Document of The World Bank

Report No: 34697

IMPLEMENTATION COMPLETION REPORT(SCL-40500)

ON A

LOAN/CREDIT/GRANT

IN THE AMOUNT OF US$186.5 MILLION

TO THE FEDERAL REPUBLIC OF

MEXICO

FOR A

WATER RESOURCES MANAGEMENT PROJECT

December 21, 2005

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 11, 2005)

Currency Unit = Mex $1 = US$ 0.0937

US$ 1 = Mex $10.676

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMSAAA Analytical and Advisory ActivitiesASDSO Association of Dam Safety OfficialsBCHYDRO British Columbia Hydro International LimitedBTEX Benzene, toluene, ethylbenzene, xyleneCCA Mexican Center for Atmospheric Sciences (Centro de Ciencias de la Atmósfera)CFE Federal Power Commaission (Comisión Federal de Electricidad)CLICOM Climate Computing Data Management Program of World Meteorological OrganizationCNA National Water Commission (Comisión Nacional del Agua)COE United States Army Corps of EngineersCOTAS Comités Técnicas de Aguas Subterráneas (Technical Aquifer Committee)CT Technical Consuhancy (Consultivo Tecnico)DBMS Data Base Management SystemDCP Data Collection PlatformEC Environment CanadaEPA United States Environmental Protection AgencyESP Extended Streamflow PredictionFAO Food and Agriculture Organization. United Nations AgencyGAS Groundwater Group (Gerencia de Aguas Subterraneas)GASIR Surface Water and River Engineering Group (Gerencia de Aguas Superficiales e Ingenieria de Rios)GF Financing Group (Gerencia de Financiamiento)GIS Geographic Information SystemGOM Government of MexicoGOES Geostationary Operational Environmental SatelliteGPS Geographical Positioning SystemGSCA Water Quality and Sanitation Group (Gerencia de Saneamiento y Calidad del Agua)GSMN National Meteorological Service (Gerencia del Servicio Nacional de Meteorologia)IBRD International Bank for Reconstruction and DevelopmentICB International Competitive BiddingICOLD International Commission on Large DamsIDSP Irrigation and Drainage Sector ProjectII Mexican Engineering Institute (Instituto de Ingenieria)IMTA Mexican Water Technology Institute (Instituto Mexicano de Tecnologia del Agua)INEGI National Institute for Geographic and Informatic Statistics (Intituto Nacional de Estadistica Geografia E Informatica)INM National Meteorological Institute, Spain (Instituto Nacional de Meteorologia, Espatta)LAN National Water Law (Ley de Aguas Nacionales)

MET British Meteorological OfficeNAFIN National Finance Institution, SNC (Nacional Financiera, Sociedad Nacional de Credito)NCB National Competitive BiddingNDSP National Darn Safety ProgramNP New PesosNOAA/NWS United States National Oceanic and Atmospheric Administration/National Weather ServiceNWSRFS National Weather Service River Forecast SystemOFMIN On-Farm and Minor Irrigation Networks Improvement ProjectOIE French International Water Office (Office Internationale de l'Eau)PMS Project Management SystemPROMMA Programa para la Modernización del Manejo del AguaQC/QA Quality Control/Quality AssuranceREPDA National Public Water Rights Registry (Registro Publico de Derechos de Agua)SECODAM Ministry of the Comptroller and Administrative Development (Secretaria de Contraloria y Desarrollo Administrativo)SHCP Ministry of Finance and Public Credit (Secretaria de Hacienda y Cródito Publico)SHEF Standard Hydrological Exchange FormatSIGA Water Geographic Information System (Sistema Geografico de Información del Agua)SGA Administration General Subdirectorate (Subdirección General de Administración)SGAA Water Administration General Subdirectorate (Subdirección General de Administración del Agua)SGP Planning General Subdirectorate (Subdirección General de Programación)SGT Technical General Subdirectorate (Subdirección General Tecnica)SEMARNAP Ministry of the Environment, Natural Resources and Fisheries (Secretaria de Medio Ambiente, Recursos Naturales y Pesca)SOE Staternent of ExpensesSOP Standard Operating ProcedureSWSSS Second Water Supply and Sanitation Sector ProjectTOR Terms of ReferenceUNDP United Nations Development ProgramUSBR United States Bureau of ReclamationUSGS United States Geological SurveyWMO World Meteorological Organization, United Nations AgencyWRMP Water Resources Management Project

Vice President: Pamela CoxCountry Director Isabel GuerreroSector Manager Abel Mejia

Task Team Leader/Task Manager: Douglas Olson

MEXICOWater Resources Management Project

CONTENTS

Page No.1. Project Data2. Principal Performance Ratings3. Assessment of Development Objective and Design, and of Quality at Entry4. Achievement of Objective and Outputs5. Major Factors Affecting Implementation and Outcome6. Sustainability7. Bank and Borrower Performance8. Lessons Learned9. Partner Comments10. Additional InformationAnnex 1. Key Performance Indicators/Log Frame MatrixAnnex 2. Project Costs and FinancingAnnex 3. Economic Costs and BenefitsAnnex 4. Bank InputsAnnex 5. Ratings for Achievement of Objectives/Outputs of ComponentsAnnex 6. Ratings of Bank and Borrower PerformanceAnnex 7. List of Supporting DocumentsAnnex 8. Project Accomplishments and Results

Project ID: P007713 Project Name: Water Resources Management ProjectTeam Leader: Douglas C. Olson TL Unit: LCSERICR Type: Core ICR Report Date: December 21, 2005

1. Project DataName: Water Resources Management Project L/C/TF Number: SCL-40500

Country/Department: MEXICO Region: Latin America and the Caribbean Region

Sector/subsector: Central government administration (88%); Water supply (12%)Theme: Water resource management (P); Pollution management and

environmental health (S); Decentralization (S); Natural disaster management (S); Environmental policies and institutions (S)

KEY DATES Original Revised/ActualPCD: 06/08/1994 Effective: 03/27/1997 03/27/1997

Appraisal: 04/01/1995 MTR: 04/30/1999 02/19/1999Approval: 06/20/1996 Closing: 06/30/2002 06/30/2005

Borrower/Implementing Agency: GOM/CONAGUAOther Partners:

STAFF Current At AppraisalVice President: Pamela Cox Shahid Javed BurkiCountry Director: Isabel M. Guerrero D-M Dowsett-CoiroloSector Manager: Abel Mejia Theodore F. NkodoTeam Leader at ICR: Douglas C. Olson Douglas C. OlsonICR Primary Author: Douglas C. Olson

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective: 3.1.1 The Water Resources Management (PROMMA) project’s general objectives are to: (a) promote conditions for environmentally sustainable, economically efficient and equitably allocated use of water resources in Mexico; (b) support the integrated comprehensive management of water resources; and (c) increase the benefits and reduce the risk related to existing hydraulic infrastructure.

Secondary project objectives are to: (a) support groundwater conservation; (b) promote the restoration of surface water quality; (c) improve meteorological services for improved water management and for the society and economy as a whole; (d) reduce flood damages downstream of reservoirs; (e) improve dam safety; (f) improve allocation of water as an economic good; (g) promote decentralization of water resources management through the establishment and strengthening of river basin councils; (h) improve water resources planning through the development of the hydrographic region plans with river basin council participation; and (i) improve water rights administration through registry of water rights users and improved fee collection.

The project’s objectives were responsive to the Government’s development priorities, highly important from both a country and sector perspective, and consistent with the Bank’s Country Assistance Strategy (CAS) and global Water Sector Strategy. The project was designed to assist Mexico to face major critical challenges in water resources management: (i) the location of population and economic activity were inversely related to the availability of water; (ii) expanding use of surface water resources was reaching its limit; and (iii) overexploitation of groundwater resources was a major problem, with the level of overexploitation of 100 aquifers amounting to 6 billion m3/year. The project supported the Government of Mexico’s water resources policy as presented in the National Water Plan 1995- 2000 (Programa Nacional Hidraulico 1995 - 2000) which aimed to ensure the availability of water to satisfy the needs of the population and promote economic development in an environmentally sustainable manner. In addition, it supported the implementation of the new legal framework and policies contained in the National Water Law (Ley de Aguas Nacionales, LAN) approved by the Congress in December 1992 and in the law’s regulations promulgated in January 1994. The LAN was modified in 2004 in order to strengthen decentralized and deconcentrated integrated water resources management (IWRM) at the river basin and aquifer levels.

The project’s objectives were consistent with the Country Assistance Strategy for Mexico presented to the Board on May 22, 1995 (Report No. 14518-ME) as discussed more fully in Section 3.5. Also, its objectives were in-line with the Bank's Water Sector Strategy and commitment: "...to focus its efforts on countries where significant problems exist or are emerging involving water scarcity, service efficiency, water allocation, or environmental damage" (Water Resources Management: A World Bank Policy Paper, Washington DC, September 1993 at p. 21). Water scarcity conditions in Mexico effectively mirrored those of primary interest for the Bank's policies.

The formulation of the project’s general objectives was very broad and ambitious, but clear. The

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specification of the secondary objectives was more concrete, and responded to the support requested from the Bank to finance key activities under the main priorities outlined in the 1995-2000 National Water Plan. These activities had different levels of specificity and the fact that some could be considered outputs while others related to impacts. An annex table in the SAR presents clearly the relationship between the general and secondary objectives. The project’s objectives were extremely demanding, complex and risky implying: (i) a fundamental change in “mindset” and CONAGUA’s institutional culture regarding water resources in line with the principles outlined in the LAN and complementary regulations, (ii) an institutional transformation for CONAGUA away from its centralized and infrastructure focused approach to a decentralized, integrated approach to water management which involved transfer of key functions and responsibilities to water users in irrigation districts. To a large extent the complexity and risk is inherent to the challenging approach of integrated water resources management, for which this was the first project supported by the World Bank that included a wide gamut of aspects related to IWRM. Taking this into account, the most obvious weakness was the expectation of producing significant measurable impacts within the relatively short period of 6 years (e.g., reducing water contamination and reduction of overexploitation of groundwater) while the fundamental processes of collecting basic information, consolidating new entities for water management, and training were just beginning. Fortunately, as indicated below, this was recognized during the mid-term review (MTR) and these impact indicators were eliminated and more realistic ones were added.

3.2 Revised Objective:The objectives did not change. However, the indicators for measuring achievement of the objectives and outputs were formally modified in January 2002 simultaneously with a two-year extension of the loan’s closing date and cancellation of US$40 million. These modifications took into account the longer implementation period and reduced cost. They included: revision of some of the numerical targets, greater precision in definition of some indicators, and addition of new indicators in particular for the new component added in 1999. Impact indicators related to reductions in overexploitation of groundwater, reductions in water contamination and reductions in downstream damages from reservoirs were eliminated at the mid-term review (formalized in 2002 amendment), recognizing that because the project did not include investments necessary to achieve these impacts, it would not directly be able to directly affect them.

3.3 Original Components:The project’s five components, described below, were designed as an integrated set of actions and activities to support integrated water resources management (IWRM) and the achievement of the project’s development objectives.

