Water projects' viability

The World Bank (WB) has delivered a devastating critique of the government's three ongoing and five upcoming water projects' economic viability. The total cost of these projects is estimated at Rs 232 billion.
WB's review of these projects points out that either sufficient water is not available for these projects or better alternatives could have been pursued on both the technical and economic sides.
The Bank says the feasibility studies of the eight projects need to be critically reviewed with a view to either dropping or deferring these or curtailing their scope, irrespective of the fact that they may have reached a point of no return due to political or other reasons.
WB particularly mentions the ongoing Rs 53 billion Greater Thal Canal and the Kachhi and Rainee Canals. It says such long-gestation and high-cost irrigation expansion schemes would be questionable even at the best of times.
All the more so when water supplies are not assured, command areas comprise sandy soils and high pay-off short-term investments compete for (scarce) resources.
Collectively, these canals would account for 4.6 million acre feet of water for Kharif requirements alone, nearly twice the additional capacity to be created by the raising of the Mangla Dam.
The prospects of supplying water to these canals during the Rabi season were uncertain until additional storage became available.
Reallocating water from other canals, though theoretically possible, would be hard to implement given the existing customary or historical rights and the lack of real attention to water conservation.
The three canals would receive water for a period of 75-90 days from July to September. Non-availability of water during Kharif (April-June) would affect cropping patterns and yields.
Their long gestation would not yield even a low level of benefits in the short term. No funds had been allocated for command areas development without which the benefits of these projects would remain elusive.
Given the sandy nature of soils, the ERR for Thal Canal (18 percent) appears overly optimistic. If the additional cost of colonisation and CAD are added, which are of the same magnitude as the main canal works, the ERRs fall to an unacceptable level.
Among the proposed irrigation projects, the Bank identified the Rs 42 billion Sehwan Barrage Complex, Rs 19 billion Chashma Right Bank 1st Lift Irrigation, Rs 99 billion Akhori Dam, Rs 18 billion Dhok Pathan Dam and Rs 1 billion Sabakzai Dam, which should be deferred till the completion of their studies.
The Sehwan Barrage Complex has an ERR of 10.1 percent, which is quite low. Given its marginal economics, if a lower cost scheme with higher benefits could not be identified after further detailed planning and analysis, the project should be deferred beyond 2011.
Similarly, the Chashma Right Bank Canal Lift Irrigation project had an ERR of 10.3 percent. Big landowners would benefit the most from additional irrigation of 67,000 acres of land.
Income disparities between large and small landowners and landless labour were likely to increase.
Given the low ERR and high O&M cost, the project should be deferred till a full and rigorous evaluation of its feasibility had been conducted and mechanisms to increase cost recovery were agreed with the beneficiaries.
On the Akhori, Dhok Pathan and Sabakzai Dams, the Bank said that since their feasibility studies had still to be carried out, these projects too should be deferred until their feasibility had been established, and their implementation deferred until after 2011.
Notwithstanding the consensus developed at the meeting of the provincial chief ministers with the parliamentary committee on water resources on building large water reservoirs, the observations of the World Bank deserve to be taken note of and addressed.
WB has made a number of pertinent points. First and foremost is the question of the total availability of water.
Since this is still shrouded in controversy, no planning worth the name can be carried out until this issue is resolved.
Second, the relative cost-benefit ratio of all projects should be assessed against their internal technical and economic feasibility as well as in comparison with alternative investments that promise higher returns in a shorter timeframe. It will be difficult for the government to resist the logic of these observations by the Bank.
Since the government has pitched its entire economic development and poverty alleviation strategy on rapid development of water projects, WB's critique of these projects knocks the bottom out of this strategy.
In the light of WB's arguments, it is time for the government to return to the drawing board and reconsider its irrigation expansion projects and priorities.