institucional, administrativo e de gerenciamento de informações de Recursos Hídricos;- Descentralização da SRH por meio da criação e implantação de 10 Casas de Recursos Naturais;-Desenvolvimento Institucional das Entidades Intervenientes, mediante capacitação, apoio logístico, estabelecimento de critérios e padrões para o desenvolvimento de estudos, projetos e supervisão de obras;- Aquisição de programas computacionais, equipamentos de medição e controle de campo e veículos;- Realizados acordos com entidades estaduais e federais para desenvolvimento de trabalhos específicos.

Legislação, regras e procedimentos

Regulação do sistema de gerenciamento;Estudo de sanção da legislação e cobrança de saláriosSuporte legal para preparação e aplicação de planos e programas;Associações de recursos hídricos;Legislação em águas subterrâneas.

Melhoria dos instrumentos jurídicos;Ausência de conflitos entre usuários;Aumento da eficácia das normas judiciais.

- Aprimoramento legislação de Recursos Hídricos;- Regulamentação e aprimoramento no processo de emissão de outorga.

Treinamento Custos, treinamento e aprendizagem técnica;Troca e cooperação técnica;Campanhas de publicação e conscientização do uso racional da água;Comunicação social e educação ambiental;Guia e treinamento de usuários de recursos hídricos;Treinamento para operação e manutenção de infra-estrutura hídrica.

Cursos realizados e avaliados pelos alunos;Campanhas realizadas e público atingido;Programas de educação ambiental – atingindo crianças e jovens e avaliação dos resultados;Cursos de treinamento de usuários e avaliação da economia de água obtida;Reabilitação das obras e manutenção regular com responsabilidade.

- Implementados 2 Programas de educação ambiental e comunicação social – atingindo crianças e jovens - com cursos e campanhas para 4.720 pessoas; -Assistência Técnica para irrigantes e reassentados; Realização de cursos de capacitação para O&M de barragens.

Eventos de publicação e

Apoio a planos, programas e sistemas

Número de eventos realizados e avaliação dos resultados;

- 330 eventos de capacitação realizados para agentes

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difusão da informação

de gerenciamento;Seminários, workshops e cursos rápidos

Publicações lançadas, número de impressos e número de leitores.

multiplicadores;- Cerca de 200.000 publicações lançadas (cartilhas, folders)- Produzidos 36.500 unidades de material de divulgação.

Apoio técnico para o gerenciamento de recursos hídricos

Informação hidrológica e hidro-meteorológica

Modernização, operação e manutenção de sistema hidrométrico.Análise, processamento e sistematização da informação hidrológica;Desenvolvimento de sistema de informação hidro-meteorológica;Monitoramento hidrológico: quantidade e qualidade.

- Modernização, operação e manutenção da rede hidrométrica, com 209 estações implantadas; - Análise, Processamento e - Sistematização de Informações Hidrológicas com implantação de banco de dados e SIG; - Monitoramento Hidrológico e da Qualidade das Águas;- Implementado o monitoramento dos recursos hídricos superficiais nas bacias dos rios Itapicuru, Verde/Jacaré e Alto Paraguaçu; - Realizado diagnóstico da qualidade da água e sedimentos dos reservatórios de Apertado, Ponto Novo, São José do Jacuípe, França e Pedras Altas.

Registro de usuários Registro de usuários: abastecimento, irrigação e outros. Registro de poços profundos tubulares. Registro de obras hídricas.Banco de dados de uso dos recursos hídricos. Sanção do direito de uso dos recursos hídricos.

- Realizados os cadastros de Usuários de infra-estrutura hídrica e Outorga de Direito de Uso de Recursos Hídricos. - Implantado Banco de Dados e SAD para o controle e monitoramento dos processos de outorga.

Sistema de recursos hídricos

Sistemas de informação sobre recursos hídricos.Sistemas de informação geográfica – SIGs;Sistema de suporte a decisão;Modelos hidrológicos: quantidade, qualidade e hidro-geológico.