Component 1: Institutional Development, Technological Support and Training (US$37.6 million, 11% of total cost). This component supports development of the institutional and organizational structure and the training of human resources necessary to carry out and oversee the water resources management functions during and after project implementation. This component finances goods, services, training and consultants to support water resources planning and management activities at all levels of CONAGUA and to improve the technological resources and professional skills of CONAGUA staff.

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• Sub-component 1.1 Technical Assistance (US$11.4 million) includes technical assistance from international and national organizations and consultants. The assistance is provided on-the-job, with experts working directly with CONAGUA technical personnel in the development, introduction and implementation of technology in the day-to-day programs of the various technical areas within CONAGUA.• Sub-component 1.2 Training (US$16.9 million) consists of courses, workshops, technical stays in international institutions, and masters and Ph.D. programs. In most cases, the training consists of courses and programs that are offered by existing institutions, although some customized training is provided. The Mexican Water Technology Institute (IMTA) is involved in various aspects of the subcomponent and other parts of the project as defined in an agreement with CONAGUA.• Sub-component 1.3 Project Coordination (US$9.3 million) includes the equipment, consulting services and travel expenses necessary for the coordination of the Project at the central and regional levels.

Component 2: Water Quantity and Quality Monitoring Improvement and Assessments (US$150.0 million, 44% of total cost) supports the updating, improvement and upgrading of the hydrological and hydrogeological water quality and quantity monitoring and related climatological/meteorological networks, including telemetric networks to provide real-time information in order to improve the quality of information for better and more efficient water resources management. It improves data collection, processing and dissemination among users. Assessments of surface and groundwater bodies and hydrological and hydrogeological studies will also be prepared. • Sub-component 2.1 Meteorological Services (US$41.2 million) supportsthe National Meteorological Services Management Unit (GSMN) in the goals of improving the collection, analysis, and synthesis of data related to atmospheric phenomenon in order to provide meteorological and climatological information and predictions to other parts of CONAGUA, other agencies and to the general public. The improvements in weather forecasting will benefit water management and the Mexican society and economy as a whole.• Sub-component 2.2 Hydrologic Assessment and Monitoring (US$38.8 million)The subcomponent supports the Surface Water and River Engineering Management Unit (GASIR)in the goals of: (a) developing and providing adequate data (water level, discharge, rainfall, evaporation, sediment transport and reservoir monitoring) at national, river basin and state levels, using appropriate technology (distributed data base) within the context of a sustainable network; (b) providing near real-time information from at least 50% of the monitoring network, in particular rainfall, stream-flow and reservoir data;(c) integrating the information collected into reports and other appropriate instruments for water resources planning and to support decisions; and(d) establishing a team of trained specialists covering all the technologies used in water resources and related monitoring, such as forecasting techniques, hydrological models, estimation of rainfall from satellites and radars, etc., as well as the supporting computer technology.• Sub-component 2.3 Groundwater Assessment and Monitoring (US$25.6 million)supports the activities of the Groundwater Management Unit (GAS) and aims to quantitatively and qualitatively assess and monitor the 144 most important aquifers of Mexico. These include 70 overexploited aquifers, 60 aquifers in fragile equilibrium of exploitation vs. resources, and 14 with

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high potential for future resource development. All the groundwater management data and information derived from the assessment studies and the monitoring system to be implemented under the project will be managed by the Groundwater Information System which will be an integrated part of the sub-component.• Sub-component 2.4 Water Quality Monitoring and Laboratories (US$44.4 million)supports the activities of the Water Quality and Sanitation Management Unit (GSCA) and has the objective of redesigning and implementing a water quality program that will provide only data that meet specific management needs, are cost-effective, and represent the types of modern environmental issues that now face Mexico (e.g. toxicity). The sub-component supports the establishment of monitoring networks, water quality laboratories including a National Reference Laboratory, water quality assessments and a Water Quality Information System.

Component 3: Reservoir Operation, Dam Safety and Aquifer Management Improvement (US$41.2 million, 12% of total cost) supports efforts to improve reservoir operation functions during flood events; reservoir operation and aquifer management functions during normal and drought conditions; and dam safety related programs. It also aims to improve flood forecasting and warning systems, as well as planning for structural and non-structural flood protection measures. • Sub-component 3.1 Reservoir Operation (US$14.2 million) supports the activities of the Surface Water and River Engineering Management Unit (GASIR) and aims to improve reservoir operation to maximize the benefits derived from the operation of existing hydraulic infrastructure by increasing water availability, reducing the adverse consequences of floods and droughts, and improving hydropower generation, while ensuring environmental protection and where possible enhancement. • Sub-component 3.2 National Dam Safety Program (US$18.6 million) supports the activities of the Technical Consultancy Management Unit during the first phase of the national dam safety program.• Sub-component 3.3 Aquifer Management Improvement (US$8.3 million) supports the activities of Groundwater Management Unit (GAS) and includes studies of groundwater resources management, aquifer protection, and stabilization of overexploited aquifers, and the implementation of groundwater resource optimization models.

Component 4: Water Rights Administration (US$41.4 million, 12% of total cost) will supportthe activities of CONAGUA's General Subdirectorate for Water Administration (SGAA) in the establishment and maintenance of the national water rights registry (REPDA) and water user assistance, and in water use and discharge fee collection and control. The improved water rights administration would facilitate the establishment of dynamic tradable water rights systems (water markets).• Sub-component 4.1 National Public Water Rights Registry and Water User Support (US$11.2 million) supports the modernization of the REPDA with a series of activities including: (a) the improvement of the registry operation, including software development for registry data processing; (b) the development of procedures for the processing of all registry data for overall checking of the national water rights; (c) the decentralization of the system at the river basin level; and (d) information diffusion and easy access to registry data by the public.• Sub-component 4.2 Water Fee and Discharge Fee Collection and Control Service

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(US$30.2 million) supports modernization of this service to include: (a) a study to develop a global assessment of the population of users and polluters; (b) a study of technology development for water withdrawal and pollution discharge measurement for fee collection and control, followed by a pilot project; and (c) a water use and discharge measurement inspection program.

Component 5: Water Resources Planning and Information Systems (US$71.7 million, 21% of total cost) supports the activities of Planning General Subdirectorate (SGP) including: (a) establishment and strengthening of river basin councils, based on the consensus of the councils members on action programs for the improvement of the water resources management and the environmental enhancement in their basin; (b) development of regional water resources planning studies for the 13 hydrographic regions; (c) updating of the Regional Water Plans and the National Water Plan; (d) prospective studies of integrated water resource management; (e) development and implementation of a CONAGUA wide telecommunications and computer network and local networks at the central and regional offices; and (f) development and implementation of geographic information system technology. • Sub-component 5.1 Water Resources Planning Studies and River Basin Council Support (US$16.5 million) supports regional and national planning which will include the following stages: (a) diagnostic of present situation; (b) preparation of scenarios for the medium and long term; (c) formulation of objectives and alternative strategies, evaluation and recommendations; and (d) preparation of the Regional and National Water Plans with the participation of the river basin councils and attention to environmental implications as they relate to water resources. It also includes component activities (b) and (d) cited above.• Sub-component 5.2 Telecommunications and Computer Networks and Geographical Information Systems (US$55.2 million) supports activities (e) and (f) cited above.

The project’s components were reasonably related to achieving the project’s objectives. They directly supported various subdirectorates in CONAGUA (Planning, Water Rights, Technical) and the coordination between the subdirectorates in carrying out IWRM. Recognizing the need for new staff and additional funding to “modernize” CONAGUA, the project design included these provisions which were fully discussed with the Mexican government during preparation and negotiations. The project built on the lessons of the Bank’s 25 year involvement in Mexico’s water sector (see section 3.5). However, this was a pioneering project—one of the first Bank supported projects for IWRM—and, therefore, there was limited worldwide experience to draw on. 3.4 Revised Components:The project was restructured in 1999 after the mid-term review. The MTR brought a more focused attention to a smaller set of very important technical issues such as aquifer over-exploitation and to the introduction of newer approaches to measure evapotranspiration as the best indicator to allocate water at the basin level. The original components were not revised, but some refinements were made to the description of activities to be financed. In addition to these refinements, a new component, Aquifers Conservation Pilot Project (MASAS) of US$0.5 million was added formally to the project via an amendment of the loan agreement in May 1999 The MASAS component aimed to support the initiation of water resources planning in critical overexploited aquifer areas, in order to take advantage of improved institutional mechanisms, information systems and technical capacities that PROMMA was supporting and to further

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promote decentralized, participatory IWRM. The amended loan agreement indicated it would do the following:

• Sub-component 6.1 Raising of awareness among water users regarding sustainable aquifer management in selected overexploited aquifers, as well as establishment and strengthening of Groundwater Technical Committees (COTAs) and local CONAGUA staff, all by conducting public information campaigns, carrying out training and capacity building initiatives for COTAs and CONAGUA regarding aquifer management, setting up information dissemination systems and supporting the creation of mechanisms for financial sustainability of the COTAs.• Sub-component 6.2 Setting up adequate monitoring and information systems in the selected aquifers to create the conditions for their sustainable management by implementing monitoring networks, developing and monitoring socio-economic, environmental and hydrogeological indicators, conducting baseline studies and implementing a technical information dissemination system.• Sub-component 6.3 Provision of support for the elaboration and implementation of demand management options to promote more efficient water use and aquifer stabilization by carrying out studies and promoting decision making among water users in areas such as water savings programs, water tariffs, expansion of water markets and reallocation of water rights.• Sub-component 6.4 Provision of support for the elaboration and implementation of investment plans by conducting studies, preparing designs and implementing structural options (including civil works) for enhanced aquifer water management.

3.5 Quality at Entry:The project’s quality at entry is considered satisfactory. It was and remains consistent with both the priorities of the GOM and the Bank’s Country Assistance Strategy, and incorporated lessons from previous Bank involvement in the sector. The strategy aimed at assisting Mexico to manage the ongoing economic/financial crisis while continuing to support longer range programs that contribute to reductions in poverty, environmental improvements and long term sustainable growth and development, particularly through investments in human resources, infrastructure and natural resource management. The strategy also aimed to extend the reform process downward to regional and state levels and support the further devolution of expenditures and responsibilities to these decentralized levels. Working within this strategy, the proposed project was specifically aimed at developing capacities to decentralize and improve water resources management functions, address environmental and water management issues at the river basin level, monitor and manage water quality and quantity. As indicated earlier, it directly supported the implementation of the government’s National Water Plan 1995-2000 and the water law. In April 2004, a modified LAN was promulgated which reinforced and deepened the legal and institutional framework introduced in the 1992 law for deconcentrating and decentralizing integrated water resources management at the river basin and aquifer levels. This is an indication of the continued relevance and importance of the project to the Mexican government’s water policies and priorities.

