RESTRICTED Report No. PS- 8a This rcport is for of ficial use only by the Bank Group and specifically authorized organizations or persons, it may not bc published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION A REVIEW OF THE LOWER MEKONG BASIN DEVELOPMENT PROBLEMS AND POLICIES February 15, 1972 Spe!cial Projects Department A pMT=r j Q'= T. MT= D LO .T = PPt)n' TUW(2 ATT DArrTC . Lk.I1.ULW"AI& LW~J £ WJL"V.L"q~ Table of Contents I. INROMUCTION 1 II. DEVELOPMENT PERSPECTIVES 4 A. Agriculture 5 B. Electric Power and Multi-purpose Projects 10 C. National and Basin Approaches 17 III. A PRIORITY PROGRAM 21 IV. INSTITUTICNAL ASPECTS 22 V. CONCLUDING 03SERVJ.T T Ol:TS 25 Annex: Priority Program Map : Mekong -- Indicative Basin Plan A DL'TT11'T fV 'Trl T.TLrMT WYMI .n>A,TAT n71 UWTfnMf n\V - PP_MTR.Mq a1\T PnT.T.TrP.. ~.L IU O. 10-I ._ t'rPDE.ETI'R-1 i.Oi In response to a request from U Tnant and tne ikiekong Uommittee.-i for closer World Bank involvement in forthcoming stages of the bMekong Basin development effort, Mr. MNcamara suggested that a first step snouwd be a review by the Bank of the work already carried out by the Mekong Committee. T-his review has now been completed and a report prepared on development of land and water resources of the Basin.2/ A consultants' report dealing at greater length with requirements for development of human resources and supporting services has already been published.3/ Throughout the review close liaison has been maintained with the Mekong Committee, the Asian Development Bank, the UNDP, FAO and other UN agenciese The present paper summarizes key conclusions of the Bank's review and discusses the institutional framework for development of the Basin in the phase ahead, including possible World Bank h/ involvement. 1.02 Due to disturbed conditions in the region, much less field work proved possible than would have been desirable. Reliance had to be placed primarily on readily available information, desk studies and data. Such sources. though mostly of good quality. have in important respects been less than adequate. Moreover, present conditions in the area gen- erally militate agaia.-st detaIl e<- planning beyond the short term by agencies of the riparLn countries. The scope of the review and con- clusions has been corresnondinglv limited. 1.03 Among neerr9 ohservqt-1ons. renoonition of the achievement of the riparian governments' Mekong Committee and the twenty-five donor governments and agnencies that hav-e supported it since its formation in 1957 merits prior place. The Mekong Basin is better documented an a wide v'im+.%t rf aspemn+.ct 4hn-n n,yt c rnale -in n+. a a imiar stlage nf r1Pua1n7)- ment; a major part of the credit is attributable to the Committee, its Ad J UJ'Jo.'..& BardL~.A. ar.d t. S t Var a.~U* *L1e Gm.Jfli++.ee VtJ~hs * 1 so -mltlAr. al role in launching a number of tributary projects. Above all, it has been nWl_ +,- ,n ,,-. --+ --- 0 - - -4 -P,,. - .4,n,, ,t-4c+~ able to {^.c+on ar.d act as, a focal po.tA for 4.AterrA&C4v^r' vsstnc throughout a period of great disturbances in the region, In the process it+ has createde - 111XJ-Iek- sp-it"1 arP cooperation -which Can 3- of P,a J.. -.aLO '..J. %A L d. V4rf.'JJ.I Oj9.LJ. LU W.j± %VJjJ'.L d,U.LSJiL n VJIL.L,..1~.4 U '1 1 4S. mental value not only for the M4ekong Basin area, but for the region as n u.Tholle, 1/ For brevity, "Mekong Basin" or "Basin" denotes the Lower Mekong Basin from the aor-/Th,w,,n .Pr,tie dm ,flAnle^rietrebon1 1m4 ++nQIt zQnn+^ the Committee for the Coordination of Investigations of the Lower TA1~" 1...,,* lAA,A- - ~ -. 1 ,. -4 1174 ,.,- 4 -It +c, AA 4 'fA--446 £J& ..., I.V4.0 '.1..? £'C . II i. SS6 LI .4t OJ .yV 4 ') ft ..44 Board and Secretariat. 2/ "'Review of Land and Water Resource Development in the Lower Mekong Basin", IBRD, January 1972. 3/ "Agricultural Development in the Mekong Basin." A Staff Study, Resources for the Future Inc., Johns Hopkins rress, 1971. W References to 'World Bank" or "Bank" should be understood to refer to the World Bank Group. - 2 - 1.04 In particular, the Indicative Basin Plan - the first compre- hensive study of the Plekongis potential for power generation, irrigation and flood control -- is to be regarded as a document of major importance. Its indicative analysis and comparison of a wide array of possible Mekong River and tributary developments have led to the identification of a number of projects which clearly merit priority for further planning andc investigation. Also, an important by-product of the preparation of the Indicative Basin Plan has been the stimulus it provided for project investigation and the collection and analysis if basic data. The long- range planning efforts so far conducted have served to focus attention on some of the main issues to be faced in the near term as well as the longer term and, with proper balance and focus, could continue to provid.e a background for more specific preinvestment studies. Also. the collective efforts in data acquisition and project investigations have provided valuable experience in the reeional cooperation which will be needed to make integrated Basin develcpment a reality. There are certainly for- midable problems to be overcome before international,deve1opment of the Basin's major water resouroes could become a reality -- in fact, nowhere are these problems more cleArly perceived than in the Mekong Committee and Secretariat -- but this should not be allowed to detract from the value of the Indicative Btas-.-p Rlan as a demonstration of alternitive ways in which the Mekcng couid be developed for the mutual benefit Of the four riparian countries. 1 .0 Tn large p-'t, the dt+aU A sg-oon- arisiIng 4yrom the B cnk's o' f~bJ.J~ *IS*¼ trQ..A B 0 .WLJAA -0 .O4 5 4k - I 1A'. *. 1fU revie-w emphasize changes in direction already evident in Basin develop- mPe-nt h actiV1H:iesn. Thei4r central thee. appears nletheles S m+v This theme, in the broadest terms, concerns the need to develop an over- PI! strat-e-,, bas-ed on, the pot-ential" of the various dfintv -so the Basin, the practical constraints to development, and the relation of devel_^,,e,-t ofP the kor.g' land and watr- reso-ar-ces t1o pr-ogram,s of national development of the riparian countries. 1 .o6 With the benefit of hindsight and information which has evolved from th;,e Iekonrg Committee s activities, it would seem that attention has been focussed too narrowly on irrigation and hydropower developments fr^m mainstem projects. In particular, the capacity to implement, eand measures to accelerate the speed of effective utilization of irrigation facl4ities, appear to have received too little consideration. Socio- economic factors impeding adaptation of traditional practices to more modern, farming methods and administrative difficulties constitute no less effective constraints than physical limitations and require equal 1eO7? The changes of emphasis suggested to increase the coherence and relevance of Mekong development activities are closely inter- related. in summary, attention should be focussed on specific projects and programs addressed to the more readily observable potentials and constraints; to continued planning and project formulation of the more promising of the mainstem projects; and to the filling in of critical gaps in basic data. Such a program would include various types of projects that can be quickly implemented, particularly in relation to partially completed irrigation schemes, to development of rainfed am4 ,, +n't +,, tor,v%. 4r.,g se eso.¶ nor.t *,i +n vmn.n,rn +.c, ;n ;n r- structure which are complementary to feasible changes in farm UC ai on ard- maunagem-ent , f 4 -1 J -4e 4-4terest to 4the ripari governments, such projects should not only maintain momentum in the near-- Lt i,i,U.LWUrl-I.er-m, b-ut U.LbU p.soviue eApesterletV of cr.ui,±u.i- importance in developing an appropriate general approach to Basin developmentu and in evaluating the major projects contemplated. Longer term investment programs should be conceived in terms of progressive refinements in a step-by-step approach based on the growing exper±I^nCs and prevailing national priorities; to maintain flexibility as well as realism, more attention should be given to practical implementation constraints. The need for basic decisions on the major mainstem projects does not yet appear imminent; but the time required to gatner needed experience for their adequate evaluation gives further emphasis to the urgency of preparing and executing smaller projects. Immediate attention to improvement of evaluation techniques appears necessary, including greater comparabU.ity of the methodologies used in various studies and more attention to social and marketing aspects. More generally, a stronger identification of the riparian authorities with the Yrkong Committee's rol. noi.- seems indicated so as to integrate the "Mekora effort" with the prog.--ioming of priorities of the riparian countries. 1.08 Land and water are the chief physical assets of the Basin countries and their developmexm clearly will play a major role in over- all economic development. However, resource development alone cannot be relied upon solely as a means for improving the material well-being of the predominantlv rural population of the Basin. Complementary efforts in rural development will also be needed such as an expanded network of farm to market roqd.S. improvement and exninsion of health services with emphasis upon the dissemination of family planning information. and the provirsion of ed tie-monal servipes which are rele- vant to the needs of farming communities. To support agricultural deveTonmTen+t andr to diversifry the economic strctue of the Basin it would also appear desirable to introduce a measure of industrial development into somp of tihe mionvr sqih_uhnbsns. P-romiqinsh MpnpoT.-nitie.p are agricultural processing and the establishment of manufacturing and light indcistri es to supply consumler goods for some of t-he sizeahle regional markets within the Basin. 1.09 Mbst of the detailed recommendations have been discussed with the I.ekong Commmittee and its Secretr-iat over the last two ye;A-0* I-ICLy of the proposals are, indeed, already under active consideration by the Co=mi+ttee and by national agencies. Couper.ation -with the Commi,Littee and its Secretariat has been further extended by the joint effort in close association -1io .