Reference 1 aichi irrigation project appraisal report by world bank

The Aichi Project is a four-purpose propostl comprising irrigation, potable water sup-ly, industrial water supply and hydro-electric rower near Nagoya, third lar&est city in Japan.. The

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This report was prepared for use within the Bank In making it | available to others, the Bank assumes no responsibility to them for the accuracy or comnieteness of the infnrmatinn contained herein.

!.NTERNATTONA-L BAN FOR I REOSRC ION AND1 -L DElVELOPMEi ZNT

REPORT ON

AICHI IRRIGATION PROJECT

JAPAN

Z 0

~~~

Department of Technical Operations

CURRENCY CONVERSIONS

US $1.00 = Yen 360

Yen 1000 = US $2.77778 Yen i million = US $2,777.78

VYn I hillinn = US $2,777,778

knnex 'C' Foreign Constructioii Equipmenu 1 -3

Annex 'D' Anticipated Increase in Agricultural Production _

REFORT ON AICHI I:IRICATION FROJECT

JAPAN

1 The Aichi Project is a four-purpose propostl comprising irrigation, potable water sup-ly, industrial water supply and hydro-electric rower near Nagoya, third lar&est city in Japan The project has been uncer discussion

in Japan for many years but comrlex engineering and financial rroblems have hitherto rrevented action Total cost at rresent prices is estimEted at about $101 million equivelent of which about $7 million would be needed in foreign currency to purchase construction machinery and to pay for foreign engineering services About four years would be recuired to complete the project

2 The project would be constructed end operated by the Aichi Irri-gation Public Corporationj agovenmPnt naenu Petph liqhPri bh scial lew

in AuEust 1955 to plan, construct and operate the Aichi Project The Cor-poration is authorized to borrow money end would be the borrower of a Bank loan with Government euarantee

missior of 1954 as sl,owinr po6i iliie for ,, 1-rnk fr n r *cie Lxvntherwa

the Land Reclamation Project for which a loan was granted December 19, 1956

study by Dutch consultants

4 Chief beneficiaries of the Aichi project would be farmers on the

ChLitLLa Peninsula, near Ne g- y- a, jswho l_ Ure ~unele to UUCL.aiu s)atisf.actorLy 'yelds'L

of crops because of chronic water shortages in the crop-growine season

Also benefited wo-ulu be nr.-uM1ous town,s a.d v-illges in the Aichi area which

do not have any adequate supply of fresh water The growing industrial area

arournu Nagoya likewise requires additional water anu une entire region needs more electric power

5 Formal request for a Bank loan was submitted by the Aichi Corpora-Lion on Novemoer 9, 1955, together with a preliminary engineering report

prepared by Erik Floor and Associates Inc., Chicago, consultants engaged by the Ministry of !£griculture and Forestry in 1954 Estimates oI agricultural benefits from the project, prepared by the Ministry, had been submitted

previously The Bank expressed interest in tne prorosal but since the docu-ments furnished were insufficient for an appraisal the Bank suggested the employment of foreign consultants to complete the plans In May 19569 the Aichi Corporation re-employed the Erik Floor Company for a more detailed engineering study and engaged an irrigation engineer, Professor A.A Bishop

of Utah Reports of the two consultants, together with additional infor-mation received from the Corporation, were reviewed at the Bank in January,

1957 and after some further clarification of cetails the Japanese were in-formed in May 1957 that the Bank was prepared to open loan negotiations

II NEED FOR PROJECT

6 Japan produces only 80 percent of her food requirements, chiefly rice, fish and vegetables To feed 90 million people the country now imports anrually about 5.5 million tons of food (brown rice equivalent)

prospective population of 100 million, the annual food deficit will be much greater unless production can be increased There is thus a clear need for increasing domestic food production by every reasonable means

7 It is estimated that increased food production from the 33,000 hectLres to be irrigated under the kichi Project will amount to about 100,000 tons (brown rice equivalent) Although this will meet only about

3, of the nntionnl food deficit it will be a welcome aodition to food

farming new ta Japan and not common elsewhere There are a further

200n000 hectares of similar land in southern Japnn, which if hrought under irrigation, would add about 600,000 tons of food (brolm rice

equi-va +.n +to thA natl+.onts: srlwr_ Tlio Lir,i; PThr;i,-e+ irll +pt t.h

fnpsi-bility of developing this type of upland country If, as expected,

sati sfactcry tech>niques necessary for a new system of farming can be d-_

veloped to the extent that a production respcnse can be obtained which

significant contribution will have been made towards solution of the

na4t-on's food SUT-3-pobemn U_LJI - .L U FLLL4 LJ .

U ± L1.1± yJV prLovisio L 4.The pLJble WoVf1 i s U al wc,MUater and electric

power will represent incidental benefits resulting from the construction

of' an irrigatilon da andi' canals., which will be obteained"_u1 wit r_,c~ ,tv el L

small additional cost

9 The law establishing the hichi Corporation gives the Corporation broad responsibility and authority to plan, construct and operate a

pro-gram will bring irrigation water to 33,000 hectares of farm land, supply

