dd mfr final

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

MINISTRY OF WATER RESOURCES

AWASH RIVER BASIN FLOOD CONTROL AND WATERSHED MANAGEMENT STUDY PROJECT

PHASE III INCLUDING DIRE DAWA

DIRE DAWA FLOOD MITIGATION PROJECT

FEASIBILITY STUDY

MAIN REPORT

Final ReportApril 2008

MINISTRY OF WATER RESOURCESAwash River Basin Flood Control and Watershed Management Study Project

DIRE DAWA FLOOD MITIGATION PROJECTFEASIBILITY STUDY

MAIN REPORT

Contents

EXECUTIVE SUMMARY.........................................................................................................ix

MAP OF AWASH RIVER BASIN AND PROJECT LOCATIONS..........................................xi

1 ORIGIN AND HISTORY OF THE PROJECT...............................................................1

1.1 Awash River Basin Flood Control and Watershed Management Study Project.........................................................................................................................1

1.2 Dire Dawa Flood Mitigation Project..............................................................3

1.3 Location...........................................................................................................3

1.4 Impact of August 2006 Flood........................................................................51.4.1 Direct Damage......................................................................................51.4.2 Indirect Damage...................................................................................61.4.3 Social Impact of the 2006 Flood...........................................................8

1.5 Context of DD FMP within Awash River Basin Project...............................9

2 THE POLICY ENVIRONMENT....................................................................................9

2.1 The Water Resources Sector.........................................................................92.1.1 River Basin Management.....................................................................92.1.2 Flood Management.............................................................................102.1.3 Watershed Management....................................................................10

2.2 The Institutional Framework........................................................................112.2.1 Federal Ministries...............................................................................112.2.2 Dire Dawa Administration...................................................................122.2.3 Oromiya Administration......................................................................132.2.4 Projects...............................................................................................142.2.5 Service Cooperatives..........................................................................142.2.6 Traditional Social Institutions..............................................................142.2.7 NGOs and Service Providers.............................................................142.2.8 Disputes and Conflict Resolution........................................................14

2.3 Macro and Other Sectoral Policies.............................................................152.3.1 Economic Development Strategy for Ethiopia....................................152.3.2 Environmental Policy..........................................................................152.3.3 Developmental Social Welfare Policy.................................................152.3.4 Poverty Reduction Strategy................................................................152.3.5 The Rural Development Policy and Strategy (2002)..........................162.3.6 Industrial Policy/Strategy....................................................................162.3.7 Urban Development Policy: (2005).....................................................16

2.4 Summary of Policy Relevant to DD FMP....................................................16

Dire Dawa Flood Mitigation Feasibility Study i Main Report_FINAL


3 THE PROJECT AREA...............................................................................................17

3.1 Geomorphology............................................................................................17

3.2 Climate...........................................................................................................18

3.3 Hydrology and Water Resources................................................................183.3.1 Hydrology............................................................................................183.3.2 Water Resources................................................................................19

3.4 Soils...............................................................................................................19

3.5 Land Use........................................................................................................20

3.6 Demographics, Poverty and Gender..........................................................213.6.1 The Rural Population..........................................................................213.6.2 The Urban Population.........................................................................21

3.7 Land Tenure..................................................................................................22

3.8 Agriculture....................................................................................................233.8.1 Crops..................................................................................................233.8.2 Livestock.............................................................................................243.8.3 Agricultural Support Services.............................................................253.8.4 Crop Marketing and Agro-Processing................................................253.8.5 Food Security......................................................................................26

3.9 Forestry and Household Energy.................................................................26

3.10 Soil Conservation.........................................................................................27

3.11 Impact of Production Systems on Catchment Condition.........................283.11.1 Crop Production Systems.................................................................283.11.2 Livestock...........................................................................................293.11.3 Common Lands................................................................................29

3.12 City Environment and Flood Defences.......................................................303.12.1 Urban Land Use................................................................................303.12.2 Population.........................................................................................313.12.3 Private Sector Economic Activity......................................................32

3.13 Project Beneficiaries....................................................................................33

4 DESCRIPTION OF THE PROJECT...........................................................................36

4.1 Overall Approach..........................................................................................36

4.2 Project Goals, Scope and Components.....................................................37

4.3 Project Description.......................................................................................384.3.1 Enhancement of Flood Defence Infrastructure...................................384.3.2 Re-settlement.....................................................................................394.3.3 Flood Warning System.......................................................................404.3.4 Catchment Management....................................................................40

4.4 Project Costs................................................................................................45

4.5 Expenditure Schedule..................................................................................48

4.6 Financing Plan..............................................................................................50

5 PROJECT IMPLEMENTATION.................................................................................51

Dire Dawa Flood Mitigation Feasibility Study ii Main Report_FINAL


5.1 Implementation Issues.................................................................................51

5.2 Executing Agency........................................................................................52

5.3 Institutional Arrangements..........................................................................525.3.1 Steering Committee............................................................................525.3.2 The Project Coordination Office (PCO)..............................................525.3.3 The Project Management Office.........................................................535.3.4 Watershed Planning Teams...............................................................535.3.5 DA (Kebele level) Support..................................................................545.3.6 Micro Watershed Community Groups................................................55

5.4 Implementation Schedule............................................................................55

5.5 Procurement Arrangements........................................................................56

5.6 Disbursement Arrangements......................................................................56

5.7 Monitoring and Evaluation..........................................................................56

5.8 Financial Reporting and Auditing...............................................................58

6 PROJECT SUSTAINABILITY AND RISKS...............................................................59

6.1 Recurrent Costs............................................................................................59

6.2 Project sustainability, risks and mitigating measures..............................606.2.1 The urban demand for woody biomass..............................................606.2.2 Urban migration..................................................................................606.2.3 Synergy between flood protection and catchment management........606.2.4 Climate change...................................................................................616.2.5 Grazing and biomass resources on Common Access land................616.2.6 Maintenance of SWC..........................................................................616.2.7 Flood Warning System.......................................................................626.2.8 Environmental Impact Assessment....................................................626.2.9 Project Coordination...........................................................................65

7 FINANCIAL AND ECONOMIC ANALYSIS...............................................................66

7.1 Summary of Project Benefits......................................................................66

7.2 Urban Flood Protection Benefits................................................................667.2.1 Summary of component benefits........................................................667.2.2 Direct damage....................................................................................677.2.3 Indirect damage..................................................................................697.2.4 Indirect damage: effect on the Dire Dawa economy...........................697.2.5 Loss of human life and injury..............................................................70

7.3 Catchment Management Benefits...............................................................707.3.1 Summary of component benefits........................................................707.3.2 Crop budgets......................................................................................727.3.3 Cropping patterns...............................................................................737.3.4 Livestock budgets...............................................................................747.3.5 Net farm returns..................................................................................75

7.4 Financial and Economic Analysis of the DD FMP.....................................767.4.1 Project Costs......................................................................................767.4.2 Project Benefits...................................................................................787.4.3 Economic Valuations..........................................................................80

Dire Dawa Flood Mitigation Feasibility Study iii Main Report_FINAL


7.4.4 Capital costs.......................................................................................807.4.5 Recurrent costs...................................................................................827.4.6 Flood protection benefits....................................................................827.4.7 Agricultural benefits............................................................................827.4.8 Project Financial and Economic Viability............................................837.4.9 Sensitivity Analysis.............................................................................85

8 CONCLUSIONS.........................................................................................................88

TABLESTable 1-1 Catchment Area and Population..............................................................................4

Table 1-2 Estimates of Direct Flood Damage 2006.................................................................6

Table 1-3 Elders and Disabled Affected...................................................................................8

Table 2-1 Coordination Bureaus and Offices.........................................................................12

Table 3-1 Land Use in the Project Area.................................................................................20

Table 3-2 Summary of Household Characteristics.................................................................21

Table 3-3 Land Use Dire Dawa Town....................................................................................31

Table 3-4 Population Density, Dire Dawa City.......................................................................32

Table 3-5 Summary of Private Sector GVP Dire Dawa Town................................................32

Table 3-6 Beneficiaries of the DD FMP..................................................................................34

Table 4-1 Project Base Cost Estimate by Component...........................................................46

Table 4-2 Estimated Staffing Requirements..........................................................................48

Table 4-3 Expenditure Schedule, ETB ‘000 (exclusive of contingencies)..............................49

Table 4-4 Financing Plan, ‘000 ETB......................................................................................50

Table 5-1 Project Performance Monitoring and Evaluation (PPME)......................................57

Table 6-1 Recurrent Costs After Project Conclusion, ETB....................................................59

Table 7-1 Annual Crop Production (tonnes)..........................................................................71

Table 7-2 Crop Yields in Present, Future Without and Future With Project (tons/ha)..........72

Table 7-3 Financial Crop Gross Margins (ETB/ha)...............................................................73

Table 7-4 Cropping Patterns: Present, % of cultivated area.................................................74

Table 7-5 Financial Dairy Gross Margins (ETB/enterprise)..................................................75

Table 7-6 Net Farm Income (ETB/farm)................................................................................76

Table 7-7: DD FMP Cost Stream, Years 1-10: Financial Costs Including Physical Contingencies, ETB................................................................................................77

Table 7-8: DD FMP Financial Benefit Stream, ETB...............................................................79

Table 7-9 Project Costs Including Contingencies (ETB ‘000)..............................................81

Dire Dawa Flood Mitigation Feasibility Study iv Main Report_FINAL


Table 7-10 Economic Crop Gross Margins (ETB/hectare)...................................................83

Table 7-11 Financial and Economic Indicators for DD FMP, ETB.........................................84

Table 7-12: Sensitivity Analysis.............................................................................................87

Dire Dawa Flood Mitigation Feasibility Study v Main Report_FINAL


FIGURESFigure 1-1 DDAC Budget 2002/03-2006/07.............................................................................7

APPENDICESAppendix 1 Project Logical FrameworkAppendix 2 DD FMP Organizational Chart: Donor Funding OptionAppendix 3 DD FMP Organizational Chart: DD AC Funding OptionAppendix 4 Financial and Economic AnalysisAppendix 5 Implementation Schedule

ANNEX OF DRAWINGS (bound separately)

SUPPLEMENTARY REPORTS TO MAIN FEASIBILITY REPORT (bound separately) SR 01 ENVIRONMENTAL ASSESSMENTSR 02 STAKEHOLDER WORKSHOPSR 03 URBAN SOCIAL AND INSTITUTIONAL ASSESSMENT AND RESETTLEMENT

FRAMEWORK SR 04 WATERSHED SOCIAL ASSESSMENTSR 05 HYDROLOGY, RESERVOIR ASSESSMENT AND EARLY WARNINGSR 06 SOIL CONSERVATION AND LAND MANAGEMENTSR 07 AGRICULTURE AND FORESTRY (INCLUDING LIVESTOCK)SR 08 INFRASTRUCTURE UPGRADING DESIGN REPORTSR 09 SEISMIC HAZARD ASSESSMENT

TENDER DOCUMENTS FOR CIVIL WORKS (two contracts, 3 volumes each, bound separately)

Currency Equivalents(as of December 2007)Currency Unit: Ethiopian Birr (ETB)ETB 1.0 = US$0.1107US$1.0 = ETB9.034

AbbreviationsABBA Awash Basin AgencyABWRAA Awash Basin Water Resources Administration AgencyADLI Agriculture Development Led Industrialization StrategyAfDB African Development BankAHP Animal Health Post

Dire Dawa Flood Mitigation Feasibility Study vi Main Report_FINAL


AI Artificial Insemination

ARBFCWMSPAwash River Basin Flood Control and Watershed Management Study Project

ARDB Agricultural and Rural Development BureauAVA Awash Valley AuthorityBoARD Bureau of Agriculture and Rural DevelopmentCA Common AccessCAO Council Administration Office (of the DDAC)CAP Community Action PlanCBRD Coordination Bureau for Rural DevelopmentCMS Community Mobilization SpecialistsCPR Common Property RightsCRS Catholic Relief ServicesCSA Central Statistical Authority/ AgencyCWDT Community Watershed Development TeamDA Development AgentDAP Diammonium PhosphateDD Dire DawaDD FMP Dire Dawa Flood Mitigation ProjectDD IDP DD Integrated Development PlanDD MP Dire Dawa Master PlanDDA Dire Dawa Administration (ie the area of the region, 1,280 km2)DDAC Dire Dawa Administrative CouncilDDASA Dire Dawa Administration Statistical Abstract 2005DDIDP Dire Dawa Integrated Development PlanDM Dry MatterDPPA Disaster Prevention and Preparedness AgencyDPPC Disaster Prevention and Preparedness CommissionEASE Ethiopia Agricultural Sample Enumeration

ECC-SDCOHEthiopian Catholic Church – Social & Development Coordinating Office of Harar

EEPCo Ethiopian Electricity Power CompanyEP Entitled PersonsEPA Environmental Protection AgencyEPRDF Ethiopian People’s Revolutionary Democratic FrontETB Ethiopian ETBFWS Flood Warning SystemFDRE The Federal Democratic Republic of EthiopiaFEPA Federal Environmental Protection AuthorityFFW Food for WorkFGD Focus Group DiscussionsFMAAM Federal Multi-Agency Assessment MissionFPA Flood Prone AreaFSaDPO Food Security and Disaster Prevention Office

Dire Dawa Flood Mitigation Feasibility Study vii Main Report_FINAL


FWS Flood Warning SystemGC Grievance CommitteeGDP

Gross Domestic ProductGIS Geographical Information SystemGoE Government of EthiopiaHCS Harerghe Catholic SecretariatHDDA The House of Dire Dawa AdministrationIaCWA Infrastructure and Construction Work Authority INM Integrated Nutrition ManagementIPM Integrated Pest ManagementIWRM Integrated Water Resources ManagementLDaAA Land Development and Administration AuthorityLLPPA Local Level Planning and Participatory ApproachLWF Lutheran World FederationMDG Millennium Development GoalMAI Mean Annual Increment (of woody biomass)

MERETManaging Environmental Resources to Enable Transitions to More Sustainable Livelihoods

MoARD Ministry of Agriculture and Rural DevelopmentMoFA Ministry of Federal AffairsMoLaSA Ministry of Labor and Social AffairsMoWR Ministry of Water ResourcesMPS Master Plan Studynd No dataNGO Non-Governmental OrganizationNMSA National Meteorological Service AgencyNWRC National Water Resources CommissionO&M Operation and MaintenancePAP’s People Affected by the ProjectsPASDEP Plan for Accelerated and Sustained Development to End PovertyPCO Project Coordination OfficePMO Project Management OfficePPME Project Performance Monitoring PRA Participatory Rural AppraisalRBO River Basin OrganizationREPO Regional Environmental Protection Office SAR Sodium Absorption RatioSC Steering Committee SDPRS Sustainable Development and Poverty Reduction StrategySMS Subject Matter SpecialistSWC Soil and Water ConservationTAC Technical Advisory CommitteeTEDP Transitional Economic Development PolicyTLU Tropical Livestock Unit

Dire Dawa Flood Mitigation Feasibility Study viii Main Report_FINAL


USLE Universal Soil Loss EquationWBISP Woody Biomass Inventory & Strategic Planning ProjectWFP

World Food ProgrammeWMaEO Water, Mines and Energy OfficeWPT Watershed Planning TeamWWDSE Water Works Design and Supervision Enterprise

NotesThe fiscal year (FY) of the Government ends on 30th JuneIn this report “US$” refers to US dollars

Dire Dawa Flood Mitigation Feasibility Study ix Main Report_FINAL


EXECUTIVE SUMMARY

Borrower Federal Democratic Republic of Ethiopia

Project Description Strengthen and extend flood protection walls in Dire Dawa city to provide protection from flash floods of up to 1:200 years return period. Instigate real-time catchment monitoring linked to a five stage Flood Warning System. Carry out re-settlement of a small amount of property outside flood defences. Implement soil and water conservation measures in the 400 km2 catchment above Dire Dawa together with livelihood improvement measures in crop and livestock production, agro-forestry and forestry on private, common property and common access land. Improvements in rural access and potable water supply. See section 4.3.

Rationale The August 2006 flood claimed 256 lives, displaced 2,500 families, caused direct damage estimated at ETB 100 million and indirect damage of similar magnitude. Food security in the catchment above Dire Dawa is poor and declining, crop and livestock production are less than half of potential. Woody biomass reserves in the catchment are expected to last no more than 13 years. Catchment management for flood protection is non-existent. Urgent measures are required to improve urban flood protection, but these will be under-mined unless catchment condition is improved or at the least maintained. Developing a synergy between environmental protection, urban security and rural livelihoods will be the cornerstone of project rationale. See section 4.1.

Outcome Due to increased security from flooding, avoided annual probability of loss and increased investment levels in urban Dire Dawa. A flood warning system will protect lives in the event of greater floods, and provide important information on small un-guaged catchment hydrology. Rural household incomes are expected to rise by about 45% as a result of catchment management and productivity increases in crop and livestock production. Significant improvements in rural transport and 100% protected supply of potable water. Woody biomass security in the catchment is expected to be improved in the short term. Long term improvements depend on the implementation of an urban energy strategy for Dire Dawa which outside the scope of this project. See section 4.2.

Cost Estimate The cost of the project excluding contingencies is expected to be ETB 474.8 million, or US$ 52.5 million. The main costs are urban flood protection, 58%, SWC 16%, and rural potable water and communications 7.4%. Agricultural extension to support catchment management is estimated to be about 7%. Resettlement and the flood warning system will each be less than 1%. The FWS About 10% of the costs will be for management and staff.

Dire Dawa Flood Mitigation Feasibility Study x Main Report_FINAL


Financing Plan

(ETB million)Source Total Cost %

Donor 344.68 72%Government 104.89 22%Beneficiaries 26.50 6%Total 476.07

Estimated Project Completion Date

Eight years after project start up. Assuming start up is January 2009 the project will be concluded in 2015. See Appendix 5.

Executing Agency Ministry of Water Resources, since Dire Dawa Administrative Council and (to a much lesser extent) Oromiya will be involved in project implementation. See section 5.2.

Implementation Arrangements

Federal level Steering Committee, a MoWR Project Co-ordination Unit and a Project Management Office based in Dire Dawa. The PMO will have an office of Flood Protection and an office of Catchment Management. 2 Watershed Planning Teams, one based in BoARD in Dire Dawa, the other in Kersa Woreda, Oromiya Region, to supervise land planning and agricultural extension in 22 kebeles. See section 5 and Appendix 2.

Procurement International, national and local competitive bidding, subject to the rules of any involved donor agency. See section 5.5.

Consulting Services Estimated to be 82 months international and 2,160 months national. See Table 4-13.

Project Benefits and Beneficiaries

It is expected that 95% of the present annual probability of loss to flood events in urban Dire Dawa will be eliminated by 1:200 flood protection coupled with FWS. This will directly benefit some 3,200 urban households. A larger but unspecified number would benefit from a reduction of economic shocks to the city economy from floods, and consequent increased levels of investment. About 9,000 farm families would benefit from improved crop and livestock productivity on private and common property land. Rural farm incomes are expected to increase by 45% in 10 years. About 1,000 landless families in the upper catchment would have short term benefits from FFW. Rural flooding would be reduced, giving non quantified avoided losses to at least 1,000 families. See Table 3-11.

Risks and Assumptions

The major risk is continued catchment deterioration if it is impossible to control woody biomass extraction for the urban Dire Dawa market on common access land. This will lead to reduced competence of the flood protection walls, increased maintenance and possibly an earlier than planned re-build. See section 6.

Consultants’ Comments

DD FMP attempts to address the problems of catchment deterioration, rural poverty and urban flood protection in an integrated way. It raises many important national development issues, including (i) rural-urban relationships and the treatment of environmental economic benefits (ii) the management of common access lands (iii) the difficulties of predicting floods in small un-guaged catchments (iv) the relationship between catchment

Dire Dawa Flood Mitigation Feasibility Study xi Main Report_FINAL


condition and flood periodicity (v) the protection of urban populations from natural disasters. DD FMP is therefore expected to be an important demonstration project, whose implementation will provide valuable experience and information.

Dire Dawa Flood Mitigation Feasibility Study xii Main Report_FINAL


MAP OF AWASH RIVER BASIN AND PROJECT LOCATIONS

Dire Dawa Flood Mitigation Feasibility Study xiii Main Report_FINAL


1 ORIGIN AND HISTORY OF THE PROJECT

1.1 Awash River Basin Flood Control and Watershed Management Study ProjectThe Awash River Basin Flood Control and Watershed Management Study Project commenced in June 2005. The Project was commissioned by the Ministry of Water Resources (MoWR) of the Federal Democratic Republic of Ethiopia, and funded by the African Development Bank. The overall aim of the study was “to provide information for a better understanding of the development challenges in the Awash River Basin area”. The terms of reference require detailed various investigations within the fields of flood control, watershed management and socio-economic studies, with the following specific objectives:

formulate effective and sustainable flood control and watershed management Projects in the Awash Basin, based on an analysis of key technical, social and economic issues;

identify proposals which will provide a focus for the future development of the Basin; and prepare (at least) two viable Projects for future financing to address the problems of

flooding, watershed management, and agricultural production.

The Project was undertaken in three phases. Phase I entailed literature review, reconnaissance and surveys/investigations planning. It culminated in the production of six working papers and their presentation and discussion at a workshop in Addis Ababa in September 2005. In Phase II, field surveys and data analysis were undertaken, and potential projects to address causes and impacts of flooding in the Basin were identified, developed to pre-feasibility level and screened. A Summary Report and six baseline reports were produced at the end of Phase II, in June 2006; the baseline reports comprised:

BR1: Awash Basin Agency – Proposed Restructuring BR2: Socio-Economic Appraisal and Community Development BR3: Soil and Water Conservation – Watershed Management BR4: River Morphology of Awash and Tributaries BR5: Flood Control, Drainage and Irrigation Development BR6: Sediment Sources and Control Measures

Drawing on these studies, various potential Projects were outlined in the Phase II Summary Report; in each case the rationale, project description, preliminary costs estimate, benefits and associated risks were described. The projects presented were as listed in Table 1.1.

Table 1.1 List of Potential Projectsidentified and assessed during Phase II

Component Code Region

Flood Control, Irrigation and Drainage

Becho Plains Flood Alleviation BEC Oromiya

Wonji Estate Flood Protection WO1 Oromiya

Wonji Out-Growers WO2 Oromiya

Merti Jeju, Abadir and Nura Era Irrigation Rehabilitation

MER Oromiya

Lake Beseka Water Level Control BES Oromiya

Amibara Flood Protection and River Training AM1 Afar

Amibara Sediment Control and Irrigation Rehabilitation

AM2 Afar

Amibara Drainage Improvement AM3 Afar

Dire Dawa Flood Mitigation Project 1 Feasibility Study Main Report_FINAL


Component Code Region

Amibara Rehabilitation of Pump Stations AM4 Afar

Amibara Institutional Restructuring and Establishment of WUAs

AM5 Afar

Gewane Irrigation and Flood Protection GEW Afar

Dire Dawa Urban Flood Alleviation DDF Dire Dawa

Integrated Watershed Management

Awash Upland Zone UAZ Oromiya

Upper Kesem UKS Oromiya and Amhara

Upper Mile and Dirma UMD Amhara

Upper Arba UAR Oromiya

Sediment Control

Mojo and North Koka Shore Badlands Rehabilitation

MOJ Oromiya

Kerayu Plain Sediment Trap KER Afar

The identified Projects were evaluated against social, economic, political and environmental criteria. For the potential watershed management Projects criteria included:

Erosion hazard: soil loss in tons/ha/year from erosion hazard assessment (EHA) so that watershed management interventions would focus on catchments with high erosion rates;

Catchment location: catchments draining into the Awash River and contributing to its sediment load and flooding regime had priority;

Accessibility: distance to an all weather road (km); Downstream beneficiaries: including government Projects (dams, irrigation schemes,

etc) and private farmers which will benefit from lower sediment flow, reduced flooding, or improved availability of water for irrigation;

Livelihoods impact: this is linked to land degradation status, the size of the affected area and the presence or absence of food security within concerned Woredas;

Markets: distance to market (km); Population size and density: participatory watershed management is labour intensive

implying a dense population is desirable. However, the more communities involved, and the more fragmented land use, the longer implementation is likely to take. Experience suggests that extremes of population densities should be avoided;

Groundwater recharge potential: depending on permeability of strata watershed management Projects may promote aquifer recharge, rising ground water levels and spring recovery; and

Land degradation status: highly degraded areas contribute a disproportionate amount of sediment to the river system. Data on land degradation status is not available, but has been inferred from other factors, such as erosion hazard and food insecurity (by woreda).

The Phase II findings and recommendations were discussed in a Stakeholder’s workshop on 6-7th July in Nazaret.

Discussions on the scope of Phase III continued until 25th November 2006 when agreement was reached to carry out full feasibility studies and detailed design for the following priority Projects that were defined during Phase II:

Upper Kesem Watershed Management; Mojo Badlands (Gully Rehabilitation); and



Amibara Irrigation Project including new permanent headworks for Amibara itself, Merti-Jeju and Nura-Era (combined structure) and Abadir, along with refurbishment of the associated flood defence, irrigation and drainage works where required.

A fourth Project, Dire Dawa Flood Mitigation and Watershed Management, was subsequently included as a contract addendum, as a consequence of the severe flooding that occurred there on the night of 5-6th August 2006. which caused extensive damage and some 300 fatalities.

Phase III – preparation of full feasibility studies for three of the above four projects, and preparation of tender designs and documents for physical works associated with Mojo and Amibara – commenced in January 2007. The feasibility study and tender design preparation for the fourth project – Dire Dawa – commenced in May 2007, upon receipt of approval to the contract extension from the African Development Bank in its role as funding agency for the Awash River Basin Flood Control and Watershed Management Study Project.

Draft final reports for all four projects (including supplementary reports, drawings and, where required, tender documents) were submitted in early February 2008 and discussed at the Final Project Workshop in Addis Ababa on 26 and 27 February 2008. Subsequently written comments were received from the African Development Bank, Dire Dawa Administration (for Dire Dawa project only) and MoWR. Reports were then finalised to reflect the comments received where appropriate.

1.2 Dire Dawa Flood Mitigation ProjectThis document is the finalised Main Feasibility Report (MFR) for the Dire Dawa Flood Mitigation Project, and presents the findings of all our Phase III studies of this intervention, including implementation proposals and financial and economic analyses. More detail of particular areas of the studies undertaken by the Consultants (for example, environment, and agriculture) are provided in the nine separately bound Supplementary Reports (see Contents List for details). Maps and drawings are included in a separate album (A3 size), and tender designs and documentation have also been prepared for upgrading the flood defences in the Dechatu and Goro Rivers.

The Project was introduced into Phase III of the Awash River Basin Flood Control and Watershed Management Study because of the severity of the August 2006 flood event in Dire Dawa. Following that catastrophe, the Government of Ethiopia and the local community became extremely anxious to identify and implement a programme of works that will alleviate flooding in Dire Dawa effectively and sustainably.

The specific objectives of the Project, as set out in the terms of reference agreed with MoWR in late 2006, were to:

identify and develop to tender stage a feasible programme of measures to reduce to an acceptable level (to be agreed with the authorities) the risk of flooding through Dire Dawa town from the Dechatu and Chirecha (Goro) watercourses that leads to major loss of life or causes significant damage to infrastructure, housing and businesses.

study and design for the repair of flood protection infrastructure through the town. study and design (an) engineering and non engineering watershed management plan for

the degraded upper catchments of Diredewa.