-WL Lu e Asizu Deve Lopment nank and FA0, to prepare a series of pioneer projects. The large measure of agreement which has beenr found to exis bodes wel for Basin development. II. DEVELOPMENT PERSPECTIVES 2.01 The Khmer Republic, Laos, Northeast Thailand and the Vietna- mese delta, which together comprise the Lower M6kong Basin, have a combined population of about 30 million in an area slightly larger tharL France.l/ Some 90% of this population is rural and the BaRsin's econnr as a whole is almost completely dependent on agriculture. Rice-growing predominates to an excentional degr.e over all other activitiesj .with rice lands accounting for as much as 85% of the 10 million hectares of cultiva,te landrL Cont+roll1d irrigatim n double An,ihh re Cnrnip,4J.. 2.02 popltion. pressue is not yet severe and extension of the cultivated area has enabled the population.increase to be accommodated., Al4though some improvements are noted for the las twv or ;-eyars rice yields have been generally stagnant at relatively low,levls -- ..t'- '= LW L ~I1 LJ. jCUUJJL A~LdL LL~i.L, U ~.L±~I rnnerng t m less t."L; 1 t-,n ofI padd per ibct>> arre s o f 0-u;s Thailand and Laos to 2.5 tons of paddy per hectare in some delta provinces. These yieldS have nevertheless permitted self -sufficienq7y in rice in Northeast Thailand, a substantial though dwindling surplus fo e3port in the 1i hi-.Ter ie7l ;-ic, and a surplus in tne Vietnam delta which, with the recent improvement, is just sufficient to meet the rice deficit of otlE r areas of the country. Only in Laos, and probably attributable i1n large measure to direct and indirect effects of pro- longed hostilities, is there a rice deficit, of the order of 10-15% of consunption. 2.03 Prospects for the future indicate serious problems. Population growth has risen to over 2V. per annum and may be approaching 3%. By contrast, currently available data indicate further availability of ladzd suitable for rice at no more than about 20% of the existing rice area in Northeast Thailand and 10% in the Khmer Republic and Vietnamese delta - and such land is generally of appreciably lower quality than existing rice land. Diversification into other crops than rice is expanding and these crops constitute major exports for Northeast Thailand and the Khmer Republic. However, a major part of such divers:i- fication is taking place on upland soils which require high standards of soil and water management to sustain present levels of production. Largely because of poor soil structure of presently uncultivated areas, the prospect for increased production using traditional techniques is quite limited. L/ Some relatively small,sparsely populated areas of Laos and the Khmer Republic lying outside the Basin are excluded; the Chiang Rai province of Northern Thailand and the larger but less populated Central HighLand provinces of Vietnam lying within the Basin are included. - 5 - 2=04 Apnrt from lnrd and water. the Rasin has on nresent knowledge few natural resources. Forests, fisher'ies and perhaps some minerals can ntlnlte to the deveInopnment of the Basin, as can the develonment of food processing industries and other urban activities. The towns of th e Pa a'0re horVr. ferw fe v,A -and lsm1fl1 ; nly Phvnm Pmnh exceeds 200,00 population. In these conditions, it is evident that for some time to co AtmTc, d ,-tw,oH .I+ v n a ai. es forn' t-he gret- y~ ~rv,4rrt of +hte population must be centered on improvements in agricultural productivity. >e B-l-s r e,vA ew rslcu- ac ordrngly concer.trated Int4cai-L on t1w arg,i cultural sector and related hydropower development. The following parJagraph. s summar1ize some of t ke-W1AU XLt y _.It .d A. Agriculture 2.o5 The information available on soils leads to the conclusion, critical for development planning, that the major part of present rice lands is not suited to other higher value crops. Exceptions occur in respect of narrow belts of alluvial soils along the banks of the river system above the delta and in some larger areas in the delta -- if water availability in the dry scss in can be improved. iv'ch more limited exceptions should be found :Ui parts of the command areas of projected irrigation schemes based on reservoir storage. 2.06 A second finding of basic importance is that, because of both low returns and high costs, tie prospects for viable year-round irri- gation schemes based on storage dams are poor, The low returns derive from the character of the command areas of projected irrigation schemes., which are predominantly rice lands generally unsuited on account of soil types and poor drainage for other crops, and from the low unit value of rice. Even an increase of four tons of paddy per hectare -- far above levels yet attained in the region -- would yield only about $200 per hectare in gross income. The incremental benefit attributable to irrigation would be significantly smaller. 2.07 Recently constructed irrigation works and feasibility studies for new projects in the area indicate that irrigation costs generally exceed the limits for viable projects based on such returns. For the two banks of the river above the delta, irrigable land and favorable water resources generallv do not coincide. Nearly 90% of the runoff of the Basin above the delta is concentrated on the eastern side of the Mekong where the monsoon strikes the Annam range. Here the topography is mountainous, areas suitable for irrigation few and the population sparse. On the west bank. rainfall is considerably lower and the tributaries carry very little water once the wvet season ends. Costs of adeouate stornpe dxunT on these tr±ibtnrieg r tr'or-reqnm4i_ina7Lv high and power potential -- and hence the costs that can be allocated to power verv limit.Oe MTjreover_ in +.'h lnrger penterntain irrigation nrean of the west bank, the undulating nature of the terrain and existing par- celizntion r,rrml snist + ti, +1ve on Ioml linnn enr consolidation. So far as the mainstem irrigation potential is concerned, two of the pr- ~a A -sedA r-AA 1'ti= -s -- w 114~ VJ.kJVUAPW ~ 1JLJ~%V WW-L% jV WJ ."_ of storage for direct gravity irrigatione However, if the cost of such irrigat40N developrz-et -- excluding thse cost of the storaioo d m -- approaches the order of $1,700 per hectare as indicated in recent studiE!s O. Pa M_-. g pretj4 4t,he ecoom,ic -siMiJiv of t-.h.ese develornmTnts mist ~....L I rL A ~ ~JF J U, UJ - -A t - be considered doubtful, and until experience with on-going irrigation projects pro I ds mor-e favor-able 'IV,.ef-P4t % &.d cos data it dse prudent to place a fairly low economic value on the potential for direct irrigatUion from mainstem ProJects. 2.08 in the case of tributary projects -where dams and main cana's have already been constructed, the incremental costs of building field distribution systems could be justified by powential benefits. A major constraint is implementation capacity, but a phased development of perhaps 250,000 hectares over the next two or three decades can be envisaged0 In selected areas the well drained alluvial soils forming the natural levees of the Mekong are suitable for diversified year- round cropping under pump irrigation. In the Vietnam Delta the extensive network of navigation and drainage canals form a source of water which is already being exploited by low-lift pumps, The potential is good fox further development of low-lift pumping, but the impact of such develop- ment on saline water intrusion requires early attention. In the upper reaches of the delta the cancis contain fresh water throughout the year, but in the lower Delta saline water enters the canals during the dry season. The minimum dry season flow entering the Delta is very large compared to likely irrigation needs, but any depletion of the flow by irrigation diversiors would teiad to worsen the salinity intrusion problem. Therefore, upstream storage on the mainstem to provide low- flow augmentation will become an important factor in Delta development. 2.09 The limitations on extension of the rice area and on viable irrigation from storage dams make it the more important that attention be focussed on other ways of increasing agricultural production. It is also evident that both an increase in rice vields and diversification into other crops need to be considered. An increase in rice yields appears necessarv to feed the growing- nopulation of the Basin and, in the case of the delta, the rest of Vietnam. In many areas of the Basin where subsistence rice farming predominates, an improvement in rice yields also appears as a prerequisite for diversification into higher value crops. Without greater assurance of adeqauate supplies of rice in poor as well as good seasons, farmers are understandably unwilling to ventu-re into other types of farrdng. Tn the lnger rtin self-sufficiency in rice needs to be accompanied by increased diversification into other crops -- whether by dry season crops on such rice land as is suitable, by non-rice farming of upland soils or by subsidiary crops and animal humsbandry on individual farms -- if the agricultlral econoomv of the Basin is to escape the limitations imposed by the low unit value of rice, 2.10 Review of existing information on the potential of the Basin for 4ncreasi.g -ice .elds and for crops ot-her than- rice indicates that a very large measure of conjecture still exists. Lack of practical exper-ience eveVn more than UiS the UU.L±U.", 'U.LJ. SO & .d LU 4 mation makes overall assessment particularly hazardous. There are some encouraging signs. 1gh-yiel4i.ng varieties of rice appear to have had considerable success in some parts of the delta over the last three or four years under conditions of less strict water control than usually considered necessary. W4here water availability has been adequate, alluvial soils in the rice areas of the delta and along the banks of the river system above the delta have grown a variety of dry season crops successfully. 2.11 The greatest uncertainty, however, concerns the large areas of upland soils above the delta. A study of land capability maps indicates that as much as 3 million hectares in Northeast Thailand may be suitabLe for dry foot crops only a fraction of which is at present cultivated in any year. A similar situation prevails in the Khmer Republic. Export crops of maize have been successfully grown for years around Korat in Northeast Thailand and in the Khmer Republic, but com- parable soils and hydrology elsewhere, at least in Northeast Thailand, appear scarce; the same is true for areas suited for rubber in the Khmer Republic. In more recent years. kenaf and cassava crops have expanded to become important exports from Northeast Thailand. They are grown by shifting cultivation, under which about 700 of land is fallow in any year, on the predomri.:L t podzolic soils of lor inherent fertility of this area. Here, the twii dangers of a reduction of fertilitv and soil erosion as a result of over-cropping are already becoming apparent and are likely to increase under the infiipmnc of rising nonu1]tfion pressure. 