- Criado um Sistema de Informações sobre Recursos Hídricos, incluindo Rede de Monitoramento, Banco de Dado, SIG e 2 SADs (outorga e operação de reservatórios).

Planejamento de recursos hídricos

Planos Diretores de Bacias Hidrográficas

Preparação, atualização e complementação dos planos diretores de bacia;Desenvolvimento e aplicação de sistemas de processamento de dados para apoio aos planos.

- Criado o sistema de armazenamento e processamento de dados dos Planos Diretores.

Plano Estadual de Recursos Hídricos

Preparação, avaliação e controle do Plano Estadual de Recursos Hídricos.Formulação de programas anuais e multi-anual de recursos hídricos

- Elaborado o Plano Estadual de Recursos Hídricos da Bahia.

COMPONENTE DE INFRA-ESTRUTURAPlano de Ação Atividades Indicadores chave Previstos Resultados atingidos

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no PAD 17.003 – BRSistema de Ponto Novo

Barragem de Ponto Novo. Sistema de abastecimento associado. Sistema de Irrigação de Ponto Novo.

Aumentar: a disponibilidade hídrica per capita, o volume de água distribuído, o número de usuários, área irrigada e volume de água produzido; associações de usuáriosAumentar a renda per capitaMelhoria da saúde: nutrição, mortalidade infantil, doenças relacionadas à água, áreas irrigadas e produção agrícola;Número de agricultores com terras regularizadas

-Aumento de: 4,7m3/s na disponibilidade hídrica superficial e de 37,25 l/s no volume de água distribuída;-Implantado o Sistema Ponto Novo, contemplando: (i) a construção de uma Barragem com capacidade para acumular aproximadamente 40 milhões de metros cúbicos de água;(ii) a implantação de um Sistema de Irrigação com área irrigável de 2.540 hectares;(iii) a implantação do Sistema de Abastecimento de Água das cidades de Ponto Novo, Filadélfia e Caldeirão Grande e a localidade de Jacaré, beneficiando diretamente 51.000 habitantes; e a execução de um Plano de Reassentamento envolvendo 557 famílias e 2.835 habitantes afetados pelas obras da barragem.- Aumento de empregos diretos para 2.600 habitantes e indiretos para 3.900 habitantes, todos na região do Projeto Ponto Novo.- Houve diminuição dos casos de dengue em 72,7%; diarréia em 77,4% entre 1999 e 2005.- Apoiada à criação e concedido apoio a 4 Associações de Usuários de Água

Projeto de Tucano

Adutoras, reservatórios, implantação de poços e projetos demonstrativos

Aumentar: a disponibilidade hídrica per capita, o volume de água distribuído, o número de usuários, área irrigada e volume de água produzido; associações de usuáriosAumentar a renda per capitaMelhoria da saúde: nutrição, mortalidade infantil, doenças relacionadas à água, áreas irrigadas e produção agrícola;Número de agricultores com terras regularizadas.

- Aumento de 100 l/s na disponibilidade hídrica;

-Implantada a infra-estrutura hídrica relacionada ao Projeto Tucano, atendendo com abastecimento de água, as sedes municipais de Nordestina, Cansanção e Quijingue e mais 29 localidades, além de reforçar o atendimento a localidades do município de Euclides da Cunha, beneficiando 33.400 habitantes.

Recuperação da mata ciliar

Implementação e recuperação de mata ciliar

Área reflorestada e mantida;Redução do transporte de sedimentos;Monitoramento da qualidade da água.

-134 ha de mata ciliar revegetada, 120.000 mudas plantadas e 8 viveiros construídos; - Realizado monitoramento da qualidade da água em 41 pontos de amostragem com 274 análises realizadas em 5 reservatórios e 44 pontos com 4.271 análises realizadas nas bacias do Itapicuru, Paraguaçu e Verde/Jacaré

Reabilitação das estruturas

Pesquisa de estruturas hídricas

Número de estruturas recuperadas;

- Elaborado um Manual de O&M de infra-estrutura hídrica

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hídricas existentes

e formulação de propostas de recuperação.