The project design incorporated lessons learnt from previous Bank involvement. The Bank has extensive experience in financing water projects in Mexico for over 25 years though the water-resources-management-type project is somewhat still new in the Bank. In fact, as indicated

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earlier, this project was the first to address a wide gamut of aspects of water resources management on a nationwide, multi-sectoral basis. Relevant lessons learned from the last five operations in the Mexican water sector, including preparation of the Irrigation and Drainage Sector Project (Loan 3419-ME, 1991) and the On-Farm and Minor Irrigation Networks Improvement Project (Loan 3704-ME, 1994), were incorporated in the design of this project. Decentralization and privatization of the operation and maintenance functions in the irrigation sector have been very positive and must be encouraged in other areas of water resources use and-management. Other lessons learned and incorporated into project design included: (a) ensuring CONAGUA ownership of all aspects of the project during preparation and through implementation;(b) introduction of adequate technologies and operation and maintenance procedures for field monitoring networks; (c) early development of relevant manuals and guidelines; (d) capacity building in water management at the central and regional levels; (e) training staff at all levels in modern water management methods and technologies; (f) ensuring coordination and integration of the various parts of the project into an integrated comprehensive whole through river basin planning and management and (g) ensuring substantial stakeholder participation through improved communications.

The project also paid sufficient attention to and adequately addressed environmental and social issues, and the Bank’s safeguard policies. Because the project was not financing any new infrastructure development or increased water extraction in any of the project areas, no major environmental issues surfaced during project preparation. It was anticipated that the project would enhance environmental quality through contributing to the alleviation of some of over-exploitation and contamination of water resources in Mexico.

The overall project quality at entry is considered to be satisfactory because it followed the main priorities outlined by the LAN and in the the 1995-2000 National Water Plan strategy in which the Bank team help through the dialog carried out during the preparation of the project. It included learning by doing approach since this was the first project to address IWRM in a country with a rich experience in water management but still with many difficult challenges. . However, in hindsight, there were some shortcomings and limitations in the project design. The project design was overly optimistic and ambitious in its estimation of achievable outputs and outcomes. Since the project supported improved capacities, knowledge and information systems, but did not include many infrastructure investments, it was not realistic to expect that the project would directly result in reductions of surface and groundwater overexploitation, and water quality improvements. This was corrected during the MTR when it was agreed to remove these impact indicators and add others more suitable for measuring the project’s impact. In addition, project implementation schedules should have been more realistic. The SAR highlighted three risks: (i) reforms in CONAGUA were underway at the same time as project implementation; (ii) uncertainty regarding budget allocations; and (iii) CONAGUA’s 13 newly established (using river basin criteria) regional offices would be responsible for implementing a substantial part of the project, while they were in the process of acquiring technical and operational capacity. Each of these risks materialized and the mitigation measures proved insufficient to avoid some negative impacts on the project’s implementation (see section 5.2).

4. Achievement of Objective and Outputs

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4.1 Outcome/achievement of objective:The project’s outcome is considered satisfactory. Achieving sustainable water resources management is a long-term goal which requires continuous effort beyond the lifetime of this project. The most important contribution of the project was in establishing a sound foundation and improving some of the basic conditions for sustainable water resources management in Mexico.

Although many obstacles and difficulties were encountered during the implementation of the project, it is clear that PROMMA supported major improvements that are essential building blocks for IWRM. Annexes 1 and 8 (Annex 1 presents selected overall indicators related to project achievements as revised in the Implementation Letter attached to the January 17, 2002 amendment letter to the Loan and Guarantee Agreements and Annex 8 presents a more qualitative assessment of project achievements) include numerical and qualitative indicators related to project outputs and outcomes. In general the project supported: (a) improvements in the timeliness, accuracy and availability of meteorological, hydrological, hydrogeological information related to both the quantity and quality of water; (b) improving the stakeholders’ and water users’ knowledge related to water availability and use, and their access to information; (c) increasing water user and other stakeholder participation in river basin and aquifer-level water resources planning and management; (e) establishing participatory river basin and aquifer institutions; and (f) establishing a complete national water rights system to provide legal certainty to water users. An added important benefit is that the project supported the complete modernization of CONAGUA’s computer and telecommunications system. The project objectives remain relevant in that they support the Government’s current strategy which includes continued implementation of the 2004 modified LAN and further promotion of decentralization and integrated water resources management for economic and social growth. The 2004 CAS identifies sustainable environmental and natural resources management as one of the key areas for the Bank’s continued support to Mexico. Water resources management is considered the most pressing environmental problem and is therefore strongly emphasized in the 2004 CAS. An important follow on project to PROMMA called Integrated Management of Basins and Aquifers (GICA) is under preparation and would be directed towards IWRM improvements in critical basins and aquifers in the northern and central part. GICA would not be possible without the water rights systems, monitoring networks, water quantity and quality assessments, hydro-geologic models, River Basin Counsels Aquifer Committees and preliminary aquifer management plans developed under PROMMA. The project was consistent with the 1995 CAS which emphasized the support of long range programs including environmental and natural resources management with regional, state and municipal participation.

Specific project objectives:

Promote conditions for environmentally sustainable, economically efficient and equitably allocated use of water resources in Mexico, and support of integrated comprehensive management of water resources. Through the activities undertaken, some of the major benefits derived include: (i) assistance in the decision-making process for the administration and management of groundwater (political definitions, development of stabilization planning,

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conservation and sustainable exploitation, transparency in the availability of information on aquifers, avoidance of unsustainable exploitation; (ii) improvements to legal certainty for users of national water and inherent assets and transparency in the administration of water rights; (iii) provision of support in decision-making for the assignment and planning of water resources development and contamination control; and (v) consolidation of a water rights base for the proper operation of markets and water banks. An incipient water market has been developed and water transfers, which reached over 300 million m3/year in 2004. This would not have been possible without the water rights administration system that was developed under the project. Thirty one River Basin Councils were established and 16 of which are considered to have assumed responsibility for water resources management decision making. Twenty five aquifer committees of the 70 established are actively focusing on and dealing with critical water resources management issues in their areas. Two hundred and two aquifers have had there water availabilities published in the national register, which is a required first step to be able to legally reduce water usage to sustainable levels. Forty three water bodies have been classified with plans developed for water quality improvement. Five critically overexploited aquifers have preliminary management plans prepared with the participation of water users CONAGUA and state governments. Thirty seven river basin plans have been prepared with the participation of water users and state governments. A National Water Plan 2001 - 2006 has been prepared. A complete National Water Rights Registry has been implemented which covers an estimated 95% of all water use in the country.

Increase the benefits and reduce the risk related to existing hydraulic infrastructure. Benefits include assistance to CONAGUA regarding the decision-making processes for : a) planning, design and operation of reservoirs and hydraulic projects, and of hydrologic forecasting in priority watersheds (Bravo, Fuerte, Yaqui and Panuco rivers), b) investment optimization and reduction of impacts due to damage from extreme events. Six modern hydrologic forecasting systems are operational in 6 critical flood prone basins. Accurate 96-hour whether forecasts are now available for critical basins. A National dam registry has been developed and over 2000 dam safety inspections have been carried out.

More details on the activities undertaken, the outputs, results and benefits are presented in Annexes 1 and 8.

Although PROMMA has contributed to major improvements in the various fundamental aspects necessary to achieve IWRM and overexploitation and pollution have improved in some areas, it is important to point out that the water resources problems in many areas have not been reversed due mainly to continued population and economic growth. Achieving sustainable IWRM while continuing to have adequate socioeconomic development is an arduous long-term goal that requires major continued support from government and civil society. Examples of successful IWRM are few and far between even in the developed world. To reach this goal in the coming years, GOM will need to give high priority, dedicate major resources, and make major painful adjustments in sectoral policies. With the 2004 modified LAN and the foundation provided through PROMMA, Mexico is in a unique position in the developing world to really be able to do it.

4.2 Outputs by components:

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Component 1: Institutional Development, Technological Support and Training (US41.6 million, 110% of appraisal estimate)Implementation of this component has been satisfactory. This component supported training and capacity building and project management. A highlight of the project was the constant technical assistance provided by the World Meteorological Organization that provided top-quality specialists and experts both international and national in all aspects of the project. These experts produced over 150 specific technical reports with practical recommendations on all aspects of the project. These reports were widely disseminated within CONAGUA and also outside and provide a wealth of knowledge that will be a significant benefit into the future In addition WMO carried out annual evaluations of the project which were very detailed and offered numerous recommendations for improvements of different aspects of project implementation. The Mexican Water Technology Institute provided significant support to many different aspects of the project and also produced numerous excellent reports and studies that are a continuing benefit.

River Basin Councils and Aquifer Committees were given training in different aspects of water resources management and institution building. Eighty courses benefiting 1,125 persons were provided for training these organizations. There were also numerous training events in other aspects of water resources management provided to CONAGUA personnel. Eleven CONAGUA engineers were provided one year of on-the-job training in France with French basin water agencies.

Component 2: Water Quantity and Quality Monitoring Improvement and Assessments (US80.7 million, 54% of appraisal estimate)Implementation of this component has been satisfactory. The national hydro-climatologic network was redesigned through a consultation process in 31 watersheds. The methodology and the reach of the project was able to cover 70% of the national territory.

The rehabilitation, modernization and improved operation of 5532 climatologic stations, 2359 hydrometric stations was carried out. The radiosounding network was modernized. Seven meteorological radars were rehabilitated and operated and maintained. Major increases in dissemination of whether forecasts through the internet was accomplished. Seventy four automatic hydromet stations were installed, operated and maintained in key river basins and 94 automatic hydroclimatological states were installed, operated and maintained throughout the country. One national reference water quality laboratory and 10 regional water quality laboratories were installed and accredited. Also, 128t groundwater monitoring networks were activated. Sediment monitoring was improved through the establishment five pilot projects.

Information systems were created and strengthened as the SIH, the SIGMAS, the SNICA, the SISP, and databases as the National Bank of Climatological Information (BANADACI), and other systems of information as the SIGA, and of administration as the SIAA. The project also supported the conception, design and implementation of the SIPAO hydraulic programming package.

Component 3: Reservoir Operation, Dam Safety and Aquifer Management Improvement (US$25.7 million, 62.5% of appraisal estimate)

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Implementation of this component has been satisfactory. In 2004, a principal target was to ensure that the successful operation and the complete application of the Systems of Hydrologic Forecasting of the CONAGUA (SPRCONAGUA) was established by the end of the project. This largely involved the migration from the operating system UNIX to the LINUX systems for the computers in four basins (Bravo, Yaqui, Fuerte and Pánuco rivers). The incorporation of the information from the telemetric station to the hydrologic forecasting systems was also carried out. The introduction of the SPRCONAGUA in the basins of the rivers Nazas, Aguanaval, Mayo and Sonora was continued and the necessary activities for the application of the system in the basins of the Sotola, Marina and San Fernando, Tamp has begun.

Regarding the organization of the National Program of Dam Safety (PNSP), the definition of policies and programs has been supported with corresponding guidelines and procedures to guarantee the decentralized functioning of the program. However, with the voluntary retirement or changes to 70% of the PNSP staff during 2003, some valuable human resources were lost.

The National Registry of Dams (RNP) has been installed and extended as part of the Computer System for Dam Safety (SISP). During 2004, 4,050 records of works and more than 13,500 digital files were checked and cleaned. 5 local databases were also recovered for review. Over 2200 dams were inspected and safety remediation needs identified.