1.3 Location



The Dire Dawa Flood Mitigation Project (DD FMP) area is located in the Eastern Catchments of the Awash River Basin. Dire Dawa city covers an area of about 30 km2

and is 510 km from Addis Ababa. The city is situated at the foot of the eastern highlands escarpment, where four wadis pass through or around the urban area (see Annex of Drawings, DDF/TD/01). The city takes advantage of water supply from groundwater under the Awash Plain accumulating from these drainage lines. At least two of the wadis, the Dechatu (catchment area 157 km2) and the Goro (catchment area 83 km2) present a severe flood risk to the city’s infrastructure and inhabitants, commonly attributed to the state of the up-stream catchments. Floods from the other two catchments, Butugi (27.21 km2) and Hare (120.93 km2) are not seen as a threat to the city, but it is logical to include them in this study.

The catchments of the four wadis together have an area of 400 km2 upstream of the city including 18.7 km2 within the city limits. This is “the catchment”, or “the project area” for the purposes of this study.

Table 1-2 below shows the administrative areas and population of the catchment. A map showing administrative areas is given as DDF/TD/06 in the Annex of Drawings. The data include the urban area of Dire Dawa which lies inside the catchment (18.7km2), but the population is for the whole city area of 30 km2. 32 rural kebeles make up the remainder of the catchment, but nine have less than 10% of their area within it, totalling 11.43 km2, or 3% of the catchment area.

Table 1-2 Catchment Area and Population

Kebele NameAdmin Region

Area in km2

Population 2005

Households 2005

Adada DDAC 26.67 7061 1068

Adiga Felema DDAC 15.06 668 113

Beke Halo DDAC 51.14 3673 690

Biyuawale DDAC 15.72 3717 621

Bshan Bohe DDAC 21.91 3146 602

CheleEissa Hara Miya 2.72 1560 299

Dengego Kersa 9.00 2,366 462

Dire Dawa (city) DDAC 18.70 251,029 51,865

Egu Hara Miya 2.22 No data No data

Gale Mirga Kersa 5.99 1,514 334

Gola Wachu Kersa 5.60 1,626 324

Halo Busa DDAC 9.81 1,564 305

Harele DDAC 16.21 5,132 857

Ije Aneni DDAC 25.58 2,502 386

Jelo Belina DDAC 49.54 6,505 999

Lege Bira DDAC 14.22 1,798 239

Lege Del DDAC 16.16 1,098 180

Lege Hare DDAC 8.48 2,220 436

Legeida Mirga DDAC 34.52 6,258 1,080

Melka Jebdu DDAC 5.92 575 88

Metekoma Kersa 2.83 955 192

Owale DDAC 22.91 5,526 879

Wechero Kersa 7.77 2,246 487

<10% kebele area in catchment Various 11.43 2,000 352



Kebele NameAdmin Region

Area in km2

Population 2005

Households 2005

Total Rural 381.41 63,711 10,995

Total Urban 18.70 251,029 51,865

Total 400.11 314,740 62,860Source: AMP GIS and 1994 Population Census (adapted), Situation Analysis on Rural Area of DDAC, DD Statistical Abstract 2005 and MoWR IWM of DD Catchments (TOR).

The catchment falls mostly in the DD Administration (DDA) administrative area (90%), but the remainder is in Oromiya Region, with 8% in Kersa Woreda, and 2% in Hara Maya Woreda. Apart from Dire Dawa city, there are only two small towns in the catchment, Kersa and Dengego, both of which are on the lip of the escarpment south of Dire Dawa.

The catchment ranges in elevation from about 2,200metres above sea level (masl) at its Southern limit at the top of the escarpment, to about 1200masl at Dire Dawa town. Distance between the Southern limit to the town is about 10 km measured on plan. On this basis, overall slope of the catchment measured South to North is about 100m/km or 1 in 10. In fact it is much steeper than this immediately beneath the escarpment, reducing progressively towards the town. It is perceived to be severely degraded.

Mean annual rainfall is in the range 775mm (Delgano) to 640mm (Dire Dawa).

The combination of steepness, sometimes intense rainfall events, and degradation mean that the Dire Dawa catchment is prone to severe short-duration floods. Although the August 2006 event (see below) was the most severe for many years, flash floods occur in the wadis that pass through the town every year, often causing loss of life and damage to property and infrastructure. They rise rapidly and arrive in the town with little or no warning.

Flood defences comprising walls and bunds have been constructed along both sides of the Dechatu throughout the town, and along a substantial length of the right bank of the Goro. In August 2006 these defences were overwhelmed in several places; substantial lengths of flood wall were destroyed by the flood, and both defended and undefended (ie, on the wadi side of the flood walls) properties were damaged or demolished.

A more detailed description of the catchment’s physical characteristics and climate is given in Section 3.2.

1.4 Impact of August 2006 Flood1.4.1 Direct Damage

The August 2006 flood impacted severely on the livelihoods of households living in Dire Dawa city adjacent to the Dechatu and Goro wadis. Rural households upstream were also affected by the flood, which destroyed infrastructure, soil and water conservation works and crops. Lege Hare and Butejie wadis did not flood in 2006, and in fact seldom flood. Neither do they have the same high concentration of urban households on their banks. It is difficult to be objective about the 2006 event, and information about the flood differs between reports, regardless of their time of preparation.



The Report prepared by the FMAAM on the 2006 event reported the deaths of 256 people, displacement of 9,956 and 244 people missing, presumed dead. The report further highlights the subsequent homelessness of 2,685 households and damage to personal effects in terms of thousands of ETB per household. Furthermore, damage to infrastructure, facilities and business premises worth more than ETB 30 Million was reported. The report proposed a rehabilitation cost based on sectoral estimates “… As per the cost estimation by different sectors the reconstruction and protection costs for urban infrastructure buildings (houses, bridges, crossings, retaining walls), urban water and sanitation, Rural Soil and Water Conservation and Agriculture, and rural water and irrigation schemes is estimated to be 89,203,262 ETB, 1,941,004.31 ETB, 1,912,494.90ETB and 1,271,655 ETB respectively.” Assuming a loss of at least ETB 5-6 million in household effects, FMAAM estimated the damage caused by the August 2006 flood as about ETB 100 million.

On evidence presented in the workshop “Options for Flood Risk Mitigation in Dire Dawa” 2006, the number of homeless was estimated to be in the order of 3,427 households, of which 1,600 were located in the city. The value of damage to property was estimated to be ETB 50 million. Damage to infrastructure and housing in Dire Dawa city was also estimated. Table 1-3 summarises both the FMAAM and Workshop estimates. There are clearly uncertainties, especially about the damage and loss to household property, private houses and urban infrastructure.

Generalising, one may say total direct damage was anything between ETB 60 and 100 million, the damage in rural areas was significant, but much less than in urban areas, and damage to infrastructure (as distinct from private property) may have been about 20% of total direct damage.

Table 1-3 Estimates of Direct Flood Damage 2006Impact Unit FMAAM 1/ Workshop 2/

People/households Dead people 256 Missing presumed dead people 244 Displaced people 9,965 Homeless households 2,685 3427 urban households 1600 rural households 1827

Financial Loss of household property ETB 5,370,000 Loss of property ETB 50,000,000 Urban infrastructure including buildings ETB 89,203,000 Road ETB 5,122,000 Ford ETB 1,220,000 Bridge ETB 1,200,000 Retaining Walls ETB 2,285,000 Urban Water and Sanitation ETB 1,941,000 Rural Soil and Water Conservation and Agriculture ETB 1,912,000 Rural water and irrigation schemes ETB 1,272,000 Total 99,698,000 59,827,000



Sources: 1/ Federal Multi-Agency Assessment Mission, 2/ DPPA, Dire Dawa flash Flood Appeal (2006) PP: As quoted in Flood Disaster Impacts in Dire Dawa: Some Recommendations for Future Risk Reduction

1.4.2 Indirect DamageIndirect damage from floods includes the long term effects on the economy of disrupted businesses, interrupted savings and expenditure patterns and psychological damage to households and the work force. These effects were clearly demonstrated by the Urban Household Survey carried out as part of this feasibility study, which showed the debilitating impact of being displaced, resulting in loss of own business or job, and income being replaced by handouts and/or remittances from family and friends elsewhere. This was found to be a significant indirect loss. Assuming in 2006 2,300 households were displaced, of which 50% of household heads lost their business or jobs (as suggested by the Urban Household Survey) resulting in the family having to survive on remittances from elsewhere or from handouts from the DDAC, then over a period of two or three years the indirect loss amounts to ETB 50 million. To this should be added the use value of housing foregone of the permanently displaced and re-housed, and the psychological damage.

The 2006 flood also appears to be having a long term impact on the DDA economy due to the divergence of the government budget to reconstruction and rehabilitation. As shown in Figure 1-1, DDAC revenue increases in 2006/07 as a result of emergency relief. This was ETB 29.5 million, of which ETB 9.6 million was collected through a special account opened in Dire Dawa, while the balance of ETB 19.9 million was collected through the federal DPPA. This was allocated as follows:

ETB 2.5 million for subsidy of rural victims ETB 12.0 million for construction of low cost houses ETB 7.0 million for retaining wall construction the balance of ETB 8.0 is not yet allocated.

Figure 1-2 DDA Budget 2002/03-2006/07 constant 2001 Birr

0

20

40

60

80

100

120

140

160

180

200

2002/03 2003/04 2004/05 2005/06 2006/07

mil

lio

n B

irr

Emergency relief

Foreign aid and loans

Treasury funds

Local government

Reconstruction and relief

Capital expenditure

Recurrent expenditure

Figure 1-1 DDAC Budget 2002/03-2006/07



The DDA Budget data 2002/03 to 2006/07 give a superficial impression of increasing robustness, i.e. increasing contribution of local government funding, rising capital expenditure and increasing expenditure per capita, but the real picture is of a shock, or at least a slow down to the city economy in 2006/07, as shown in Figure 1-1.

Capital expenditure remained static on 2005/06, while recurrent expenditure (maintenance, and repair not included in reconstruction and relief) rose sharply. Adding together the ETB 29.5 million in emergency relief, and a notional ETB 24.3 million increase in recurrent expenditure as a result of the flood (this assumes that without the flood recurrent expenditure would have increased by only 16% on the previous year, rather than the observed 43%) suggests the year 1 effect on the public sector alone was a loss in the order of ETB 54 million. To this should be added additional recurrent costs and reconstruction expenditure from 2007/2008, plus additional flood relief related expenses by NGOs in the order of ETB 5-10 million, plus losses incurred by the private sector. It is expected that the effects of the shock will continue to be seen in the city accounts over a period of at least two more years.

Added to these problems, the essential lifeline of budget support from the centre may be weakening. The share of DDA from the national coffer was on average 1.5% for the last ten years. Unfortunately, this reduced to 0.66% of the total budget support flow to regional states in the Ethiopian fiscal year 1999. The local tax base must be strengthened to compensate, or the DDA will be in a progressively poorer position to meet recurrent expenditure, for example on flood mitigation structures.

1.4.3 Social Impact of the 2006 FloodThe Social and Labour Affairs Bureau of DDA kept records of the impact of the flood on elders and disabled groups of the community. This included information on 110 elders and 46 disabled people from Kebeles 03, 09, and 05 respectively. About 10 individuals lost all their family to the flood, together with all their cash and assets, reported to total more than ETB 270,000. The proportion of cash to total assts was reported as small. Table 1-4 shows the gender and age categories of elders and disabled who officially registered for assistance.

Table 1-4 Elders and Disabled AffectedNo Age category Elder Disabled

Men Women Men Women1 < 49 0 3 17 132 50 – 59 10 14 4 03 60 – 69 19 19 3 24 70 – 79 11 13 2 25 80 and above 15 5 2 0

Total 55 56 28 17Source: Social and Labour Affairs Bureau of Dire Dawa Administration: List of Elders and Disabled affected by 2006 flood.

The Urban Household Survey (SR3 section 2) also showed clearly that the 2006 flood disproportionately affected poorer households. Flood affected families were more likely to be male headed, large and relatively young, under-educated and poor. The survey also showed that the affected were not a transient or recently arrived group, but nucleated, resident families with jobs and small businesses in the city. For this reason the indirect damage on the DDA economy would be expected to be deeper and more prolonged.



A striking finding of the Urban Household Survey was the degree of helplessness still experienced by re-housed flood victims almost one year after the incident. The majority responded that they were still unable to construct their own house and about 90% remained jobless and at least partially dependent on assistance. It might be observed that the main problem for the flood victims was and remains poverty and its debilitating long term effects. Because of their poverty they were rendered more vulnerable to the flood, which in turn deepened their impoverishment.

1.5 Context of DD FMP within Awash River Basin ProjectAn outline description of the DD FMP was included in the Phase 2 Awash River Basin Flood Control and Watershed Management Study Project Baseline Report 5 - Flood Control, Drainage and Irrigation Development (see Annex L), final draft issued in June 2006. The project was screened using MCA techniques and positively evaluated because of the evident causal relationship between catchment degradation and downstream flooding. Nevertheless, the outline project was ranked last in the Phase 2 “long list”. This was because it was seen as an urban flood control project and therefore not associated with the key ranking criteria of increases in agricultural production and major reductions in sedimentation. More damaging to its final score, the proposed project had no links to irrigation, investment in commercial agriculture and the production of export crops.

The August 2006 flood changed that perspective at a stroke, because of the loss of life, extensive damage to public and private property and a clear shock to the Dire Dawa economy. However, as the feasibility study has shown, the project represents more than a necessary response to a natural disaster. DD FMP attempts to address the problems of catchment deterioration, rural poverty and urban flood protection in an integrated way. It raises many important national development issues, including (i) rural-urban relationships and the treatment of environmental economic benefits (ii) the management of common access lands (iii) the difficulties of predicting floods in small un-guaged catchments (iv) the relationship between catchment condition and flood periodicity (v) the protection of urban populations from natural disasters. DD FMP is therefore expected to be an important demonstration project, the implementation of which will provide valuable experience and information.

2 THE POLICY ENVIRONMENT

2.1 The Water Resources Sector 2.1.1 River Basin Management

Flood mitigation projects are unusual in Ethiopia and the DD FMP is particularly interesting because it covers both urban and rural areas, it will be executed by an urban administration which (like Addis Ababa) does not have an absolutely clear constitutional autonomy, and it has implications for water management in four regions. The headwaters of the wadis posing a flood threat to the city originate in Oromiya State, and these drainage lines are responsible for at least part of the re-charge of aquifers at Aseliso, which are the source of water supply for Harar, Aweday and Haramaya towns. Thus four national regional administrations are potentially affected: Oromiya State, DDA, Harari Administration and Somalia State. Finally, the project is multidisciplinary and has both a high technical content and economic and social implications. For all these reasons it is important to place the project in the context of water management policy.



Government policies are endorsed by proclamations, regulations and laws, which vary in degree of enforcement with laws being the most binding. All national policies are at the least endorsed with a proclamation which has been passed by Parliament.

The Ethiopian Water Resources Management Policy is described in SR3, section 3.2.8 and 3.3.2. The river basin development approach, integrated water management, economic water pricing, full cost recovery, community empowerment for water resource management, and equitable utilization of water resources are the pillars for future development of the sector. The policy is endorsed by the Water Resource Management Proclamation 197/2000 which aims for optimum water use and equitable distribution. and designates the MoWR as the supervising body for implementation. To facilitate implementation, the Ethiopian Water Resource Management Regulation (115/2005) was promulgated. The regulation covers in detail water permitting procedures and the disposal of waste water.

In respect of DD FMP, the policy implies that water control is required from watershed to basin aquifer, ensuring as far as possible optimum equitable economic value at each point of use. However, neither the proclamation nor the regulation specifies requirements for flood management.

2.1.2 Flood ManagementCombating and regulating floods is one of the Water Resources Management policy objectives and the strategy document entitled Disasters and Public Safety includes a section on flooding, as described in SR3 section 3.2.8. However, not much has been done to implement the document at national level except the launching of the Awash River Basin Flood Control and Watershed Management Study, and the specification of aftermath emergency actions at local level. Floods are perceived as less damaging than drought, and the Early Warning System operating under DPPA is in fact highly drought oriented. However, the dearth of flood forecasting (and therefore management) is due to a lack of tools to implement the strategy recommended above.

Flood prediction in DDA, as in many other locations in Ethiopia, is dependent on high quality rainfall data and the construction of IDF (intensity duration and frequency) curves on a catchment basis. This essential tool for flood management is not available in DDA. To make matters even more complicated, floods depend on catchment condition. In the DDA it is perceived that this is deteriorating year by year due to extension of cultivation onto unsuitable land, declining soil fertility and removal of herbage and woody biomass cover. However, there are no systematic measurements of this deterioration, nor an objective appreciation of how SWC or other measures would improve it.

The flood management strategy of DDAC, like other civil authorities in the country, is therefore limited to promoting public awareness, emergency planning and the construction of flood defence structures whose effectiveness is progressively eroded by deteriorating catchment condition. In addition, and although much has been done by DDAC to re-locate administrative and residential areas away from the flood risk areas, the use of the wadi common access land by the poorest for marketing, sanitation and even residence has proved an intractable problem. Flood zoning remains a difficult issue; it is one that DDAC must grasp, and the policy tools are available to do it.



Proclamation of Expropriation (455/2005), and the later Regulations on the Payment of Compensation for Property Situated on Landholdings Expropriated for Public Purposes 135/2007, are new proclamations described in SR3 section 3.3.1. The proclamation details the power for expropriation of land, the procedures to be followed and the amount to be compensated. Regional governments have the discretion to set their own local rates. Re-settlement in the public interest therefore has appropriate policy support.

2.1.3 Watershed ManagementProclamation 456/2005, entitled Rural Land Administration and Land Use covers the issue of land certificates to farmers. Certificates are even now being issued in many regions. The expectation is that if farmers are given greater security of tenure, they will increase on-farm investment (soil and water conservation works, irrigation etc) and improve management, operation and maintenance of existing farm infrastructure.

Interestingly, the Proclamation links land certification with a statement of obligations of the land holder, including the requirement to participate in the development of a land use master plan (eg at kebele level). Mandatory practices are also specified, including prohibition of free grazing on land with conservation structures, a requirement to use bench terracing on land of slopes between 30 and 60%, only forestation, perennial crops and forage production is permitted on lands greater than 60%, and the closure of highly degraded land. It remains to be seen how these guidelines will be implemented.

However, experience over the last decades suggests that land use management “by command” has done more damage than good, as population growth and limited land resources have seen the movement of the poorest rural households onto increasingly marginal land. The fundamental problems of food security, adequate herbage production for livestock, sustainable woody biomass production and potable and livestock water supply must be solved as part of a community land use planning exercise. The effort that individual farmers and communities will put into the maintenance of SWC structures will always be directly linked to the marginal value product of the farm against off-farm income activities, so increasing farm productivity is also fundamental to watershed management. These economic issues are not well articulated in Proclamation 456/2005, but they do appear in MERET implementation guidelines and in the implementation experience of watershed management projects.

Under the Proclamations Nos.197/2000, 299/2002 and 456/2003, the Ministry of Water Resources, the Ministry of Agriculture and Rural Development and the Environmental Authority all have the mandate to implement watershed development programs. In Proclamation 197/2000 the MoWR is required to promote watershed management strategies and practices to conserve water and soil, improve water quality and reduce reservoir sedimentation. The Ministry of Agriculture and Rural Development has the roles of coordinating the Regional Agricultural Bureaux and providing technical support and training to woreda personnel to undertake effective watershed management within the framework of the FFW Programme. MoARD and the BoARD.have been working on watershed development over the past three decades in the three woredas in the catchment; their activities are described in section 3.10.

2.2 The Institutional Framework2.2.1 Federal Ministries

The Federal ministries are empowered to advise and intervene if necessary by Proclamation 471/2005 (A Proclamation to Provide for the Definition of Powers and Duties of the Executive Organs of the FDRE) which provides common and specific



tasks to twenty line Ministries. The core responsibility of key institutions is described below.

The Ministry of Water Resources has responsibility to administer water resources crossing two or more regional states and the international boundary. The Ministry issues permits to regulate water development by the private sector and implements the responsibilities of the federal government in respect of water bodies. It is also responsible for the provision of meteorological services. One of the major task of the Ministry is to commission and oversee the implementation of river basin master plans. The Ministry of Agriculture and Rural Development is mandated to oversee, guide, and implement activities associated with the improvement of the agricultural sector. It is also responsible for natural resources protection through sustained agricultural development, identifying export markets for agricultural products, national food security, advising and sometimes implementing rural infrastructure, implementing agricultural research and conserving biodiversity. The Ministry of Labour and Social Affairs has the responsibility for industrial relations, health and safety, and equitable employment. It carries out studies on manpower in the formal and informal sectors and on social well-being, especially the protection of family and marriage, the creation of equal opportunity for persons with disabilities and the provision of care to the elderly.The Ministry of Works and Urban Development is charged with construction and urban development, undertaking studies related to urbanization, particularly insuring the availability of affordable housing (including re-settled households), initiatives to reduce urban poverty, coordinating support to urban administrations to improve service delivery, and studies for the integration of urban and rural development activities, and monitor the activities of city administrations which are accountable to the Federal government.

2.2.2 Dire Dawa AdministrationAs described in SR3 section 3.2.1, Ethiopia is administered by the Federal and Regional governments, of which there are nine which have the power to decide on their own internal affairs vis a vis, and consistent with, the policy and regulation of the Federal government. However, Dire Dawa is not one of these states, and was administered directly under the Prime Minister’s office and the MoFA until 2004. Though Dire Dawa is not mentioned under the Constitution, the town has its own council and administration that will exercise the same powers in administering social and economic development programs. The power of the DDAC rests on the Charter (Proclamation No 416/2004) promulgated to re-establish the DDA. Proclamation No 2/2004 further elaborates the structure and duties of the Executive Body and the Municipality Service organs. The Executive Body has two levels of elected members, namely the City Council and the Kebele administration. The details of the DD AC administration are described in SR3 section 1.4, and summarised in Table 2-5.

Table 2-5 Coordination Bureaus and OfficesNo Name of Bureau Name of Offices

1 Coordination Bureau of Capacity Building

1.1 Education Office1.2 Civil Service Commission1.3 Civil Service Reform Program Office

2 Coordination Bureau of Trade and Industry Development

2.1 Trade and Industry Office2.2 Co-operatives Organization and

Promotion Office2.3 Investment Agency



No Name of Bureau Name of Offices 2.4 Micro and Small Scale Business

Enterprise Agency3 Coordination Bureau of Finance

and Economic Development3.1 Finance Office3.2 Revenues Agency3.3 Environmental Protection Authority3.4 Policy studies and Plan Commission

4 Coordination Bureau of Information and Culture

4.1 Information4.2 Environmental Development Offices

5 Coordination Bureau of Justice, security and Legal Affairs

5.1 Justice Office

6 Coordination Bureau of Health and Social Affairs

6.1 Health Office6.2 HIV/AIDs Prevention and Controlling

Office6.3 Labour and Social Affairs Office6.4 Youth and Sports Commission6.5 Women’s Affairs Office

7 Coordination Bureau of Rural Development

7.1 Agriculture Office7.2 Water, Mineral and Energy Office7.3. Food Security and Disaster

Prevention Office

An evaluation of the role of the various bureaux, offices and municipality organs in the DD FMP is given in SR3 Urban Socio-economic and Institutional Assessment and Resettlement Framework, Appendix 3.

Kebeles are the lowest administrative organ of the DDAC. Kebeles were established under the DDA Charter and Proclamation No 1/2004. The Proclamation gave wider responsibility to the kebele as a second level administrative body (ie below the City Council) responsible for the social and economic development of the community within the Kebele boundary. Proclamation No 1/2004 identifies nine urban Kebeles and 38 peasant associations (rural kebeles). As elected bodies the kebele administration is accountable to kebele residents and the DDA. Most of the specialized offices and some of the Bureaux have a branch at kebele level. Kebeles receive their operating budget from the DDA based on an agreed allocation formula. To secure the budget, Kebeles administrations are required to produce a plan of action that fits with the overall plan of the DDAC. Kebeles have the responsibility for collecting revenues in accordance with the rate and standards set by the Federal Government and the DDAC.

2.2.3 Oromiya AdministrationThe watershed area extends across two woreda administrative units in Oromiya, Kersa and Hara Maya. The woreda administration is the fourth administrative wing of the government and the seat of agencies including Health, Education, Revenue, Agriculture and Rural Development, Youth, Women and Police. The function and responsibilities of the woreda administration were upgraded in 2001 to include the following:

Implement policies, laws and directives of the state Coordinate various activities undertaken by different offices in the woreda Maintain peace and security within the woreda while directing the police and security

forces Plan and implement projects



Supervise project development within the woreda Administration of the annual budget.

An administrator heads the woreda and chairs the Woreda Council, which is formed of agency representatives. The Woreda Administrator is accountable to the council and provides progress reports supplied by agency heads. Therefore, three tiers of authority are exercised - the council, the administrator and the heads of assigned agencies.

Kebeles are the lowest administrative unit of the catchment; there are seven in the Oromiya sector that occupy 10% of the area and about 16% of the rural population. Their functions and organisation are described in SR3 section 1.4.4.

2.2.4 ProjectsThere are a number of on-going federal and regional projects which impact on the project area and from which implementation experience can be gained. These include water supply (Harar Water Supply project, ADB) soil and water conservation (various NGOs, as described in SR 07 Table 3.6), livestock (National Livestock Development Project, ADB as described in SR07 section 6.8.3) and crop production (Agricultural Sector Support Project, ADB).

2.2.5 Service CooperativesTwo types of rural cooperatives exist in Ethiopia. The first is the producers’ cooperative that focuses on agricultural production and marketing. The second is the service cooperative that deals with distribution of major consumable services. The first type appears weakened by the process of privatization, while the second type now deals with fertilizer and input distribution. This increasingly takes place through the cooperative unions - legal entities that can enter into international procurement procedures to obtain the requirements of members. The basic goods such as salt, sugar etc are no longer available through the cooperatives, being left to private traders. The original idea of service cooperatives was to protect farmers from exploitation, by delivering/distributing basic goods through government agencies.

2.2.6 Traditional Social InstitutionsTraditional institutions based on mutual assistance known as debo or wonfel are means of labour exchange among neighbours. Membership ranges from 5 to 10 persons formed as a group.

Another social institution prevalent in Ethiopia and the study area is the Edir. The Edir plays multiple roles for promoting cohesive social bonds among the indigenous community. It raises financial assistance to needy members in times of funeral service, marriage, flood damages or when work oxen die. Edirs also settle disputes and conflicts arising among the contending parties.

The last group of indigenous institutions are those led by elders and religious leaders who are often involved in dispute settling. The elders are socially respected and their decisions are generally accepted by community members.

2.2.7 NGOs and Service ProvidersHararghe Catholic Secretariat (HCS) has been involved both in relief and conservation works across Kersa, Meta and Dire Dawa rural kebeles. It has also dispersed extension workers to initiate conservation based development. Another small NGO known as Self Help Development is also undertaking nursery and seedling production in Haramaya Woreda.



