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Implementation Completion Report (ICR) Review - Iran - Alborz Integrated Land And Water Management Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Iran - Alborz Integrated Land And Water Management Project
Project Costs(US $M)
 198.3  101.53
L/C Number:
Loan/Credit (US $M)
 120  61.6
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
Board Approval Date
Closing Date
10/31/2012 10/31/2012
Irrigation and drainage (90%), Agricultural extension and research (3%), Central government administration (3%), General agriculture fishing and forestry sector (2%), Forestry (2%)
Rural services and infrastructure (25% - P) Participation and civic engagement (25% - P) Water resource management (24% - P) Land administration and management (13% - S) Rural policies and institutions (13% - S)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Keith Robert A. Oblitas
Roy Gilbert Christopher David Nelson IEGPS1

2. Project Objectives and Components:

a. Objectives:

To assist the borrower in: (a) sustainably increasing agricultural productivity through improved irrigation, drainage and participatory management; (b) reducing soil erosion and sediment yields into the Alborz Dam on the Babol river, through improved upper watershed management; and (c) protecting the water environment through improved water quality monitoring, reservoir operation, and pest management in the project area.

Source: Loan Agreement

b. Were the project objectives/key associated outcome targets revised during implementation?

c. Components:

1. Upper Watershed, Forestry and Rangeland Management. (Expected cost at appraisal (base costs without contingencies), US$ 13.2 million. Actual cost by closing US$ 7.0 million). (i) Technical assistance for preparing an upper watershed master plan, and capacity building for community management organizations; (ii) forest and rangeland rehabilitation and management (including establishment of nurseries and regeneration of natural and artificial stands; and (iii) soil and water protection measures (such as gabions and vegetative measures) over the upper watershed area. (The PAD and ICR also comment that the aim was to establish effective soil and water protection through sustainable participatory community based forest and rangeland management, including establishment of water management cooperatives in the upper watershed.)

2. Irrigation and Drainage Management. (Expected cost at appraisal (base costs without contingencies), US$ 128.7 million. Actual cost by closing US$ 73.7 million). (i) rehabilitation and construction of irrigation and drainage systems for 52,000 ha of which 33,000 ha on traditional irrigation areas and 19,000 ha of new irrigation, including supplementary irrigation from groundwater; (ii) capacity building and technical assistance for establishment of water user associations (WUAs) for management of secondary networks and cost recovery of O&M expenditures; and (iii) agricultural extension and research to support farmers for improved water management, crop diversification and increased incomes.

3. Integrated Water Resources Management. (Expected cost at appraisal (base costs without contingencies), US$ 4.9 million. Actual cost by closing US$ 0.3 million). (i) Establishing a Basin Water Council; and (ii) a Basin Water Fund, to provide assistance for community based water and natural resources conservation; and (iii) establishing a support system enabling the Basin Water Council to involve stakeholders in sharing information on environmental impacts, project benefits and promotion of water conservation in the basin.

4. Environmental management. (Expected cost at appraisal (base costs without contingencies), US$ 7.6 million. Actual cost by closing US$ 7.74 million). As identified in the Environmental and Social Management Plan: (i) water quality monitoring; (ii) river ecology monitoring and mitigation measures; (iii) forest monitoring and management; (iv) preparing an integrated pest management plan; (v) resettlement; (vi) preparing a Dam Safety Plan; (vii) cultural property management; and (viii) public participation and awareness raising.

5. Project Implementation and Coordination Support. (Expected cost at appraisal (base costs without contingencies), US$ 3.9 million. Actual cost by closing US$ 12.8 million). Support for project implementation and coordination at national and basin levels including the Ministry of Agriculture and the two Regional Water Companies.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

