This study provides a feasibility evaluation and quantitative analysis of the costs and benefits of the medium-scale irrigation projects in Korea, which are supported by loans from the International Bank for Reconstruction and Development (IBRD), in their first year.
While small- to medium-scale irrigation projects are the main subject of this study, the effects of such projects on tourism, landscape improvement, and recreation are difficult to translate into market prices and also to quantify, and therefore have been excluded from the scope of this study. As a quantitative analysis, this study focuses on the internal return on investment rate as the indicator of investment efficiency, and applies both domestic and international prices.
The internal returns on investment were estimated for each region that received funding, applying both the Korean and international prices. When the Korean prices were applied, the return rates for all of the IBRD and AID project zones amounted to 19.1 percent and 9.3 percent, respectively. When the international prices were applied, however, the rates declined to 12.4 percent and 6.8 percent, respectively. This is because, whereas the new projects in the IBRD project zones are scheduled for completion over a period of two years, the projects in the AID project zones typically require four to seven years to complete, and therefore carry greater investment costs in terms of present values. In addition, the IBRD Team previously assessed in its feasibility report that the return rate of the IBRD project zones amounted to 12.6 percent, while this study assessed it at 12.4 percent. Moreover, the direct effects and benefits of these investments include: the development of arable land; increase in output per unit; transformation of the acreage-under-cultivation system; decrease in the demand for human labor; increase in labor productivity; and the increase in the profitability per unit.
The autonomy of farmers in the arable land irrigation cooperatives should be increased in the future in order to empower farmers and cooperative members as much as possible, while minimizing governmental intervention. So as to prevent unnecessary trial and error resulting from a lack or shortage of literature surveys, policymakers will need to carry out sufficient analyses of the technical and economic feasibility of these projects, while also finding ways to ensure the fiscal self-sufficiency of these projects so as to minimize dependency on loans from external parties. As inflation will be the norm for the Korean economy for years to come, the financial burden on farmers should be minimized by allowing them to repay their debts in equal installments, combining both principal and interest. Should natural disasters or other emergencies affect certain project zones and create the need for emergency repairs or maintenance, the reserve funds of other zones should be made available.
IBRD차관 중규모수리사업평가분석(Evaluative analysis of medium-scale irrigation projects involving IBRD loans)
1차년도보고서(year 1 report)
|Series Title; No||연구보고서 / 제77-13권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Territorial Development < National Land Development|
|Holding||KDI; KDI School|