2.12 In brief, there are a number of encouraging indications for thr±.her nivers; +ication n a sf &l1un-1 rice land f d r saon crops if water can be provided, and for rainfed upland soils if proper soil and water managemen.t cn be inroduced. To twhese should added some small areas of better soils such as the Bolovens plateau and the BPatt-am'Danr. _--a _at t-e wse. endA of +U- C1-4ea TL l-e 4in , Khemuer 'A LJ ViJL U . %~."UC "J2 I~.L. UL4 ; IUJ4lJ.. Republic which have higher intrinsic, but so far largely untested, poter.+ + -al+, -14 1U 9.13 It is~ + aga;,st this bAckgod that th.e B 'anks review has considered the possibilities for raising agricultural productivity apart greater attention should be paid to lower cost ways of providing ;pro,v,ed -water conLtru.ol. above td.L UdeltUUa, VE;iaL+V11d U±Ur l U 1B tL.UI1ug of the monsoeon and the frequent occurrence of dry spells during the graoing season presenrt serious hazards resulting in wide variations in rice production from year to year. Some modest run of the river schemes for __1 _ v 133_ L3 __ -- I _ _ - - I . I I suppling a water at th e crucial early growing stage colda well prove viable. Based on very limited information, the area which could be s sLvced is, hUwever, likely to be quite smalle More important could be expansion in use of low-lift pumps along rivers and the eist9ing rnetwork oI canals in the delta. The rate of expansion in the use of' pumps in the delta indicates considerable possibilities and should permit some diversification into higher value dry season crops on stretches of alluvial soils. Improved drainage and better control of flood runoff can provide additional possibilities in some other areas. Groundwater availability does not, on existing evidence, appear encouraging, but more needs to be learnt. In the lower delta, a high priority must be rehabilitation and reconstruction of canal and other structures controlling salinity intrusion. Further possibilities appear to exist for extending this system which will allow greater use of low-lift pumps. Finally, less costly methods of delivering water from the storage dams of multi-purpose projects such as Pa Mong may prove feasible, including diversion into existing tributary river systems, to sunolement water availability in dry spells of the wet season as well as in the dry season. Though not a short-term possi- bilitv. the extent of thA n-rea thAt nould nhvsicallv be serviced from such storage is so large, perhaps over 132 million hectares in the case of Pa Mhngj that su_ch poss-bihites eiserve careful study. 2.1) Mm leqs imnnr+.nt. anrd inrIeed to a isrge extent comDlementarvo is the improvement of seeds, The apparent success of high-yielding vr_ieties Of ricein -v m - n of the dela.n nver the Inst three or four years has already been referred to. Nqo evidence was found of any care- M' W .nit.^W.g olf this j nWh-l4nv_ leTcel of f'Pr+j1izPer nnd other inputs, with a view to determining the limits of more general applicab4'ty. Yetv such an assessment would appear of the highest priority. It is, however, nct only in the new high-yielding varieties of traditional varieties to substitute for seed rice kept over from the pre LU-us -4prywelhv Te age oe.i^ AA AOdo v±~~J JV 1UjJVii Wt.LL 11dIVU '~% JdArtLL VV LU.LdLe LA~Qj~- adopt-ion of high-yielding variety rice in the delta -- from a negligible d.LI~d DU over )UU>UUW IIa ±1I ILLJ.Ut: y -JUL-Ut;WLLO WV.L.J. ±J. VIJAJ- of farmers to change when success is demonstrable. 2.15 A third direction of great importance to which more attention is needed is tne promotion of rainfed crops, incl-uding trial of new crops in different areas on a sufficiently extensive scale for results to have applicability for normal farming conditions * As already noted, the proportion of rice lands likely to be irrigated is small and for the longer term diversification into higher value crops appears indis- pensable for a significant raising of living standards. That the process wiLl be long, given the time inevitably needed to introduce new types of farming and supporting services, makes it the more urgent for action to be initiated quicULy. In this connection tne use oI crop rotations for proper management of upland soils deserves particular attention. 2,16 Supporting activities in such fields as transport, storage, credit and education appear vital to the success of other measures. Conditions in these respects vary considerably over the Basin. over large parts of the Basin, however, the rural transport system is inadequate to provide farmers with quick and economical access either to inputs or to markets for their produce. More generally, growth in agricultural production is constrained by inadequacies in storage and processing. Shortage of people with mechanical, technical, or managerial skills, makes remedying this situation particularly difficuLt and points to the need for a thorough analysis of the constraints, and - 9 - action in several interrelated fields. The report by Resources for the Future recommends immediate attention to providing vocaticnal education relevant to the experience of rural children, expansion of storage and processing facilities, and the designing of credit systems to provide short-term credit mn reasonable terms to farmers for Invest- ment in fertilizer and for capital goods for farm improvement, 2.17 To sum up the prospects in the absence of greater experience of changing the predominantly traditional rice-farming pattern of agriculture in the area is obviously difficult, However, so far as the next five years or so are concerned, it would appear that, taking account of the possibilities for a greater degree of cropping in relation to cultivated area as population expands and existing development policies; the rice balance shoild be maintained. For Northeast Thailand and Laos this would imply self-sufficiency, for the Khmer Republic some margin for export mnce the =ng scarce 'ore-gr. exch.ge receipts and development resources, wJhile some part of any power economies achieved in Thailand and Vietnam would presumably redoun-d to their Basin LerItorizs. 2.20 Of particular relevance to Basin development plarnnLig is the conclusion that none of the zriainstem projects would, on the basis of existing information provide power at a significantly lower cost than alternative conventional or nuclear fuel plants. Partly for this reason, partly because technological advances of the last two decades as related to neighbouring countries such as Japan have reduced the importance of moderately low cost energy arm -;g the factors relevant to location of electricity-intensive industry, and partly due to the sparse raw material resources, Nekong power appears unlikely to prove a major determinant in the siting of industries such as bauxite refining wfithin the Mekong Basin. The va.lue of enclave processing type industries not based on local materials for the economy of the Basin would, if experience elsewhere in the world is a guide, be likely to be marginal in any case. 2.21 Given that the economic advantage for power of the mainstem projects wiLl probably not prove large, additional considerations are likely to play heavily in decisions on their building and timing. These considerations include on the one hand the extent to which national power systems are willing to rel-y on remote sources of energy, large in relation to the total system, particularly when situated outside national territorre On the other hand, and of particular relevance to the development of the Basin for its inhabitants, lie considerations of additional benefits which may be obtained from the multipurpose nature of some of these projects. 2.22 The Indicative Basin Plan proposed the construction of six major projects in the following sequence: Sambor (1981), Nam Theun (1981), Pa Mong (1983), Stung Treng (1992), Ban Koum (1997), and High Luang Prabang (1999). Except for Nam Theun, a project on a Mekong tributary in Laos, the projects are all on the mainstem of the Mbkong. The plan was conceived in accordance with the principle that pawer reauirements of the four riparian countries for the period 1980-2000 would be met by ex- plDiting the hydroelectric potential of the Mekong Basin. 2.23 All of the mainstem projects would derive their primary benefits from power generation, but two of the projects -- Pa Mbng and Stung Treng - because of their large reservoirs, would have other attributes in terms of Basin development. Pa Mong would open up possibilities for irrigation in both Northeast Thailand and Laos and considerably reduce flooding in the upper and middle reaches of the Mekong. Stung Treng would offer possibilities for irrigation in the Khmer Republic. and eliminate flooding of large areas in the Delta which are now subject to inundation every year, Also the projects wotild siihstantina] v increase drv-season flows in the Mekong Deltao In fact, either of the projects alone would provide dry-season flows in excess of an'y foreseeahle requirements for Delta irrigation and salinity control. 