An Economic Analysis In The Context Of Environmental Impact Assessment Of An

Irrigation Project In Gutu District, Zimbabwe

A Mini Dissertation
Submitted To The University Of The Free State In Partial Fulfillment Of The Requirements
For The
Masters Degree In Disaster Management

Presented By
Lynnette Tshabangu

Supervised By
Mr Andries Jordaan

November 2009
Abstract
Previous economic analysis of agriculture projects has excluded the cost implications of
environmental protection. Analyzing the gross margin budgets, a project can prove to be
economically viable, but such viability does not factor in the cost of the natural resources
(environment). Exploitation of the environment and local institutions have a strong
bearing on the successful implementation of the project and its sustainability. This study
was an effort to do an economic analysis of a proposed irrigation project scheme for
Gutu south in Zimbabwe with a backdrop of environmental impact of the scheme. The
study utilized the Environmental Impact Assessment (EIA) framework to analyze the
socio economic and biophysical impacts of the proposed scheme. Under the
socioeconomic impacts the study leant that the project will bring about food security
(food availability and diversified diet), employment creation, business opportunities,
infrastructure development and increased household income for engaging farmers.
Undesired outcomes of the scheme-included disputes on water rights and participation
in the scheme, increased risk to HIV/AIDS infection during scheme construction and
increased exposure to water born diseases. Considering the biophysical impacts of the
scheme, increased vegetation cover, increased crop yield, land conservation through
good agronomic practices constitute the positive side. The negative side is
predominantly soil erosion, slope instability, soil salinity and reduced biodiversity. The
project design incorporated environmental management strategies to mitigate the
negative impacts. The economic analysis of the project indicated a gross benefit of
US$13.930 million, by comparing the economic values of the ‘with’ and ‘without’ project
situation over a 30-year project life spun. Incorporating environmental protection costs of
US$27,560 the proposed irrigation project showed a net present value of US$1.729
million. The proposed irrigation project can then be safely recommended for
implementation with a higher degree of confidence. The result of integrating EIA in
economic analysis of a project provides a comprehensive decision making approach in
development programming.

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Declaration

I, the undersigned, hereby declare that the work contained in this dissertation is my own
original work, that all sources used or quoted, have been indicated and acknowledged by
means of complete references, and that this dissertation was not previously submitted by me
or any other person at any other university for a degree.

Signature: ________________________
Date: 25 November 2009

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Acknowledgements

This study would not have been possible without the provision, protection and promotion
from the Lord Almighty, whose grace is enough for me. I wish to express my sincere
gratitude to the people and institutions that made this study a success. My special
thanks goes to my husband, Mdabuli for all the spiritual and intellectual inspiration,
which enabled me to go the distance. My heart-felt gratitude goes to our boys Thubalami
and Thandolwenkosi for enduring with me through-out the study period. I am indebted to
my sister Mrs Sharbert Munyoro for making it possible for me to give this task all my
attention the final days before the due date of submission. I am grateful to the support
and encouragement I received from my supervisor Mr Andries Jordaan through out the
study period. I would like to acknowledge the support I received from my line manager
Clement Mhlanga, a colleague Taungana Dzikati and Debra Maleni from AGRITEX. I
also want to thank Oxfam GB for creating a conducive environment and availing relevant
materials used during the study period.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION .......................................................................................1

1.0 Introduction ...............................................................................................................1
1.1 Working Definitions ...................................................................................................2
1.2 Preliminary Literature Review....................................................................................2
1.3 Background To The Problem Area ............................................................................4
1.4 Problem Statement And Research Questions ...........................................................6
1.5 Research Design.......................................................................................................7
1.5.1 Data Sources......................................................................................................8
1.5.2 Data Collection Methods.....................................................................................8
1.5.3 Sampling ............................................................................................................8
1.5.4 Data Analysis .....................................................................................................9
1.6. Delimitations Of The Study.......................................................................................9
1.7 Outline Of Chapters...................................................................................................9
CHAPTER 2: Theoretical Framework ............................................................................11
2.0 Introduction .............................................................................................................11
2.1 The Environmental Impact Assessment Framework................................................11
2.1.1 EIA as a Statutory Requirement in Zimbabwe ..................................................15
2.2 An Overview Of Economic Analysis Of Projects ......................................................17
2.3 The Role Of Economic Analysis In EIA....................................................................20
2.4 Methodologies Used In Economic Analysis Of Environmental Impacts....................22
2.5 Case Studies From Other Countries........................................................................29
2.6 Case Studies From Zimbabwe ................................................................................31
2.7 Conclusion ..............................................................................................................32
CHAPTER 3: METHODOLOGY AND PROCEDURES..................................................34
3.0 Introduction .............................................................................................................34
3.1 Selection of study area ............................................................................................34
3.2 Methods Employed in Data Collection .....................................................................35
3.3 Methods Used In Data Analysis...............................................................................37
3.4 Limitations ...............................................................................................................43
3.5 Conclusion ..............................................................................................................44
CHAPTER 4: FINDINGS AND RESULTS .....................................................................45
4.0 Introduction .............................................................................................................45
4.1 The EIA Of The Proposed Ruti Irrigation Scheme ...................................................45

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 4.1.1 The Socio-Economic Aspects ...........................................................................45
4.1.2 The Bio-Physical Aspects .................................................................................47
4.2 Analysis of the Environmental Impact Identified.......................................................49
4.3 Economic Analysis Of the Proposed Irrigation Project .............................................57
4.3.1 The ‘Without’ Project Situation..........................................................................57
4.3.2 The ‘With’ Project Situation...............................................................................58
4.3.3 Valuation Of the On-Site Effects .......................................................................60
4.3.4 Valuation of Off-Site Effects..............................................................................64
4.3.5 Measurement of Economic Viability of The Proposed Irrigation Project ............65
4.4 Conclusion ..............................................................................................................68
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS ..........................................69
5.0 Introduction .............................................................................................................69
5.1 Discussion Of Findings And Results........................................................................69
5.1.1 Discussion of Bio-physical and Socio-economic Findings.................................69
5.1.2 Discussion of Benefit-Cost Analysis Findings ...................................................71
5.2 Conclusion ..............................................................................................................72
5.3 Recommendations ..................................................................................................73
LIST OF REFERENCES ...............................................................................................74
ANNEXURE ..................................................................................................................80
A. Discussion Guide ......................................................................................................80
B. Gross Margin Budget for Irrigated Crops...................................................................83
C. Gross Margin Budgets for Dry-Land Crops ...............................................................87
D. Ruti Irrigation Scheme Project Budget ......................................................................92

LIST OF FIGURES
Figure 1: A map of the proposed site for the Ruti irrigation scheme.................................6
Figure 2: The Impact Screening Process.......................................................................38
Figure 3: A Simple Valuation Flowchart.........................................................................40
Figure 4: The Incremental Production of Irrigation Project .............................................63

LIST OF TABLES
Table 1: Challenges And Recommendations For Economic Analysis Of Environmental
Impacts..................................................................................................................27
Table 2: Identified Negative Environmental Impact Identified And Mitigation Measures.49

