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Armenia: Addressing the Economic Crisis by Creating Jobs and Conserving Water

Addressing the Economic Crisis by Creating Jobs and Conserving Water

Improving the Irrigation Infrastructure and Creating Employment Opportunities in Armenia


Synopsis

With IBRD funding and expertise, the Irrigation Rehabilitation Emergency Project (IREP) is helping Armenia improve its irrigation infrastructure to provide reliable irrigation water services on about 36,000 hectares to more than 130,000 people who derive their income from agriculture. Irrigation rehabilitation activities have so far generated more than 11,000 jobs, an extremely important benefit for an economy severely hit by the 2009 financial and economic crises.



Challenge

The Bank has been supporting the rehabilitation of the irrigation and drainage (I&D) infrastructure and institutional development process in the subsector in Armenia since 1995. While much had been achieved, irrigation rehabilitation investments in Armenia remained important. As a result of the 2009 economic and financial crises, unemployment rose sharply, as many mines were closed or slowed down, construction activity dropped by 56 percent in the first five months of 2009 compared to the same period in 2008, and migrants working abroad returned home due to the lack of employment opportunities outside the country.


Approach

The need for short-term employment stimulation through labor-intensive infrastructure projects has once again drawn attention to the I&D sector, especially because rehabilitation work on the main irrigation canals could be carried out only during the winter (the off-irrigation season), when other construction activities are impossible and unemployment is the highest. The IREP aimed to improve water use efficiency in two selected irrigation schemes while fostering immediate rural employment. These objectives were achieved by rehabilitating two main irrigation canals to reduce water losses and providing limited assistance to strengthen the institutions managing the irrigation infrastructure. To boost employment and reduce poverty as quickly as possible, the Government and the Bank chose as its criteria: (i) areas where Millennium Challenge Corporation (MCC) preliminary designs were ready to go; (ii) areas with increasing unemployment due to the financial crisis; (iii) schemes with sufficient economic returns to justify the investment; and (iv) systems with no complex social or environmental ramifications. The project also used construction approaches that maximized labor inputs without sacrificing construction quality and integrity.


Results

  • A full 89.4 km of all identified sections of the Armavir and Talin main canals were rehabilitated in 2010–11, reducing water losses between primary intake and secondary structure interface on average of about 15–16 percent (from about 22.5 to some 6–7 percent).
  • An estimated 7,000 hectares can potentially be returned to irrigation.
  • All 44 operating Water User Associations (WUAs) have developed business plans, which were nonexistent in November 2009 at the launch of the project.
  • In 2010–11, irrigation rehabilitation activities generated 11,379 man-month temporary jobs, instead of the expected 9,000. The value of wages generated by this temporary employment is estimated to be approximately US$5.4 million, as compared to the expected US$4.5 million.
  • About 1,200 additional agricultural jobs were created during the 2010–11 agricultural seasons. An estimated 1,200 more agricultural jobs are expected to be generated in the two years following project completion, when higher-value crops will replace those of lower-value.

Bank Contribution

The total project cost is US$57.93, of which the IBRD provided US$30 million under the original project and US$18 million under the additional financing approved in 2011. The Government counterpart funding is US$9.93 million.


Partners

The Bank team had developed a long-standing partnership with the MCC, which was initiated in 2005 under an earlier irrigation project. Technical designs for the rehabilitation of all systems were prepared under the MCC program. In close discussions between the MCC, the Government, and the Bank, two schemes—the Talin and Armavir primary canals—were identified for the IREP. Technical designs made available by the MCC formed the basis for the project. Other technical designs developed by the MCC were used to scale up and geographically expand IREP activities under additional financing.


Moving Forward

Additional financing of US$18 million has been effective since December 13, 2011. A follow-up irrigation project of US$22 million will continue the reforms already started and focus on strengthening the WUAs as key institutions for ensuring sustainability in the sector. A larger focus will be placed on water management issues, including the wider use of modern irrigation techniques and a more efficient use of water, which may help to reduce water delivery costs and contribute to financial sustainability in the irrigation sector.


Beneficiaries

Fifty-one communities in Armenia’s Armavir marz (province), populated by more than 130,000 people, including 49,000 women, and consisting of about 32,500 households, of which1,300 are headed by female water users, benefitted from the infrastructure improvements. More water availability necessitated an increase in the irrigated areas, resulting in an addition of approximately 1,200 rural jobs in the 2010–11 agricultural seasons. Vrezh Yeghikyan, a farmer from the Berkashat village (Armavir marz), noted: “For the farmers of the region, this project was the best investment over the last 70 years.”

 

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