2.24 In their review of mainstem development, the Bank and its consultants concentrated on. thee of the six nroiects -- Pa Mong. Stung Treng and Sambor. The first two obviously merit attention because they are the only projects with sufficient storage to even osut the wide seasonal variations in river flows. Also, they are not only the largest projects but also the only true murlip pocne projects. Pa Mong has been studied in considerably more detail than any other project on the main- stem. Work on Stung Treng 1ho-:. been. co-fined to mapping and geonhveical investigations, and a desk study by the Yekong Secretariat. Further desk studies of the project were .ade by the Bank's cons"11tantse The Sambor Project was selected for review because it has been the subject of a feasibility grade study aLd it w-aas assiged priority in the Indicative Basin Plan. The Tonle Sap Barrage, which had been investi- gated -under the auspices of the MekAong Colm-mttee, was a"so revweweds This is a scheme for a barrage across the Tonle Sap designed to utilize the Great Lake in the mnmer Repullic as -a stor-age reservoe 2.25- Revised and updated estimates of Pa i1iong, prepared b- the Bank's consultants, indicate a mid-1970 cost of US$1 ,133 million for the dam and high tension transmission lines for integration into the Thai power system. As presently planned, the project would have an installed capacity of 4!,80o Irvl and generate about 27,,0000 GIL V A- anua 'y. the energy from Pa Mong could be absorbed progressively into the Thai power system, it would accloynt for about 60% of Thailaud! Uotl power- demand in the early 19901'- the earliest date when all of the Pa Mong 1/ Forecasts of power "needs" for periods of several decades are diffirlt in wn,y cointry. They are the more so when rates of growth are very high from a small base, heavily dependent on assumptions of rates of overall econoomdc grom,th and on backl1os due to hostilities: and also on decisions on the priority of electricity as against, say, educati4on in cor.ditioan of -jee sttmr^1 Ir Avelrrenn-t remsorees. In accepting estimates that appear reasonable, it is recognized that they will need to be frequently revied. The broad conclusions presented here may be affected somewhat as regards timing, but are -1 'i-ell lo le so 4-. other respects. - 12 - units could be installed. Thailand, therefore, has to make an importanl, policy decision on whether it would be willing to depend for a large percentage of its national power from a single source located about 600 km away from the main load center of Bangkok. Since the project lies on the border between Thailand and Laos, prior agreement between the two countries would be necessary on the legal financial, construction and operational aspects of the proJect. 2.26 As a means of assessing the relative economic merit of alter- native modes of power development and to provide a comparison between mainstem projects, the Bank's consultants used the "eninlizing discount rate" (EDR), This is the discount rate which equalizes the present value of costs - capital costs and operating costs - of 'alternative power systems developments designed to meet identical load growth. Non-power benefits of mninstem projects were considered as cost off-sets in these analyses. The EDR for Pa Mong is about 10% for power benefits alone 9,QQr with fuel ccsts for the therma1 plants at 30 cents per million BTIJ and 10.1% at 40 cents. If commissioned in the latter part of the eighties, permritting faster insta'lation of the pow-er units, the EDR would be increased by about 1%. Average annual foreign exchange savings of the order of $70 million woulJd also be significant. The costs of year-roiund gravity irrigation I"rom the Pa Mong storage on present estimates appear too great to warrant any signiicat attribution of net benefits in the overall evaluation, Flood control benefits in the d t- . J 'wouLI l lL~±1L WI SC) X L~.'J £i. 4 AJ4 4.1i±' deltalJoud 's be o i marg.:,..al i;l.-s. due -&Uo thXe L.act that Vlle major part of the Basin runoff cccurs below Pa Mong. Some important flood control benefits wou.ld, however, accrue along the upper reaches of the river and are estimated on the basis of present designs to add 0.7% to the JED1R, or somewhat lower if a paru is preepwuptd by p-ior dyke protection of the Vientiane area. Pa Nlong would also, if the first maJor project built, contri'bute significantly to the augmentation of dry-season flow in the delta and thereby substantially reduce salinity problems iUl-nltl more is known on the delta water regime and agricultural potential, it is difficult to assess the benefits that Pa Mong -- or othuier major projects -- could provide in this regard. A rough and possible conservative estimate indicates a 1,5% addition to the EDR. 2.27 Although Pa Mong project has been the subject of detailed technical studies, one major uncertainty remains; this is the resettle- ment of the reservoir population which presently numbers about 280,000 and would have grown to 45O,000 by the mid-i980's. Lands suitable for resettling the reservoir population have not so far been located in either Laos or Thailand. An adequate resettlement program for the population, which by the time of project completion will be several times larger than that relocated under such projects as Aswan, Kariba, Volta or Mangla, would be much more costly than figures used in the project cost estimates. Thus, the economic benefits of the project would also have to be weighed against the economic costs and the social and political risks of such a massive relocation and compensation program. Map studies indicate that reduction of the dam elevation by 20 m combined with modifications of associated structures could reduce the population affected by more than two-thirds. The Bank, therefore, recommends that serious consideration be given to an alternative project formLlation wr;4th a lo-,er reservofr levtel in order too red-ces the4 4 men problem to more manageable proportions. Until such alternatives have beenn co"SiddeML, an -Adeqaae -rsettle.,.ert program; h'a LA-en fori-,,,latved and costed, the agricultural benefits have been studied in greater dea.1 W WA LLJJ.klJd.L L DU vue p uJeL;LJ ecologcal impact has been assessed, an adequate evaluation of Pa Mong project is hardly possible. 2.28 Investigations of Stung Treng are mach less advanced. The project differs romi Pa 'Pbng in certain essential features. The main part of thei power produced would be apportioned to Vietnam as well as ha loau centers. e reservoir, lying below the confluence of the Mekong and the main east bank tributaries, would provide major flood control for the delta as well as augment dry season flow and thus permit a change in the upper delta from floating rice to varieties of perhaps 50% higher yield. Consultants estimate indirect benefits from reduction of delta flooding of the order of $30 million annually -- against $6 million for Pa Miong. Population displaced would be less, though still of the order of 250,000 by 1985, and land appears to be more readily availa-ble for relocation. 2.29 Estimates based on desk studies indicate that Stung Treng would cost some 500 more than Pa Mong while energy generation would be about 30% higher. Although, therefore, the equalizing discount rate based on potier alone can be expected to fall below that of Pa Mong - 8% to 9% on the rough estimates -- its rating on total net benefits may prove comparable, Foreign exchange savings would be somewhat higher than for Pa long. 2.30 Stung Treng, lying completely outside the territory of either of the main power consumers, poses in even more acute form than Pa Mong the problem of site location in relation to national boundaries, Mbre- over, whereas Thailand has negligible hydropower potential to develop apart from Mekong mainstem possibilities, Vietnam has perhaps 2,500 SW of potential, outside the Basin and on Basin tribrutaries, sufficiently attractive to warrant technical studies* On the other hand, Stung Treng is the only mainstem project which could provide Vietnam with a sub- stantial measure of flood protection for the delta. It would appear that a careful wei-hing of these factors by the riparian countries concerned and a determination of policy is required before very extensive and expensive feasibility grade investigations of Stung TrenP would be justified. 2.31 The Sambor project was studied by the Overseas Technical Cooperation Agencv (OTCA) of Japan. Desk studies ___ere a1so made byr the Bank's consultants. As formulated by OTCA, Sambor is essentially a power proiect -- the active storage in the reseroir avrailable for augmentation of dry-season flow in the delta is quite small. The Bank's review has indicated that a revision in the project's mode of oper-' 4 on to increase active storage and to maximize the project's multipurpose benefits me-rits further studyt. The aim Of such a revision woul d be to formulate a viable hydro-power project which would also make a signifi- cant ontriii-tnn ionto A- eson swater needs In the deltDa. - 14 - 2.32- LIJ Th L'JL SapJ pJr.oj U th LLI ULIV RIep Xlc waJi- primarily to augment the flood control effects of the Great Lake which actLs as a h1ug-e IatuJ..- storage reservoir for- th isn Mkong flow during the monsoon period. By erecting gates across the connecting channel, flood storage capacity coiud be r-eserved fo- peak flow pers AS and the waters released at a later period. The project cost is modest relative to Stung Treng or Pa Mong - of the order OfL $ Ih million. Unfortunately, studies of the potential flood control effects have proved disappointing. Further difficulties arise from constraints on operation to reduce interference with the important though declining Great Lake fish catch. An alternative design which would involve a lower structure and control only the outflow from the lake merits consideration. As well as augmenting the dry-season flow in the delta., the project might also help to improve fish production. The former function would duplicate the major mainstem projects; -but if the fish potential proves large and/or the project is commissioned sufficiently in advance of Pa ,Pong or Stung Treng, the project at lower level may prove viable. 2.33 Long-range planning for the Mekong Delta has also received attention., Two conceptual TK'}S have been prepared; one by Development and Pesources Corporation li) in cooperation with a planning group of' the Vietnam Governlment, and one outlined in the Indicative Basin Plan. The two proposals have much in common but differ in scope and timing. 2.34 The D&R proposed a nassive investment in water control works in the Vietnamese Delta over an area of 1.6 million ha. The physical works envisaged comprise a system of levees extending on both sides of the Mekong and Bassac stopping short of the Khmer border. These levees would be primarilv for flood control down to Can Tho and would continue thereafter for the purpose of salinity control. Within the protected area existing canals would be used and, where necessary, extended to provide a complete system of irrigation and drainage channels, with a series of npnmnR ,nd control styniiture to resinlate the flow of water. The estimated capital cost of the program was US$1.25 billion. The nro7ram was nhased in four stages over a neriod of 20 vears from 1971-1990 with the major works substantially complete by 1986. Increased apricultmrnl nroduiction would result from lateral expansion, reclamation. improved agricultural practices, flood control and irrigation. The mnnor compnnent of ths increase, ahout +hT -crtPvs is projected to result from dry-season irrigation. 