The CAADP Pillar I Framework

Main factors affecting costs: The biggest determinant of project costs is the type of irrigationinvestment financed. The range of costs in the sample for the component study is huge — from $225per hectare for simple rehabilitation to $55,000 per hectare for a large-scale multi-purpose project.The principal reason for the lower unit costs of projects recently is the move away from theconstruction of large-scale schemes to rehabilitation projects and, more recently, to small-scale andmicro-irrigation projects. Evidently, the lessons of the past have, to some extent, been learnt. Thischange is also linked to the continuing decline in cereals prices and hence to the deterioratingeconomics of large-scale irrigation for staples as well as to the improving economics of horticulture,for which smaller scale and micro-irrigation is well adapted (IWMI, 2005b). The evidence oneconomies of scale is mixed. The component study found that unit costs vary inversely with projectsize, i.e., there are economies of scale, but that within larger projects smaller scale schemes hadhigher economic returns (IWMI, 2005b). By contrast, an FAO study (FAO, 2005b) found only weakcorrelation between project size and unit costs. Although the sample sizes in the studies are toosmall and the population too heterogeneous to establish clear conclusions, it is likely that the region‘shigh software costs do reduce when apportioned over larger projects. Community empowerment maykeep costs down and improve performance. The component study found that projects where farmersthemselves made larger capital contributions and managed irrigation systems or sharedmanagement with a government irrigation agency recorded significantly better results in terms ofproject performance and unit costs (IWMI, 2005b). To some extent, the lessons on keeping costsdown are already being reflected in recent projects. More recent projects are selective in choice oftechnology and are often decentralized and farmer-driven, with higher farmer contributions andleading to lower unit costs. For example, for new development at Mali‘s Office du Niger, farmers wereasked to contribute 20 percent of the total cost. As a result, development costs, which have typicallyexceeded $10,000 per hectare for large scale development, were only $2,518 per hectare (Aw andDiemer, 2005).Experience of design and implementation: The component study on the design andimplementation processes (IWMI, 2005d) found that project design in the past was largely top down,although newer projects are adopting more participatory approaches. Although there was a widedivergence of experience, the study found that past project design was generally characterised by alack of fit of projects to goals, lack of consideration of alternatives and lack of demand drive.Schemes developed by governments were often based on imperfect understanding of markets,farming systems and livelihood strategies. The component study found that newer projects haveadopted a less top-down approach. In some countries, a start has been made on integrating userparticipation (intellectual and financial) into project planning and implementation. Some of theseprojects are carried out through decentralised units as part of larger community driven ruraldevelopment programmes. In fact, many of the donor-financed projects that have been evaluated assuccessful on completion in recent years have been characterised by both decentralised andparticipatory approaches. It is, however, too early to tell whether these approaches consistentlyimprove project performance and if decentralisation has encountered problems. The quality ofprojects has been reduced by common weaknesses in preparation. Weaknesses include: (i) poortreatment of the key land and water security issues; (ii) lack of adequate environmental assessment;(iii) lack of evaluation of markets and profitability; (iv) lack of a related realistic agricultural supportpackage; (v) over-estimation of institutional capacity, evidenced by too complex designs and toomany components; and (vi) poor technical design and over-optimistic hydrological analysis (IFAD,2007). Weakness has resulted in technology choices and costs that were not appropriate for themarket prospects of the crops grown (IWMI, 2005d).Farmer empowerment appears to improve project quality. Underlying these weaknesses, the studyfound a pervasive top-down approach and neglect of farmer ownership. By contrast, approaches thatempower farmers by taking them in as partners and decision makers from the beginning andsupporting their development as commercial agents equipped to deal in the market place appear tohave the potential to improve the economics and prospects for project sustainability. Approaches toempowerment found to significantly improve project quality at entry include: (i) moving responsibilityand capacity for project implementation and services to the local level; (ii) increasing the participationof disadvantaged groups in decision making; (iii) improving the accountability of service providers;and (iv) helping smallholders form strong organisations (IWMI, 2005d; World Bank, 2005m).65