1
FINAL PROJECT DOCUMENT
1. IDENTIFIERS:
PROJECT NUMBER:
4E-PE-4-5864
PROJECT NAME:
Mekong River Commission (MRC) - Water
Utilization Project
DURATION:
7 Years
IMPLEMENTING AGENCY:
World Bank
EXECUTING AGENCY:
Mekong River Commission
REQUESTING COUNTRY OR COUNTRIES:
Cambodia, Laos, Thailand and Vietnam
ELIGIBILITY:
Eligible under para 9(b) of GEF Instrument
GEF FOCAL AREA:
International Waters
GEF PROGRAMMING FRAMEWORK:
OP 8 Water-body based
2. SUMMARY:
The project will help the member states of the Mekong River Commission (MRC): Cambodia,
Laos, Thailand, and Vietnam, implement key elements of the 1995 Agreement on Cooperation
for Sustainable Development of Mekong Basin (Agreement). The project's broad development
objectives are to assist the MRC to establish mechanisms to promote and improve coordinated
and sustainable water management in the Mekong Basin, including reasonable and equitable
water utilization and water quality management by the countries of the Basin and protection of
sensitive ecological systems including wetlands, flooded forests and the estuary system that
support globally significant biodiversity. This would be achieved through preparation of
"Rules" for water quantity and quality (in particular, minimum in-stream flows on the Mekong
River) and protocols for information exchange, notification/consultation in accordance with the
Mekong Agreement. The project would assist in the formulation and implementation of the
Rules by facilitating consultations among the MRC-member states and helping the MRC
develop a Basin Simulation Model Package and Knowledge Base.
The project will help the MRC formulate "Rules" by providing analytical tools, building
technical capacity in the MRC and the riparian states, facilitating consultations and providing
legal expertise. The terms and conditions of the obligations incurred by the MRC-member
states in adopting different types of "Rules" will be explored during the course of consultations
and with the support of an internationally-recognized water law expert.
3. COSTS AND FINANCING (MILLION US):
GEF:
-Project
US$11.00 million
-PDF:
US$ 0.35 million
Subtotal GEF:
US$11.35 million
CO-FINANCING:
-IA:
n/a
2
4. ASSOCIATED FINANCING (MILLION US$)
5. OPERATIONAL FOCAL POINT ENDORSEMENT:
Name: Mok Mareth
Title: Minister of Environment
Organization: Ministry of Environment
Date: March 2, 1999
CAMBODIA
Name: Monemany Nhoybouakong
Title: Officer in Charge
Organization: Department of Environment Policy
Date: February 17, 1999
and Protection
LAO PEOPLE'S DEMOCRATIC REPUBLIC
Name: Pham Khoi Nguyen
Title: President of GEF-Vietnam
Organization: GEF-Vietnam
Date: February 28, 1999
Name: Wanee Samphantharak
Title: Deputy Secretary-General for
Organization: Office of Environment, Policy and
Secretary General
Planning, Thailand
Date: March, 1999
6. IA CONTACT:
Robin Broadfield, GEF Regional Coordinator, EAP,
Tel. # 202-473-4355
Fax: 202-522-1666
Internet: rbroadfield@worldbank.org
3
CURRENCY EQUIVALENT
Currency Unit = US Dollar (US$)
FISCAL YEAR
MRC: January 1 - December 31
IBRD: July 1 - June 30
WEIGHTS & MEASURES
Metric System
ABBREVIATIONS AND ACRONYMS
Agreement
-
Agreement on Cooperation for Sustainable Development of Mekong Basin
ADB
-
Asian Development Bank
ASEAN
-
Association of Southeast Asian Nations
AusAid
-
Australian International Development Agency
BDP
-
Basin Development Plan
DANIDA
-
Danish International Development Agency
GIS
-
Geographic Information System
JICA
-
Japan International Cooperation Agency
JC
-
Joint Committee of MRC
LACI
-
Loan Administration Change Initiative
MOU
-
Memorandum of Understanding
MC
-
Mekong Committee
MRC
-
Mekong River Commission
MRCS
-
MRC Secretariat
NMC
-
National Mekong Committee
IBRD
-
International Bank for Reconstruction and Development
PMR
-
Project Management Reports
PIP
-
Project Implementation Plan
SOE
-
Statement of Expenditures
TOR
-
Terms of Reference
UNDP
-
United Nations Development Program
WUP
-
Water Utilization Program
4
Mekong River Commission
Water Utilization Project
Table of Contents
Page
A. Project Development Objective...............................................................................
2
1. Project development objective and key performance indicators..............................
2
B. Strategic Context.......................................................................................................
2
1. Sector-related CAS goal supported by the project ..................................................
2
2. GEF operational strategy /program objective .........................................................
3
3. Main sector issues and MRC strategy ....................................................................
4
4. Sector issues to be addressed by the project and strategic choices ..........................
6
C. Project Description Summary..................................................................................
6
1. Project components ...............................................................................................
6
2. Key policy and institutional reforms to be sought...................................................
7
3. Benefits and target population ...............................................................................
8
4. Institutional and implementation arrangements ......................................................
8
D. Project Rationale....................................................................................................
11
1. Project alternatives considered and reasons for rejection........................................
11
2. Major related projects financed by the Bank and/or other development agencies....
12
3. Lessons learned and reflected in project design......................................................
13
4. Indications of borrower commitment and ownership..............................................
13
5. Value added of GEF/Bank support in this project ..................................................
14
E. Summary Project Assessment.................................................................................
14
1. Economic..............................................................................................................
14
2. Financial ...............................................................................................................
14
5
Page
F. Sustainability and Risks............................................................................................
19
1. Sustainability.........................................................................................................
19
2. Critical risks ..........................................................................................................
20
3. Possible controversial aspects ................................................................................
21
G. Main Grant Conditions.............................................................................................
21
1. Effectiveness .........................................................................................................
21
2. Dated covenants ....................................................................................................
21
H. Readiness for Implementation..................................................................................
22
I. Compliance with Bank Policies..................................................................................
22
ANNEXES
Annex 1. Project Design Summary ..................................................................................
23
Annex 2. Detailed Project Description .............................................................................
26
Annex 3. Estimated Project Costs....................................................................................
42
Annex 4. Incremental Cost Analysis .................................................................................
43
Annex 5. Procurement, Disbursement and Financial Management ....................................
51
Table A. Project Costs by Procurement Arrangements .............................................................
54
Table B. Thresholds for Procurement Methods and Prior Review .............................................
55
Table C. Allocation of Grant Proceeds.....................................................................................
55
Annex 6. Project Processing Budget and Schedule...........................................................
56
Annex 7. Documents in Project File.................................................................................
57
Annex 8. Statement of Loans and Credits ........................................................................
58
Annex 9. MRC Strategic Plan and Trans-boundary Diagnostic Analysis ..........................
66
Annex 10. Country at a Glance.........................................................................................
74
MAPS
Project map: IBRD 30089
6
Mekong River Commission
Water Utilization Project
Project Appraisal Document
Global Environment Facility
East Asia and Pacific Regional Office
Date: November 3, 1999
Task Team Leader/Task Manager: Mei Xie
Regional Program Coordinator:
Sector Manager/Director: Geoffrey B. Fox
Mr. Bradley Babson
Country Director: Ngozi N. Okonjo-Iweala
Project ID:
Sector: Environment
Program Objective Category: Environmentally Sustainable
4E-PE-45864
/Natural Resources
Development
Lending Instrument: GEF Grant
Program of Targeted
[ ] Yes
[x ] No
Intervention:
Project Financing Data
[ ]
Loan
[ ]
Credit
[ ]
Guarantee
[x ] GEF
Grant
For Loans/Credits/Others:
Amount (US$): US$ 16.3 million SDR 8million (US$11.0 million equivalent) GEF Grant
Financing plan (US$m):
Source
Local
Foreign
Total
GEF Grant
5.7
5.3
11.0
Co-Financing
Japan
0.0
1.0
1.0
Finland
0.0
1.2
1.2
France
0.0
0.6
0.6
National Governments
1.2
0.0
1.2
Mekong River Commission
1.3
0.0
1.3
Total
8.2
8.1
16.3
Recipient: Mekong River Commission (MRC)
Guarantor: n.a.
7
A: Project Development Objective
1. Project development objective and key performance indicators (Annex 1):
The Project would assist the member states of the Mekong River Commission
(MRC): Cambodia, Laos, Thailand, and Vietnam, to implement key elements of the
1995 Agreement on Cooperation for Sustainable Development of Mekong Basin
(Agreement). The Project's broad development objectives would be to assist the
MRC to establish mechanisms to promote and improve coordinated and sustainable
water management in the Basin, including reasonable and equitable water utilization
by the countries of the Basin and protection of the environment, aquatic life and the
ecological balance of the Basin. This would be achieved through preparation of
"Rules" for water utilization (quantity and quality) and procedures for information
exchange, notification/consultation in accordance with the Mekong Agreement. The
Project would assist in the formulation and implementation of the "Rules" by
facilitating consultations among the MRC-member states and helping the MRC
develop a Basin Simulation Model Package and Knowledge Base. The Project
would promote protection of sensitive ecological systems including wetlands,
flooded forests and the estuary system that support globally significant bio-diversity.
The Project duration is seven years, from 2000 to 2006, and key performance
indicators include (i) a functional, integrated and comprehensive Basin modeling
package by 2003; (ii) a functional and integrated knowledge base on water and
related resources, with a communication system linking the National Mekong
Committees (NMCs) with the MRC Secretariat (MRCS) by 2003; (iii) adoption of
protocols for information exchange, water use monitoring, and preliminary
notification/consultation procedures by 2004; (iv) adoption of provisional in-stream
flow "Rules" by 2005; and (v) adoption of provisional water quality rules by 2006.
B: Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the Project
(Annex 1):
CAS document number:
Date of latest CAS discussion:
The Thailand CAS (18002-TH; 16 June 1998) lists, as one of its key
development objectives, protection of natural resources and the environment, and
proposes improvement of natural resources management as a key action to meet this
objective. The related World Bank objectives include: (i) increasing efficiency of
water use; (ii) improving watershed protection through establishing a framework for
watershed management; and (iii) establishing clear policy and institutional
frameworks. In giving priority to rural development and natural resources, the CAS
indicates the Bank's desire to take a strategic approach to its assistance in these
areas. To this end, the Bank has undertaken work with Government on a Rural
8
environmental sustainability is a key consideration and an integral element of all
Bank interventions. It emphasizes that agriculture is the backbone of the Lao
economy, yet poverty is concentrated in rural areas. Reducing slash-and-burn
farming and increasing forest protection in major watersheds are important elements
to preserve catchment areas of hydropower sites. The Vietnam CAS (18375-VN;
Sept. 22, 1998) places great emphasis on Bank's support for improving management
of natural resources, of which water resources form an important part. The
Cambodia CAS (16255-KH, Jan. 28, 1997) highlights enhancing rural development
and natural resources management as one of the key CAS supported areas. It states
that effective management and protection of country's forest and other natural
resources is a priority on which the Bank places considerable emphasis in its
assistance strategy. Bio-diversity protection is also an area for support. The
Mekong River Basin is also partially within the territories of China and Myanmar,
although they are not members of the MRC. Considerations related to China and
Myanmar are discussed in Sections B.3, C.2 and E.3.
In achieving the Bank's overall objective of poverty alleviation through
sustainable development of natural resources, the Bank supports global and
regional initiatives that help countries deal with trans-boundary issues, such as
international waters. This is reflected in the Bank's Water Resources Management
Policy (1993) which directs the Bank to promote the cooperative management of
international water resources, when requested. The 1995 Mekong Agreement among
the four lower riparian countries reflects the goodwill of the MRC-member states to
cooperate in the sustainable development of the Basin, and to create a positive
foreign policy environment in the region. The Agreement sets a framework of
riparian cooperation and outlines general principles and procedures, organizational
arrangements of MRC and scope of authority. But the MRC still needs to make
progress in implementing the provisions of the Agreement to sustain the
international goodwill of regional collaboration engendered by the Agreement. This
Project is in the nature of regional technical assistance to support the MRC and its
member states. Its outcome will contribute to natural resources protection and
improved water resources utilization and management in the basin, and thus is in
line with the thrust of individual country CASs in the MRC member countries, i.e.
supporting sustainable natural resources management.
2. GEF operational strategy/program objective:
Regional Cooperation in the Mekong. Regional cooperation in mainland
Southeast Asia has increased dramatically since the end of the Cold War and the
cessation of the Cambodian conflict in the early 1990s. Vietnam, Cambodia and
Laos are now full members of the ASEAN. There are currently a number of regional
initiatives to promote economic integration in the trade, transport and power sectors
and through cultural exchanges in the basin. Some of these initiatives are backed by
9
management teams in major regional meetings of GEF project teams in the other
strategic regions and in the Global IW meetings being planned by UNDP (Annex 2).
Cooperation among the lower Mekong countries began in 1957, with the
establishment of the "Committee for Coordination of Investigations of the Lower
Mekong Basin." The Committee conducted hydro-meteorological investigations and
pre-investment studies which focused on a cascade of large international reservoirs
along the main river. In the aftermath of the Vietnam War, the framework of
cooperation was restructured to reflect the new geopolitical realities when Cambodia
became a "non-participating/active member" in 1976 (although it did not renounce
the earlier Mekong treaties). The other three countries established the "Interim
Mekong Committee" to keep the Mekong Committee's (MC) activities going until
Cambodia would participate in "reactivating" the MC. Following the Cambodian
Peace Agreement in 1992, Cambodia requested readmission to the MC. By the early
1990s, however, the mainstream reservoir cascade no longer appeared tenable
because of environmental and resettlement concerns. The framework of cooperation
was restructured to include Cambodia and address the two most important issues:
dry season water sharing, and protection of the environment and ecological balance.
In 1995, the four countries (Cambodia, Laos, Thailand and Vietnam) of the lower
Basin signed the "Agreement on Cooperation for the Sustainable Development of
the Mekong River Basin". The Agreement, which establishes the MRC, recognizes
the vital role that water resources play in socio-economic development and the need
to ensure that valuable natural resources are developed and managed in a sustainable
manner.
The Agreement includes provisions for MRC to formulate "Rules" for
Water Utilization and other "Rules". The term "Rules" is used in a general sense to
refer to the obligations of the MRC-member states with respect to: (i) Procedures for
the notification and consultation of proposed water uses under Article 5 of the
Agreement. (ii) Maintenance of flows on the mainstream of the Mekong River
according to Article 6 of the Agreement. In particular, the maintenance of dry season
flows based upon an analysis of the natural flow regime. (iii) Water quality criteria,
rules, and measures for the protection of beneficial uses, including the aquatic eco-
system. (iv) Procedures for monitoring water use and diversions in the Mekong
Basin. (v) Procedures for information exchange and monitoring.
Consistency with GEF Operational International Waters Program. The
Project is consistent with the policies and priorities of the GEF Waterbody-Based
Operational Program (OP#8). The Project would develop tools and the related
knowledge base to enable the riparian countries to gain a deeper understanding of
the hydrologic linkages between the natural environment, water utilization, and
strategic transboundary water and environmental issues, and to formulate and
implement appropriate "Rules" to ensure reasonable and equitable water use. These
10
3. Main sector issues and MRC strategy:
Main Sector Issues. The major sector issues concern the equitable sharing
of the water resources and sustainable development of the natural resources in the
Basin. The most critical factors are related to changes in the hydrology and dry
season flow in the lower Basin. Laos and Cambodia rely heavily on river transport
and the reduction of dry season flows could adversely affect navigation. Cambodia
has the long-term potential for increasing its irrigated agriculture. Over the decades,
Vietnam and Thailand have developed extensive irrigation systems that currently
face dry season water constraints. Seawater intrusion into the Mekong Delta during
the dry season adversely affects irrigation and domestic water supplies. Vietnam is
concerned with dry season flows of the River because it needs flows to prevent
seawater intrusion and for irrigation purposes. Thailand has been studying options
for diverting water from the Mekong, and for inter-basin diversion of water from
Mekong tributaries.
Hydropower development throughout the Basin is gaining momentum,
especially in China and Laos. Currently, there are 500 MW of installed capacity in
the Lower Mekong and 1500 MW along the Chinese portion of the River. China is
constructing several hydropower schemes on the Mekong River. Laos has plans to
construct a number of medium-sized hydropower projects on Lao tributaries to the
Mekong. Carefully planned hydropower development can bring two positive
regional impacts. First, both China and Laos would like to export power to Thailand
and options for creating a regional power grid are under study. Second, hydropower
schemes with substantial storage could increase the dry season flows by storing wet
season flows and releasing the water to generate power during the dry season.
Increased dry season flows would benefit the dry season water demand in the Lower
Basin. Thus, how to share the potential additional dry season flow would be of key
interest to the lower riparians. Hydropower development, however, also carries
significant risk of upsetting the Basin's ecological balance by changing the annual
flow regime (i.e., decreasing wet season flows and increasing dry season flows) and
effecting important fish migration routes.
The Mekong Basin supports one of the most productive and diverse
freshwater ecosystems in the world. Freshwater and estuary capture fisheries
constitute a major source of protein and an important element of food security for
the Basin's mainly poor and rural population. Annual floods support a rich riparian
habitat and an extensive network of wetlands. For example, the estuaries in the
Mekong Delta maintain important ecological processes such as transport of
nutrients, plankton, shrimp, fish larvae, and detritus-- all essential components in the
aquatic food webs. Protecting the Basin's ecological balance would bring important
global benefits because of its significant bio-diversity, wetlands, flooded forests, and
estuary (see Annexes 4 and 9 for detailed analysis).
11
monitoring and assessment and hence to build the knowledge base. The water
quality issue also includes the Delta salinity management which depends not only on
upstream water use and the outflow from Ton Le Sap in the dry season, but also
irrigation and drainage management by Vietnam in the delta.
MRC Strategy. In June 1998, the MRC, with assistance from UNDP,
prepared its first "Strategic Plan (1999-2003)", which sets out visions, goals and
strategies both for the Lower Mekong Basin and for the MRC. The Strategic Plan
recognizes the changing socio-economic and financial environment in the region,
and reviews the forces driving the changes in the countries, donor community and
global environment. It then, within the broad MRC mandate of the Agreement,
identifies five medium-term goals:
· Establish the "Rules": this includes, inter alia, establishing minimum
flows on the Mekong River and the review of proposed water uses.
· Formulate the Basin Development Plan: To be used as a general
planning tool for sustainable management and development of the
Mekong Basin.
· Establish MRC environmental management policies and guidelines.
· Complete and evaluate on-going programs and projects.
· Improve the capacity of the MRC.
To achieve the goals, the Strategic Plan identifies four Key Result Areas
(KRA) or "Core Business Areas"---(i) Natural Resources Planning and
Development; (ii) Environmental Management and Social Considerations; (iii)
Database and Information Systems; and (iv) Organization Management and
Cooperation. Specific strategies and performance indicators are defined for each
KRA, which drives the formulation of the MRC five-year indicative work plan and
the 1999 work program. The Strategic Plan and the priority programs were
extensively discussed with key stakeholders, including national line agencies. The
MRC Council approved the Strategic Plan and the work plan in October, 1998,
which were then presented at and widely supported by a Donor Consultative Group
Meeting after the Council meeting.
4. Sector issues to be addressed by the Project and strategic choices:
The Project would support the MRC in achieving one of its five major
medium-term goals: establishing "Rules". It would directly address the key sector
issues of water utilization and ecological protection. It would provide the MRC with
both the analytical tools for their Water Utilization Program (WUP), and assistance
in formulating and negotiating the "Rules" (Section E.3). Both the indicative 5-year
work plan and the 1999 annual work program highlight the WUP, together with
12
and management programs. However, international water management is a long-
term, dynamic and often contentious process. The objective of the WUP and the
process of river basin management will be evolutionary and may take a long time to
mature.
BDP preparation has just started and will provide a basin-wide framework
for sustainable socio-economic development. BDP and the WUP will support each
other, will be implemented in parallel, and will be carefully coordinated. The timing
of the two projects is seen to be mutually beneficial. Several donors have
conditioned their future financial support to the MRC on demonstrated progress in
these two key areas.
Establishing the WUP and formulating the BDP are mutually supporting
exercises in three ways: i) the BDP will use among others the databases and
modeling tools developed by WUP; (ii) the "Rules", developed under WUP,
particularly the dry season minimum flow "Rules", will establish constraints on
future water resource developments; and (iii) by analyzing economic development
strategies and water-related projects under different development scenarios, the BDP
will provide valuable information to the MRC when it reviews proposed water uses
under the notification "Rules" formulated under WUP.
This project will mark the starting point of for MRC's the long term
implementation of WUP. While the Project has a 7-year span, it should be seen as a
first step along a long road, aiming to provide an opportunity to bring the riparians
together for meaningful dialogue on improved and sustainable basin management.
(see Section E.3 for detailed technical issues).
C: Project Description Summary
1. Project components (see Annex 2 for description and Annex 3 for cost):
The project will consist of three components:
A) Developing necessary analytical tools and a comprehensive basin
simulation package to support MRC's basin management decisions, determining,
monitoring and implementation of the "Rules"1; and putting functional information
sharing mechanisms in place.
B) Drafting "Rules" to establish minimum flows in the Mekong River and
define water sharing, utilization and water quality rules; preparing detailed review
and notification procedures; and assisting in negotiations and consultation during
formulation of the "Rules".
C) Strengthening institutional (regional and national) capacity to implement
the "Rules", undertaking basin management functions, promoting participation of
upper riparians, coordination with donor agencies, supervision and monitoring of the
13
B. Rules for Water Utilization
Institutional
1.3
8%
1.1
82%
C. Institutional Strengthening
Institutional
5.1
31%
3.3
65%
Total Project Cost
16.3
100%
11.0
67%
The Project will take 7 years to complete. The implementation period is
necessary because the modeling, knowledge base development and rule making are
long-term activities which will require many iterations and a long process of
consensus building. The project will help the MRC formulate "Rules" by providing
analytical tools, building technical capacity in the MRC and the riparian states,
facilitating consultations, and providing legal expertise. The terms and conditions of
the obligations incurred by the MRC-member states in adopting different types of
"Rules" will be explored during the course of consultations and with the support of
internationally-recognized water law expertise. Protection of the globally significant
ecosystems in the Mekong River Basin will be a key element in the development of
the analytical tools and a principal requirement in the rule making.
2. Key policy and institutional reforms to be sought:
At present the MRCS is made up of individuals working on and financed by
specific projects that are usually donor-driven and donor-defined. There has been a
lack of an overriding coherent strategy and approach. The MRC's new Strategic
Plan calls for a shift of MRC focus away from managing specific projects to
managing water and related natural resources in the Basin, and away from basin
development to basin management. In the past, the MRC and its predecessor, the
MC, have collected a huge amount of information on the Mekong Basin but because
of insufficient integration of data bases and expertise have been ill-equipped to use
this data for management purposes. The shift will drive the organizational
development and reform of the MRC and its Secretariat. The second challenge will
be the shift away from donor-driven project dynamics to MRC-driven program
dynamics that is now discernibly in progress, underlined by the Strategic Plan. Both
the content and implementation process of the Project will be at the heart of support
for these shifts. To do so, it would provide the MRC with analytical tools to assist
information processing, sharing and informed decision-making, and will put in place
necessary institutional measures for managing the basin's water and related
resources. The Project will be implemented and managed by the MRC and NMCs,
with assistance incorporating international experience.