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Table 3: Impact Screening Process Results ..................................................................52
Table 4: Current Annual Cropping Pattern In The Study Area .......................................58
Table 5: Expected Crop Production Pattern ‘With’ Irrigation ..........................................59
Table 6: Financial Gross Margins For Rain-Fed And Irrigated Crops.............................60
Table 7: Computation of Net Present Value For The Irrigation Project ..........................67

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 CHAPTER 1: INTRODUCTION

1.0 Introduction

Irrigation schemes are being strategically established in the rural areas of Zimbabwe as
a drought mitigation measure for income and food security reasons. Since 1980, the
use of water from river flow, reservoir storage and deep motorized boreholes has seen
the development of 187 smallholder irrigation schemes, across the agriculture sector
(FAO, 2000). The country has vast potential water resources in Trans-boundary Rivers
and in-land dams. An assessment done in Zimbabwe on Irrigation Feasibility by FAO in
2000 revealed that the country has potential for irrigation development to cover at least
240,000 hectares of arable land in the agricultural farming sector. Gutu district in
Masvingo province is one such area with potential water resources for irrigation
development given that it is prone to recurrent droughts. At the boundary of the south-
eastern part of the district is a perennial Ruti dam. This dam is a potential water resource
for irrigation development as a drought mitigation measure for the Gutu community.

The Gutu rural district council drew a plan to develop the irrigation scheme sometime in
the 1990s but due to a lack of funding from the government, the implementation of the
plan has been delayed. Oxfam Great Britain (Oxfam GB), a non-governmental
organization operating in the area was approached in 2007 for funding. In response,
Oxfam GB conducted a feasibility study for irrigation development in the area towards
the end of 2007. The study recommended development of an irrigation project as key
priority for the community in view of climate change impact. The study also pointed out
the need to promote sustainable livelihood options, which are economically viable given
that the community has been food insecure since 2002. These indications prompted
Oxfam GB to fund the establishment of an irrigation project with the aim of meeting food
security for the Gutu community, in view of achieving sustainable livelihoods. This study
is therefore a follow-up to conduct an economic analysis of the proposed irrigation
project. The analysis is done in the context of Environmental Impact Assessment (EIA)
framework. The EIA framework provides an opportunity to predict environmental
damages and mitigation measures, as well as providing options for maximizing
productive and non-productive benefits of the environment. The economic analysis
focuses on establishing the benefits and costs for establishing the irrigation project
incorporating the environmental protection measures.

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The study takes into account the national and international policies on environmental
damage prevention and mitigation. This includes the National Environmental
Management Act and the International Protocols and Agreements on the environmental
management. Therefore the EIA framework is used in view of Zimbabwe Environmental
Management Act, to ensure that environmental protection measures are incorporated in
the design of the irrigation project.

1.1 Working Definitions

In view of the proposed study, the following terms are defined as follows;
• EIA is a generic term that embraces both an administrative process and set of
analytical techniques designed to predict and appraise environmental impacts
of development proposals. In summary it is a process of ensuring that proper
consideration has been given to environmental effects in development
decisions.
• Environment is the physical, ecological, economic and social aspects, which
are life support systems for local communities around the proposed site for the
irrigation scheme.
• Economic analysis refers to assessing the efficiency with which resources are
used to meet community preferences. This entails making use of valuation
methods that allows the placing of economic values on many environmental
impacts and incorporates them in benefit-cost appraisals.
These definitions have been adopted from the United Nations Environment Programme
(UNEP, 2004) and David James (1994).

1.2 Preliminary Literature Review

The long-term fluctuation in the earth’s weather conditions has been associated with
global warning induced by greenhouse gases such as carbon dioxide, methane, nitrous
oxides and hydro-fluorocarbons emitted from human activity (Chasi, 2009). Trend
analysis on annual rainfall across Zimbabwe is decreasing by about 5 to 20% of the
1961-90 average and annual warming reaching about 0.15 to 0.550C per decade by
2080 (Chasi, 2009). The accelerating and deepening impacts of climate change is
affecting all especially the poor who stand to suffer most due to the inherent vulnerability
caused by poverty and an already degraded environment. The current climate variability

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experienced in Zimbabwe, particularly drought cycles, means that rain-fed agriculture
which is the major source of livelihood for the rural majority will be greatly affected.
Climate change has been observed to show increased drought frequency, water
scarcity, land degradation and reduced or loss of ecosystem functions.

Coping strategies to the impacts of climate change for agricultural based livelihoods
especially in Zimbabwe have often been characterized by disposing of productive
assets, reduce food consumption, dependency on food aid, as well as reduced
expenditure on health and education (Chasi, 2009). Most if not all of these mechanisms
will push more people into extreme poverty with long term repercussions to increased
vulnerability to climate change related hazards. In light of this, most assessments have
concluded that there is need to improve food security, water and environmental
management. This implies better management of disaster risks including early warning
systems and protection from vector borne diseases. Recommendations have been made
to build the capacity of the rural poor to adapt to changing climate through technology
transfer and strengthening positive coping mechanisms. One way of building community
capacity to adapt to the effects of climate change is through irrigation development.

According to a study done by Stockle (2001) on a Review of An Environmental Impact of

Irrigation, irrigated lands contribute significantly to the world agriculture output and food
supply. The study estimates that in 1986 about half of the increase in agricultural
production in the previous 35 years had come from irrigated land. It also highlights that
about one-third of the world’s crops were grown on one-sixth of the cropped area, which
was irrigated. Irrigated land was found on average to be more than twice as productive
as rain-fed land.

A study done in Ethiopia by Mahmoud (2007) on an Irrigation Project suggests that

irrigation projects have an imperative importance to realize development policies like
poverty reduction and food self-sufficiency, especially in developing world. Therefore
much attention should be given to the environmental conservation in view of maximizing
production and productivity. This emanates from analyzing the water conservation
measures and uses by considering issues such as the utilization of agro-chemicals in
irrigated fields, which may find their way back to the water source. The study

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recommends that it is indispensable to carry out the EIA of an irrigation project in a given
area.

The Environmental Management Act (Act 13 of 2002, Chapter 20:27) of Zimbabwe has a
provision that protects environmental degradation in all economic sectors such as
manufacturing, mining, construction, tourism and agriculture. To promote environmental
management practices the Department of Natural Resources and Environmental
Management has drawn guidelines to conduct EIA as a statutory requirement. The
guidelines stipulate that for all irrigation projects, there is need to conduct EIA in view of
environmental protection. Therefore environmental related projects at all levels are
expected to demonstrate environmental protection measures before they are
implemented.

An irrigation evaluation study done by FAO (2000) in Zimbabwe on irrigation schemes

across the country revealed some of the problems faced by communities operating the
schemes. These problems include market access, water management, social conflicts,
operation and maintenance expertise. The study recommends that specialized technical
experts especially in irrigation development, social, environmental and agricultural
management should work closely with the farmers to develop viable and sustainable
irrigation projects.

According to James (1994), economic analysis is becoming increasingly important as a

planning and evaluation method in environmental assessments. The economic approach
offers a logical means of integrating applied science and public decision making. It
provides a basis of reaching balanced decisions on development and environmental
protection. Economics in EIA have been found to provide a framework for the collection,
analysis and interpretation of information. This allows efficient assessment of resource
utilization in view of meeting community preferences.