Vazão e volumes de água recuperados;Eficiência de operação e manutenção;Serviço de operação e manutenção.

- 2 barragens recuperadas e 5 com O&M eficiente;

Outros sistemas

Elaboração de estudos e projetos de outras obras de estrutura hídrica.

Número de projetos elaborados;Critérios usados atualizados e inovados;Avaliação da evolução da qualidade do projeto;Estudos de qualidade ambiental e reassentamento.

- 5 estudos de viabilidades e 5 projetos de barragens elaborados, utilizando critérios atualizados e inovadores;- 5 estudos de ambientais;- 2 estudos de reassentamento.

Obras não previstas

- Construída a barragem de Pindobaçu regularizando 1,59 m3/s;

- Em construção a barragem de Bandeira de Melo que regularizará 18,83 m3/s;- Eletrificação do sistema de irrigação de Ponto Novo, disponibilizando 13.8 Kw.

Além dos indicadores citados nos Quadros acima, o Projeto desenvolveu, no seu último ano, outros indicadores numéricos específicos que constam do Relatório Final de Avaliação da Implementação e do Impacto do PGRH.

3.2. Avaliação dos Resultados Alcançados

Em uma análise da execução do PGRH, comparativamente com os objetivos propostos, é notório que os resultados obtidos extrapolaram o que foi planejado, conforme as seguintes constatações:

Gerenciamento de recursos hídricos:

As avaliações realizadas junto aos órgãos executores demonstraram que o Projeto, ajudou no incremento da eficiência das atividades de planejamento do setor; contribuiu para a melhoria da qualidade dos projetos de engenharia e estudos conferindo-lhes uma visão bem mais ampla da bacia hidrográfica; criou condições para trabalhos de organização e capacitação de usuários de água; concedeu apoio técnico especializado; apoiou na reestruturação e na incorporação de práticas administrativas, sobretudo no acompanhamento de despesas; estabeleceu sistemática de reassentamento, envolvendo aspectos sociais, altamente positivos, não previstos normalmente em outros projetos de governo; contribuiu para uma melhor definição da política ambiental do Estado da Bahia; contribuiu para a educação ambiental da população e para o empoderamento deste tipo de ação pelos beneficiários; promoveu o fortalecimento institucional para o cumprimento das atividades de monitoramento e avaliação ambiental em bacias hidrográficas; possibilitou a adoção de parcerias entre entidades científicas, para a realização do monitoramento ambiental; e possibilitou avanços tecnológicos, sobretudo aqueles relacionados com informações hidrométricas, bancos de dados e sistemas de apoio à decisão;

O fortalecimento da SRH se deu por meio da legislação que alterou a sua estrutura

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organizacional, definiu suas atividades, lhe deu autonomia administrativa e financeira. Complementarmente, foi implantado o seu Planejamento Estratégico e foram implantados os seus sistemas: Documental, de Divulgação Institucional, Administrativo, de Gerenciamento de Informações e de Gerenciamento de futuros projetos. Cabe destacar a Certificação do órgão no ano de 2005 na ISO 9001:2000, alçando a SRH o posto de ser o primeiro órgão gestor de recursos hídricos do Brasil a obter uma certificação ISO abrangendo o processo de outorga. Houve um expressivo ganho de integração de esforços, de melhor qualidade e produtividade dos serviços prestados nos municípios, quando da implantação das 10 Casas de Recursos Naturais, pois estas funcionam como representações locais voltadas para o atendimento de usuários, tendo como principal objetivo o apoio à realização de todos os trabalhos por cada um dos órgãos do gerenciamento de recursos hídricos do Estado da Bahia.

