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Nepal

Public Expenditure Tracking Survey: Cooperative Farming, Small Irrigation and Transportation of Seeds and Fertilizers Programme

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Executive Summary

Climate Change (CC) has the potential to negate development gains and undermine the future possibilities and aspirations of the people. As a climate vulnerable country, Nepal must effectively and efficiently mobilise resources – from both domestic and international sources – to respond to the negative impacts on dayto-day lives and livelihoods. Nepal’s climate change budget has increased by over sevenfold since fiscal year (FY) 2013/14. Further, the country is positioned to receive additional international funds -- as commitments made by the international community indicate. Hence, it is important to generate evidence on whether or not public money reaches the end beneficiaries in an effective and efficient manner to help them in responding to the increasing climate change risks.

The Public Expenditure Tracking Survey (PETS) was piloted in the government’s ‘Cooperative Farming, Small Irrigation and Transportation of Seeds & Fertilisers Programme’ in Bardiya and Udayapur districts. The programme is a response to climate change and covers all of Nepal’s 75 districts.

Agriculture is most vulnerable to climate change impacts. About two-thirds of Nepal’s population is engaged in agriculture. As such climate related resources and programmes should reach these groups for enhancing their resilience to climate impacts. The government programme that was analysed seeks to provide subsidies for the repair of small irrigation schemes through farmers’ groups and is regulated by the Small Irrigation Special Programme Implementation Guideline-2061 BS (Amendment-2070 BS). The government guideline allows it to implement small irrigation programmes of up to Rs. 150,000 in collaboration with farmers’ group, and up to Rs. 300,000 through a cooperative. The recipients have freedom to design and implement schemes to match their needs.

The PETS was conducted among beneficiaries associated with 20 farmers’ groups/cooperatives that had received grants through the District Agriculture Development Office (DADO). The survey traced the flow of funds from government agencies to end-users throughout FYs 2013/14 and 2014/15. The study was carried out from September 2016 to January 2017.

The key objective of the PETS is to generate evidence on how funds flow through existing financial and administrative systems, determine how much of the originally allocated resources reach end beneficiaries, identify political and institutional problems in the deployment of human and in-kind resources in the districts and assess compliance against the government guidelines for managing the small irrigation special programme. The study adopted a topdown view of the context of climate finance, policy frameworks and structures along with its outcomes, and a bottom-up view based on perspectives of beneficiaries and stakeholders of the programme while focusing on the flow of funds and its accountability effects. The PETS used a mixed-method combining quantitative and qualitative techniques using literature reviews, beneficiary surveys, consultations, field observations, Focus Group Discussions (FGDs), and Key Informant Interviews (KIIs). Information acquired from the primary sources included the planning and decision-making process, fund flow mechanisms and practices, monitoring and evaluation, benefits to end users and transparency and accountability practices.

Nepal has introduced some exemplary policy interventions, initiatives and mechanisms to respond to the adverse effects of climate change. The government developed the Climate Change Budget Code (2012) and carried out the Climate Public Expenditure and Institutional Review (CPEIR) in 2011. These serve as tools for planning and budgeting for channelling funding for climate change and related activities. The tools have also opened up avenues for tracking climate finance. Sustainable use of water resources for energy, forestry, irrigation and safe drinking water are some of the 11 areas considered as climate changerelated activities according to the Climate Budget Code. According to Climate Change Budget Code-2012 developed by the National Planning Commission, development activities related to any of the following are considered as climate change related. They are sustainability of natural resources and greenery promotion, land use planning and climate resilient infrastructures, climate change induced health hazards, climate change induced hazards to endangered species, Green House Gas (GHG) emissions reduction, sustainable use of water resources, food safety and security, low carbon emission through renewable and alternate energy, climate induced disaster risk reduction, awareness, education and database creation and policy, legislation and plan of action for climate change. The programme studied is ‘Highly Relevant’ to climate change according to the criteria but had been overlooked while coding in government documents.

Key findings

Overview of expenditure

Based on the data of the government treasury controller’s office in the districts, the expenditure of the irrigation programme was about 98 percent and 99 percent in Bardiya district in FYs, 2013/14 and 2014/15, respectively; and it was 100 percent and 97 percent in Udayapur in the corresponding years. Likewise, the capital spending was 73 percent and 93 percent in Bardiya, and 100 percent and 91 percent in Udayapur (See Table 4-1).