1.3 Background To The Problem Area

Gutu district has a population of over 198 000 people with more than 90% of the
population depending on subsistence rain-fed agriculture for livelihood. It covers natural
regions III, IV and V, which are characterized by erratic and unreliable rainfall patterns
(Rukuni and Eicher, 1994 pp 42). This makes rain-fed agriculture a risky venture and

4
statistics indicate that success rate of rain-fed agriculture in these regions especially IV
and V are in the order of one good harvest in every 4 to 5 years (FAO, 2000). Lately due
to climate change, the district has experienced repeated droughts and faces chronic
food insecurity. It has been a seasoned recipient of food aid from various institutions
including World Food Programme, Churches and the government since the 2002.

Water resource management is a major concern in rural areas as most irrigation

schemes that were operational are no longer functional (Dzvurumi, 2006). Poor
management of irrigation systems poses a threat to the environment as this contributes
to the severity of the impact of drought to the environment. Other agriculture activities
such as overgrazing, over-cultivation, stream bank cultivation and deforestation can
further compound the impact of a drought on the environment. Therefore there is need to
effectively manage the environment and water resources for irrigation. This will provide
leverage to the local population from the current droughts and improve their food
security and livelihood. This includes managing factors that can make the environment
vulnerable to drought such as the supply and demand of water sources, water use
patterns and drought preparedness measures. According to James (1994), the
environment is viewed as a natural resource that constitutes part of the national capital
stock. Therefore it yields goods and services that have recognizable economic value to a
community, despite the fact that not all such goods and services can be valued explicitly
in terms of market price.

Despite being in region IV, the south-eastern part of Gutu has the potential to reduce
dependence on unsustainable rain fed agriculture through effective utilization of Ruti
Dam. The dam was commissioned in 1979 and is along Nyazvidzi River in the Save
Catchment Area and covers an area of over 1500ha. A report done early 2000 by the
Gutu Irrigation Department on the irrigation assessment utilizing the Ruti dam indicates
that there are 3 sites suitable for irrigation that can cover a total area of 250 hectares.
The initial assessment report revealed that the area nearest to the weir has a potential
for 80 hectares, and up to 20 hectares can be irrigated by gravity. The drawn irrigation
proposal is intended to irrigate a maximum of 20 hectares of arable land. This targets to
engage 80 farmers directly to produce crops in the irrigation. In the subsequent years
and depending on funding available, the scheme will be developed to its full capacity,
initially by expanding it to irrigate up to 80 hectares and later up to 250 hectares. The

5
figure below shows the south eastern part of Gutu district and the proposed site for the
irrigation scheme.

Figure 1: A map of the proposed site for the Ruti irrigation scheme

1.4 Problem Statement And Research Questions

As a drought mitigation option, an irrigation project proposal has been drawn to utilize
the Ruti dam in the south eastern part of Gutu district. This study therefore seeks to
answer the broad research question; Is it economically viable to develop the proposed
irrigation project in Gutu district, incorporating environmental protection measures?

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In view of answering this question, the following specific research questions were
pursued:
• What are the probable environmental damages and benefits arising as a result
of the proposed irrigation project?
• What are the environmental protection measures to be considered in view of
the probable environmental damages?
• What are the costs and benefits of ‘with’ and ‘without’ the irrigation project?

1.5 Research Design

This study considered economic analysis and EIA as a means of internalizing
environmental effects by placing values on damage to or improvements in the
environment as part of development planning. The application of economics in EIA
allows for the evaluation and provision of recommendations on the ranking of
alternatives and design options. Economic analysis will be applied to help design and
select project options that contribute to the welfare of the people in a community.

Benefit-cost analysis will be used to assess the potential benefits and costs of the
irrigation project to the community, in view of calculating the net benefits. In order to do
this, the ‘with’ and ‘without’ irrigation project situations will be compared. The without-
project is captured as the present baseline conditions of the irrigation site. The with-
project situation focuses on future conditions if the irrigation project was to be
undertaken. The benefit-cost analysis focuses on the net changes that are predicted to
occur; that is the differences between the ‘with’ and the ‘without’ project situations. This
method permits the local authorities to determine in the broad sense whether the
proposal would use available resources efficiently from a community standpoint.
However, other considerations especially social factors are considered in drawing
recommendations as the benefit-cost analysis only offers economic efficiency.

The study will collect information on:

- The physical and temporal boundaries of the irrigation project
- The physical, ecological, social and economic environment of the proposed
irrigation project
- Possible adverse and beneficial environmental impacts that may influence the
design of the irrigation project.

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 - The environmental safeguards and mitigation measures in view of the predictions
of environmental impacts of the irrigation project
- The cost and benefit implication of the project considering the ‘with’ and ‘without’
irrigation project situations.
- The indication of recommended course of action for implementation of the
proposed irrigation project, including environmental management aspects.

1.5.1 Data Sources

Oxfam GB and the Gutu Rural District Council will provide the proposed irrigation project
documents for reference. Institutions focusing on environmental and irrigation issues
such as the Department of Agriculture and Extension Services (AGRITEX), Department
of Irrigation, District Development Fund, Zimbabwe Electricity Supply Authority (ZESA),
FAO and statutory authorities will be consulted to collect secondary data for literature
review and indicators for economic analysis. The local community and key informants
such as community leaders, local based AGRITEX and Irrigation officials will be
consulted to provide information on the physical, ecological, social and economic
environment of the irrigation project.

1.5.2 Data Collection Methods

Data collection from environmental and irrigation institutions will be done through
reviewing of documents, reports and publications. Informal interviews will be conducted
with key informants, while focus groups discussions will be conducted with the
community surrounding the proposed irrigation site. For both the key informant and local
community interviews, semi-structured questionnaires will be used to guide the
discussions. Site visits will complement this to verify the identified baseline
environmental issues.

1.5.3 Sampling
Participants for the focus groups discussions will be drawn from the community
surrounding the proposed site. Both men and women are expected to attend and efforts
will be made to invite people who are currently utilizing the site such as farmers, fisher-
men and others. The study proposes 4 focus group discussions each with at most 12
people, which is more that 10% of the targeted 80 farmer households expected to be
operating and benefit directly from the proposed irrigation project. Triangulation of

8
information will be done with the key informants who are stakeholders in the design and
development of the irrigation project. This includes people such as the community
leaders, local based specialists in agriculture, irrigation, environment, land use planning
and ZESA officials.

1.5.4 Data Analysis

Information collected will be analyzed and presented in varying degrees of detail, such
as summary tables and narrative descriptions. Collected quantitative information will be
analyzed by simple statistical aids and use Microsoft Excel to construct graphs as
applicable. Qualitative information collected through informal interviews and focus group
discussions will be analyzed by inductive reasoning and presented in words and
narratives.

1.6. Delimitations Of The Study

The study was limited to the south-eastern part of Gutu district, which is serviced by the
Ruti dam. Due to resource limitations, the proposed irrigation site and community
targeted by the proposed irrigation project were the primary sources of information for
this study.

1.7 Outline Of Chapters

The study has the following layout of chapters;
Chapter 1: This section provides the background of the study, justification and the focus
of the study. It describes the research objectives, research questions and methodology,
which guides the conduction of the study.

Chapter 2: With the purpose of giving an insight into the theoretical background and
related studies, this chapter provides the reviewed literature. It also gives insights on key
emerging findings and gaps existing from previous studies and related assessments.