The majority of the elements have been established to implement the PNSP and a calculation program was distributed for “simplified hydrological analysis of dams with free discharge spillways (Version 1.0)”. The system of calculation for Hydrological Security for Dams for free and controlled discharges (SHIP version 2.0) and the study “ Practical guidelines to evaluate the influence of the local conditions in the dynamic response of the area ”, which focused on the preliminary analysis of dams were completed.

Studies were performed for groundwater availability and use permitting the classification of 653 aquifer systems, prioritizing 144 out of the 258 that are most heavily exploited in Mexico. Jointly with the advances of REPDA, the publication of water availability in 202 key aquifers was accomplished starting from 2002, which is a key legal step to allow for the restriction of water usage to sustainable levels. Detailed hydrogeological models were developed for 35 aquifers that will greatly facilitate future aquifer stabilization plans and actions.

The application of remote sensing technologies to estimate evapotranspiration was initiated with the purpose of trying and validating these technologies in addressing hydrogeological problems by establishing what is the real evapotranspiración and the net groundwater extraction volumes. The method is being applied, tested, calibrated and adapted, to estimate the components of evaporation and evapotranspiration in the water balances of the Sonora and Yaqui river basins. Appropriate training was also carried out for the application of the model.

Component 4: Water Rights Administration (US$18.1 million, 44% of appraisal estimate)Implementation of this component has been satisfactory. Over 400,000 water uses were registered and issued valid water rights through REPDA. REPDA is now the single official record for water rights, offering certainty and legal basis with transparency and credibility linked with the national

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waters and inherent public goods, including the dissemination of the simplified procedures and products over the Internet. In October, 2004 ISO 9000 quality certification was achieved.

Sampling points and quality parameters were established for discharges in select locations. Over 24,000 inspections of discharges were carried out and sanctions were issued where discharges exceeded parameters.

Component 5: Water Resources Planning Studies and River Basin Council Support (US$55 million, 77% of appraisal estimate)Implementation of this component has been satisfactory. The three planning targets, established originally for this project: (i) the development of 13 regional water plans and strategies; (ii) the preparation of the National Hydraulic Program (PNH);and (iii) pilot analyses of the water resources were all completed satisfactorily. In 2003, a special analysis was made to evaluate goals and proposed targets, since this represented the completion of the mid-term of the National Hydraulic Program 2001-2006, the development of which was supported by the project.

The national water geographic information systems, a massive geographically referenced data management system was developed. This component also supported the complete modernization of CONAGUA’s computer and telecommunications systems. Prior to the project, computer systems were primitive and not interconnected. All technical personnel are now connected to a CONAGUA intranet and the internet. Much of the web page development for CONAGUA was supported by the project.

25 River Basin Councils were established, with the supporting groups for monitoring evaluation, other specialized working groups, as well as more than 70 COTAS and several other commissions and basin committees.

Component 6. Aquifers Conservation Pilot Project. (US$0.5 million, added at mid-term review)Implementation of this component has been satisfactory. In support and as part of the integrated aquifer management project (MASAS), five studies were developed in 2002, 2003 and 2004 for 5 critically overexploited aquifers (Aguascalientes, Coast of Hermosillo, Querétaro, el Bajio of Guanajuato and San Luis Potosi) to explore diverse arrangements for the development, use, and extraction of groundwater in order to reduce overexploitation. These studies were developed in a participatory manner with CONAGUA and other federal agencies, water users organizations and State entities closely involved. Critical water management issues were evaluated and plans for reducing overexploitation were developed.

4.3 Net Present Value/Economic rate of return:During project preparation it was recognized that the nature of the PROMMA project did not lend itself to a standard cost-benefit analysis or a comparison in net present values of project-related increases in the production of goods and services. Annex G of the Staff Appraisal Report did attempt to provide a sense of the fact that PROMMA-type projects result in considerable benefits that although not directly measurable are nevertheless real. The benefits derive from enhancements in the way information is organized and made available to decision making processes. Based on studies and anecdotal evidence from different parts of the world, and

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on the estimate of the economic values associated with different economic activities that can benefit from improved information in Mexico, the SAR attempted to show that PROMMA-type projects result in major benefits. However, attempts to estimate the economic benefits of PROMMA during or after project implementation was not contemplated nor included as a project activity.

4.4 Financial rate of return:Not applicable. As above.

4.5 Institutional development impact:The project’s institutional development impact is considered to be substantial.

Mexico has a long and well established tradition in water resources which started in the 30s when the country began investing heavily in water storage facilities and in groundwater development to expand irrigation to about 6 million Has in 2000, and supply water to the rapidly expanding urban population which grew from around 25 million in 1950 to about 100 million in 2000.

Mexico began to focus on water resources management in the early 70s. In 1972 the Government of Mexico entered into a tripartite agreement with the World Bank and the United Nations Development Program to prepare the 1975 National Water Plan. The resultant Plan provided a basis for water development and management during the ensuing 25 years and has proved to have been valuable in outlining the general direction for these activities. The National Water Plan was farsighted and defined the needs for the construction of new infrastructure and for improvements in water resources management. The National Water Plan identified the following needs in order to improve water resources management: (a) the need to develop and enact a modified National Water Law; (b) the need to establish a national water authority with responsibility for developing and implementing water policy and regulations within a modified National Water Law; (c) the need to carry out integrated water resources planning and management; (d) the need to increase water use efficiency and to restore and improve water quality; (e) the need to improve coordination between different public and private entities involved in water use and management; (f) the need to decentralize responsibilities and promote water user participation in planning and management; (g) the need to introduce pricing and other economic incentives to induce efficient water use and pollution abatement; (h) the need to transfer operation and maintenance responsibilities in irrigation areas to water users; and (i) the need to development research and training programs to support institutional development and improved water resources management. Based on this plan, The National Water Commission (Comision Nacional del Agua – CONAGUA) (the national water authority) and IMTA (Mexican Institute of Water Technology) were established in 1988; the National Water Law (Ley Nacional de Agua – LAN) was promulgated in 1992 and modified in 2004; irrigation and drainage systems were transferred to water user associations and responsibilities related to municipal water systems were transferred to municipalities in the 1990s.

The project (PROMMA) was designed to help address many of the initial issues including improved institutional mechanisms for coordination between stakeholders, improved participatory planning, improved information systems and knowledge related to water resources quantity and

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quality for both surface and groundwater, and the establishment of a complete system of water rights. PROMMA supported all of the necessary elements to provide a firm foundation and platform for moving towards integrated water resources management (IWRM) in Mexico. This project was the first in the Bank to address a complete set of activities related to IWRM. One remarkable feature of the project is that it did not include infrastructure investment but was exclusively designed to support improvements in water resources management. The project was in line with the conclusions of the international water meeting in Dublin and of the Bank’s Water Resources Policy Paper. The Government of Mexico (GOM) requested the Bank’s support on the project in order to continue and deepen the reform began in the 1975 water plan and to be in line with international best practices. The Bank was seen as a key partner because of the long history of support beginning with the 1975 water plan and a series of sectoral projects supporting irrigation and drainage, water supply and sanitation and watershed management. It was particularly recognized by GOM and the Bank that in order to really be able to carry out IWRM it was critical to improve monitoring and assessments of water resources in terms of both quantity and quality, to have a solid water rights system, to carry out water resources planning at the river basin level, and to establish participatory institutions to support water resources planning and management.

During the period of creation and initial consolidation of CONAGUA, 1988-1992, it represented an important experiment in consolidating most aspects of water resources management into one institution, including: policy, water rights administration, planning, irrigation and drainage development, and water supply and sanitation development. In other countries these activities are divided between various institutions and it was believed that consolidating them within one institution would greatly facilitate integration. PROMMA was designed to support various departments in CONAGUA (Planning, Water Rights, Technical) and to support cooperation between the departments in carrying out IWRM. From the beginning PROMMA also was designed to support regionalization and decentralization of water resources management to the river basin level. At the time PROMMA was initiated, CONAGUA was reorganized such that regional offices were defined by hydrologic boundaries and not by administrative (state) boundaries as had been the case in the past. These regional offices although they continue to have weaknesses due to inadequate personnel and other resources, played an important role in project implementation.

Since its inception CONAGUA has evolved into a remarkable institution with many accomplishments and still important challenges that need urgent attention. It is an institution of approximately 16,000 strong staff distributed in all the territory with 13 regional offices and 32 state offices, a budget of about US$1.3 Billion and has a well recognized capacity to respond to natural disasters. Even within CONAGUA, the integration of activities to achieve IWRM is still far from being a reality. CONAGUA faces major challenges: reducing over-exploitation of aquifers, pollution and over-allocation of water rights, implementing effective decentralization, improving efficiency of operations, improving policy analysis and formulation to influence decision making particularly in sectoral policies (like the Tarifa 09 electricity tariff) that are often at cross purposes to sustainable use of groundwater. GOM needs to focus more attention on the political economy dimension. To a certain extent, CONAGUA followed the inertia of the past in terms centralization, excessive dedication to infrastructure expansion, limited attention to O&M,

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lack of coordination of sectoral views, and by tradition limited consideration to policy analysis including economic, social and environment. PROMMA did not include a dimension for high-level dialog to address these issues and was therefore unable to provide adequate support in this policy arena.

Mexico has been undergoing a broad decentralization and democratization process, which in the water sector is strongly reflected in the 2004 revision to the National Water Law. The revision to the law had its underpinnings in the ongoing transformation and modernization of water resources management in Mexico supported by the project. The River Basin Councils and particularly the Aquifer Committees have broad water user and other local stakeholder participation and they have been playing an increasingly important role in understanding and beginning to deal with the serious local water resources management problems. The project has made important contributions to this process through: (a) the establishment and strengthening of the River Basin Councils and Aquifer Committees, (b) the establishment and dissemination of information and information systems, (c) improved water rights administration, and (d) river basin and aquifer participatory planning processes. The institutional impact is considered to be sustainable. A change in thinking has begun towards valuing water as an economic, social and environmental resource. The project has supported improvements in the capacities of local communities and the integration of their water-related activities with regional and national water resources management entities.

4.5.2 The project contributed significantly to the strengthening of CONAGUA’s technical capacity and improved coordination and regionalization of water resources management related activities, and supported the strengthening of CONAGUA regional offices (within the constraint of their limited personnel and budget) improving their ability to take on the responsibilities given them under the 2004 National Water Law.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:Although there were not significant changes in CONAGUA personnel, the change in administration in 2000 had a significant slow-down effect on the project particularly in regard to the implementation of the new component – MASAS that was included after the mid-term review. Because of this transition, MASAS did not actually begin implementation until 2002. Other components also suffered a slow down while the new administration defined its priorities. Historically CONAGUA has dedicated major effort on managing emergencies, particularly relating to hurricanes and flooding, but also to droughts. When these emergencies occur, as several did during project implementation, budgetary resources are reallocated to meet the emergency requirements and ongoing activities, such as PROMMA suffer slow downs.

