Yuan Mou Efficiency Water-Saving Irrigation Project

Country | China

Region | Asia

Sector | all sectors

QII Principles | Principle 1: Sustainable Growth & Development Principle 2: Economic Efficiency Principle 3: Environmental Considerations Principle 4: Building Resilience Principle 5: Social Considerations Principle 6: Infrastructure Governance

QII Sub-Principles | 1: SDGs, 1: Wider economic benefits, 2: Value for money analysis, 2: Life-cycle costing, 2: Operation and maintenance, 2: Technological innovation, 2: Risk management, 3: Environmental Impact Assessment, 3: Disclosure of environmental aspects, 4: Resilience, 4: Disaster risk management, 5: Social Impact Assessment, 5: Job creation, 5: Capacity and institutional building, 5: Gender, 5: Occupational health and safety, 5: Low-income groups, 6: Procurement transparency, 6: Financial & debt sustainability, 6: Access to information and data, 6: Legal and Regulatory Frameworks, 6: Institutional Framework of infrastructure investment, 6: Enabling Environment, 6: Policy

Overview

Cost: 45 million USD

Size: The total irrigated area of the project is 7,600 hectares with smart water measurement devices, automatic control and information management system and on-farm drip irrigation systems.

Parties involved (public and private) :

• Yuanmou County Water Affairs Bureau (Public)
• Dayu Irrigation Group Co., Ltd (Private)
• Yuanmou County Large-scale Irrigation District Water Professional Cooperative   (Private)
• Yunnan Farmland Water Conservancy Investment Fund Partnership (Private)

Relevant contractual details (type, length etc.):

• 22 years cooperation period;
• BOT;
• Payment mechanism is user payment.

Context: The project covers four towns around the county, benefiting 13,300 households and 126,300 people.After the implementation of the project, the average annual water saving is 21.58 million m³, and the water saving rate is 48.6%. Technical and economic indicators: the water supply pressure is guaranteed to be within the range of 1.5-2 kg; two water intakes will be constructed; the water mains 32.33 km long; 46 water mains with a total length of 156.58 km; 801 water distribution mains with a length of 266.2 km; 1901 branch water distribution pipes, 345.33km long; 4,933 DN5 smart water meters will be installed; 4,753 auxiliary pipes, 241.73km long; efficient water-saving information system will be installed.

Aim(s) of the project: Apply PPP model to introduce private sector to participate in this project so as to rationally allocate risks, solve government’s short term funding difficulties and achieve sustainable agricultural development. By letting professional people do professional work, the project can help achieve following social and economic goals: improve water use efficiency to save irrigation costs, increase productivity and farmers' income for poverty alleviation, reduce farmers' water costs etc.

Timeline

Key dates including procurement, construction, operations

• 4/19/2016  Procurement date;
• 1/1/2017 - 12/31/2017 Construction period;
• 1/1/2018 - 12/31/2037 Operation period.

Relevance to QII

• This project increases access to essential services. Usually farmers couldn’t get water on demand and couldn’t grow high-value cash crops and get good yields. This PPP project solves the above problems by integrated design, construction and management of the water-saving irrigation project. With the complete and advanced drip irrigation system the labor intensity for irrigation has been reduced significantly which is of importance for women and vulnerable farmers.
• It enhances resilience and responsibility towards environmental sustainability. In addition it helps the development of further similar projects. By using regulated reservoirs as water source, the project can guarantee the irrigation water demand in extreme dry season under climate change. By applying drip irrigation and fertigation technology, water saving is achieved, and run off from farmland is also reduced, which not only increasing water using efficiency, but also reducing the losses of fertilizers and contributing to environment protection.
• It fully involves all stakeholders in the project. Government achieving local social and economic development in sustainable way by increasing agricultural production, generating employment opportunity, saving water and reducing fertilizer application. Financial institutes can get the expected investment return. Irrigation company get economic return from the design, construction and operation of the project. Farmers get benefit for increasing income, reduced labor intensity and better service. Business sectors get more business opportunities in product processing industry and marketing. Thus this project contributes to local poverty alleviation.
• The project has successfully completed procurement and financing. China has established a comprehensive policy framework for PPP, including laws and regulations, operation guideline, assessment guidelines, procurement guideline, contract guideline, and performance evaluation guideline, etc. PPP units have been set up both at central and local level. The project has successfully completed procurement and financing and its information has been disclosed on the national PPP platform to ensure transparency.

Benefits

Highlights

• Jointly invested by government, Dayu irrigation Group (private partner) and local farmers.
• Integrated and comprehensive design, construction, operation and maintenance.
• Managed by specialized team with involvement of all stakeholders, including the government, private partner and local farmers.
• Enhanced the participation of water users by involving in management, water users not onlyget benefit from irrigation but also the project operation.
• Encouraged water saving by introducing step water prices.
• Introduced water right and water trade mechanism.
• Extended service to farmers beyond water, such as fertigation and market information.

Expected and realized benefits

• In the project area, cropping intensity has increased from 1 crop to3 or 4 crops a year, and crop changed from conventional field crops to cash crops, as the result the gross revenue from farmland is increased from 21,000 USD to 85,000 - 113,000 USD per
• After the implementation of the project, the average annual water saving is 21.58 million m³, and the water saving rate is 48.6%.
• Due to the increase in agricultural production, the processing industry and transportation have developed dramatically, which increasing sustainable employment and local income.
• Due to scaling up of farm size and application of automation in the management of irrigation system, labor intensity for irrigation is reduced and more labor can shift from field to other sectors;
• More employment opportunity is generated for women labors in harvest of fruits and vegetables, processing industry and marketing products.
• With the success operation of this project, it contributes to Yuanmou county’s poverty alleviation.

Metrics

Through performance-based management, we can measure outcome based on agreed output specification and performance standards as required in the PPP contract.  For example, local farmer’s income increases and water saving increases etc. In addition, Value-for-Money assessment will be used in performance evaluation after 3-5 years of operation and whole life cycle. This project conducts operation and delivery performance monitoring, report and review according to which payment is made.

Name of Institute

China Public Private Partnerships Center, Ministry of Finance, China

(Based on the project information input by local government, private partners and SPV onto the National Comprehensive PPP Information System)