Chapter 3: This chapter documents the design and methodology followed during the
research fieldwork. It discusses the instruments used in the measurement of the key
variables of the study and explains the sample design, techniques used in data
collection and analysis.

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Chapter 4: This chapter presents the findings and results of the information collected for
an economic analysis of an irrigation project in the context of EIA framework.

Chapter 5: This chapter discusses the main findings of the study and draws conclusion
and recommendations. It provides a summary of the research project in view of the
broad research focus.

Annexes of tools used to conduct the study and other relevant detailed analysis for the
study.

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 CHAPTER 2: Theoretical Framework

2.0 Introduction
This chapter provides the theoretical framework and literature reviewed that relates to
this study. It discusses the theoretical framework of economic analysis in the context of
EIA. The first section discusses the EIA framework for irrigation development. Reference
is made to the Zimbabwean EIA framework as a statutory requirement for environmental
management. The next section of the chapter provides literature on the relevance of
economic analysis in EIA as a tool for project planning and designing. Key concepts
used in economic analysis that are specific in this study are also defined. A detailed
review of the methodologies used in economic analysis of environmental impacts is also
discussed. The last section provides information on reviewed evaluations done on
existing smallholder irrigation schemes in view of economic viability and mitigating the
negative impacts of drought in communities.

2.1 The Environmental Impact Assessment Framework

Irrigation agriculture has proved to enormously contribute towards increased food
production and improved quality of life for millions in developing countries. However,
irrigated agricultural development also has had negative environmental impacts, which
according to Amerasinghe and Boelee (2004) are largely through:
− The physical construction of irrigation systems. This involves issues such as
human resettlement; watershed degradation, encroachment into unique
ecosystems, historical and cultural sites; biodiversity loss and change (including
wildlife and fishery resources); proliferation of invertebrate and vertebrate pests
and disease carriers, soil erosion and sedimentation.
− The management of irrigation systems. This depends on the nature of water
sources (surface or ground water or both), quality of water, and its delivery to the
irrigated land. The withdrawal of groundwater can lead to land subsidence,
salination and increased pollution by other chemical contaminants. Withdrawal of
surface water leads to changes in river hydrology. Examples include water
quantity, flow regime and quality that can affect these and other associated
aquatic ecosystems. Water delivery to the irrigated land and agricultural run-off
can lead to soil erosion, impact on aquifers, water-logging and salination of soil
and water.

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 − Agriculture management practices. These may contribute to the pollution of
ground water and down stream surface water through inputs of salts,
agrochemicals and toxic leachates.

There is therefore an increasing trend to make irrigated agricultural development

accountable for its impact on the environment. This includes the need to improve its
environmental performance so as to ensure long term sustainability (Stockle, 2001). In
order to achieve this, United Nations Environmental Protection (UNEP, 2003) promotes
EIA to identify environmental and social impacts of a project prior to implementation,
during and after implementation. As a prospective tool, EIA can be used to predict
environmental impacts at an early stage in project planning and design. This allows one
to find ways to reduce adverse impacts, mould projects to suit local conditions, and
present options to decision-makers. EIA also can be used as a retrospective tool, to
identify and sometimes quantify impacts after implementation. Ideally, EIA should
examine environmental implications in all project phases under both normal conditions
and defined worst-case scenarios. It should also assess the overall environmental risks
associated with the project.

The EIA as a component of environmental management is part of the broader

responsibility of nations to preserve the environment and pursue sustainable
development. This was agreed at the United Nations Conference on Environment and
Development (UNCED) 1992 conference in Rio de Janeiro. In view of protecting the
integrity of the global environmental and developmental systems, 27 principles were
documented in the Rio Declaration on Environment and Development. These principles
are part of the International agreements, which respect the interests of all and protect
the integrity of the global environmental and developmental system. As a guide to
implementing the principles, the Agenda 21 document was drawn detailing progamme
management information. It gives a comprehensive detail of action to be taken globally,
nationally and locally by organizations of the UN, governments, and major groups
(Wikipedia, 2009).

The implementation of Agenda 21 was reviewed in 1997 (Rio +5) by the general
Assembly of the United Nations. It was recognized that progress was uneven and noted
key trends including increasing globalization, widening inequalities in income and a

12
continued deterioration of the global environment. The Rio+10 conference conducted in
Johannesburg in 2002, focused on the World Summit on Sustainable Development
(Earth Summit 2002). It affirmed the United Nation’s commitment to the implementation
of Agenda 21, alongside achievement of other international agreements such as the
Millennium Development Goals (Wikipedia, 2009). The call on countries is to adopt the
National Sustainable Development Strategies in view of the human impact on the
environment. Implementation by member states is voluntary and they should work within
the context of Agenda 21. The conference assessed progress on implementation of the
results of the Rio Summit and pointed out the need for countries to develop approaches
that would tackle social and ecological problems jointly, in dealing with environmental
problems effectively. One of the recommended approaches was for countries to ensure
that EIA is incorporated as a national instrument. This way, EIA will be undertaken for
proposed activities that are likely to have a significant adverse impact on the
environment and are subject to a decision of a competent national authority (UNCEP,
1992).

The Asian Development Bank (ADB) publication on EIA (2000) refers to sustainable
development as the result of carefully integrating environmental, economic and social
needs. This should achieve an increased standard of living and a net gain or equilibrium
among human, natural and economic resources to support future generations. This was
borne out of the realization of the need to overcome environmental challenges in order
to achieve sustainable development. These environmental challenges include land
degradation and depletion of natural resources; human settlements unfit for habitation
due to inadequate shelter, sanitation and water supplies; soil water and air pollution; and
global issues like global warming, ozone depletion, and loss of biodiversity (ADB, 2000).
In view of these challenges, EIA processes come in handy for examining the social and
environmental consequences of projects prior to their execution. In this regard, the
purpose of EIA is to provide information to decision makers and the public about the
environmental implications of proposed actions before decisions are made. The
information provided is broadly on the environmental impacts and the means for
preventing or reducing those impacts.

The ADB (2000) publication highlights 3 essential phases in conducting an EIA:

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 i. The identification phase. This involves characterizing the existing physical,
social, economic and ecological environment and identifying components of a
development project which are likely to impact that environment.
ii. The prediction phase. The project impacts are quantified using standards
and by comparison with the findings of the other projects. This phase
forecasts on the nature and extent of the identified environmental impacts,
and estimates the likelihood of the occurring impacts.
iii. The assessment phase. This phase judges the importance or significance of
the predicted impacts. It determines the costs and benefits to user groups
and the population affected by the project. It also specifies and compares
trade-offs between various alternatives.
These processes should lead to the development of a report that clearly gives an
identification and analysis of the environmental effects of proposed activities, including
their probability of occurrence. An environmental management plan should be drawn in
the report, which outlines the mitigation measures to be undertaken. The report should
also document an environmental monitoring programme, which outlines the data that
must be collected in conjunction with the project. The results of these processes should
allow decision makers to clearly identify beneficial and adverse impacts of the proposed
project and its development alternatives (ADB, 2000).