The Project will encourage the participation of upper riparians, China and
Myanmar, in MRC political dialogue and in Project technical activities relating to
basin modeling and management issues. Currently, China and Myanmar are not
signatories to the 1995 Mekong Agreement, but official MRC dialogue partners.
14
in the development of basin analytical tools, building the basin knowledge base, and
in the formulation of the "Rules", the Project will create the enabling environment
for policy reform and action at the national level essential to achieving the regional
goal of sustainable development of the natural resources of the Mekong Basin.
3. Benefits and target population:
The target population will be those living within the Mekong River Basin or
utilizing their waters. The Project would benefit the populations in the Basin, as
well as in the riparian countries that depend heavily on the Mekong basin's natural
resources to sustain their socio-economic development. It would benefit the basin's
ecosystems. These benefits would result eventually from the implementation of the
"Rules" and procedures for water utilization and the improved understanding of the
river system through the models and analytical tools. The Project will also benefit
the whole region in terms of facilitating greater political cooperation and dialogue.
Donor community and other interest groups would gain indirect benefits from a
more effective and coordinated use of their funds and assistance.
4. Institutional and implementation arrangements:
The Mekong River Commission. The MRC is an inter-governmental
organization of the four lower Mekong Basin states: Cambodia, Laos, Thailand, and
Vietnam. The MRC is composed of three permanent bodies:
· The Council, which is composed of one member from each state at the
Ministerial and Cabinet level who is empowered to make policy decisions on
behalf of his/her government.
· The Joint Committee (JC), which is composed of one member from each state at
no less than the Head of Department level and acts as the management body for
the MRC and implements the policies and decisions of the Council.
· The Secretariat (MRCS), which renders technical and administrative services to
the Council and JC, and is under the supervision of the JC. The MRCS is located
in Phnom Penh and has a staff of approximately 100, including both
international and riparian staff.
The JC has established sub-committees to help it address two high-priority
MRC activities: Basin Development Plan and Water Utilization. There are two water
utilization sub-committees: Water Quantity Sub-Committee and Water Quality Sub-
Committee. The MRCS renders technical and administrative services to the sub-
committees.
The MRC has an annual budget of approximately $12-$15 million per year,
which can be divided into two parts: administrative costs ($2-3 million), and
15
have three bodies: (i) an inter-ministerial policy-making body; (ii) a management
group consisting of key governmental departments; and (iii) a secretariat to support
the NMC.
Implementing Agency. MRC, through its Secretariat, will be the
implementing agency for the project. The Grant Agreement will be negotiated with
MRCS which will be responsible for project management, including financial and
procurement management. MRCS will: (a) undertake procurement duties,
including: (i) contracting consultant services, (ii) purchasing office and
communication equipment, and (iii) purchasing computers, software, and related
equipment; (b) maintain and report adequate financial records, facilitate audits and
manage special account and disbursements; (c) monitor and evaluate project
implementation; and (d) prepare and submit to the Bank semi-annual reports
including detailed work plans. The details are found in PIP and its Annex H.
WUP Management Team. The MRC will create a permanent WUP
Management Team to lead and coordinate the WUP. The Team, directed by the
CEO of MRCS, will consist of the MRCS's WUP Unit and the heads of NMC WUP
Units.
MRCS WUP Unit. The MRCS will create its permanent WUP Unit directly
under the Chief Executive Officer. The Unit will consist of four highly-qualified
specialists, acceptable to the Bank, one from each MRC member country selected by
the MRCS on a competitive basis. The Unit will have a leader and three members
who are heads of three working groups (see below), and required riparian support
staff. It will be supported by a small team of consultants. Indicative TORs for the
leader and key consultants are included in PIP Annex H.
National WUP Units. Each NMC will establish a permanent WUP Unit
composed of high caliber technical staff from the NMC Secretariat and seconded by
key line agencies. The national Units will have day-to-day responsibility for
coordination of national participation, review of short-lists of technical specialists to
be selected by the MRCS for the MRCS WUP Unit and working groups. National
WUP Units will facilitate and support the participation of line agency technical
specialists in the WUP implementation, and carry out agreed technical and
administrative tasks. The relationship between the NMC's WUP Units and the
MRCS will be formalized in a Memorandum of Understanding (MOU) signed
between the JC and the MRCS.
WUP Working Groups. The WUP management team will organize and
supervise three "Working Groups"--(i) Basin Modeling and Knowledge Base; (ii)
Environmental and Trans-boundary Analysis; and (iii) Rule Formulation. WUP
management team will draft Terms of Reference (TOR) for the working groups.
The working groups will carry out WUP activities. They will also support the BDP
16
WUP. Finland confirmed its support for the definition and screening of modeling
and data requirements and for the sub-modeling of the Tonle Sap sub-basin (Section
H). France has an interest in supporting WUP water quality related activities and
has made fund disbursement to MRCS. Japan is primarily interested in supporting
the hydrological analysis component and the filling of data gaps in WUP. During
appraisal, preliminary scopes of work by each donor were outlined as part of PIP
Annex L to better define these activities and their interrelationship with the GEF
supported WUP components.
Partnership with UNDP. UNDP has been involved in MRC development
since its pre-inception. UNDP provided key support in the negotiations the 1995
Mekong Agreement, and recently in the development of the MRC's first "Strategic
Plan (1999-2003)" (Section B.3). MRC has recently approved a UNDP program to
support the implementation of the Strategic Plan through capacity building of
MRCS, NMCs and national line agencies. This program will be critically important
for the long-term success of MRC and of WUP. While the UNDP program will
focus on improving overall MRC management, the WUP Project will focus on
strengthening the technical capabilities of MRCS, NMCs and the national line
agencies to manage the water resources of the basin through the development of
analytical tools and the adoption of "Rules". These programs are complimentary
and mutually necessary. During Project implementation, the Bank will work closely
with UNDP, exchange information, and draw support from their experience and
programs to ensure Project success.
Accounting Financial Reporting and Auditing
. During project preparation,
an assessment of financial management was carried out and found that the current
accounting system in MRCS is capable of handling the GEF funds and providing
separate reports on fund utilization. MRCS prepared a financial manual (July 1999)
to set out policies and procedures under this Project for budgeting, fund utilization,
accounting and reporting of donor funds entrusted to MRCS. It has agreed to
maintain separate books of accounts to record and report for expenditures financed
under the project, and to the quarterly reports to be consistent with the formats of
Monitoring Reports (PMR) described in the Bank's LACI Handbook. A Special
Account will be set up under the project for the GEF grant in a commercial bank
acceptable to the Bank and will be managed by MRCS. The Statement of
Expenditures (SOE) disbursement method is recommended at this stage. The Bank
and MRCS will review the disbursement methodology by December 31, 2000 when
a determination could be made to switch to PMR-based disbursement (Section E.4).
MRC will prepare annual financial statements in accordance with international
standards for accounting, will include, at a minimum, Summary of Sources and Uses
of Funds Statement, a Project Balance Sheet at the year end, comparative figures
from the previous year and notes to the financial statements. It will install a
17
achievements and impact have been agreed with MRCS and included in the PIP
(covenants d-h), which will be followed and updated as needed during
implementation. MRCS will set up by June 30, 2000 a monitoring system using
proper project management software to track physical progress, costs, budgets,
procurement and disbursement, and key performance indicators (covenant-b). The
results will be reflected in the quarterly PMR to be prepared by the WUP
management team. Bank supervision missions will review project progress and
results at mid-term review (mid-2003, covenant-c) and at completion (end of 2006).
Semi-annual reports will be submitted for Bank review (covenant-a). A project
completion report will be prepared within six months after the grant closes
(covenant-i).
D: Project Rationale
1. Project alternatives considered and reasons for rejection:
In general terms, activities required to achieve the long-term goal of MRC
include: inter alia, (1) inventory and assessment of water and environmental
resources; (2) inventory and assessment of existing and potential water uses and
discharges; (3) identification, evaluation and determination of requirements for
preservation of wetlands, fisheries, watersheds and other ecological resources; (4)
development of integrated geographically referenced databases and computer
systems/networks; (5) putting in place appropriate institutional and legal
frameworks, and policies and procedures for water resources management; (6)
development and calibration of hydrologic, environmental and decision support
models and using them to evaluate different structural and non-structural
development and management alternatives, water utilization "Rules" relating to both
quality and quantity, and scenarios for the operation of hydraulic infrastructure; (7)
definition, adoption and implementation of "Rules" for water utilization and
discharge in terms of both quantity and quality; (8) development of basin
management and development plans; and (9) improving the capacity of MRC,
NMCs and the line national agencies to carry-out, maintain and update the above
activities through training and technical assistance.
Initially, the Project concept considered inclusion of improving the
hydrological network monitoring, data collection and database/ GIS building. But it
later became apparent that the above activity areas (1) (4) have been relatively
well-supported by various donors, and most of MRC's programs completed or on-
going are in the nature of collecting data or inventorizing basin resources (Section
D.2). Consequently, the Project concept was reshaped to support only key activities
that are not being adequately addressed so far, such as the activity areas (5) (7).
The Project would focus on the formulation and implementation of "Rules", to allow
GEF resources to be concentrated on a single priority activity and to minimize
18
WUP. Thus, BDP concept was dropped and the basin modeling was added to the
Project design.
The Project initially was conceived to include only water quantity issues.
However, given the close integration with the water quality aspect, it now includes
both quantity and quality aspects in basin modeling and formulation of "Rules".
2. Major related Projects financed by the Bank and/or other development agencies:
The Bank or GEF does not have any regional Project dealing with MRC.
But many other donors have been funding MRC's activities, mostly bilateral aid
programs that in some cases involve more than one MRC country. Those providing
key assistance to MRC include UNDP (strategy; institutional capacity); Denmark
(fishery; wetlands); Switzerland (watersheds; GIS); Sweden and UNEP (water
quality monitoring; groundwater investigations); ADB (transport; power; wetlands;
GIS); UNEP (GIS; water quality monitoring; environmental assessment); Japan
(institutional capacity; hydrological monitoring); Australia (institutional capacity;
hydro-meteorology); Finland (hydrographic surveys) and Germany (forest
management).
A large portion of MRC's past and on-going programs relate to resources
inventory, surveys and database /GIS building in hydro-meteorology, hydrographic
atlas, water quality, fisheries, forest cover, and wetlands. There are some modeling
programs on salinity, groundwater and flood planning, and programs relating to
environment management, environmental impact assessment, watershed
management, and soil erosion and sedimentation.
Donor
Sector
Projects
Timeframe
1.
Natural Resources Planning and Development
UNDP
Plan
Mekong Delta Master Plan
90-93
Denmark
Fishery
Assessment of Mekong Fisheries & Impact of WRM
97-01
Denmark
Fishery
Support for Fishery Management
97-99
Denmark
Fishery
Management of Reservoir Fishery
95-99
Denmark
Fishery
Extension for Acquaculture in the Mekong Delta
98-00
Switzerland
Watshds
Strategy study for dev. of watershed management/ forestry sector
98-99
Netherlands
Agri.
Sustainable Irrigated Agriculture Project Consolidation
97-99
Germany
Resour.
Sustainable management of resources in the lower Mekong Basin
97-01
Korea
Flood
Flood Control Planning for the Development of the Mekong Delta
97-00
France/
Resour.
Natural Resources based development strategy for Tonle Sap area
\\
UNDP
2.
Environment Management/Social Considerations
Switzerland
Watshds
Watershed classification in the lower Mekong Basin
92-99
Germany
Forest
Assessment and monitoring of Mekong forest cover
93-99
19
Netherlands
..
Groundwater modeling in the Mekong Delta
98-00
Japan
Monit.
Improvement of Hydro-meteorological Network - Component I
\\
Australia
Monit.
Improvement of Hydro-meteorological Network - Component II
97-00
Sweden,unep
Qlty
Water quality/acidity monitoring in Mekong Delta (I)
87-95
Sweden
Qlty
Water Quality/acidity monitoring in Mekong Delta (II)
95-98
ADB
GIS
Geographical Information Systems
\\
Swiss
..
Geographic Information System
\\
UNEP/
..
Geographic Information System
\\
GRIC
4.
Organization Management and Cooperation
UNDP
Institution.
Strategic Planning and Capacity Building
98-01
Sweden
Institution.
CTF for studies, training
96-99
Denmark
Institution.
CTF for Capacity Building
97-00
AusAid
Institution.
MRC Cooperation
97-99
3. Lessons learned and reflected in Project design:
Negotiations for the 1995 Mekong Agreement were difficult and time-
consuming, and UNDP negotiation assistance was necessary for the parties to reach
consensus on a new framework of cooperation. Early attempts in 1996 by the MRC
alone to formulate subsidiary agreements demonstrated that the process of defining
and agreeing upon "Rules" for water utilization will be long and require a concerted
sustained effort founded upon good technical information and utilizing a iterative
consultative approach. The Project design takes these lessons into account.
The BDP preparation process, supported by UNDP, Sweden and Danida,
provided some lessons. Its progress has been slow and produced less than expected
results. The phasing of project preparation and implementation has been adopted as
an approach that allows for designing and implementing well thought out steps a
building on the experience gained as the project progresses. BDP project preparation
has taken a two-phase approach. Phase-1: formulation of Project concept and
consultations on MRC and country consensus (Section E.7). Phase-2: formulation of
detailed Project components.
Another lesson was to avoid duplication and to enhance coordination among
MRC programs (Sections D.1, D.2). MRC has already set up five major databases:
(1) Wetlands (wetland surveys in each country), (2) Fisheries (one of the biggest
databases in MRC, containing information on sustainable catch and basic statistical
data), (3) Socio-economic, (4) Land use (forest covers and agricultural use), and (5)
GIS mapping. It also has three on-going monitoring programs on hydrology, water
quality and groundwater. These databases and information systems were reviewed
and found sufficient enough to start developing a basin-wide knowledge base and
modeling package. During implementation, the modeling effort should link the
20
WUP Project concept proposal for GEF financing. The proposal was approved by
the JC in September 1998 and by the MRC Council in October 1998, both of which
highlighted this Project among the MRC priority programs in the 5-year work plan
and in the 1999 work program (Section B.3). The draft PIP, including the MRC
Business Finance Plan (PIP Annex K) was approved by the JC in July 1999 and by
the Council in October 1999.
5. Value added of GEF and Bank support in this Project:
Promote regional cooperation and consultation. The process of
formulation of "Rules" will be not only technically challenging but politically
sensitive, and will involve many parties. GEF support would promote and facilitate
extensive consultations among the member countries during the sensitive
negotiations process, contribute to awareness and reaching consensus on basin
management issues among interested parties in and outside the region, and provide
value added to regional cooperation that ensures the conservation of globally
significant environmental resources.
Play catalyst role. There is no shortage of donor interest in supporting the
MRC. But an increasing concern from the donor community has been the lack of
coherence and coordination among various MRC and donor supported programs.
Often these programs have been conducted independently with practically no
common interface, or audit of desired outcomes. Donors also have priorities that
differ from MRC. Donor funds are sometimes not managed directly by MRC, and
come in the form of visiting experts from donor countries, or studies carried out by
donor teams. In mid-1996, MRC efforts to independently negotiate the "Rules" ran
into difficulties due to a dispute over how to address water quality issues. During
dialogue with donors, MRC and several donor agencies expressed their wish to see
the Bank take play a role in regard to these sensitive water-sharing issues, due to the
Bank's technical competence and experience with complex international water
management issues. MRC has welcomed Bank/GEF involvement in the Project, as
it has been seen as playing a catalyst role in coordinating MRC programs, various
stakeholders and donors, and providing funds to be managed and implemented
directly by MRC.
Provide technical expertise. The Project is complex as there are a number
of issues under debate among the riparian countries, including integration of water
quality and quantity, establishment of low-flow requirements and subsequently
determining the minimum flows, utilization of surplus waters, and monitoring and
procedures for notification and consultation on proposed development schemes.
Bank technical contributions and devolution of responsibility for Project
preparation, monitoring, evaluation and supervision would add value to MRC's
21
project would provide an opportunity for promoting regional cooperation and help
identify investment opportunities that are sustainable in the long run.
E: Issues Requiring Special Attention
1. Economic
[ ] Summarize issues
[ ] To be defined
[x] None
Per GEF's requirement, a project specific analysis on GEF incremental costs was
carried out by the project task team, and the results are included in Annex 4.
2. Financial
[ ]Summarize issues below
[ ] To be defined
[x] None
3. Technical
Basin Modeling and Knowledge Base (Project Component A)
. For MRC
to become a fully functioning international river basin agency responsible for
sustainable management of water and other natural resources in the Mekong River
Basin and with good interaction and coordination between the member states, it
needs to be equipped with a unified system of basin models, planning and decision-
making tools to enable it to undertake the formulation of "Rules" on sound scientific
basis and to fulfill its functions for basin management in the long run. MRCS has
had a number of modeling studies. However, those models have not resulted in a
comprehensive basin simulation model package, as they were developed separately
and often concerned with sub-sectoral issues (such as hydropower planning,
hydrology, flood control, or salinity intrusion simulation). They have been carried
out as individual attempts which do not have a strong focus on the basin planning
and management functions of MRC. Thus, there has been little incentive to keep
them operational as they have not created permanent modeling capacity in MRCS or
the riparian states to apply and update the models.
Implementing the operational provisions of the Agreement requires the
development and operation of an integrated and comprehensive
hydrological/hydraulic and water quality modeling package for the mainstream and
tributaries of the entire basin. To do so, one needs to understand the interaction
between the physical, ecological and biological features of the basin, their changes
due to human activities, and trans-boundary concerns. Some important concerns
(Annex 9) related to water use in the Basin include navigation, water use, sediment
transport and sedimentation, pollution, migratory birds and fish, flood plains and
wetlands, and changes in the yearly flow regime. Under the proposed project, water
quality modeling will be fully integrated into the basin modeling package under a
program supported by the French. This activity will be initiated with a thorough
22
The knowledge base and modeling and analytical tools to be developed
under the Project should have the following objectives: (i) develop the basin
modeling package for operationalizing of the Mekong Agreement, testing and
monitoring of the "Rules", and supporting basin planning and management decision-
making; (ii) provide an analytical tool to integrate the basin planning and
management processes, and to assess environmental and socio-economic impacts of
development options; (iii) create sustainable modeling capability within the riparian
countries (including the NMCs and line agencies) and MRCS; and (iv) identify data
gaps of water resources monitoring and MRC information systems and give
feedback for possible adjustments to these programs (Section D.2). Thus, the Project
needs to carefully evaluate available models (both in MRCS and internationally) to
determine their suitability and adaptability for the whole basin. The process and
criteria to evaluate and select appropriate basin models need to be defined and
agreed during the early stage of Project implementation.
China's Critical Role. China's average annual contribution to the Mekong
River flow is about 76 billion m3, accounting for 16% of the Mekong River's
average annual flow of 475 billion m3. Although details of China's future
hydropower program on the Mekong River are sketchy, the MRC's 1997 "Mekong
River Basin Diagnostic Study" estimates that the current Chinese reservoir storage
capacity of 1 billion m3 could increase to almost 20 billion m3 in the next few
decades, with an ultimate storage capacity approaching 40 billion m3. The pace and
extent of Chinese hydropower development is uncertain. Chinese consumptive water
demands in the Mekong Basin are very low, due to unsuitability of the land for
irrigated agriculture. Hence, Chinese water resources development may alter the
flow pattern of the Mekong River, but will probably not have a significant impact on
total annual flows. Myanmar contributes only 2% of the Mekong River's annual
flow, and has no significant plans to develop its water resources in the Mekong
Basin.
In the medium term, and with the construction of Xiaowan reservoir (about
14 billion m3), total storage in the Chinese portion of the Basin could reach about 20
billion m3. Under this scenario, sources indicate that Chinese reservoirs could
regulate approximately 25% of the Chinese portion of Mekong River flows and 5%
of the total annual flow. Some researches indicate that dry season flows near
Vientiane, Laos could increase by 50% and into the Mekong Delta by 20%, although
the downstream impacts of the future Chinese reservoirs have not been
authoritatively quantified and would depend on reservoir operations. Under normal
operations, the decrease in wet season flows in Mekong River might be on the order
of 10% at the Chinese border, with a progressive decrease as the Mekong River
flows downstream. Under non-normal operating conditions, for example during
reservoir filling or extreme flood events, Chinese reservoirs could have larger,
transitory, impacts on both wet and dry season flows.
23
Myanmar participate in the drafting and implementation of the "Rules". The Chinese
and Myanmar governments are not adverse to working with the MRC. The Project
design would encourage further collaboration.
China and Myanmar are currently official dialogue partners with the MRC,
providing them an opportunity to participate in discussions at MRC Council and
Joint Committee meetings. In 1996, the MRC, China and Myanmar agreed to
consider establishing technical working groups on hydrology and navigation. A legal
agreement on navigation between China, Thailand, Laos and Myanmar on the upper
Mekong River is in the final stages of negotiations. MRC officials periodically
undertake missions to Yunnan province in China for discussion on water-related
matters. The MRC is committed to information exchange and technical collaboration
with China, and the Project includes dedicated funds for upper riparian collaboration
on WUP-related technical matters and meetings. The MRC will use these funds as
appropriate, and when China or Myanmar indicate a willingness to participate in
WUP.
Development of the Rules for Water Utilization. The term "Rules" is used in
a general sense to refer to the obligations of the MRC-member states with respect to
Articles 5 and 6 of the Agreement. Article 5 contains the general principle of
"reasonable and equitable utilization" of the waters of the Mekong system, and
outlines the conditions for notification, consultation, and agreement on proposed
water uses. Article 6 calls for the maintenance of flows on the mainstream with
respect to i) natural dry season flows, ii) wet season flows sufficient to enable the
acceptable natural reverse flow of the Tonle Sap, and iii) peak flood flows. Article
26 mandates the Joint Committee to prepare "Rules for Water Utilization and Inter-
Basin Diversions" pursuant to Articles 5 and 6. In order to implement Articles 5
and 6, and adhere to the principles of Article 3: "Protection of the Environment and
Ecological Balance," and Article 7: "Prevention and Cessation of Harmful Effects,"
additional "Rules" on water use monitoring, information and data exchange
procedures, and water quality are needed. In summary, "Rules" for water utilization
anticipated to be formulated under the Project are: (i) Physical "Rules" with regard
to maintenance of flows on the mainstream; and water quality. (ii) Procedural
"Rules" with regard to information exchange; monitoring water use and diversions
in the Mekong Basin; and notification and consultation on proposed water use.
The drafting of "Rules for Water Utilization" will be a multi-faceted, long-
term process that requires extensive consultations, negotiation assistance, and solid
scientific analysis. The terms and conditions of the obligations incurred by the
MRC-member states in adopting different types of "Rules" will be explored during
the course of consultations. A structured and facilitated consultation process with
the Sub-Committee(s) for Water Utilization (Quantity and Quality) is envisioned.