The project's actual implementation was 7 1/2 years (from Board Approval on May 26, 2005 to closure on October 31, 2012.), which was the same period and dates as estimated at appraisal. Loan Effectiveness was February 17, 2006, 9 months after the Board date. There was no change in the closing date. The project's total cost estimated at appraisal was $198.3 million. Actual costs were $101.5 million, 51 percent of the appraisal estimate, mainly due to shortfalls in implementation of the irrigation component (20,000 ha of improved irrigation and drainage were completed compared with a planned 52,000 ha), and the watershed component (20,000 ha of of improved watershed were completed as against the target of 51,500 ha) There were no cancellations of the Loan during implementation. A Project Preparation Advance of $1.4 million was provided. The borrower's contribution to project costs was $40.0 million, half the originally anticipated $80.3 million, reflecting the shortfalls in physical implementation, and the commensurate halving of project costs and financing needs. Of the original loan of $120 million, $61.6 million was disbursed, and the remainder cancelled. There were no cofinancers. No fiduciary issues are reported in the ICR.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:

The project's objectives were consistent with the Bank's and Government's strategic priorities at the time of expressed in the Interim Assistance Strategy issued in April 2001. This strategy referred to the need to introduce integrated river basin water management, improve inefficient irrigation systems, reduce excessive groundwater exploitation, reduce water losses in conveyance and distribution, enhance agricultural productivity (per ha and per unit of water), reduce soil erosion and land degradation, increase carrying capacity of range and pasture lands and reduce over-cultivation of marginal soils. A water resources strategy paper issued by Government in 2003 contains similar objectives. The Task Team Leader has advised that, while Government's current water sector priorities have not been enunciated in a more recent paper for the water sector, Integrated Water Resource Management has featured consistently in Iran's Five-Year-Plans. Since the Bank does not presently have a lending program in Iran, there is no current Bank strategy to determine the current relevance of the project's activities. However, the project's approach is consistent with the Bank's Water Resources Management Strategy (2003), and Iran's need to improve water sector management, and the productivity of water remains as relevant today as it did at project conception.

The Project's Objectives were well formulated, and Substantially Relevant overall.

b. Relevance of Design:

The logical chain between objectives, components, outputs and outcomes (PAD, pages 24 to 26) is of varying quality. The objective to improve the water environment is reasonably navigable in the causality of the project actions to achieve the objective - actions include improving watershed management; adjusting operations of the Alborz dam to increase downstream flow; and providing monitoring stations for water quality, coupled with specific performance targets for the volume of downstream releases and sediment content. The components for achieving the project's objectives to reduce soil erosion and sediment yields, and to increase agricultural productivity are less well linked to the objectives. Outputs are expressed in terms of physical achievements such as hectares covered and the numbers of community organizations, but the nature of project activities (eg. what is being done at tertiary levels for irrigation improvements), and their impact supporting the objectives are less clear. Another shortcoming is the limited discussion in the PAD of how the individual components complement each other to achieve the broader goal of improved river basin management. A more holistic approach might have yielded more synergies between components. Relevance of design was Modest.

4. Achievement of Objectives (Efficacy) :

Objective 1: Sustainably increasing agricultural productivity through improved irrigation, drainage and participatory management:

The project's physical output in terms of the investment in irrigation and drainage fell well below target - 20,000 ha of new or rehabilitated irrigated area was created, as compared with 52,000 ha planned at appraisal. (Procurement disruptions due to the trade and financial sanctions on Iran were a major impediment here.) The project fared better in its efforts to establish Water User Associations. - 19 WUAs were created as compared with the appraisal target of 10. There are no indicators or proxy indicators of the functionality of the community organizations (for instance, on maintenance and sustainability of infrastructure, meetings convened, adequacy of operational funds, and number of advisory visits by the Ministry of Agriculture and of the Basin Water Council).

The key measure of outcome is the degree to which agricultural productivity has increased. The ICR reports that cropping intensity has increased to 130 percent, from a pre-project baseline of 120 percent, - the target was 134 percent. Yields of rice, the main field crop, increased by between 10 to 20 percent. The PAD target (Results Framework, page 25) was for a 65 percent increase. The ICR does not specify the time period for the increases in cropping intensity and yields, but even if the measurement period only spans 3 or 4 years, the annual increases would be quite marginal. The Efficacy of achieving the first objective was Modest.

Objective 2: Reducing soil erosion and sediment yields into the Alborz dam on the Babol river through improved upper watershed management.