Most countries in the southern Africa region have demonstrated commitment to the
International agreements on environment and development systems by ensuring that
environmental management issues are incorporated in statutory instruments. In
Zimbabwe, this has been done through the enactment of the Environmental
Management Act 13 of 2002, Chapter 20:27. The Act has a section on Environmental
Impact Assessment, Audit and Monitoring of Projects. Though EIA has been recognized
as an integral part of environmental management for most developing countries, ADB
(2000) recommends that there is need to overcome the following limitations in its
implementation:
- Insufficient procedural guidance;
- Inadequate baseline data upon which to base analyses;
- The cost of EIA study preparation; potential delays in project implementation;
- The lack of expertise for assessing impacts;
- Inefficient communication of EIA results to decision makers;

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 - Lack of niter-agency coordination;
- Limited capacity for review of EIA reports; and
- Insufficient commitment to follow up on the implementation of environmental
protection and monitoring requirements.

2.1.1 EIA as a Statutory Requirement in Zimbabwe

The Zimbabwe Agricultural Policy Framework (ZAPF) 1995-2020 documents the
national policies and objectives for the agriculture sector. Pertaining to water resources
and irrigation, ZAPF clearly states the policy objectives as follows:
- Growth in the irrigated area particularly in the smallholder sector with minimal
negative impacts on the environment and human health;
- Equitable allocation and efficient use of scarce water resources;
- Establishment of a water pricing structure which is consistent with cost and social
efficiency;
- Establishment of an effective institutional structure; and
- Implementation of drought mitigation strategies

Milestones towards achieving these objectives include the Zimbabwe Environmental

Impact Assessment Policy of 1997, which stipulates that irrigation is a prescribed
activity, which require EIA to be conducted before authorization to proceed is granted.
The Zimbabwe National Water Authority Act of 1998 (Chapter 20:25) reformed the water
sector to ensure a more equitable distribution of water resources and stakeholder
involvement in water resource management. In this policy, water is now treated as an
economic good and the “user pays principle” applies. This follows that water is no longer
privately owned, therefore water users require water permit of limited duration, which will
be allocated by Catchment Councils. Such measures are aimed at ensuring that water
resources are utilized and managed efficiently in view of achieving development and
sustainable objectives. The recent Environmental Management Act (2002) enforces the
EIA policy of 1997. It further requires public and private development institutions to
adhere to mitigating activities that protect the environment. The Environmental
Management Act 2002 (Act 13 of 2002) was developed to provide for the following;

- The sustainable management of natural resources and protection of the

environment;

15
 - The prevention of pollution and environmental degradation;
- The preparation of a national Environmental Plan and other plans for the
management and protection of the environment;
- The establishment of an Environmental Management Agency (EMA) and an
Environment Fund;
- To amend references to intensive conservation areas and committees and
associated matter in various Acts;
- To repeal the Natural Resources Act (Chapter 20:13), the Atmospheric Pollution
Prevention Act (Chapter 20:03), the Hazardous Substances and Articles Act
(Chapter 15:05) and The Noxious Weeds Act (Chapter 19:07); and
- To provide for matter connected with or incidental to the foregoing.

The Environmental Management Act (Act 13 of 2002) defines the environment and
environmental impact assessment as follows:
Environment means
a) the natural and man-made resources, physical resources, both biotic and abiotic,
occurring in the lithosphere and atmosphere, water, soil, minerals and living
organisms, whether indigenous or exotic, and the interaction between them;
b) ecosystems, habitats, spatial surroundings and their constituent parts, whether
natural or modified or constructed by people and communities, including
urbanized areas, agricultural areas, rural landscapes and places of cultural
significance;
c) the economic, social, cultural or aesthetic conditions and qualities that contribute
to the value of matters set out in paragraphs (a) and (b).
Environmental Impact Assessment means an evaluation of a project to determine its
impact on the environment and human health and to set out the required environmental
monitoring and management procedures and plans.

The mandate to regulate, monitor, review and approve environmental impact

assessments for specific listed projects, such as irrigation schemes, lies with EMA. To
effectively execute its functions, EMA has developed general terms of reference for all
the listed projects for which EIA should be conducted. These terms of reference are for
use by consultants who are specialists listed by EMA.

16
The Environmental Management Act (Act 13 of 2002) requires the project developer to
submit a prospectus containing information regarding the assessment and the proposed
project to EMA, prior to conducting an EIA. Once the prospectus has been approved, the
developer can conduct the EIA in reference to the terms of reference provided by EMA.
In some instances, EMA may require an independent person or consultant who is an
expert in environmental planning and management services to conduct the EIA.

According to the Environmental Management Act (Act 13 of 2002), the EIA report on a
project is expected to contain the following information:
a) Give a detailed description of the project and the activities to be undertaken in
implementing it; and
b) State the reasons for selecting the proposed site of the project; and
c) Give a detailed description of the proposed site of the project; and
d) Specify the measures proposed for eliminating, reducing or mitigating any
anticipated adverse effects the project may have on the environment, identifying
ways of monitoring and managing the environmental effects of the project; and
e) Indicate whether the environment of any other country is likely to be affected by
the project and any measures to be taken to minimize any damage to that
environment; and
f) Where applicable, indicate how the developer proposes to integrate biological
diversity in the project; and
g) Describe concisely the methodology used by the developer to compile the
environmental impact assessment report.

2.2 An Overview Of Economic Analysis Of Projects

As defined in chapter 1, economic analysis implies assessing and tracing the real
resources flow induced by investment rather than the investment’s monetary effects. In
projects, economic analysis entails evaluation of projects that will last several years and
that have differently shaped future cost and benefits streams; and evaluating projects of
varying sizes (Gittinger, 1982). The analysis allows one to judge among alternative
projects or alternative forms of a particular project, as to which will make a significant
contribution to project objectives. This allows decision-makers to make objective
informed decisions regarding proposed projects, as well as enhancing the quality of the
project. Therefore the basic purpose of project-based economic analysis is to help

17
design and select projects that contribute to the welfare of a country and its people (Belli
et al, 1998).

Economic analysis allows determination of whether, and by how much, the benefits
exceed the costs in terms of achieving the objective of the project. According to Gittinger
(1982) the economic analysis of a project entails identifying and valuing the costs and
benefits that will arise ‘with’ the proposed project and compares them with the situation
as it would be ‘without’ the project. In this regard, anything that reduces or subtracts from
the project objective is a cost and anything that increases or adds to the project objective
is a benefit. Financial values are a starting point for estimation of economic values, and
these can be adopted if they reflect the market price of a commodity or service.
Adjustments should be made, if necessary, for transfer payments, distortions of the
exchange rate and wage rate, and capital constraints by using shadow prices (James,
1994).

A benefit-cost analysis of a development proposal permits the relevant government

agency to determine whether, in the broad sense, the proposal would use available
resources efficiently from a community standpoint (James, 1994). The results of a
benefit-cost analysis do indicate the preferences of the community in relation to the use
of resources and the pattern of development. The analysis process entails identifying
costs and benefits, pricing, and valuing them, in order to determine the incremental net
benefit arising from the project investment. That is benefit-cost analysis focuses on the
net changes that are predicted to occur; the difference between the ‘with’ project and the
‘without’ project situations. This can be done through a process called discounting. This
is a process of finding the present worth of a future amount or the time value of money,
using a discount rate (Gittinger, 1982).