Three to four consultations per year, starting in mid-2000 and lasting until 2006, are
24
The MRC places a high priority on drafting a coherent and integrated set of
water utilization "Rules" in an expeditious, yet scientifically sound manner. The
strategy pursued in the Project is to facilitate and support a flexible, yet structured
process in formulating the "Rules" for water utilization. Moreover, in a manner
consistent with the principle of adaptive management, and in light of the prevailing
uncertainties in some key data, the "Rules" will be adopted on an interim basis,
subject to review and revision according to the conditions promulgated by the MRC.
4. Institutional
Basin Management Capacity. Although MRC and MRCS have had
experience in managing many programs and projects financed by donors, there have
been increasing concerns, both from the countries and from the donor community,
about the lack of clear vision and strategy in the MRC's work programs and weak
organizations and management of the MRCS. UNDP recently helped the MRC
develop a Strategic Plan (Stage 1) and is starting a program to boost MRC capacity
(Stage 2). At the 1998 Donor Consultative Group Meeting, many donors expressed
the view that the next few years will be critical for the MRC testing whether it can
successfully implement the principles in the Mekong Agreement. The MRC
Council recognizes these problems and has vowed to improve its effectiveness,
improve accountability, transparency and efficiency, and to define clear technical,
financial and administrative roles. The Project will support the MRC reform
(Section C.2).
NMCs Capacity. The MRC's Strategic Plan calls for a greater integration
with NMCs and their national agencies. The capacity and role of NMC vary greatly
between the countries. Vietnam seems strongest. Thailand would need to
strengthen its own capacity, now that the MRCS has moved to Cambodia. Laos and
Cambodia still lack sufficient technically capacity. Strengthening of NMCs under
the Project should be tailored to the different situations.
Financial Management Capacity. Since MRC/MRCS manages numerous
donor funds, it is regularly audited. The 1997 PriceWaterhouse's Audit Report
showed that MRCS's accounting records and procedures were in accordance with
generally accepted auditing standards. The Project funds primarily technical
assistance and training which are subject to simple procurement procedures. To
ascertain the financial management system complies with the requirements of
OP/BP 10.02, an assessment was carried out by the PriceWaterhouseCoopers, in
March 1999, of the accounting, financial reporting and auditing arrangements at
MRCS. Based on the assessment (Annex 5), a well organized financial function with
qualified staff exists at MRCS, and its accounting system is capable of separately
reporting on different donor funded activities. Given MRCS' long experience in
dealing with donor funded activities, the project should have been eligible for PMR-
25
5. Social
[ ] Summarize issues below
[ ] To be defined
[x] None
6. Environmental
a. Environmental issues:
[ ] Summarize issues below
[ ] To be defined
[x] None
b. Environmental category: [ ]
A
[ ]
B
[x]
C
c. Justification/Rationale for category rating: The Project will be of a technical
assistance nature, with strengthening of institutional capacity. It does not involve
physical investment works. The Project would add value to sustainable
environmental protection and improvement water management in the basin.
f. Status of any other environmental studies: There does not seem to be shortage
of donor support and funding for MRC on environmental studies, relating mostly to
data collection and database building, survey, investigations, mapping and
inventories, policy studies and assessment. Subjects of these programs completed or
on-going range from inventories of ecosystems, wetland bio-diversity, watersheds,
freshwater fishery and forest covers, to environmental assessment, salinity and acid
sulfate soils, water quality and quantity monitoring. Active donors are Sweden,
Denmark, UNEP, Switzerland and Germany (Section D.2).
g. Local groups and NGOs consulted: n.a. Consultations see Section E.7 below.
h. Resettlement.
[ ] Summarize issues below
[ ] To be defined
[x] None
i. Borrower permission to release EA:[ ] Yes; [ ] No;
or [x]
n.a.
7. Participatory Approach:
a. Primary beneficiaries and other affected groups:
Implementation of the Mekong Agreement requires strong political
commitment from all member states, and the participation and support of key
stakeholders in the basin and external parties. The Project preparation and
implementation must be owned by MRC who will work through NMCs with
national line agencies and other stakeholders. To enhance this ownership, MRC
organized national workshops and two regional consultation workshops with NMCs,
national agencies, MRC JC members, national GEF focal points, and donors during
the two-stage of Project concept formulation. In Stage-I, the MRC team and the
consultants developed a conceptual framework for the WUP and the Project, which
was used as the basis for the first regional consultation workshop on January 8-9,
26
consultation process, which would include consultation among the member states
during drafting the "Rules" in a manner that is appropriate to the sensitive nature of
the discussions, and consultations with interested groups and stakeholders on
modeling, technical, social and environmental issues. In March 1999, MRC adopted
new guidelines for public participation in MRC activities. It also prepared a public
participation plan for implementation under this Project (see PIP Annex I). The plan
aims to initiate stakeholder participation on a cross-national basis in the Mekong
Region, to carry out stakeholder analysis and to include civil society in the
consultation process. Review by Bank social unit found the plan to be acceptable,
with some improvements.
b. Other key stakeholders:
Preliminary discussions were held with JICA, Finland and France on
potential parallel co-financing of the Project, and with UNDP, ADB, UK Embassy
in Bangkok and AusAid on coordination. Further exchange of information took
place during the MRC Donor Consultative Group Meeting in October 1998.
8. Procurement:
Procurement under the Project is expected to be simple, as most of the
procurement activities will involve hiring of consultants by MRC, arrangements for
training, seminars and study tours, and purchase of computer and office equipment
for MRCS and riparian agencies. MRCS staff have good experience in procurement
of international consultants and goods through their past involvement with various
donor supported programs. It has also gained experience with Bank procurement
policy through executing the GEF PDF Block-B grant during Project preparation.
The Bank Regional Procurement Adviser carried out a procurement review in
Phnom Penh in March 1999, and concluded that staff in the MRCS is capable of
carrying out the project procurement. Subsequently, MRCS prepared a draft
procurement plan (PIP Annexes E and F) and provisional procurement regulations
(PIP Annex J) which were reviewed by the team's procurement staff, who found the
regulations a sound basis to work on. It was agreed with the MRCS that: (a) a
procurement advisor will be recruited on a short-term basis to assist MRCS in
procurement matters during the first year of Project implementation; and (b) MRCS
staff will participate in Bank procurement training that will be provided in the region
during the upcoming year.
F: Sustainability and Risks
1. Sustainability:
Institutional: The long-term viability of the MRC depends on two main
elements: the interest of the riparians or the demand for such a regional institution to
help facilitate and promote regional cooperation in the Basin; and the technical
27
C.4). MRC-member countries pay for some nominal share of the MRC's
administrative costs and counterpart staff support. If donor funding were to
decrease, it is unclear if the MRC would be able to continue to carry out its current
programs. Given the continued importance of the Basin in the region, the strong
donor interest demonstrated over the past 40 years, and MRC being the only
regional organization dealing exclusively with water and related resources
management in the Basin, it is not foreseeable that donors would reduce
dramatically their support to the MRC. Nonetheless, MRC concurs that its long-
term goal should be to increase the amounts of member contributions and generate
other revenues to cover greater share of the MRC activities. For this purpose,
MRCS has prepared a Business Finance Plan (June, 1999) to demonstrate how it
would gradually take over financing of the WUP management team as GEF
financing will be set on a declining basis. The Plan, as part of PIP, has been
endorsed by the JC in July, 1999.
Technical: There are no insurmountable technical issues. While the basin
modeling would be a complicated exercise, numerous basin models have been
available in the market and applied in many river basins of the world. One concern
is the sustainability of the modeling efforts. Previous modeling results have not been
used effectively. The main reason is that the models were developed separately with
certain sub-sectoral interest, and do not have a strong focus on MRC's decision-
making for basin planning and management. Thus, there has been little incentive to
keep them operational. Nor have these studies created much permanent modeling
capacity inside MRCS or among the riparian states to apply the models and update
them (Section E.3). The modeling component under this Project would have the
primary focus of developing and testing the formulation of the "Rules", of being
operational to assist MRC in monitoring and review of the implementation of the
"Rules", and of aiding decision making on basin management issues. Regardless of
what models are adopted, they would be data driven. There is a large amount of
information in MRC on the environmental aspects, an area where in the past the
MRC has been relatively strong in data gathering and analysis. However, a detailed
review into the adequacy (data quality, interval, format, integration) of the databases
would be carried out during the start of the Project implementation by qualified
experts as a pre-modeling exercise. The focus of the review would be on supporting
basin modeling and not on general data collection.
28
2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):
Risk
Risk
Risk Minimization Measure
Rating
Annex 1: from Output to Objective
MRC agenda and programs are donor-
M
To provide GEF Project funds directly to MRC for its
driven.
management, with Bank/GEF supervision.
Low implementation and management
S
Include a capacity building component. UNDP Phase
capacity, and coordination of MRC,
II support program to increase institutional capacity in
MRCS, NMC.
parallel to the implementation of the Project.
Weak national capacity to implement
M
The basin model package to be made operational to
the project and continually use the
support monitoring, review and evaluation of the
analytical tools for basin planning and
"Rules". Provide training to national agencies to
management.
operate and apply the models.
Member states unable to reach
S
To ensure high level commitment from MRC, concept
agreement on interpretation of the
review only after MRC Council's endorsement of the
principles in the Mekong Agreement or
Project proposal, and negotiations after JC and
on draft "Rules", thus causing delay in
Council's approval of PIP. Set moderate Project
Project implementation.
outputs and realistic performance indicators. To
promote regional cooperation, rather than create
conditions to riparian development. Provide high-
powered international advisory panel to facilitate
consultation and negotiations.
Annex 1: from Component to Output
Riparians unable to reach agreement on
M
Consultations with key parties in the riparian states
model selection and parameters.
from an early stage of Project preparation, and during
implementation. Provide technical assistance with
international experience.
Complicated issues related to water
M
Set modest Project scope, limited to assistance in
quality measuring and unclear mandate
developing water quality rules and guidelines, review
of MRC in setting environmental
of country environmental policies, and drafting water
standards.
quality monitoring procedures.
Inadequate participation or information
S
Project to provide funds to encourage upper riparian
exchange with China and Myanmar.
participation, to facilitate dialogue.
More donor interest and enough funds
N
No need to mitigate, as GEF sees it as a positive sign.
to support the whole WUP; GEF funds
to cover incremental cost become
unnecessary.
Overall Risk Rating
S
Risk Rating - H (High), S (Substantial), M (Modest), N (Negligible or Low)
3. Possible Controversial Aspects (Project Alert System):
None
29
2. Dated Covenants:
a) Prepare semi-annual reports (progress report, monitoring and evaluation
report and work plan for the next six months) by June 30 and December 31
of each year, starting June 2000.
b) Set up, by June 30, 2000, a project monitoring system using proper project
management software to track physical progress, costs, budgets,
procurement and disbursement, and key performance indicators.
c) Carry out project implementation mid-term review by June 30, 2003.
d) Complete development of functional integrated basin modeling package by
October 31, 2003.
e) Complete development, installation and testing of a functional and
integrated knowledge base and information systems by December 31,
2003.
f) JC approval of preliminary procedures for information exchange, flow and
water use monitoring, and notification/consultation protocols by July 31,
2004.
g) JC approval of provisional in-stream flow "rules" (including minimum
flows) by July 31, 2005.
h) JC approval of provisional water quality related "rules" by July 31, 2006.
i) Prepare project completion report by December 31, 2007.
H. Readiness for Implementation
[x] The WUP team leader was recruited through competitive process and came on
board in September, 1999. This expenditure is expected to be retroactively financed
by GEF grant after project approval. Preparation of a short list for the international
adviser to the WUP management team and for the procurement expert is underway.
[x] Recruitment of the consultant team under the Finnish funds to carry out the
"Identification of Modeling Needs, Data Requirements and Selection Criteria" is
expected to be initiated shortly. The French funds have been made available to
MRCS and initial activities have started.
[x] Appointments of National WUP coordinators have been made in all four
countries.
[x] MRCS submitted a draft PIP for Bank review in July 1999. The PIP was found
to be generally realistic. Revisions were discussed at negotiations and a revised PIP
is expected to be submitted to the Bank prior to Board.
30
international waterways. The Project will be of a nature of a technical assistance
program, involving information collection, modeling studies, training and
institutional strengthening. It is in the Bank's judgement that the Project falls into
this exception to official notification. Nonetheless, China and Myanmar have been
informed about the Project and have participated in annual dialogue meetings,
including a recent one in July 1999. They will be invited in technical discussions and
riparian consultations during implementation (Section E.3).
Task Team Leader:
Mei Xie (EASRD)
Sector Manager: Mr. Geoffrey Fox (EASRD)
Country Director: Ms. Ngozi N. Okonjo-Iweala (EACSM)
Regional Program Coordinator: Mr. Bradley Babson (EAPVP)
31
Annex 1
MRC: Water Utilization Project
Project Design Summary
Monitoring and Supervision
Critical Assumptions/Risks
NARRATIVE SUMMARY
KEY PERFORMANCE INDICATORS
Operationalized Mekong Agreement, with
MRC Annual reports and
Political and economic stability
subsidiary agreements/rules on water sharing in
News Letters
of riparian states.
place.
Reports from MRC-JC and Continued willingness of
Formulation and adoption of a basin development Council meetings
riparian states to collaborate on
plan.
the basin development.
MRC GOAL:
An economically prosperous,
socially just and
environmentally sound
Mekong River Basin
DEVELOPMENT
OBJECTIVES:
Development of a functional, integrated basin
MRC project
The Mekong Agreement is
Establish effective mechanisms modeling package by October 31, 2003;
implementation progress
respected by member states,
to improve water resources
reports
there is continued high political
management for the economic
Development, installation and testing of a
support from the member states
and social development of the
functional and integrated knowledge base and
GEF/Bank and donor
for the MRC and its decisions,
Mekong Basin in an
information systems on water and related
supervision reports
with coordinated actions at the
environmentally sustainable
resources, with a communication system linking
national level.
32
manner (including reasonable
the NMCs with the MRCS, by December 31, 2003; MRC Annual reports and
and equitable water utilization
News Letters
Continued donor support for
by the countries of the Basin;
Adoption of protocols for information exchange,
MRC.
protection of environment,
water use monitoring, and preliminary notification Reports from MRC-JC and
aquatic life and the ecological
/consultation procedures by July 31, 2004;
Council meetings
Future increments of dry season
balance of the Basin).
water from development of
Adoption of provisional in-stream flow "rules"
Council resolutions
upper basin (which creates
(including minimum flows) and final
continued interest of lower
notification/consultation/agreemetn protocols by
riparians to collaborate).
July 31, 2005;
Adoption of provisional water quality rules by
July 31, 2006.
33
Outputs:
MRC agenda and programs not
1. A functional and
Basin model package installed and being applied at MRC project
driven by individual donor
acceptable package of
MRCS and member countries.
implementation progress
interest.
basin simulation modeling
reports
and analytical tools
supported by improved
Member states able to reach
databases
preliminary agreement on
A set of provisional "rules" proposed to the
interpretation of the principles
2. A set of recommended
MRC JC and Council.
Reports from MRC JC and
in the Mekong Agreement.
rules for water utilization
Council meetings
(i.e. dry and wet season
Adequate project management
flow levels on the River;
capacity and coordination of
notification and review
MRC, MRCS and NMC.
procedures for proposed
water uses, water quality)
GEF/Bank and donor
National capacity to implement
Project management teams in place in MRCS and supervision reports
the project and continually use
3. Enhanced project and
NMCs; WUP units and working groups
the analytical tools for basin
basin management
established and functioning with appropriate
Visits by Bank supervision
planning and management.
capacity in MRC, NMC,
staffing and training
missions
MRCS and relevant
national agencies
Project Components:
Input:
(see Annex 2)
A.1 Technical assistance through consultancy in MRC project
Riparians able to reach
hydrological and hydraulic modeling, testing, Implementation progress
agreement on model selection
A. Develop basin modeling calibration, installation and analysis.
reports
and parameters.
and analytical tools
A.2 Purchasing of commercial modeling software,
computer hardware for regional and national uses, Bank/GEF supervision
communication equipment, monitoring equipment. mission reports
A.3 Supplemental data collection, surveys,
monitoring and mapping.
A.4 Integrate existing databases with the basin-
wide modeling system in MRCS and member
states.
A.5 Training of regional and national staff in
modeling operating and application.
A.6 Consultations among member states on
34
modeling results and their use for formulation of
rules of water utilization.
B. Formulate water utilization
rules
B.1 Technical assistance through consultancy
Complicated issues related to
in drafting of rules.
water quality measuring and
B.2 Structured and mediated consultations
unclear mandate of MRC in
through an expert panel to facilitate extensive
setting environmental standards.
negotiations among MRC member states.
B.3 High-powered consultant panels to work
Participation of upper riparians,
with politicians.
particularly China, in the
C. Strengthen institutional
consultation process.
capacity for basin management C.1 Provide training courses, on-the-job
and WUP implementation
training, workshops, and study tours for MRC
Adequate in-house capability of
and NCM staff, and representatives from relevant
MRCS and continuity of MRCS
national agencies on water resources and basin
and NMC project teams.
planning and management relating to WUP,
NMCs' active participation in
improvement of MRC and MRCS's
implementation through
effectiveness, accountability, transparency and
contributions in kind, quality
efficiency.
staff input, and discussion
C.2 Fund incremental administrative costs in
meetings.
MRCS relating to implementation and supervision,
including the establishment of a project
monitoring and evaluation system.
C.3 Strengthening of MRCS capacity in financial
and procurement management.
C.4 Facilitation of information sharing and
consultations with upper riparians.
Note:
Development Objective: Describes the impact the project's outputs will have on the beneficiary, institution, or system in terms of changed behavior or improved performance. The development
objective defines the project's success.
Project Outputs: Defines what the project can be held directly accountable for producing--the project's deliverables, the goods, and services it will produce. Typically, outputs are independent,
synergistic, and integrated.
Project Components: Clusters of activities that define how the products and services will be delivered (technical assistance, physical infrastructure, and the like).
35
Annex 2
MRC: Water Utilization Project
Project Description
1.
The WUP Project will help establish a permanent and functional program to support the management
of water resources in the Mekong Basin in a manner consistent with the Mekong Agreement. It consists of
three components: (A) Develop basin model package and knowledge base. (B) Develop rules for water
utilization. (C) Strengthen institutional capacity of MRC/ NMCs.
2.
The output of the Project is expected to be MRC use of the basin model package and knowledge base
(Component A) to help formulate rules for water utilization (Component B) and the Basin Development Plan
(BDP). The outcome is expected to be MRC use of the knowledge base to review proposed water uses by
MRC-member states according to the "rules for water utilization" and for consistency with the BDP.
A. Basin Model Package and Knowledge Base
3.
The broad aim of Component A is to provide an analytic tool to support WUP, and the BDP, that is
based on improved understanding of the interaction between the physical and biological features of the basin
and their functions, and the changes in these that may occur due to human activities. The Project would
support the recruitment of international and local consultants to work with the countries, and the procurement
of related computer and communications equipment to develop the related shared information system and
knowledge base at MRC for decision making, planning and modeling by developing, testing and
implementing a system of shared data bases and software tools (sub-component A.1), to develop the basin
modeling package (A.2), and to use the models to identify and analyze transboundary environmental, social
and economic impacts of proposed actions on the aquatic ecosystem and other water uses and functions of
social, economic, and regional and global importance (A.3).
A.1 Information and Knowledge Base Development
4.
(i) Modeling Needs, Data Requirements, and Selection Criteria. The WUP project will not attempt to
develop a completely new model with new software. The project will select models that are presently
available in the market. Selection of the modeling system is a major decision to be taken early in the project.
The differences that exist among existing modeling systems are found in the appropriateness of the basic
scientific approaches and assumptions built into the model, the computational techniques, the user and data
system interfaces, their flexibility in adapting and building the model in different physical, environmental
and economic settings, and the speed and ease with which changes in the model and data can made. Most
importantly, the outputs of the selected modeling system should be able to address and support the objectives
of the WUP project, particularly the consultative process by which the rules for water utilization will be
negotiated among the riparian countries.
5.
As a preparatory work, MRCS carried out a preliminary model screening study with financial and
technical assistance from AusAID from late 1998 July 1999. The study provided, with primary focus on
36
7.
(ii) Review of Available Data. Modeling and related analytical tools are only as useful as the
quality and completeness of the data on which they are based. A lot of effort and donor support has been
given (both in the past and currently) to building and improving water and environmental related knowledge,
including inventories, surveys and data collection, monitoring networks, GIS building, and mapping. Active
areas with the most donor support include hydrology, water quality, wetlands, groundwater, fisheries,
forestry, salinity, acidity and sedimentation. These data can be found in the seven databases installed in the
MRCS: forestry; meteorology and hydrology; water quality; socio-economy; water resources; groundwater;
and wetlands.
8.
Basic data needed for the basin modeling package include catchment features, meteorology,
hydrology, water quality, social and economic, water use, major infrastructure, groundwater and
hydrographics. Primary sources of data include the hydromet network, project studies, remote sensing, GIS
systems under development, maps and survey results. The project should review and use existing data or
data likely to emerge from ongoing projects. The project will support additional data collection if they are
critical for model building, and if calibration data are missing or outdated. The modeling needs of the WUP
project would also influence and shape some MRC's ongoing and planned monitoring and data collection
programs.
9.
(iii) Identification and Filling of Critical Data Gaps. Both the WUP project, and the long-term
support for implementation of the water utilization rules depend on the MRC knowledge base and the quality
and reliability of data in its information system. The improvement of the knowledge base and the
information system will necessarily be a gradual and evolutionary process. Nevertheless during the WUP
project, an effort will be made to close critical data and information gaps. During the review of available
data, and the analysis of transboundary environmental, economic and social issues, these gaps will be
identified and priorities agreed between the WUP teams in MRCS and NMCs. Moreover, in consultation
with the concerned donors, the MRCS will formulate a program to close these gaps through adjustments to
existing projects where this is feasible or by securing new support from donors.
10.
(iv) Data Bases and Information System Design. The aim is to have a modern information system
with appropriate data bases at the core of the MRC knowledge base that is shared and equally accessible to
the MRCS an the NMCs. The project will support the design of this information system including the
selection and preparation of required software, design of data structures, hardware and communications
arrangements, and the development of procedures for data base development and maintenance. These
concepts and specifications will be summarized in a report thoroughly discussed with all stakeholders in the
riparian countries and agreed by between the MRCS and the NMCs. This agreement is intended to be a
critical input to consultations on the proposed information and monitoring exchange protocol (B.1.1), and is
required to initiate the development, testing and implementation of the WUP data bases and information
systems (A.2.5).
11.
(v) Assessment of National Legal and Institutional Frameworks. Under this sub-component the
national legal and institutional frameworks will be reviewed to assess the legal and institutional capacity of
the NMCs and national line agencies to implement the rules developed in Component B) and to provide the
37
13.
(vii) Development, Testing and Implementation of Data Bases and Information Systems. The
development, testing and implementation of the data bases and information systems would involve the
procurement of hardware and software and its installation and integration into a knowledge base computer
network accessible to the NMCs and line agencies as well as the different divisions and units within the
MRCS in accordance with the design. This would include an Intranet system and access to the Internet. This
activity will also include the development of operation and maintenance programs and the training
technicians responsible for the system. Quality assurance systems will need to be operationalized. The
system will need to be fully tested to ensure that its structure and formats are compatible and that the
designed access and use functions are operational. The systems will also require electrical and virus safety
features that should be fully implemented and tested.