The core actions to achieve this objective were to develop watershed management plans to implement a variety of measures for water and soil conservation such as: controlled rangeland and forest management, small erosion control measures like check dams (small dams to trap water runoff) and vegetative bunding (planting on contours of vegetative small "hedges" to slow runoff and reduce soil erosion), and the development of community organizations for resource management and related income generation (eg. higher yield pasture management allied with livestock production).

In output terms only 40 percent of the intended target area benefitted - 20,000 ha of 52,000 ha planned. The ICR provides little information about the effectiveness of the watershed plans or what was actually implemented.

An outcome indicator – rate of reduced soil erosion and sediment yields flowing into the Alborz Dam showed a sediment yield reduction of 15 percent over the project period. The Task Team Leader has advised IEG that measurement was done by international consultants and followed a standard technical method and overall model. (NB: Government's completion report - attached as Annex 7 - has a larger estimate of sediment yield reduction - about 27 percent. But this may refer to the improved watershed lands only, whereas the 15 percent estimate refers to the whole watershed.)

The broader goal of "basin wide integrated water resources management (PAD, pages 3 and 15) was advanced through individual project sub-components, such as for watershed management and operation of Alborz dam water flows, but lacked the more comprehensive management - institutionally and technically - of a more integrated approach to water management. Nevertheless, especially in dam operations, the project advanced key elements for a more integrated basin management approach.

Given the shortfall in the area under watershed management plans, and the uncertainties on the quality of the plans, and their implementation, Efficacy for the Second Objective is rated Modest.

Objective 3: (c) protecting the water environment through improved water quality monitoring, reservoir operation, and pest management in the project area.

Significant steps were taken: a Water Quality Plan was prepared; hydrological and water quality monitoring stations were increased from six to ten stations as planned, including refurbishing of the six existing stations; a common data base for hydrological data was introduced, and information made available to involved agencies; the Alborz dam was made operational including an O&M manual and instrumentation which monitored dam safety and water flow; release of water was increased to provide a river flow estimated to give adequate flushing for environmental purposes; and dissolved oxygen (the main indicator that was used to assess water quality) increased marginally – from 5 mg/litre to between 5 and 6 mg/litre, meeting the appraisal target which was restricted to maintaining existing levels. Also, a Pest Management Plan was prepared and implemented. Hence, the project established a good base for protecting the water environment, and Efficacy was Substantial.

5. Efficiency:

Implementation Efficiency. Project implementation was slow (although this was primarily due to the trade and international financing embargo's on Iran during the second half of project implementation). By project closure (the same date as at appraisal, making a total implementation period of 7 1/2 years), total project expenditures, Bank disbursements, and Government counterpart funding were each only about half of the appraisal estimates.

The two main project components (irrigation and watershed management, initially comprising 90 percent of appraisal project costs) achieved only about 40 percent of the appraisal hectare targets.

Cost Effectiveness can be roughly, though incompletely, gauged using the largest project component – irrigation (representing about 74 percent of the project’s total actual costs). About 38 percent of the intended total area for improvement or development had been completed by project closure. whereas expenditures on irrigation were significantly higher - about 57 percent of appraisal estimates.

Economic Viability. The ICR calculates an ERR for the irrigation and drainage component alone, accounting for about 73 percent of total project costs, based on benefits from increases in yields and cropping intensity. The ERR at completion was estimated in the ICR to be 16.6 percent, virtually the same as the 17.4 percent estimated at appraisal. The high completion ERR was sustained as a result of rising commodity prices (partly compensating for the project's cost overruns) and should not be attributed to the project itself. The ERR was found to be sensitive to changes in commodity prices – a 20 percent reduction in rice prices, for instance, would bring the ERR down to about 11 percent.