The process will give the Net Present Value (NPV), which is one of the 3 discounted
cash flow measures of project worth. NPV refers to the expected present value of the net
benefits of the project. For a project to be accepted, the NPV must not be negative when
discounted at an appropriate rate, and the project’s expected NPV must be at least as
high as the NPV of mutually exclusive alternatives (Gittinger, 1982). The other 2
discounted cash flow measures of project worth are the Internal Rate of Return (IRR)
and the Net Benefit-Investment Ratio (NBIR). IRR is the discount rate that results in zero

18
NPV for the project. A project whose NPV is greater than or equal to zero at some
discount rate, say d, also has IRR that is greater than or equal to d, leads to the same
results, accept project (Gittinger, 1982). IRR will not be the basis for decision making
given that a project can have multiple IRR and there is need to choose if the IRR is
acceptable. NBIR is often abbreviated N/K ratio and refers to the present worth of the
net benefits divided by the present worth of the investment. When using the NBIR, the
selection criterion is to accept all projects with a net benefit-investment ration of 1 or
greater when discounted at a suitable discount rate, in order of ration value until all
available investment funds are exhausted. The NBIR can be used to rank independent
projects and cannot be used directly to choose among mutually exclusive alternatives
(Gittinger, 1982).

Belli et al (1998), recommends that for projects whose benefits are measurable in
monetary terms, the appropriate yardstick for judging whether the project is acceptable
in the project’s NPV. For EIA, this implies quantifying and assigning monetary values to
the impact of the project on the environment. It therefore requires that the EIA report
provide all the possible environmental impacts of the project. It should also provide
sufficient quantitative and qualitative descriptions of identified environmental impacts.
This information becomes the basis for the economic valuation carried out.

Below are the key concepts for economic analysis that will be referred to in this study:
• Present value refers to the value at present of an amount to be received or
paid at some time in the future, determined by multiplying the future value by a
discount factor. It is therefore the value of future flows discounted to the
present. It is also referred to as the present worth.
• Discount rate refers to the interest rate used to determine the present worth of
a future value by discounting.
• Net benefit refers to the amount remaining after all outflows are subtracted
from all inflows. This can be referred to as the net cash flow.
• Incremental net benefit is the increase in net benefit with the project as
opposed to the case without the project. It is the incremental cash flow, and is
the basis for calculating measures of project worth.

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 • Shadow price refers to the value used in economic analysis for a cost or a
benefit in a project when the market price is felt to be a poor estimate of
economic value.
• Conversion factor refers to a number usually less than 1, that can be
multiplied by the domestic market price, opportunity cost, or value in use of a
non-traded item to convert it to an equivalent border price that reflects the
effect of trade distortions on domestic prices of that good or service. A standard
conversion factor is the reciprocal of 1 plus the foreign exchange premium
stated in decimal form.
• Economic value refers to the amount by which production of a project output
or use of a project input changes national income. This can be a market price
or may be an estimate of value in use or opportunity cost that differs from the
market price.

2.3 The Role Of Economic Analysis In EIA

Sustainable development recognizes a relationship between economic development and
environmental protection that takes into account the productive role of natural resources
and the environment. Economic analysis and EIA have proved to be effective tools in
integrating effects on the environment in project planning. With economic analysis,
damage to and improvements in the environment can be weighed by placing economic
values. This allows the value of the environment as a natural asset to be recognized
more readily, and it is less likely to be damaged unaccountably. Thus the application of
economics in EIA offers a practical mechanism for protection of the environment,
including the design of mitigating measures (James, 1994).

James (1994) further highlights that under the traditional EIA, judgments about the
significance of effect tend to be derived in an ad hoc manner. However, under the
economic approach an attempt is made to measure rigorously social costs and benefits
and express them in a familiar unit of measurement, that is the monetary value. An
acknowledgment is however noted that although economic techniques are capable of
valuing a wide range of environmental impacts, in cases where there is insufficient
scientific information on environmental effects, ethical judgment should be used.

20
According to the Asian Development Bank (2000), the methodology of valuing costs and
benefits of environmental goods and services is still evolving; the role of economics in
EIA can be summarized as follows:
a. The use of economics for “benefit-cost analysis” as an integral part of the project
selection. Benefit-cost analysis can be used in the prescreening stage of the
project, and the environmental components can be brought into the process of
presenting various options and selecting among them. This leads to a project
selection process, which takes the environment into consideration.
b. The use of economics in the assessment of activities suggested by the EIA. The
economic assessment is focused on the cost assessment of environmental
mitigation measures and management plans suggested in the EIA. The
Economic analysis in the EIA may include a summary of the project costs and
how such cost estimates would change due to the activities proposed under the
EIA. This can be considered as an accounting of the environmental investment of
a project.
c. The economic assessment of the environmental impacts of the project. This is
geared towards seeking the economic values (of both costs and benefits) of the
environmental impacts. These impacts are neither mitigated, nor taken into
account in traditional economic analysis of projects. They should be identified by
the EIA and sufficient quantitative and qualitative explanations should be given in
EIA documents.

James (1994) indicates that economic analysis of environmental impacts is important in

project preparation to determine whether the net benefits of undertaking the project are
greater than the alternatives, including the non-project scenario. He argues that
economic assessment of different alternatives in the early stages of project planning
should provide important inputs to improve the quality of decision-making. He further
indicates that economic analysis of the environmental impacts of the selected projects
also allows for a more complete assessment of project’s costs and benefits.

Beder, (1997) highlights that because environmental 'assets' are free or under-priced
they tend to be overused or abused, resulting in environmental damage. She notes that
by estimating a monetary value for environmental 'assets' more weight will be given to
environmental protection in the decision-making process. Therefore analyzing the costs
and benefits in conjunction with environmental impact assessment is promoted as a

21
primary method for integrating economic and environmental considerations in decision-
making. (Noorbakhsh and Ranjan, 1998) Suggests that for an environmental
assessment process to be meaningful and to be able to serve the purpose of promoting
sustainability, integration of environmental considerations in economic appraisal and
development plans is required.

2.4 Methodologies Used In Economic Analysis Of Environmental Impacts

There is increasing interest in measures to promote sustainable development, leading to
interest in integration of environmental considerations in project and development
planning. Sustainable development can be defined as the level of welfare that is to be
sustained and promoted through economic, social, institutional and technological change
(Noorbakhsh and Ranjan, 1998). This implies integration of economic, social and
environmental considerations when planning and selecting new projects and guiding
future development. Noorbakhsh and Ranjan note that although the significance of
environmental impact may be expressed in economic terms it is not a requirement of an
EIA. They indicate that in the majority of the cases, this is not considered to be practical,
because of problems regarding the quality of data available and the reliability of
economic valuation methods available. The following challenges are said to have an
effect on the process of expressing environmental impacts in economic terms:
- Environmental costs do not reflect their true social costs and benefits as markets
for them are often distorted or absent;
- There are associated uncertainties and ignorance with respect to the reality and
relevance of their effects;
- They can occur in complicated systems hence not always easily detectable and
attributable;
- They are usually unequally distributed; and
- Being public goods with no well-defined property rights they often result in a
conflict between individual and collective interests.

The authors (Noorbakhsh and Ranjan) however acknowledge that when the
environmental impacts are not expressed in economic terms it becomes difficult to
integrate the EIA findings in the decision making process and much is left to the value
judgement of the decision maker. According to Little and Mirrlees (1991) a number of
investment projects implemented in many developing countries by aid agencies,

22
international donors and public sectors have yielded little or nothing. These failures can
be partly attributed to the disproportionate emphasis on the financial and economic
viability of projects at the expense of other important planning aspects.