14.
The data bases and information systems will be designed to be compatible and integrated with other
on-going MRC activities including the proposed "Integrated Geographic Information System and Statistical
Databases for Natural Resources Management" project to be financed by Denmark and the development of
Intranet and Internet connections between the MRCS and the NMCs being financed by Finland and UNDP.
A.2 Development of Basin Modeling Package
15.
The need for the development of an operational, integrated, comprehensive basin modeling package
for the water resources of the mainstream and tributaries of the Lower Mekong River Basin is based on three
considerations:
· Implementation of the provisions of Chapter III of the Agreement specifically Articles 5 and 6,
and Chapter IV specifically Article 26 (Water Utilization Rules).
· Support preparation of a Basin Development Plan.
· Achieving the key results sought in the Vision and Strategy document recently adopted by the
MRC.
16.
The riparian countries and the MRC have recognized that the complexity of the water resources of
the Mekong Basin, and the wide range and scope of existing water uses and development proposals and plans
of the riparian countries, must be adequately taken into account in evaluating options to implement the
Agreement and in implementing priority studies and projects that constitute their regional and national
strategies.
17.
Prior Modeling Activity. MRCS, and its predecessor Mekong Committees, have undertaken a
number of modeling studies in the past, and some models are available. However, those models have not
resulted in a comprehensive Mekong Basin modeling package. Nor have these studies created a permanent,
continuing modeling capacity inside MRCS or within NMCs and their partner line agencies. This is because
those studies have mainly reflected specific sub-sector interests (such as salinity, hydropower or irrigation),
were often ad hoc or for specific project purposes, and did not have any linkage to the planning and
38
19.
Choice of an appropriate time-step will be necessary for the modeling package. Observed flow show
considerable variation within each of the months during the wet season. This variation is important in
maintaining wetland processes. Additionally a daily time-step may be needed for water quality modeling,
and in the delta area, where tidal influence must be considered, even a shorter time step may be considered.
The short time step allows better evaluation of the management rules relating to water quantity and
notification procedures.
20.
Basic Approach. The basin divides into three major zones or parts because of the underlying
hydrologic and hydraulic character of the river and the types of river functions and environmental concerns
that predominate. Although each part of the basin requires a different modeling approach, the WUP
modeling package must be capable of an overall integrated analysis of the basin and the river's annual cycle.
The basin modeling package must be flexible and user-friendly. Special emphasis should be put on the
transparency and ease of understanding assumptions, structure, and results. Visual output should be
emphasized. The basin modeling package should be implemented in a manner to permit the MRCS and NMC
modeling working groups to readily change the underlying structure, assumptions, parameters, and data
incorporated in the various model components (this may require that the they have full access to the model
computer code).
A.2.1 Upper Basin
21.
The Upper Basin generally comprises the watershed and river system above Pakse (to be confirmed).
The watershed lies primarily in Laos, Thailand, China and Myanmar. This is the upland portion of the
watershed where hydrologic processes, including rainfall, glacial and snow melt, and groundwater recharge
and discharge predominate in the determination of river flow. The modeling approach in this portion of the
watershed should therefore be hydrologic, concentrating on predictions of runoff and recharge and the related
hydrologic processes.
22.
Groundwater Modeling and Assessment. Because of the importance of groundwater recharge and
discharge in this portion of the watershed, understanding groundwater behavior is particularly important in
modeling both the quantity and quality of water resources.. This is particularly the case where water quality
is related to geologic conditions in the catchment. For example, the high salinity levels of the Mekong
tributaries in some parts of Thailand are related to rising levels of saline groundwater in these watersheds.
The level of groundwater is expected to continue to rise as the clearing of land for cultivation and the
development of irrigation expands. This process will lead to increasing salinity in surface waters.
Understanding, predicting and developing proposals for managing this phenomenon will be an important
task.
23.
Reservoirs. Reservoirs are a critical element in modeling the Upper Basin. The largest and most
important existing and proposed reservoirs are located in the Upper Basin. Storage and regulation for
different purposes (primarily hydropower, irrigation and water supply) are the primary objectives of these
projects. Their mode of operation has significant effects on downstream flow patterns and on water quality
because of changes in flow level, timing, assimilative capacity caused not only by the scheduling of releases
39
critical period of water use and function. The project will support efforts by the WUP team to involve
Chinese specialists in the development of the basin modeling package, and to seek the active participation
and support of China and Myanmar to the overall WUP program of the MRC.
A.2.2 Lower Basin
25.
The Lower Basin below Pakse has a quite different hydrologic and hydraulic character. This portion
of the basin consists of the Cambodian flood plain, the Great Lake (Ton Le Sap), and the delta in Vietnam.
The flows pattern in this portion of the basin is primarily determined by hydraulic conditions, particularly
water levels and tidal influences, except in the monsoon season where the high rainfall in this portion of the
basin, high mainstream flows and the lack of drainage causes extensive flooding and surface storage of
excess water. Downstream of Pakse, and in the delta, the mainstream divides into several channels and
branches further complicating the flow pattern and the modeling.
26.
Tonle Sap. The Great Lake (Tonle Sap), the main feature in the Cambodian plain, is of exceptional
ecological and economic importance to Cambodia, the Mekong Basin, and globally. The Lake includes
extensive wetlands, flooded forests, and its perimeter is extensively cultivated and irrigated. The Lake is
connected to the mainstream of the Mekong in Phnom Penh by the Tonle Sap River which functions as a
inlet to fill the Lake with Mekong River water in the high flow period and as a drain in the low flow season.
Significant volumes are also contributed to the Lake by its surrounding watershed. The Lake's surface area
varies from about 3,000 km2 at the end of the dry season to about 16,000 km2 at the end of the wet season.
The subsequent gradual draining of the Lake during the dry season is a significant contributor to the dry
season flow of the Mekong below Phnom Penh. This globally unique Lake-River system including its
wetland and flooded forest ecosystem is thought to be critical to the bio-diversity and inland fishery of the
Mekong Basin. The is a critical dynamic element of the WUP basin model package.
A.2.3 The Delta
27.
Third major zone in the Mekong basin is the Delta. Tidal influences extend above Phnom Penh.
Just below the confluence of the Tonle Sap River with the Mekong River in Phnom Penh, the Mekong
divides into the Bassac River and the mainstream of the Mekong. About 80% of the flow continues down
the Mekong. Both rivers are important to navigation and are sources of irrigation water in the Delta. This is
an agriculturally and ecologically rich area with extensive mangrove forests near the coast. Irrigation and
drainage is provided to about 2.4 million hectares of rice. Water management is extremely complex in such
a highly populated and developed delta region. In addition to the problems of water supply, drainage and
navigation, and control of salinity intrusion, the Delta includes extensive areas of acid-sulfate soils that when
drained and developed result is very acidic drainage water. These acidic drainage waters tend to also result
in increased levels of soluble aluminum that is a significant factor in fish disease. The Delta is an integral
part of the entire ecosystem of the Lower Basin, and its water management system and needs must be an
integral part of the WUP basin modeling package. Vietnam has developed expertise and models to support
the development of the Delta, and these existing resources should be fully integrated and utilized in the
development of the WUP basin modeling package.
40
29.
The Agreement provides no guidance on the form or criteria for water quality rules (sub-component
B.2.2). Given the uncertainty inherent in the existing data, the lack of viable options to address some
problems, and the weak state of environmental law and enforcement capacity, its seems likely the Sub-
committee should develop and recommend to the MRC a strategy with interim rules that can be improved as
the water quality knowledge base improves and the institutional capacity and policy framework for dealing
with the issues improves. It is therefore most important to understand which problems are of greatest
strategic and economic importance and deal with those problems by the most effective means available. The
most difficult questions facing the Sub-committees on rules for water quantity and quality will be to set
priorities among the problems and threats that have been identified and to use the integrated basin modeling
package to develop a strategy to address those problems. Such a strategy in the near term is likely to rely
less on legal standards for ambient water quality or emissions than on a specific action plan to be undertaken
by each country as appropriate to strengthen water quality and emission monitoring, harmonize and increase
the effectiveness of their legal frameworks, and strengthen the enforcement and policy framework. At the
same time the interim rules could be framed to address those specific problems about which there is good
knowledge of the root causes and consequences, and for which there are viable means to address the
problem.
A.2.5 Integration of Upper and Lower Basin Models
30.
Individual models appropriate for the physical and environmental setting and principal features in
each part of the basin will be linked to form a single integrated modeling package capable of analyzing the
entire basin and the linkages and relationship between actions in different parts of the basin at different
points in time. Modeling of water quantity and quality, and linkages with important environmental, social
and economic issues such as wetlands, fisheries, salinity and navigation will be integrated to insure
consistent and comparable results and recommendations, and to provide a comprehensive basis for
comparing options. The basin modeling package is intended to be able to analyze the entire annual cycle of
the Mekong River, as well as specific critical periods at selected locations under a range of assumptions and
project proposals.
A.2.6 Calibration and Verification of the WUP Modeling Package
31.
The WUP basin modeling package is intended to provide the key analytical support to the MRC's
process of negotiation of the rules for water utilization, provide similar support to the preparation of the
Basin Development Plan, and support project and strategy development in each of the riparian countries. It
must therefore be a tool accepted by all the riparian countries and its results and outputs must be considered
by all as credible and reliable (within the limits of the data that is available at any point in time). Hence,
particular attention will be given to the calibration of the WUP basin modeling package. After calibration
the modeling package should be verified using different input data than used in the calibration process,
before its is used to formulate, test, and evaluate options.
A.2.7 Verification of Water Use Monitoring Protocols
41
A.2.8 Support for Rules Formulation and Consultations
33.
The calibrated basin modeling package and the knowledge base will be used to test procedures and
guidelines developed during consultations on the Procedural Rules (sub-component B.1) and to formulate
and evaluate alternatives and options for the Physical Rules (sub-component B.2).
A.3 Environmental, Economic and Social Trans-boundary Analysis
34.
The ability to identify, predict and assess linkages and impacts between proposed actions and
transboundary environmental, economic, and social needs and concerns is critical to the success of the WUP
project. Such an analytical framework would provide important support to consultations among the riparian
countries on the interpretation and implementation of the Agreement. It would also provide the tools needed
to review project proposals and plans under the notification and consultation protocols, to analyze options
implement the Agreement, to properly carry out environmental impact assessments for proposed actions, and
to support the preparation of a Basin Development Plan that is consistent with sustainable development and
management of the water resources of the Mekong River Basin.
35.
The development of such an analytical framework depends on an understanding on how the
environment and other water uses and functions (navigation, salinity control, wetlands, fisheries, water
supply, water quality) could be affected by changes in the flow regime of the river at critical times and
locations, and on the ability to predict changes in the flow regime that would result from proposed actions.
The latter ability will be provided by the basin modeling package developed in A.2. The aim of this sub-
component A.3 is to develop additional model components for the basin modeling package that would enable
the MRCS and NMC WUP teams to analyze and predict transboundary impacts on the aquatic ecosystem
and other water uses and functions of social and economic importance. review of existing data and
knowledge, and problem assessment
A.3.1 Trans-boundary Problem Assessment, Priorities, and Data Needs
36.
MRCS and UNEP completed a Diagnostic Study of the Mekong River Basin in 1997. At the time of
that study there did not exist sufficient knowledge of problems and their importance to set priorities, or to
develop specific guidelines or strategies to take preventive or corrective action.
37.
This sub-component would rely primarily on existing data, and data that is likely to be obtained from
ongoing studies and field research. MRCS has implemented and has ongoing, an extensive program of field
investigations, training, and capacity building focusing on key transboundary issues in the Mekong Basin
including fisheries, forestry and watershed management, wetlands, salinity, acid-sulfate soils, flood plain
management, and soil erosion and sedimentation. These activities are placing increasing emphasis on
collecting data and carrying out related research on linkages with the flow and hydrologic regime. Assessing
each problem area with all available data, determining which problems are of regional and global
significance, identifying specific needs for additional data is the key step in launching this process.
42
39.
In areas where specific data are lacking, the project would support the contracting of national and
international scientific expertise to review actual conditions in the field, discuss issues and experience with
local specialists, and develop change and response scenarios. The scientific experts would visit the sites
where assessment is needed, and would utilize information and data from the social assessments, local
knowledge, reviews of the national and international literature, model outputs, and results of environmental
and physical studies made at the site. The panels would assess the impact of simulated changes in the river
flow caused by different planning alternatives. The result is a subjective but scientifically assessment that
would provide a basis for the WUP team to make progress and a basis for reformulating MRCS's long term
program of studies and research.
A.3.2 Transboundary model component development
40.
The objective of this component is to use the information from past investigations together with
information on the past and simulated river flow regimes, to guide river basin management decisions on
water and land use. Knowledge is needed on wetland issues such as the location, extent, timing and duration
of inundation, and their productive capacity. The data and models should establish relationship between the
river flow and these variables. Once the relationship has been established, the impact of flow changes to the
ecosystem can be estimated.
41.
Development even of semi-quantitative environmental response and impact analysis will take time.
In many cases descriptive or simple tabular relationships are expected to be the best form of such analysis in
view of the limited knowledge and data available. Anyhow, in the case of some fishery studies and the Study
of Cambodian Wetlands and Flood-Plains some kind of semi-quantitative response and impact analysis
should be possible.
B. Development of the Rules for Water Utilization
42.
The project will support the MRC in the formulation of "Rules for Water Utilization" by providing
analytical tools, building technical capacity in the MRCS and the riparian states, facilitating consultations,
and providing legal expertise. The term "rules" is used in a general sense to refer to the obligations of the
MRC-member states with respect to Articles 5 and 6 of the Mekong Agreement, and other actions necessary
for the sustainable development of the Mekong River Basin. The terms and conditions of the obligations
incurred by the MRC-member states in adopting different types of rules will be explored during the course of
consultations and with the support of an internationally recognized water law expert. The WUP modeling
and knowledge base working groups will also support the rule-making process.
43.
A structured and facilitated consultation process with the Sub-Committee(s) for Water Utilization
(Quantity and Quality) is envisioned, with clear mile-stones and time-frames. The drafting of "Rules for
Water Utilization" will be a multi-faceted, long-term process that requires extensive consultations,
negotiation assistance, and solid scientific analysis. At least five consultations per year, starting in mid-2000
43
44.
Article 26 of the Mekong Agreement mandates the Joint Committee to prepare "Rules for Water
Utilization and Inter-Basin Diversions" pursuant to Articles 5 and 6 of the Mekong Agreement. Article 5
contains the general principle of "reasonable and equitable utilization" of the waters of the Mekong system,
and outlines the conditions for notification, consultation, and agreement on proposed water uses. Article 6
calls for the maintenance of flows on the mainstream with respect to i) natural dry season flows, ii) wet
season flows sufficient to enable the acceptable natural reverse flow of the Tonle Sap, and iii) peak flood
flows. In order to implement Articles 5 and 6 of the Mekong Agreement, and adhere to the principles of
Article 3: "Protection of the Environment and Ecological Balance," and Article 7: "Prevention and Cessation
of Harmful Effects," additional rules on water use monitoring, information and data exchange protocols, and
water quality are needed.
45.
In summary, "Rules" for water utilization anticipated to be formulated under the Project are: (i)
Procedural "Rules"---Protocols for information exchange; protocols for monitoring water use and diversions
in the Mekong Basin; and protocols for the notification and consultation on proposed water use. (ii) Physical
"Rules"--maintenance of flows on the mainstream; and water quality "Rules".
46.
The MRC places a high priority on drafting a coherent and integrated set of water utilization rules in
an expeditious, yet scientifically sound manner. The strategy pursued in the WUP project is to facilitate and
support a flexible, yet structured process in formulating the rules for water utilization. Moreover, in a manner
consistent with the principle of adaptive management, and in light of the prevailing uncertainties in some key
data, the rules will be adopted on an interim basis, subject to review and revision according to the conditions
promulgated by the MRC.
47.
The initial phase of formulating the protocols outlined above, including: i) information exchange, ii)
water use monitoring, and iii) notification and consultation, can proceed soon after the start-up of the WUP
project because they deal primarily with "procedural rules." Critical data gaps and improved information
management needs will be identified under Component A.1 of the WUP Project (Information and
Knowledge Base Development); this information will provide the foundation for developing protocols for
information exchange and water use monitoring. The exchange of information engendered by these protocols
should help in the development of the Basin Modeling Package (Component A.2) and the Trans-boundary
Response Analysis (Component A.3), and support the formulation of the Basin Development Plan. Sub-
Committee deliberations on notification and consultation protocols can also begin during the early stages of
the of the WUP project.
48.
Formulating rules related to maintenance of flows on the mainstream and water quality rules,
requires more scientific and environmental analysis and thus should wait until the Basin Modeling Package
(Component A.2) and the Trans-boundary Response Analysis (Component A.3) are adequate to support this
effort. These two sets of rules are referred to here as "physical rules." As discussed below, the project
envisions water utilization rule-making proceeding with "procedural rules" first, followed by "physical
rules."
B.1 Procedural Rules
44
50.
Information and data exchange protocols are required to ensure that the MRCS and the NMCs and
the line agencies in each of the riparian countries are aware of their responsibilities in providing information
and management actions within their areas of responsibility. Types of information which might be subject to
exchange protocols include:
· Hydrological information on mainstream, tributaries, distributaries, groundwater
· Meteorological data
· Water use data
· Water quality information
· Land Use: Forestry, wetlands
· Feasibility studies and associated EIAs, scientific surveys, etc.
· Socio-economic data
· Fishery data
· Water-related infrastructure: reservoir and conveyance capacities, pump station sizes, etc.
· Sector information related to water use and development
51.
The exchange protocols should include details such as:
· Objectives and outcomes sought from the information exchange
· Type and format of information to be exchanged
· Information transfer chain from (and to) the MRCS, NMCs, government agencies, and the
community
· Timing of such information transfers
· Responsibility for maintaining database
· Type of access to data bases
52.
Formulating and revising information exchange protocols will be a long term and continuous
process, but it is expected that significant progress can be made in the early stages of the WUP project, both
to support the development of the Model Package and Knowledge Base (Component A) and the Basin
Development Plan. A key performance indicator for the WUP project will be the MRC adoption of an
information exchange protocol for high-priority items within 2 years of the start-up of the WUP project.
B.1.2 Water Use Monitoring Protocols
53.
Article 26 of the Mekong Agreement calls for the MRC to "improve the mechanism to monitor the
intra-basin uses" and "set-up a mechanism to monitor inter-basin diversions." Although the MRC and the
former (Interim) Mekong Committee have collected hydrological data for over four decades, there does not
exist a shared understanding among the MRC-member states of their respective use of water. Developing a
Basin Model Package and discussing the "reasonable and equitable use" of water resources is not possible
unless water uses are identified and quantified.
45
55.
In addition to providing information on water use, mechanisms may need to be formulated so that
water use reporting in each riparian is accurate and acceptable by the other MRC member countries.
Verification procedures could include on-site inspections by MRCS staff, certified reports by MRC member
states, etc.
56.
Formulating and revising water use monitoring protocols will be a long term and continuous process,
but it is expected that significant progress can be made in the early stages of the WUP project, both to
support the development of the Model Package and Knowledge Base (Component A) and the Basin
Development Plan. A key performance indicator for the WUP project will be the MRC adoption of a water
use monitoring protocol for high-priority items within 2 years of the start-up of the WUP project.
B.1.3 Notification, Consultation and Agreement Procedures
57.
Article 5 of the Mekong Agreement calls for the notification, consultation, and agreement on
proposed water uses according to the season (dry or wet), point of diversion (mainstream or tributary), and
location of use (intra- or inter-basin). The practical implementation of these procedures requires the
formulation of notification, consultation and agreement procedures. Chapter II of the Mekong Agreement
presents the following definitions:
· Notification: Timely providing information by a riparian to the Joint Committee on its proposed use
of water according to the format, content, and procedures set forth . . . [in the Rules for Water
Utilization].
· Prior Consultation: Timely notification plus additional data and information to the Joint Committee
as provided in . . . [the Rules for Water Utilization] that would allow the other member states to
discuss and evaluate the impact of the proposed use upon their uses of water and any other effects,
which is the basis for arriving at an agreement.
58.
The Sub-Committee(s) for Water Utilization will need to make recommendations to the Joint
Committee on the "format, content and procedures" for notification and consultation.
59.
In addition to specifying the notification/consultation procedures, the MRC also needs to develop
internal procedures for handling the notification of proposed water uses.
60.
Formulating and revising notification and consultation protocols will be a long term and continuous
process, but important progress can be made in the early stages of the WUP project. For example, the basic
conceptual questions can be addressed and draft protocols can be considered. A preliminary definition of wet
and dry seasons may be adopted. It may be possible to identify proposed water use projects that all MRC
members support, formulate notification procedures, and process the project in the MRC as test cases. Not
only would this help the MRC develop notification procedures, but it would also allow important water
resource development projects to proceed through the MRC using unambiguous and officially-sanctioned
46
and any other considerations contained in the notification protocols. Nevertheless, the MRC should be able to
agree on a complete set notification protocols by the mid-term of the WUP project. A key performance
indicator for the WUP project will be for the MRC to adopt a complete set of provisional notification and
consultation procedures within 3 years of the start-up of the WUP project.
B.2 Physical Rules
B.2.1 Maintenance of Flows on the Mainstream
62.
Article 6 of the Mekong Agreement calls for the maintenance of flows on the mainstream. During
the dry season, the flow should be "not less that the acceptable minimum monthly natural flow during each
month of the dry season." Wet season mainstream flows should also be sufficient "to enable the acceptable
natural reverse flow of the Tonle Sap to take place." Establishing minimum flows based upon the natural
flow regime is a key element of the sustainable development of the Mekong River Basin and the protection
of existing beneficial uses. Evaluating alternative minimum flow regimes require extensive scientific,
environmental, and socio-economic analysis. The Basin Model Package and Knowledge Base, developed
under Component A of the WUP project, will be used to evaluate the impacts of different minimum flow
regimes.
63.
With respect to the dry season flow rules, there are a number of specific items identified in the
Agreement (Article 26), including:
· Specifying which months are subject to the dry season minimum flow rules. For example, March
through May, or January through June.
· Establishing the location of the hydrological stations, and determining the flow level requirements at
each station.
· How to incorporate drought episodes into the dry season flow rules.
64.
During the wet season, the acceptable natural reverse flow is defined (Chapter 2) as:
· the flow level in the Mekong River at Kratie that allows the reverse flow of the Tonle Sap to an
agreed optimum level of the Great Lake.
65.
During the WUP project preparation phase (1997), the MRC adopted the concept of using the natural
hydrograph and associated uses of water as the basis for formulating rules on mainstream flows. Key
considerations in this approach include:
· Identifying beneficial uses of water and their linkages to the annual hydrograph. For example, in-
stream uses, such as navigation, salinity repulsion, and pollution dilution require minimum water
47
· Dry season flows into the Mekong Delta are partly dependent on the amount of wet season
mainstream flows stored in the Tonle Sap.
66.
Understanding the flow regime of the Mekong River Basin in the most complete sense, including
temporal (seasonal and annual) and spatial (mainstream, tributaries, distributary, wetland, floodplains)
variations is the foundation for establishing minimum flow rules, formulating the BDP, and the review of
proposed water uses. A key performance indicator for the WUP project will be the publication of an MRC
report on the "Hydrology, Water Quality, and Beneficial Uses of the Mekong River Basin" within 3 years of
start-up. This report will serve as the foundation for rule-making related to minimum flows and water
quality.