5.2 Factors generally subject to government control:During the execution of the project there were several obstacles which resulted in an extension of the completion date and the cancellation of the resources that were to be used during the period

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of 1996-2001. The principal problems were: 1) an initial shortage of qualified personnel and insufficient hiring of qualified personnel during implementation, and 2) inadequate budget allocations throughout project implementation that necessitated scaling back of project activities; extension of the implementation period and cancellation of US$65.7 million of the loan.

During the preparation of this project, it was anticipated by CONAGUA that budget allocations to the various management units would be significantly larger than prior to the project. However, the Government had budgetary and policy constraints that did not allow it to follow through on the commitments expressed at negotiations to increase CONAGUA’s budget allocations commensurate with the financing needs of the project. The Government’s ICR report indicates there was a vicious cycle because CONAGUA was not able to increase staffing with professionals with skills that it lacked (the SAR estimated a total of 724 permanent staff which would be offset by attrition), it fell behind in project implementation and did not fully execute its budget which led to a reduction of the budget in the following year.

A related issue affecting World Bank projects in Mexico, is that the Bank loans bring little or no additionality in terms of resources for the executing agencies like CONAGUA. CONAGUA and the various management units within CONAGUA receive only their annual budget allocation and do not directly receive the loan proceeds. The financial resources expended by the different management units within CONAGUA a large portion of which are identified as project expenditures are their budget allocations. The amount of budget allocated to each management unit is determined through the normal annual budgeting process. Although it appears that the amount of resources expended under the project are large, when compared to the needs of a country the size of Mexico with its serious water resources management issues, the resources available and expended are small. To put this into perspective, in the United States, approximately US$15 Billion is expended annually at the federal and state levels on activities similar to those in PROMMA. Mexico expends less than $US50 Million per year on these activities.

At the time of the transition of administration in 2000 the Bank prepared a Water Policy Note and held discussions with the new administration that included the suggestions for deepening reforms and reinforcing the holistic structure of CONAGUA, arguing against the possibility of returning irrigation infrastructure responsibilities to the Agriculture Secretary. These discussions initiated an increase in high-level dialog between the Bank and GOM on water-related issues.

5.3 Factors generally subject to implementing agency control:CONAGUA experienced difficulties in following Bank procedures in procurement and financial management within the timeframes dictated by their annual budgeting cycle. The budget cycle for CONAGUA is such that resources for activities other than salaries and overhead are normally not available until about March or April of each year. Management units are very busy and normally do not begin to prepare terms of reference and specifications until they are sure that budget resources are available. This creates a situation where expenditures for consultant services, goods procurement and civil works are often made during the last few months of each year. During the latter years of project implementation this problem was partially alleviated through multi-annual contracts that need to be approved by SHCP on a case-by-case basis.

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5.4 Costs and financing:Total actual project costs were US$221.6 million, 65% of the total project cost estimated at appraisal; of this amount, the Bank loan financed 55% of the cost as expected at appraisal. As explained in section 5.2, the project’s cost and scope were reduced due to limitations on CONAGUA’s hiring of personnel needed for project implementation and on its authorized budget. Taking this into account, US$65.7 million of loan funds was cancelled: US$40.0 million in May 2002, US$14 million in May 2003, and US$11.7 in February 2005. The Bank also agreed to the Government’s request for an additional 3 years to complete core project activities: (i) an extension of 2 years was granted in January 2002, and (ii) an extension of 1 year was granted in April 2003. Slow disbursements was a issue throughout the project’s life, reaching a 42 months lag compared to the original estimate. Disbursement lags are a common problem of Bank-financed projects in Mexico. This is due to among other things, the absence of an incentive mechanism for facilitating quick disbursement of international loans, which does not affect the overall budget of the line ministry implementing a project (no additionality).

6. Sustainability

6.1 Rationale for sustainability rating:The outcomes of the project are likely to be sustainable provided the Government and CONAGUA remain committed to improving the management of the water resources sector. Water is a national security issue in Mexico and a major policy and political issue. This by itself provides for the rationale for sustaining gains achieved during the project. The activities and perhaps more importantly the dialogue initiated under this project have been key to advancing water resources development and use that is economically, socially and environmentally sustainable in Mexico. The Bank engaged the client in a broader discussion on the strategy for future water development with a view to having a more integrated approach which included linking the institutional and organizational issues into the overall water resources management.

This operation however involved an important constraint. Water resources management needs to be carried out at the local level in basins and aquifers. The project supported the formation of river basin councils and aquifer committees that have made good progress in understanding water issues and potential solutions. The 2004 modified LAN strongly supports decentralization of water resources management to Basin Organizations that would be formed out of existing CONAGUA regional offices. However, the regional offices have a limited number of personnel with technical abilities in project-related areas and have inadequate budget. This restricted the extent to which decentralized water resources management was carried out under the project and will undoubtedly limit the ability to carry out the 2004 modified LAN reforms in the future. In addition, CONAGUA historically has been a large, hierarchical, centralized institution and changes to any institution such as this one are often difficult and require significant time to accomplish.

The political commitment to transfer staff and budgetary resources to new river basin organizations is the main issue that needs to be resolved in order to ensure availability of a critical mass of professionals and budget that can support the development of the sector. This is another factor that will contribute to the sustainability of the outcome. There are a bare minimum number

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of technicians and other qualified personnel in CONAGUA and the other supporting agencies needed to carry out project related activities. These persons will be instrumental in supporting sustainable water resources management and scaling-up best practices. Government hiring restrictions severely limit the ability of CONAGUA to replace departing personnel. This has required that CONAGUA reassign and train existing personnel to support priority project-related activities. Although less than ideal, this approach has proved adequate. In addition, with the training that was conducted in this project, local communities are now more capable of managing the resource.

It is important to note that in the current sectoral policy framework, the progress towards an integrated approach to water resources management made under the project and supported by the 2004 modification to the LAN could prove to be insufficient. It has been clearly established that the overexploitation of aquifers is fundamentally a result of the policies of water pricing and subsidies that promote irrigated agricultural production, independently of what this costs society. Agriculture consumes 70 to 80 % of the water in Mexico. The tariff 09 for the electricity and other programs creates conditions – via subsidies - that encourage the overuse of water in low-value activities which not only is very costly for the Mexican society but also wastes scarce natural resources. The economic signals of these policies result in situations where farmers continue to overexploit the water resources, including some aquifers that are crucial to the socio-economic activities in several regions of the country, thereby compromising the future economic and social development of these regions. The bank is presently carrying on a dialog with Mexican government leaders and is preparing several AAA activities to support this dialog. Particular emphasis is being placed on being well prepared to dialog with the transition team after the July 2006 presidential elections and prior to their assuming office in December.

Good water resources management is dependent upon having a solid technical understanding and knowledge base of water resources availability, quality and existing uses. A complete water rights system is another essential building block. The project supported these aspects and in so doing, provides strong momentum to advance the next steps towards sustainable integrated water resources management.

6.2 Transition arrangement to regular operations:During preparation of the project several potential areas for follow-on operations were identified, including: (a) construction of hydraulic infrastructure; (b) implementation of water quality improvement plans; (c) implementation of groundwater stabilization plans; (d) implementation of river basin plans; and (e) remedial action on existing dams with safety problems. The GICA project presently under preparation would build on the foundation provided by PROMMA and develop and implement specific IWRM plans in critical water scarce basins and aquifers in the northern and central part of the country. As presently conceived GICA will support detailed scenario planning in the Rio Bravo Basin and the development and implementation of IWRM plans in 6 aquifer areas, 5 of which benefited from preliminary planning in the MASAS component. It will be decentralized and deconcentrated integrated water resources management and planning at the basin and aquifer level with the participation of local stakeholders, water users, state and local governments and CONAGUA in accordance with the 2004 modified LAN. The plans will define in detail the needs for infrastructure and management improvements and will

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support investments to partially implement these plans. GICA will also support the development of financing plans and mechanisms to channel existing programs and finances towards the implementation of the IWRM plans. Although important, no follow-on actions are presently planned for dam safety remedial actions. CONAGUA does have an ongoing program in this regard, that is addressing these issues.

7. Bank and Borrower Performance

Bank7.1 Lending:The Bank’s performance preparing and obtaining approval of the project is considered moderately satisfactory. The Bank team understood well the problems that exist in the Mexican water resources sector. Hence, the Bank supported the design of a project that was planned to demonstrate the importance and value of integrated water resources management in order to reduce the water scarcity problems and to change some of the perceptions regarding the resource and the sector. However, it is now clear that the project design was overly ambitious in undertaking a national program of this nature and magnitude, and the Bank task team did not fully understand the difficulties and challenge of the undertaking. In addition, the project did not include a comprehensive policy component to support strategies and dialog with other sectors, and with relevant government agencies. Nevertheless, it should be kept in mind that this was the first complete IWRM project supported by the Bank, and the project’s successful completion is partially due to its well thought out and comprehensive design.

7.2 Supervision:The Bank’s supervision of the project is considered satisfactory. The Bank team actively provided technical and administrative support to the project. The technical contribution was imperative to achieve the modernization of services and the measurement facilities for efficient administration, planning, new technologies such as the determination of remote sensing based evapotranspiration, and to develop the holistic approach for the MASAS. The Bank’s supervision missions were regular and identified critical problems early and cooperated with the project unit in seeking solutions and improving implementation. The supervision team had a good measure of continuity.

The mid-term review was carried out as scheduled in early 1999 and due to the delays already incurred, the completion date was extended; the resources not expected to be used were cancelled; and the project was restructured as explained in Section 3.4 with the introduction of more realistic indicators. The project development objectives were unchanged since the activities to be undertaken remained relevant to the objectives i.e. "improving and promoting conditions" and ''supporting'' a platform for IWRM. Mutual agreement on the proposed changes was obtained from CONAGUA, NAFIN, SHCP and the Bank.

It is important to point out that the project also had the excellent support of the World Meteorological Organization (WMO) for the supervision missions and for evaluation, as well as for the contracting of consultancies, execution of technical assistance and high level training. This WMO assistance is a highlight of the project and brought much international expertise to help

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Mexico to be a leader in the developing world in water resources management related activities.

7.3 Overall Bank performance:The Bank’s overall performance is considered satisfactory.

Borrower you need to expand on these sections/very little is mentioned

Borrower7.4 Preparation:The borrower’s performance in project preparation is rated as satisfactory. The borrower committed as many resources as was feasible to the preparation effort and was well organized. All of the different CONAGUA management units involved in the project dedicated significant effort to project preparation. In general, the Project Implementation Plan could be considered as a 5-year work plan for the different management units within the Planning, Technical and Water Administration Subdirectorates of CONAGUA, and they considered it to be as such. CONAGUA took advantage of the PHRD grant and the support provided by WMO and the Bank to develop modernization plans for all of these management units utilizing high-caliber international experience in the areas of meteorological services; surface water and groundwater quantity and quality monitoring, assessment and management; river basin planning and management; dam safety and water rights administration. Project preparation also provided an important opportunity, which was taken advantage of by the borrower, to consider how to improve the integration of the different activities being carried out by the different CONAGUA management units at the central level. During project preparation, CONAGUA implemented a reorganization of its regional offices along hydrologic rather than administrative boundaries, recognizing the importance of carrying out water resources planning and management at the river basin level.