45 million cuDiC meters of water to munœcipalities anrd adL about 100

million kWh per annum to the existing regional network

10 The proposed loan from the Bank would cover the foreign exchenge needs of essential facilities included in the program and specifically for construction of a dam, a main canal, a regulating reservoir and a system of secondary or distritution canals The Bank's interest, however, goes beyond the immediate project to the farm operations and the municipal water and power supplies resulting from the project since these represent the benefits coming from the program The Bank, therefore, will need to

be kept informed concerning the progress of the program as a whole and has obtained satisfactory assurances in this regard

3

-11 The dam located at Makio Bridge on the Ctaki River, will be of

rock-fill construction 264 m lon-g Al a high imrounding 75 million m3 of water and with an effective capacity of 69 million m3 A site will be

provded for a power house near the darn From an existing barrage 120 km down river a main canal, 114 km long and with maximum capacity of 30 m3/sec.

km of secondary canals will branch out over the urea to points from which

5 hectares of farm lanu will be irrigated A main regula+ ng MreSer and

undertaken as necessary

also design and construct the secondary canals and will later operate the entire system from the dam to the terminals of the secondary canals Ditches (or sprinkler irrigation mE.ins) leading from the encs of the secondary canals

to 22,000 farms will be designed, built and operated by legally constituted

water supvlv systems will be constructed by the Kensei Power Company

respec-tively with loans from the Corporation These facilities will be operated

by those agencies under contracts with the Corporation

13 Heavy earth and rock-moving and canal-buildine machinery required for constructing the dam, canals, and reservoirs will be imported under the Bank loan It will be purchased under international competitive bidding Machinery for building and equipping the power house, water supply system and the bulk of the machinery necessary for construction of the secondary canals and for land development work is to be rurchased in Japan

IV THE BENEFICIARIES Agriculture

14 33,000 hectares will receive up to 100 million m3 of irrigation water depending on rainfall actually received during the growing season

17,000 hectares of rice paddies require water throughout the summer and 16,000 hectares of upland or ridRe land used for growing vegetables, fruits, winter cereals and upland rice, require irrigation during the very dry months of

July and August Most of the 22,000 farms involved already exist but new farms will be established on land not now occupied Many paddy fields in

Aichi maist now be used in wrinter to store water but with the coming of

irrigation these will be available for growing winter vegetables and cereals

On the uplnuds, increased nroduction will come from a wider cropping pettern and from higher yields of crops now damaged by severe drought in late summer

15 Paddy rice farming is an ancient and highly developed skill in Japan

and the paddy farmers should have no diffic-ulty obtaining maximum benefit

to estimate as this is a new kind of agriculture in Japan However, Japanese farmers are renownred for their compete.nce and diligence and they can be

expected to obtain maximum yields after experience is gained in applying

the necessary skills from the results of research into upland irrigation

which has already commenced under the auspices of an Aichi Irrigation Special Investigation Committee organized by the Ministry of Agriculture

16 At the Bank's suggestion and under the guidance of Professor Bishop, the original plan of developing these lands by extuensive arnd costly land

reduced in favor of the less costly and more manageable plan of irrigation

by contour furrows Cn slopes too steep for furrows and on fields above the canal level, sprinkler irrigation, also an innovation in Japan, will ue

employed

17 The operation of an irrigation system as complex as this is also

without precedent in Japan To study irrigation project operations and

also to observe details of irrigation farming, the Corporation proposes

to send qualified technicians to the United States and elsewhere for periods

of about six months, at least one year in advance of comp]etion of the project

It will also employ foreign irrigation consultants as needed

18 Municipal Water

360,000 people living in 24 towns and villages along the Chita

Peninsula are dependent on unreliable and often brackish wells for water

The project will supply annually about 18 million m3 of water suitable for drinking

Factories in three industrial cities, including Nagoya, cannot

expand because water consumption is limited to 63 million m' annually

The project will add 27 million m3 of raw water annually to this supply

and assure continued growth of industry

19 Electric Power

The Hydro-electric potential of the Otaki and Kiso rivers is almost ccmpletelv utilized bv 16 existing power plants but construction of the dam will permit the addition of a small 10,000 }w plant at the dam site.

and water supply and from special releases for power when storage is surplus