67.
The WUP strategy calls for an incremental, but comprehensive and integrated approach to setting
minimum flow rules. Because maintaining dry season flows is one of the most critical management decision
confronting the MRC, and the analysis of dry season flows is generally more straight-forward than wet
season flows, the Water Utilization Sub-Committee will focus on setting dry season flow rules first. A key
performance indicator for the WUP project will be for the MRC to adopt a set of provisional dry season
minimum flow rules within 4 years of the start-up of the WUP project.
68.
The hydrology and hydraulics of wet season flows is complicated by a number of factors. Overbank
flooding, flows into the Mekong delta, and reverse flows into the Tonle Sap during the wet season require the
use of sophisticated hydraulic models. Moreover, hydrological data in Cambodia is sparse and a basic
understanding of Tonle Sap hydrodynamics is lacking. Critical knowledge gaps on the Tonle Sap include: i)
the transfer function (and quantity) of reverse flows from the mainstream into Tonle Sap; ii) contribution of
Cambodian tributaries to Tonle Sap storage during the wet season; and iii) volume, depth, and surface area
curves for Tonle Sap. Addressing these knowledge gaps will take time and sophisticated analysis, and thus
the establishment of wet season rules will take somewhat longer than dry season minimum flow rules. A key
performance indicator for the WUP project will be for the MRC to adopt a set of provisional wet season
minimum flow rules within 6 years of the start-up of the WUP project.
B.2.2 Water Quality Rules
69.
Water quality considerations will be an integral part of formulating protocols related to: i)
information and data exchange, ii) water use monitoring protocols, and iii) notification and consultation
protocols. Water quality considerations (salinity intrusion, pollution dilution, and ecological water quality
needs) will be an integral part of establishing minimum dry season flow rules. A clear understanding and
categorization of the beneficial uses of the water resources of the Basin, their water quality requirements, and
the most critical water quality threats to these beneficial uses are not well-known. In general, point source
pollution, such as municipal and industrial wastewater discharges appear to be localized and not yet of major
trans-boundary concern. Diffuse non-point sources of water pollution, such as increased sediment loads and
agricultural run-off, may be more important but their significance is not well-understood. An important step
in addressing water quality concerns is to first characterize the problem. The project will support the
publication of an MRC report on the "Hydrology, Water Quality, and Beneficial Uses of the Mekong River
48
will be an experienced international specialist in water resources management as well as program
management. The adviser will work with the WUP teams, working groups, and national line agencies to
provide technical assistance and on-the-job training. The consultant will identify problems and propose
solutions, and will provide continuous liaison with the Bank supervision team. The project will also support
short-term consultants as needed in areas such as information systems, knowledge management,
environment, fisheries, hydrology, water quality, groundwater, modeling, negotiations, and water law/rule
making. These consultants will be brought in to assist in different key areas of project implementation when
needed and will provide technical assistance to the working groups. In order to retain maximum flexibility
and in the spirit of trouble shooting, the needs for short-term consultants will be defined during project
implementation. The project will finance the procurement of office equipment, such as photo copy
machines, fax machines, cellular phones, etc.
C. 2 Technical Training and Capacity Building
71.
The project will provide training to the WUP management teams, working groups, staff from MRCS,
NMCs and the national line agencies. At present, some NMCs and line agencies do not have an effective
capacity to meet the requirements of the WUP within their jurisdiction. The project will include in-country
and overseas training (including with river basin organizations, regional institutions, and other academics).
There is also a need within MRCS to develop skills and systems necessary to manage the WUP. The training
will also include fostering of development and implementation of policies supportive to the WUP.
C.3 Communications, Participation, and Public Awareness
72.
The participation of stakeholders in determining the environmental, water use, social and economic
problems and needs would be a key aspect of knowledge base and model development as well as rule
making. The project would support information campaigns, workshops, surveys and other participatory
exercises to promote interchange of ideas and enhanced mutual understanding of different project-related
aspects with different stakeholders.
C.4 Participation in GEF Regional and Global Programs
73.
The project is an important initiative in the GEF's broader global strategic program in international
waters (IW). Thus it would support the participation of the MRC and its WUP management teams in:
(a) The ongoing IW Learn Program being implemented by UNDP, links together GEF all IW
project teams to provide a modern electronic mechanism for experience sharing and distance learning; and,
(b) The regional effort to concentrate GEF IW portfolio in order to maximize its strategic impact.
Two regions are the Danube-Black Sea basins, and the South China Sea region. In the latter region a major
regional project involving three of the four Mekong riparian countries (Thailand, Cambodia, and Vietnam) is
at an advance stage of preparation by UNEP. The project would support the participation of the WUP
49
Annex 3
MRC: Water Utilization Project
Project Costs
Project Component
Total
Local
Foreign
Foreign
Total
Cost
Costs
Cost % Base Cost %
A. Basin Modeling and Knowledge Base
9.1
3.3
5.8
64%
61%
B. Rules for Water Utilization
1.2
0.6
0.6
51%
8%
C. Institutional Strengthening
4.7
2.7
1.0
21%
31%
Total Baseline Cost
15.1
7.6
7.5
50%
100%
Price Contingencies (8%)
1.2
0.6
0.6
16.3
8.2
8.1
TOTAL COST
50
Annex 4
MRC: Water Utilization Project
Incremental Cost Analysis
Regional Context and Broad Development Goals
1.
The 65 million inhabitants of the Mekong Basin depend to a great extent on the natural resources
of the Basin for their livelihood. Few of the economic benefits of the extraordinary economic growth that
occurred in the surrounding region of Southeast Asia in the last decade were experienced in the Basin.
Eighty-five percent of the Basin's population lives in rural area, of which a high proportion depend on the
river and aquatic ecosystem for an important part of their subsistence livelihood. Capture fisheries is the
major source of low-cost and high quality protein for the people of the Basin, and an important source of
employment and income in rural areas. Poverty is widespread, and the stress on the natural resources of
the Basin is increasing.
2.
Wetlands that are vital for the maintenance of the fishery and support globally significant bio-
diversity, depend on the annual ebb and flow of the Mekong River system to sustain these sensitive
ecological balance. Exploitation of these wetlands is increasing, and in some cases they are being drained
for cultivation. The prospect of increased water diversions and construction of dams on the Mekong
River and its tributaries also threaten the Basin's aquatic eco-system. Shifting cultivation and wide-
spread logging in the sensitive upland areas are degrading the watersheds, increasing erosion, and
modifying the hydrological regime.
3.
Economic growth is an imperative in the Basin, and water resources development is a key area in
each country's long-term investment program. In preparation for the MRC's Basin Development Plan
(BDP), the MRC-member governments prepared general position papers in 1997 on their country's
development needs in the Basin, as summarized below:
4.
Cambodia: Agricultural development through increased and improved irrigation, and improved
agricultural support systems (i.e., credit, extension, marketing, etc.) is a key development priority for
Cambodia. Maintenance of freshwater capture fisheries and navigation improvements are prominent
features of Cambodia's development program. Cambodia relies heavily on fisheries from the Mekong
River system-- especially in the Great Lake (Tonle Sap), to support its mainly subsistence level rural
population. Navigation is the primary form of transportation in Cambodia due to its poorly developed
road and train system. Access to maritime shipping through the Mekong-Bassac River system is
important. The Cambodian government plans to develop small and medium-scale hydropower facilities
on tributaries to the Mekong River. Cambodia's forests remain generally intact, but are threatened by
illegal and unsustainable logging practices.
5.
Laos: The Lao government has ambitious plans to tap Laos' enormous hydropower potential,
51
large-scale development program for the Northeast of Thailand, centered around irrigation development,
agro-processing, and reforestation. The government is considering the diversion of water from the
Mekong River into the Northeast of Thailand, which is by far the driest part of the Mekong Basin and
suffers from periodic droughts. It also has tentative plans for the inter-basin diversion of water from
Mekong tributaries in the far north of Thailand, into the Chao Phraya Basin (where Bangkok is located).
The power demand in Thailand is expected to significantly expand in the future, and Thai power agencies
are considering importing energy from hydropower facilities in China and Laos. Thai travel companies
are increasingly using the Mekong River and its riparian areas as tourist destinations, including hotels,
golf courses, and boat rides.
7.
Vietnam: The Mekong Delta is Vietnam's "rice bowl" and produces over half of the country's
rice crop and is a major fruit producer. Aquaculture, mainly in the Delta's numerous canals is an
important source of income and subsistence for many of the Delta's residents. During the wet season,
massive flooding in the Delta results in annual loss of lives and property damage. Flood management is a
high priority for Vietnam. Improving agricultural water control infrastructure (e.g., irrigation, drainage,
and control of floods and of sea water intrusion) and maintaining (or increasing) dry season flows while
preserving water quality, are key development objectives for the Vietnamese government. Improvement
of the inland navigation system in the Delta is also important for Vietnam. The Mekong Basin also
encompasses part of the Vietnam Highlands, and the Vietnamese government plans to construct (or is
constructing) a number of medium-sized hydropower projects.
8.
China and Mynamar: Neither China or Mynamar are MRC-member states but their activities may
have an impact on the lower Mekong Basin states. China has started hydropower development on the
upper reaches of the Mekong River. Because the irrigation potential in the Chinese portion of the Mekong
Basin is limited, these reservoirs should help regulate the flow and increase dry season flows into the
lower Basin. In the long-term, China may wish to export hydropower to and open up a navigation route
into mainland Southeast Asia. Myanmar currently has no plans to develop the water resources of its
portion of the Basin.
Baseline Scenario
9.
The "baseline scenario" describes the course of future activities by the countries in the absence of
GEF support; i.e, if the countries do not take global environmental considerations into account. Two
levels of analysis are used for the baseline scenario. The higher level of analysis consists of a general
description of the environmental dangers and investments risks associated with each country pursuing its
own, uncoordinated water resource development activities. At a lower level, a review of the MRC's work
program, in the absence of GEF support, is presented. For practical reasons, the scope of analysis for
calculating incremental costs is limited to the MRC's work program, which constitutes the de facto
baseline.
10.
The Strategic Problem of the Mekong Riparian Countries. Each MRC-member country has an
economic and social development agenda in which the protection and development of water resources
52
of the whole river basin. Rural economic development will eventually relieve this pressure, but in the
meantime, serious ecological and social damage could occur with the attendant increases in rural-urban
migration and poverty if the water resources of the Basin are not cooperatively and wisely planned and
managed with these concerns in mind.
11.
National Policies and Investment Plans. National and sector water policy actions in each of the
countries, required to accelerate economic development, and ensure that its economic impact is
environmentally and socially sustainable, are constrained by this uncertainty. Moreover, without clarity
on the ground rules for implementing the Mekong Agreement, particularly the provisions for notification
and consultation (Article 5), and maintenance of flows on the mainstream (Article 6), it is difficult in
some cases to mobilize external financial resources to undertake urgently needed investments in water
resources.
12.
The Baseline Program of MRC Secretariat. The MRCS Work Program has been reorganized in
accordance with the recently approved MRC Strategic Plan. Projects have been programmed into four
Key Result Areas (KRAs): Natural Resources Planning and Management; Environmental Management
and Social Considerations; Data Base and Information Systems; and Organization Management and
Cooperation. The complete MRCS 1999 portfolio includes 17 ongoing and fully funded projects which
total about US$36 million (including a US$18 million grant to upgrade ferry facilities in Cambodia), and
another 50 projects that are proposed or partly funded and total US$87 million, of which US$15 million
of funding has been secured from various bilateral and multilateral donor agencies. The total cost of the
MRC's proposed portfolio is therefore US$123 million ($36 + $87 million), and donor commitments total
US$51 million ($36 + $15). Historically, average annual expenditures (including projects) by the MRC
are around US$12 million.
13.
For the purposes of the GEF incremental cost analysis, the MRC's projects are divided into two
groups. The first group of projects deal with specific national investment projects, such as ferry facilities
or hydropower feasibility studies, and are not directly related to WUP and thus excluded from the
incremental cost analysis. The second group of MRC projects will, directly or indirectly, support the
GEF-financed WUP and thus constitute the "baseline scenario costs." Table 1 summarizes projects in the
MRC portfolio that are related to the WUP (as well as the Basin Development Plan). None of these
projects, however, would integrate the results and outcomes of all the MRC's disparate studies and
projects, nor provide the comprehensive Basin analytical tools to use the information and knowledge
being developed through these projects. None of the projects in Table 1 focus on the core Basin
management functions of MRC or the implementation of the Agreement (except the proposed WUP and
BDP projects). Nevertheless valuable knowledge, data and tools are being developed by some of these
projects.
Global Environmental Objectives and Benefits
14.
The global environmental objective of the Project is to prevent harm and irreversible loss of
water and ecological resources in the Mekong River Basin and related coastal and marine resources. The
53
extensive network of wetlands. Water flooding into nutrient rich areas, combined with high levels of solar
energy, help fuel a high-powered eco-system. There are an estimated 1200 fish species in the Basin.
Many fish species in the Basin are highly migratory, but relatively little is known about the Basin's
aquatic ecology. The long-term sustainability of the Basin's fisheries is threatened by increasing harvests,
habitat degradation and water development projects that cut off migration corridors between spawning,
nursery, and adult habitats. Already a number of aquatic dependent species have been classified as rare or
endangered, including 18 species of waterbirds and 16 species of mammals. Important endangered
species include the Irrawaddy dolphin, the Chinese white dolphin, the black finless porpoise, the
freshwater giant catfish, and five waterbirds: the Eastern sarus crane, the giant ibis, the white-shouldered
ibis, the greater adjutant stork, and the lesser adjutant stork. There is little information about freshwater
turtles, tortoises and terrapins, but there are almost certainly several rare and endangered species in this
group.
16.
The heart of the Mekong Basin's ecosystem lies in the globally significant wetlands and flooded
forests in the Tonle Sap, the Plain of Reeds, and the Coastline Ecosystem. The Tonle Sap (also know as
the Great Lake of Cambodia) lies in the middle of Cambodia and is fed by runoff from its own sub-basin
and by reverse flows from the Mekong River during the wet season2. During the dry season the Tonle
Sap drains into the Mekong Delta, helping to combat seawater intrusion and maintain the Delta's
ecological balance, including extensive mangrove forests. During the wet season, the Tonle Sap expands
from 2,500 km2 to over 10,000 km2, and supports an extensive flooded forest which provides ideal habitat
for fish spawning and nursing. Fish migrations from the Tonle Sap into the Mekong River help restock
fisheries as far upstream as China and many tributary rivers along the way.
17.
The Plain of Reeds covers 7,000 km2 in Vietnam and 3,000 km2 in Cambodia. It is subject to
seasonal flooding from the River system. During the peak flood period the Plain becomes a vast lake with
some areas flooded up to 4 meters. The flora is quite complex due to the high variety of flood regimes.
During the flood season, the Plain supports a large number of fish species which move from upstream
areas for breeding and nursing. A number of water birds, many winter migrants considered to be
threatened birds of the world, are supported in the Plain of Reeds.
18.
The estuaries in the Delta maintain important ecological processes such as transport of nutrients,
plankton, shrimp, fish larvae, and detritus-- all essential components in the aquatic food webs. The
estuaries of the Tien River (part of the Mekong River system) has been listed by IUCN as an
internationally important wetland. Many shrimp and fish species depend on the estuaries for their
breeding and nursing. Their migration and reproductive patterns are strongly influenced by river water
flow and tidal regimes. The estuaries of the Delta also support rich mangrove forests.
19.
(b) Regional Cooperation. Cooperative and integrated management of trans-boundary water
resources of international river basins is one of the most pressing current problems in sustainable natural
resources management. The earth's largest reserves of accessible and usable freshwater resources are
contained in its more than 200 trans-boundary lake and river systems. In nearly two-thirds of these
systems, a wide variety of agreements are being implemented and monitored by international river Basin
54
GEF Alternative
20.
The baseline scenario described above would do little to mitigate the increasing risks to, and
relieve the development pressures on, the ecological resources of the Basin. In spite of the extensive
information on the Mekong garnered through the MRC's past projects, the MRC has been unable to
utilize this information to make sound water resource management decisions. The Project would address
this critical gap by developing Basin-wide and integrated tools and the related knowledge base to enable
the riparian countries to gain a deeper understanding of the hydrologic linkages between the natural
environment, water utilization, and strategic trans-boundary water and environmental issues. The Project
would also support a consultative process to formulate and implement appropriate procedures, guidelines
and rules to ensure reasonable and equitable water use. These rules, and the corresponding procedures
and analytical tools for their implementation, provide the essential framework for sustainable and
equitable water resource management in the Basin.
21.
The linkages between cooperative Basin management and sustainable national water policy and
strategies will be strengthened under the project by directly involving national stakeholders including the
respective NMCs and national institutions concerned with water and natural resource sector. The MRCS
and each riparian would have a complete package of analytical tools and information systems and the
capacity to use them. The protocols on data and information exchange to be developed and implemented
under the project would provide procedures and rules, under which these systems would be jointly
maintained and updated. The proposed project would thus addresses the key existing barriers to effective
regional cooperation needed to promote and support the adoption of national policies and strategies that
are consistent with the protection and enhancement of the globally significant natural resource base of the
Basin. The proposed GEF Alternative includes three components (see Annex 2 for details):
· Basin Model Package and Knowledge Base. The incremental cost is $9.9 million, of which
the GEF is asked to fund $6.6 million.
· Development of the Rules for Water Utilization. The incremental cost is $1.3 million, of
which the GEF is asked to fund $ 1.1 million.
· Institutional Strengthening of the MRC and NMCs to Implement WUP. The incremental cost
is $5.1 million, of which the GEF is asked to fund $3.3 million.
22.
Related GEF Investments and Programs. The Project is an important initiative in the GEF's
broader global strategic program in international waters. It would support the participation of the MRC,
specifically the WUP management teams in the MRCS and the NMCs, in two aspects of this global
program:
(a) The ongoing International Waters (IW) Learn project, being implemented by UNDP, links
together GEF international waters project teams for experience sharing and provide a modern electronic
mechanism for distance learning. The project would support the participation of the MRCS and NMC
55
Incidental Domestic Benefits
23.
In addition to the global benefits described above, the Project would also generate significant
incidental domestic benefits for the MRC-member countries. Following the review procedures
established under the Project, and with the new analytical tools and knowledge base, countries could
implement projects with more confidence that they will not harm other countries nor endanger sensitive
ecological resources. The Project would also help build technical capacity and databases, as well as
ownership, in the national line agencies and NMCs which participate in the Project. This will help the
national agencies play a more supportive role in the MRC, as well as formulate efficient and sustainable
water and natural resource policies at the national level.
Incremental Costs
24.
To summary the above sections, the incremental costs required to achieve the stated global
environmental benefits is US$16.3 million, of which US$11 million is sought from GEF:
Project Component
Incremental
GEF Fund
Country
Cost
Contributions
A. Basin Model Package & Knowledge Base
9.9
6.6
3.3
B. Development of Rules for Water Utilization
1.3
1.1
0.2
C. Institutional Strengthening of MRCS/NMC
5.1
3.3
1.8
Total
16.3
11.0
5.3
25.
Table 2 summarizes the incremental cost assessment.
Table 2. Summary Incremental Cost Assessment Matrix
Baseline Scenario
Alternative
Global
None
Protection of globally significant
Environmental
ecological resources: biodiversity
Benefit
conservation (fish, waterbirds,
aquatic mammals, etc.)
Globally significant eco-systems:
Tonle Sap, Plain of Reeds, Delta
estuary
Example of cooperative and
coordinated international water
resource management.
Domestic Benefit
Data on hydrology, fisheries,
Multi-purpose and coordinated water
navigation, watersheds, mapping,
resource management in the Mekong
wetlands, etc.
Basin.
56
Table 1. MRCS BASELINE PROGRAM
Component
Project
Project
Ongoing/
Cost
Funding
SOF
Code
Planned
US$mil
Secured
Sought
A Basin Modeling Package and Knowledge Base
A.1 Information and Knowledge Base
3.19/95
Inland Fisheries Information System
Planned
2.60
2.60
3.01/98
Improvement of Documentation Center
Planned
0.10
0.09
3.13/92
Improvement of Hydro-meteorological Network
Ongoing
4.26
2.48
0.82
Aus; Japan
3.03/97
Integrated GIS and Statistical Databases for NRM
Planned
1.09
0.99
3.07/97
Land Resources Inventory
Ongoing
1.23
0.37
0.65
Japan
2.50/93
Watershed classification
Ongoing
3.00
2.60
Swiss
2.49/92
Mekong forest cover monitoring
Ongoing
4.17
4.06
Germany
A,2 Basin Modeling Package
3.43/87
Updating of hydrographic atlas, survey, mapping
Ongoing
7.66
6.96
Finland
2.11/97
Mekong morphology and sediment transport
Planned
0.51
0.49
2.36/95
Model for salinization studies in Lower Mekong Basin
Planned
1.60
1.30
2.49/96
Chaktomuk area environment, hydraulic and
Planned
0.58
0.58
morphology
3.14/96
Upgrading of salinity forecasting in Delta
Planned
0.63
0.45
3.09/94
Flood forecasting/damage reduction study
Planned
3.29
0.25
2.83
Denmark
A.3 Environment, Economic, and Social
1.02/96
Assessment of Mekong Fisheries
Ongoing
5.75
5.21
Denmark
Transboudary Analysis
1.17/95
Support to fisheries management and development
Ongoing
1.09
1.06
Denmark
cooperation
1.13/88
Management of reservoir fisheries
Ongoing
3.84
3.49
Denmark
1.16/94
Rural extension for aquaculture in Mekong Delta
Ongoing
2.08
1.89
Denmark
1.21/96
Management of freshwater capture fishery (Cambodia)
Planned
4.86
4.18
1.03/98
Management of reservoir fisheries (II)
Planned
5.35
4.71
1.20/94
Watershed management strategy study
Ongoing
0.21
0.20
Swiss
1.51/92
Sustainable NRM in Lower Mekong Basin
Ongoing
4.80
4.30
Germany
1.42/96
Soil and water conservation in small watersheds
Planned
0.97
0.80
1.37/95
Management of salt-affected soils on Lower Mekong
Planned
0.60
0.40
3.13/92
Inventory of Cambodian wetlands (I)
Ongoing
2.00
1.80
Denmark
2.03/98
Wetland conservation in the Lower Mekong Basin
Planned
2.80
2.50
2.01/98
Integration of social/econ/poverty consid into MRC
Planned
1.30
1.20
57
2.02/98
Community involvement in water resource
Planned
3.35
3.10
development
2.19/97
Basin-wide water borne disease management project
Planned
1.24
0.98
2.01/95
Environment program
Ongoing
13.62
8.14
4.60
Denmark;
Var
Sub-totals
84.58
42.81
33.27
B. Development of Rules
4.01/98
Preparation of framework Mekong Navigation
Planned
0.75
0.66
Agreement
2.04/98
Comparative study of environment law in MRB
Planned
0.25
0.25
Sub-totals
1.00
0
0.91
C. Institutional Strengthening of MRCS and NMCs
4.01/97
HRD for MRCS
Planned
7.67
0.83
6.27
UNDP; Var
4.45/94
Training on legal aspects of WRM (MRCS)
Ongoing
0.68
0.25
0.35
Japan
4.02/98
Project Management
Ongoing
0.2
0.02
0.18
4.03/98
Financial Management
Planned
0.3
0.3
Sub-totals
8.85
1.10
7.10
TOTAL
94.43
43.91
41.28
58
Annex 5
MRC: Water Utilization Project
Procurement, Disbursement and Financial Management
Procurement
The Bank guidelines: Procurement under IBRD Loans and IDA Credits (January 1995,
revised in January and August 1996, September 1997 and January 1999) would be applied to GEF-
financed procurement of goods. Contracts for consulting services would be procured in accordance
with the provisions of the "Guidelines for the Selection and Employment of Consultants by World
Bank Borrowers", published by the Bank in January 1997 and revised in September 1997 and
January 1999 (Consultant Guidelines). The goods and services not financed by GEF will be
procured in accordance with national regulations of the riparians or regulations of the parallel co-
financing institutions. MRCS' Division Finance and Administration would be responsible for all
procurement. This would include preparation of tender documents, obtaining clearance from the
Bank as required, evaluation of bids, preparation of contracts, and purchase. Bank Standard
Bidding Documents, Bid Evaluation Form and Request For Proposals will be used for GEF-
financed contracts. The procurement profile is shown in Table A.