7.5 Government implementation performance:The government’s implementation performance is rated as moderately satisfactory for the reasons set out in section 5.2. Within the constraints of limited budget and personnel, SHCP, NAFIN and CONAGUA did an excellent job of implementing the project, diligently carrying out their responsibilities as defined in the Project Implementation Plan. At the mid-term review these GOM entities carefully reviewed project progress and agreed with the Bank to adjust project components and indicators to make them more realistic.

7.6 Implementing Agency:CONAGUA’s implementation performance is rated as satisfactory. Within the constraints of insufficient personnel and financial resources and preoccupation of government leaders to other pressing problems and emergencies, the functionaries in CONAGUA and NAFIN working on the project were very dedicated, hard working and diligent. Their strong efforts clearly resulted in the project's successes and benefits. Prior to each supervision mission, excellent progress reports were prepared. Annual evaluation reports prepared by WMO consultants were highly beneficial in reviewing different project activities and making realistic recommendations for implementation activities during the following year. CONAGUA and NAFIN diligently carried out procurement and financial management fiduciary activities in accordance with Bank guidelines. A post-project review of procurement found implementation to have been satisfactory. Annual audits were

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carried out on time and did not identify serious financial management problems.

CONAGUA has major responsibilities to reform and adjust its operations in accordance with the 2004 modified LAN, which supports decentralization and deconcentration of water resources management in order to carry out IWRM at the river basin and aquifer levels with the participation of water users other stakeholders and the state and municipal governments, and to develop and implement a water financing system. Some progress was made in this regard during project implementation particularly in the development of regional water plans and in the MASAS component introduced at the mid-term review. The regional offices took on additional responsibilities and are presently being reorganized into River Basin Organizations in accordance with the 2004 modified LAN. The new project under preparation (GICA) is designed to further support this reform process.

7.7 Overall Borrower performance:The overall performance of the Borrower is assessed as satisfactory. Notwithstanding the significant limitations outlined above, the Borrower’s execution of the project was adequate. Representatives from SHCP, NAFIN and CONAGUA as well as other Mexican government agencies gave dedicated attention to project implementation issues, participated in supervision missions and paid strong attention to aide memoire recommendations.

8. Lessons Learned

Sustainable water resources management efforts cannot succeed without a holistic integrated approach that deals with irrigation and drainage, water supply and sanitation, agricultural productivity and the environment, and these need to be planned and managed at the basin or aquifer level with the direct participation of water users and other stakeholders. Irrigation and drainage and water supply and sanitation draw from water sources, consume water and return water with reduced quality to water systems, as well as impact flow regimes and ecological systems. The environment is a special “water using sector” and most environmental concerns are typically the responsibility of environmental rather than water management agencies. But environmental service activities are important to overall WRM, particularly in regard to the provision of ecological flows.

Although IWRM projects are inherently complex, care should be taken to limit the scope to the extent possible and to focus on the most important elements. The dam safety and some of the meteorological services sub-components could perhaps have been handled better under separate operations. The nationwide and centralized approach of the project reduced the ability to focus on major problem areas, although this was partially ameliorated through the inclusion of MASAS at the mid-term review.

Climatological and hydrological monitoring networks need to be well designed and have strong operation and maintenance programs. The project benefited strongly from the support of the WMO which greatly helped to ensure the quality of these aspects.

Implementing a nationwide water rights registration and administration program is a massive and

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complex undertaking. Because of the inability to measure the amount of water usage by each water user, Mexico opted to assign water rights amounts based on declarations by the water users when they registered. This resulted in overallocations, which are now having to be dealt with on a case-by-case basis. The water rights administration system under the project is a tremendous achievement, not duplicated anywhere in the developing world. It provides an essential platform for IWRM. However, this overallocation aspect has complicated the effectiveness of the water rights program. It remains to be seen whether the approach taken was the best, although many officials insist that it was the only way possible to proceed.

Putting the appropriate technical information in the hands of the users greatly helped them to accept that they have a role to play in managing the resources and to develop some ownership on their part. There is a persistent mindset in Mexico and elsewhere that the government needs to solve the problems mainly through investments. Although government-supported investments are essential, water users and other stakeholders need to take a direct interest and play a critical role in the planning and management of water resources. The gradual incorporation of the users into the decision-making processes at the River Basin Councils and Aquifer Committees is contributing to addressing the sustainability of the resource. The process however has been slow and is not completed; it needs to be kept on-going, strengthened and scaled-up.

Decentralization of management is a long and continuous process, which requires unwavering commitment by the Government and responsible agencies. Although the process of decentralization has gained some momentum, it is imperative that additional activities, such as improving the regulations and procedures in support of the LAN, and continuing to build capacities are followed up. State and municipal governments had limited participation in the project although they were involved in the regional water planning and the MASAS component. The GICA project will emphasize more state and municipal involvement.

It is important that the Government provides a clear signal and remains true to the reform process in support of the LAN, to create confidence and political support for integrated water resources management. Often changes in policy following a political/election cycle send conflicting or wrong signals and undermine the process. It is important to have clear objectives and a sustained vision not only within a project designed to support IWRM but also at the highest levels of government. Governments have multiple agendas that are often at cross purposes, which can significantly impact the ability to achieve IWRM. A project such as this one requires strong government support and priority. The project should support a continuing high-level dialog to strengthen the government’s water-related policy agenda. The Bank should provide continuous support to this dialog through periodic high-level contacts and complementary AAA. Many times during the implementation of the project, the Bank team and Mexican counterparts felt somewhat like orphans and that there was a lack of high-level government understanding and commitment both within CONAGUA and in other parts of the government. During the later years of project implementation, the Bank increased its broad support to the Mexican water agenda including a number of AAA activities. There have been corresponding improvements in the government’s support. The project would have been better designed if it had had a policy component that included this high-level dialog and linkage to AAA activities from the beginning.

- 23 -

Irrigation and water sector development activities being carried out under the direction of CONAGUA and other related agencies are not sufficiently taking into account water resources availability and management parameters. The amount of water that can be consumptively used in a basin or aquifer as well as meet environmental needs should form the basis or centerpiece for project planning and investment. This project has provided much of the technical monitoring and assessment necessary for determining water availability as well as some of the institutional mechanisms necessary to ensure sustainable water resources management and use. It is recommended that CONAGUA expand the dialogue on water resources limitations and appropriate management with the other sub-directorates not involved in the project and also with the other entities involved in water irrigation and water supply activities, particularly at the local basin and aquifer level. This is a long-term issue that needs continuous focus and deepening, if sustainable water resources management is to be achieved.

9. Partner Comments

(a) Borrower/implementing agency:Please refer to Annex 9.

(b) Cofinanciers:

(c) Other partners (NGOs/private sector):Comments provided by WMO via Email.

The World Meteorological Organization (WMO) and the World Bank have cooperated in the last 10 years providing assistance and support to Mexico through the Bank financed Mexico Water Resources Management Project. The project has resulted in major improvements to nearly every aspect of water resources management in Mexico. It has been recognized as an excellent example of collaboration between WMO and the World Bank, which could serve as a model and be applied in other countries. WMO is a specialized Agency of the United Nations for weather, climate and water.

WMO provided technical assistance, transfer of technology, training and key advice and recommendations for the different specific areas which contributed substantially to the implementation of the project. This support provided through WMO professional staff and top-class international and national experts and consultants was important for the successful implementation of the project and continued collaboration would be very beneficial.

10. Additional Information

- 24 -

Annex 1. Key Performance Indicators/Log Frame Matrix

- 25 -

Overall Indicators

1996 1997 1998 1999 2000 2001 2002 2003

TY

PE

OF

IND

ICA

TO

R

EJE

CU

TO

R

IND

ICA

TO

RS

UN

IT

Ori

gin

al

Tar

get

Act

ual

Ori

gin

al

Tar

get

Act

ual

Ori

gin

al

Tar

get

Act

ual

Ori

gin

al

Tar

get

Act

ual

Ori

gin

al

Tar

get

Act

ual

Rev

ised

T

arg

et

Act

ual

Rev

ised

T

arg

et

Act

ual

Rev

ised

T

arg

et

Act

ual

SG

AA

Improved Allocation of Water as an Economic Good

Annual volume of water transferred (millions of m3)

1 65.9 2 84.2 3 201.1 5 285.8 5 334.2 285 439.4 285 585.2 285 733

GC

C

River Basin Councils Having Assumed Principal Decision Making Responsibilities for Water Management Activities

# of councils 1 0 1 0 3 1 6 2 11 10

GC

C Aquifer committees

established and carrying out WRM responsibilities

# of committees 0 0 8 10 16 17

GA

S Aquifers with water

availabilities published in the national register

# of availabilities published 3 0 8 0 14 0 14 0 14 202

GS

CA

Water Bodies Classified and Water Quality Improvement Plans Developed

# of water bodies 2 3 30 11 160 19 240 21 320 25 320 36 48 41 54 43

GA

SIR

Hydrological Forecasting Systems Operational

# of river basins 0 0 1 0 4 2 11 3 11 4 4 4 5 4 6 4

US

MN

Accurate 96-Hour Weather Forecasts for river basins

% of accurate forecasts 55 50 40 65 50 75 60 79 70 77 75 75 79 79 80 79

GA

S Aquifers with

integrated management plans

# of aquifers 0 0 4 4

SG

AA

Financial sustainability of water management

% of CONAGUA budget covered through water fee payments

65 55 75 54 85 45 50 54 50 56 50 69 50 71 50 68

O

UT

CO

ME

S

GP

H River Basin Plans

Adopted

# of Plans 4 0 10 12 13 13 13 13 13 13 13 13

- 26 -

- 27 -

GA

S Groundwater

Monitoring Networks Operational

# of networks 16 10 35 40 57 90 68 130 88 130 99 108 102 108 120

GA

S Integrated analysis

of overexploited aquifers

# of hydro-geologic models 3 7 23 12 43 18 58 18 21 23 59 23 59 23

GA

S Integrated analysis

of aquifers in equilibrium

# of hydro-geologic models 0 0 0 0 0 0 0 11 11 11 0 11 0 12

GA

S

Analysis of intersectoral management, systematic framework and sustainability measures

# of studies 3 7 3 17 13 27 27 27 27 27 27 27 27

GA

S

Groundwater information system

% implementation 25 50 61 70 77 82 93 90 100 100

SIG

A

Water geographic information system % progress 20 30 50 60 60 75 80 90 90 100 95 100 98

GS

CA

National reference laboratory installed and accredited

# of laboratories 0 0 1 0 1 0 1 1 1 1 1 1 1 1 1

GS

CA

Regional and mobile laboratories Installed # of laboratories 0 0 5 0 13 0 13 0 13 1 1 19 6 19 6