Another seven international NGOs including CRS, Oxfam-GB, CARE, IRC, World Vision and Save the Children USA operate in the catchment. Currently they have taken the initiative to launch an integrated flood mitigation strategy, and have undertaken small baseline surveys around the three woredas.

2.2.8 Disputes and Conflict ResolutionIn an environment of acute resource scarcity, conflict may occur among neighbours, families, communities and localities. The Oromo tradition (which is widespread in the rural areas of the catchment) provides space to elders and religious leaders to solve or defuse emerging conflicts. After 1975 and following the formation of local kebele tribunals, the conflicting parties may alternatively present their cases to the kebele judiciary body. The kebele tribunal has a mandate to punish or negotiate between the conflicting groups. The local kebele tribunal thus has jurisdiction specified in article 20 and 21 of the Land Proclamation. In essence this is where the conflicting parties are residents of the kebele, or where the source of conflict is situated or the offence is committed within the kebele jurisdiction. The kebele court may impose a variety of minor penalties.

2.3 Macro and Other Sectoral Policies2.3.1 Economic Development Strategy for Ethiopia

This strategy is named and commonly known as the “Agriculture Development Led Industrialization strategy (ADLI)”: This strategy, described in SR3 section 3.2.3 is the guiding tool for the current development of the country. The basic objectives of the strategy are:

Sustainable economic growth; Equity, including regional equity; and Self reliance, meaning dependence on national resources and independent national

developmentADLI provides important guidance for rural-urban economic relations, which is a central issue of the DD FMP.

2.3.2 Environmental PolicyThe Environmental Impact Assessment Proclamation (299/2002) empowers the Environmental Protection Agency (EPA) and the Regional EPAs to require the submission of an Environmental Impact Assessment study report prior to the implementation of any project which falls into categories defined by directives pursuant to the Proclamation. The Proclamation insists that if the project is of a trans-regional nature, submission of a report to the Authority is required, together with the consent of all the participating regions. It sets out also the content of the report and procedures for the evaluation of the report. The regional office is mandated to follow up the implementation of the project to assure its conformity with the original design. Accordingly FEPA and the Regional Environmental Protection Office (REPO) will be involved in the EIA and implementation of the DDA FMP.

2.3.3 Developmental Social Welfare Policy The policy is described in SR3 section 3.2.5. The policy prioritizes six groups, namely children, youth, family, women, elders and Persons with Physical and Mental Impairment. The following policy directives are relevant to flood mitigation actions:

Social welfare services shall be accessible to all Ethiopians in accordance with the principles of equity and justice;

Special attention shall be directed towards the development of infrastructure and the fulfilment of basic social welfare services;



A variety of programs aimed at preventing and minimizing the causes of social problems shall be designed and implemented;

Efforts shall be made to plan and implement appropriate rehabilitation programs and services to meet the needs of those members of society who are in especially difficult circumstances.

The policy implies that vulnerable and disadvantaged groups should receive especial attention in project design.

2.3.4 Poverty Reduction Strategy The Poverty Reduction Strategy was introduced in 1999 – 2001. SR3 section 3.2.6 describes the goals and targets. The second generation of the plan - “Plan for Accelerated and Sustainable Development to End Poverty” (PASDEP) - covers the period from 2002 to 2007. The scope of this plan is broader than the first and incorporates the well known “Millennium Goals”. The regional states, including DDA, are expected to address poverty issues in accordance with PASDEP.

2.3.5 The Rural Development Policy and Strategy (2002)This strategy confirms the driving role of the primary sector to gear up the growth of the secondary and tertiary sectors, as specified in ADLI. According to the strategy, different development strategies shall be prepared based on the agro-ecology of the country. The links between the agriculture and industry sectors, as well as rural - urban linkages and the importance of markets, are identified. The policy is extremely interesting since it emphasises the importance of comparative advantage in planning, rather than directing resources to disadvantaged areas, and is being incorporated by regional planning departments as a supplement to the traditional 5 year plan.

2.3.6 Industrial Policy/StrategyThe policy has an objective of creating bimodal links between the urban and rural setting and the agricultural sector with the industry. It further encourages the industrial sector to play a role in the creation of employment for displaced rural labour. Urban centres according to the policy will become important media for the development of industry and creation of demand for industrial goods. Dire Dawa town has a strong industrial sector (see section 3.12) which is playing an important role in employment creation. It is however prone to economic shocks including floods (see section 1.4.2).

2.3.7 Urban Development Policy: (2005) This is a comparatively new policy endorsed by the Council of Ministers in March 2005. The policy has two interrelated objectives:

to enable urban centres to become centres of development to bring urban residents to the living standard of middle income countries.

The policy also has chapters on provision of land and environmental issues. Under the policy, land remains a public good, which government has the mandate to reallocate for any purpose deemed important for the public. Individuals have access to use the land at reasonable cost. According to the policy the following will get priority in allocating urban land.

Condominium houses Social Services (Schools, health centres) Industry, Micro and Small scale trades Other residences Other Businesses and Recreation areas



The environmental part of the policy sets the direction on sanitation and related issues. Unfortunately, the policy has not well covered issues related with flood disaster and others. However, this issue might be dealt with town by town while the development plan is in preparation, and would include such guidance as flood zoning.

2.4 Summary of Policy Relevant to DD FMPDD FMP is an innovative project, in a unique location. Flood mitigation in cities is not a familiar action in Ethiopia. Dire Dawa is one of the principal cities of the country and lies at the base of a small, steep and highly degraded rural catchment. It is important to set the proposed project correctly in its policy context. Policy suggests the following: Subsidiarity (see section 2.2) whereby decisions are deferred to the lowest possible

administrative unit. This approach is being pursued especially in the Catchment Management component, where implementation will be at micro watershed level, and in the planning, construction and cost recovery of flood defences which are the responsibility of DDAC.

Involvement of federal agencies where cross border resource issues are at stake (see section 2.1.1), a particularly important issue for catchment and aquifer management in the context of the design of this project where four States are involved.

Implementation of a market economy (see section 2.3.5), which introduces the principle for paying for the use of natural resources – or their conservation – which again introduces the responsibility of urban dwellers to compensate rural dwellers for providing environmental amenity which does not wholly benefit the rural dwellers.

The interdependence of the urban and rural sectors (see section 2.3.1 and 2.3.5), which must be considered in DD FMP especially in the context of the market for woody biomass: Dire Dawa city is in fact contributing to its own flooding problem through unsustainable use of the catchment for fuel.

Attention to the interests of the most disadvantaged in both the urban and rural sectors, including the issue of access to services and resources and compensation for re-settlement where necessary (see sections 2.3.3 and 2.1.2).

Poverty reduction, including an affirmative policy for access to natural resources by the poorest, implying that disenfranchising the rural poor from the use of marginal land in the catchment is not an option, and neither is forcibly evicting the urban poor from common urban land unless the public good outweighs the private good and compensation is paid (see sections 2.3.4 and 2.1.2).

Attention to environmental issues (see section 2.3.2), including fulfilling all EIA responsibilities connected to the project.

Placing the water conservation and flooding issues in the context of national water policy (see section 2.1), which implies that the rural population has a responsibility for catchment condition, flood control and aquifer recharge not only for itself, but also for downstream users (see also section 2.1.3).

Urban flood management is at an embryonic stage in Ethiopia (see section 2.1.2) because of the natural pre-occupation with drought, but it is clear that urban administrations have the responsibility for taking all reasonable and cost effective flood protection measures on behalf of citizens (see section 2.3.7).

Re-settlement must take place in the context of the Proclamation of Expropriation (see section 2.1.2).

In short, policy can be confusing but it is not incoherent. The policies described set guidelines for design and implementation of the project which, if followed, will lead to outcomes which will benefit all the catchment population, urban and rural, relatively rich and poor.



3 THE PROJECT AREA

3.1 GeomorphologyThe topography of the study area falls within the Harar Plateau and the Dangago and Kersa escarpments. The upper part of the catchment accounting for 12% of the total area is between 2,000 - 2,300 metres and has higher rainfall. Slopes normally exceed 15% and may rise to over 60% but there are small pockets of flatter land. (see Annex of Drawings, DDF/TD/0). Administratively most of this zone falls in Oromiya Region. The central part of the catchment between 1,400 – 2,000 metres is dominated by large steep hills outcropping in a bowl which may have significant areas with slopes less than 15%; rainfall here is lower than on the escarpment. This area is entirely within DDA and accounts for nearly 70% of the catchment area. The lower part of the catchment near Dire Dawa city is increasingly arid and flat, until the drainage lines lose their competence on the Awash Plain. This area accounts for about 20% of the catchment area. A significant proportion of the population lives in steeply sloping topography requiring soil and water conservation (SWC) measures for sustainable agriculture.

3.2 ClimateThe catchment is situated in the Woina Dega (1,500 – 2,300 m) and dry Kola (< 1,500 m) agro-climatic zones with elevation between 1,300 and 2,200m above sea level. The climate is warm and dry, with mean annual temperatures ranging between 20-30C. Relative humidity is about 36% and 40% at elevations of 1,200m and 1,800m respectively and is relatively low. Potential evapo-transpiration is therefore high at 3,255mm on average. Mean annual temperature is inversely correlated with altitude and increases by about 1oC for every 100 metres fall in altitude (DD Master Plan, Phase 3, Volume 4 Table A.1).

Mean annual rainfall declines from the highlands (775 mm pa at Dengano) to the plains (640 mm at Dire Dawa city) and is therefore positively correlated with altitude, declining by about 40 mm for every 100 metres. The mean monthly August maximum rainfall is 155 mm (Dengano) and 115 mm (Dire Dawa city). The rainfall records indicate the rainfall to be erratic, with both spatial and temporal variability. The rainfall is classified as bimodal but the short belg rains are usually insufficient for rain fed agriculture.

Because of the light and variable rainfall the whole project area can be considered to be marginal for rain fed agriculture and to be food insecure. Over an observation period of 51 years, the highest annual rainfall in Dire Dawa city was 1,258 mm and the lowest was 357 mm. In 2002, a year of low rainfall, about 40% of the rural population in the catchment were the recipients of food aid, and cereal production in the DDA area as a whole was only about 20% of the previous season.

3.3 Hydrology and Water Resources3.3.1 Hydrology

Four rivers pass through or along the boundaries of Dire Dawa. As can be seen from SR2 Figure 1, the Dechatu and Butugi Rivers pass through the city while the Hare and Goro Rivers pass along its eastern and western boundaries respectively. There are only three rainfall stations in the catchment area, Dire Dawa, Kersa, and Dengego. The available records are for 55, 22 and 10 years of data respectively. Rainfall intensity data are not available for any of the stations. No runoff data are available for catchments around Dire Dawa.



Analysis of the data shows that extreme rainfall events leading to severe flash floods floods will generally have limited aerial coverage and are relatively unrelated to the amount of annual rainfall. In addition, they do not necessarily occur during the main part of the rainy season. Annual daily maximums were estimated for selected return periods using the Gumbel Distribution (see SR2 Table 2).

As no runoff data are available, rainfall-runoff modelling has been used to derive flood discharges from the rainfall data. The times of concentration for the four wadis were calculated to be 2.3 hours for the Dechatu River, 2.7 hrs for the Goro River, 2.04 hrs for the Butugi River and 3.7 hrs for the Hare River. Flood discharges were estimated and are shown in SR2 Table 4. The 2006 floods in the Goro and Dechatu Rivers were of the order of magnitude of the 1 in 50 year floods. Flood peak information is unclear and difficult to interpret, but an initial assessment would indicate that the peak discharge in the Dechatu River was very high indeed, almost certainly higher than the estimated 50 year peak discharge of 1,368 m3/s1. This does not give reason for complacency. Flood frequency analyses are based in one way or another on past history. If it is true, as some have suggested, that land use practices and climate change are resulting in an increase in flood frequency and magnitude, what used to be a 50 year flood 10 years ago, may be an average event today. This underlines the needs to review these types of estimates regularly, and to make a major effort to improve the data on which they are based.

3.3.2 Water ResourcesAlthough the surface water potential for the DDA area as a whole is 211.2 Mm3

(Development Master Plan Volume 4), there are few surface water resources and no perennial rivers within the catchment, only seasonal floods from the uplands of Hararghe highlands during the rainy seasons (see Annex of Drawings DDF/TD/02). Any benefits that may be derived from surface water storage are very limited because of the high rate of sedimentation. The Development Master Plan Study Report, Phase 3, Volume 4 reports no issues of surface water quality; salinity and SAR are all adequate for irrigation use.

The groundwater in the lower part of the catchment is essential for the urban supply of Dire Dawa (Sabiyan field) and Harare (Haseliso field). The aquifers have problems of over exploitation and pollution.

In the low rural areas of the catchment, most water supply is from boreholes and hand dug wells. They are well protected in most cases, and generally safe for humans and livestock. There are numerous springs in the upper catchment some of which have been developed for rural water supply. The coverage of secure rural water sources in DDA as a whole was low, only 24% in 2002, and improved rural sanitation was only 3% (Development Master Plan, Phase 1, section 3 volume 3). However, data from the same source suggest that the rural water supply within the DDA portion of the project area (87% of the catchment area and 81% of the population) is better (53%). This is as one would expect since the population is more concentrated than on the plain, and the water sources are cleaner and more accessible. In 2002 about 50 standpipes, 27 improved wells and 23 improved springs were functional in the project area.

There are 43 small and medium scale traditional irrigation schemes in use on 2,100 ha in 25 kebeles of DDA. These schemes mainly depend on spring water, though some use spate irrigation during the rainy season. Only about 820 ha produced an irrigated crop in 2005/06 because of water supply limitations. Small scale irrigation in the

1 APL estimates used in the economic and analysis assumed that the August 2006 flood had a return period of 1:75, Q=1,400m3/sec and 13 million m3, and a duration of about 2.5 hours.



project area appears to account for about 30% of the irrigation scheme area in DDA. The pastoralists also undertake opportunistic supplementary spate irrigation activities in valleys and depressions during the rains, using run off from higher areas.

3.4 SoilsLeptosols (15% of area) are mostly found on the mountain and hilly areas and are characterized by very shallow depth. These soils are seldom cultivated, being droughty even with soil conservation measures. They are largely left as open access communal grazing land. The excessively drained Fluvisol (22%), Xerosol (55%) and Solonchak (4%) soil types are found on flat, alluvial plains and in valley bottoms and depressions. They are deep with medium to coarse texture. Very small areas of Cambisols are found on the undulating and rolling plains and have moderately deep, medium texture (see Annex of Drawings DDF/TD/05).

One of the main agronomic constraints in the study area is low soil fertility due to severe land degradation and soil erosion. These in turn is due to cultivation of lands with slopes greater than 40%, and over-grazing/over-browsing by livestock. Soil loss was estimated by WBISPP as between 5-10 tons per ha pa but this is likely to be an under-estimate at the time (see section 3.10); it will anyway now be greater, due to deteriorating catchment conditions. The problem is compounded by many soils being inherently shallow and droughty. The rate of soil formation is believed to be about 6 tons/ha/pa in the Wiona Dega and possibly half that in the dry Kola. As expected there is therefore an annual net soil loss from the catchment.

In response to low and variable rainfall, shallow soils and steep slopes, farmers have terraced much of the cultivated land. Although the maintenance in some cases is not the best, there is clearly a strong tradition of soil conservation works in the area, encouraged in the past by WFP and several NGOs. It is apparent that on these steep, shallow, coarse textured soils in a relatively low rainfall area, farmers risk crop failure without adequate SWC.

The main problem areas in fact are the steep and overgrazed hills (18% of the area), which have very shallow soils. They have very low land capability and most of the area is open access commons. Runoff is high and intense, and concentration times in the wadis is very rapid, which exacerbates the downstream flood problem. However, soil loss may be less from the hills (where most soil has already been removed) compared with the cultivated land.

The other critical constraint in respect of soil fertility is the very high pH of many of the soils of the lower part of the area, associated with alkaline soil parent material (limestone, shale and mudstones) and low rainfall, so that leaching is not as pronounced in this lower area as it is on the escarpment. pH is high enough to inhibit the uptake of phosphate and may have negative effects on the uptake of other soil nutrients. Farmers are well aware of this through experience, and the use of inorganic fertiliser in the lower catchment is practiced by only 5% of farmers, compared with 65% of farmers at high elevations.

3.5 Land UseThe major land use data for DDA and the project area catchment is shown in Table 3-6 and the Annex of Drawings DDF/TD/04. Adjustments were made to the GIS interpretation, incorporating the known cropping intensity of areas in farms, known areas of plantations and shrub land, and estimated area of infrastructure.



Table 3-6 Land Use in the Project Area

Land cover

GIS Estimate

haPresent land use

haCultivated 20,550 9,895Uncultivated common property lands 4,429Existing plantations and enrichment planting 1,989Grass land 2,200 2,200Bare land 16,037 7,122Shrub land 8,915Infrastructure 4,237Urban 1,517 1,517Total 40,304 40,304

Source: Project GIS and DD MP land suitability data

Both the land capability and suitability in the project area are low. The DDAC Master Plan identified only 13,700 ha of land suitable for plantation forestry in the catchment. Subtracting the cultivated area and the present area under plantations implies that only 1,800 ha is suitable and available for new plantations or woodlots. The remaining 66% of the catchment is essentially unsuitable for cultivation or plantation forestry, and most of this is grassland, shrub land or bare land.

Shrub and grass lands (28% of the catchment) are used for grazing and browsing. There is a severe shortage of grazing and the DD MP notes that there appears to be a shift in livestock holding types from cattle to camels and small ruminants (goats and sheep). Camels and goats are mainly browsers and ensure that shrub and tree re-growth is limited. In general the grazing lands are communal, particularly in the lowlands of the region. Because of their low land capability and degraded state these are now common access lands, “first come first served” to the little grazing and wood available. There appears to be little or no community sponsored activity to close grazing areas periodically or regulate access. Consequently grazing land in the lower catchment is in a state of long term decline.

The land use statistics suggest that the land area of the catchment is fully utilised, albeit with a very low level of productivity of the cultivation, livestock and woody biomass production systems. There is very little potential for changing land use – the cultivated area already exceeds the cultivable area, and only 1,800 ha can be changed from its present common property grazing and fuel wood collection to higher production woodlots or plantations.

3.6 Demographics, Poverty and Gender3.6.1 The Rural Population

In respect of the rural population, and as shown in Table 1-2 the catchment is heavily populated, with 64,000 rural inhabitants in 11,000 households and an average family size of about 6-8 persons. The average farm size is about 0.9 ha, so there are nearly 7 persons per cultivated ha. The household size and the dependency ratio is higher in the upper catchment than the lower. In the upper catchment poor landless households may amount to 50% of the total, which would imply the existence of about 1,000 landless families in the upper catchment.

There are 133 micro watersheds in the project area, the average size is 1,000 ha, maximum 1,978 ha, minimum 386 ha. On average the micro watershed population is



about 80 households with 5.8 household members. The area in farms within the micro watershed varies widely from as little as 3% to over 40%. The remainder is communal land, normally bare and severely degraded steeply sloping land, particularly in the lower catchment.

3.6.2 The Urban PopulationUrban beneficiaries of the project are concentrated on the wadi bank areas within Dire Dawa city. There are no official records of the numbers of households that reside within the flood risk area in Dire Dawa city; the best estimate is between 2,000 and 3,000 households. Table 3-7 summarises some of the key features of flood prone and flood displaced households as reported in the Urban Household Survey (see SR3 section 2), and compares them with the Dire Dawa city population where the data exist. It is clear that these households are more likely to be male headed, large and relatively young, under-educated and poor. The survey has also shown that the affected are not a transient or recently arrived group, but nucleated, resident families with jobs and businesses in the city.Table 3-7 Summary of Household Characteristics

Household characteristicsDD

PopulationFlood prone Displaced

Male headed 58% 67% 66%Female headed 42% 33% 34%Married household head nd 77% 91%Number of members 4.5 6.15 5.53Proportion of females in family 50% 54% 47%Proportion with less than 5 yrs residence nd 8% 13%Muslim households 46% 50% 84%Proportion of household less than 15 34% 31% 40%Proportion of household more than 60 4% 4% 1%Households of Oromo ethnic group 31% 16% 62%Households of Somali ethnic group 14% 21% 25%Households of Amhara ethnic group 40% 37% 13%HH head without high school education nd 78% 94%Family members without high school education nd 69% 75%Proportion with less than average hh income nd 92% 97%Inadequate dry waste disposal 46% 94% 100%

Source: Urban Household Survey 2007

3.7 Land TenureFull details on the agricultural characteristics of the catchment are given in SR7. Size of land holding belonging to about 75% of rural households is between 0.25 to 0.75 hectares. As a result of sub-division at inheritance, private lands are usually fragmented, particularly in the highlands, into between three and five parcels. With parcel size 0.3 ha and smaller, returns to other inputs including labour tend to decline. It also becomes more difficult to implement SWC measures, as almost every bund, waterway and terrace will cross the private holdings of many farmers.

The land in farms in the catchment is about 10,000 ha and the overall population density per farm area is 6.44 persons. The catchment holds about 45% of the DDA rural population and 75% DDA farmed area. About 20% of the total number of rural households in the catchment live outside the DDA in Kersa and Hara Miya woredas.

“Private” land, including cultivated land and homesteads, belongs to the public and the State, and farmers have use rights only. However, the policy is now to define farmers’



rights more firmly through land certification. The expectation is that if farmers are given greater security of tenure, they will increase on-farm investment (SWC works, irrigation etc) and improve management, operation and maintenance of existing farm infrastructure. The Proclamation links land certification with a statement of obligations of the land holder, including mandatory land use practices and the requirement to participate in the development of a land use master plan (eg at kebele level).

Common land refers to those lands accessible to the population by customary right, but excluding private farm land. Two types of common land can be distinguished in the project area:

“common property” land (CPR) in which local residents have rights over the material resources of the land, including wood, grass and grazing, have an institutional mechanism for harvesting them, and the right to exclude others from access

“common access” land (CA) which is open to all, the material resources of which are also available to all on “first come, first served” principle.

There are four types of CPR/CA land in the catchment, namely: hilltop forest land (very small in extent) managed by MoARD/HCS CPR managed by local communities CPR grassland managed by community grazier groups CA land.

The area of common land in the catchment is deduced to be about 240 km2 or 63% of the total area. About 10,000 ha is common property management, and 14,000 ha is open access. Management of common access is the crux of catchment management .It is highly degraded, steep, de-vegetated marginal land. Use rights are weak in these areas, not only because they now have very limited resource value, but also because pastoralists from outside the catchment also have access rights. As a consequence, increasing population pressure and livestock density have made common property management by the resident population almost impossible. It is estimated there is about 14,000 ha of this type of land in the catchment.

3.8 Agriculture3.8.1 Crops

Cropping pattern data is given in SR7 Table 5.2 The data show: A high proportion of cereals in the cropping pattern (62%) Teff, barley, wheat and maize are only significant in the higher rainfall western highland in

Kersa woreda; cereals are dominated by sorghum in the lower catchment Pulses and oilseeds are grown throughout but the areas are very small Vegetables and roots are grown throughout but the areas are tiny Chat is an immensely important crop throughout the catchment Other perennial crops are minor About 17% of the farm area is sown to perennial crops.

Because of inter-cropping, farm cropping intensity is 111%, which is very high for a rain fed farming system. Nearly all land is cultivated without fallowing and rotation, because of severe land shortage and land fragmentation. According to EASE 2002, there is virtually no cultivation in the belg rains, which are too short and unreliable. This means that the cropping season and its associated labour requirements are highly compressed between June and November.



Yields for the catchment were obtained from EASE 2002 and given in SR7 Table 5.3 and 5.4.The average yields of both annual and perennial crops produced in the catchment are very low compared to the national average, and for cereals yields are about half their potential. This low productivity is due to soil fertility problems, erratic rainfall, use of local varieties and poor cultural practices. In addition the use of improved inputs is very low, commonly attributed to poor cash flow and lack of credit. However, the risk of losing both crop and inputs as a result of drought may deter farmers from over-committing themselves. Additionally, fertiliser response is low on the soils of high pH found in the lower catchment.

On-farm employment occupies no more than 12% of the time of the rural population of working age (SR7 section 5.6). Of course there are considerable additional household and farm labour requirements, including collecting fuel wood for household use and sale, water collection and food crop processing; all these are low productivity occupations. Alternative employment is difficult to obtain, and limited to petty trading, milling and cottage industry. Household poverty is therefore deeply entrenched.

3.8.2 LivestockThe estimated livestock population for the watershed is 18,400 cattle, 19,300 sheep, 36,800 goats, 3,800 donkeys, 2,300 camels, 19,400 poultry and 770 bee colonies. The total in Tropical Livestock Unit (TLU) for the watershed is 25,500. The improved stock include more than 1,200 head (Holstein), mainly found in Dire Dawa urban area and its outskirts.

The livestock density in the catchment is about TLU 66 per km2, or TLU 0.66 per ha. It is substantially higher in the upper catchment, TLU 1.1 - 1.6 per ha, than in the lower catchment, about TLU 0.56 per ha. This is because of the higher rainfall and greater availability of feed stuffs in the highland. Cattle dominate the total TLU in the upper catchment (nearly 80%), whereas sheep, goats and camels account for nearly half the TLUs in the drier lower catchment. Donkeys, at 13% of total TLUs, replace camels as beasts of burden in the upper catchment. In the lower catchment donkeys are only 9% of total TLUs.

There are about 25,500 TLUs in the catchment, 63,700 people and 11,000 households. This suggests an overall figure of 2.32 TLUs per household and 0.4 TLUs per person. The average household might be expected to have about 1.8 cows, a herd of about 6 sheep and goats and a few chickens.

Improved types of animals are found only in and around Dire Dawa town, and are limited to the herds of the individually owned or large-scale dairy farms. There are currently three dairy farms under the later category, namely, Ahmdel, Derara and Hafcat. These dairy enterprises supply the major part of milk and other dairy products to Dire Dawa town. However, the livestock management system followed in the catchment is traditional, and described in detail in SR7 section 6.3.

The major sources of livestock feed in the watershed are natural pastures (70% of dry matter), crop residues (25%), industrial by-products (wheat bran and short) (2%) and thinning/weeds (3%). Formulated feed is also available in Dire Dawa city, but use is confined to improved dairy cattle and stall feeders. About 56%, 40% and 4% of the grassland is under communal, private and joint ownership, respectively. There is a steady decrease in the area of the grassland in the watershed. As shown in SR7 Tables 6.5 and 6.6, the land cover of the watershed comprises bare land, cultivated land, physiognomic vegetation, and settlement. The total annual dry matter expected



from the different land cover of the catchment is about 57,000 tons. The cultivated land contributes about 65% of the total herbage production, followed by bare land (28%) and physiognomic vegetation (7%). The dry matter (herbage) required for livestock is thus about 90% of the annual herbage production in a normal year of production. However, accessible herbage is much lower than total supply, because of waste and access considerations. The Tables show that dry matter requirement would be insufficient in a normal year and in a year of comparatively low rainfall it would be quite inadequate.