2.35 Included as one of the major projects in the Indicative Basin Plnn iSacon p l plan. referred to as Delta Devrelopment- The mnnor flood control and irrigation works are designed to include the Delta 4A.n t*n.e almmer JwOI: bAlJ.c as we''l a-, Vietna-l0. V DeAv.el. - p rn - stages timed to coincide with the implementation of the two major up- stre&, s4.torage p c4t4- - Pa Mn.on --A Q4-,,.- T M-. This - st,a -nill also include the completion of coastal embanlments. The estimated eJ..jJUU.L UJ LL.F±L.1uig l,it: jLE[I PU.L-.LU U J I 7t u -J -U.J' INU .LLL UV~ V.L UIL1U 'JJ. '.&' exy-en dit -ule rt -2l the __1A pe-o _o, 1980200 -4_d eo_t; re of one billion US dollars. By making allowance for the effect of up- stream storage projecus, bLlC scope of the WOrks would be less than the D&R proposals. 2.36 Further elaboration of these plans will require a much more detailed knowledge of delta hydrology and agronomy than presently exists. Also, irrigation on the scale proposed would only be possible following construction of the Tonle Sap project or one of the major upstream storage projects. In the formulation of long-range plans, a clearer assessment of the potential for more productive agriculture in the absence of large investments in water control appears to be required. The inves- tigations of delta hydrology and agriculture which are currently being undertaken under the auspices of the Mekong Committee with the help of the Netherlands Government, should, in conjunction with other recommendations made in the Bank's review, help to fill vital gaps in the information. 2.37 In summary. the Bank's review concludes that the iustification and timing of mainstem project development must be viewed in the context of the increasing demand for power within the riparian countries, the feasibility of reservoir resettlement, the need for flood control in specific areas of the Basin and the advantages of improved irrigation along the river itselfe However, development of an international river involves considerablv more technicnl, legnl; nolitical ,and administrative problems than that of a national river. Moreover, it requires the fuil commitment and the active partcinpntion Of nal the nountries which are affected, directly or indirec'ly, by such development, and in some cases, the chief beneficiary mnay nnt. h e +.iourntr+.y in which +.he. nronieCts Are located. 2.38 Pouer needs will obviously be an important determinant of the timing and sequence of mi.4,,ste,, devvlo,-.ents. Al+ gh 1ong-ter, pro jections must be treated with caution. Before 1990 the power demand of the riparian countries will have probably rachAed a sufficie.nt Iv to absorb at least one hydroelectric scheme on the scale contemplated in the oil-fired or nuclear installations but in view of the lack of indigenous fuels such a mode of dve-ilopmuent -rlvvoLves a perriuarienii co0l-MJUtL,e=nt bLy) the riparian countries to using energy with a high foreign exchange cost. H.ow-ever, some of thle rajor hydropower projects lie ouutside of the countries with the largest demands. Even countries in areas with a his- tory of politiadl stability hav-e shown relua-ence to depend Vn plants outside of their borders for a large part of their power capacity. Thus th.e creation o a regional po-wer systeLL w CH -11 ±Or a high dege Vo cooperation and a mutual confidence between the countries concerned. 2.39 Irrigation demands as a determinant of mainstem development are subjeCt to uw uvevn greater degree oI uncertainty than power demands. There are three areas of the Basin in which mainstem development would prvvlut Opportunities Ior large-scale irrigation -- Northeast ThaiLand, the area north of the Great Lake in the Khmer Republic and the Mekong Delta. In Northeast Tnailand, a first priority is to make effective use of water stored in existing storage reservoirs; only when this has been accomplished will there be a basis for judgments on the economics and timing of direct irrigation from Pa Mong. In the Khmer Republic, the areas which could be commanded from Stung Treng have yet to be studied in any detail. In the Vietnam Delta there is considerable scope for development of low-lift pump irrigation from existing canals. However, irrigation diversions during the dry season would tend to worsen the .- 16 - salinity fitrusion problem in the ;o'wer Delta. Thu the need for a modest volume of upstream storage to increase dry-season flows in the Delta during a period of two to three months will Decome an imiporuant factor in mainstem development. A more detailed understanding than presently exists of the potential for agricultural development in the absence of irrigation will also be needed to assess future irrigation needs. Outside of the Vietnam Delta, there have been virtually no attempts to adopt new technologies in the production of rice, the Basin's principal agricultural product. Intensive efforts directed to accumu- lating experience in the development of the water resources of the tributary basins and the delta and in promoting the development of rain- fed agriculture appear, therefore, as an essential prerequisite to decisions on irrigation from mainstem projects. 2.40 Considerable emphasis has been placed to date on the need to overcome the problem of flooding. In addition to specific reaches up- stream, particularly the area around Vientiane, about five million ha are subject to annual flooding in the area of the Delta and around the Great Lake The pattern of agricultural cultivation has evolved around this natural nhenomenon_ and varieties of rice are adapted to the particular flood conditions t1hnt prevail; however, flooding does result in a deDression of vields ir, .-:ome areas. Also, flood-dependent varieties possibly have lcss potential for yield increases than varieties cultivated u-nder rainfed condit-ions. To some extent, hcwever. the adverse effects of floods can be circumvented by using short maturation varieties of rice in conju Aention w.th O.low-Tl`t pumping which will enable a higher yielding crop to be harvested before the onset of the flood, Also, the introduction of sorghumh as an "after-flood" crop in Vietnam has indicated the feasibility of more productive land use without large investments ;n~ flo- control ~ .Thus the flood problem 1 as far as agricilltlire is concerned may now assume a lawer priority than it has previously been given. 2elil Xths culDext Xt9 wo-th roing that Stung T'ren i9 thp only project capable of providing a high degree of flood control in the lower reachLeV- of Use riYvrer a,d nMA the Dnelta. TOn-J; e -f ood conotrol is generally regarded as beneficial it will result in profound changes in the wt-reeanu.e These cagscould 4Lnsal 4e 4 m 5;ng ifr they are introduced too abruptly and without careful advance planning. Agreemernts on the mode of operation of Stung Treng would be necessary to protect the interests of Vietnam and the Khmer Republic, the riparians who would be affected by the project. 2.142 The Bank's review has confirmed thle findings of t,he Miekokng Committee that multipurpose development of the Mekong River is tech- nically feasible and in the long-term holds considerable promui,se for- regional economic development. However, before such plans can be translated into firm decisions on the timing and sequence of maJor investments, numerous problems attendant to the assessment of project costs and benefits and to the joint development of an international river will have to be resolved. - 17 - Co National and Basin Approaches 2.43 Consideration of the development of the ilbkong Basin is rendered more complex by the fact that territories of four countries are involved and that for two of them, Thailand and Vietnam, the territories within the Basin constitute only a part of their total national territory. Even if the Basin lay entirely within one country,, problems of priority and allocation of resources, of local interests and of political balance would arise. The history of major river storage schemes bears ample testimony to the difficulty of securing an acceptable allocation of costs. Such difficulties are particularly evident when, as is often the case. the costs and disturbance of con- struction is concentrated upstream where the most advantageous sites for storage and power potential are found, while the major benefits lie downstream or in urban centers outside the Basin. WVithin a single country. acljuiA_tments in national financial assistance can help in finding a solutions Betwseen two or more countries, the finding of an acceptable solution is inevitabbly more diffict. though it is possible that international financial assistance, where available, can play a catl-+vrs- role. T is nonetheless of evTen greater imnportance than in the case of a single contry tFt the benefits as well as the costs of the proposed projeots shcu.d L. ;lly r 7.Orized by all corcermed: without such a common bais, the possibilities of cooperative action must inevitably be reduced, A.-ch light 4- st be shed on the problems before enli3htened self-interest can play its part. 2,44 The benefits of cooperation betwJeen the riparian countries in tUhe developmfinv ofL IMP'lek>eong Basin hLave to date be-ien di1,sCSsed l^a^ge.lyr in terms of total estimated costs and benefits of the proposed mainstem projects in an integrated development of the river system and wi4h reference to agreement on mainstem low-flow water use. These certainly constitute a most important aspect and the desirability of regardizng the river and its tributaries as a total system from the beginning can be fully endorsed. Only in this way can benefits be maximized in relation to costs and the international difficulties often caused in other river systems Dy isolated, independent action be averted. 