Key institutional mechanisms

The key institutional mechanisms involved in the flow of funds from government agencies to end beneficiaries of the ‘Cooperative Farming, Small Irrigation and Transportation of Seeds & Fertilizers Programme’ include LegislatureParliament, National Planning Commission (NPC), Ministry of Finance (MoF), Ministry of Agricultural Development (MoAD), Department of Agriculture, Agriculture Extension Directorate, Office of the Auditor General (OAG), District Treasury Office (DTO), DADO and grantees (farmers’ groups and cooperatives).

Compliance status

The government guidelines were followed on legal registration, operation, contribution, commitment and engagement of groups/ cooperatives to be eligible for accessing grants from the DADO. The guidelines state that the groups/cooperatives should be registered with DADO or under other concerned government agencies and should have completed at least a year of operation with regular meetings, and must also be committed to the development of the agriculture sector, and abide by the process required to be followed to receive the grants.

Socio-economic impacts

The programme has been effective in terms of service delivery, was transparent on use of budget, and had contributed to increase in food production and productivity, crop intensity and crop switching. The irrigation opportunities offered by the small irrigation schemes had allowed farmers to have food security and generate income through offseasonal commercial vegetable farming. Small irrigation had allowed them to cultivate at least three crops, including vegetables, each year, and to switch to commercial farming from subsistence agriculture, and generate higher incomes.

Another positive aspect of the project was the group mobilisation, awareness among farmers about the grant selection process, discussion among stakeholders on climate change related concerns, and people’s participation in the construction and maintenance of irrigation schemes.

Transparency/Accountability

The farmer and cooperative groups followed a transparent decision-making process followed by social accountability practices such as annual public hearings and sharing of information among members. More than half of the total 20 institutional respondents (55 percent) said that the grant allocated to groups/cooperatives was used properly while 35 percent said it was moderate in terms of use. The beneficiaries were interested in attending public information meetings on programmes and plans. Around 45 percent respondents had actively participated in public audits/hearings organised by farmers’ groups/cooperatives. None of the respondents had used the Right to Information to seek and receive information from the concerned public bodies.

The programme has helped small farmers to adapt to water scarcity in farming/agriculture. Further, irrigation channels designed locally also suit local needs, and have helped to address climate risks.

Gaps

Compliance of guidelines

• Involvement of frontline farmers’ groups in the procurement of irrigation equipment and machineries

• Distribution of grants to the same groups in two consecutive years

• Scattered distribution of grant amounts

Participatory monitoring

• Inadequate participatory and transparent monitoring of the irrigation schemes

• Monitoring was not undertaken with checklists and was not useful for bringing improvements to the programme, for learning and promoting accountability practices

• There was almost no practice of preparing monitoring report with evidences from the monitoring agencies such as DADO, civil society organization (CSO) representatives, media and other government officials and on this the farmers saw room for improvements

• Inadequate participatory planning due to lack of information

• Mismatch between the needs and design of the irrigation schemes in some cases

• Affluent people and leaders influence location of irrigation schemes

• Ad-hoc decision-making was evident in the programme selection, planning and investment.

Discrepancy in records

• There were slight discrepancies between the records of the DADO and the responses of beneficiaries, especially in regard to the grant amount and contingency deductions in some cases. There was some variance in the grant amount provided by the DADO and that received by farmer groups in some cases, indicating leakage. However, this was not the case for all small irrigation special grant recipients.

Major learning

• The small irrigation programme was useful for addressing climate change with people’s participation and was also an example of effective use of resources

• The project has potential up-scaling and replication to engage more farmers

• The engagement of CSOs as intermediaries can assist in bridging the information gap and can help towards fact-based analysis

Key recommendations

• The programme needs to be up-scaled and replicated to include more beneficiaries to increase resilience capacity of small farmers to adapt to climate impacts

• Increased coordination among government agencies (for example, Department of Irrigation, Department of Soil Conservation and Watershed Management and Department of Water Induced Disaster Prevention) can assist in designing more effective interventions

• There is need for information sharing and sensitisation on procurement practices and the compliance guideline among farmer groups

• Government agencies including DADO should carry out monitoring as per the guidelines and provide feedback to stakeholders for effective delivery

• Engagement of CSOs needs to be promoted to bridge the information gap between the frontline service providers and beneficiaries for ensuring accountability at various stages

• Newly-formed local governments need to be encouraged to continue and upscale this model especially in the districts that have experienced regular droughts