No que se refere ao fortalecimento das organizações de usuários de água, houve um grande envolvimento e participação da população, contando inclusive com o apoio de Universidades Estaduais, que implementaram projetos na área de organização de usuários da água em parceria com o órgão gestor.

Os recursos oriundos da cobrança, pelos serviços prestados pela SRH no fornecimento de água bruta de seus reservatórios, passarão a ser receita da SRH, o que propiciará autonomia relativa à autarquia para desenvolvimento de estudos e custeio do órgão. Os recursos oriundos da cobrança nos rios de domínio estadual serão direcionados para o Fundo Estadual de Recursos Hídricos – FERH que deverá elaborar um planejamento anual da sua aplicação, devendo, parte dele, reverter para a própria bacia onde os recursos foram arrecadados.

O banco de dados contribuiu para o controle e monitoramento da situação da grande maioria dos usuários de recursos hídricos, bem como permitiu que, internamente, a SRH pudesse controlar, de forma eficiente, a situação dos processos de outorga.

Infra-estrutura:

A criação do Painel de Segurança de Barragens – PSB proporcionou, não apenas a SRH e as demais entidades governamentais,vinculadas à gestão de recursos hídricos, mas também a todas as empresas de consultoria e construção das barragens, a melhoria da qualidade dos projetos elaborados e consequentemente a economicidade das estruturas projetadas, chegando, inclusive, a definir padrões para certas estruturas comuns;

O Plano de Reassentamento de Ponto Novo serviu como um modelo de atendimento às populações atingidas por obras de barragem, antes norteada por uma política baseada apenas em indenizações financeiras, quase sempre aviltadas, e por isso mesmo, altamente prejudiciais à vida das pessoas, na grande maioria, pobres e carentes. O Plano proveu: (1) assistência legal para revisar documentação de terra existente e prover títulos de terra válidos; (2) serviços de extensão para ajudar efetivamente os fazendeiros a fazer a transição de agricultura de sequeiro para irrigada; (3) treinamento em O&M de infra-estrutura hídrica; e (4) assistência para fortalecer as associações comunitárias.

O aumento da área dos lotes, de 2 para 5 ha com sistema de irrigação por aspersão, medida pontuada como um benefício extra, favoreceu os agricultores, que puderam aumentar a área cultivada e consequentemente à produção e renda;

A perenização de rios, conseguida após a construção e recuperação de barragens, proporcionou acesso

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seguro e sustentável a água para uso potável e na irrigação, em áreas domiciliares rurais pobres, melhorando a saúde da população e gerando emprego e renda;

A transferência de O&M de barragens para a SRH, auxiliará no processo de cobrança pelo uso da água, garantindo a futura sustentabilidade do sistema.

3.3. Custos e Financiamento do PGRH

O PGRH foi orçado em US$ 85,0 milhões, dos quais US$ 51,0 milhões oriundos do empréstimo do Banco Mundial e US$ 34,0 milhões da contrapartida do Estado. Foram utilizados até setembro de 2005, US$ 83,997,846.00 sendo US$ 50,925,939.00 oriundos do financiamento do Banco Mundial e US$ 33,071,907.00 da contrapartida estadual. Despesas continuarão a serem pagas até 31 de janeiro de 2006, data de encerramento do período de graça.

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Quadro 2 - PGRH - Programação e Execução Financeira por Componente (Valores em US$ 1.00)