Taking account of the project’s implementation efficiency, cost-effectiveness and economic rate of return, overall Efficiency is assessed Modest.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:

Rate Available?
Point Value
ICR estimate:

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

In Iran's water-short situation - with demand for water increasing across all sectors - increasing agricultural productivity, reducing soil erosion and reservoir sedimentation, and protecting the water environment were relevant objectives. But the project's design could have placed greater emphasis on a more integrated approach to basin water management. Project implementation in the second half of the project period was beset by the various financial and trade sanctions on Iran, reducing achievements in watershed and irrigation development to less than half of appraisal estimates. Achievement was better for the third objective - water measurement instruments were established and river flows adjusted for ecological management. The ERR for the irrigation component was the same as at appraisal, caused by higher commodity prices than originally anticipated. Other measures of efficiency, especially cost effectiveness, were weak. With a modest relevance of design, modest achievements for two of the three objectives, and a modest efficiency, the overall Outcome is rated Unsatisfactory.

a. Outcome Rating: Unsatisfactory

7. Rationale for Risk to Development Outcome Rating:

For the objective to increase agricultural productivity through improved irrigation, drainage and participatory management; the largest risk may be the degree to which water user associations are institutionally and financially resilient and continue their O&M activities, but little is known about their functionality. Concerning the second objective - to reduce soil erosion and sediment yields into the Alborz dam through improved catchment management - reductions in sediment yields have been achieved, but there are no indicators regarding the sustainability of the watershed cooperatives. Improvement of the water environment is the objective that is least at risk as the Alborz dam and the water quality measurement system are established, staffed, and functioning.
But, as there are substantial risks for the first two objectives, with limited information on impact or on actions to mitigate the risks, Risk to Development Outcome is rated Significant.

a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:

In choosing to undertake the project, the Bank recognized that for Iran’s water short and multi-user situation, basin based, integrated water resources management was a key need. Consultation with stakeholders was extensive, helping to build commitment. On the other hand, the project was not fully ready for implementation: detailed designs and costing were incomplete, hence initial contracting was substantially based on outdated models; and land acquisition was behind-hand. Both factors resulted in a slow start-up. Also, M&E design was weak (Section 10). In broader terms, the project design could have given integrated water resources management a more focal role.

Project implementation risks were systematically covered in the PAD's risk assessment (page 9). Potential issues identified included inexperience with procurement, and uneven implementation capacity, although mitigating actions were in-built (training, consultancies) and had some positive effect during implementation. However, the complexities of meshing Iranian and Bank procurement practices were insufficiently recognized.

By far the largest issue was the sanctions on trade, international flow of funds and banking that Iran experienced from the third year of the project, although at time of appraisal, the broad scope of the eventual sanctions could not be foreseen.

But, based on the other constraints above that were within the Bank's capacity to improve, Quality at Entry was Moderately Unsatisfactory.

Quality-at-Entry Rating: Moderately Unsatisfactory

b. Quality of supervision:

Supervision missions were about twice yearly up to June 2009, slightly over three years after Loan Effectiveness. During that period, the main activity was on building capacity for basic implementation (procurement, financial management, technical skills) through training and consultancies. Thereafter, for the rest of the project period and during ICR preparation, the Bank halted missions to Iran, and Supervision relied on Bank communications with the local teams by telephone and e-mail. The Bank continued its monitoring of procurement and financial management, and no fiduciary issues are reported in the ICR. The project’s general progress was also monitored based on progress reports provided by the borrower, and through close dialogue with the implementation agencies. However, it was difficult to tackle some of the broader areas like integrated water resources management, which require field visits and discussions with multiple agencies. But overall, and taking account of the extreme circumstances under which the Bank had to operate, Supervision Performance is rated Moderately Satisfactory.

Taking account of both Quality at Entry and Quality of Supervision, the Overall Performance of the Bank was Moderately Unsatisfactory.

Quality of Supervision Rating: Moderately Satisfactory

Overall Bank Performance Rating: Moderately Unsatisfactory

9. Assessment of Borrower Performance:

a. Government Performance:

The Government has been committed to implementing and completing the project. At the time when the Bank had difficulty disbursing because intermediary banks could not transfer funds due to the financial sanctions, the Government allocated $50 million to the project so that it could still be funded. And the Government is continuing to finance the operation after closure of the Bank loan.

