This activity has two components: 1) complete a Feasibility Study which will inform the design and implementation of the main objective, 2) a project which will pilot an output-based subsidy in selected communes (to be determined by the Feasibility Study) to an Irrigation and Drainage Management Company or a Farmers Cooperative  which will pre-finance the infrastructure improvement for Level 4 and 5 canals to convey surface water to farmers’ plots.  The improvement includes the lining of tertiary canals, pumping water if necessary to higher plots that cannot be served by gravity, and installing gates for water release. 

The pilot project will target areas with poverty levels higher than the national average and in addition to the irrigation scheme to improve water services, will include a bio-fertilizer component that will be applied in parallel to improve harvest yield.
The feasibility study will be led by a senior staff of EMWF, Ms. Nguyen Thi Minh Thu with inputs from conducted by a consultancy firm hired by GPOBA in coordination with the Department of Irrigation under MARD, the Institute for Water Resource Science, and the Institute for Water Resource Management and Economics and will explore the following:

• Targeting: Geographical coverage, specify participating province, and expected number of poor households which will participate in the project.
• Funding structure:  Total project size.   The percentage to be covered by the GPOBA subsidy, other financing through EMWF and beneficiaries respectively. Mechanism for pre-financing.
  Subsidy level: The amount of subsidy per household (depending how outputs are defined)
• Innovation: The mechanism for output-based financing, and risk sharing among stakeholders
• Scale-up and replication:  What does the project envisage in terms of scale-up? How will this be achieved?
   

Funding for the feasibility study has been approved by the Project Management Unit. Eligibility for subsidy funding has been confirmed.

Vietnam is a world leading rice exporter. Rice production has been the key economic activity for the country. The government of Vietnam is pursuing a strategy for high quality rice for export for which active and effective irrigation is a key to reduce chemical use. This system will also help reduce water waste. Subject to the findings of this feasibility study, the proposed project will potentially provide knowledge to many other farming cooperatives and households who want to develop high quality rice:

• Economic cost benefit: The main benefit will be increased and improved access of the poor to better irrigation system, hence improve crop quality and quantity.  The study will attempt to quantify the benefits if possible on the basis of crop production for clean rice production, clean rice price compared to normal production method, and water saving.
• Impacts relative to current situation: The project will target areas and households that have limited acces to irrigation. These households will benefit from increased revenue, which will allow them to incur in other expenses like health and education. Expected reduction of water wastage will allow to irrigate other areas. Other benefits expected will also be described at feasibility study stage.
   

GPOBA will fund the cost of completing the feasibility study and subsequently the subsidy for the pilot project.

Mario Suardi