ITENS PAD AGO/97 REALIZADO (1) % REALIZADO

A. Componente Estrutural

1. Sistema Ponto Novo 34.525,293 34.027,231 98,6

a) Barragem 12.296,721 11.875,166 96,6

b) Plano de Reassentamento 5.030,036 6.997,891 139,1

c) Recuperação Vegetação Ci l iar 2.134,025 176,251 8,3

d) Sistema de I rr igação 11.494,722 7.700,613 67,0

e) Eletrif icação do Sistem a de Irrigação - 1.603,550 -

f) Sistem a de Abastecimento de Água 3.569,789 5.673,760 158,9

Sub-Total Ponto Novo 34.525,293 34.027,231 98,6

2. Projeto Tucano 8.503,894 7.219,589 84,9

3. Recuperação de estr. hídricas deficientes 10.293,535 2 .169,185 21,1

4. Outros Sistemas: Estudos e Projetos 1.615,121 2.641,483 163,5

5. Outras Intervenções: Barragem e Eletrif icação - 18.993,204 -

a) Barragem de Bandeira de Melo - 9.391,558 -

b) Reassentamento Barragem Bandeira de Melo - 475,993 -

c) Barragem de Pindobaçu - 9.049,575 -

d) Reassentamento Barragem Pindobaçu - 76,079 -

Sub-Total Estrutural 54.937,843 65.050,692 118,4

B. Gerenciamento de R. Hídricos

1. Componente Institucional 13.068,727 8.065,530 61,7

a) Desenv. Sist. Integrado Gestão de R. Hídricos 861,466 917,200 106,5

b) Desenv. Entidades estaduais de R.Hídricos 7.022,891 6.228,438 88,7

c) Desenv. Legislação Gestão R. Hídricos 649,843 - -

d) Capacitação e treinamento recursos humanos 3.539,234 919,893 26,0

e) Eventos difusão Gerenciamento R. Hídricos 995,294 - -

Sub-Total Componente Institucional 13.068,727 8.065,530 61,7

2. Apoio Técnico 10.867,917 4.177,096 38,4

a) Consol idação base informações hidrológicas 5.918,679 2.991,448 50,5

b) Cadastro de Usuários e Outorga R. Hídricos 3.422,422 335,480 9,8

c) Desenvolvimento de Sistema de R. Hídr icos 1.526,816 850,168 55,7

Sub-Total Apoio Técnico 10.867,917 4.177,096 38,4

3. Instrumentos de Gerenciamento R. Hídricos 3.159,503 1.879,152 59,5

a) Planos Diretores de Bacias 1.730,674 - -

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4. PRINCIPAIS FATORES QUE AFETARAM A IMPLEMENTAÇÃO DO PGRH

4.1. Fatores fora do Controle do Governo Estadual

• Em 2004, o ritmo das obras foi prejudicado em função de greves deflagradas por funcionários públicos de órgãos responsáveis pelas obras. Como impacto da paralisação, os cronogramas para conclusão das obras atingiram estágio crítico pela desaceleração das atividades técnicas e administrativas dos órgãos;• Ocorrência de manifestações e protestos do Movimento dos Atingidos por Barragens – MAB, que interditaram por diversas vezes o acesso ao canteiro de obras de barragens, por discordância com pontos acertados no reassentamento de famílias atingidas;• A maior disponibilidade financeira criada pela valorização do dólar frente ao real trouxe a possibilidade de executar, novas obras e intervenções.

4.2. Fatores, em Geral, Sujeitos ao Controle do Governo

• Dificuldades na implementação dos convênios com os parceiros e o cumprimento das obrigações em tempo e forma exigiram grandes esforços de coordenação e integração, vez que as prioridades do Projeto nem sempre coincidiam com as dos parceiros;• Modificações de configuração legal dos órgãos parceiros ao longo do período de execução, o que impactou as relações interinstitucionais;• Falta de planejamento, entre os anos de 2000 e 2001, por não prever que novos projetos deveriam estar sendo elaborados simultaneamente, vez que inexistiam projetos em condições de serem executados, considerando as exigências do Banco Mundial;

5. SUSTENTABILIDADE DAS AÇÕES REALIZADAS

Pode-se considerar que a sustentabilidade do gerenciamento dos recursos hídricos está assegurada, devido: (i) As funções da SRH estarem sedimentadas e fundamentadas em legislação adequada e moderna, demonstrando que o Governo do Estado definiu parâmetros em busca de uma eficiente gestão dos seus recursos hídricos; (ii) a perspectiva da implantação da cobrança pelo uso da água bruta no Estado da Bahia;