Beder presents an interesting discussion on the issue of incorporating economic

analysis in EIA. She highlights that advocates of increased quantification in cost-benefit
analysis argue that by placing explicit values on proposed actions, the process is more
open to scrutiny by others. She however points out that once economic terms are
integrated, the analysis becomes highly technical, and neither available nor accessible
to the public. She argues that the value judgements are hidden beneath a mass of
figures that give the impression that the analysis is rational, neutral and objective. She
concludes that this hinders public debate of the policy issues and lessens the
accountability of bureaucratic officials; as numbers carry an unwarranted authority when
used to legitimate decisions that are basically political in character. In view of these
issues, Lee and Kirkpatrick (1997) have concluded that given the wide variety of legal
and institutional context within which decision making takes place there is no ‘best’ way
of integrating environmental assessment with economic or other forms of appraisal.
They acknowledge that the economic analysis approach is more demanding in its data
requirements while the other forms of appraisal can have serious shortcomings.

According to the Asian Development Bank (2000), the methodology of valuing costs and
benefits of environmental changes is still evolving. Three conceptual issues are
recommended for the process of valuing environmental impacts and these are; the need
to choose valuation techniques; the definition of analysis boundaries and the
selection of an appropriate time horizon. Some general guidelines for conducting
useful economic analysis of the environmental impacts of development projects adopted
from the Asian Development Bank’s Guidelines for Economic Analysis of Projects (Asian
Development Bank, 1987) are noted below.
i. Start with the most obvious and easily valued environmental impacts. First
select the effects that have directly measurable productivity changes that can
be valued by market prices, for example, changes in fish or crop production
due to a diversion of water for a hydroelectric power project.

23
 ii. Always look at both the benefit and cost sides. A clear distinction should be
made between benefits and costs, as these will be the reference from which
changes are measured.
iii. Economic analysis should be done in a “with and without project” framework.
Project alternatives should also be considered.
iv. All assumptions in the economic analysis should be stated clearly.
v. When market prices cannot be used directly, surrogate market prices should
be used.

Belli et al (1998), recommends that the first step in assessing costs or benefits of
environmental impacts is to determine the functional relationship between the project
and the environmental impact, as measured by some physical characteristics. The
second step is to assign a monetary value to the environmental impact by means of
objective and /or subjective valuation techniques. Belli et al (1998), defines objective
valuation techniques as techniques, which are based on technical and/or physical
relationships that can be measured. They rely on observable environmental changes
and on market prices of goods or services (or expenditures). The authors further define
subjective valuation techniques as techniques, which are based on behavioral or
revealed relationships. Frequently, they use surrogate measures to estimate values; that
is, the analyst uses a value for a marketed good to infer a value for an unpriced
environmental good or service. The subjective measures are said to rely on surrogate
markets, hypothetical markets (based on surveys), or implicit values as expressed by
various “hedonic” techniques. Subjective techniques offer the only practical way to
measure certain categories of environment-related benefits and costs, and they are
increasingly accepted for decision-making (Belli et al, 1998).

Belli et al (1998) discusses a number of important methods available for valuating

environmental impacts. One of the methods discussed is the changes in productivity
technique. This technique is useful for valuing environmental impacts that affect the
productivity of fisheries, forests and agriculture, amongst others. It values physical
changes in production due to environmental impacts. Market prices for inputs and
outputs can be used or, when distortions exist, appropriately modified market prices
should be considered. The first step is to identify the changes in productivity caused by
the environmental impacts both on-site and off-site. Effects on productivity “with the

24
project” and “without the project” should be assessed as the second step. The latter
option is used to specify the change the project will cause and to clarify the degree of
damage or the damage avoided by the project. Assumptions should be made about the
time over which the changes in productivity must be measured, and any future changes
expected in relative prices.

Aravosis and Karydis (n.d) categorize the environmental impact evaluation techniques of
non-tradable goods into 3 general evaluation approaches as follows:
Revealed preference techniques (direct valuation), which derives from preferences
from actual, observed, market-based information. The techniques include the hedonic
pricing, travel cost method and replacement cost. These techniques infer environmental
values from markets in which environmental factors have an immediate influence.
Stated preference techniques (indirect valuation), which attempt to elicit preferences
in direct way by use of questionnaire. The same techniques enable economic values to
be estimated for a wide range of commodities, which are not traded in real markets,
such as environmental resources. The common approaches used are the contingent
valuation and conjoint analysis.
Production function approaches, which link environmental quality changes to changes
in production relationships. These approaches are indirect means of non-market good
evaluation, related either to firm’s productions goods or services, or to household
producing services that generate positive utility. The averting behavior and dose-
response functions are 2 such approaches.

In their inquiry of the most suitable combination of environmental assessment

techniques of non-tradable goods for project evaluation, Aravosis and Karydis conclude
that each monetary valuation technique is applicable in specific cases and under certain
circumstances. They emphasize that the final choice of the most desirable combination
is based on the critical judgment of the involved evaluators. It should also be according
to its applicability and result credibility.

Belli et al (1998), indicates that the choice of valuation technique depends on the impact
to be valued; data, time, and financial resources available for the analysis, and the
socio-cultural setting within which the valuation exercise is carried out. They recommend
that the simplest techniques are usually the most useful. They further indicate that in
most bank projects, the most useful valuation techniques are those that rely on actual

25
changes in production, on replacement costs or preventive expenditures, or on
information about impacts on human health (cost of illness). All of these deal with
physical changes that can be valued using market prices and are all included in the
objective set of techniques.

There are however a number of challenges noted by the Asian Development bank
(2000) with regards to economic analysis of projects when incorporating environmental
values into benefit cost analysis. The table below presents some of the challenges and
recommended course of actions, which will be considered in this study.

26
Table 1: Challenges And Recommendations For Economic Analysis Of Environmental Impacts
Challenge Recommended Action
Economic analysis does not address the effects of the project There is need to incorporate distributional impacts into the economic
on income distribution. Some projects may show high benefit analysis by assigning different weights to different income groups.
cost ratios yet they benefit wealthy individuals at the expense
of poor individuals.

Intergenerational equity is difficult to address for projects with One way of addressing this issue is directly related to the choice of
environmental issues having an impact over a long period. discount rate. A high discount rate will favor projects with immediate net
Future generations might have fewer resources available than benefits, while a low one will have fewer restrictive effects on projects
they would have had without the project, resulting in a high with long-term negative benefits and will give more weight to negative
benefit-cost ratio. future impact.

Economic analysis also has to deal with risk and uncertainty. Expected values are used as alternative values for variables (that is,
Natural events such as drought, floods, earthquakes, and plant prices, quantities whose precise value cannot be known in advance).
and animal diseases may seriously affect projects. By using a single number, this “expected value” method of accounting
for risk and uncertainty does not indicate the degree of uncertainty or
the range of values, which might actually be expected. Sensitivity
analysis can also be used to handle risk and uncertainty in projects.
Here, the use of optimistic and pessimistic values for different variables
can indicate which variables will have the most pronounced effects on
benefits and costs.