to consumptive use requirements The project, through water regulation, will also increase the generating capacity of the existing plants and the net

annual energy increase is estimated at about 100 million kWh This would add about 1.4% to the regional output of the Kansai Power Company

-5-20 Water Supplv

Hydrological calculations are based on 10 years of flow recordings

and a further 44 years of ranfall' data The calculations show that require-ments for irrigation and municipal water can be met in average seasons from

the naturaL flow of the Otaki River, in, excess of existing requiremerts,

20 million m3 from the dam storage This wo-uld leave a reser-,e capacity

in the dam of 49 million m3 to take care of emergencies in dry years and for power generattoni a.fter irrigati±on ad iacpal water requirements _re

assured

sT Pnb Ul aftl% _ ibl7a I Ur, TT L T,,;AATTt

v fun A tZ Tq f u J AND ME 'U.G1'il The Aichi Irrigation Public Corporation

Corporation as a governmental agency under the general jurisdiction of the

appointed by the Minister of Agriculture and Forestry and up to five

are well qualified and competent

sufficient powers for carrying out its program It is authorized to borrow from the International Bank and from the Central Government or other banking institutions

23 The Corporation maintains separate financial accounts and its

anmual budget must be approved in advance by the Ministry It is expected

to be non-profit making and self-liquidating through an elaborate system

suoh repayments

Consultants

terms of reference are adequate for proper execution of the works under their

with the concurrence of the Bank He is well qualified for this work

Arrangements for the employment of additional irrigation consultants have not yet been completed but are being negotiated

Contracts

25 Works The works under the project will be contracted on the basis

of competitive bidding and after evaluation and recommendations of the

the discharge points of the secondary canals, will subsequently be operated

by the Cornoration

26 Municipal Water Supply Arrangements for the Aichi Prefecture to construct (with funds provided by the Corporation) and operate potable and industrial water Lacilities are made under a contract of March 19, 1956

of the proportionate share of the Corporation's investment (at 6.5% over 20 years), and operating and maintenance expenses

27 Electric Power A contract of December 24, 1956 between the

Corporation and the Kansai Power Company makes similar arrangements in

regard to electric power except that interest on the Corporationts investment

is at 7.*5

28 Irrigation Legallv binding arrangements for construction and

operation of irrigation facilities beyond the ends of the secondary canals taRke the form of Articles of Association for the Aichi Irrigation Land

Improvement District and two smaller districts covering the area benefited

powers over all farmers as more than the necessary two thirds majority have given .th.eir written- consent to cooperate The Associations are liable to

apport-ioned to farmers and payments so levied are collected under compulsory powers

and techn-ical supervision of the Prefect-iura! Government through its Aichi

of these bodies has been esta"biihed to coordinate the work

Detailed cost estimates for the Makio Danm, spillway and main canal

and prices in Japan on comparable work and were reviewed and checked

construction, is Yen 36,500 million ($101 million equival'ent) There is a

dollar component of $7 million, which represents machinery ($4.4 million)

($10.5 million equivalent) This covers margins of 4% against possible

increases in local currency price levels plus 12% on works items against

unexpected construction difficulties

7

sectors - agric lture, water -upply &nd pr T-is " n Jocation Is based

on the concept of "justifiable investment" or ability to pay Under this cost of the project, municipal water 12.3% and power 6.3%

RErT UIRT1 IAR7 1TIM C' A KT C' fQ.TTnflfTIC' fTl 1'r'TAW! A T.¶ '

period, which ends December 1960 and prior to realization of the residual va"lue of the construction equipment, are estimated at Yen 38,398 million ($106.6 equivalent) The fund procurement plan provides for only Yen

36,415 million ($101.1 equivalent) This is because the Government is not prepared to commit funds in advance to cover the full margin for

contingencies which the Bank considers prudent (paragraph 32)

It is proposed, therefore, to obtain the undertaking of the Government that such funds as are necessary to complete the project will be provided

35 Funds are to be provided as follows:

Figares in Millions

Loans

National Trust Fund Bureau and

36 The Government will contribute Yen 13,750 million as subsidy but only Yen A-6nO million of this amount will he prrvided during the

con-struction period

37 The Aichi Corporation is eligible to borrow from the National Trust

T.bmnl Pairpnii ir1por t.P-nm of t.hni Tt Win ln Tsaw n+ C 9A i ntp-rp-q+ rt-nAnnrhl a

of Finnnnce reserves the right, h-wever, to provide money from nother soure"

if needed

38 In the original calculations most of the local currency requirement,

4% interest from U.S P.L 480 surplus commodity transactions Decision of the Japanese Goverrent, ear-ly in 1957, to disconti-nue the pP.T 402

agreement reduced the amount which could be allocated to this project to

vYen ,-, 6 m-1 f illion