Water availability is also a serious problem for livestock owners in the dry season. The total amount of water required for livestock in the watershed is over 312,000 m3 (see SR7 Tables 6.7 and 6.8). Groundwater sources tend to dry out between the months of December to April (Tahisas to Miazia). At this time, livestock owners reduce watering frequency and/or travel long distances with the herds looking for water. Every two or three years the herds have to leave DD AC for localities in Somali Regional state.

Because of shortages of feed and water livestock owners prefer more resilient traditional breeds, the productivity of which is low. Animals take a relatively long time to reach sexual maturity and the breeding interval is long. As a result, the numbers of offspring obtained from the dams are few. The milk yield for cattle is not much over 1.7lts./hd/day, which is on the low side. With this level of production, and the small numbers of livestock per household, it is not surprising that animal protein normally supplies only 7% of food energy taken by rural households in Ethiopia. There is no reason to believe animal protein consumption in the catchment is any higher than the national average.

3.8.3 Agricultural Support ServicesThe Agricultural and Rural Development Bureau (BoARD) provides agricultural credit, input supply and training services. There is also an Agricultural Regulatory Team which is responsible for the organization and strengthening of the service cooperatives. The BoARD in DDAC channels extension services through the Agricultural Extension Team. The Extension Team is headed by a Team Leader and assisted by subject matter specialists (SMS). The Extension Team discharges its duties through Development Agents (DAs) assigned to the Development Centres established in each kebele. There are 35 Development Centres across DDA to which three DAs are assigned as a team at each Development Centre responsible for crop production, livestock production and natural resources respectively. The administrative system is similar in the upper part of the catchment in Oromiya Region, but here the SMS are based at the woreda administration in Kersa and Hara Maya. SR7 section 5.6 argues that the staffing of support services has improved in recent years and it is assumed most staff are in place. However transport and other work resources are very rudimentary.

3.8.4 Crop Marketing and Agro-ProcessingLocal market opportunities in DDA are good, especially in Dire Dawa and Melka Jebdu. The location of Dire Dawa relative to Djibouti, Somalia, Yemen and Saudi Arabia markets is also good; market outlets exist for chat, livestock and livestock products, coffee, vegetables, fruits, hide and skin, etc. Dire Dawa is also well located in respect of domestic markets such as Addis Ababa, Nazaret, Shashemene and other small towns located along the main routes. Rail, road and air transport links are good. Traders purchase agricultural produce directly from farmers.



There are about 450 km. of all weather and dry weather roads across the DDA. The major market problem is lack of market/collection centres in the agricultural hinterland for perishable crops such as vegetables, fruit and chat. Road surfacing is usually poor and storage is limited, so crops are often damaged in transit. There is no formal market information available to producers.

There are two major agro-processing plants in Dire Dawa town. These are the Dire Dawa Food Complex which produces macaroni, spaghetti and biscuits both for the local and export markets, and a dairy farm undertaking milk processing for local and export markets. In addition there are also a number of flour and oil mills owned and operated by private entrepreneurs.

There are no well established Agricultural Service Cooperatives to represent farmers and mitigate marketing problems, especially with regard to price fluctuations. There is a particular need for fruit and vegetable marketing centres and fruit and vegetable producers cooperatives. There is however one well established Chat Export Association in Dire Dawa but there are no chat producer cooperatives to undertake and control price fluctuations.

3.8.5 Food SecurityFarm size, number of persons per farm, cropping pattern and yield all assist to make an estimate of the contribution of crops to the energy requirements of the household. The daily requirement is considered to be 2,100 kcals per capita. For the “average” small farm size and the “average” family size, field crops contribute only about 45% of the total family food energy requirement (see SR7 Table 5.5). Food security is inversely correlated with rainfall, and the lower and east of the catchment is more food insecure; especially since the staple, sorghum, has a much lower calorific yield than other cereals. The balance of the household food energy must come from livestock, food aid, food purchases made from sales of cash crops like chat, livestock and fuel wood, and food purchases from cash earned from off and non farm sources.

One reason that farmers have the reputation for being unwilling to invest in time and energy in the construction and maintenance of SWC for field crops is that field crops contribute a rather small proportion to the household food energy budget. The marginal rate of return on off-farm activities, in particular trading and non farm labour, is probably higher than time spent on the farm where the returns to labour are very low, being limited by the farm size. Returns to off farm activities are probably more reliable also, especially in years of drought. Of course, the decision will be affected by any cash or food aid payments for work done on SWC on the farm.

3.9 Forestry and Household EnergyTrees, mostly Eucalyptus camaldulensis, Cupressus lusitancia and Prosopis juliflora, are planted around homesteads and urban areas. These trees are sources of construction material and fuel wood, and the planted area is in the region of 2,000 ha in 2006. This includes about 840 hectares of plantation forest. There are also some enrichment plantations carried out on about 900 hectares of land designated for area closures. In addition about 200-300 hectares of newly planted forests were added in the 2006/2007 crop season. The quality of the plantations is poor, due to encroachment and poor management. In 2002 840 ha of plantations contained about 2,000 tons of total stock, 1,500 tons MAI and 1.8 MAI tons per ha (WBISP). Probably only about 3% of the total woody biomass stock was in improved production in 2003. New plantings since then have been limited.



The results of the Woody Biomass Project (WBISPP 2001) estimates for DD AC are discussed in detail in SR7 section 3.2 and 8.3. The catchment accounts for 26% of the total area of DDA and has 24% of its shrub land. It contributes 27% of the shrub land stock value and 22% of the MAI. The relatively low MAI is because of the high population density of the catchment, to which MAI is negatively correlated. Shrub land contributes about 85% of the woody biomass stock in the catchment; the remainder comes from cultivated land, commons and plantations. The total catchment MAI is in the order of 17,500 tons per annum (shrub land is about 7,600 tons per annum of this). As a rough estimate, the total stock is 182,100 tons, or 32% of the shrub (not total) woody biomass stock of DDA.

Consumption of wood as fuel (including charcoal) in the Administrative Council is 71,257 tons (1,187,762 M3) per annum, which is set against an annual sustainable supply of only 34,550 tons (57,500M3). This means that the consumption rate is more than twice the annual sustainable supply. The project area within DDA does not deviate from this pattern. The annual consumption of both fuel wood and construction timber by the rural population in the catchment is estimated to be 22,100 tons. This is 32% more than the catchment MAI.

The DDAC Master Plan 2003 (Part 2 Forestry and Energy) concludes that woody biomass use for energy will continue to expand with population and urban growth in the foreseeable future, and that “the woody biomass potential of the Administrative Council is enormous”. This is probably a fallacy. It has already been demonstrated that the land suitable for forestry in the catchment is virtually fully committed. In addition, initiatives to expand peri-urban plantations and enrichment plantations have stalled for lack of funds, incursions, low MAI and concerns with groundwater draw-down.

3.10 Soil ConservationSR7 section 3.4 describes the significant efforts in SWC by both by the government and NGOs over the last ten years. The total expenditure is estimated to be ETB 78 million in 2006 prices. Over 70% of the expenditure was reported to be on hillside and gully reclamation. About 28,800 ha (288 km2) was covered in the period 1995-2005, most of which was in the project area. In addition an unspecified but considerable quantity of physical works was carried out between 1975 and 1995. The extent of works, especially bench terracing visible within the catchment, suggests that this is true. The question needs to be raised, why, despite a considerable effort and expenditure on SWC works in the recent past, is catchment condition apparently deteriorating and agricultural production substantially lower than its potential?

The problem is that most costs have been incurred for in-field bunding, hillside reclamation and gully control on cultivated land. Farmers clearly value this as a measure to reduce the droughtiness of soil by increasing depth and reducing run off. Area enclosure on cultivated and household (ie “private”) plots, plus planting of exotic trees is also a feature, particularly higher in the catchment. The DDAC Statistical Abstract 2005 notes that over 14,500 ha had some sort of conservation works in place in the mid 1990s. This is approximately equivalent to the area in farms in the whole administrative area.

What is not visible, either in the expenditure estimate or in the field, is attention to the state of open access community lands, in particular any management of grazing or attempts at reforestation. Expenditure on reforestation and grazing improvement was a mere 3% in the period 1995-2005. Expenditure on farmer training, demonstrations and



institutional support to the extension service appears to have been negligible. The budgets of the implementing agencies show no allocation for maintenance of works, neither is there an indication that communities have assumed this responsibility. The community is apparently still not conversant with this type of natural resources management at catchment level and still does not understand the importance of soil and biomass for environmental protection against floods and drought. The government’s initiatives have been hampered by a lack of land use policy, regulations and laws on sustainable natural resources management. The other major problem has been a shortage of trained manpower and resources particularly in the natural resources sector.

On the positive side, there is not much evidence that soil loss per se is the major problem in the catchment. WBISPP calculated erosion for the whole of DDA at only 5.28 t/ha/yr, and for the catchment above Dire Dawa city 6.04 tons/ha/pa. The rate of soil formation is probably about half of this, at 6 tons/ha/pa on the dry Woina Dega and only 3 tons/ha/pa in the dry Kolla, so there is certainly a net soil loss in DDA and the catchment, and the WBISPP soil loss estimate is certainly a minimum, if only for the reason that land cover has progressively deteriorated and the study is nearly ten years old. Nevertheless, it may well be that soil erosion in terms of tons of soil lost per year is not the significant problem of the catchment. Bare rocky hills account for 40% of the area and here the soils are naturally thin. Conservation works are already established in the cultivated areas, thus lowering slope angle and slope length. Farmers do apply manure to their fields rather than burning it for fuel, which reduces soil erodibility. Under these conditions, soil loss in terms of tonnage would not be expected to be abnormally high. This suggests that the volume and speed of concentration of runoff caused by deforestation on hills with naturally thin soils is a more significant cause of downstream floods than loss of soil water holding capacity due to erosion. Unfortunately this problem has not been addressed by the SWC programmes undertaken over the last decades.

3.11 Impact of Production Systems on Catchment Condition3.11.1 Crop Production Systems

Although yields remain very low, the crop production system is not in fact a major threat to deteriorating catchment condition because:

Physical conservation works including expensive bench terracing have already been implemented on a large proportion of cultivated land

Over 15% of the farm area is in perennial crops, mostly chat which leads to continuity in land cover, assists water retention and reduces soil loss

Farmers recognize that without conservation works the chances of crop failure dramatically increase; therefore they will continue to maintain the structures

The rate of soil loss in the catchment as a whole is comparatively low by Ethiopian Highlands standards, mostly due to relatively low rainfall and shallow soils

Farm sub-division and farm population density cannot continue to increase much further, as a large proportion of the rural population are already food insecure and must seek livelihoods elsewhere.

Although the crop production system does not present a serious threat to worsening catchment condition, there is much to be done to improve it, including:

Promote mechanisms for community maintenance of existing conservation structures, as farms are so small that only a community approach to maintenance at micro watershed level is possible

Encourage the adoption by communities and individual farmers of land use guidelines in Proclamation 456/2005 to restrict inappropriate land use on steep slopes



Increase food crop yields particularly on the smallest farms, in order to reduce food insecurity and increase the relative value of cultivated land as a household resource – thus promoting improved maintenance of soil conservation infrastructure

Increase crop yield to promote stand density and reduce the erosivity of rainfall Increase perennial cropping (chat, fruit trees etc) and irrigation to improve land cover and

therefore soil water retention Improve input use, particularly the use of organic fertilisers to increase soil water holding

capacity Construction of additional conservation structures where required Support to agricultural extension and training, the expenditure on which seems to have

been very limited in the last decade.

3.11.2 LivestockLivestock density has increased with population and the area cultivated. However, livestock density per se is not the major threat to catchment condition because the livestock density is only TLU 0.66 per ha, which is not high, particularly as over 50% of the herd are cattle which are individually fed. It is true though that dry matter requirement is insufficient to meet herd requirements but the most severe effects of this are felt in years of below average rainfall.

The cattle component of the total herd is also not a negative impact on catchment condition. Cattle account for up to 80% of total TLU in the upper catchment and over 50% of the TLU in the lower. Cattle consume 63% of the total dry matter requirement of the total herd, and a large proportion of this would be dry matter production from cultivated land, or cut and carried from managed grazing, since biologically cattle require higher quality herbage than sheep, goats, donkeys and camels. Cattle do not usually compete for dry matter production of the open access commons; they graze supervised by the farmer in the cultivated areas. But cattle movement does have a negative effect on soil condition locally, where movement is concentrated along cattle paths to grazing and drinking points. On the other hand, cattle excrete a significant quantity of manure and urine which adds to soil fertility. On balance the conclusion is that cattle are not a problem to catchment condition.

The main threat by livestock to catchment condition is the 50% of the total herd in the lower catchment (which is 90% of the total catchment area). These comprise mainly sheep and goats (nearly 30% of the total herd), and also donkeys and camels, which are the main competitors for grazing in the open access commons. Use of these commons is by the poorest households, with minimal land resources of their own, who favour raising sheep and goats for their rapid weight gain. In addition, the grazing resources that the poorest command can only be tolerated by sheep and goats. This part of the herd, which at 50% is significant, has a great impact on the regeneration of the open access commons, as they selectively graze and browse out seedlings and re-growth.

It seems likely that with increasing poverty in the catchment, the proportion of sheep and goats in the total herd will rise (a trend noted in the DDAC Master Plan over DDA as a whole), bringing further deterioration to the commons. The condition of the open access commons is the key to catchment condition as a whole, as will be explained in the next section.

3.11.3 Common LandsThe principal threat to catchment condition is the state of open access community lands, which is in stark contrast to homestead and cultivated land. This is because:



The demand for fuel wood in Dire Dawa city has presented a significant commercial opportunity to rural households (particularly land poor, food insecure households) and this is likely to continue ; already, harvesting of woody biomass on communal land is proceeding at twice the annual replacement rate

The predominance of goats and sheep in the livestock system, and the temporary presence of pastoralists from the plains on open access communal land means that more productive communal land management systems including re-planting of woody biomass resources, are difficult to implement

Apparently little attention or investment has been given to the open access communal lands by either line agencies or NGOs in the last decade, with expenditure on forestry and improved grazing being only 3% of the total.

Urgent attention to the open access communal lands is required to make significant improvements to catchment condition. This will be a long term activity with long term benefits, but will lead to a reduction in the frequency of floods of any given magnitude. Without such improvement in catchment condition, the flood protection structures in Dire Dawa city will be under continuing and increasing threat as the design flood becomes a more frequent event. Consequently the competence of the flood defence structures will decline, due to ever more active scour, sedimentation and channel movement in the main drainage lines.

The common access lands in the lower catchment are not promising land resources. Rainfall is low, soil cover is thin and slopes are steep. Most of it has been classified as unsuitable for plantation forestry. The implication is that the only option to improve productivity is to upgrade the existing vegetation resource rather than change it.

3.12 City Environment and Flood Defences3.12.1 Urban Land Use

Currently, the Dire Dawa city spreads over about 30 km2 and has a mixed settlement pattern. Table 3-8 shows the approximate areas and percentages of different land use types.



Table 3-8 Land Use Dire Dawa TownNo Land Use category Total area in ha Percent1 Residence 962.3 35.91.1 Pure Residence 929.3 34.61.2 Mix Residence 32.9 1.22 Commerce and trade 57.8 2.23 Industry and warehouse 150.7 5.64 Services 165.1 6.25 Recreation 61.8 2.36 Road and transport 582.4 21.76.1 Transport 273.3 10.26.2 Road 309.1 11.57 Administration 34.9 1.38 Urban agriculture 106.5 3.99 Forest 80.8 3.0110 Vacant area 279.7 10.411 Special functions 201.8 7.511.1 Military Camp 68.7 2.611.2 Reserved area 20.9 0.811.3 Water bodies 112.1 4.2

Total 2,683.8 100.01Source: Yalemtsega Teruneh, Storm Water Management Issues in the Current Dire Dawa, Integrated Development Planning, Options for Flood Risk Mitigations In Dire Dawa, Workshop Proceeding, p 74.

Table 3-8 shows that much of the land within the urban area is designated for particular land uses, and that vacant and reserve areas comprise less than 10% of the total. This implies both that urban growth is active, and that land available for re-settlement in convenient locations may be limited.

The older part of the city is split between Kezera to the west of Dechatu (planned on a grid system), and Megala to the east of the Dechatu. Megala has developed piecemeal following the terrain. The problems resulting from lack of planning in this area in the past are now exacerbated by illegal settlers, which appear to be concentrated to the south and north of the town, east and west of Dechatu. There are also areas of illegal settlement around Goro in the west. These problems are well appreciated by the DDA and expressed in the IDP, but solutions are difficult to find. Homeless and transitory people often stay and sleep around the wadi crossings in the vicinity of the markets, the sites of which are considered communal land.

As well as these two core areas of the “old” city, Dire Dawa is expanding rapidly both to the north and the west. Note must be taken of the industrial park in the north on the left bank of wadi Dechatu, and the residential area on the right bank. Both residential and industrial expansion is also taking place on the left and right banks of wadi Goro. Another important settlement feature of the town is the new and well planned administrative and residential area in the north east.

3.12.2 PopulationIn 2005 the number of households was 52,000 located in nine urban kebeles, as shown in Table 3-9. The population density exceeds 40,000 per km2 in kebeles 5, 6 and 7, but is less than 3,000 per km2 in kebeles 1,2,3 and 9. The official figures do not include illegal settlers.



Table 3-9 Population Density, Dire Dawa City

Urban Kebele

Population of kebele

Kebele area (km2)

Length of road in the kebele (Km)

Road length km per

km2

Population density, persons per km2

Road km per 1,000

Population1 13,087 29.56 26.57 0.90 443 2.032 36,185 40.81 74.54 1.83 887 2.063 26,363 9.27 31.294 3.38 2,844 1.194 30,336 2.26 19.492 8.62 13,423 0.645 30,662 0.61 12.826 21.03 50,266 0.426 29,492 0.66 8.977 13.60 44,685 0.307 35,668 0.73 13.272 18.18 48,860 0.378 39,477 1.06 23.044 21.74 37,242 0.589 30,798 8.02 16.393 2.04 3,840 0.53

Total 272,068 92.98 226.408 2.44 2,926 0.83

3.12.3 Private Sector Economic ActivityThe number of enterprises, number employed, the Gross Value of Production and the Value Added accruing to business activities in Dire Dawa town is given in Table 3-10. The private sector employs about 34,000 people, and the Gross Value of Production approaches ETB 394 million. We cannot combine this with the Government budget of ETB 240 million (see Figure 1-1). The government will have spent some of the budget as a “customer” of the private sector, purchasing goods and services (e.g. construction services, printing etc) for public use. To add the government budget to the private sector GDP would therefore lead to double counting. The private sector regional GDP alone is about ETB 1,700 per capita pa (US$ 180 pc pa).

Table 3-10 Summary of Private Sector GVP Dire Dawa Town‘000 ETB

Number Employment

Wages &

salaries

Gross Value of

ProductionValue Added

Large and medium scale industry 32 1,429 9,821 182,337 32,848Small scale industry 467 1,665 2,527 24,811 9,175Cottage and Handicrafts 3,729 6,536 39,722 12,218Urban informal 13,640 15,951 127 25Distributive and Service Trade 4,219 8,226 3,067 146,277 33,549

Total 33,807 393,275 87,815

The history of Dire Dawa is closely bound up with flash floods, although proper records or flood archives have not been found. 91% the respondents to the Urban Household Survey were affected in some way, and 96% of the residents of flood prone areas are apprehensive of future floods. The majority of residents of flood affected areas prefer a mix of flood protection walls and evacuation from the flood prone areas. A significant proportion favour only flood protection walls built along the wadi. A very small proportion, less than 4%, favoured a Flood Warning system. According to the sample, about 85% of respondents stated their willingness to be evacuated from flood risk



areas if the need arose. Opinion of the degree of coordination of the flood issue from policy makers down to kebele varied widely.

3.13 Project BeneficiariesThere are a number of rural and urban beneficiary groups which are summarised in Table 3-11. The Table includes a summary of the characteristics of the beneficiaries and an estimate of their numbers and locations. It will be apparent the distribution and magnitude of project benefits will be difficult to monitor and evaluate. This issue will be dealt with in section 5.7.



Table 3-11 Beneficiaries of the DD FMPBeneficiaries Characteristics Location Approximate numbers Type of benefit Benefit timescale

Urban households

Relatively poor, nucleated urban

resident families with high dependency ratio

Flood risk areas adjacent to the wadi banks served with flood protection walls with-project

up to 3,200, which would be affected by a

1:200 flood

Lives, houses and personal property will have improved

protection from flooding

On completion of construction

Small businesses and informal traders

Owners, operators and employees of small

under-resourced enterprises


up to 2000, depending on flood magnitude

Businesses premises, stock and market access will have improved

protection from flooding


InstitutionsReligious, government,

NGO, industry and business


up to 500, depending on flood magnitude

Premises, assets and access of which will have improved protection from flooding


Urban consumers of fuel wood and construction timber

Households and construction industry

Dire Dawa cityAn unknown proportion

of 250,000 city inhabitants

Improved sustainability of wood supply and more stable wood

prices

Benefits begin within 10 years

Consumers of groundwater from Aseliso aquifer

Households, industry and businesses

Dire Dawa, Harar, Aweday and Haramaya cities

about 400,000 consumers

Improved sustainability of groundwater supply

Long term

Consumers of urban services

Households, industry and businesses

Dire Dawa city 250,000 city inhabitantsImproved quality and quantity of

urban services provided by DDAC/municipality

On completion of construction and

recovery from 2006 flood shock

Dire Dawa work force Active urban population Dire Dawa city 100,000 city inhabitantsGreater employment opportunities

in business and industry

On completion of construction and

recovery from 2006 flood shock

Rural farm families Non-poor and near poor

landed familiesCatchment cultivated area

10,000 ha and 9,000 farm families

Improved crop, livestock and woody biomass yields


Rural farm families Non-poor and near poor

families with common property access rights

Community common property lands in catchment

4,500 ha and 9,000 farm families

Improved grazing and woody biomass productivity


Small ruminant graziers and

Poor and very poor households with limited

Catchment common access lands

To be established, perhaps 3,000 graziers

Transfer of common access to common property, compensation

for temporary land closure, improved grazing and woody




Beneficiaries Characteristics Location Approximate numbers Type of benefit Benefit timescale

biomass and common property ruminant numbers) biomass production

Rural farm families All rural householdsLand and property near gullies

and drainage lines

Unknown, perhaps a few hundred families at

risk

Slightly reduced flood risk due to improved catchment

characteristicsLong term

Rural farm families Poor landless families Upper catchmentEstimated as 1,000

families

Increased opportunity in FFW on SWC construction on common

lands

On commencement of construction



4 DESCRIPTION OF THE PROJECT

4.1 Overall ApproachThe goal of the Dire Dawa Flood Mitigation Project (DD FMP) is to reduce the risk of urban flooding in Dire Dawa city and to improve the livelihoods of the rural population in the catchment above it (see DD FMP Logical Framework, Appendix 1). This will be achieved in the first place by strengthening and extending existing flood protection walls in the vicinity of the city. However, the upstream catchment is small (only 400 km2) and increasingly degraded. If the hydrological characteristics of the catchment continue to deteriorate, further reductions in concentration time and return period of floods of given magnitude will result. This not only leads to more frequent and more aggressive floods, but also reduces the competence of the designed flood protection works. Maintenance costs will increase, and eventually it may even be necessary to re-build the flood protection once the return period of the design flood becomes unacceptably frequent. The rural population will become increasingly impoverished with catchment deterioration; crop yields will decline from their present very low levels, herbage for livestock will become increasingly scarce, and the woody biomass resource will be extinguished within 15 years2.

It is essential therefore at least to maintain catchment condition to protect the designed flood defences. Any improvements in catchment condition will correspondingly increase the level of urban flood protection, make savings in maintenance costs and increasing the life of the flood protection works. At the same time, food security will improve as crop yields rise, rural household cash incomes will increase with improved animal husbandry, and the woody biomass resource will tend to increase rather than decline; these outcomes will sustain the incomes of the poorest rural households engaged in the fuel wood trade, and help to stave off an energy crisis in urban Dire Dawa.

The immediate and necessary solution is improved flood protection based on engineering works. In view of the steepness of the catchment and consequent rapidity of flood onset, these should be complemented by an effective flood warning system (FWS) that will enable people to remove themselves from unprotected areas (particularly the wadis themselves) when floods are expected. In the medium term, watershed management may have an impact on concentration time and flood volumes, and is likely to improve livelihoods and agricultural sustainability in the rural areas of DDA.

The challenge of the project design is therefore to identify the optimum balance of measures to reduce flood risk and improve the livelihoods of the rural population. The measures will include flood protection defences, catchment management through SWC and improved agricultural production, FWS and re-settlement of the urban population in flood risk areas. Fundamentally, there are two ways of defending Dire Dawa against flooding:

To reduce the magnitude of the flood peak, by storing water in the catchment, with some repair of existing defences through the town damaged in 2006 ;

To improve the standard of flood protection through the town, by enhancing the design of the floodwalls (improved resistance to undermining, and raising/extending where necessary.

2 See estimates in SR7 Agriculture, Livestock and Forestry, sections 3.2 and 10.2.4Dire Dawa Flood Mitigation Project 36 Feasibility Study Main Report_FINAL


Potential floodwater storage sites exist in both the Dechatu and Goro catchments just upstream of Dire Dawa. Both the above alternatives were therefore considered, and studies undertaken to enable their comparison from the perspectives of :

Effectiveness in reducing risk of damage caused by floods Sustainability and risk of serviceability failure Cost

In order to establish the project interventions required, a number of other studies and field investigations were carried out. Most important of these were both urban and catchment social assessment, including PRA and household surveys and detailed field surveys to establish the need for SWC, water supply and communications. All this work is written up in the appropriate Supplementary Reports.

The following supplementary reports are associated with this feasibility study: SR1 Environmental Assessment SR2 Report of the Stakeholder Workshop 3 July 2007 (submitted 20 August 2007) SR3 Urban Socio-economic and Institutional Assessment and Resettlement

FrameworkSR4 Watershed Social AssessmentSR5 Hydrology & Reservoir AssessmentSR6 Soil Conservation and Land ManagementSR7 Agriculture, Livestock and Forestry SR8 Infrastructure Design Report and O&M ManualSR9 Flood Warning SystemSR10 Seismic Hazard Assessment

4.2 Project Goals, Scope and Components The project Logical Framework is in Appendix 1 of this report. The goals are:

Reduction of losses of life and property of urban residents caused by flooding in Dire Dawa city

Reduction of poverty amongst rural households in the catchment above Dire Dawa city

The goals will be achieved by realizing two principal outputs. Output 1 is based on improved flood management and has two components – flood defence engineering and flood warning. Output 2 relates to catchment management and has five components. These are the social and institutional capability at kebele and community level to carry out catchment planning (rather than simply in-field SWC), implementation of SWC, land management and rural infrastructure, crop production, demonstration and training, livestock demonstration and training, forestry demonstration and training,

The performance targets of Output 1a are: Improvements in performance of the existing flood protection walls to 1:200 (2.5 km) Extension of flood protection walls to other urban areas (5.062 km) to the same level of

protection Upgrading of walls destroyed in 2006 and currently under construction to 1:200 (4.25 km) Repair and protection of associated infrastructure (5 crossings, 2 bridges Re-settlement as required (38 houses) outside the line of flood defence

The performance targets of Output 1b are: Implementation of a catchment monitoring system to predict floods exceed flood

protection design (10 rainfall intensity gauges, 6 river stations plus control centre) Training of DD AC hydrologists in management and operation Training in evacuation procedures.