GS

CA

Water body classifications studies and plans to improve water quality indices

# of studies 20 3 80 17 165 29 32 34 40 54 46 60 52

GA

SIR

Improve and maintain the climatological monitoring network

# of stations 790 488 1841 1865 2892 2636 3592 2799 4086 3689 4489 5336 4801 5836 5114 5539

GA

SIR

Improve and maintain the hydrometric monitoring network

# of stations 663 146 1542 645 2431 1340 3131 1377 3131 1638 1853 3840 2019 4280 2269 2340

OU

TP

UT

S

GA

SIR

Automatic Hydrometric Stations Operational

# of stations 0 0 44 0 44 0 44 44 54 44 54 44 54 54 63 63 - 28 -

US

MN

Synoptic Observations

# of observa-tions (thousands)

150.5 151.5 152.5 150.2 150 149.1 175 152 180 139 120

US

MN

Radio soundings # of soundings (thousands) 4.8 4.8 4.9 4.4 5.7 5.7 13 6 14 5.4

US

MN

Bulletins disseminated

# of bulletins (thousands) 266.3 532.1 574.2 659.3 629.2 591.5 650 372.9 650 220.9

US

MN

Internet consultations

# of consultations (thousands)

13.2 63.3 178 191.9 440.2 768.8 300 1009.3 360 1550

US

MN

Automatic hydroclimatological stations operational

# of stations 0 60 150 74 170 84

GC

T

Dams Inspected # of dams 500 1 1500 210 2500 601 3500 982 4500 1229 3950 1531 4950 1790 5950 1989

GC

T Instrumentation of dams # of dams 0 0 0 0 1 1 2 2 2 2 2 3 2 3 2 3

GC

T Review of dam

design and emergency plans

# of dams 0 0 2 0 4 2 4 6 6 8 10 35 16 35 24 35

GC

T Topobatrimetric

studies and flood plain planning

# of studies 0 0 0 0 0 0 3 2 6 3 9 6 12 8 16 15

SG

AA

Water Users Registered

# water rights registered (thousands)

80 56 150 116 220 208 280 347 300 388 300 405 327 414.2 327 424

SG

AA

Dischargers Inspected

# of dischargers inspected (thousands)

5 1.4 10 3.4 15 5.7 20 6.7 25 8 30 9.8 24.9 14.29 26.8 19.3

- 29 -

GIT

Local Area Computer Networks Installed

# of networks installed 13 4 26 14 50 19 50 19 68 19 72 75 75 102 102

GIT

Computers Installed # of computers 1679 250 2637 650 3500 1350 5360 1950 5360 2100 5360 8432 8744 9672 10174 10912

- 30 -

Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionA. Institutional Development, Technological Assistance and Capacity-Building

37.70 41.60 110.3

B. Evaluations and Modernization of Data Monitoring Systems on Quantity and Quality of Water

150.00 80.70 53.8

C. Modernization of Dan Security and Operation and Aquifer Management

41.10 25.70 62.5

D. Water Use Administration 41.40 18.10 43.7E. Planning and Information Systems for the Water Sector 71.70 55.00 76.7F. Sustainable Management of Underground Water Sources

0.00 0.50 0

Total Baseline Cost 341.90 221.60Total Project Costs 341.90 221.60

Total Financing Required 341.90 221.60Annex 2a – Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million

equivalent)

Project Component Appraisal Estimate

Actual/Latest Estimate

2004

Percentage of

Appraisal A Institutional Development, Technological

Assistance and Capacity-Building 37,7 41,6 110,3

1 Technical Assistance 11,4 9,6 84,2

2 Capacity Building 16,9 12,3 72,8

3 Project Coordination 9,4 9,9 105,3

2 Professional Fees of PROMMA Personnel 9,8 NA

B Evaluations and Modernization of Data Monitoring System on Quantity and Quality of Water

150,0 80,7 53,8

1 Meteorological Monitoring Networks 41,2 28,4 68,9

2 Hydrometric, Climatic, Sediment and Reservoir 38,8 24,6 63,4

- 31 -

Level Monitoring Networks 3 Evaluation and Monitoring of Underground

Waters 25,6 6,3 24,7

4 Networks for Monitoring Water Quality and Laboratories

44,4 21,3 48,1

C Modernization of Dam Security and Operation and Aquifer Management

41,1 25,7 62,5

1 Reservoir Management 14,2 10,2 71,8

2 Dam Security 18,6 5,3 28,5

3 Improving Aquifer Management 8,3 10,2 122,9

D Water Use Administration 41,4 18,1 43,7

1 REPDA and User Services 11,2 7,9 70,5

2 Collection, Inspection and Control 30,2 10,2 33,8

E Planning and Information Systems for Water Sector

71,7 55,0 76,7

E1 Establishment and Strengthening of Watershed Councils

16,5 16,4 99,4

E2 Regional and National Planning

E3 Information, Telecommunications and SIGA 55,2 38,6 69,9

F Sustainable Management of Underground Water Sources

0,0 0,5 NA

MASAS 0,5 NA

TOTALS 341,9 221,6 64,8

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 0.00 0.00 26.10 26.10(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 75.00 15.00 1.10 3.30 94.40(63.70) (12.80) (0.90) (0.00) (77.40)

3. Services 0.00 0.00 100.00 0.00 100.00(0.00) (0.00) (85.10) (0.00) (85.10)

4. Training 0.00 0.00 17.20 0.00 17.20(0.00) (0.00) (14.70) (0.00) (14.70)

5. Incremental Operating Costs - IMTA

0.00(0.00)

0.00(0.00)

14.00(9.30)

0.00(0.00)

14.00(9.30)

6. Recurrent Costs 0.00(0.00)

0.00(0.00)

0.00(0.00)

90.10(0.00)

90.10(0.00)

Total 75.00 15.00 132.30 119.50 341.80(63.70) (12.80) (110.00) (0.00) (186.50)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 0.00 4.72 0.00 4.72

- 32 -

(0.00) (0.00) (2.11) (0.00) (2.11)2. Goods 31.76 0.00 4.50 0.00 36.26

(17.68) (0.00) (3.00) (0.00) (20.68)3. Services 0.00 0.00 56.64 0.00 56.64

(0.00) (0.00) (32.94) (0.00) (32.94)4. Training 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00)5. Incremental Operating Costs - IMTA

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

6. Recurrent Costs 0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total 31.76 0.00 65.86 0.00 97.62(17.68) (0.00) (38.05) (0.00) (55.73)

Expenditure Category Budget Used

Total BIRF1

Counterpart Local Contribution

Total Contribution

Total Cost

1 Assets 38.652 42.724 3.154 8.306 9.272 51.997 2 Consulting 76.511 61.501 625 16.509 16.509 78.010 3 Watershed Councils 1.658 834 185 300 300 1.135

4 Capacity-Building 5.251 6.930 16 704 704 7.635 5 Works 11.664 8.845 2.361 5.023 5.960 14.805 6 Vehicle 625 0 0 625 625 625 7 Indirects 16.587 0 0 16.343 16.343 16.343 8 Disbursements IMTA

0 0 0 0 0 0

Subtotal 150.948 120.835 6.340 47.811 49.715 170.550 9 Fiscal Resources 70.674 0 178 41.350 41.350 51.073 9.1 Disbursement Eligibles

25.672 0 178 1.111 1.111 10.833

9.2 Expenditure 45.002 0 0 40.239 40.239 40.239 Total US$ (thousands)

221.622 120.835 6.518 89.161 91.064 221.622

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.A. Institutional Development, Technological Assistance and Capacity Building

29.10 8.50 23.10 18.50 79.4 217.6

- 33 -

B. Evaluations and Modernization of Data Monitoring Systems on Quantity and Quality of Water

71.70 78.40 56.50 24.20 78.8 30.9

C. Modernization of Sam Security and Operation and Aquifer Management

22.60 18.60 13.20 12.50 58.4 67.2

D. Water Use Administration

8.60 32.70 6.50 11.60 75.6 35.5

E. Planning and Information Systems for Water Sector

54.50 17.20 21.00 34.00 38.5 197.7

F. Sustainable Management of Underground Water Sources

0.00 0.00 0.50 0.10 0.0 0.0

- 34 -

Annex 3. Economic Costs and Benefits

- 35 -

Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation03/01/1995 3 TASK MANAGER (1);

CONSULTANTS (2)S S

Appraisal/Negotiation06/29/1995 5 TASK MANAGER (1);

CONSULTANTS (2);AGRICULTURALIST (1); PROCUREMENT SPECIALIST (1)

S S

Supervision

08/09/1996 2 WATER RESOURCES ENG. (1); CONSULTANT (1)

S S

06/27/1997 3 SR. HYDROGEOLOGIST (1); SR.WATER RES. ENGINEER (1); SR. FINANCIAL ANALYST (1)

S S

11/27/1997 2 TASK MANAGER (1); SR.FINANCIAL ANALYST (1)

S S

07/16/1998 4 WATER RES. ENG. (1); TTL-WATER RES. ENG. (1); FINANCIAL ANALYST (1); ECONOMIST (1)

S S

02/19/1999 8 TTL - WAT. RES. ENG. (1); ECONOMIST (1); ECONOMIST (FAO/CP) (1); HYDROLOGIST (CONS.) (1); LAWYER (CONS.) (1); HYDROGEOLOGIST (CONS.) (1); ENGINEER (CONS.) (1); CONFLICT RESOLUTION SP (1)

S S

02/19/1999 3 TTL - WAT. RES. ENG. (1); ECONOMIST (FAO/CP) (1); HYDROLOGIST (WMO) (1)

S S

02/19/1999 3 TTL - WAT. RES. ENG. (1); ECONOMIST (FAO/CP) (1); HYDROLOGIST (WMO) (1)

S S

03/02/2001 7 TTL - WATER RES. ENG. (1); PROCUREMENT SPECIALIST (1); FIN. MAN. SPEC. (2); AGRO-METEOROLOGIST (1); HYDROLOGIST (1); WAT.

S S

- 36 -

RES. SPECIALIST (1)07/20/2001 6 TTL - WAT. RES. ENG. (1);

PROCUREMENT SPEC. (1); FIN. MAN. SPEC. (1); AGRO-METEOROLOGIST (1); HYDROLOGIST (1); WAT. RES. SPEC. (1)

S S

03/08/2002 6 TTL - WAT. RES. ENG. (1); FIN. MAN. SPEC. (1); ECONOMIST (1); AGRO-METEOROLOGIST (1); HYDROLOGIST (1); WAT. RES. SPEC. (1)

S S

08/24/2002 2 TTL _ WAT. RES. ENG. (1); ECONOMIST (1)

S S

08/24/2002 2 TTL- WATER RES. ENG. (1); ECONOMIST (1)

S S

09/06/2003 2 TTL - WAT. RES. ENG. (1); CONS. - ECONOMIST (1)

S S

03/15/2004 2 TTL WAT. RES. ENG. (1); CONS. ECONOMIST (1)

S S

08/20/2004 2 TTL WAT. RES. ENG. (1); CONS. ECONMIST (1)

S S

ICR04/11/2005 3 TASK MANAGER (1);

CONSULTANT (1); OPERATIONS ANALYST (1)

S S

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 182.8 434.6Appraisal/Negotiation 39.6 96.5Supervision 160.3 503.0ICR 5.5 6.7Total 387.2 1040.8

- 37 -

Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

- 38 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

- 39 -

Annex 7. List of Supporting Documents

- 40 -

Additional Annex 8. Project Accomplishments and Results

Outputs Results Benefits Meteorological and Climatological Prognostics

Component 2

(i) Technological modernization of the various networks of the Meteorological Observation System, telecommunications and the computational base for the processing of meteorological data. (ii) Improvement of the National Bank for Climatological Data (iii) Improvement in the quality of meteorological prognostics.