Goods (office and modeling equipment) with an estimated cost of US$0.78 million are
expected to be procured through international shopping based on at least three price quotations.
Technical Assistance of US$6.8 million would be carried out by teams of consultants to
assist in basin modeling, knowledge base management and drafting of rules and related studies.
Consultancy contracts with firms for all contracts over US$100,000 would be based on `Quality
and Cost-Based Selection' procedures following the Consultant Guidelines, with an aggregated
amount of US$5.3 million. All consulting assignments over US$200,000 would be advertised in a
General Procurement Notice in the Development Business and a national newspaper of each MRC
member country, requesting expression of interests, prior to short-listing of consultants. Consultant
assignments under US$200,000 may use shortlists made up of national firms from the MRC
member countries pursuant to part 2.7 of the consultant Guidelines. For small contracts, less than
US$100,000, selection based on consultants' qualifications would be used, or with prior approval
by the Bank, "single source selection" procedures may be used. The procedures for appointment of
individual consultants to carry out legal advisory and expert panel functions would follow Section
V of the Consultant Guidelines. Training, study tours, consultation workshops and incremental
staffing of US$3.4 million would be reimbursed based on programs agreed with the Bank.
Bank Prior Review (Table B) would apply to GEF-financed goods and services with a total
value of US$8.32 million, covering over 76% of the total GEF-financed contract value. The prior
review is US$150,000 for goods, US$100,000 for consulting services through firms and
US$50,000 for consulting services through individuals. Sole-source selection, terms of reference
59
Disbursement
To avoid delays in project implementation, retroactive financing of US$0.5 million is
included to cover payment made between appraisal and the signing of the Grant Agreement. This
will include primarily recruitment of the WUP team leader, international advisers and support staff
of the WUP unit for initiating WUP activities. MRCS will follow Bank procurement guidelines.
The grant would be disbursed over a period of 7 years. A Special Account in US dollars
to be operated by MRCS would be set up in a commercial bank acceptable to the Bank, with an
authorized allocation of $0.5 million (equal to GEF-financed average expenditure for 4 months).
MRCS would submit to the Bank applications for replenishment monthly or whenever the amount
is drawn down by 20% of the authorized allocation, whichever comes first. The minimum
application size, outside of replenishment to the Special Account will be 20% of the authorized
allocation. MRCS would reimburse NMC's for MRCS approved travels and workshops
expenditures and use SOEs for reimbursement from the project. The project is to be completed in
December 31, 2006, and the grant is to be closed on June 30, 2007. The allocation of grant
proceeds is shown in Table C.
Statements of expenditure (SOE) would be required for disbursements to be made against (a)
contracts for goods costing less than $150,000; (b) expenses for training, study tours, consultation
workshops; (c) consultant services costing less than $100,000 for firms and less than $50,000 for
individuals; and (d) expenses for incremental operating costs. SOE would be subject to sample
post-review. MRCS would retain all supporting documents and make available for review by Bank
supervision missions. In the case of contracts for goods and services above these thresholds,
disbursements would be made against the full documentation of the contracts and supporting
documents.
Financial Management
A financial management assessment of the MRCS was carried out by Price Water-house &
Coopers (PWC) to ascertain whether the FM system comply with the requirements of OP/BP
10.02. The PWC report concludes that the financial management systems at the secretariat are
sufficient to control and monitor the financial operations of MRCS.
MRCS is largely a donor funded organization. As a result of having to control and monitor
donor funds, the MRCS has in place a comprehensive system of controls to ensure that funds are
fully and accurately accounted for. The finance function is headed by a Finance Director, assisted
by a Chief Accountant and subordinate accounting staff. Separate project accounts are maintained
to account and report for different donor funds. All accounting records are closed monthly, i.e. 15
days after the end of the month. Bank reconciliations are prepared and these are reviewed by the
Chief Accountant and approved by the Finance Director. At the end of each quarter, Income and
Expenditure Statements and fund balance statements are produced for each fund managed for
60
Accounting and Funds Flow. Project expenditures will be separately recorded and
reported by MRCS based on separate project accounts to be maintained. MRCS will establish a
separate bank account to facilitate receipts and disbursements of the project funds. Procedures for
receipt and disbursement of funds from parallel co-financiers will be in accordance with separate
bi-lateral agreements with each of the parallel co-financiers. Similarly, separate bank accounts will
be established to receive and disburse funds of co-financiers and contributing national
governments. Contributions from national governments and MRCS will be in the form of
personnel, office facilities and overhead, which will be handled through normal budgeting and
administrative procedures.
Given MRCS' long experience in dealing with donor funded activities, the project should
be eligible for PMR-based (Project Management Reports) disbursement. However, as the current
accounting system is not Y2K compliant, there is a risk that MRCS may not be able to prepare
timely reports until the new system being developed is fully installed, tested and operational.
Therefore, PMR-based disbursement is not recommended. The Bank and MRCS will review the
disbursement methodology by December 31, 2000 when a determination could be made to switch
to PMR-based disbursement.
Reporting. MRCS will be responsible for preparing quarterly PMRs. The PMRs will be
based on formats as described in the Bank's LACI Handbook. The formats will be agreed with
MRCS prior to negotiations. MRCS will prepare annual financial statements in accordance with
international standards for accounting. The annual project financial reports will include, at a
minimum, Summary of Sources and Uses of Funds Statement, a Project Balance Sheet at the year
end, comparative figures from the previous year and notes to the financial statements.
Auditing. MRCS will appoint an independent auditor acceptable to the Bank before project
effectiveness. The auditor will be responsible for the annual audit of the project accounts,
providing an opinion on the eligibility of the expenses disbursed on the basis of SOEs and
transactions on the Special Account. The audited financial statements together with audit reports
for SOE and the SA will be submitted to the Bank within six months of the end of the Project's
fiscal year. The audit will be conducted in accordance with international standards for auditing and
under terms of reference acceptable to the Bank.
61
Annex 5, Table A: Project Costs by Procurement Arrangements
(in US$ million equivalent)
Expenditure Category
Procurement Methods /a
Total Cost
IS
QCBS
CQ
Other
NGF
(incl. cting.)
1. Goods
(a) Office equipment
0.18
-
-
-
0.18
(0.16)
(0.16)
(b) Modeling/knowledge base equipment
0.60
-
-
-
0.60
(0.54)
(0.54)
2. Services
(a) TA
-
5.33
1.53
-
6.86
(5.33)
(1.53)
(6.86)
(b) Training/workshops/
-
-
-
2.49
2.49
Consultations
(2.49)
(2.49)
3. Incremental operating costs
-
-
-
0.93
0.93
(0.93)
(0.93)
GEF Total 0.70
5.33
1.53
3.42
10.98
Donor Parallel Co-Financing
2.80
2.80
NMC Counter-Part
1.24
1.24
MRC Counter-Part
1.25
1.25
5.30
Total
16.28
(10.98)
a/
IS= International shopping. QCBS = Consultant services procured under Quality and Cost-Based Selection.
CQ= Selection of individual consultants based on qualifications (per Section V of Consultants Guidelines). Other =
training and workshops. NGF= Non-GEF Financing.
62
Annex 5, Table B: Thresholds for Procurement Methods and
Prior Review (US$ million)
Expenditure
Contract Value
Procurement
Contracts Subject
Total Value
Category
US$'000
Method /a
to Prior Review /b Subject to Prior
Threshold
Review
1. Goods
>150
IS
All
0.78
<150
IS
None
0.00
Subtotal
0.78
2. Services
Firms>100
QCBS
All
5.33
Individuals >50
CQ
All
1.53
Subtotal
6.86
3. Training
All
CQ
All
0.68
a/ IS = International Shopping. QCBS = Quality and Cost-Based Selection. CQ = Selection based on Consultant's
Qualifications.
b/ To be financed by GEF.
Annex 5, Table C: Allocation of Grant Proceeds
Expenditure Category
Amount
Financing Percentage
(US$ million)
(%)
I. Goods
0.7
100% foreign
100% ex-factory
75% locally procured
II. Consulting services
6.9
100%
III. Travel, Training, Consultations
2.5
100%
IV. Incremental operating costs
0.9
100%, 75%, 50%, 25%
Total
11.0
63
Annex 6
MRC: Water Utilization Project
Project Processing Budget and Schedule
A. Project Budget (US$000)
Planned
Actual
(At final PCD stage)
PCD
78
110
Final
307
340
B. Project Schedule
Planned
Actual
(At final PCD stage)
Time taken to prepare the project (months)
9
13
First Bank mission (reconnaissance)
n.a.
1/17/98
Identification mission
n.a.
5/14/98
PCD Review
1/12/99
1/12/99
Preappraisal mission
1/99
1/16/99
Appraisal mission departure
4/99
4/4/99
Negotiations
7/99
11/1/99
Planned Board Date
9/99
2/7/00
Planned Date of Effectiveness
12/31/99
Prepared by: Mekong River Commission (MRC)
Preparation assistance: GEF-PDF
Bank task team who worked on the project included:
Name
Specialty
M. Xie
Water Management (Task Team Leader)
D. Olson
Water Resources Engineering
W. Garvey
Lead Water Specialist
S. Shen
Ecology
W. Wickrema
Financial Management
G. Browder
Water Resources
K. Hudes
Legal
C. Dharmajaya
Task Assistant
64
Annex 7
MRC: Water Utilization Project
Documents in Project File
A. Project Documents:
Global Environmental Facility (GEF) WUP Project:
Project Proposal to the MRC-JC (August 1998)
Mekong River Commission "Water Utilization Program Preparation"
Final Report (December 1998)
Mekong River Commission "Water Utilization Project"
Draft Project Implementation Plan (PIP, July 1999)
Including Annexes:
A
Project Description
B
Detailed Cost Estimates
C
MRC Strategic Plan and Trans-boundary Analysis
D
GEF Incremental Costs Analysis
E
Procurement Plan
F
Implementation Schedule
G
Performance Indicators
H
Terms of References
I
Participation Plan
J
Procurement Manual
K
Business Finance Plan
L
Parallel Co-Financing Proposals
B. Bank Staff Assessments:
Identification Mission Aide-memoire: May 1998
Project Concept Document (PCD): January 12, 1999
Pre-appraisal Mission Aide-memoire: January 29, 1999
Appraisal Mission Aide-memoire: April 13, 1999
Follow-up Mission Back-to-Office Report: July 7, 1999
65
Annex 8
Statement of Loans and Credits
Status of Bank Group Operations in Cambodia
IBRD Loans and IDA Credits in the Operations Portfolio
Difference Between
expected
Original Amount in US$ Millions
and actual
Fiscal
disbursements a/
Project ID
Year
Borrower
Purpose
IBRD
IDA
Cancellations
Undisbursed
Orig Frm Rev'd
Number of Closed Projects: 2
Active Projects
KH-PE-45629
1998
CAMBODIA
URBAN WATER SUPPLY
0.00
30.96
0.00
30.60
1.93
0.00
KH-PE-4033
1997
GOVT OF CAMBODIA
AGRI.PRODUCT IMP.
0.00
27.00
0.00
25.89
11.55
.16
KH-PE-4034
1997
KINGDOM OF CAMBODIA
DISEASE CONTROL&HEAL
0.00
30.40
0.00
25.99
10.82
0.00
KH-PE-4032
1996
KINGDOM OF CAMBODIA
PHNOM PEHN POWER REH
0.00
40.00
0.00
13.27
13.54
0.00
KH-PE-34755
1995
GOVT. OF CAMBODIA
TECHNICAL ASSISTANCE
0.00
17.00
0.00
4.03
3.00
0.00
KH-PE-37088
1995
KINGDOM OF CAMBODIA
SOCIAL FUND
0.00
20.00
0.00
.40
1.85
0.00
Total
0.00
165.36
0.00
100.18
42.69
.16
Active Projects
Closed Projects
Total
Total Disbursed (IBRD and IDA):
57.03
101.77
158.80
of which has been repaid:
0.00
0.00
0.00
Total now held by IBRD and IDA:
165.36
102.70
268.06
Amount sold :
0.00
0.00
0.00
Of which repaid :
0.00
0.00
0.00
Total Undisbursed :
100.18
0.00
100.18
a. Intended disbursements to date minus actual disbursements to date as p rojected at appraisal.
Note:
Disbursement data is updated at the end of the first week of the month and is currently as of 31-Jan-99.
66
Annex 8
Statement of Loans and Credits
Status of Bank Group Operations in Lao Peoples Democratic Republic
IBRD Loans and IDA Credits in the Operations Portfolio
Difference Between
expected
Original Amount in US$ Millions
and actual
Fiscal
disbursements a/
Project ID
Year
Borrower
Purpose
IBRD
IDA
Cancellations
Undisbursed
Orig Frm Rev'd
Number of Closed Projects: 16
Active Projects
LA-PE-42237
1999
LAO PDR
LA-PROVIN. INFRAST.
0.00
27.80
0.00
28.96
.22
0.00
LA-PE-44973
1998
SOUTHERN PROVINCE RE
0.00
34.70
0.00
35.96
1.30
0.00
LA-PE-4210
1997
GOVT. OF LAO PDR
HIGHWAY IMPROV. III
0.00
48.00
0.00
40.47
8.76
0.00
LA-PE-4208
1996
GOVT. OF LAO PDR
LAND TITLING
0.00
20.70
0.00
17.74
1.78
0.00
LA-PE-4200
1995
LAO PDR
HEALTH SYS. REF. & M
0.00
19.20
0.00
13.28
6.80
0.00
LA-PE-4196
1994
GOVT OF LAOS
FOREST MGT & CONSERV
0.00
8.70
0.00
6.42
6.26
0.00
LA-PE-4201
1994
GOVT OF LAOS
H'WAY IMPROVE II
0.00
30.00
0.00
4.50
2.06
0.00
LA-PE-4207
1994
GOVT OF LAO PDR
LUANG NAMTHA PROV DE
0.00
9.67
0.00
3.60
.30
0.00
LA-PE-4197
1993
GOVT. OF LAO PDR
PROV'L GRID INTEGRAT
0.00
36.00
0.00
3.83
3.51
0.00
LA-PE-4203
1993
LAO PDR
EDUCATION DEVELOPMEN
0.00
19.00
0.00
9.25
4.73
0.00
Total
0.00
253.77
0.00
164.01
35.72
0.00
Active Projects
Closed Projects
Total
Total Disbursed (IBRD and IDA):
91.45
301.97
393.42
of which has been repaid:
0.00
5.97
5.97
Total now held by IBRD and IDA:
253.77
305.55
559.32
Amount sold :
0.00
0.00
0.00
Of which repaid :
0.00
0.00
0.00
Total Undisbursed :
164.01
18.82
182.83
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.
Note:
Disbursement data is updated at the end of the first week of the month and is currently as of 31-Jan-99.
67
Annex 8
Statement of Loans and Credits
Status of Bank Group Operations in Thailand
IBRD Loans and IDA Credits in the Operations Portfolio
Difference Between
expected
Original Amount in US$ Millions
and actual
Fiscal
disbursements a/
Project ID
Year
Borrower
Purpose
IBRD
IDA
Cancellations
Undisbursed
Orig Frm Rev'd
Number of Closed Projects: 108
Active Projects
TH-PE-56269
1999
SOCIAL INVEST PROJ
300.00
0.00
0.00
293.75
-6.25
0.00
TH-PE-53616
1998
FIN SEC IMPL ASST
15.00
0.00
0.00
11.20
7.56
0.00
TH-PE-54799
1998
ECO MGT IMPLE ASSIST
15.00
0.00
0.00
14.48
10.83
0.00
TH-PE-37086
1997
METROPOLITAN ELECTRICITY
METROPOL'N DIST REIN
145.00
0.00
0.00
120.03
3.38
0.00
TH-PE-42268
1997
PEA
DISTR AUTOM & RELIA
100.00
0.00
0.00
93.56
54.82
26.11
TH-PE-4805
1997
GOVT OF THAILAND
UNIVER SCI & ENG.EDU
143.40
0.00
0.00
137.90
37.84
0.00
TH-PE-4791
1996
GOVT OF THAILAND
SEC.EDUC. QUALITY IM
81.90
0.00
0.00
81.30
38.75
0.00
TH-PE-4793
1996
GOVT OF THAILAND
TECHNICAL EDUCATION
31.60
0.00
0.00
31.60
24.00
0.00
TH-PE-4800
1996
GOV. OF THAILAND
HIGHWAYS V
150.00
0.00
45.00
103.59
146.92
1.84
TH-PE-4799
1995
EGAT
LAM TAKHONG PUMP STO
100.00
0.00
0.00
48.30
31.30
0.00
TH-PE-4801
1995
PROV ELEC AUTHORITY
DISTRIBUT.SYSTEM REI
50.00
0.00
0.00
4.34
4.35
0.00
TH-PE-4802
1995
BANGCHAK PETROLEUM PCL
CLEAN FUELS & EA QUA
90.00
0.00
0.00
64.43
58.60
0.00
TH-PE-4803
1995
RTG
LAND TITLING III
118.10
0.00
0.00
62.37
35.92
0.00
TH-PE-4796
1993
METRO ELEC AUTHORITY
DISTRIB. SYS & EGY E
109.00
0.00
0.00
16.60
16.58
16.58
Total
1,449.00
0.00
45.00
1,083.45
464.60
44.53
Active Projects
Closed Projects
Total
Total Disbursed (IBRD and IDA):
320.54
5,072.27
5,392.81
of which has been repaid:
7.89
3,237.41
3,245.30
Total now held by IBRD and IDA:
1,396.11
1,837.15
3,233.26
Amount sold :
0.00
196.73
196.73
Of which repaid :
0.00
196.73
196.73
Total Undisbursed :
1,083.45
2.00
1,085.45
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.
Note:
Disbursement data is updated at the end of the first week of the month and is currently as of 31-Jan-99.
68
Annex 8
Statement of Loans and Credits
Status of Bank Group Operations in Vietnam
IBRD Loans and IDA Credits in the Operations Portfolio
Difference Between
expected
Original Amount in US$ Millions
and actual
Fiscal
disbursements a/
Project ID
Year
Borrower
Purpose
IBRD
IDA
Cancellations
Undisbursed
Orig Frm Rev'd
Number of Closed Projects: 3
Active Projects
VN-PE-4828
1999
SOC REP OF VIET NAM
HIGHER EDUC.
0.00
83.30
0.00
86.89
2.34
0.00
VN-PE-4833
1999
MOF, GOVERNMENT OF VIETNA
URB TRAN IMPROVEMENT
0.00
42.74
0.00
44.00
1.30
0.00
VN-PE-45628
1998
GOV
TRANSMISSION & DISTR
0.00
199.00
0.00
202.04
4.93
0.00
VN-PE-4839
1998
GOVT OF VIET NAM
FOREST PROT.& RUL DE
0.00
21.50
0.00
21.49
1.65
0.00
VN-PE-4843
1998
GOVT OF VIET NAM
INLAND WATERWAYS
0.00
73.00
0.00
74.06
1.98
0.00
VN-PE-4844
1998
GOV
AGRI DIVERSIFICATION
0.00
66.85
0.00
69.40
2.17
0.00
VN-PE-39021
1997
GOV'T OF VIET NAM
RURAL TRANSPORT
0.00
55.00
0.00
38.21
2.78
0.00
VN-PE-4830
1997
GOV
WATER SUPPLY
0.00
98.61
0.00
99.27
24.72
0.00
VN-PE-4842
1997
GOVT OF VIET NAM
HIGHWAY REHAB II
0.00
195.60
0.00
181.06
43.23
0.00
VN-PE-36042
1996
SOC. REP. OF VIETNAM
BANKING SYSTEM MODER
0.00
49.00
0.00
45.31
42.64
.59
VN-PE-42236
1996
GOVT. OF VIETNAM
POWER DEV
0.00
180.00
0.00
8.24
-9.74
0.00
VN-PE-4838
1996
SOCIALIST REPUBLIC OF VIE
NATIONAL HEALTH SUPP
0.00
101.20
0.00
81.11
13.63
0.00
VN-PE-4841
1996
SOC REP OF VIET NAM
POPULATION & FAMILY
0.00
50.00
0.00
34.46
8.70
0.00
VN-PE-4847
1996
GOV
RURAL FINANCE
0.00
122.00
0.00
56.54
17.23
0.00
VN-PE-4834
1995
GOV
IRRIGATION REHABILIT
0.00
100.00
0.00
71.81
10.15
0.00
VN-PE-4836
1995
EVN PC2 PC3
POWER SECTOR REHAB &
0.00
165.00
0.00
39.88
46.68
-39.83
VN-PE-4832
1994
GOVT OF VIET NAM
HIGHWAY REHAB
0.00
158.50
0.00
66.81
65.55
40.97
VN-PE-4835
1994
SOC REP OF VIET NAM
PRIMARY EDUCATION
0.00
70.00
0.00
35.36
20.37
.11
VN-PE-4837
1994
GOVT OF VIET NAM
AGRIC REHABILITATION
0.00
96.00
0.00
2.30
-2.40
-3.82
Total
0.00
1,927.30
0.00
1,258.24
297.91
-1.98
Active Projects
Closed Projects
Total
Total Disbursed (IBRD and IDA):
629.51
243.82
873.33
of which has been repaid:
0.00
6.87
6.87
Total now held by IBRD and IDA:
1,927.30
237.83
2,165.13
Amount sold :
0.00
0.00
0.00
Of which repaid :
0.00
0.00
0.00
Total Undisbursed :
1,258.24
0.00
1,258.24
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.
Note: Disbursement data is updated at the end of the first week of the month and is currently as of 31-Jan-99.