The performance targets of Output 2 are: 2 WMT, Training and equipping 66 DAs, 22 FTC and 7 AHC, 8 CMS CAP in 133 micro watersheds SWC implemented in 133 micro watersheds Community grazing plans on 9,000 ha including formation of 90 grazier groups Improvements in water and communications including potable water supply, livestock

watering points, water harvesting and footpaths, foot bridges and roads Crop demonstrations of 4 technical packages in 22 kebeles in DD AC and Oromiya Improvement of communal pasture at 132 sites, 22 forage seed nurseries and livestock

demonstrations Demonstrations of agro forestry and cultivated and common property land, private and

village woodlots established on 1,800 ha, establishment of 44 private forestry nurseries.

The outcome (Outcome 1) of improved flood protection and the FWS will be increased security for Dire Dawa city. It is estimated than 95% of the present APL from flood damage will be eliminated by protection from a 1:200 year flood or smaller. Up to 3,200 urban households would directly benefit by avoiding loss from a 1:200 flood. This will result in increased levels of investment and sustainable growth of the city economy. Outcome 2, from catchment management will be sustainable increases in crop, livestock and woody biomass production and improved catchment condition. This is expected to result in a 45% increase in rural household incomes within 10 years.

The logic of the project relies on establishing a synergy between the two outputs which will reinforce the twin goals: a more prosperous rural population as a result of catchment management, and a more secure urban environment as a result of improved catchment condition. This will strengthen urban-rural links, and may in time allow taxpayers in the city to pay the rural population in the catchment for environmental goods (i.e. catchment condition) that reduce flood risk. There are risks to achieving the synergy predicted. The greatest risk is that despite all efforts to achieve increases in fuel and wood production, the urban demand for woody biomass will still outstrip any incremental MAI on common access land (40% of the catchment), and catchment deterioration will continue.

4.3 Project Description4.3.1 Enhancement of Flood Defence Infrastructure

The August 2006 floods caused major damage of the city along the two rivers as a result of overtopping or washing away some parts of the flood defences. Existing flood protection walls were overtopped at several locations in both rivers, and in some reaches the walls were washed away altogether. The most affected reaches are along Dechatu River, including severe bed scour at some locations.

The Dire Dawa Administrative Council in alliance with different government and non-government institutions is undertaking urgent urban flood defence works. These include construction of masonry retaining walls along most affected / vulnerable reaches of the Dechatu River totaling a distance of 3.48km, and a total of 2.26km along the Goro River. The construction of these flood walls has progressed well and they are due to be completed shortly.

Under this study, the adequacy of these existing walls (the newly constructed and the old walls which were not damaged) has been assessed. Additional reaches in both



rivers that need protection have also been identified. Designs have been prepared both for upgrading the existing walls, and for new walls. Improved protection for the Dechatu crossings and bridge piers have also been designed. The details are given in SR8 Infrastructure Upgrading Design Report.

In summary, the works proposed for the enhancement of flood protection along the Dechatu are:

Detailed design of the flood wall defences taking into account predicted flood levels, scour and the configuration of the wadi

Recommendation for the construction of new flood walls on both the left (2.969 km) and right banks (1.505 km)

Gabion dykes for some downstream reaches outside the built-up area on the right bank (0.5 km) and left bank (1.520 km)

Upgrading and strengthening of existing walls on the right bank (2.686 km) and left bank (3.02 km)

Detailed design for protection of river structures including the main road bridge and five ford crossings

The works proposed for flood protection along the Goro are: Detailed design of the flood wall defences taking into account predicted flood levels,

scour and the configuration of the wadi Recommendation for the construction of new flood walls on both the left (0.959 km) and

right banks (0.869 km) Gabion dykes for some downstream reaches outside the built-up area on the right bank

(0.68 km) and left bank (0.846 km) Upgrading and strengthening of existing walls

The total cost of the proposed works (exclusive of contingencies) is ETB 176 million for Dechatu (contract package reference 8) and ETB 96.8 for Goro (contract package reference 9).

4.3.2 Re-settlementA certain amount of re-settlement will be required as a result of the re-alignment of the flood protection walls to avoid constrictions. The legal framework for re-settlement is given in SR3, section 5.3, and the re-settlement requirements and a re-settlement plan is given in section 7.

Land acquisition and resettlement impact will be kept to a minimum. However there are certain bottlenecks along Wadi Dechatu where widening is recommended, particularly (i) at the bus station; and (ii) at the Hafkat ford area where major damage occurred in the August 2006 flood. A total of 38 houses are affected, and part of the Dire Dawa city bus station (4,000 m2), (see SR3 Table 7.1 and Table 7.2). Using either national rates or rates specific to DD AC, the total cost is expected to be in the order of ETB 4.5 million, plus 10% administration costs. The details for implementing and monitoring the proposed re-settlement are given in SR3 sections 7.2 and 7.4.

Buffer zones within the protected area (behind the flood walls) are not required from the perspective of flood defence effectiveness. For maintenance purposes, there is some advantage in having access behind the wall, but this is outweighed by the cost of resettlement to provide it along the full length of defences on both banks; the number of properties involved could well exceed 200, at a unit resettlement cost of ETB100,000/property (ie, > ETB 20m, vs current resettlement budget of ETB 4.5m). Where land immediately behind the defences is currently undeveloped, it is recommended that DDA do not allow development within 5m of the defence centreline.



Similarly, if land within this strip becomes vacant in the future, DDA should prevent its redevelopment and retain it for maintenance access. However, it is not necessary to resettle any current occupants of this 5m strip simply to achieve continuity of access behind the defences along their full length; most maintenance can be achieved from within the wadi bed between floods.

4.3.3 Flood Warning SystemThe details of the FWS are given in SR2 section 7. Fundamental to adequate FWS is good real time flood development data collection, rapid data processing and an established and understood decision support system based on defined level of readiness. In addition, the process of establishing and running a FWS will greatly enhance the knowledge of the performance of small un-guaged catchments in the region.

It is proposed that a minimum of 10 automatic logging tipping bucket rain gauges be installed, the locations are shown on SR2 Figure 7. In addition a total of 5 river gauging stations are also proposed on the main tributaries of the Dechatu River (3 sites), Goro and Hare Rivers. A key component of the monitoring and data collection system will be the linking of the data loggers to the monitoring office in Dire Dawa. Because all the necessary software is available and affordable, it will be possible to provide communications using the GSM (cell phone) network. However, the system must be carefully installed by qualified technicians, fully protected and regularly checked and visited. A five stage system of flood readiness is described in SR2 Figure 8, together with the necessary actions and procedures associated with each stage.

4.3.4 Catchment Management

4.3.4.1 Objectives

Inadequate crop and feed productivity, drinking water and woody biomass generation to meet expanding community needs (both to consume directly and to sell) are the root causes of land degradation, increased flooding in Dire Dawa city and rural poverty in the catchment. The design of interventions to achieve sustainable catchment management must include planning to meet these needs, thereby substantially raising livelihoods. This introduces some specific objectives for project design, and consequently specific measures to achieve them.

4.3.4.2 Improving Household Food Security

Crop production meets about 45% of the food energy requirements of the average farm family. A reasonable target to aim for is 90%, assuming meat, fish, honey etc account for the other 10%. There is little possibility to expand cropped area because nearly all suitable land is fully committed, so the measures must target increasing yields. About 53% of food energy requirements in the catchment are from sorghum and 26% from maize. A further 7% comes from root crops and 6% from pulses. The biggest impact on food production can be achieved by targeting cereal yields, and these need to double to meet the target, with smaller increases in other crops. This is technically possible, though challenging.

The responsibility for achieving this lies with DA (Crops), with agronomic support from a Watershed Management Team based in DDA and Kersa, for the Oromiya sector of the watershed. DA (Crops) are appointed to each kebele and a farmer training centre has already been constructed in association with the DA office. DA transport is



assumed to be a bicycle or mule. The DA (Crops) will run a total of 16 demonstrations in each kebele:

Improved cultivation practice In-field measures for SWC Soil fertility management Introduction of improved varieties.

In addition the DA will run eight training courses per annum, for 20 farmers each, covering the main aspects of the demonstrations. The demonstrations will be revised annually taking into account their relevance and practical experience of farmers in implementation. It is believed the demonstration and training programme should be implemented at kebele level and not micro watershed level as part of the CAP. This is because:

CAP should be confined to SWC works implementation to allow a more simple plan It would be very difficult logistically as well as expensive to implement an extension

programme at micro watershed level

The CAP will be a basis for implementing SWC works and will resemble a contract between the community and the project. It will include an implementation budget. The demonstration and training programme should not be included in this because it would imply a responsibility to provide it at micro watershed level, which is logistically difficult.

The details are described in SR7, sections 10.2.1, 10.3 and 11.2 and SR4, section 6.2.

4.3.4.3 Increasing cattle feed availability

A reasonable target is to provide adequate dry matter for an improved cattle herd of similar size to the present. There are about 18,500 unimproved cattle in the catchment with a DM requirement of 33,000 tons or 1,780 kg per cow. The total DM availability is 56,000 tons and the share of cattle is 56% (14,400 cattle TLU out of a total of 25,500 TLU). Reducing available dry matter by 5% for waste and 5% for access difficulties, then the DM availability for the present cattle herd is only 28,500 tons, or 87% of requirement in an average year of rainfall.

Assuming an increase in herd quality, with 25% of the cattle herd upgraded to an improved breed weighing 230 kg and the weight of the remaining indigenous cattle raised by 5% to 205 kg, then the cattle herd would account for 63% of the total herd expressed in TLUs. The DM requirement for cattle would rise to 35,500 tons. Because of increases in crop yield, the available dry matter from crop residues on 10,000 ha would rise by 25% to 2.25 tons per ha and the total DM availability would increase to 60,700 tons. Of this, 24,500 tons would be allocated to the (assumed unchanged) sheep, goat, donkey and camels herds, leaving a balance of 36,500 tons. Deducting 5% for waste and 5% for inaccessible fodder, leaves 33,000 tons, or 94% of the improved cattle herd’s requirement.

It is therefore necessary to plan for the production of a minimum incremental 2,300 tons of fodder production. This could be produced in a variety of ways, but the most convenient is to plan for 770 ha of improved fodder production in the catchment yielding 3 tons per ha, or 0.08 ha per farm. On larger farms this could be accommodated easily, but on farms with less than the average 0.9 ha farm size it would conflict with food crop production and may have to be achieved by sharing common property resources.



Implementation of the sub-project will be through DA (Livestock) in each of 22 kebeles in the catchment, supervised by SMS at ARD based at woreda level in Oromiya State (7 kebeles) and through the Bureau of ARD at DDAC (15 kebeles). Note there is one AHC to serve 3 kebeles.

Capital costs are for up-grading the DA offices and AHPs. As far as it is known DA (Livestock) are appointed to each kebele and an animal health centre has already been constructed in association with the DA office. DA transport is assumed to be a bicycle or mule. The DA (Livestock) will identify six common pasture areas in the kebele and their users, and advise on the management of the pasture, including the opportunity for the use of improved forage. The DA (Livestock) will establish an improved forage nursery in the kebele for the production of forage seed for distribution to farmers. It is preferable that, like agro-forestry nurseries, these are in the private sector with supervision and support from the DA. In association with this distribution he/she will establish four improved forage demonstrations in the kebele.

The AHC will function with the support of the project in the purchase of equipment and medicines. Provision exists for the improvement of AI services as well as animal health, but note that DDA at least is comparatively well served for AI, and the catchment area is relatively small and close to Dire Dawa. Therefore it is assumed the existing AI facilities are adequate.


4.3.4.4 Improving Woody Biomass Production

Over 80% of the present production of woody biomass in the catchment is accounted for by about 9,000 ha of shrub land in the lower catchment. The demand of the rural population in the catchment is 22,100 tons of fuel wood and timber for construction. The total annual inflow for fuel wood in Dire Dawa city was estimated to be about 16,000 tons (urban users use a greater proportion of alternative energy sources) and the demand for industrial wood is an additional 8,000 tons pa. At least some of this comes from the catchment, say 20% which is roughly in proportion to its area within DDA and proximity of the catchment to the city. Therefore the total annual demand met by the catchment is 27,000 tons, and according to DDAC, it will rise by about 1% per annum. Use therefore exceeds sustainable yield by about 55%.

The total stock in the catchment is about 182,100 tons. An annual woody biomass budget was prepared taking into account stock, MAI (taking into account change in MAI on the preceding year), and increasing demand. The budget shows that the woody biomass resource in the catchment would be extinguished in 13 years. This attrition rate is causing a rapidly deteriorating catchment condition which will increase the frequency of flooding in Dire Dawa city, increase maintenance costs of the flood protection works, and may necessitate re-building them to higher specifications within the life of the planned works.

There is insufficient suitable and available land in the catchment to reverse this trend, and careful long term planning will be required to secure woody biomass resources in DDA as a whole. However, the catchment management component can postpone the total loss of woody biomass stock by about 10 years with the following measures, which are only just achievable in the seven years elapsed time of the project:

A 5% increase in the cultivated area, resulting from land reclamation and a 15% increase in woody biomass stock as a result of increased agro-forestry



Expansion of private woodlots by 1,800 ha, (ie the area suitable for plantation forestry minus the cultivated area)

A 15% increase in stock on remaining uncultivated common property lands as a result of increased agro-forestry

Natural growth in existing plantations and enrichment planting A 10% increase in woody biomass stock on shrub land in the common access lands in

DDA.

Implementation of the sub-project will be through DA (Natural Resources) in each of 22 kebeles in the catchment, supervised by SMS at ARDBs based at woreda level in Oromiya State (7 kebeles) and through the ARDB at DDAC (15 kebeles). The DA (Natural Resources) will run a total of 4 demonstrations in each kebele, two of which will be agro-forestry practices on cultivated land and two will be on community property land. In addition, DA (Natural Resources) will establish two agro-forestry nurseries per kebele. It is preferable that, like forage seed nurseries, these are in the private sector with supervision and support from the DA. Included in the sub-project are the costs of establishing agro-forestry and woodlots on common property land. The project will pay the community at standard FFW rates for the labour required to establish and maintain these.


4.3.4.5 Improved Management of Common Access Lands

Given that about 16,000 ha or 40% of the catchment is highly degraded common access land with little or no management, changing this situation will be a challenge. The objective is to increase the productivity of grazing and woody biomass production on common access land which is unsuitable for plantation forestry or enrichment planting. It is impossible to say with the data to hand by how much herbage production could be improved or allocated, but a 10% increase in woody biomass stock on shrub land in the common access lands in DDA is required to meet the target for woody biomass production described in section 4.3.4.4.

Common access shrub land (9,000 ha) is mostly in the lower catchment, where nearly 90% of the goats and sheep in the catchment are found. In addition there is 7,000 ha of “bare” land which is probably used in the same way, but it is assumed this land is mostly rock outcrops and has no potential for improvement. Common access land is used informally by the poorest for grazing and fuel wood collection. This land must be improved to protect the livelihoods of the poorest, and to reduce runoff which causes both rural and urban flood damage.

The approach will be to formalise use of this land by forming grazier/fuel wood groups over 100 ha (or similar) units. The objective is to create common property rights for group members in land that was previously common access. The groups will then decide on the rotational closure of the land, according to a suitable formula, say 15% of the land to be closed for a defined period, probably two years to allow regeneration of natural grasses and woody shrubs. This would result in improved grazing and a 10% increase in woody biomass (taking into account shrub land MAI). If the land is suitable, this could be supplemented with enrichment planting, but no cost has been allocated for that. As an incentive, there is a case for compensating the group for livestock productivity/fuel wood collection foregone, since one benefit of the measure would be to reduce runoff and flood intensity downstream.



The sub-project would be run by DDAC ARDB and supervised by an SMS. Grazier group formation and management would be coordinated by community mobilisation specialists (CMS), who would also assist in the development of micro watershed CAPs. CMSs would be appointed by kebele, and each would be responsible for about 4 micro watersheds and 4 grazier groups.

See SR7 sections 10.2.5 and 11.2.3 and SR4 section 6.3.4 for a more detailed description of the measures proposed.

4.3.4.6 Improved Rural Water Supply and Access

Increased water points are required for cattle, so as to avoid the need to move the herd in years of very low rainfall. The water requirement for cattle is 168,000 m3, and the available data suggest that only about 16% of cattle have access to improved water sources. However, in planning the requirement for incremental water points it is reasonable to consider the requirements of the total human and livestock population in the catchment. The numbers of people and head of livestock in the catchment is known, and the total drinking water requirement is 661,000 m3 per annum. It is known from that 97 sources serve a defined number of people and livestock, the total requirement of which is 298,000 m3 per annum, so each source must yield in the order of 3,000 m3 pa. The incremental water requirement from improved water resources is 363,000 m3, which suggests a further 118 improved sources should be planned for in the catchment3. At full development, a total of 215 improved sources would serve 11,000 rural families and their livestock, which is about one source per 50 households.

Rural water supply will be planned and funded under the project, and implemented by the Bureau of Water, Mineral and Energy Office. It is assumed that 75% of water source development will be from springs in the upper and middle catchment, where the majority of the population live. Because water harvesting often requires house modifications (eg roofing and sometimes house shape) it will be done on a demonstration basis only, two sites per kebele.

The catchment is well served with farm roads. Unfortunately most of these roads are inadequate for all season access, but the costs of up-grading them to all-weather standard is very high. Note that most FFW roads constructed by the community do not achieve all weather motorable standard and a more determined approach is required.

See SR7 sections 10.2.3 10.6 and 11.2.5 for a more detailed description of the measures proposed.

4.3.4.7 Alternative Livelihoods

There are about 1,000 landless and near landless households in the catchment, which is about 8% of total rural households in the project area. Expanding alternative livelihoods opportunities for these, other rural households with very small land holdings and vulnerable female headed households will tend to mitigate environmental pressure arising from grazing and fuel wood collection by these households on open access commons. However, implementation modalities are complicated by:

The relatively small number of landless households (<10% of the total) The concentration of rural landless Oromiya Region in seven kebeles which

account for only 10% of the catchment area

3 It is assumed that these exist. The sedimentary geology of the escarpment suggests there should be many sites for development. Furthermore, 6 springs were identified in the sampled micro watershed Ejeru (5.3 km2), indicating a density in the order of one spring per km2 in the upper catchment.



The risk of overburdening DD FMP (which is already complex) with additional activities, and alternative livelihood promotion (credit, micro-credit, training etc) tends to have high management overheads

Opportunities for feasible non-farm activities in the upper catchment are not well known, but will mostly be petty trading, cottage industry and seasonal labour.

DD FMP will provide employment opportunities for landless labour in soil and water conservation on common land (see 6.3.1 SR04) throughout the project area. Furthermore, rural landless are the principle users of open access commons, for which measures to improve livelihoods in respect of grazing and woody biomass production are proposed (11.2.3, SR 07). Increasing crop and livestock productivity will tend to promote crop processing and rural trade. In addition, specific livelihood programmes will be implemented. See SR7 sections 10.7 and 11.2.6 for a description of the measures proposed.

4.4 Project CostsProject costs (exclusive of contingencies) are summarised by component in Table 4-12. The Table gives reference to the component cost Tables in the Supplementary Reports.

The SWC were based on the detailed costs estimated in the field for each land category for two sampled micro watersheds. This allowed unit area SWC costs to be estimated for the two major land development units.

The Environmental Management Plan costs are estimated to be ETB 1.05 million, as specified in SR01 Table 6.2. The constituent costs of this activity are distributed between cost items 2.2, 2.8, 2.10, 2.11 and 6 in Table 4.1 below.



Table 4-12 Project Base Cost Estimate by Component

Estimated Costsub

head component Table referenceNumber Project Component ETB US$ % %

1 Project Coordination Office 0.8%1.1 Staff costs 3,864,000 426,961 0.8% SR3 Table 6.3

2 Project Management Office 8.2% SR3 Table 6.32.1 Staff costs: Project Management 1,555,200 171,845 0.3%2.2 Staff costs: Resettlement 672,000 74,254 0.1%2.3 Staff costs: Flood Protection Component 8,978,400 992,088 1.9%2.4 Staff costs: Catchment Management Component 14,880,000 1,644,199 3.1%2.5 Staff costs: support staff 1,260,000 139,227 0.3%2.6 Office and transport costs 5,917,600 653,878 1.2%2.7 Training of contractors 105,000 11,602 0.0%2.8 Training of DDAC Line Departments 420,000 46,409 0.1%2.9 Urban kebele evacuation procedures 271,000 29,945 0.1%

2.10 Resettlement 4,369,057 482,769 0.9%2.11 Monitoring and Evaluation: urban flood protection 500,000 55,249 0.1%

3 Flood Protection Walls 57.3% See BOQ3.1 Dechatu River Flood Mitigation Work 176,108,229 19,459,473 37.0%3.2 Goro River Flood Mitigation Work 96,767,603 10,692,553 20.3%

4 Watershed Planning Teams 3.2% SR4 Table 6.14.1 Staff costs 8,893,500 982,707 1.9%4.2 Office and transport costs 4,408,700 487,149 0.9%4.3 Training of DA and CMS 367,000 40,552 0.1%4.4 Community Training 638,000 70,497 0.1%4.5 Preparation of CAP 665,000 73,481 0.1%4.6 Monitoring and Evaluation: catchment management 350,000 38,674 0.1%



Estimated Costsub

head component Table referenceNumber Project Component ETB US$ % %

5 Catchment Management Measures 29.9%5.1 Improved agricultural practices 4,134,970 456,903 0.9% SR7 Table 11.15.2 Improved livestock practices 4,791,726 529,472 1.0% SR7 Table 11.25.3 Improved Management of Common Access Lands 8,354,629 923,163 1.8% SR7 Table 11.35.4 Improved agro-forestry practices 15,130,238 1,671,849 3.2% SR7 Table 11.45.5 Rural water supply, roads and footpaths 35,068,946 3,875,022 7.4% SR7 Table 11.55.6 SWC Costs 74,998,723 8,287,152 15.8% SR6 Table 8.65.7 Alternative Livelihoods 860,750 95,110 0.2% SR7 Table 11.6

6 Flood Warning and Catchment Monitoring SR5 Table 14Equipment and operation 1,744,388 192,750 0.4% 0.4%

Total 476,074,657 52,604,935Exchange rate 1US$ = ETB 9.05 (Dec 2007)



Project management costs were built up from estimated staffing requirements and operating expenses. The elapsed time of the project is 7.5 years, as shown in the Implementation Chart, Appendix 5. The amount and allocation of proposed staff time is shown in Table 4-13. It is assumed that the PMO and the WPT will be staffed by national consultants with support from international consultants in a few key disciplines. The Consultant’s Team Leader will initially be an internationally selected Civil Engineer/Flood Management Specialist and will remain in post for 4.5 years until construction is complete. This person will have overall responsibility for the operation of the PMO. Following completion of construction, the Consultant’s Team Leader will be the Catchment Management Specialist.

Table 4-13 Estimated Staffing Requirements Technical Management National International Support TotalProject Coordination Office 168 84 252Project Management Office 54 732 82 924 1,792

Watershed Planning Teams 1/ 1,428 672 2,100

Total 222 2,244 1,596 4,1441/ Excludes time of DA and SMS (already in post)

4.5 Expenditure ScheduleThe expenditure schedule is shown in Table 4-14.



Table 4-14 Expenditure Schedule, ETB ‘000 (exclusive of contingencies)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 TotalProject Coordination Office 552,000 552,000 552,000 552,000 552,000 552,000 552,000 3,864,000Project Management Office 10,957,929 7,421,798 7,041,366 4,091,421 2,023,829 1,511,429 1,511,429 34,559,200Resettlement costs 2,184,528 2,184,528 0 0 0 0 0 4,369,057

Flood Protection Walls 0 136,437,916136,437,91

6 0 0 0 0 0 272,875,832Watershed Planning Teams 4,472,700 2,002,667 2,002,667 2,002,667 1,613,833 1,613,833 1,613,833 15,322,200Catchment Management MeasuresImproved agricultural practices 587,740 773,075 968,010 1,172,545 211,200 211,200 211,200 4,134,970Improved livestock practices 590,368 803,692 1,033,449 1,279,639 361,526 361,526 361,526 4,791,726Improved Management of Common Access Lands 700,464 1,349,986 1,362,721 1,375,457 1,388,193 1,400,929 776,879 8,354,629Improved agro-forestry practices 1,728,096 2,025,466 2,335,436 2,658,005 2,004,375 2,127,745 2,251,114 15,130,238Rural water supply, roads and footpaths 0 0 3,506,895 7,013,789 7,013,789 7,013,789 7,013,789 3,506,895 35,068,946

SWC Costs 0 0 7,499,87214,999,74

514,999,74

514,999,74

5 14,999,745 7,499,872 74,998,723Alternative Livelihoods 156,500 160,413 164,325 168,238 172,150 19,563 19,563 0 860,750Early Warning and Catchment Monitoring 697,755 697,755 58,146 58,146 58,146 58,146 58,146 58,146 1,744,388

Total 22,628,081 154,409,296162,962,80

335,371,65

230,398,78

629,869,90

4 29,369,22311,064,91

3 476,074,657



4.6 Financing Plan

The sources of financing are not clear at the time of the preparation of this report (February 2008). It would be a suitable and interesting project for donor funding, but DDAC may wish to implement all or part of the proposed project alone (or with partial or full support from MoWR), in order to avoid negative impacts on the annual budget received from the federal government. However, it is unlikely that DDAC would either wish or be able to implement the Catchment Management Component without the involvement of MoWR/MoARD and Oromiya State. Implementation of a donor funded project with MoWR as the executing agency is recommended, as discussed in Section 4.1. The Financing Plan assumes this modality, and states the levels of funding required from an international funding agency (e.g. AfDB, NGO etc), the Government of Ethiopia (GoE) and project beneficiaries.

The financing rules are: The donor will fund 80% of the costs of the supervision and construction costs of urban

flood protection ; the balance will be funded by DDAC The donor will fund the costs of capital equipment (vehicles, office equipment etc) and

consultancy fees GoE will fund office space, local salaries and recurrent costs The costs of SWC and Agricultural support will be allocated as described in detail in SR4

section 6.3.1, which inter alia states that the costs of SWC on privately farmed land will be the responsibility of the farmer, SWC on common property land will be carried out by the community and paid for at FFW labour rates subsidised by the community at 20%, and SWC on all other land will be carried out at the full FFW labour rate (assumed to be ETB 10 per day).

The costs of rural water supply, roads and footpaths will be divided equally between donor, GoE and community

Re-settlement will be funded by GoE Alternative livelihood interventions will be funded by the donor FWS and catchment monitoring will be funded by the donor.

The Financing Plan is shown in Table 4-15.