(i) Substantial increase in the quantity and opportunity of available data over the state of the atmosphere and the hydrological cycle, in particular during emergency situation like hurricanes and droughts. (ii) Improvement of alert capabilities, in particular for the National Civil Protection System. (iii) Prognostics at the disposal of user and general public through SMN’s website, with more than 2.2 million users in 2004. (iv) Daily knowledge of the weather in the country for everyday use. (v) Prognostics and alerts for hurricanes, tropical storms and droughts.

(i) Assistance daily decision-making for social and economic activities (e.g. agricultural and like activities in general, social events, etc) (ii) Minimization of effects caused by extraordinary hydrometeorological phenomena (protection of human lives, damage to cultivation zones, destruction of homes, involuntary displacement, economic loss, etc.) (iii) Contribute elements for the integrated management of water resources.

•Surface water monitoring �Flood Prevention �Dam Security

Components 2 and 3

(i) Establishment of telemetric networks in a total of 100 hydroclimatologic stations in critical zones (ii) Rehabilitation and continuous modernization of conventional climatological and hydrological stations (iii) Establishment of the Hydrological Information System (SIH) (iv)Redesign of the national hydroclimatological network that covers 70% of the national territory (v) Modernization of the sediment monitoring through the establishment of a pilot program (vi) Establishment of the River Prognostic System of the CONAGUA (SPRCONAGUA) in four priority watersheds (vii) Establishment of the National Dam Security Program (PNSP) (viii) Establishment of the National Dam Registry (RNP) / Dam Inventory

(i) Substantial increase in the availability and use of hydroclimatological information, as well as information for riversheds, and dike water levels through the SIH; (ii)Prompt transmission of hydroclimatological information to the central headquarters of the GASIR through the internet, the SIH; (iii) Availability of information for sediment removal in pilot riversheds; (iv) Daily hydrologic prognostics in prognostics centers in the cities of Monterrey, NL; Hermosillo, Son; Cd Victoria, Tamps; y Torreón, Coah; (v) Decentralized program, with regional participation, for the realization of follow-up activities related with dam security; (vi) Registry of dam and report on dam inspections

(i) Assist the decision-making process within the CONAGUA and in other constituencies and other users, for: a) planning, design and operation of reservoirs and hydraulic projects, and of hydrologic forecasting in priority watersheds (Bravo, Fuerte, Yaqui and Panuco rivers), b) investment optimization and reduction of impacts due to damage from extreme events; (ii) Contribute elements for the integrated and sustainable management of water resources.

Evaluation and Management of Groundwater Resources

Components 2 and 3

(i) Studies and aquifer analysis covering 24 of the 144 most important aquifers in Mexico; (ii) Reactivation of piecemetric networks in the most important aquifers, an the installation of automatic monitors of water levels and hydraulic conductivity; (iii) Development of the Geographic Information System for the Management of Underground Waters (SIGMAS); (iv) Introduction of the SEBAL method, to validate the use of certain technologies of remote perception, developed as an instrument to study hydrogeological problems; (v) Development of projects for the plotting of underground waters.

(i)Publication of the average annual availability for selected priority aquifers; (ii) 204 priority aquifers count with upgraded and available technical documentation; (iii) Complete and reliable knowledge of geo-hydrological variables; (iv) Real evotranspiration estimation and of net volume extraction of underground waters with the SEBAL methodology; (v) Application of technologies for the increase of underground water recharge and control of contamination through saline intrusion of aquifers in costal zones.

(i) Assistance in the decision-making process in the administration and management of groundwater (political definitions, development of stabilization planning, conservation and sustainable exploitation, transparency in the availability of information about the situation of every aquifer, avoid unsustainable exploitation of groundwater, facilitate expedited attention to requests for new water sources; (ii) Contribute elements for the integrated and sustainable management of water resources.

Water Quality Monitoring

Component 2

(i) Complete redesign and validation of water quality monitoring networks; (ii) Establishment of the National

(i) Availability of useful data about the condition and tendencies in the quality of Mexican water resources;

(i)Assist the decision-making process within the CONAGUA and other constituencies for the management of

- 41 -

Reference Laboratory (LNR); (iii) Eight accredited regional laboratories to fulfill the requisites of the Norm for metrology; (iv) Development of the SNICA to improve the preparation of the relevant information of water quality.

(ii) Assurance in the reliability of all nationally-produced data on water quality; (iii) Establishment, promulgation and application of water quality standards toward the improvement of supply.

water quality (risk minimization and costs for the use/consumption of contaminated water; water treatment planning for streams and bodies of water), (ii) Contribute elements for the sustainable and integrated management of water resources.

Water Rights

Component 4

(i) Consolidation of the Public Registry of Waters (REPDA) that is required by the LAN, in combination with the management of the legal documentation of assistance to concession and permits, (ii) Operation of the SIAA; (iii) Gradual compliance with the norms relative to the controlled use of volumes of water from concessions and to the quality of discharges, product of inspection visits and fiscalization; (iv) Increase in the collection of rights that must be paid by responsible stakeholders of concessions and permits.

(i) Regularization of a large extent of the universe of users of water sources and of discharges from residual waters, through the emission of the corresponding title of ownership, and its registry in the REPDA; (ii) Attention to the most efficient users; (iii) Operation of a more efficient and modern rights registry system; (iv) Availability of a platform to manage a adequate registry and control of users through a uniform and homogeneous data model; (v) Compliance with the LAN in what is relevant with the implementation of actions set to correct and reduce contamination through discharges of residual waters y the payment of rights and fines caused by infractions; (vi) Integral use of generated information from the central, regional and state offices of the SGAA.

(i) Legal certainty for users of national water and inherent assets (assistance in the decision-making of users in terms of their investments); (ii) Transparency in the administration of water rights; (iii) Support in decision-making in the assignment and planning in terms of the management of water resources and contamination control; (iv) Consolidate a base for the proper operation of the market and water banks; (v) Contribute elements toward the integrated and sustainable management of water resources.

Water Basin Committees

Component 5

(i) Development of technical assistance, capacity-building, equipment supply and specific studies for the establishment and consolidation of the CC and COTAS in the 13 administrative regions of the CAN; (ii) Development of capacities at the levels of the different stakeholders of water, through the realization of events in each CC and two national events of CC; (iii) 15 CC have already development their “management instruments”; (iv) Development of meetings for all CC and their auxiliary organs, with ample social participation.

(i) The CC and auxiliary bodies (COTAS and other assistance organs) operate with the support of the Regional and State Management Offices; (ii) Strengthening of the conceptual framework of water management by hydrographic watershed; (iii) Availability of plans and work programs, where activities and tasks can be gathered and complied by each Council in the following years, and that respond to the uncertainties and necessities of every watershed.

(i) Increased participation of the civil society and governmental authorities in the decision-making process of water management; (ii) Assistance over the decentralization of water management; (iii) Increased confidence of users for water management; (iv) Contribute elements to the integrated and sustainable management of water resources.

National and Regional Planning

Component 5

Elaboration of (i) Master Regional Plans (MRP) for each of the 13 Regions with a general vision until de year 2025; (ii) National Development Plan 2001-2006 (PND); (iii) National Hydraulic Program (PNH) 2001-2006 and its evaluation for the medium-term; (iv) the third edition of “Unified System of Basic Water Information” (SUIBA); (vi) Strengthening and broadening of System for Geographic Information of Water (SIGA).

(i) Count with a general vision of water resources and of the related national and regional levels; (ii) Establishment of the necessary projects to satisfy the defined criteria for the three scenarios, along with the priorities implicit in the implementation process; (iii) Availability of statistic and basic cartographic information, as well as information for socio-economic topics, land use, water use, etc. in the planning process; (iv) Panorama for a sustainable future of water resources until the year 2025, as well as scenarios, strategies and action plan for the period of 2001-2006; (v) Regional goals for the period for 2002-2006 and necessary project identification with the priorities implicit in the implementation process.

((i) Strengthening of the regional and central planning process of water resources; (ii) Increase the access to information to users and general public over the sustainable planning of water resources; (iii) Contribute elements for the integrated and sustainable management of water resources.

Sustainable Management of Groundwater Resources

(i) Management strategies and action plans in pilot areas that include the

(i) Sensibilization and construction of consensus and establishment of

(i) Support the reduction in the unsustainable exploitation of aquifers

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Component 6Aguascalientes Valley (Ags), the Bajío (Gto), the Centro and Sur de Querétaro regions (Oro), the Hermosillo Coast and Cuenca del Río Sonora (Son) and Central San Luis Potosi region (SLP); (ii) Technical assistance to strengthen the project development; (iii) Establishment of pilot farms for plasticulture.

contacts, details action plans and mechanisms to initiate the instrumentation of pilot areas; (ii) Availability of aquifer management policies and action plans for overly-exploited aquifers; (iii) Modernization projects in the irrigation sector and strategies in the management and actions plans in five pilot areas; in three of them its implementation is already being considered by the corresponding state governments.

and the stabilization of extractions; (ii) Contribute to the guarantee of sustainable use of underground water resources, from the public and private sector, urban and industrial, as well as the agriculture sector; (iii) Assist the rationalization over the use of water based on its valuation; (iv) Contribute elements for the integrated and sustainable water management.

Institutional development, technological assistance and capacity-building

Component 1

(i) Development of actions toward institutional strengthening; (ii) Elaboration of reports, manuals and technical studies; (iii) Development of capacity-building workshops in the different components of PROMMA; (iv) Execution of numerous activities in technical assistance of national and international character; (v) Establishment of special covenants of technical assistance.

(i) Technology transfer and increase and strengthening of technical capacity of CONAGUA and CC staff and users of national waters; (ii) Technological assistance of International character for CONAGUA staff.

(i) Improvement of staff productivity in daily activities; (ii) Contribute elements for the integrated and sustainable management of water resources.

Information Systems and Telecommunications

Component 5

Policy definition and establishment of computational and telecommunication networks of the CONAGUA in its central, regional and state offices.

(i) Establishment of modern information infrastructure (more than 9,000 network points in the CONAGUA); (ii) Integration of information systems; (iii) optimization of corporate information and telecommunication services; (iv) Monitoring of increase demand for information and data, as well as the flow, process and storage of information for technical, regional and administrative sectors of the CONAGUA, as well as for the variety of users

(i) Increasingly agile, opportune and reliable decision-making and execution of action; (ii) Contribute elements for the integrated and sustainable management of water resources.

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Additional Annex 9. Comments from CONAGUA

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