69
Annex 8
Cambodia
STATEMENT OF IFC's
Committed and Disbursed Portfolio
As of
(In US Dollar Millions)
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan Equit Quas
Parti
Loan Equit Quas
Parti
y
i
c
y
i
c
Total Portfolio:
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Approvals Pending
Commitment
Loan Equit Quas
Parti
1998
CPP
15.00
y
0.00
i
4.30
c
45.20
1997
SLP
5.25
0.00
0.00
2.25
INVESTMENTS
Total Pending Commitment:
20.25
0.00
4.30 47.45
70
Annex 8
Lao Peoples Democratic Republic
STATEMENT OF IFC's
Committed and Disbursed Portfolio
As of 31-Jan-99
(In US Dollar Millions)
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan Equit Quas
Parti
Loan Equit Quas
Parti
y
i
c
y
i
c
1998
SEF Endeavor
.15
0.00
0.00
0.00
.15
0.00
0.00
0.00
1998
SEF Settha
1.00
0.00
0.00
0.00
1.00
0.00
0.00
0.00
Total Portfolio:
1.15
0.00
0.00
0.00
1.15
0.00
0.00
0.00
Approvals Pending
Commitment
Loan Equit Quas
Parti
1998
SEF BAFCO
1.10
y
0.00
i
0.00
c
0.00
Total Pending Commitment:
1.10
0.00
0.00
0.00
71
Annex 8
Thailand
STATEMENT OF IFC's
Committed and Disbursed Portfolio
As of 31-Jan-99
(In US Dollar Millions)
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan
Equity
Quasi
Partic
Loan
Equity
Quasi
Partic
1979/81/84/87/91
Siam City
20.00
0.00
0.00
55.00
20.00
0.00
0.00
55.00
1984/91
SEAVI Thailand
0.00
1.50
0.00
0.00
0.00
1.50
0.00
0.00
1987/96
HMC Polymers
0.00
3.92
.36
0.00
0.00
3.92
.36
0.00
1988
Peroxythai
4.01
0.00
0.00
0.00
4.01
0.00
0.00
0.00
1989
SCB-CKAP
0.00
.41
0.00
0.00
0.00
.41
0.00
0.00
1989
SCB-Thai Baroda
0.00
.78
0.00
0.00
0.00
.78
0.00
0.00
1989
TFB-Ladprao
0.00
.33
0.00
0.00
0.00
.33
0.00
0.00
1989
TFB-Top Easy
0.00
.15
0.00
0.00
0.00
.15
0.00
0.00
1990
Siam Asahi
0.00
7.70
0.00
0.00
0.00
6.37
0.00
0.00
1990/95
Shin Ho Paper
8.28
7.54
0.00
9.67
8.28
7.54
0.00
9.67
1991
VIM Thailand
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1991/93/96/98
Ayudhya Leasing
10.00
2.42
0.00
0.00
10.00
2.42
0.00
0.00
1992
Krung Thai IBJ
0.00
.35
0.00
0.00
0.00
.35
0.00
0.00
1993
Advance Agro
10.00
0.00
0.00
0.00
10.00
0.00
0.00
0.00
1993
Bumrungrad
25.00
2.24
0.00
29.00
25.00
2.24
0.00
29.00
1993
Central Hotel
0.00
13.95
0.00
0.00
0.00
13.95
0.00
0.00
1993
Samui Beach
2.14
0.00
0.00
3.57
2.14
0.00
0.00
3.57
1993
Star Petroleum
91.07
0.00
0.00
297.50
91.07
0.00
0.00
297.50
1993
Sukhontha
1.43
0.00
0.00
3.57
1.43
0.00
0.00
3.57
1993
TUNTEX
11.40
4.92
0.00
95.60
11.40
4.92
0.00
95.60
1994
Dhana Siam
20.44
0.00
0.00
3.14
20.44
0.00
0.00
3.14
1994
Vinythai
34.49
0.00
0.00
44.74
34.49
0.00
0.00
44.74
1995
Finance One
30.00
0.00
0.00
132.40
30.00
0.00
0.00
132.40
1995
Saha Farms
25.00
9.90
10.00
25.00
25.00
9.90
10.00
25.00
1995
UPOIC
0.00
1.08
0.00
0.00
0.00
1.08
0.00
0.00
1995/96/98
BTSC
80.00
9.83
9.83
0.00
49.28
9.83
9.83
0.00
1996
NFS
22.50
0.00
0.00
0.00
22.50
0.00
0.00
0.00
1996
Thai Petrochem
76.67
0.00
20.00
383.33
76.67
0.00
20.00
383.33
Total Portfolio:
472.43
67.02
40.19
1,082.52
441.71
65.69
40.19
1,082.52
Approvals Pending Commitment
Loan
Equity
Quasi
Partic
1996
NFS
10.00
0.00
0.00
0.00
Total Pending Commitment:
10.00
0.00
0.00
0.00
72
Annex 8
Vietnam
STATEMENT OF IFC's
Committed and Disbursed Portfolio
As of 31-Jan-99
(In US Dollar Millions)
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan Equit Quas
Parti
Loan Equit Quas
Parti
y
i
c
y
i
c
1994
Hanoi Metropole
3.67
0.00
3.50 12.12
3.67
0.00
3.50 12.12
1995
Baria Serece Prt
3.00
0.00
0.00
1.80
3.00
0.00
0.00
1.80
1995
Foremost Dairy
6.40
0.00
0.00
5.20
6.40
0.00
0.00
5.20
1996
Kyoei Steel
13.93
0.00
0.00
0.00 13.93
0.00
0.00
0.00
1996
Morn.Star Cement
30.00
0.00
0.00 66.60 30.00
0.00
0.00 66.60
1996
Sucre de Bourbon
22.00
0.00
0.00 20.00 22.00
0.00
0.00 20.00
1996
SMH Glass Co.
10.00
0.00
0.00
4.50 10.00
0.00
0.00
4.50
1996
Vimaflour
8.00
0.00
0.00
3.00
8.00
0.00
0.00
3.00
1996
VILC
0.00
.75
0.00
0.00
0.00
.75
0.00
0.00
1997
Nghi Son Cement
30.00
0.00
0.00 26.50
0.00
0.00
0.00
0.00
1997
Saigon Hilton
13.05
0.00
0.00 21.00
0.00
0.00
0.00
0.00
Total Portfolio:
140.0
.75
3.50 160.7
97.00
.75
3.50 113.2
5
2
2
Approvals Pending
Commitment
Loan Equit Quas
Parti
1998
BA RIA
24.20
y
4.00
i
0.00
c
49.00
1998
BAWC
12.50
0.00
0.00 12.50
1997
NGHE AN SUGAR
20.00
0.00
0.00 30.00
1997
SEM HOTEL
0.00
0.00
4.50
0.00
1996
VIETNAM INTL
5.00
0.00
0.00 10.00
73
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan Equit Quas
Parti
Loan Equit Quas
Parti
y
i
c
y
i
c
LSE
1997
VINAFOOD
10.50
0.00
0.00 13.50
Total Pending Commitment:
72.20
4.00
4.50 115.0
0
74
Annex 9
MRC: Water Utilization Program
Transboundary Analysis
1.
The 65 million inhabitants of the Mekong Basin depend to a great extent on the natural
resources of the basin for their livelihood. Few of the economic benefits of the extraordinary
economic growth that occurred in the surrounding region of Southeast Asia were experienced in
the basin. Poverty is widespread, and the stress on the natural resources of the basin is increasing.
About 75% of the population depend on agriculture and fisheries. Fish is the major source of
low-cost and high quality protein for the people of the basin, and an important source of
employment and income in rural areas. Wetlands that are vital for the maintenance of the fishery
and support globally significant bio-diversity, depend on the annual ebb and flow of the Mekong
River system to sustain these sensitive ecological systems. Exploitation of these wetlands in
increasing, and in some cases they are being drained for cultivation. There is great pressure on
the sensitive upland areas that are the source of runoff and groundwater recharge because of the
lack of cultivable land and alternative sources of income shifting cultivation and illegal forest
exploitation are degrading the watersheds, increasing erosion, and threatening the water supplies
on which so many of the people of the basin depend.
Sustainable Water Resource Development
2.
Economic development and investment are imperatives in the Mekong Basin, and water
resources development is a major focus and priority for this investment. Agriculture is the
predominate economic sector and a key element in each riparian country development strategy.
Because of the long dry season irrigation development is essential for long term growth of the
agriculture sector, especially in Cambodia in the lower basin where little development has so far
taken place. Increased productivity of existing agriculture, especially in northeast Thailand and
the Vientiane plain in Laos in the upper basin, and in the delta of the lower basin in Vietnam, will
also be led by expanding irrigation water supplies to support intensification, and new irrigation
and drainage infrastructure to improve water control to increase productivity. Hydropower
development is also a high priority, both as a source of export earnings in Laos, and as a key
growth factor in each country's national development in 1993 electrification reached just 4% of
Cambodian households, 13% in Laos, and 10% in Vietnam. The importance of inland navigation
along the mainstream and the principal tributaries will remain high because the road and rail
network is extremely limited.
3.
More than 80% of the basin's population is rural, of which a high proportion depend on
the river system and the aquatic ecosystem for an important part of their subsistence livelihood.
Changes in the flow pattern (flow, water level, timing, quality, sediment load) brought about by
75
basin, water availability particularly in the dry season when irrigation supply is needed and water
depths in the mainstream are critical for inland navigation, water use, water quality and aquatic
ecosystems elsewhere in the basin. The major transboundary concerns as they relate to
sustainable water use and ecological resources, and their transboundary character, are
summarized in Table 1. Until recently too little was know about the specific linkages in the
Mekong Basin to help formulate regional guidelines to protect these resources or prevent
unacceptable harm. The major ongoing investment in these areas by MRC, the riparian countries,
and their donor partners to develop basic ecological and social and economic knowledge is
expanding the availability of these data, and should enable WUP to make significant progress in
integrating these considerations into develop plans and policies.
5.
A combination of regional and national actions are required to address these
transboundary issues, and to protect water and ecological resources. In the Mekong it seems clear
from experience to date that both the process and technical and institutional capacities needed to
develop the regional framework to implement the Agreement are also critical to guiding the
countries towards national policies for sustainable water and ecological resource development.
6.
Global Benefits of Cooperation in the Mekong Basin. There are two main areas in
which timely and catalytic intervention can prevent further degradation and conserve water and
ecological resources resulting in substantial global benefits:
(a)
Ecological Resources. The basin contains globally significant bio-
diversity,wetlands and flooded forests in the Tonle Sap basin (Cambodia alone has an estimated
5% Asian wetlands of international importance as estimated by IUCN), in the Plain of Reeds in
Vietnam and Cambodia (a nearly 1 million ha multiple use wetland, a third of which are acid-
sulphate soils requiring managment), extensive mangrove forests in the delta, and the coastal and
marine resources connected to the river where it empties into the South China Sea. Tonle Sap is
one of the most unique natural Lake-River systems in the world. It is a vast shallow Lake in the
center of the Cambodian plain. filled in part from its own drainage basin, and from reverse flows
through the short Tonle Sap River during the months of peak flow in the Mekong River. In the
dry season the Lake slowly drains through the Tonle Sap River into the Mekong River near the
head of the delta, providing a substantial part of the dry season flow in this part of the basin and
help significantly to control salinity intrusion and conserve the mangrove forests. The Lake basin
contains extensive wetlands and flooded forests (the latter have already been reduced by half
from an estimated 1 million ha) that are critical to the lower basin fishery and other bio-diversity
resources.
(b)
Regional Cooperation. Cooperative and integrated management of transboundary
water resources of international river basins is one of the most pressing of current problems in
sustainable natural resources management. The earth's largest reserves of accessible and usable
freshwater resources are contained in its more than 200 transboundary lake and river systems. In
nearly two-thirds of these systems implementation of a wide variety of agreements are being
76
Existing Regional Framework
7.
The Mekong Agreement. The riparian countries have long recognized the need for
cooperation to develop the water resources of the Mekong Basin. Cooperation among the
riparian countries of the Mekong River Basin has its origin in the establishment of the Committee
for the Coordination of Investigations of the Lower Mekong Basin in 1957. This Committee and
its successor, the Interim Mekong Committee, carried out a large number of investigations and
technical studies, including extensive work on the establishment of a hydro-meteorological
network, a mathematical modeling capability and a large number of pre-investment planning
studies. This approach, however, was not sustainable. Civil and international conflict prevented
major investments with regional benefits from being undertaken, and the committee approach did
not have the essential elements of a legal framework for cooperation.
8.
Recognizing more recently the vital role that water resources development will continue
to play in the social and economic development if each of the riparian countries, and hence the
need to ensure that these valuable natural and environmental resources are developed and
managed sustainably, the four riparian countries of the Lower Mekong River Basin (Cambodia,
Laos, Thailand and Vietnam) signed and ratified the "Agreement on the Cooperation for the
Sustainable Development of the Mekong Basin" (Agreement) in April 1995.
9.
The Agreement provides a legal framework for cooperation that commits the four
riparian countries to "sustainable development, utilization, conservation and management of the
Mekong River Basin". The parties agreed to cooperate to optimize the multiple use and mutual
benefits of all riparians, and to minimize the harmful effects that might result. In particular, it was
agreed to protect the environment, natural resources, aquatic life, and ecological balance of the
Mekong River Basin from pollution and other harmful effects resulting from any development
plans and uses of water and related resources in the Basin.
10.
Institutional Framework for Cooperation. The Agreement establishes the Mekong
River Commission (MRC) as an international body and the institutional framework for
cooperation in the Mekong River Basin. The MRC consists of three permanent bodies: (i) the
Council, a Ministerial-level body which provides policy direction and makes decisions necessary
to implement the Agreement; (ii) the Joint Committee (JC, whose members are to have a rank not
less than the level of Head of Department present representatives are at the level of Director
General or Vice-Minister) implements policies and decisions of the Council, and is charged with
preparing a Basin Development Plan, mobilizing resources to implement the programs and
projects in the plan, exchanging information and data, conducting studies and assessments for the
protection of the environment of the Basin, and supervising the annual Work Program of the
Secretariat; and (iii) the MRC Secretariat (MRCS) which provides operational capability and
technical and administrative support to assist the Council and the Joint Committee to implement
their mandates.
77
12.
Relations with the Upper Riparian Countries. The two upper riparian countries, China
and Myanmar are not parties to the Agreement and are not likely to become so in the near future.
Nevertheless, MRC has made serious efforts to enhance and sustain dialogue with both countries.
China and Myanmar have been designated as dialogue partners and are regularly invited to
meetings of the JC and the Council where they are allowed to speak. At a technical level, the
MRCS has made continuing efforts to establish a permanent technical working group with
Chinese experts to discuss common issues particularly concerning the hydrology of the upper
basin. Ad hoc expert level meetings are currently held about twice a year. These efforts have
continued because of the importance of planned developments of the upper basin by the Chinese.
Their portion of the basin (16% of the drainage area, and about 18% of the average annual flow
just 2% of the drainage area is in Myanmar) has very large potential for hydropower development
involving at least one very large reservoir (with an estimated potential of 4800 MW) whose
regulation of the river would have significant positive effect on dry season flows downstream.
The Strategic Regional Problem of the Mekong Riparian Countries
13.
Each Mekong country has an economic and social development agenda in which the
protection and development of water resources plays an important if not vital role. But each
country is uncertain of the motives and plans of the other riparians, and each country is concerned
that plans and future opportunities not be foreclosed or delayed by disagreement, or that its
people and vital ecological resources not be harmed by the actions of the other riparians.
14.
National and sector policy actions in each of the countries, required to accelerate
development, and ensure that its economic impact is environmentally and socially sustainable, are
constrained by this uncertainty. Moreover, without clarity on the ground rules for implementing
the Mekong agreement, particularly the provisions for notification and consultation, and
maintenance of flows on the mainstream, it is difficult if not impossible in some cases to mobilize
external financial resources to undertake urgently needed major investments in water resources.
Only limited investment in irrigation and hydropower are going forward in the face of this
constraint, but major projects are planned and in an advanced stage of preparation such as the
Nam Thuen II project (hyrdopower) in Laos, and Kok/Ing/Nan and Khon/Chi/Mun projects
(irrigation) in Thailand.
15.
Since signing the Agreement, the parties have not been able to agree on how the key
provisions should be interpreted, nor which issues and provisions should be given priority or
emphasis at this stage. The small progress achieved so far has been a struggle ever since the
Agreement was signed requiring difficult accommodations at each step. Each Mekong country is
committed to cooperation as the cornerstone of sustainable development and use of their shared
water resources of the Mekong basin. But for there to be cooperation, they must know the ground
rules and procedures for cooperation. Creating these ground rules and procedures is itself a
critical cooperative action, one that all view as the way to launch the long term process of
cooperation for sustainable development and the realization of the goals of the agreement.
78
(i)
first, the MRCS was established with a weak financial base. MRCS has three
sources of funds: contributions of the riparians, overhead charges of 8% on each
donor grant, and treasury operations on the advances and other funds in the
possession of MRCS. Each country contributes equally (despite the enormous
disparity in GNP among the countries) and the total amount of these contributions
is currently US$740,000 per year. MRCS's current operating budget is about 2.4
million/year, and the difference is derived from donor funded projects and treasury
operations. This imbalance has forced MRCS to concentrate on mobilizing an ever
larger amount of donor funds for projects to ensure its income and maintain a large
staff and its office overhead. A large proportion of its staff have become project
officers devoted to project management and administration Mobilization of donor
funds, without a sense of program strategy and priority aimed at the immediate
steps required to implement the agreement, has been the driving force in MRCS's
work program, with the result that it has lost its focus on the core functions of
MRC. Some would argue that this is caused by narrow and specific interests on the
part of the donors, and this is in some cases an important factor, but the root cause
is the lack of a coherent strategy nad program on the part of MRCS that would
ensue that the portfolio produces the right results;
(ii)
second, lacking any real strategy or priorities related to the core functions of MRC,
MRCS did not create the internal structure, staffing pattern, working culture or
essential links with stakeholders, that would ensure its success. It is doing
everything from monitoring and basic planning to investment project preparation.
Although many parts of its work program focus on key environmental and natural
resources management areas where the knowledge base is weakest (fisheries,
wetlands, hydrologic monitoring including water quality, and forestry and
watershed management) the overriding focus on accumulating and managing
projects has caused it to lose sight of why it is doing these studies.
(b)
Lack of an Appropriate Shared Knowledge Base. The national governments,
particularly the Laotian and Cambodian line agencies and to a lesser extent the Vietnamese line
agencies, are hampered considerably by the lack of a basin information and knowledge base.
MRCS, despite over US$40 million in donor assisted projects since 1995, has failed to build this
knowledge base -- which contains not just a large body of basic data though that is necessary as
well, but information in the form of models, interpretations and analysis of the data, guidelines
and good practice, and other knowledge of the physical, ecological, social and economic
conditions so important to good planning and natural resource management. Data is collected but
never used, and in some instances is not even shared within MRCS. A significant portion of this
program will be vital in the immediate future to WUP and to the BDP, but so far almost no use
has been made of this expanding body of data and knowledge, for example, on hydrology,
fisheries, wetlands, water quality, or the social and economic conditions in the basin. Exchange
and sharing of data between the countries and the MRCS is informal and limited because there is
79
Secretariat on a new course, and agreement on the comprehensive and integrated approach
proposed for WUP resolves long standing disagreements among the countries on how to begin a
process leading to implementation of the Agreement.
18.
The Council took two other important actions in October 1998. It decided to develop
regional or basin wide guidelines on EIA that may form and important part of the future
notification and consultation procedures under the Agreement, and for the first time recognized
the importance of participation as a key part of MRC water and natural resource planning. The
latter decision reinforced and expanded its earlier mandate to MRCS to give greater attention to
social and economic factors in its planning.
19.
The MRC Strategic Plan, prepared with extensive consultation among and with the
riparian stakeholders sets out a "vision" for the Mekong Basin and the Mekong River
Commission. The plan includes a mission statement for the MRC, establishes 5 specific goals for
the mid-term, and identifies four "key result areas":
·
Natural resource planning and development;
·
Environmental management and social considerations;
·
Data bases and information systems; and
·
Organization management and cooperation.
20.
In the plan, specific objectives are identified for each "key result area", a strategy is
proposed for each area that addresses these objectives, and measures of success are identified.
While the plan and the strategic planning process are necessary steps, they are not sufficient to
ensure that MRC becomes a more effective and supportive partner seen by the riparian countries
as adding real value for this MRCS must make substantial progress on the each of the "key
result areas" (KRAs).
21.
The plan makes an initial attempt to link the MRCS work program to the strategy, and
adopts criteria for assigning priorities to projects and activities. The need for a transition period
in which MRCS would restructure and prioritize its work program is explicitly recognized in the
MRC Plan because so many projects and activities are ongoing. The importance of this initial
Plan, and in particular the strategic planning process, cannot be overemphasized if the process
is continued at regular intervals in the same participatory manner then one may expect real
progress if the MRC's external partners are supportive. So far the donors have reacted in a
positive way to MRC's actions.
Immediate Follow-up Actions.
22.
The two highest priority activities identified in the work program for the MRC's Strategic
80
23.
The BDP is seen by the countries as a way to move beyond the operational requirements
of the Agreement (the rules for water utilization) to embrace the broader theme of
environmentally and economically sustainable development (including the first and second "key
result areas") which is the basic tenet of the Agreement. The Swedish Government is currently
implementing the first phase of BDP preparation with the aim of reaching agreement with the
MRCS and the JC in July 1999 on the final terms of reference and plan for carrying out this
program.
24.
WUP would address the critical first step in implementing or making operational the
Agreement. Equally important WUP would provide the analytical tools and knowledge base ( the
second and third "key result areas") required to support negotiation of the rules and their
implementation, and provide the technical and institutional capacities required for longer-term
cooperation to sustainably manage the basin's water and ecological resources.
25.
UNDP has prepared a Phase II project of capacity building both in MRCS and the
National Mekong Committees (NMCs) that addresses the fourth "key result area". Progress
under the UNDP Phase II project is critical to the success of both the BDP and WUP. As noted in
paragraph 16(a) above, the weakness of MRCS has been a root cause of the lack of progress on
cooperation among the riparian countries, and UNDP's proposal addresses many of the
fundamental problems within MRCS noted in that paragraph.
26.
Genuine collaboration will be required between the BDP and WUP teams, with UNDP,
and within MRCS and with the NMCs and their line agency partners. Moreover, progress on the
broader MRCS work program, particularly in areas such as fisheries, wetlands and their linkages
with the flow pattern and hydrology of the Mekong river system, and on monitoring both water
quality and quantity, will be needed to ensure that data and knowledge are available concerning
key transboundary ecological resources.
Role of the GEF WUP Project
27.
As noted above WUP will make a major contribution to two of the MRC's "Key Result
Areas". By concentrating on developing the analytical framework to support consultations on the
rules for water utilization, and supporting the consultations themselves, WUP will be the catalyst
needed to start a long-term process of genuine cooperation that will prevent the loss of future
development opportunities and protect ecological resources of great value in the Basin and
globally .
28.
The design of the WUP Project is based on four principles or aims:
·
Institutional Capacity. WUP is designed to be a long term program of institution
and capacity building complimentary to and coordinated with UNDP's Phase II.
Production of reports, carrying out of studies or making calculations are not the
81
·
Analytical Tools. A shared knowledge base of the basin and the related
functional information systems and data bases, and analytical tools in the form of
a basin modeling package, are required as the foundation for cooperation.