Table 4-15 Financing Plan, ‘000 ETB Donor GoE Beneficiaries TotalProject Coordination Office 3,864,000 3,864,000Project Management Office 30,989,200 3,570,000 34,559,200Resettlement costs 4,369,057 4,369,057Flood Protection Walls 218,300,666 54,575,166 272,875,832Watershed Planning Teams 12,370,200 2,952,000 15,322,200Catchment Management MeasuresImproved agricultural practices 3,929,570 205,400 4,134,970Improved livestock practices 3,779,524 1,012,202 4,791,726Improved Management of Common Access Lands 8,354,629 8,354,629Improved agro-forestry practices 14,924,838 205,400 15,130,238Rural water supply, roads and footpaths 11,689,649 11,689,649 11,689,649 35,068,946SWC Costs 37,737,949 22,451,892 14,808,882 74,998,723Alternative Livelihoods 860,750 860,750Early Warning and Catchment Monitoring 1,744,388 1,744,388

Total 344,681,361 104,894,766 26,498,530 476,074,657



5 PROJECT IMPLEMENTATION

5.1 Implementation IssuesThere are a number of issues that need to be taken into account in the implementation design of the project:

Flood protection for Dire Dawa city could be treated as an internal regional matter, and implemented without reference to federal funding.

DDAC may prefer this in order to avoid any change to annual budgetary arrangements with the centre.

For technical and administrative reasons the Catchment Management component cannot be implemented by DDAC alone; the catchment falls in two regions, DDA (90% of catchment area and 81% of population) and Oromiya (only 10% of area in the highest part of the catchment but 19% of the catchment population) and affects two others through water supply issues. Best technical practice requires that the whole catchment is included in the project, so the provision of implementation resources for both regions is included in project design.

Because the project area covers two regions, the MoWR, MoARD and any other concerned Ministries at Federal level must be included in project implementation.

The rural administrative structure of DDAC is different from Oromiya, notably it has no administrative woredas and the administrative bureaux in Dire Dawa coordinate directly with the urban and rural kebeles; however rural kebeles in DD AC and Oromiya function in a similar way

Like nearly all SWC projects, the implementation area is the micro watershed (average size in the catchment 1,000 ha) not the administrative kebele (average size in the catchment 2,400 ha); so technical staff at woreda and kebele level have to work with micro watershed residents (normally 80-120 households)

Only one micro watershed in the southwest of the catchment, Gale Mirga (16.09 km2) has more than 50% of its area in Oromiya Region; the soil conservation and land management programme would therefore be implemented by Kersa woreda ARDB. Following the 50% rule, SWC in all other micro watersheds (96% of the catchment) would be done by DD AC ARD/PMO

SWC alone will not give the project benefits expected and required (ie improvements in food security, woody biomass production and grazing resources), so the recommended interventions in agriculture, livestock and forestry are also required; in the 7 kebeles in Oromiya Region with more than 10% of their area in the catchment this will require the involvement of the Oromiya DA staff.

For these reasons, two implementation modalities have been considered. The first, recommended modality, assumes donor funding and implementation with the full participation of Oromiya State. The second assumes no donor funding, and implementation by DDAC with minor inputs from Oromiya State, limited to kebele level interventions on the upper catchment in improved crop, livestock and agro-forestry.

The Consultants recommend the former administrative arrangement for the following reasons:

The technical scope of the project is broad and likely to exceed the capacity of DDAC to implement it alone, hence national consultancy staffing is appropriate

Cost considerations: the total contract cost of enhanced flood protection will be equal to the entire DDAC budget of 2006/07

Therefore the remainder of this section assumes that the project will be implemented at national level with donor funding.



5.2 Executing AgencyGiven that the catchment falls in two regions and has other cross-boundary implications for the transfer of water resources, the executing agency shall be MoWR

5.3 Institutional Arrangements5.3.1 Steering Committee

A schematic for institutional organisation for the donor funded project option is given in Appendix 2. The organisation, concept and activities of the project will be spearheaded by a Steering Committee (SC) composed of stakeholders from the federal and regional administrations and beneficiaries. The proposed membership of the SC is:

I. Federal Institutions1. Ministry of Water Resources 2. Ministry of Agriculture and Rural Development3. Ministry of Works and Urban Development4. Ministry of Finance and Economic Development

II. Regional Administrations 1. Agriculture & Rural Development, Oromia (2)2. Dire Dawa Administration

2.1. Office of the Mayor2.2 Water, Mines and Energy Office2.3 Agriculture Office2.4 Infrastructure and Construction Work Authority2.5 Land Development and Administration Authority2.6 Food Security and Disaster Prevention Office2.7 Women’s Affair Office 2.8 Policy Study & Plan Commission2.9 Micro and Small Business Enterprises Development Agency2.10 Cooperatives organization and Promotion Office2.11 Coordination Bureau of Information and Culture 2.12 Representatives of Beneficiaries (3)

III Project Administration1. Project Coordination Office (PCO)2. Project Management Office (PMO)

IV The Donor

The SC will meet once every six months. The details of the duties would be, To provide policy direction on the overall execution of the project To approve the work plan, budget and annual targets of the project To monitor the performance against the target To review the challenges faced in implementation and provide guidance

5.3.2 The Project Coordination Office (PCO)The PCO will be housed within the MoWR because it falls within the ministry’s technical remit and experience. The duties of the PCO will be;

Strengthen the capacity of PMO at grass root level Facilitate communication and release of funds with donors Follow up implementation of decisions made by the SC Prepare Annual Action Plan and Budget in collaboration with PMO Monitor the project and present the finding to the SC and other relevant institutions. Control project funding in accordance with the rules of procedures agreed with financers.



The PMO will be formed within the DDA Coordination Bureau for Rural Development (CBRD) because the Agriculture Office, the WMaEO and FSaDPO have technical responsibility for watershed management, water related construction and food security and disaster respectively, and are directly accountable to CBRD.

Other institutions like the IaCWA, Environmental Development, Small Scale Business Enterprise Development and Cooperative and the Women’s Affairs Office could play an important role in crosscutting issues. Day to day support on operational activity of the project will be provided from the PCO.

5.3.3 The Project Management OfficeThe PMO is directly responsible for the successful implementation of the project. It is involved in day to day execution of the project and will have extensive contact with stakeholders, contractors and consultants. It will also supervise the daily performance of all the units accountable to the PMO. The brief duties are:

Establish a project implementation system with close support from the PCO. Prepare the annual and quarterly action plans and implement the same upon approval of

the SC. Confirm the smooth and timely flow of procurement and funds Monitor the implementation of the project in accordance with the design Prepare monthly, quarterly and annual progress reports Submit Monitoring and Auditing Reports within the agreed time. Communicate with stakeholders.

The PMO would take direct responsibility for the implementation of flood protection works as specified in contract packages 8 and 9, included as the Tender Documents for Civil Works.

Technical responsibility for the Catchment Management Component implementation will also be through the PMO which will have a dedicated unit responsible for directing and supporting the activities of the DDAC ARDB and the Oromiya ARDB to implement the sub-projects assigned to the Component. That is, all sub-projects recommended in SR 3 Soil Conservation and Land Management and SR7 Agriculture, Livestock and Forestry. In practice 96% of the area of SWC sub-projects will be carried out by DD AC Bureau of ARD in 15 rural kebeles. This is because all but one of the 133 micro watersheds in the catchment fall mostly (>50%) in DDA. However, the sub-projects for agriculture, livestock and forestry will be carried out in 15 rural kebeles of DDA and 7 in kebeles in Oromiya State (5 in Kersa woreda and 2 in Hara Maya). About 55 km 2 of these 7 kebeles fall outside the catchment (and even outside the Awash basin) – this is an issue which must be flagged during implementation. In the meantime the costs of this “extra” work have been included in the project budget, but not the benefits.

The proposed staffing and budget arrangements of the PMO are shown in SR3, Table 6.3.

5.3.4 Watershed Planning TeamsThe operational responsibility for carrying out the Catchment Management Component will be with two Watershed Planning Teams (WPT) established in DDAC ARDB and Kersa Woreda ARDB. Note that responsibility for implementation of the component in the two Hara Maya kebeles (only 4.94 km2 or less than 2% of the catchment) will be with Kersa Woreda, in order to avoid excessive over-head costs. The two Watershed Planning Teams will be staffed as follows:



WPT Coordinator (Watershed Management Specialist) Agronomist Livestock Specialist Agro-forestry Specialist Community Mobilisation Specialists (CMS) (at least four per WPT)

It is likely that these specialists will be appointed as national consultants, in order to minimise interruption of other ARDB activities. They will act at the level of SMS.

The WPT will coordinate and direct the implementation of Component sub-projects. Agriculture, Livestock and Forestry sub-projects will be implemented by kebele, Soil Conservation and Land Management sub-projects will be implemented at micro watershed level. Specifically, the WPT will:

Review and approve micro watershed CAP Coordinate micro watershed CAP with kebele level development plans especially health,

water, micro finance, credit etc. Organize and train the kebele watershed management committee and micro watershed

communities Select and prioritize CAP within the kebele, especially cross-kebele CAP Work plans, budgets and reporting.

The proposed staffing and budget arrangements of the PMO is shown in SR4, Table 6.1.

5.3.5 DA (Kebele level) SupportThe allocation of DA staff to kebeles is similar in both DD AC and Oromiya. Three DAs, Crops, Livestock and Natural Resources are appointed to each kebele - 15 kebeles in DDA, 5 in Kersa and 2 in Hara Maya. The number of DAs in the catchment should therefore be 66. It is understood that the DA staff are in place, but they are under-resourced. Provision has been made for office, equipment and transport resources for 66 DA in the Agriculture Livestock and Forestry sub-project costs.

The DAs will be responsible for the implementation of training and demonstration programmes run at kebele level and as described in the Agriculture, Livestock and Forestry sub-projects.

The DAs, in conjunction with the WPT Community Mobilisation Specialists, will also support micro watershed residents in the implementation of Soil Conservation and Land Management sub-projects at micro watershed level.

It is believed the demonstration and training programme should be implemented at kebele level and not implemented as part of the micro watershed CAP. This is because (i) CAP should be confined to SWC works implementation to allow a simpler plan (ii) it would be very difficult logistically, as well as expensive to implement, an extension programme at micro watershed level

The CAP will a basis for implementing SWC works and will resemble a contract between the community and the project. It will include an implementation budget. The demonstration and training programme should not be included in this, because it would imply a responsibility to provide it at micro watershed level, which is logistically difficult.



Cross micro watershed access improvements (budget included in SR7 Agriculture, Livestock and Forestry) also should be planned at kebele level by the WPT. Local access (ie footpaths and foot bridges) will be included in SWC costs and implemented at micro watershed level. Because of the interests of water supply to women (the principal carriers of water) are essentially local, planning for improved water supply will also be done at micro watershed level.

5.3.6 Micro Watershed Community GroupsAt the micro watershed level there is no formal institution to take responsibility for the implementation of Soil Conservation and Land Management sub-projects. However, there may be one or more of (i) a watershed committee at kebele level; (ii) informal common property management groups with specified rights to grazing, fuel wood and other natural resources within the micro watershed or around it; (iii) community self-help organisations such as Edir which may have interests in micro watershed management issues. CMS will be responsible for identifying an appropriate forum for implementing the sub-projects, which will normally be SWC physical works.

It is intended that, with DA and SMS guidance, the micro watershed community will assess the soil and water resources in the catchment, prioritize measures for improvement, prepare a Community Action Plan (CAP) and agree the implementation measures with the WPT. Implementation will then proceed over a three year period.

Considerable effort will be required from the CMSs to motivate and inspire the micro water shed community to plan and implement the work required, not only for their own benefit but for the management of the catchment as a whole. This work will fall under the following heads:

Community empowerment and institutional strengthening Leadership training (to identify priorities, tasks and responsibilities) Capacity development (organise and divide responsibilities) Consultative planning (to react positively with WPT and others) Gender training and sensitization (inclusion of women in planning) Work equipment (assessment of requirements) Infrastructural planning (water, access etc)

A budget for these important activities has been included under the heading of community training and CAP preparation (see SR4 Table 6-1). Implementation costs are included in the SWC works.

5.4 Implementation ScheduleThe Implementation Schedule is given in Appendix 5. The Project is expected to be implemented over a period of 7.5 years. The priority activities after project start-up will be the flood protection works and the establishment of the FWS. It is envisaged that the construction period will be two years (estimated to be completed by mid year 2012), and the FWS will be operational in 2009.

The Catchment Management component will require establishment, training and awareness phases so implementation is unlikely to begin before 2010. The main challenge will be to prepare and implement the CAP in 122 micro watersheds before project completion in mid 2015. This reflects an expected three year implementation period for each CAP, due to constraints on community labour availability.



Following completion of SWC works, the Project will provide aftercare support for at least one year. This will entail visits to assist in resolving problems, technical advice and participatory monitoring and evaluation.

5.5 Procurement ArrangementsUnless otherwise specified in a loan agreement, procurement of consultancy services will be in accordance with the Donor’s rules and procedures for the use of consultants4. It is envisaged that national competitive bidding with quality–cost based procurement will be carried out for the procurement of national consultants. The successful company will have associated with a reputable international company for the provision of international consultants.

For 3rd Party, NGO or local consultancy services, for project performance monitoring and evaluation, national or local competitive bidding with quality–cost based procurement is envisaged.

Civil works with local contractors for urban and rural infrastructure works will be procured using national competitive bidding, subject to prior Donor review.

The bulk of proposed watershed interventions in each micro-catchment will be implemented directly by benefiting communities (SWC works are the major cost of these). For these interventions, which will be documented in the Community Action Plan, works will be implemented on a force account basis under agreements with the CWDTs.and / or community members concerned.

5.6 Disbursement ArrangementsA donor funded project is assumed. To expedite disbursement and ensure timely execution of the project, the Executing Agency (i.e. MoWR) will, within 15 days of loan effectiveness, open a Project Account with the Commercial Bank of Ethiopia, Addis Ababa. Payment will be made to and from this account for eligible expenditures under the Project.

The Project Account will be managed by the Executing Agency and the PMO. in accordance with Donor’s disbursement procedures, and any detailed arrangements agreed upon by the Government and Donor.

The initial disbursement to the Project Account will not exceed six months of estimated expenditure and not more than 10% of the total loan amount. The Donor’s statements of expenditure procedures will be used to reimburse expenditures.

5.7 Monitoring and EvaluationProject performance monitoring and evaluation uses, as a basis, the Project Framework given in Appendix 1. The monitoring components are grouped as follows:

Project Management Information System; Impact Monitoring and Evaluation; and Monitoring of Safeguard Policies.

The PMO and Project Consultants will carry out the majority of monitoring and evaluation activities, reporting quarterly and annually. In addition, the services of no more than two independent 3rd Party consultants / NGOs shall be procured by the

4 In case the donor is the African Development Bank, procurement shall be in accordance with the Rules and Procedures for the Use of Consultants. 2007 Edition.



PMO. One will be responsible for assessing the impact of urban flood protection, in particular:

Re-settlement, to ensure procedures are adhered to, implementation is effective and the re-settlement programme is sustainable (ie households do not return to areas designated as high risk flood zones) (Output 1a (v) and (vi))

FWS, to ensure that communities are aware of procedures and can follow evacuation instructions (Output 1b (iv))

Measure land use and economic change in flood protected areas (Outcome 1) Identify environmental impacts.

The other consultant will monitor catchment management implementation, including: Preparation and implementation of CAP with reference to role of community in planning

and implementation of SWC measures (Output 2a (iii) and Output 2b (i)) Formation and operation of grazier/fuel wood collection groups of common access land

(Output 2a (iv) and Output 2b (ii)) Adoption of improved on-farm crop and livestock production and agro-forestry on private

and common property lands as a result of training and demonstrations (Output 2b (iii), Output 2c (iv), Output 2c (iii) Outcome 2 (ii), (iii), and (iv)

Identify environmental impacts.

The consultants will carry out catchment monitoring on a sample of at least 10% of micro-catchments.

Monitoring responsibilities are summarised in Table 5-16.

Table 5-16 Project Performance Monitoring and Evaluation (PPME)No. Component Responsibility Summary of Purpose Frequency

of Reporting

Project Management Information System1. Project

Progress PMO (Project Consultants)

To track and report progress against work plan targets.

Progress of implementation of re-settlement, flood protection structures and FWS

Progress to detail number and types of interventions implemented in catchment management.

Quarterly (Q), Annually (A)

2. Social & Institutional Development

PMO (Project Consultants)

To monitor effectiveness of urban flood protection, including responsibilities for maintenance of structures and FWS

To monitor key steps in participatory development approach in each micro-catchment.

Also to monitor capacity of WPT and effectiveness of training and capacity building workshops.

Q, A

3. Technical Monitoring

PMO (Project Consultants)

To monitor technical aspects of project interventions.

This to include transparent award of contracts to contractors; construction quality; etc.

Q, A



No. Component Responsibility Summary of Purpose Frequency of

Reporting

4. Finance PMO To account for all project expenditures Q, A

Impact Monitoring and Evaluation1. Impact of

project interventions in respect of urban economic growth as a result of flood protection

3rd Party (Consultant / NGO) procured by the PMU for impact monitoring and evaluation

To test and evaluate the impact of project interventions on a representative sample of affected households, businesses and other economic activities.

The impact monitoring and evaluation system to be informed by Protect Log-frame, to assess extent that performance targets are reached.

Baseline surveys to be carried out before or in Yr 1 of micro-catchment development, and final survey to be carried within 2 years after completion.

2. Impact of project interventions in selected micro-catchments.

3rd Party (Consultant / NGO) procured by the PMU for impact monitoring and evaluation

To test and evaluate the impact of project interventions in a representative sample of micro-catchments (about 10%).

The impact monitoring and evaluation system to be informed by Protect Log-frame, to assess extent that performance targets are reached.

Baseline surveys to be carried out before or in Yr 1 of micro-catchment development, and final survey to be carried out within 2 years after completion.

A

Monitoring and Evaluation of Safeguard Policies1. Monitoring

and Evaluation of land acquisition / resettlement

PMO (Project Consultants) and 3rd party consultants

To ensure land acquisition and resettlement procedures have been followed in accordance with Government and Donor requirements.

Q, A

2. Environmental Monitoring

PMO (Project Consultants) and 3rd party consultants

To ensure that procedures for environmental protection have been followed in accordance with the requirements of Government and Donor.

Q, A

The proposed PPME system, as outlined in Table 5-16, will assist achievement and safeguard of Project’s outcomes. It will also ensure: (i) that lessons are learnt; (ii) that subproject designs, including scope and activities may be improved; and (iii) that mitigation measures are adopted as required.

5.8 Financial Reporting and AuditingThe Executing Agency will maintain records and accounts adequate to identify the works, goods and services financed from the loan proceeds, the financing resources received, expenditures incurred for the project, and the use of local funds, in accordance with generally accepted accounting principles.



6 PROJECT SUSTAINABILITY AND RISKS

6.1 Recurrent CostsThe recurrent costs which will be incurred after project completion include:

repair and maintenance of Flood Protection Structures in Dire Dawa city annual management and operational expenses associated with the Watershed

Management Teams, particularly the CMS annual maintenance of the soil/water conservation (SWC) measures annual maintenance of rural water supply and access infrastructure constructed under the

Project; operational costs associated with continuing agricultural extension/training services annual costs of the animal health and livestock extension services. annual costs of maintaining the fodder seed and tree nurseries

It is essential that these recurrent costs are met to ensure the sustainability of the various project interventions, in particular the flood protection structures, FWS and SWC works. These annual costs are significant, as shown in Table 6-17.

Table 6-17 Recurrent Costs After Project Conclusion, ETB Item BoARD DDAC Community Private TotalProject Coordination OfficeProject Management OfficeResettlement costsFlood Protection Walls 5,457,517 5,457,517Watershed Planning Teams 612,000 612,000Catchment Management Measures 0Improved agricultural practices 211,200 211,200Improved livestock practices 45,100 36,300 101,200 182,600Improved Management of Common Access Lands 76,414 76,414Improved agro-forestry practices 123,200 740,218 154,000 1,017,418Rural water supply, roads and footpaths 171,633 171,633SWC Costs 749,987 749,987 1,499,974Alternative livelihoods 0Early Warning and Catchment Monitoring 58,146 58,146

Total 991,500 5,515,663 1,774,552 1,005,187 9,286,902Notes: Repair and maintenance of flood protection walls is 2.5% of capital cost pa

Repair and maintenance of SWC is 5% of capital cost pa

It is expected that the annual costs of flood protection and FWS in Dire Dawa city will be raised from local taxation. Tax revenue has grown by about 40% per annum in real terms since 2001 (albeit from a very low base). If tax revenue grows by only 15% pa from the 2006/07 level then ETB 5.5 million will be about 2.7% of tax revenue in 2012. As the city economy growths, flood wall maintenance will rapidly become a much smaller proportion of the city’s tax base. Repair and maintenance of the flood protection walls and the annual cost of the FWS are therefore affordable to DDAC.

It is also possible to demonstrate that the costs of SWC on privately farmed land are affordable and will be met by farmers. Assuming a cost of ETB 150 per farm ha, this will be less than 3% of the net farm household income, which is affordable Net farm



household income is projected to grow by nearly 50% as a result of the project, so it is logical to assume that farmers will be willing to pay to maintain the structures. Note also that private farmers are not expected to pay for maintenance, as it will be done with family labour.

It is very much harder to demonstrate affordability and willingness to pay for SWC maintenance on common property and common access land, on which maintenance costs are likely to be higher (steeper land) with lower returns (less suitable land). We encounter here the likelihood of rural communities being asked to produce environmental goods (i.e. catchment condition) for the benefit of the downstream population which are financially uneconomic for their common land enterprises. If detailed studies in the course of implementation show that this is indeed the case, then subsidies will be required to maintain the SWC works on common land. These should paid for by the Dire Dawa urban population, which is the beneficiary. Because SWC works maintenance on common land will be in the order of ETB 4 million pa, the amount which may have to be subsidized may be significant. See section 6.2.6 below.

6.2 Project sustainability, risks and mitigating measures6.2.1 The urban demand for woody biomass

Project sustainability cannot be taken for granted. The catchment does not have sufficient suitable land available even to approach meeting the woody biomass demand of Dire Dawa city (it is assumed it meets only 20% now), and insufficient investment has been made elsewhere in DDA to meet this demand. Interventions have been planned that lead to an accumulation of woody biomass in the catchment during the lifetime of the project, but ultimately growing urban demand will extinguish this unless supplies are produced elsewhere. This is a high risk for the project, and very little can be done to mitigate it.

6.2.2 Urban migrationThe population of Dire Dawa city is expanding fast and the task of providing adequate urban services is very difficult. Although the Urban Household Survey concluded that the majority of flood affected households had been resident in the city for some years, there is always a high transitory population, and under-resourced households seeking to establish themselves more permanently. This population will inevitably be marginalised into high risk areas with a low level of services (the wadi banks, the edge of land fill areas, areas without sewage disposal etc). It may be that as soon as the re-settlement exercise is completed in flood risk areas, other poor households may replace them.

The only sustainable way to reduce flood risk is to provide adequate urban services in areas outside the flood risk envelope and ensure the services are accessible to the whole urban population – an impossible task with the present DDAC budget. It would require re-locating the wadi market area, re-locating the bus station, providing adequate water supply and sanitation and enforcing flood zoning. All these measures would tend to re-locate (both physically and economically) the vulnerable urban poor.

DDAC are clearly doing all they can to address the urban planning issue, but it may not be enough to allow the proposed project to be sustainable. Again, mitigation of this risk is beyond the capacity of the Project.

6.2.3 Synergy between flood protection and catchment managementThis is both a risk and an opportunity. One risk is that, even with catchment management, the continued demand for woody biomass will reduce catchment



condition leading to an increase in the frequency of damaging floods which erode the effectiveness of the flood protection, increase maintenance costs and even require early rebuilding. The opportunity is that catchment management will enhance the flood protection works and lead to proportionally greater benefits, including greater protection and reduced maintenance.

6.2.4 Climate changeIncreased rainfall intensity as a result of climate change is possible, and would lead to an increase in the frequency of damaging floods. Since even the present hydrology of the catchment is only imperfectly known, the magnitude of the risk cannot be discussed further.

6.2.5 Grazing and biomass resources on Common Access landNearly 40% of the catchment area is common access land which has about 80% of the woody biomass resources of the catchment. These resources are rapidly disappearing, and it is very important for catchment condition that they be maintained and if possible augmented.

The need for internalising common access resources into common property has been discussed in SR7 section 11.2.3. It will be extremely difficult to do this because of the lack of cohesive social structures in the utilisation of common access land. However, the risk of not attempting this sub-project is greater than the risk of failing, because a further deterioration of catchment condition over 40% of the area may negate any improvement from catchment management on the remainder.

6.2.6 Maintenance of SWCThe community based participatory watershed development approach provides the foundation for future project sustainability. The active involvement of local communities in the planning, implementation and monitoring of the proposed interventions is critical to the success of the project. The establishment of a local institutional framework, through the WPT, to manage and maintain the SWC and rural infrastructure will also safeguard the sustainability of project investments. At the end of the project (year 7), beneficiary communities will take over responsibility for the management and maintenance of the physical works and meet all the required recurrent costs.

The proposed physical works will, however, not achieve the expected social and economic benefits without equal focus being given to enhancing the livelihoods of the local households, and reducing the high level of poverty within the watershed. The project components designed to enhance local livelihoods include: (i) crop production and forestry development, and (ii) community livestock development. These livelihood components are aimed directly at increasing household incomes and food security within the project area, and consequently provide beneficiary communities with the incentive to participate fully in project activities as well as the subsequent maintenance of the SWC and rural infrastructure. The financial viability of the project investments is assessed in Section 7; the analysis clearly indicates a significant increase in farm household incomes resulting from project interventions.

The failure to maintain SWC/regeneration planting on common access land remains a significant project risk, because the financial returns from common access enterprises may be insufficient. However, if it can be argued that these works are providing environmental benefits specifically to the urban population by reducing flood intensity, then there is a case for an urban-rural subsidy.



6.2.7 Flood Warning SystemA state-of-the-art telemetric system is proposed which is appropriate for the challenging task of providing adequate flood warning, but implementation and management may be difficult, especially initially. The purpose of the FWS is not to protect property but lives, and even with flood protection walls providing protection up to 1:200 the wadis will inevitably be used for marketing, sanitation etc. The primary purpose of the FWS will be to give time to evacuate the wadis to behind the flood protection in the event of floods of any magnitude. There is a risk that in the early years of operation a complex system may not deliver this purpose as well as a more simple system. Nevertheless, it is felt that this risk is worth bearing, since management experience can be transferred to other flood risk situations.

6.2.8 Environmental Impact AssessmentAn environmental impact assessment was undertaken for flood management project for Dire Dawa comprising a flood alleviation scheme for Dire Dawa town, a watershed management component for the upstream catchment, and a flood warning system. The EIA is reported in SR1.

The flood alleviation component in Dire Dawa town involves the rehabilitation of existing flood defences on the Dechatu wadi, the construction of additional flood bunds on both the Detachu wadi and the Goro wadi, and renovation of the bridge piers and two fords on the Detachu wadi. The construction programme is expected to take two years, without seasonal constraints. Once constructed, the flood defences will provide a standard of defence of 1:200 years through Dire Dawa town.

The beneficial impacts of the proposals are: Major, beneficial, permanent reduction of flooding in Dire Dawa, which in turn results

in,

Major, beneficial, permanent reduction in the risk of casualties of people living in flood prone areas along the Dechatu and Goro wadis, infrastructure damages, and disruption to livelihoods as a consequence of losses in a major flood.