2,45 It is not infrequently suggested, on the other hand, thIati because the four national territories of the Basin are so dissimilar and because priorities for their development must be determined in the context of national planning involving non-Basin territories and their problems in the case of Thailand and Vietnam, the major emphasis shouid be on national approaches to development of the respective Basin terri- tories. The four component territories differ substantially in physica:l conditions, in ethnic groups, in population density, in degree of inte- gration into commerce, in transport facilities and in education levels to mention only a few of the important considerations for policy. It is indeed for this reason and because of the need for a national perspective in determining priorities, that the Bank's review stresses the desirability of considering separately the potential of each of the four component territories of the Basin. - 18 - 2o46 The national and Basin-wide approaches are not, hofever, regarded as being in antithesis but as strongly complementary. Apart from the mainstem projects, which directly affect more than one riparian country, joint riparian efforts can be of great assistance to the sub- basin's development by economizing Basin studies and expertise, in communicating relevant experience, in preparation of a-ricalJural pro- jects and in organizing financing and technical assistance., In current. conditions in the Basin, shortage of expertise and requiremnents for training appear at least as important as shortage of finance. The pioneer project program is illustrative. Fourteen pioneer project,areas are being selected throughout the Basin to test, on a scale large enough to have wider practical application, various techniques for agricultural management and water control. Tley are being chosen and designed so that the experiEnce gained will have relevance for other parts of the Basin irrespective of national boundaries. At the same time, a system of multilateral financing and riparian involvement has been created which facilitates the provision of international financial and technical assistance support. 2eL7 Moreover. i-t is only h- no1ne internetisn between the national and Basin approaches, that `.he experience in the development of sub- basins can cOn'ri¾irte to the evalualtion Angnnd n of the manjr orMpro+ects A close working relationship betwieen the program makers at national and Rag-in level iS in naddition, essentianl to w.iden th.e appreciation at natimal level of the benefits and limitations of the major projects 2.l8 Nvnn oftetm prJt with thepsibl xeto. Tonle Sap, seems likely to be appropriate for completion for perhaps 1~~~~~~ i<± as rna oo .IL.AJL__r L ,__|= nA ~_z Ss5S - v-~ , 1s1% wJ.sls L w VC:tA X.Lv-;U11 u c u lt, U11 t D G;:1 a _L1U1r PJAiU.L VU LV AL L:AUL be considered as uncomfortably short for the formulation of a detailed approach to the developmQ"ent of MUf1ekong Basin and iUkonlg RiL-Ve. TL11ime will also be required to gain the additional experience required for detal'ed project forrrmalation and realistic assessment of agricultural benefits. Riparian agreement, detailed design, arrangements for ,D;~.% -4 _ on A an ct - B A ar oprc vs 49 t JU.LlJ W U QLUU;H U.LLUkJ. ULi iuy rUq.LrU EL UV>Uta years or more for such major projects as Pa 1Hong or Stung Treng even wLen, as for Pa Mong, mTuclh of the data and site tesing have already been accomplished to feasibility grade. Accordingly, although the need or basic duecisions on urie m1ainstem projects is not regarded as imminent -- and in any case appears impractical in present conditions the inLteraction and, where necessary, coordination of national and Basin approaches is not a matter of only future concern. It is rather of i-ummediate urgency. 2.49 In the longer run, such activities could have more far- reaching effects. The economies of the four riparian countries are at present largely isolated from each other. Trade between them (excluding entrepot trade in the case of Laos) represents only a few percent of their total foreign trade; their exports, almost exclusively agricul- tural products, are competitive. Yet in the longer term, benefits may be derived from greater integration of their relatively small domestic markets, The lk'bkong effort could provide a basis for greater cooperation in other fields, perhaps extending to neighbouring countries. -r4 19 - 2.H ;v U.Lthis CUJ±IGL L o.A.&U ,L' UJ1U. oIf the s.J± -.d national approaches, some brief observations on national policies and pr±u.siLU. L.± "ppfea.L a Up.- ±aLV . L Nac'ne VI U,IIU Vu.1. V -LW pd.L.L LWLUs.Ltr-iL have long-term perspective type plans for development. In Thailand., hlowe-vesr, a I ve-year devUeloPent plyan for u 92y-16yru its Uenlg udrafud including a five-year plan for development of Northeast Thailand. Here, at the invitation of the Tnai Government, a Bank team has been able to review more closely the problems of overall development, relative priorities of water resource projects and relationships to national programs. Conditions in the other territories of the Basin have pre- cluded similar studies. it is understandable that in Laos, the Khmer Republic and Vietnam immediate problems dominate to such an extent as to give long-term planning relatively low priority. While attention is in fact being given in all four countries to the adoption of broad policies towards future development, it is probably unrealistic to anticipate close attention by the four countries to detailed long-term planning on a Basin-wide basis at this time except as an adjunct to pressing shorter term programs. 2.51 There is an evident danger in these circumstances of planning at national and Basin levels getting so out of step as to render their integ-ation difficult, with s -sulting isolation of the Basin planning. It is the more important that the Basin-wide effort take into account the constraints under which the national development efforts must necess>ziily operate over the years imnodiately ahead. For the reasons indicated, it was not poss:ble vo undertake an assessment of general development priorities in each of the riparian countries in relation to the Basin territories. The following observations are therefore no more than indicative of types of consideration which may be of particular consequence for the next phase of the Basin development effort. 2e52 In its national setting Northeast Thailand's 13 million population is almost as important a proportion as it is for the Basin -- it constitutes about 33% of the Thai totnl And about 45f of the Basin total. Even more than in the case of the Basin, however, the Northeast's proportion of total production is simnificantly lower. IMore revealing than the fact that income per head in Northeast Thailand is only about 25` of the Central repion of Thailand which includes Bangkok. is the fact that it is only 4vQ% of the Southern or 55% of the Northern region. 2.53 It could be argued that, because of its poor resource base and locationm it is wasteful to give priority to the Northeast in allocation of national development resources. "Almost anything can be pnrnalrl more M-aS *ni1 otr 4vA p&-vhs ofP Tlqj4l-vAi-fll Apr,,+ hk*r1r'v' frmn socio-political aspects which are of evident concern to the national go*e r-on.t there are stro. '¼fl j.S.' considerAt.LiLo.Ls beh;AAILI ThAi.L Government's continuing efforts for development of this region. The "s,A,,w,_+ s4 4n;.., .,,-.,4 * fl .'sost -1 4 _ o - .4. 4__ A 1 .4 9_ _ AQA. _ek-^ .~dvj X. VJI" LWV U. -vWJUXsgD A A1q hMcUn n SI-IV'r soV Ullar physical, is low. The studies carried out by the Bank team indicate .A' PC"Ji,_c "- t.t-LL se 'ts tf'0clency Xl- 0oods,-->ff^s sho-'d_ au _les be maintainable with relatively limited expenditures given a concerted effU-u to reduce corns+traint1s in several cQmplemen+vary fieluds In the - 20 - longer term both an expansion of export crops from diversified upland agriculture and greater industrialization appear feasible. More generally, although incomes are likely to remain lcter than in other parts of Thailand in the foreseeable futnre, a development policy concentrated on fields where the comparative disadvantage of the Northeast is least, appears likely to produce acceptable returns in the natianal setting. 2.54 The investigations conducted by the Bank team indicate that a priority program of roughly $300 million of expenditures for 1972-1976 comprising technical assistance and preparatory investigations as wfell as capital pro.ects might provide a balanced approach when coupled with various administrative improvements. The program would include phased completion of irrigation nroiects where the main infrastructure already exists, upland crop and seed improvement, agricultural extension and credit. an extension of hightwavs adn feeder roads. rural electrification and health, vocational educsu~ion, urban infrastructure and preliminary stens towardq locating indrstries for processing local agricultural and other products and possibly certain light industries. 2.55 In laos, the extended. period of hostilities, the flow of refugees to the Vientiane ar-c and the distort±ons nroduced in the economy by various measures of support will make the formulation of a i~vM rffrn1 deve~~ p;v..t policy of ,rnwr +th_qn Short-te+rnmi 1iture nprticularlv difficult for some time to come., An important part of the country's pop i I r +ti^ of UJ. .li is J- j +.,H co .cetatds he ie,_n+JnP area which has developed a deficit in rice. Laos is the largest of the fo- D--sn territ4or-es and tran.sport b-4--nen +e^-e ppatdara is . . U I. .L .L JL " .'J u dLcAJJ U V ~ VW-'~' V" difficult, In the short-term both improvement of rice productivity and ne ._z^ - .4:__:-- T: _@ __ |T., AA7m- ;J someW WLLh UI LVt; .Vel area uhe ds in the Vs UC "c v_ * priority. Some reduction in the special advantages enjoyed by Tlhai expouter-s Of foodtu-AsUI.LLi ,S to Lauos resul.LbI1g .LIOIL preSent tLLA'i L± AL associated policies may be required to provide necessary incentives. 2.56 Exports of laos cover only about 3% of imports. Commissicning 0 1, VId.Ls1 J'LWip VJet1 W4±. rU TATJU 7 -J.LS VL1L1 _: vUl-J. UU 4-U- Thailand incurred during construction are repaid. If the full potential of I 3 Xr is inst&L ±ea, net foreign exchange receipts UUuo- UU bot order of $3 million annually compared with $2 million and $68 million for current exports and imports, in the long-term a much larger potential for export of power exists both from tributary projects and Pa Mong if and when arrangerents can be made for purchase by Thailando An inventory of mineral resources would also deserve early attention. 