·
Hydrological and Ecological Linkages. Because of the need to integrate the
analysis of water and ecological resources, water quantity and quality, and
transboundary issues and concerns, the knowledge base and basin modeling
package will incorporate components to allow the direct assessment of
transboundary impacts on ecological, social and economic resources and
conditions. This novel approach may be initially limited in some areas because
of the lack of data on specific linkages with respect to some issues or in some
areas of the basin, but its incorporation into the basic design and framework for
WUP will promote a more focused prioritized work program in the MRCS that
should lead to rapid progress in filling these information and analytical gaps
given the major support it receives for work on ecological issues from the donors.
·
Consultations to Formulate the Rules. A process of consultation and
negotiations, well supported by the knowledge base and basin modeling package
is essential for the formulation and agreement on the rules and for their
implementation. This is also a long process so it must be started early in the
project focusing first on the procedural rules that depend less on the basin
models.
29.
WUP is therefore targeted on the root causes constraining cooperation in the Mekong
basin, and on the "key result areas" in the MRC Strategic Plan.
82
Thailand at a glance
East
Lower-
POVERTY and SOCIAL
Asia &
middle-
Thailand
Pacific
income
Development diamond*
1998
Population, mid-year (millions)
61.1
1,817
908
Life expectancy
GNP per capita (Atlas method, US$)
2,200
990
1,710
GNP (Atlas method, US$ billions)
134.4
1,802
1,557
Average annual growth, 1992-98
Population (%)
1.1
1.2
1.1
Labor force (%)
1.6
1.6
1.5
GNP
Gross
per
primary
M ost recent estimate (latest year available, 1992-98)
capita
enrollment
Poverty (% of population below national poverty line)
13
..
..
Urban population (% of total population)
21
35
58
Life expectancy at birth (years)
69
69
68
Infant mortality (per 1,000 live births)
33
37
38
Child malnutrition (% of children under 5)
..
20
..
Access to safe water
Access to safe water (% of population)
89
77
75
Illiteracy (% of population age 15+)
5
15
14
Gross primary enrollment (% of school-age population)
87
117
103
Thailand
Male
..
119
105
Lower-middle-income group
Female
..
118
100
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1977
1987
1997
1998
Economic ratios*
GDP (US$ billions)
19.8
50.5
149.1
111.3
Gross domestic investment/GDP
26.9
27.9
30.1
25.3
Trade
Exports of goods and services/GDP
20.0
28.9
48.4
58.9
Gross domestic savings/GDP
21.5
28.4
32.2
41.8
Gross national savings/GDP
21.5
27.1
30.2
40.6
Current account balance/GDP
-5.5
-0.7
-2.0
12.8
Interest payments/GDP
0.6
2.1
2.3
1.8
Domestic
Investment
Total debt/GDP
16.9
40.3
62.7
86.8
Savings
Total debt service/exports
13.7
21.9
15.4
6.4
Present value of debt/GDP
..
..
59.3
..
Present value of debt/exports
..
..
119.4
..
Indebtedness
1977-87
1988-98
1997
1998
1999-03
(average annual growth)
GDP
5.8
6.9
-1.3
-9.4
2.7
Thailand
GNP per capita
3.6
5.5
-2.1
-8.5
..
Lower-middle-income group
Exports of goods and services
9.5
11.3
6.6
-0.8
5.0
STRUCTURE of the ECONOMY
1977
1987
1997
1998
Growth rates of output and investment (%)
(% of GDP)
20
Agriculture
24.8
15.7
9.7
11.2
Industry
29.3
33.3
41.3
41.2
0
Manufacturing
20.2
24.3
31.2
32.1
93
94
95
96
97
98
Services
45.9
50.9
49.0
47.7
-20
Private consumption
67.9
60.2
57.7
47.5
-40
General government consumption
10.6
11.3
10.1
10.7
GDI
GDP
Imports of goods and services
25.4
28.3
46.3
42.4
1977-87
1988-98
1997
1998
Growth rates of exports and imports (%)
(average annual growth)
Agriculture
3.5
2.6
-0.1
-0.4
30
Industry
6.9
8.8
-0.6
-12.6
15
83
PRICES and GOVERNMENT FINANCE
1977
1987
1997
1998
Inflation (%)
Domestic prices
(% change)
10
Consumer prices
..
2.5
4.9
8.1
8
Implicit GDP deflator
6.0
4.7
3.0
8.7
6
4
Government finance
2
(% of GDP, includes current grants)
0
Current revenue
12.9
15.3
18.1
15.6
93
94
95
96
97
98
Current budget balance
1.2
1.1
7.2
3.1
GDP deflator
CPI
Overall surplus/deficit
-2.9
-2.1
..
..
TRADE
1977
1987
1997
1998
Export and import levels (US$ millions)
(US$ millions)
Total exports (fob)
3,490
11,654
57,604
54,340
80,000
Rice
656
884
2,075
2,099
Rubber
302
799
1,832
1,340
60,000
Manufactures
..
6,989
45,113
42,323
Total imports (cif)
..
13,471
61,353
42,895
40,000
Food
..
..
2,041
1,774
20,000
Fuel and energy
..
1,733
5,367
3,159
Capital goods
..
..
29,796
19,747
0
92
93
94
95
96
97
98
Export price index (1995=100)
..
95
136
156
Import price index (1995=100)
..
71
130
157
Exports
Imports
Terms of trade (1995=100)
..
133
105
99
BALANCE of PAYMENTS
1977
1987
1997
1998
Current account balance to GDP ratio (%)
(US$ millions)
Exports of goods and services
3,985
14,665
72,415
65,913
15
Imports of goods and services
5,083
14,361
72,437
48,536
Resource balance
-1,098
304
-22
17,377
10
Net income
-38
-894
-3,481
-3,562
5
Net current transfers
39
225
479
415
0
Current account balance
-1,098
-365
-3,024
14,230
92
93
94
95
96
97
98
-5
Financing items (net)
1,106
1,277
-15,226
-17,452
Changes in net reserves
-9
-912
18,250
3,222
-10
Memo:
Reserves including gold (US$ millions)
..
..
26,202
28,842
Conversion rate (DEC, local/US$)
20.4
25.7
31.4
41.4
EXTERNAL DEBT and RESOURCE FLOWS
1977
1987
1997
1998
(US$ millions)
Composition of total debt, 1998 (US$ millions)
Total debt outstanding and disbursed
3,344
20,385
93,416
96,681
A: 2,111 B: 96
IBRD
346
3,413
1,728
2,111
C: 3,238
IDA
19
111
98
96
D: 2,384
Total debt service
572
3,458
11,716
4,451
G: 34,836
IBRD
44
445
296
301
E: 13,657
IDA
0
1
3
3
Composition of net resource flows
Official grants
14
129
78
..
Official creditors
165
30
5,930
1,621
Private creditors
165
-103
7
-873
Foreign direct investment
106
352
3,745
..
Portfolio equity
0
115
-308
..
F: 40,359
World Bank program
Commitments
138
34
767
1,015
A - IBRD
E - Bilateral
Disbursements
75
157
443
498
B - IDA
D - Other multilateral
F - Private
Principal repayments
19
181
194
181
C - IMF
G - Short-term
84
Cambodia at a glance
East
POVERTY and SOCIAL
Asia &
Low-
Cambodia
Pacific
income
Development diamond*
1998
Population, mid-year (millions)
10.7
1,817
3,515
Life expectancy
GNP per capita (Atlas method, US$)
280
990
520
GNP (Atlas method, US$ billions)
3.0
1,802
1,844
Average annual growth, 1992-98
Population (%)
2.6
1.2
1.7
Labor force (%)
2.6
1.6
1.9
GNP
Gross
per
primary
M ost recent estimate (latest year available, 1992-98)
capita
enrollment
Poverty (% of population below national poverty line)
36
..
..
Urban population (% of total population)
22
35
31
Life expectancy at birth (years)
54
69
63
Infant mortality (per 1,000 live births)
103
37
69
Child malnutrition (% of children under 5)
38
20
..
Access to safe water
Access to safe water (% of population)
13
77
74
Illiteracy (% of population age 15+)
..
15
32
Gross primary enrollment (% of school-age population)
110
117
108
Cambodia
Male
119
119
113
Low-income group
Female
100
118
103
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1977
1987
1997
1998
Economic ratios*
GDP (US$ billions)
..
..
3.2
3.0
Gross domestic investment/GDP
..
..
19.0
15.0
Trade
Exports of goods and services/GDP
..
..
32.5
34.6
Gross domestic savings/GDP
..
..
9.3
4.5
Gross national savings/GDP
..
..
11.1
5.9
Current account balance/GDP
..
..
-5.9
-7.4
Domestic
Interest payments/GDP
..
..
0.1
0.2
Investment
Total debt/GDP
..
..
66.9
74.2
Savings
Total debt service/exports
..
..
1.0
1.3
Present value of debt/GDP
..
..
52.4
..
Present value of debt/exports
..
..
175.8
..
Indebtedness
1977-87
1988-98
1997
1998
1999-03
(average annual growth)
GDP
..
4.9
1.0
1.0
..
Cambodia
GNP per capita
..
..
..
..
..
Low-income group
Exports of goods and services
..
..
..
..
..
STRUCTURE of the ECONOMY
1977
1987
1997
1998
Growth rates of output and investment (%)
(% of GDP)
8
Agriculture
..
..
50.7
50.6
6
Industry
..
..
14.8
14.8
Manufacturing
..
..
5.8
6.2
4
Services
..
..
34.5
34.6
2
0
Private consumption
..
..
81.7
86.6
93
94
95
96
97
98
General government consumption
..
..
9.0
8.9
GDI
GDP
Imports of goods and services
..
..
42.2
45.2
1977-87
1988-98
1997
1998
(average annual growth)
Agriculture
..
2.4
1.3
0.4
Industry
..
8.5
-2.8
1.1
Manufacturing
..
7.1
7.6
6.4
85
PRICES and GOVERNMENT FINANCE
1977
1987
1997
1998
Inflation (%)
Domestic prices
(% change)
20
Consumer prices
..
..
9.1
14.8
15
Implicit GDP deflator
..
..
9.2
16.9
10
Government finance
5
(% of GDP, includes current grants)
0
Current revenue
..
..
10.6
8.4
-5
93
94
95
96
97
98
Current budget balance
..
..
1.6
-0.3
GDP deflator
CPI
Overall surplus/deficit
..
..
-3.2
-3.7
TRADE
1977
1987
1997
1998
Export and import levels (US$ millions)
(US$ millions)
Total exports (fob)
..
..
874
999
1,600
Rubber
..
..
23
25
Logs
..
..
124
100
1,200
Manufactures
..
..
279
390
Total imports (cif)
..
..
1,142
1,227
800
Food
..
..
..
..
400
Fuel and energy
..
..
..
..
Capital goods
..
..
..
..
0
92
93
94
95
96
97
98
Export price index (1995=100)
..
..
..
..
Import price index (1995=100)
..
..
..
..
Exports
Imports
Terms of trade (1995=100)
..
..
..
..
BALANCE of PAYMENTS
1977
1987
1997
1998
Current account balance to GDP ratio (%)
(US$ millions)
Exports of goods and services
..
..
991
994
0
Imports of goods and services
..
..
1,285
1,297
92
93
94
95
96
97
98
Resource balance
..
..
-294
-303
-4
Net income
..
..
-17
-18
-8
Net current transfers
..
..
123
101
-12
Current account balance
..
..
-188
-220
-16
Financing items (net)
..
..
216
231
Changes in net reserves
..
..
-28
-11
-20
Memo:
Reserves including gold (US$ millions)
..
..
262
390
Conversion rate (DEC, local/US$)
..
..
2,861.1
3,605.9
EXTERNAL DEBT and RESOURCE FLOWS
1977
1987
1997
1998
(US$ millions)
Composition of total debt, 1998 (US$ millions)
Total debt outstanding and disbursed
..
..
2,129
2,211
IBRD
..
..
0
0
G: 43
F: 3
IDA
..
..
132
156
B: 156
C: 66
Total debt service
..
..
10
13
D: 121
IBRD
..
..
0
0
IDA
..
..
1
1
Composition of net resource flows
Official grants
..
..
210
194
Official creditors
..
..
39
55
Private creditors
..
..
-3
-3
Foreign direct investment
..
..
168
120
Portfolio equity
..
..
0
0
E: 1,822
World Bank program
Commitments
..
..
57
31
A - IBRD
E - Bilateral
86
Lao PDR at a glance
East
POVERTY and SOCIAL
Lao
Asia &
Low-
PDR
Pacific
income
Development diamond*
1998
Population, mid-year (millions)
5.0
1,817
3,515
Life expectancy
GNP per capita (Atlas method, US$)
330
990
520
GNP (Atlas method, US$ billions)
1.6
1,802
1,844
Average annual growth, 1992-98
Population (%)
2.6
1.2
1.7
Labor force (%)
..
1.6
1.9
GNP
Gross
per
primary
Most recent estimate (latest year available, 1992-98)
capita
enrollment
Poverty (% of population below national poverty line)
46
..
..
Urban population (% of total population)
22
35
31
Life expectancy at birth (years)
53
69
63
Infant mortality (per 1,000 live births)
98
37
69
Child malnutrition (% of children under 5)
40
20
..
Access to safe water
Access to safe water (% of population)
51
77
74
Illiteracy (% of population age 15+)
..
15
32
Gross primary enrollment (% of school-age population)
112
117
108
Lao PDR
Male
123
119
113
Low-income group
Female
101
118
103
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1977
1987
1997
1998
Economic ratios*
GDP (US$ billions)
..
1.1
1.7
1.6
Gross domestic investment/GDP
..
10.2
28.7
24.0
Trade
Exports of goods and services/GDP
..
6.1
23.8
39.2
Gross domestic savings/GDP
..
2.3
11.4
1.8
Gross national savings/GDP
..
..
13.8
5.6
Current account balance/GDP
..
-8.6
-14.4
-13.6
Domestic
Interest payments/GDP
..
0.2
0.4
0.5
Investment
Savings
Total debt/GDP
..
106.8
132.8
148.0
Total debt service/exports
..
16.1
6.4
5.9
Present value of debt/GDP
..
..
53.0
..
Present value of debt/exports
..
..
216.8
..
Indebtedness
1977-87
1988-98
1997
1998
1999-03
(average annual growth)
GDP
..
6.8
6.9
4.0
6.2
Lao PDR
GNP per capita
..
4.1
4.2
1.6
3.8
Low-income group
Exports of goods and services
..
..
..
..
..
STRUCTURE of the ECONOMY
1977
1987
1997
1998
Growth rates of output and investment (%)
(% of GDP)
10
Agriculture
..
..
52.8
55.6
8
Industry
..
..
21.0
20.8
6
Manufacturing
..
..
15.9
15.1
4
Services
..
..
26.2
23.6
2
0
Private consumption
..
89.4
81.2
89.9
93
94
95
96
97
98
General government consumption
..
8.3
7.4
8.3
GDI
GDP
Imports of goods and services
..
14.0
41.2
61.4
1977-87
1988-98
1997
1998
(average annual growth)
Agriculture
..
4.9
7.0
3.0
Industry
..
13.1
8.1
4.0
Manufacturing
..
14.3
9.3
3.7
87
PRICES and GOVERNMENT FINANCE
1977
1987
1997
1998
Inflation (%)
Domestic prices
(% change)
100
Consumer prices
..
..
19.3
95.1
80
Implicit GDP deflator
..
..
19.3
87.5
60
40
Government finance
20
(% of GDP, includes current grants)
0
Current revenue
..
..
16.6
13.7
93
94
95
96
97
98
Current budget balance
..
..
7.0
2.8
GDP deflator
CPI
Overall surplus/deficit
..
..
-8.0
-4.5
TRADE
1977
1987
1997
1998
Export and import levels (US$ millions)
(US$ millions)
Total exports (fob)
..
..
317
375
900
Wood products
..
..
90
87
Agricultural products
..
..
18
23
600
Manufactures
..
..
169
139
Total imports (cif)
..
..
648
728
Food
..
..
..
80
300
Fuel and energy
..
..
81
92
Capital goods
..
..
189
182
0
92
93
94
95
96
97
98
Export price index (1995=100)
..
..
..
..
Import price index (1995=100)
..
..
..
..
Exports
Imports
Terms of trade (1995=100)
..
..
..
..
BALANCE of PAYMENTS
1977
1987
1997
1998
Current account balance to GDP ratio (%)
(US$ millions)
Exports of goods and services
..
65
417
510
0
Imports of goods and services
..
147
721
800
92
93
94
95
96
97
98
-3
Resource balance
..
-83
-304
-290
-6
Net income
..
-14
-21
-16
Net current transfers
..
..
73
82
-9
Current account balance
..
-93
-251
-224
-12
Financing items (net)
..
82
221
275
-15
Changes in net reserves
..
11
30
-51
-18
Memo:
Reserves including gold (US$ millions)
..
..
136
181
Conversion rate (DEC, local/US$)
..
175.1
1,260.0
2,605.9
EXTERNAL DEBT and RESOURCE FLOWS
1977
1987
1997
1998
(US$ millions)
Composition of total debt, 1998 (US$ millions)
Total debt outstanding and disbursed
..
1,161
2,320
2,437
IBRD
..
0
0
0
G: 1
IDA
..
48
358
395
B: 395
..
Total debt service
..
10
28
31
IBRD
..
0
0
0
C: 62
IDA
..
0
3
4
Composition of net resource flows
Official grants
..
..
..
..
E: 1,420
Official creditors
..
163
120
78
D: 559
Private creditors
..
0
0
0
Foreign direct investment
..
0
104
54
Portfolio equity
..
0
0
..
World Bank program
Commitments
..
15
48
63
A - IBRD
E - Bilateral
Disbursements
..
5
42
25
B - IDA
D - Other multilateral
F - Private
Principal repayments
..
0
1
1
C - IMF
G - Short-term
88
Vietnam at a glance
East
POVERTY and SOCIAL
Asia &
Low-
Vietnam
Pacific
income
Development diamond*
1998
Population, mid-year (millions)
76.5
1,817
3,515
Life expectancy
GNP per capita (Atlas method, US$)
330
990
520
GNP (Atlas method, US$ billions)
25.6
1,802
1,844
Average annual growth, 1992-98
Population (%)
1.7
1.2
1.7
Labor force (%)
1.9
1.6
1.9
GNP
Gross
per
primary
Most recent estimate (latest year available, 1992-98)
capita
enrollment
Poverty (% of population below national poverty line)
37
..
..
Urban population (% of total population)
24
35
31
Life expectancy at birth (years)
68
69
63
Infant mortality (per 1,000 live births)
35
37
69
Child malnutrition (% of children under 5)
45
20
..
Access to safe water
Access to safe water (% of population)
38
77
74
Illiteracy (% of population age 15+)
17
15
32
Gross primary enrollment (% of school-age population)
114
117
108
Vietnam
Male
..
119
113
Low-income group
Female
..
118
103
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1977
1987
1997
1998
Economic ratios*
GDP (US$ billions)
..
..
24.8
25.9
Gross domestic investment/GDP
..
14.6
27.6
19.8
Trade
Exports of goods and services/GDP
..
6.5
47.5
46.4
Gross domestic savings/GDP
..
5.1
..
..
Gross national savings/GDP
..
..
19.8
14.9
Current account balance/GDP
..
..
-7.7
-5.0
Domestic
Interest payments/GDP
..
..
1.1
1.5
Investment
Total debt/GDP
..
..
87.0
86.6
Savings
Total debt service/exports
..
..
7.8
9.0
Present value of debt/GDP
..
..
78.4
..
Present value of debt/exports
..
..
167.7
..
Indebtedness
1977-87
1988-98
1997
1998
1999-03
(average annual growth)
GDP
..
7.9
8.8
3.5
5.1
Vietnam
GNP per capita
..
5.5
3.7
..
..
Low-income group
Exports of goods and services
..
25.0
13.3
3.3
9.1
STRUCTURE of the ECONOMY
1977
1987
1997
1998
Growth rates of output and investment (%)
(% of GDP)
50
Agriculture
..
39.1
26.2
28.6
40
Industry
..
33.9
31.2
36.1
30
Manufacturing
..
31.5
..
..
20
Services
..
27.0
42.6
35.3
10
0
Private consumption
..
..
71.7
77.0
93
94
95
96
97
98
General government consumption
..
..
8.8
9.0
GDI
GDP
Imports of goods and services
..
15.9
55.5
52.3
1977-87
1988-98
1997
1998
Growth rates of exports and imports (%)
(average annual growth)
Agriculture
..
5.0
4.5
2.5
75
Industry
..
12.3
13.1
7.5
89
PRICES and GOVERNMENT FINANCE
1977
1987
1997
1998
Inflation (%)
Domestic prices
(% change)
40
Consumer prices
..
..
3.2
7.8
30
Implicit GDP deflator
..
365.6
5.1
6.5
20
Government finance
10
(% of GDP, includes current grants)
0
Current revenue
..
14.2
20.4
20.7
93
94
95
96
97
98
Current budget balance
..
0.0
5.3
5.5
GDP deflator
CPI
Overall surplus/deficit
..
..
-0.6
-0.5
TRADE
1977
1987
1997
1998
Export and import levels (US$ millions)
(US$ millions)
Total exports (fob)
..
610
8,955
10,379
20,000
Rice
..
..
927
..
Fuel
..
..
1,443
..
15,000
Manufactures
..
..
..
..
Total imports (cif)
..
1,184
13,466
17,443
10,000
Food
..
..
..
..
5,000
Fuel and energy
..
..
..
..
Capital goods
..
..
..
..
0
92
93
94
95
96
97
98
Export price index (1995=100)
..
..
..
..
Import price index (1995=100)
..
..
..
..
Exports
Imports
Terms of trade (1995=100)
..
..
..
..
BALANCE of PAYMENTS
1977
1987
1997
1998
Current account balance to GDP ratio (%)
(US$ millions)
Exports of goods and services
..
..
11,841
11,997
0
Imports of goods and services
..
..
13,841
13,526
92
93
94
95
96
97
98
Resource balance
..
..
-2,000
-1,529
-4
Net income
..
-94
-632
..
Net current transfers
..
27
712
950
Current account balance
..
-592
-1,920
-1,292
-8
Financing items (net)
..
295
2,236
1,307
Changes in net reserves
..
297
-316
-15
-12
Memo:
Reserves including gold (US$ millions)
..
..
94
-524
Conversion rate (DEC, local/US$)
..
..
11,900.0
12,580.0
EXTERNAL DEBT and RESOURCE FLOWS
1977
1987
1997
1998
(US$ millions)
Composition of total debt, 1998 (US$ millions)
Total debt outstanding and disbursed
0
191
21,629
22,437
IBRD
0
0
0
0
B: 851
G: 2,271
IDA
0
60
569
851
C: 391
D: 419
Total debt service
0
2
907
1,087
IBRD
0
0
0
0
IDA
0
0
4
5
F: 4,421
Composition of net resource flows
Official grants
207
41
222
..
Official creditors
0
-1
382
1,092
Private creditors
0
0
287
-368
Foreign direct investment
..
..
1,800
1,200
E: 14,084
Portfolio equity
0
0
-94
..
World Bank program
Commitments
0
0
466
427
A - IBRD
E - Bilateral
Disbursements
0
0
181
254
B - IDA
D - Other multilateral
F - Private
Principal repayments
0
0
1
1
C - IMF
G - Short-term