Slight, beneficial, temporary socio-economic benefit to local people due to opportunities for employment and services, such as selling food, during a two year construction period.

The significant adverse impacts of the proposals are: Major, adverse, temporary impact on poor people resulting from the demolition of

approximately 38 properties, and the relocation of an estimated 209 persons (assuming 5.5 persons per family)

Slight adverse, temporary impact due to disruption to townsfolk during construction of the proposed flood defences.

Slight adverse, temporary H&S risk for labourers during construction

Slight adverse, permanent impact on natural resources due to quarrying for raw materials

Slight adverse, permanent impact on parking at the bus station due to the reduction in area

Impacts arising from construction activities on local air quality, construction noise, and waste disposal were not considered to be significant.



No legal restrictions such as protected areas or declared national monuments were identified in areas affected by the proposed Project.

An environmental management plan (EMP) has been prepared for the flood management component to ensure that the adverse impacts identified in the EIA are managed appropriately. See SR1 section 6. This puts forward proposals for implementation, environmental mitigation and monitoring. It is recommended that the contractor(s) is required to prepare and implement a construction management plan to address the adverse impacts identified in the EIA plus any other impacts identified prior to construction. The duties of the PMO should include supervision of the implementation of the construction management plan and good housekeeping measures on site. It is also recommended that the PMO prepares a resettlement action plan to ensure that persons displaced by the demolition of property are re-housed at least on a like-for-like basis and to make provision for the safeguard of their livelihoods.

The two main goals of the watershed management project are:

To reduce poverty among rural communities in the upper catchment, and

To provide benefits to the urban dwellers through reduced flood peaks resulting from improved management of the catchment.

The two goals are closely linked, as the long term sustainability of the watershed management component is highly dependent on the willingness of the local communities to continue to implement SWC measures after the end of the project and throughout the catchment. Discussions undertaken to date with local communities have indicated a willingness to participate in watershed management interventions and the bottom-up approach to implementation based on community participation is vital to encourage the longer term adoption of these measures.

The watershed component comprises five sub-projects concerned with improved household food security, increased cattle fodder production, improved woody biomass production, improved management of common access lands and improved rural water supply. These interventions revolve around training, demonstration plots, provision of materials and equipment, and implementation by farmers.

Taken together, the implementation of the watershed management sub-projects should lead to the following benefits:

Increased crop yields for staple cereals maize and sorghum with a goal to provide 90% of household food energy requirements

Increased fodder production with a goal to provide an additional 2,300 tons of fodder on 770 ha

Improved animal health and productivity due to improved breed lines, fodder, and animal health services

Improved soil fertility and structure through on-field measures for SWC and soil fertility management

Introduction of agro-forestry and woodlots on common property land to offset partially the declining biomass resources in the catchment with a goal to extend biomass reserves by about 10 years.



Increase natural resource yield of common access lands through area closure, leading to recovery of grasses and to a lesser extent shrubs which could be exploited for cut-and-carry fodder and fuel wood.

Improve the security of rural water supply to benefit local communities and animal welfare

Increase household incomes through increased production of crops and livestock

Improve living standards, including nutrition, health, and material goods

Improve the capability of individuals and groups through training programmes

It is very difficult to assess the cumulative impact of the watershed management component on flood attenuation, given the lack of hydrological data in the catchment and the uncertainty over the coverage and success of the watershed management interventions. An assessment of the impact of watershed management on flood discharge was estimated using the Rational Method. Assuming that the watershed interventions could reduce the runoff coefficient by 15% over 40% of the catchment, the flood peak would fall by about 6%. This reduction is significant in terms of a lower flood peak, greater standard of protection afforded by the flood bunds, and economic benefits.

No significant adverse impacts have been identified for the watershed management component. However, it is notable that the demand for woody biomass for fuel outstrips supply, and even with the proposed intervention for agro-forestry and woodlots, the denudation of the catchment is delayed by ten years rather than halted or reversed. Other interventions (i.e. implementation of a strategic plan at DD AC level) are required to safeguard the forest and woody biomass reserves in the watershed, for example through increased electrification, reduced tariffs, adoption of more efficient stoves, import of woody biomass from elsewhere and adoption of other fuel types.

The FWS comprises the installation of 10 new rain gauges and 5 river gauging stations coupled with management activities to maintain the equipment, liaise with the NMS and other relevant bodies, and implement the actions in the DSS for different categories of risk. Instrumentation of the catchment will cause highly localised modification of the environment and some disruption during installation, but not sufficient to be considered significant. Implementation of the DSS would have significant benefits in reducing stress among the population who continue to fear the recurrence of flooding and in the longer term help to prevent loss of lives and personal effects in the event of an out-of-bank flood.

It is recommended that the whole project is implemented by the PMO to be located in DDAC. The PMO should appoint third parties to monitor periodically the implementation of all three components (see section 5.7), including the monitoring of environmental and social issues. The implementation package also includes provision for training to the EPA staff to assist them in their duties to monitor major construction projects for which an EIA has been prepared.

In terms of the World Bank environmental classification of projects, the flood alleviation project in Dire Dawa is a Class B project, indicating that there are some potential adverse effects, but not sufficient to warrant a full EIA. The watershed management and the FWS components are considered to be Class C projects, where there are no significant adverse environmental effects.



6.2.9 Project CoordinationIt was drawn to the attention of the Consultants (meeting at ADB 23 rd April 2008) that consultation during project preparation had not been all that it should have been, particularly for the Catchment Management Component. In view of the complex nature of the DD DMP, focussing as it does on both urban and rural issues across two regions, this potential problem will need careful management during implementation. The project will require strong coordination by the executing agency, and full representation on the project steering committee. The implementation arrangements described in section 5 therefore represent both a risk and a mitigation measure and will need careful monitoring to ensure the requirements of the project are met.



7 FINANCIAL AND ECONOMIC ANALYSIS

7.1 Summary of Project BenefitsThe main benefits from urban flood protection (flood protection walls and FWS) are expected to be (i) avoided loss of loss of human life and injury (ii) avoided direct loss of destruction and damage to personal property, including housing and personal effects (iii) avoided indirect loss of reduction in household incomes due to interruption of jobs and businesses (iv) avoided direct cost of emergency services (v) avoided indirect cost of support to displaced (vi) avoided cost of shocks to the local economy as a result of loss of purchasing power, diversion of government budget from capital expenditure to relief and reconstruction loss, and reduced private investment due to loss of confidence in the urban economy.

The main economic benefits from catchment management are expected to be: (i) increased crop production and farm incomes; (ii) better livestock productivity; (iii) greater fuel wood production; and (iv) enhanced sustainability of future agricultural development due to mitigation of soil erosion and land degradation as well as improved soil fertility.

In addition, there is a synergy between urban flood protection and catchment management, in that improved catchment condition will reduce the frequency of floods of given magnitude. The flood protection walls will be deigned to resist a flood with a 1:200 year return period, but as the catchment condition improves this flood will become less frequent. Without further hydrological studies it is not possible to estimate the revised probability, but very rough estimates using the Rational Formula5 suggest that the return period of large floods whose frequency is less than 1:200 years may double with an improvement in the catchment coefficient C of about 15%. The basis for this assumption is discussed in SR7 section 10.2, but because of the lack of reliable catchment data the calculations are not reproduced.

7.2 Urban Flood Protection Benefits7.2.1 Summary of component benefits

The analysis of benefits from the urban flood protection measures (protection walls and FWS) is based on the probability of flood events and the cost of the damage incurred with each. Clearly flood damage increases with the size of the flood event, but the probability of larger flood events is smaller. Multiplying the financial cost of damage of each flood event by its probability and summing the results gives an “annual probability of loss” (APL) or the loss that Dire Dawa city can expect each year from flood damage.

The accuracy of the analysis is unfortunately limited because of the lack of rainfall data in the catchment, so that the probability of flood events of different magnitude is not known with any accuracy. Further, information on damage associated with floods of different magnitudes is only known imperfectly. Even for the very recent catastrophic flood of August 2006 the best estimate is that the return period was somewhere between 1:50 and 1:100 years, the direct damage (damage to property and infrastructure caused during the flood) caused was about ETB 60 million, the indirect damage (reduction on household incomes due to loss of jobs and businesses) was about ETB 25 million and the cost of rehabilitation and support of the displaced

5 The Rational Formula predicts a flood from a small catchment of Qm3/sec using the formula k*C*I*A, where k is a constant, C is the catchment runoff coefficient derived from the coefficients of different land use types weighted by their area in the catchment, I is the rainfall intensity in mm/hr and A is the area of the catchment in ha. The most intractable unknown is I, as rainfall stations collect data in mm/24 hours.



(emergency housing and direct relief) was about ETB 16 million. As yet it is not possible to calculate the medium term impact on the Dire Dawa economy; it may be in the order of a 3% reduction in 2006, progressively reducing over about three years.

Superficially, avoided loss is not commensurate with the costs of the protection works required. Flood walls along the wadi offering protection from a 1:200 flood will cost in the order of ETB 283 million, which would require an avoided APL of ETB 45 million per annum to justify. The APL of the August 2006 flood (alone) would only be (1/75*ETB 100 million) about ETB 1.33 million per annum. The problem is that the flood impacts proportionally more on relatively poor households with low associated levels of urban services which are inevitably marginalised in the higher risk areas. However, the point is that the enhanced flood protection works are for a city which is expected to have a high rate of economic growth in the future, due to its strategic location for trade. Therefore the value of property protected will increase substantially during the lifetime of the works (50 years). Further, flood protection should lead to a higher rate of economic growth by reducing risk and enhancing the investment climate. This future benefit has to be factored in to the financial and economic analysis, even though the assumptions on future city growth rates are very tentative.

7.2.2 Direct damageThe size of the flood for each return period between 1:2 and 1:1,000 was calculated using the Rational Formula and assuming catchment condition remained as at present. Because of the lack of information of rainfall intensity in mm/hour, the only event of relative certainty is 1:75, which led to a flood of 1,400 m3/sec in August 2006 and was known to flood an area of 0.68 km2 (the “flood envelope”), destroying or damaging about 700 houses and affecting 2,700 households6 and businesses. The flood envelopes of other floods were calculated assuming it was directly proportional to the size of the flood and the depth of flooding is constant for each breach of the wadi banks (about 90 cm). The number of properties affected was assumed to be directly proportional to the size of the flood envelope.

The APL in the future without (FWO) project could then be assessed, by assuming loss of personal effects of ETB 2,000 per household7, house damage ETB 14,5008 per house, damage to infrastructure at ETB 7.3 million per square kilometre9 and cost of emergency services at ETB 2,500 per household10. Further, it was assumed that the FWO project flood walls offer protection against floods with up to 1:30 return period, but that a flood of higher magnitude will breach the walls and cause damage. The direct damage was then summed for each flood event, multiplied by the cumulative probability of the event and summed to give the FWO APL. Mathematically:

where APLFWO is the future without project annual probability of loss, p is the probability, D is the cost of damage and n = 1,000.

6 Since several hundred affected families were rural, this suggests many damaged houses were occupied by two or three families.

7 From Options for Mitigation of Flood Risk in Dire Dawa City (Loss of household property divided by number of households affected).

8 From Options for Mitigation of Flood Risk in Dire Dawa City (Damage to property divided by number of households affected).

9 From Options for Mitigation of Flood Risk in Dire Dawa City (Damage to urban infrastructure divided by flood area affected).

10 Consultant’s estimateDire Dawa Flood Mitigation Project 67 Feasibility Study Main Report_FINAL


A similar calculation was made for the future with (FW) project situation, with flood walls offering protection against floods with return period up to 1:200. The APLFW was then subtracted from APLFWO to give the project benefit of avoided APL.

A similar procedure was used to calculate APL with both flood protection and catchment management. The Rational Formula was used to calculate the change in return period of a flood of given magnitude of Q with a notional 15% improvement in the catchment coefficient of cultivated, common property, plantation and shrub land. Note that the coefficients of bare land, grassland, infrastructure and urban land remain the same FW project. The assumption made was that with catchment management flood peaks would attenuate by 5-6% but this requires additional hydrological studies 11 . The APL was recalculated using the increased probabilities of flood return period and the incremental benefit from catchment management was estimated as:

(APLFWO – APLFW flood walls + catchment management ) - (APLFWO – APLFW flood walls only)

It is also necessary to consider the without project situation, and the likelihood that flood return periods are increasing with deteriorating catchment condition. This situation was modelled by assuming that in 10 years today’s 1:30 flood event will increase in frequency to become a 1:25 year event. It is unlikely that catchment condition will deteriorate much further in the FWO after 10 years, after which time it is estimated there will be no more available woody biomass from common access land (see SR7 sections 3.2 and 10.2.4).

The values of the estimates of APL are:APLFWO = ETB 1.818 million paAPLFWO (with increase in frequency of flood) = ETB 3.000 million paAPLFW flood walls and catchment management = ETB 0.115 million paAPLFW flood walls only = ETB 0.292 million pa

The calculation of direct dames for APLFWO and APLFW flood walls only is shown in Appendix 4, section 1, Table 1. Other values, for indirect damage and with catchment protection and with catchment deterioration were calculated in a similar way.

The present level of protection offered against direct damages in the FW project is estimated as significant, 84% of the APLFWO. The incremental benefit from catchment management was about 10% of the total avoided APL: significant, but not huge. It must be emphasised that these estimates are based on very little hydrological data and a rough estimate of direct damage from only one major flood.

Avoided APL can be carried forward to the cost:benefit analysis as a benefit without any further adjustment. It represents the annual reduction in APL that can be expected FW project, and the cost:benefit analysis requires no adjustment for inflation. It can only be claimed after the completion of construction and is therefore heavily discounted.

7.2.3 Indirect damageThe estimate of indirect damages were considered in two parts, the impact on household income and the subsequent relief and rehabilitation costs incurred by

11 SR 2 section 6 concludes that “watershed management interventions could reduce the runoff coefficient by 15% over 40 % of the catchment. Over the remaining 60% the runoff coefficient is assumed unchanged. The result would be a 6-10 % decrease in the 1:200 flood peak”. We take the lower boundary of this estimate.



DDAC. It was assumed that 40% of heads of households affected by the flood lost their business or job12 and as a result suffered a loss of 15% of household income for a three year period after the flood. The remainder of households maintained their level of income, but only through remittances13 which amounted to 50% of their pre-flood household income. This too was assumed to continue for three years. Since the number of affected households has been estimated for floods of different return periods, it was straightforward to calculate the indirect losses of households.

Indirect losses from the relief and rehabilitation activities of DDAC were estimated as construction of emergency housing for the homeless, ETB 17,000 per unit14, and direct assistance, ETB 250 per displaced person15.

The APL calculation as described above was applied to the above estimates. The results were:APLFWO = ETB 1.345 million paAPLFWO (with increase in frequency of flood) = ETB 2.218 million paAPLFW flood walls and catchment management = ETB 0.085 million paAPLFW flood walls only = ETB 0.216 million pa

Indirect damages are some 40% less than direct. This is expected, given the poverty of the affected population. The protection offered against direct damages in the FW project is 94% of the APLFWO. The APL of total direct and indirect damage is only ETB 3.3 million per year. This is substantially less than the ETB 45 million per year required to achieve an NPV of 0 for a capital expenditure of ETB 283 million on upgraded flood protection walls. It is clear that other sources of benefits from urban flood protection need to be identified in order to justify the investment.

7.2.4 Indirect damage: effect on the Dire Dawa economyAs noted in section 7.2.1, the flood protection walls will have a life of 50 years, and during this time should see a substantial increase in the value of property protected. This can be estimated. The Regional Gross Domestic Product is about ETB 500 million per annum16 and may be growing at about 12% pa17. The present urban population is about 251,000 and GRDP per capita is therefore about ETB 1,990 pa18. According to CSA, the urban population in 2030 is predicted to be 682,000. Assuming a growth in RGDP per capita of about 5% pa, then the RGDP of Dire Dawa in 2030 will need to be over ETB 5 billion in present prices. Using this approach it is straightforward to make an estimate of the growth of the city up to 2054, a 50 year period.

The impact of flooding on the city economy at present is unknown, though post August 2006 flooding the year 1 impact on the public sector budget was a reduction of about 3%19. Surmising, this impact of the shock might persist for two more years, at 2% and 1% respectively. Even more unknown is the impact floods of different magnitudes may have, but this does not matter very much as the probability of floods over 1:500 is very low, so that when the probability of the flood is multiplied by the expected economic

12 Urban Household Survey, see SR3 Table 2.1313 Urban Household Survey, see SR3 Table 2.1214 DDAC spent ETB 12 million after the August 2006 flood to build 700 housing units for the homeless.15 DDAC spent ETB 2.5 million to provide emergency relief to 10,000 affected people after the August 2006

flood. 16 See SR3 section 1.5.6.617 The DDAC expenditure budget grew at an average 17% pa in the period 2002 – 2006 (see SR3 section 1.4.5).

There is no time series data for the change in size of the private sector, but it is likely to be less volatile.18 The GDP per capita in 2005 (rural and urban) was about ETB 1,570 pa.19 See SR3 section 1.4.5



damage it tends to become insignificant. Basically we can say that a three year shock to RGDP at 3%, 2%, 1% pa decline is a reasonable estimate at present. Whether it would be so in 50 years is conjectural, as the dynamic of the city may have shifted from the wadi banks to new growth areas elsewhere within the city limits. However, the necessity of crossing the wadis as part of intra-city travel, and the fact that the wadis are natural features suggests that economic activity will always be relatively high in their vicinity.

The APL calculation, with and without catchment management can be carried out as before. However, with this calculation, avoided APL increases annually as the city economy grows. The avoided APL will be about ETB 1.9 million now after the completion of the construction of the flood walls. The additional avoided APL from catchment management will be about ETB 0.9 million after completion of the Catchment Management component, by which time, in 2016 the avoided APL from the flood protection will be ETB 2.8 million. The avoided APL will grow slowly to 2057, by which time it is estimated to have reached about ETB 34 million pa; a large figure but fairly insignificant once discounted.

Total benefits (avoided losses) reach about ETB 10 million pa by 2019 and continue to grow. But avoided losses cannot be claimed before the construction of the flood walls is completed. Furthermore, the greatest avoided losses will be in the future, as the city grows. Economic IRR from flood protection alone (see section 7.4) is therefore only 2.7% (without project overheads and catchment management costs and benefits). In short the works are an appropriate public works project, in that the government will assume the financial burden of building for the public good now and for very long term economic benefit. The structure is typical “public works” and as such a low internal rate of return is expected.

7.2.5 Loss of human life and injuryThe cost of the loss of human life or incapacity as a result of flooding has not been included in the analysis. On the economic margin human life is not very valuable20 and including the “value” of loss of life in the cost:benefit analysis would have a only a small effect on project indicators, as well as appearing distasteful. Another problem is the death toll is related to the time of day of the flood; the August 2006 flood occurred at night and claimed many more lives than an equivalent diurnal flood. One of the chief benefits of the FWS would be to save lives, as it could have only a small effect on either direct or indirect damage.

7.3 Catchment Management Benefits7.3.1 Summary of component benefits

Increased crop production will be primarily derived from improved crop productivity and crop diversification. The land under crops within the project area, which is currently estimated at 10,000 hectares (only 26% of the total watershed), is expected to expand by only about 10% following reclamation of eroded areas.

In the future with project situation, it is anticipated that the cropping patterns will still be dominated by the production of sorghum, maize and pulses, but a significant increase in the yields of these staple food crops will be critical to meeting household food requirements.

20 A rough calculation would be the discounted GDP per capita over working life, plus social security payments to dependents. On this basis the death toll in August 2006 would be valued as about one fifth of the APL of direct damage. It follows that in a growing economy a life lost in the future has a greater (undiscounted) cost than a life lost now, when GDP per capita is lower. A philosophical question arises when the comparison is carried across different economies and nations. The question can be avoided by not doing the analysis.



As a consequence of project interventions, the annual production of sorghum and maize is expected to reach around 16,700 tons and 4,000 tons respectively. In addition, there will also be increases in the production of pulses, vegetables, roots and chat. Chat is by far the most important cash crop in the catchment and its performance is likely to be of key interest to farmers. The expected increases in the level of production for the various crops grown in the watershed are summarised in Table 7-18.

Table 7-18 Annual Crop Production (tonnes)

Crop Present Future with Project IncrementTeff 239 380 59%Wheat 92 137 50%Barley 70 105 50%Maize 1,759 4,032 129%Sorghum 7,067 16,658 136%Pulses 398 597 50%Oilseeds 11 17 54%Vegetables 720 1,188 65%Roots 1,652 2,181 32%Fruit 242 339 40%Chat 2,530 4,330 71%Coffee 161 204 26%Enset 134 162 21%

Source: Consultant’s estimate

Livestock productivity is also expected to increase. At present, livestock productivity is extremely low with average milk yields of about 400 litres/cow/annum. In the future with project situation, increases in livestock productivity will principally arise from the adoption of better livestock husbandry, particularly with respect to improved quality and availability of feed and animal health care. In the analysis, it has been assumed that the annual milk yield will increase by 600 litres/cow (to 1,000 litres/cow) as a result of the adoption of improved husbandry practices. There will also be additional improvements in the productivity of and poultry. Production from small ruminants would however decline slightly with rotational closure of common access land. Neither have been quantified; the respective gains and losses are expected to compensate each other.

An assessment of the benefits of the forestry component has also been made which primarily includes the value of production from agro-forestry activities (both homestead and community plantations) with the provision of additional fuel wood and poles for construction. This has little impact on the project indicators (NPV, IRR etc) because of the long growth period; the main benefit will be seen in improved catchment condition.

It should also be noted that the increase in income and employment opportunities resulting from an expansion of processing, transport and marketing of crop and livestock products has not been included in the analysis. However, these secondary benefits will make a notable contribution to the economic development within the project area.

Financial analysis was undertaken to determine the likely impact of project interventions on net household income as well as to assess whether the financial



benefits are sufficiently attractive to encourage the full participation of farmers in project interventions and subsequent maintenance activities.

7.3.2 Crop budgetsCrop budgets were prepared for 13 crops. Information on present crop yields, input use (i.e. seeds, manure, chemical fertilisers and pesticides), as well as output and input prices were collected for farmers during the PRA surveys. Information was also collected from local agricultural offices and other secondary sources. The average crop yields used in the analysis for the present, future without (FWO) and the future with (FW) project situations are given in the Table 7-19. It can be seen that the current yields of all major crops are very low.

In the future with project situation, increases in crop productivity will principally arise from the implementation of appropriate soil/water conservation measures and the adoption of improved agronomic practices. Improved practices would include better land preparation, adoption of improved seeds, use of compost/organic manure, introduction of crop rotations, improved weed control, and application of integrated pest management (IPM) techniques. Yields of the main food crops, sorghum and maize will need to double to increase food calorific requirement from 45% of household requirements to about 90%.

Table 7-19 Crop Yields in Present, Future Without and Future With Project (tons/ha)

Crop PresentFuture without

Project Future with projectTeff 0.9 0.8 1.3Wheat 1.5 1.4 2.1Barley 1.8 1.6 2.4Maize 2.4 2.2 5.0Sorghum 1.4 1.3 3.0Pulses 1.1 1.0 1.5Oilseeds 0.5 0.5 0.7Vegetables 10.0 10.0 15.0Roots 10.0 10.0 12.0Fruit 5.5 5.0 7.0Chat 0.9 0.8 1.4Coffee 0.7 0.7 0.9Enset 2.5 2.5 2.8

Source: Field Survey (April 2007) and Consultant’s estimates.

To achieve higher levels of crop productivity, fertiliser use (both organic and chemical) is expected to rise and there will also be an increase in the application of pesticides. Furthermore, enhanced land preparation techniques, improved weed, disease and pest control, as well as increased harvesting and post-harvesting activities, would require a notable increase in labour requirements per hectare.

It is envisaged that future yield levels would be fully attained three years after project completion. There is, however, still considerable scope for further increases in productivity, which have been modelled at 1% pa in the future with project (FW). In the future without project situation (FWO), it is anticipated that crop yields will slowly decline (1% pa) as a result of increased land degradation and lower soil fertility. The average crop yields in the FWO project situation, presented in Table 7-19, reflects the expected levels of productivity after 7 years and further gradual falls in crop yield are also anticipated in the long term.



The crop yields, input use and labour requirements were then valued in 2007 farm gate prices in order to derive financial gross margins per hectare for each crop. In the financial analysis, farm gate prices for wheat, barley, maize, pulses and oilseeds were based on the actual prices received by farmers for these commodities within the project area, and these prices vary according to the different seasons. Fertilizers prices are currently controlled by the government and so the present government prices were used in the financial analysis.

The financial crop budgets for the present, FWO and FW project situations are detailed in Appendix 4.1: Financial and Economic Crop Budgets. The financial gross margins are summarised in Table 7-20. It is evident from Table 7-20 that, at the present levels of crop productivity, average gross margins per hectare for cereals, pulses and oilseeds are low. It is also apparent that the net returns per hectare from vegetables, coffee, chat and fruit crops are substantially higher than the returns from other crops. However, it is important to note the attractive returns from horticultural crops are moderated by the risks associated with large seasonal price fluctuations.

In the FW project situation, the significant improvements in the net returns for all types of crop reflect the higher levels of productivity which generate incremental returns in excess of the additional production costs. In both the FWO and FW project situations, it has been assumed that farm gate prices (in constant terms) will remain unchanged from their present values.

Table 7-20 Financial Crop Gross Margins (ETB/ha)

Present Future without

Project Future with ProjectMaize 4,433 3,987 8,151Sorghum 1,848 1,650 2,704Wheat 3,286 2,904 3,670Barley 3,502 3,102 3,976Teff 3,030 2,630 3,694Vegetables 8,713 8,713 12,489Pulses 3,134 2,714 3,416Oilseeds 2,813 2,451 3,214Roots 8,878 8,865 9,886Banana 9,739 8,836 11,442Chat 6,497 5,696 10,500Coffee 9,876 9,275 11,526Enset 5,080 5,080 5,200

Source: Consultant’s estimates based on field survey (April 2007)

7.3.3 Cropping patternsSorghum and chat dominate the cropping patterns in the escarpment area, and teff and maize are also important on the moister plateau areas. The present cropping patterns are likely to remain unchanged in both the future without and future with project situations, though there may be some diversification as food security improves.

The present cropping intensity of over 100% is also expected to remain the same. Cropping intensity could increase further if more short cycle vegetables are grown, but local market demand places a constraint on the development of horticultural crops in the short to medium term, so only modest increases can reasonably be expected. For each catchment development zone, the cropping patterns used in the financial and



economic analysis for the present, FWO and FW project situations are presented in Table 7-21.

Table 7-21 Cropping Patterns: Present, % of cultivated area

CropPresent and Future Without Project Future With Project

EscarpmentWestern Plateau

Eastern Plateau Escarpment

Western Plateau

Eastern Plateau

Annual Crops

Teff 0 17 2 0 17 2

Wheat 0 3 4 0 3 4

Barley 0 2 2 0 2 2

Maize 2 33 12 2 33 12

Sorghum 60 9 21 60 9 21

Pulses 4 3 1 4 3 1

Oilseeds 0 1 0 0 1 0

Vegetables 1 2 1 1 2 1

Roots 1 3 4 1 3 4Perennial Crops

Fruit 0 1 0 0 1 0

Chat 30 15 52 30 15 52

Coffee 1 8 1 1 8 1

Enset 0 3 0 0 3 0Cropping Intensity 100 100 100 100 100 100

Source: EASE (2002), Field Survey (April 2007) and Consultant’s estimateNote: cropping intensity may be higher than 100% due to inter-cropping. See SR7 section 5.1.