(iii) as práticas e metodologias implementadas pelo PGRH estarem sendo adotadas por diferentes instituições levando à consolidação dos conceitos no Estado; (iv) os procedimentos em relação à implantação de infra-estrutura hídrica adotados pelo PGRH foram incorporados aos projetos de engenharia e as obras executadas pelos órgãos estaduais; (v) as Sistemáticas de Reassentamento seguidas pelo PGRH estarem, em parte, sendo observadas por outros projetos que requerem reassentamentos de populações; (vi) a manutenção pelo Estado de um Comitê de Segurança de Barragens, nos moldes daquele instituído no âmbito do PGRH; e (vii) O Estado da Bahia ter iniciado, ainda em 2004, procedimentos para buscar novo financiamento do Banco Mundial, visando à continuidade das ações do PGRH.

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A sustentabilidade das ações de infra-estrutura hídrica foi fortalecida no Estado da Bahia, a partir da implementação do PGRH:

(i) uma vez que a SRH tornou-se responsável pela segurança, operação e manutenção, bem como pela gestão dos reservatórios e áreas de entorno, de barragens prioritárias, o que permitirá a cobrança pelo uso da água e posterior melhoria na O&M dos reservatórios; e(ii) uma vez que os projetos elaborados a partir do PGRH, passaram a dar ênfase nas especificações de métodos construtivos mais apropriados e condizentes com as características regionais, na qualidade dos materiais empregados nas obras, e na operacionalidade e adequação dos equipamentos hidromecânicos e de instrumentação, garantindo a maior durabilidade das obras.

6. AVALIAÇÃO ECONÔMICA

A mesma metodologia, apresentada no documento “Análise do Impacto Econômico, Financeiro e Fiscal – MAIO DE 1997” foi utilizada para a avaliação econômica ex post do Projeto, incorporando todos os custos e investimentos nos componentes: (1) Gerenciamento de Recursos Hídricos, contemplando os cálculos dos valores anuais dos impactos mais prováveis; e (2) infra-estrutura, utilizando ferramentas analíticas específicas para cada tipo de atividade analisada.

A viabilidade do componente de Gerenciamento de Recursos Hídricos apresentou uma relação custo/benefício em torno 0,0042, quando se utilizou o valor máximo dos custos anuais do componente. O resultado da análise indica claramente um grande impacto mínimo, garantindo a viabilidade econômica de implementar o projeto. Considerando-se, no entanto, o valor médio (em vez do valor máximo) dos custos anuais do componente Gerenciamento de Recursos Hídricos, equivalente a US$ 2,5 milhões, esta relação seria de 0,0030, equivalente à previsão ex ante.

Para a avaliação econômica do componente Infra-Estrutura, foram calculadas as taxas internas de retorno econômica (TIREs) para dois sub-componentes de infra-estrutura – Ponto Novo, com dois tipos diferentes de intervenção (irrigação e sistema de abastecimento de água) e Tucano, com apenas o sistema de abastecimento de água –, por meio da análise custo benefício, atingindo os seguintes resultados comparativos:

Quadro 3 – Taxa Interna de Retorno Econômico – TIREBenefício ex ante ex post

Ponto Novo TucanoPonto NovoTucanoIrrigação 32,2% 20,1%30,3%*Abastecimento de Água 24,0% 32,8%22,4%45,8%

(*) – Não foi implantado do sistema de irrigação Tucano.

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7. DESEMPENHO DO BANCO MUNDIAL E DO ESTADO

7.1 Desempenho do Banco Mundial

• O Banco Mundial teve o papel de orientador permanente na formulação de diretrizes e na exigência quanto à realização das ações previstas.• O Banco Mundial contribuiu para a aplicação de critérios para a indenização e para o reassentamento, que garantiram maior justiça social;• Houve uma contribuição significativa do Banco Mundial quando da concepção do perímetro de irrigação, em relação à organização social dos beneficiários e durante a implantação, através de supervisão técnica;• Os prazos de implementação poderiam ser reduzidos a partir da diminuição dos prazos de tramitação dos pleitos junto ao Banco Mundial.