Nevertheless, the ICR indicates areas where Government could have provided more support, including: resolving land acquisition difficulties (delays in land acquisition were one of the key constraints holding up project implementation); facilitating design and bidding processes; and expediting issuance of visas for consultants. As such issues, especially land acquisition, contributed to the project's slow implementation, Government Performance is rated Moderately Unsatisfactory

Government Performance Rating: Moderately Unsatisfactory

b. Implementing Agency Performance:

The implementing agencies (Central Liason Office, Project Implementation Units, Basin Water Council, Basin Water and Soil Committee, Ministry of Agriculture, Regional Water Company, and other technical agencies) were committed to the project, and are continuing the program. But physical achievements of the irrigation and watershed development programs (the two largest project components) were only half of appraisal targets. While the slow implementation was evidently influenced by the banking and trade sanctions; there were also several shortfalls in performance: land acquisition was inadequately planned; progress with survey, design and bidding documents was slow in the first two years of the project; and M&E was weak. Implementing Agency Performance was Moderately Unsatisfactory.

The Overall Performance of the Borrower was Moderately Unsatisfactory.

Implementing Agency Performance Rating: Moderately Unsatisfactory

Overall Borrower Performance Rating: Moderately Unsatisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:

The PAD established monitorable indicators for measuring progress towards the achievements of each objective, and also provided indicators for measuring intermediate (output) results. However, output indicators were mostly in terms of physical achievements (eg. Numbers of WUAs), and more qualitative indicators to gauge effectiveness (for instance, regular meetings, representational balance of stakeholders on committees, revenues, O&M and financial status) are absent. Likewise, definitions when needed are not made - for instance, what yardsticks are used for assessing the Basin Water Council as “functional?”

b. M&E Implementation:

Base data was collected by the specialist departments concerned – in particular, the Ministry of Agriculture and the Regional Water Company. This made sense given each agency’s direct interest and specialist skills. Coordination and preparation of semi-annual reports was done by the project’s Central Liason Office. No specialized M&E unit was established.

The absence of a unit dedicated only to evaluation reduced the effectiveness of M&E, as the Central Liason Office spent much of its time on procurement and project implementation. Thus, although some progress was made in establishing a management information system, evaluative and cross-cutting M&E for comprehensive basin development and management received less attention. A more comprehensive and interlinked M&E system, even if qualitative rather than quantitative in some aspects, would have been desirable.

a. M&E Utilization:

The most effective use of the M&E data was in river management. Data from monitoring of water flows and dissolved oxygen levels were the primary factors for decision making on water releases.
The common website could in principle have also been useful, but the ICR does not provide information on the extent of usage and stakeholder views. Similarly, there is little information regarding the extent of utilization of M&E to monitor achievements of the first two project objectives.

The overall Quality of M&E was Modest.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:

The project was Environmental Category A, and triggered seven Safeguards: Environmental Assessment, Pest Management, Cultural Property, Involuntary Resettlement, Forests, Safety of Dams, and Projects on International Waters. An Environmental and Social Management Plan was prepared during project preparation, which covered all of the safeguards, and this was followed during project implementation by preparation of action plans and subsequent mitigating actions as below:

The Environmental Assessment was followed by preparation of water quality, river ecology, and wildlife monitoring plans, all of which were implemented.

A Pest Management Plan was prepared and implemented, including promotion of integrated pest management, phasing out of hazardous pesticides, monitoring of health impacts, and analysis of water quality.

A survey and mapping of cultural property was made for the entire dam area and several excavations undertaken, with some findings now displayed in the local museums.

For involuntary resettlement, a resettlement action plan was prepared, followed by payments of compensation for land acquisition. Social workers assisted affected villagers to enable satisfactory outcomes. Subsequent to implementation a consultant review confirmed that all project affected people were appropriately compensated.

For forests, a master plan was prepared, with subsequent actions including rehabilitation of existing forest roads, and measures to reduce soil erosion.