2.57 In Vietnam, self-sufficiency in rice has now been restored and is likely to continue. A much wider base for exports and for sub- stitution of imports exists though heavy investments will be required. Obviously restoration of war damage in many parts of the country wi-N merit priority for several years. Moreover, the delta population is advantaged in many respects as compared with other parts of the country such as the small coastal deltas to the north where pressure of pop- ulation, sQollen by refugees, is in some cases already intense; and the - 21 - VeU. L- se aUU.Lto.L.ies are 'LL.c1 d.UJ Iad- Ud.MU' V±±l on e-JdLc pIogUerams LI the delta of the types recommended earlier. Although investigations to clar-ify such projects as Stuung Treng Or Tonllc Sap clearly- ierit close attention in view of their important potential in the longer term, a high priority ior allocation oI national development resources to najor projects in the delta such as the D&R proposals seems unlikely for some years unless particular favorable net benefits can be demonstrated. 2.58 Tne Kumer Republic -idll be faced with heavy expenditure on repair of war damage. Rice production, wihich normally accounts for over one-third of exports, is however much less dependent on structures such as canals and salinity controls than in the case of Vietnam and reconstruction requirements in the field are likely to be correspondingly less. Cn the other hand, the rubber estates which normally account for about a quarter of exports have been extensively damaged and their re- habilitation ilvl presumably constitute a relatively high priority as will repair and improvement of the transport network -- of considerable importance to the improvement of agricultural productivity. The returns attainable from the incremental costs of the completion of the Prek Thnot project, due to the pro:ximity of Phnom Penh as a market for rice and diversified crops, cor&ni-)ne to suggest that speedy completion of the Prek Thnot project should also rank high in the priority list. III. A PRIORITY PRCGRAP 3001 The Bank's review confirms the priority of agriculture in Basin development and emphasizes the merit of regional cooperation in the development of the Basin's land and water resources. However, the review also concludes that most, if not all. of the promising oppor- tunities for land and water development in the Lower 1b'kong Basin require substantial further preparation before thev could be considered ready for implementation, Recognizing the urgent need for project preparation, the Bank's reviewq has identified a "Pri oritv Proarpin" of nre-investment studies to promote investments in the period immediately ahead and to lead logically into a longer term basin development program. 3.02 The program includes studies and investigations with impll- cations for the Basin as a whole, including the preparation of a Basin- wide progrnm nf pioneer agricultural pronects wthich is nlready flnded, selected pre-investment studies in each of the national components of the asin, nand the most. urgent follow-uip action in the preparation of multipurpose projects on the Mekong River. A preliminary estimate indic_ntes n fDincling repi-remnz . ntof' TUt1. 0 rnilliron r T.yhi-h m-ir.,+. le eventually to follow-up investments on the order of US$250 million. 3.03 It is recommended that this program, many elements of which Vo7o !21 ¶ .,rq? hol-t -Ar,vx+ A W1r o / W4-o eAAA 4 ,, .d_-; work program of the Committee. In addition to the pioneer project u.Fro6_.m VVAIL li .L3 t 'A U lead ut vaUg=,y 50 V.1. ofL '.JJ%,U. the priority program places emphasis on investigations that could be speedily- ---VV -3_A --A cv--c 4.lL and .ti - f--the ±Vej1IwLLU n fld *- 22 - distribution systems for existing reservoirs in Northeast Thailand and the Khrior Repnbhlic. TnveJq1-3tiga nf o the potential in the Khmer Republic for improving the prodactivity of river-bank farms by crop diversification Drud o~f +he, ('sreat Lake0 fihris ar. ir. Northeast Thailand of flood protection in the lower reaches of the Naim NMn are .-I-clded. In the Vie_-tnm. delta, e a is oLAt further potential for law-lift pumping and expanded use of high-yielding - - . - - -. .9 . -..4 . LW4.~±SJ.WC"k.. U .LL±V~S.UJ.6L UJU .LJ.. .LL.L LV. U%. 'J . salinity control cum irrigation projects, and on hydrologic data cO rUeU101 quir d dOJOa basi IforJ.1 Cmo-e M to[LhV,5M,JP.eILETLU16 U±L Dt±lc. development. In Laos, investigations required for extension of the Nazi ar,LII i prujectv wu fr ubewnini±ng the furtier potential 01 te ijam Ngun valley below the dam are included along with studies to enable final decisions to be taken on flood protecti.on oI the Vientiane Plain. 3 .04 Investigations of Basin-wide significance include further studies of Pa Mong, particularly relating to reduction in dam elevation., Studies of a basic redesign for the Tonle sap project, a consolilation of the work so far carried out on Stung Treng, further studies of the Sambor project, and a continuation of the delta studies undertaken by the Netherlands teamr Par.e'olar importance is attached to a Basin- wide program of research a.id field trials of techniques for Lnproving agricultural p:cductivity under rainfer conditions. IV. INSITUTIONAL ASPECTS 4.01 From the analysis outlined above, it follows that the degree of association between the national authorities of the riparian countries and the M.ekong Secretariat will be of crucial importance for the next stages of the Nekong Basin development activities. The initial studies undertaken by the Committee could be carried out with limited involve- ment of national agencies. The time has now arrived when closer attention to this association appears necessary to ensure the most effective use of the resources available for development both short term and in the longer run9 as also the relevancy of Basin planning in relation to national planning. The legal and administrative framework for implementation and management will also need increasing attention as investigations lead to projects. 4.02 The need to enlarge the scoDe of Basin develoDment activities and for closer association between the Committee and national authori- ties has clearly been appreciated by the Committee. and its activities have in fact widened from a predominantly engineering approach centered on consideration of mainstem Droiects to a more genernl npproach to development of water and land resources. Its Advisory Board of eminent engineers was enlarged in 1(968 hy the _iiti-nk of tuhree e-fpet in +,hp fields of agriculture, finance and economics. Of potentially great importance. an agriculilture subr%ommil-±oo -omposed of directors from the respective ministries of agriculture of the riparian states, was crrri-tedrl in 1Q71 .nLm O *J%' ay to 4 .case he pa.ipat.Ln - 23 - of r-pau^5n nivsl NS '4n te upper r.-UA.1 olf t1he wSeCMeta.i-t . Sre U.I ._U Z:U-Ja .&AL 1iaU.JILd L." .-L.L VALLL u.JJL . '-'. - parallel efforts by national agencies to facilitate integration with tOe work c,f t_lle LJoLf111LLtVb dVE d.Laso eTvJLUXre 4.03 Tnese efforts are stll cOlntinuingO.Since the pr par;ation of the draft Indicative Basin Plan, discussions between the Secretariat and national agencies appear to have increased sig1i tcant-Y. TO major aspects nevertheless appear to deserve imlnediate emphasis. The first is the problem of determining tne scope of Conmrittee actilvitiV Jes in relation to those of national authorities involved in Basin develop- ment. The second concerns the identification of the riparian govern- ments with the Committee and its Secretariat* 4.04 To a large extent these two problems can be considered as opposite sides of the same coin. Insofar as the riparian governments thoroughly identify themselves with the Mekong Committee, the problem of defining the scope of thle activities carried out under the aegis of the Committee and those of national agencies can be more expeditiously resolved. The danger of mutual lack of sufficient confidence, and hesitation in collaboration, which could reduce effectiveness and acceptance of the Committee 's work, should also be much reducede Closel.y related is the problem of keeping the capacities of Basin-wide and national agencies reasonably in step. It is essential that each of the parcners should have the technical capability of evaluating the stud- rs and recommendations produced. These considerations appear to point to the riparian governnme-Its deciding in considerably greater detail than in the past and in full discussion writh agencies involved, the scope of the Basin-w-ride activities. )1.05 It would be presumptuous for the Bank to suggest explicit means by which the further evolution of the Mekong Committee can most effectively be acromplished. However, the explicit consideration of the problem suggested should, it would seem, take into account the -nqrmOmn±. iTlnrr+.irt-P of -onnn-itnninric -I-n mAntgin h Hi gh le1 of com- petency in the iekong Secretariat, the considerable advantages which a continuing association with the UN can afford. and the need for flexi- bility to reflect the differing administrative organization of the four riparian cGouln-trnies. 06ro r setsf difi,ri1ti09 ;n Amtlrino the mnririmum effectiveness of the contribution of the Mekong Com.mittee and its Secretariat meri merit mentionA The frs+. noncrnis the nuimber of qenarnte activities in relation to the capacity of the Secretariat. The second corcerns procedures for _n., viducl stdeies r,dAr b-v r a +IThich have often resulted in rather minimal Secretariat involvement in the delp:AintIiOn of the "deta-3.ed ScopUe of 4-vhe -nV-4tigat-4- the cndc of the investigations, the monitoring of progress, or discussion of pre- I _ __ A,- X._ ,134 - 4.07 At tne presenrti ITRiC, tlle wuriUL. P.rEg.UFIl UoL WVe iIn C,V t- includes nearly 50 main program heads, many containing several individLal sub-programs,, either ongoing or for which funds are soughtv. Secre-tariat professional staff numbers less than a hunired including expert - 24 - consultants and administrative officers. This situation indicates firstly that a clearer system of priorities based on the evolving Basin strategy will need to be worked out for the future to avoid dissipation of effort9 While the Committee should certainly maintain an overview of the activi- ties carried out for Basin development, that these activities should be competently carried out appears more important than under whose auspices they are performed provided that adequate liaison is maintained. Here agpain. the improvement of the association with national authorities is directly relevant. Secondly, considerable advantage should be gained by huilding up a section in the Secretariat snpcificallv devoted to project preparation and evaluation. In the initial stages, such a unit could serve a most vallhble flunction in the Secretariat's contribution to the conduct and evaluation of investigations. The donor countries could assist by .mmodification of