7.3.4 Livestock budgetsThe livestock component of the project is expected to improve productivity and income from the different types of livestock enterprises within the watershed. In the financial analysis, livestock budgets were prepared for dairy production only. The production data on oxen and other cattle, small ruminants and poultry were insufficient to make any estimates. In the future with project situation, it was assumed that increases in dairy productivity will result from the adoption of improved nutrition and animal health practices being promoted by the project. It is envisaged that FW project yields levels would be fully attained 3 years after project completion.

The dairy outputs and inputs were then valued in 2007 farm gate prices in order to derive financial gross margins for the enterprise. The financial dairy budgets for the present, FWO and FW project situations are detailed in Appendix 4.2: Financial and Economic Livestock Budgets, and the gross margins are summarised in Table 7-22.



Table 7-22 Financial Dairy Gross Margins (ETB/enterprise)Livestock Enterprise

Present Future Future

Without Project With Project Dairy Production (1 cow) 417 508 1,411

The number of dairy cows in the catchment is probably about 5,000 head21. During the 7 year project period, it is anticipated that all of these animals will be managed under improved dairy husbandry, plus an additional 10% to reflect improved availability of feed in the catchment.

7.3.5 Net farm returnsFarm budget analysis was undertaken to determine the impact of the project interventions on farm income and the extent to which farmers would be willing to participate in, and benefit from, project activities. Farm budgets were prepared for 0.9 ha farms on: (i) the escarpment zone, (ii) western plateau, and (ii) eastern plateau. These farm models were prepared using the crop budgets and cropping patterns derived from information on crop areas, crop yields, input use and labour requirements, as well as input/output prices collected for both primary and secondary sources.

Based on the cropping patterns given in Table 7-21, the crop areas for each farm model were calculated and then applied to the respective financial crop gross margins in order to derive the likely net returns to farmers in the present, FWO and FW project situations. The net returns from the livestock enterprise were then added to net crop returns, within the different farming systems. Following the deduction of fixed costs (e.g. land tax, farm tools, and building repairs), net farm incomes for each farming system were obtained. The additional net farm income was then calculated and these estimates provided an indication of the financial viability of project interventions from the farmers’ perspective.

The detailed farm budgets are presented in Appendix 4.3: Farm Budgets and a summary of the net farm returns in the present, FWO and FW project situations are given in Table 7-23. Comparing the present and FW project situations, it is evident that there are likely to be significant increases in net farm incomes for all watershed zones.

Based on a typical farm of 0.9 hectares in the lower catchment zone, the overall net farm returns are estimated to rise by about ETB 2,000 (from ETB 4,400 to around ETB 6,400 per annum). This increase is very important because the overwhelming majority of rural households depend upon the crop and livestock production for their food security as well as household income. Furthermore, the incremental net farm returns far exceed the costs of maintaining the SWC and rural infrastructure (estimated at ETB 200/hectare), so farm households and local communities will have a strong incentive to ensure that the physical works are maintained in a satisfactory manner.

21 There are 18,500 head of cattle, and the proportion of milk cows to the total herd is usually about 27%.Dire Dawa Flood Mitigation Project 75 Feasibility Study Main Report_FINAL


Table 7-23 Net Farm Income (ETB/farm)

Watershed Zones PresentFuture

Without ProjectFuture With

Project

Lower catchment (0.9 ha) 4,387 4,030 7,492

Western Plateau (0.9 ha) 3,573 3,362 6,087

Eastern Plateau (0.9 ha) 3,758 3,475 6,647

Overall Project 4,100 3,800 6,800Source: Consultant’s estimates

7.4 Financial and Economic Analysis of the DD FMP7.4.1 Project Costs

The financial costs of the various project components including physical contingencies were distributed over a 7.5 year period in accordance with the proposed implementation schedule (see Table 4-12 and Table 4-14). In addition, post-project recurrent costs were added, as shown in Table 6-17. Physical contingencies were taken as 10%, except for construction costs of flood protection walls and SWC structures, 5%. Maintenance costs were taken as 2% pa for SWC structures and 2% pa for flood protection.



Table 7-24: DD FMP Cost Stream, Years 1-10: Financial Costs Including Physical Contingencies, ETB

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Project Costs including contingencies

Project Coordination Office 607,200 607,200 607,200 607,200 607,200 607,200 607,200

Project Management Office12,053,72

1 8,163,978 7,745,503 4,500,563 2,226,211 1,662,571 1,662,571

Resettlement Costs 2,402,981 2,402,981 0 0 0 0 0

Flood Protection Walls 0143,259,81

2143,259,81

2 0 0 0 0

Watershed Planning Teams 4,919,970 2,202,933 2,202,933 2,202,933 1,775,217 1,775,217 1,775,217 612,000 612,000 612,000

Catchment Management Measures

Improved agricultural practices 646,514 850,383 1,064,811 1,289,800 232,320 232,320 232,320 211,200 211,200 211,200

Improved livestock practices 649,405 884,061 1,136,794 1,407,603 397,679 397,679 397,679 182,600 182,600 182,600

Improved Management of Common Access Lands 770,511 1,484,984 1,498,994 1,513,003 1,527,012 1,541,021 854,566 76,414 76,414 76,414

Improved agro-forestry practices 1,900,906 2,228,013 2,568,979 2,923,806 2,204,813 2,340,519 2,476,226 1,017,4181,017,41

8 1,017,418

Rural water supply, roads and footpaths 0 0 0 0 0 0 0 0 0 0

SWC Costs 0 0 7,874,866 15,749,73215,749,73

215,749,73

2 15,749,732 7,874,866

Alternative livelihoods 172,150 176,454 180,758 185,061 189,365 21,519 21,519 0

Flood Warning and Catchment Monitoring 767,531 767,531 63,961 63,961 63,961 63,961 63,961 63,961 63,961 63,961

Maintenance of SWC structures 0 0 149,997 449,992 749,987 1,049,982 1,349,9771,499,97

4 1,499,974

Maintenance of flood protection structures 0 2,728,758 5,457,517 5,457,517 5,457,517 5,457,517 5,457,5175,457,51

7 5,457,517

Total costs24,890,88

9163,028,33

0170,933,36

9 36,051,17630,881,01

830,599,24

3 30,348,48916,845,95

39,121,08

4 9,121,084



7.4.2 Project BenefitsThe calculation of APL from flooding was described in section 7.2. The benefit from flood protection is the avoided APL in the FWO and FW project situation. This approach acknowledges the fact that flood risk is never completely eliminated. Further, avoided APL requires no further adjustment other than discounting, so for each type of avoided APL the annual value is the same.

Note that avoided APL can only be claimed when flood protection construction is completed. This delays benefits, thus making project indicators less favourable. However, with the inclusion of the catchment management component, we can claim avoided APL as a result of improved catchment condition in proportion to the assumed rate of implementation of SWC.

The calculation of benefits from catchment management was described in section 7.3. The benefit from catchment management is the incremental benefit from crop, livestock and forestry production. It would be expected that financial benefits of catchment management will be low relative to other SWC projects; this because the productive area (cultivated land plus common property land) is only 35% of the catchment area. There are environmental benefits to improving unproductive land also, but these are captured in avoided APL as a result of improved catchment condition.

The benefit stream from flood protection and catchment management is shown in Table 7-26. Further details can be found in Appendix 4.3, Tables 1 and 2.



Table 7-25: DD FMP Financial Benefit Stream, ETB

2010 2011 2012 2013 2014 2015 2016 2017

Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Project Benefits/Avoided LossesAvoided APL of direct loss to households: floodwalls only 830,002 1,660,005 1,660,005 1,660,005 1,660,005 1,660,005 1,660,005 1,660,005Avoided APL of indirect loss to households: floodwalls only 344,796 689,591 689,591 689,591 689,591 689,591 689,591 689,591Avoided APL of indirect loss to support displaced: flood walls only 219,668 439,335 439,335 439,335 439,335 439,335 439,335 439,335

Avoided APL of indirect loss to economy: floodwalls only 782,151 1,735,876 1,923,053 2,126,849 2,348,302 2,588,461 2,848,385 3,129,130

Avoided APL of direct loss to households: increment from catchment management 19,224 48,059 86,506 124,953 163,400 192,235 192,235 192,235Avoided APL of indirect loss to households: increment from catchment management 30,455 76,137 137,047 51,907 67,879 79,858 79,858 79,858Avoided APL of indirect loss to support displaced: increment from catchment 19,403 48,507 87,312 33,070 43,245 50,877 50,877 50,877Avoided APL of indirect loss to economy: increment from catchment management 86,704 240,534 479,646 1,026,193 1,341,944 1,578,758 1,578,758 1,734,366

Avoided APL of deteriorating catchment condition without project 215,696 539,240 970,632 1,402,024 1,833,416 2,156,961 2,156,961 2,156,961

Agricultural, livestock and forestry benefits from catchment management 2,717,466 5,434,931 8,152,397 10,869,863 13,587,328 16,304,794 19,022,260 28,266,565

Total benefits 5,265,563 10,912,216 14,625,525 18,423,791 22,174,447 25,740,875 28,718,264 38,398,922



7.4.3 Economic ValuationsThe principal objective of the economic analysis was to establish whether proposed investments are justified for the economy as a whole. The need for economic analysis arises principally from the existence of distortions within an economy, which can lead to a divergence between market prices and real resource costs of the economy. In terms of efficient allocation of resources, the prices applied in an economic analysis should therefore reflect the next best alternative use (or opportunity cost) of those resources. A matter of particular interest in this project is the economic viability of the flood protection and catchment management projects, both separately and jointly.

Traded GoodsEconomic prices for internationally traded goods relevant to the project (i.e. cement, reinforcing bar, wheat, grain legumes and fertilizers) were derived from World Bank commodity price projections22 for 2010. Prices were converted to 2007 constant prices using the manufactures’ unit value (MUV) index and were adjusted for insurance, freight, processing, transport and handling to determine economic farm gate/construction site prices. Economic prices for grain legumes were derived on an export parity basis, while the economic prices for construction materials, wheat and fertilizers were calculated on an import parity basis. (See Appendix 4.4: Derivation of Economic Prices). Non-traded GoodsPrices for non- traded goods (e.g. housing, household effects, infrastructure, local services, vegetables, fruit, straw etc) were based on 2007 prices prevailing in the project area. Financial prices for these goods were converted to economic prices by applying the standard conversion factor (SCF) of 0.9023. Transport costs were based on the rates for transport between farm and market which are currently prevailing within the catchment. However, these financial prices were converted to economic prices by applying a conversion factor of 0.90. It was assumed that all avoided losses were non traded items (housing, personal effects, infrastructure, emergency relief services etc). Financial prices for these goods were converted to economic prices by applying the standard conversion factor (SCF) of 0.90.

LabourLabour on small farms is almost exclusively provided by either family members or exchange labour and, in the economic analysis, the value of farm labour was based on the prevailing wage rates (in cash or kind). Labour costs varied according to the type of farm activity but averaged around ETB 8 per day for most farm operations. However, given the high levels of unemployment and underemployment in the project area, a shadow wage rate factor of 0.72 was used to determine the economic value of labour. Unskilled labour in Dire Dawa city will be used for construction, and the wage rate offered is currently ETB 12 per day. However, as in the rural areas, a shadow wage rate factor of 0.72 was used to determine the economic value of labour.

7.4.4 Capital costsIn the derivation of economic costs of the project, import duties and taxes were first omitted from the financial costs, as these are transfer payments within the economy and so are not real resource costs. The standard conversion factor of 0.90 was then applied to the financial costs of local materials, machinery/equipment and skilled

22 World Bank. Prospects for a Global Economy: Commodity Price Forecast. September 2007.23 Ministry of Finance and Economic Development, National Economic Parameters and Economic Analysis for Public Investment Programs in Ethiopia, Addis Ababa.



labour. The cost of unskilled construction labour was also reduced by applying a shadow wage rate factor of 0.72. The financial cost of foreign goods and services remained unchanged.

These economic conversion factors were then applied to the financial costs, as given in the detailed cost tables for the various project components, in order to determine the economic costs of the project. The economic costs (including physical contingencies) were estimated at ETB 407.56 million. The financial and economic costs are summarized in Table 7-26.

Table 7-26 Project Costs Including Contingencies (ETB ‘000)

Number

Project Component

Estimated CostFinancial Economic

1 Project Coordination Office1.1 Staff costs 3,864,000 3,864,000

2 Project Management Office2.1 Staff costs: Project Management 1,555,200 1,555,2002.2 Staff costs: Resettlement 672,000 672,0002.3 Staff costs: Flood Protection Component 8,978,400 8,978,4002.4 Staff costs: Catchment Management Component 14,880,000 14,880,0002.5 Staff costs: support staff 1,260,000 1,071,0002.6 Office and transport costs 5,917,600 4,550,4802.7 Training of contractors 105,000 81,9002.8 Training of DDAC Line Departments 420,000 327,6002.9 Urban kebele evacuation procedures 271,000 211,380

2.10 Resettlement 4,956,822 4,461,1402.11 Monitoring and Evaluation: urban flood protection 500,000 450,000

3 Flood Protection Walls3.1 Improvement of existing walls 176,108,229 136,131,6613.2 Construction of new walls 96,767,603 74,801,3573.3 Improvement of walls under construction 2006/073.4 Rehabilitation of existing structures

4 Watershed Planning Teams4.1 Staff costs 8,893,500 8,893,5004.2 Office and transport costs 4,408,700 3,390,1754.3 Training of DA and CMS 367,000 286,2604.4 Community Training 638,000 497,6404.5 Preparation of CAP 665,000 598,500

4.6Monitoring and Evaluation: catchment management 350,000 315,000

5 Catchment Management Measures5.1 Improved agricultural practices 4,134,970 3,225,2775.2 Improved livestock practices 4,791,726 3,776,522

5.3Improved Management of Common Access Lands 8,354,629 7,210,044

5.4 Improved agro-forestry practices 15,130,238 13,181,0535.5 Rural water supply, roads and footpaths 35,068,946 29,457,9155.6 SWC Costs 74,998,723 57,974,013



Number

Project Component

Estimated CostFinancial Economic

5.7 Alternative Livelihoods 860,750 774,675

6 Flood Warning and Catchment MonitoringEstimated cost 1,744,388 1,569,949

Physical contingencies at 10% 47,666,242 38,318,664

Total cost 524,328,665 421,505,306Source: Consultant’s estimate, Note the breakdown of costs of EMP, Resettlement etc is given in the corresponding Tables in the Supplementary Reports

7.4.5 Recurrent costsThe annual post project maintenance costs for SWC (2%) and flood protection (2%) were based on the economic valuation and included in the economic analysis as these costs will have to be incurred if the future benefits of the project are to be sustained. Other post-project recurrent costs detailed in Table 6-17 were also included, but adjusted by the SCF.

7.4.6 Flood protection benefitsAvoided APL as a result of flood protection walls were attributed after completion of construction. The financial estimates were multiplied by the SCF to obtain an economic valuation. Avoided APL as a result of improved catchment condition were identified separately. This enables the economic viability of the flood protection and catchment components to be estimated independently.

7.4.7 Agricultural benefitsThe adoption of improved crop and livestock practices, coupled with the implementation of soil/water conservation, land development and agro-forestry measures, are expected to lead to improved agricultural productivity. In the estimation of the crop production benefits, economic crop gross margins per hectare were calculated by valuing the physical input and output quantities in terms of their respective economic prices.

The economic gross margins for each crop grown are summarised in Table 7-27, and their derivation with respect to crop yields, crop inputs and labour requirements, as well as economic input and output prices, are presented in detail in Appendix 4, Table A4.1: Financial and Economic Crop Budgets.

The economic gross margins per hectare were then multiplied by the crop areas to determine the net crop benefits in the present, future with and future without project situations (see Appendix 4.6: Agricultural Benefits). Similarly, the net livestock benefits were estimated by multiplying the economic gross margins for each enterprise by the number of improved livestock enterprises which will be adopted by farmers during the project period.



Table 7-27 Economic Crop Gross Margins (ETB/hectare)Crop Present Future without Project Future with ProjectMaize 4,307 3,862 8,203Sorghum 2,294 2,058 4,040Wheat 2,389 2,080 2,559Barley 2,546 2,231 2,785Teff 2,431 2,083 2,934Vegetables 6,519 6,519 9,844Pulses 2,885 2,482 3,174Oilseeds 2,589 2,234 2,984Roots 6,742 6,730 7,478Banana 7,468 6,640 8,630Chat 3,736 3,012 7,345Coffee 7,025 6,483 8,504Enset 3,204 3,204 2,878

Consultant’s estimates based on field survey (April 2007)

The differences between the net crop and livestock benefits in the present, future without and future with project situations were then calculated in order to determine the economic impact of the project interventions. As a result of improved productivity, the project’s net agricultural benefits are estimated to rise by ETB 32.44 million per annum (from ETB 31.80 million to ETB 64.24 million per annum). Furthermore, the net economic benefits from agro-forestry development were also added to the economic benefit stream.

It is envisaged that FW project agricultural benefit would be fully attained three years after project implementation. The potential for intensifying and diversifying agricultural production will be clearly shown by the demonstrations which form part of the agricultural support services. Gradual adoption of these improved methods, supported by expanding domestic markets, will therefore lead to increases in agricultural production and farm income.

7.4.8 Project Financial and Economic ViabilityBy deducting the financial and economic capital and recurrent costs from the net benefit stream, an incremental net benefit stream for the project was determined over a 50 year period (in constant 2007 prices). The incremental net benefit stream was then used to estimate the financial and economic internal rates of return (F&EIRR), net present value (F&ENPV) and benefit:cost ratio (B:C ratio). NPVs and B:C ratios were calculated at a discount rate of 10%, which corresponds to the opportunity cost of capital in Ethiopia. The results are shown in Table 7-28.



Table 7-28 Financial and Economic Indicators for DD FMP, ETB Financial EconomicDD FMP: Project Including PCO, PMO, Flood Protection and Catchment ManagementNet Present Value -79,338,035 -2,399,705 Internal Rate of Return 8.4% 9.9%B:C Ratio 0.81 0.99

Flood Protection Component (excluding PCO and PMO)Net Present Value -208,377,440 -153,425,192 Internal Rate of Return 1.7% 2.4%B:C Ratio 0.23 0.27

Catchment Management Component (excluding PCO and PMO)Net Present Value 129,402,229 153,595,294 Internal Rate of Return 19.6% 24.0%B:C Ratio 2.24 2.80

Note: Discounted at 10%

It could be said that the financial indicators are not attractive, but this is not surprising. In respect of flood protection, consider that the avoided APL to justify an investment of about ETB 258 million in flood protection walls would have to be in the order of ETB 40 million pa, and the avoided APL of direct damage of the August 2006 flood (alone) would only be about ETB 1.53 million per annum. Flood victims in 2006 were among the most disadvantaged in Dire Dawa city and there is not much financial benefit in protecting them. Benefits are heavily discounted as they may only be claimed after completion of construction. The level of urban flood protection offered is very high. Only by including avoided APL of indirect damage, particularly the long term effects on the city economy, can benefits be made commensurate with costs. Basically, the project is being implemented early; in ten years time with a strong growth in the city economy in the meantime, the economics could look much more attractive. Even so, the project is clearly appropriate for public sector funding: high cost, high risk and with long term benefits to the public as a whole.

The catchment management component brings good benefits despite the catchment being small. This is because a large amount of SWC on private land has already been done, and the costs of raising productivity on this land are therefore relatively small. Note also that the costs of potable water supply and improved infrastructure (ETB 35 million) have been excluded from the above analysis, because no benefits have been calculated for them. Including these costs would bring the EIRR of DD FMP down to 9.7%, and Catchment Management down to 16.7%.

The financial and economic analysis is an incomplete measure of project worth. There is a strong social and political argument for implementing the project. This includes the urgency of the protection both of human life and of urban and rural citizens’ property, and achieving at least minimal environmental quality in the catchment.

In addition, much can be learned about flood management from this project. Such experience will become increasingly useful in Ethiopia as population density and urbanisation increase, and environmental quality deteriorates at least in the short term. There are alternative ways of approaching the problem; including urban re-structuring of Dire Dawa (flood zoning, provision of water and sanitation, re-location of markets



and the bus station etc.) and a complete re-think on the provision of urban energy. However (and recognizing that DD AC has made considerable efforts to achieve the former), there is neither the time nor the budget to adopt either of these two strategies.

The analysis does vindicate the strong opinions of the DDAC, made at the Project Stakeholder Workshop in July 2007, that catchment management is a necessary complementary intervention to flood protection measures. Not only will it increase benefits (and also reduce maintenance costs and avoid early re-building, the implications of which have not been modelled); it will also contribute significantly to the welfare of the rural population and help to establish the rural-urban linkages so essential for both development and eventual environmental quality. It is interesting to see that after project completion catchment benefits comprise 80% of total benefits up to 20/20, but then declines as the city economy grows to only about 55% of benefits by the end of the analysis period.

7.4.9 Sensitivity AnalysisA simple sensitivity analysis was done to identify the parameters of the model to which the project economic indicators are most sensitive. The results are reported in Table 7-29. The model is clearly stable, because the indicators do not change much with quite large changes in costs and benefits, and this is because of the long discounting period of 50 years. The most sensitive cost parameter is the cost of flood protection, and this would be expected. However, even a cost overrun of 20% (on the cost including contingencies) would lower EIRR only to 9.1%. Similarly, a 20% saving in the cost of construction would raise EIRR to over 11%. Similar changes in the cost of SWC, the second largest cost item has relatively little impact on EIRR, while the cost of re-settlement has virtually no effect.

In respect of changes in benefits, a 20% decrease in the estimated avoided losses due to direct and indirect benefits leads to an EIRR of 9.8% - a very small change. This is good, since the estimate of APL is subject to more inaccuracies than any other cost or benefit. It is comforting to know that even if the estimate is seriously wrong, it will not have a dramatic effect on project economic indicators. A change in the benefits from agricultural production does have an impact on EIRR however. A 20% reduction in the these benefits will reduce EIRR to only 8.8%. A reduction in benefits from catchment management (e.g. if the drain on woody biomass reduction cannot be reversed, and/or there is a failure to improve management of the common access lands) actually affects the economic indicators rather little. This is an interesting conclusion because these are seen as significant project risks.

Changes in total costs and benefits do impact on EIRR. A 20% increase in costs will reduce EIRR to 8.6% while a 20% decrease in benefits reduces EIRR to 8.3%. So the model is slightly more sensitive to reductions in benefits than increases in costs. Delays in benefits also have an impact. If benefits from increased agricultural productivity are delayed by three years the EIRR would be reduced to 8.1%

Changes in discount rate obviously change the ENPV substantially. 10% is the recommended discount rate in Ethiopia, but if overall funding can be obtained at 8% for this specific project, for example partly through a grant or loan, then the project value to the nation rises nearly 100 fold.

Without catchment management there is a risk of increased maintenance costs and even a re-build to higher specifications within the elapsed time of the project. Assuming 3% pa maintenance costs and re-construction of the flood walls after 30 years, the



EIRR for flood protection only falls from 2.4% to -1.3%. There is no hydrological evidence to support this scenario, but it is a logical result of deteriorating catchment condition and possibly increases in the magnitude and frequency of rainfall events which lead to aggressive flooding. This adds weight to the importance to the importance of implementing both catchment management and urban flood protection within the same project.



Table 7-29: Sensitivity Analysis

EIRR ENPV-20% -10% 0% 10% 20%

Change in cost of flood protection 11.1% 10.5% 9.9% 9.5% 9.1%Change in cost of SWC 10.2% 10.1% 9.9% 9.9% 9.8%Change in resettlement costs 10.0% 10.0% 9.9% 10.0% 10.0%

Change in direct and indirect losses 9.8% 9.9% 9.9% 10.0% 10.1%Change in avoided losses from catchment management 9.9% 9.9% 9.9% 10.0% 10.1%Change in benefits from extension and SWC 8.8% 9.4% 9.9% 10.5% 11.1%

Change in total costs 11.9% 10.8% 9.9% 9.2% 8.6%Change in total benefits 8.3% 9.1% 9.9% 10.8% 11.5%

Delays in benefits One year 9.3% Two years 8.6% Three years 8.1%

Change in discount rate: 12% -64,553,716 10% -2,399,705

8% 107,944,356 6% 302,124,514



8 CONCLUSIONS

The conclusions of this feasibility study are: At present Dire Dawa city faces an annual probability of direct and indirect loss from

floods in the order of ETB 3 million pa, and this figure will increase as the city economy grows

Improvement and extension of flood protection walls and a Flood Warning System are therefore urgently required to protect lives and property of about 4,000 urban families in Dire Dawa city, and to secure a better investment climate of the city as a whole

Catchment management of 400 km2 above Dire Dawa city is a necessary complementary activity in order to secure the considerable investment in flood protection walls and reduce still further the annual probability of loss

Food security of 10,000 rural households in the catchment above Dire Dawa is poor and declining, crop and livestock production are less than half of potential, and at present consumption rates of woody biomass reserve in the catchment are expected to last no more than 13 years; therefore urgent measures are required to increase rural productivity which cannot be achieved by physical SWC works alone

By addressing these issues, development of a synergy between environmental protection, urban security and rural livelihoods is possible, which is highly relevant in the Ethiopian development context, and already adequately supported by policy

The project is expected to reduce the annual probability of loss from floods of urban residents by about 95%, crop, livestock and forestry productivity increases are expected to almost double rural farm incomes and catchment management is expected to further reduce the annual probability of loss from floods by urban residents

The overall EIRR of the project is only 10% and the benefit from rural livelihood improvements is almost 75% of total benefits after project completion, but this is likely to fall to 55% as the city economy grows; though the project indicators are not attractive (because the level of protection is very high and the property protected rather low value), the project economic indicators are reasonably robust

The greatest risks to project performance are failure to manage and provision urban energy demand in Dire Dawa, and failure to improve the management of common access lands in the catchment (40% of the area); however this will probably not affect expected project benefits drastically

The implementing agency of the DD FMP should be MoWR because the project involves the allocation of water resources in four regions and will require a high level of management, particularly in the implementation of the proposed Flood Warning System and an understanding of the hydrology of small catchments in semi-arid areas

While flood wall maintenance is likely to be about 2.5% of the city revenue after construction it will rapidly become a smaller proportion as the city economy growths. However the capital cost required to upgrade protection (ETB 284 million) exceeds the DD AC revenue for 2006/07. This suggests that external funding will be necessary.

DD FMP attempts to address the problems of catchment deterioration, rural poverty and urban flood protection in an integrated way. It raises many important national development issues, including (i) rural-urban relationships and the treatment of environmental economic benefits (ii) the management of common access lands (iii) the difficulties of predicting floods in small un-guaged catchments (iv) the relationship between catchment condition and flood periodicity (v) the protection of urban populations from natural disasters. DD FMP is therefore expected to be an important demonstration project, whose implementation will provide valuable experience and information for Ethiopia and elsewhere.