7.2. Desempenho do Estado da Bahia

• O Mutuário sempre concedeu prioridade as ações do Projeto, em termos de alocação de recursos financeiros e humanos;• Houve empenho não só na manutenção da equipe de gerenciamento do Projeto como também na escolha cuidadosa dos Dirigentes que se sucederam na administração da SRH e Secretarias envolvidas;• O aparelhamento legal, técnico e logístico do setor foi facilitado, conforme revela a aprovação de diversas leis, inclusive aquelas que legitimam a cobrança pelo uso da água, reforços técnicos foram concedidos, além do investimento financeiro realizado no fortalecimento e descentralização da SRH;• A autorização concedida pelo Governador do Estado para iniciar a cobrança pelo uso da água, ainda em 2005, demonstra a importância dada ao setor e a busca por sua sustentabilidade no longo prazo.

8. PRINCIPAIS LIÇÕES ASSIMILADAS 8.1. Em relação ao Componente Institucional

• A descentralização de atividades de gestão contribui para que os usuários de água se aculturem, participem, tenham maior sentimento de comunidade e concedam maior importância à água e para uma maior eficiência das ações de fiscalização de usos;• É de suma importância o apoio técnico, mediante a contratação de especialistas, para respaldar a definição de ações de gestão de recursos hídricos, as formas mais adequadas para a intervenção em bacias hidrográficas e a definição de critério para a implantação de infra-estrutura hídrica;• O alto retorno conseguido pelo trabalho de educação ambiental direcionado para o uso da água, em comunidades dispersas, demonstrou a validade destas atividades, em benefício dos usuários da água, além de uma alta relação beneficio/custo para a sociedade como um todo.

8.2. Em relação ao Componente de Infra-estrutura

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• Os efeitos econômicos e sociais de Projetos como o PGRH seriam mais rápidos, se não coubesse ao Estado implantar perímetros públicos de irrigação como alternativa de geração de emprego e renda. O papel do Estado deveria ser somente a implantação da infra-estrutura básica, deixando para a iniciativa privada os investimentos para a utilização das áreas;• Em respeito às populações afetadas, em função do cumprimento do cronograma de obras e em termos de soluções de menor custo, as ações relacionadas a desapropriações e reassentamentos, devem ser equacionadas antes do inicio da execução de obras;• A legalização fundiária é um item de importância capital dentro do processo de reassentamento, estes devem ser iniciados o mais cedo possível, em virtude das terras rurais na área piloto ser na sua grande maioria, irregulares no que concerne à documentação;• A implantação de um lote modelo no momento da negociação com a comunidade a ser reassentada contribuiu fortemente para adesão ao reassentamento nos lotes irrigados. As aulas práticas de assistência técnica e associativismo também utilizaram este espaço com sucesso, resultando na introdução de práticas agrícolas orgânicas e na criação de associações;• A inserção da variável ambiental de forma efetiva desde o início do planejamento dos projetos de engenharia e estendendo-se às fases de licitação e execução, asseguraram maior controle ambiental, principalmente através das especificações técnicas ambientais incluídas no edital de contratação das obras, junto às especificações técnicas inerentes às obras de engenharia dessa natureza;• A possibilidade de utilização da faixa de preservação permanente e do lago objetivando a compatibilidade com a conservação e recuperação da vegetação nesta área, bem como a expectativa de geração de emprego e renda com a formação do lago mostrou-se altamente motivador e satisfatório para usuários e proprietários. Esta experiência serviu de respaldo à elaboração da Resolução do CONAMA nº 302/02, de 20 de março de 2002, que dispõe sobre os parâmetros, definições e limites de Áreas de Preservação Permanente de reservatórios artificiais e o regime de uso do entorno.

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