For dam safety, a number of studies were carried out: a re-evaluation of potential magnitudes and ground motions caused by tectonic activity; embankment body stability study; seismic studies; construction quality review; fault rupture study; emergency preparedness action plan; and ongoing monitoring by dam safety measurement instruments. The ICR states that the dam has been assessed safe, although a number of recommendations for further enhancing safety have been made.

b. Fiduciary Compliance:

No cases of fiduciary or procurement irregularity are reported in the ICR. Financial reporting was initially slow, but became timely after provision of staff training, consultant assistance, and software tailored for the project. Auditing was regular and no significant qualifications were raised in the audit reports.

c. Unintended Impacts (positive or negative):

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Risk to Development Outcome:
Bank Performance:
Moderately Satisfactory
Moderately Unsatisfactory
Integrated water resources management and design of M&E needed more attention. Project not ready for implementation (incomplete designs and costing). 
Borrower Performance:
Moderately Satisfactory
Moderately Unsatisfactory
Delays in land acquisition and in preparation of detailed designs for contracts. Weak M&E. 
Quality of ICR:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:

IEG derives the following three lessons:

1. A river-basin based integrated water resources management project, needs to place resources management at the core of the operation, with project components integrating around this fulcrum.

The PAD highlights in its discussion of project objectives the "piloting" of "basin-wide integrated water resources management." However, in project design, integrated water resources management was treated more as a separate component than as the center of a holistic water management approach, and the ICR has only limited discussion of the activities and benefits from the basin coordination institutions, begging the question as to whether further opportunities for better water management may have been missed.

2. Integrated water resources management projects require outcome oriented M&E, water resource management at the center of the M&E evaluation program, and a dedicated unit for coordinating M&E.

There were several good indicators for monitoring impacts such as water quality and sediment yield, but most indicators were for measuring project implementation progress rather than for assessing actions and impacts related to water management. Indicators for water resources management, even if qualitative or indirect (for instance, a qualitative listing of decisions made and implemented by the basin institutions) would have provided greater focus on integrated water resources management.

Another issue was that M&E was not under a dedicated unit. It was coordinated by the Central Liaison Office which was preoccupied with operational matters.

3. The benefits of a river basin water resources management project should be assessed from as broad a base as possible, even where part of the benefits can only be expressed qualitatively.

The viability of the project was calculated based on the agricultural productivity of the irrigation investments, the project’s largest component. Broader water resources management benefits are mentioned in the PAD and ICR, but more as a postscript than as one of the thrusts of the project. While such benefits are often difficult to quantify, establishing a framework for the project’s benefits as a whole, even if qualitative, would have provided a more comprehensive overview.

In addition, the ICR and borrower's ICR (at Annex 7 of the ICR) include the following important lessons:

4. The setting up of effective integrated water resources management requires: experienced staff within the concerned government and stakeholder agencies motivated to cooperate in holistic water management; capacity building; and government commitment and leadership. (ICR)

5. Key actions to prepare a project for implementation, such as land acquisition and detailed design and bidding documents for works, should be done before project start-up. (ICR and borrower ICR)

6. Beneficiaries should be involved early in planning water management/irrigation improvements. Implementation of the irrigation component would have been faster with such early involvement. (Borrower ICR)

14. Assessment Recommended?


15. Comments on Quality of ICR:

The ICR had to be a desk study continuing to contend with the ban on missions of the previous several years. The task team did well to muster whatever information was available regarding the quality of implementation, stakeholder perspectives, project performance and institutional development, and provided a candid account of the project’s achievements and shortcomings within these constraints. The ICR could have done more to present and analyze the project from an Integrated water resources management perspective, but such a review requires in-country visits and discussion, and access to a greater range of data than was possible in this case. Despite these limitations, the ICR team provided an informative review, effectively exploiting the information and indicators that were available. This was usefully supplemented by an annex with photographs of project works and activities. The Quality of the ICR was Satisfactory. The borrower's ICR (included in the ICR as Annex 7) also merits comment. It is a factual account of project (physical) achievements together with lists of issues and lessons, and provides a good complement to the Bank ICR.

a. Quality of ICR Rating: Satisfactory

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