their procedres. A re ad'ine to involve the Secretariat to a greater extent than in the past both in initial dis- cuvnssion of t.he terms of reference, and by providing for a coni-4inai-in dialogue between their consultants and the Secretariat and for monitoring during course of 4ivestigations could contribufte to the efficaty of the overall programO 4.08 In view of the size an.d variety of needs for assistance and because of the d iversity V-o respect- .g present and poaenti - donors, consider:. b.e flexibi' lity in arrangemonts for donor support appear .iniU.cated. uihau v-1;.11 ericom-Xpass b-ilaterall artd .r,U.iUU1lat-eral ad,~ and aild to the ri,:xrian nations zs well as via the Mekong Committee. Tne Committee's auaspic.s -would, Elowever, appeax -o have par-tcul-ar advantage where investigations or projects are of direct concern or applicability to more than one riparian country, where innovative tecr-i`q-uesi iu/ 01- relatively large components of foreign technical assistance are involved, wAhere individual donors wish to associate themselves with others and where a project of a size requiring multi-national donor finance is concerned. Multilateral financing arrangements appear particularly appropriate within the Committee's program for basic Basin studies, for investigations and projects involving several donors and, more generally, for an amount sufficient to provide the Committee with sufficient flexi- bility to maintain an overall balance in its program of activities. The pioneer project program involving several donors and international agencies as well as the Committee, its Secretariat and national agencies represents an experiment in a limited multilateral approach which, with modifications appropriate to the circumstances, may provide a flexible system applicable on a wider scale in future operations of the Committeee 4.09 This paper does not attempt to predicate in detail the role of the World Bank Group in future Mekong activities. Its purpose is rather to provide a background against which discussions of such a role can be held. The considerations above, however, do lead to some general obser- vations. The first is that a large measure of aid, financial and technical assistance, will be required for the Mekong development effort both at the national and regional levels. The provision of assistance by the World Bank Group should be viewed in this context and might naturally contain an element at both levels. It also appears that the Bank Group can best serve the interests of Mekong Basin development by aint.aining its normnl approach to appra_nisal of nronc4ts nnd program.s This could. be of particular importance in respect of any service the Bank Group may be able to prov4de in mobilizing donor support -- -nd in which close association with other aid-giving agencies, including _a_4-1-_1- +ho- A-1-_ nM,^ ro"L ewr_7 -C e c f, nl z+ 4.1w 0 v , -- recoL.ize, o +he o+her hn . ta to pv tp. services adequately requires a close liaison with the Mekong Committee .d its Secr4t - natO =,k -r up vol-vs=. --.4 the 4 iner roec an.e re .LL'O -J"±Ud L .L J £ULJ.f. W.L-UUj .11 VLVEAIL1JA1 .LIJ IU14 IJ,11~~01 F dJ'-U program and other parts of the priority program outlined above and sum- 1"1-r.Lzetd L1U Lthe annaex rniggivu psJ-UV.iUd on1te lfltauiI V.L ±LUL'ItWL-Lg thi.L i asor.soulio, Assistance in the building up of a project evaluation unit in the Secre- tariat might provide anothlere A Bank Office has already been set ui in Bangkok for liaison with the Secretariat and could be strengthened for this purpose. At the Committee's invitation, the Bank nas senu obseveirs to meetings of the Mekong Committee and its Advisory Board as well as to meetings on particular subjects. This practice should clearly continue.. The pioneer projects program provides for ad hoc meetings of the Secretariat, -UN)DP), ADB, FAO and World Bank to formulaze the program and discuss its progress and findings. Similar arrangements for other programs of the Committee could be consideredn The World Bank nas acted as adiministrator of the Nan iT:.cm project, the largest prcject implemented under Committee auspices. SirJlar arrangements for other projects could be corsidered. Trhe Bank Group has not provided finance, as opposed to tecLi.cal assistance, for any of the Mekong Committee's projects. hcnk- ever tshe priority program outlined in Section III above could open up the possibility of Bank Group financial participation in the near future. Also, in relation to larger projects, the Bank could certainly help the Committee in the organization of multilateral financing arrangements. 4.11 Activities undertaken by the Bank for the riparian governments can also directly complement support for the Committee's activities, The review of Northeast Thailand development referred to earlier has, for example, led to recommendations for a program covering several inter-related fields in which the Bank might participate both in the initial stages of preparation and in the financing of resulting projects. Training courses for the personnel of national agencies, particularly in the field of project evaluation, at the Economic Development Institute of the Bank and/or in the area, offer further possibilities. V. CONCLUDING OBSERVATIONS 5.01 The Mekong Committee's Indicative Basin Plan represents an important first step toward the preparation of a comprehensive plan for Basin develonment. A maior contribution has been made towards the identi- fication of constraints and potentials. Future planning should, however, relv more heavilv on nracticql exnerience gained in the constituent territories of the Basin and should be continuously refined as develepment prnapeds and new informAtion hecoms avavilahle0 More snecificallv. the Bank's review indicates the need to concentrate on specific projects ancd - 26 - programs adlressed to the more readily observable potentials and con- straints; to cantinue planning and project formulation of promising projects of immediate interest to riparian countries; and to fill in critical gaps in basic data on the Basin's land and water resources for the longer term developmento Greater experience witJh irrigation, crop diversification and supporting activities is required before definite conclusions about the merit, priority and timing of mainstem projects for agricultural development can be reached. 5.02 U Thnnt referred in his letter to a "new nhasel in which "decisions should be made, so far as possible in the cantext of a careful review of invnstmpnt nriorities for the 1hsin as a whole nnd for the general development programs of the riparian states.' It is hoped that the Bank's review - wi,1 be of assistance in determining the priorities in the new phase. LOWER MEKCONG BASIN PRIORITY PROGRRAM Estimated Estimated Estimated Estimated Cost Cost of Cost Cost of Description of Pre- Likely Description of Pre- Likely Investment Follow-up Investment Follow-up Studies lnvestment St udies 'Investment ($ million) ($ million) ($ million) ($ million) A. BASINWIDE STUDIES C. NORTEAsTr THAILAN]D 1. Pioneer Protect Program 1/ 50.0 1. Irrigation from Existing Reservoirs 2. Pa Mong Project (a) Stage I (40,000 ha) 0.20 (a) Aof Low 2a Mhqg 050 (b) Stage II 0.hO (b) Review t rormulation of Ecological Studies 0.05 2. Nam Mn Flood Protection 0,20 (c) Elogica Studtes 0.50 3. Nam Ohi Development 0,20 3. Tonle Sap Project 0.20 4 Ratnfed Crop Tmnrovement 0,20 4. Sambor Project 0.20 Sub-Total 1.20 45.o 5. Stung Treng Proiect Desk Study 0.102/ 6. Delta Study (follow-up) 0.60 D. KHMIER REPUBLIC 1. Prek Thnot Pro4cst - 7. Central Data Bank 0.30 Phase II 1.00 8. Rainfed Crop Improvement 2- B+-F.-an, Pro;ect 0.L0 Research and Field Experiments 3.00 t O 3. Stung Chinit Project 0.10 9. Improvement of Agricultural Data Base 0.°4 L. Riverbank Farms 0.20 Rub-Total 5.85 50.0 I Ffgheries Studies 0.30 B. LAOS Sub-l'otal 2.00 50.0 1. Nam Ngum Project (Re: Spillway Gates and Phase IT) 0.05 VIETNA24 DELTA 2. Flood Protection for 1 . Froject Plarning i.00 Vientiane Plain 0.10 2. fReview of Low-lift Purn 3. Reconnaissance Studies for Development Na-m Ngum Valley 0.20 3. Review of High Yielding 4. Resource Surveys 0.30 Variety - rogran 0.10 Sub-Total 0.65 25.0- h. Hydrologic Data Collection 0.50 5. Inventory of aater Control Infrastructure 0.30 Sub-Total 2.30 80.0- T o T A L 12.00 250.0 1/ Estimated cost of US$ 2.0 million already funded. v Site investigations and feasibility study estimated at US$ 12 million should be deferred pending review of desk s;tudies by riparian Governments. 2y To cover the cost of the followi.ng possible investments: Nam Ng-m g Power Plant Fhase II; Nan Mgu-. SpilIway Gatei; and Flood and Bank Protection Works for Vtentiane. 4/ To cover the cost of the following possible investments: two major tributary projects; and one program of minor irrigation works. To cover the cost of the following possible investments: one major salinity control and irrigation project including rehabilitation of existing swa defenses; oorc flood protectiogr, irrigatiow afd drainae e -prjent including rehabilitation of existing water control works; and one program for low-lift pump devoloprient. t3 C H I Ns. u A ~~~~~~~~~~INDICATIVE BASIN~ PLAN S~~~~~~~~~~~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~ i-g -d ._ .ri-rlsc h-e LobrAeon o | C_.@_,, t L.i;>bsv & ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~SHORT RANGE PLAN (1971-198.')1 | t. . j ~~~~~ph.n5 S.~ -j D.m unwderosrc B U R M A fz >,.S % R HANoss ~~~~~~~~~~~~~~~~~~~~~~~~~~~LONG RANGE PLAN(Oga - ?OOO1 ; / l J S \ *_ _ ~~~~~~~~~~~~~~~~~~~~~~B,idgn j 4 X ~~~~~B- Hf Kh-m Bnbu (S? _ .- I crlop IDnd S ; . h-aoO97°- N.. OU r7 Jmrl o,; 20-> ox¢v HIGH UA G LUN 20 , Z- _ arCvrzwn nEXS" , , 1, ir--' P L k D°S(i~~~ AO '- ' 'st-' 1 ES /'' y t. f 8' '% 41NFD A:4-s 0 I h//J\\0~~~~~~~~~~~~~~AANU A /) a ,1 / x1 W d X g 44 °°! uoThs r< PA X )'wK ? ' t onnaWbetJ > >~~~~~~~~ G_// of rtonkin 1 t i ) , < ^ n Koen W:i ZK~~~A. AMeia 5 8 rR A < ; L NAMDPHROM C>\ 5~ < > Ba Hegc Done J <8t > KAM pjnIG <<> ST 2 A I 'L fP N D0 zem/orpt >-v kW it) u_> kJ '> uP:qC § 7_ % :<+ t >ax q~~~~~~~~~~~~~~~~~~S DU R nfi^> \ g Sk K: Amp>S gJ- D K.ig D- 1- |~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U. D.t, D> E_ S~~~~~~~~~~~~~~~~~~~h fq& iJ LAMr i¢C° I $, £;t {8 . I DSoSv6acaIcFLEEING t | | | ' ' ' ' f _ /~~~~~~~~~~~~~~~~~~~~~~~~k_G iOO' KlLouETErlE 104. > 106'~~~~~~~~~~~~~~~~~~~~~~j- K I~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ER 3523 ri Dx EhsEEg 1 971~~~~~~~~~~~~~~~~SUN