27
Accounting of the irreversible damage projects have on Irreversibility can be accounted for by the opportunity-cost approach
available natural resources. Irreversible impacts may have since it indirectly provides information on the cost of preservation.
significant consequences in the future. Caution should be made in the choice of projects, by wisely using
nonrenewable resources and implementing projects, which promote
sustainable use of renewable resources.

Ethical and moral considerations in the valuation of human Methods have been devised to evaluate project activities, which will
lives, especially in determining how much compensation an affect human health. The most useful valuation techniques rely on
individual will accept for the loss of his life. information about impacts on human health (cost of illness). However,
ethically no project proponent could shamelessly show willingness to
buy/pay for human lives that might be affected by the project.

Economic valuation will also have limits if the resources in The preventive expenditures valuation technique may be used in this
question are imbedded in the people’s cultural traditions and case. However, although people may be willing to pay to preserve or
value systems. This is specifically true for cultural, historical, retain a resource, they might be constrained by income.
and aesthetic resources where the people’s perception of
losses of these resources depends a great deal on their cultural
and historical attachment to them.
Source: Adopted from the Asian Development Bank, 2000.

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2.5 Case Studies From Other Countries
An economic assessment of an irrigation project in Greece by Psychoudakis et al,
(1995) revealed that the internationally significant wetlands surrounding Lake Mikri
Prespa were adversely affected in the 1960s by an irrigation project to increase
agricultural production and income. The irrigation project was delayed by 2 years
resulting in an increase in public costs by 4.4 times the initial estimate and the irrigation
area reduced to 41.3% of the initially planned area. A reduction in wetland area and the
effects of intensive farming are highlighted as key adverse environmental impacts. An
ex-post cost-benefit analysis shows that the social value of the project is negative, such
that the economic losses would have been avoided by conserving the area in its natural
state, besides its intrinsic environmental value. However, the benefits to farmers were
substantial, although less than that expected, thus explaining the local support for further
expansion of irrigation.

A technical paper on Irrigation development in New Zealand documented by the Ministry

of Agriculture and Forestry (MAF, 2001) indicates that irrigation development is a huge
business investment requiring detailed analysis for decision makers. Provision of a
decision-making framework to assist individual on-farm decisions is an important part of
the information flow, which is highly recommended. Even though the document does not
directly highlight the need to conduct an environmental impact assessment, it
recommends the need to maximize non-productive benefits of water resource
enhancement such as environmental, recreational and cultural.

In a review study on the Environmental Impact of Irrigation, Stockle (2002) mentions that
the potential to increase substantially the irrigated area of the world is limited. The study
argues that gains from new capacity are expected to be offset by losses such as water
logging and salinization, as well as retirement of areas being irrigated by pumping water
in excess of rates of recharge. It points out that managing existing irrigation projects so
as to minimize their environmental impact is a requirement for long-term sustainability of
irrigated agriculture. However, a note is made that developing countries are already
struggling to provide safe drinking water and proper sanitation to their exploding
populations, let alone enough irrigation water to maintain sufficient food production
levels. As a result, their ability to restore and maintain the environment is questionable,

29
especially considering the negative effect of global warming on water resources and the
environment (Stockle).

Amerasinghe and Boelee (2004), in their documentation on assessing the impact of

irrigation projects on health and the environment, noted that water resources
development has major impact on human health. Positive impact arise from higher
incomes, better diet and nutrition, and improved access to health care systems, all of
which translate to better overall health status. Negative impacts are illnesses resulting
from water-related diseases, obtainable from 4 groups of water-associated diseases that
are distinguished by their method of transmission:
• Water-borne or faecal-orally transmitted diseases, such as cholera, typhoid and
diarrhea;
• Water-washed diseases, such as louse-borne infections and eye infections and
skin diseases;
• Water-based diseases with an intermediate host living in water, such as guinea
worm and schistosomiasis; and
• Water-related insect-borne parasitic diseases such as malaria, river blindness
and filariasis.
The authors however indicated that water-washed diseases might be reduced with
irrigation, while water related diseases transmitted through vectors might increase with
irrigation development. In order to minimize these negative impacts and identify
mitigation measures, impact assessments, which take health issues into consideration,
are recommended before implementation of water-related projects.

A study by Assefa (2008) on small-scale irrigation in The Central Rift Valley (CRV) in
Ethiopia revealed that the increased use of water for irrigation puts a great pressure on
the local hydrology and ecosystem. The sustainability of irrigated agriculture is
questioned as the study points out that competition for irrigation water, land and biomass
increases resource management complexity. In view of providing information to guide
resource management, the study recommends the need to ensure economic viability of
irrigations schemes. Other specific issues recommended by the author include the need
to improve the economic and environmental performance of small scale-irrigation
schemes, institutional support, training of farmers on improved crop and water
management issues, regular supervision and monitoring of scheme activities.

30
2.6 Case Studies From Zimbabwe
A study done by ECHO on Food Aid in Zimbabwe (2007) revealed that food insecurity in
communal lands is caused by population pressure. The resultant increased
environmental degradation leads to reduced production in dry land farming. The study by
ECHO (2007) argued that soil fertility is deteriorating tremendously over the years,
resulting in farmers failing to achieve reasonable or optimum harvests. It is also
highlighted that decline in food production is a result of extensive soil erosion in the
arable areas, thereby rendering the soil less productive. These factors, coupled with the
effect of drought, have been used as the basis for land reform and resettlement. Land
reform has seen “new” farmers with no prior experience of irrigation being allocated plots
on former commercial irrigated farms. The main problem noted amongst these farmers
with surface drainage system is lack of proper maintenance resulting in below optimum
functioning of the systems (FAO, 2007). It was also noted that some farmers in these
irrigation schemes had planted trees in the surface drainage systems, rendering them
malfunction.

A report by the Department of Agricultural Engineering and Technical Services, (AETS,

2002) on the status of irrigation development in Zimbabwe highlighted that poor drainage
and salinity are not a major problem in irrigated areas in Zimbabwe. The preceding are
normally associated with poor land levelling and poor water management or the use of
poor quality irrigation water. The report however highlighted that there is a general
increase in the use of agrochemicals in the country due to the intensification of crop
production. It is thought that regular use of commercial levels of agrochemicals is an
occupational risk for irrigation farmers which also risks contamination of both surface
water and groundwater resources (FAO, 2007). However, data on water analysis
showing agrochemicals levels in natural water sources in Zimbabwe has not been
documented to establish the extent of pollution due to irrigated agriculture. Clinical
reports have records indicating that communities from especially surface irrigation
schemes are more vulnerable to agrochemical poisoning and enteric diseases like
diarrhoea, skin and eye diseases, as well as a high risk of malaria and schistosomiasis
(FAO, 2007).

31
Smallholder irrigation in Zimbabwe has been viewed as a contributor to rural
development and for improving the standards of living among the rural communities.
This is borne from the fact that most evaluations done on irrigations schemes have
revealed that yields achieved on smallholder schemes are higher than rain-fed dry-land
yields in communal areas (FAO, 1999). However, Makhado (1984) questioned the
economic viability of these smallholder irrigation and points out that certain smallholder
schemes have failed and are under-utilized. The failure has been attributed to poor
management, lack of inputs and irrigation experience by smallholder farmers. Poor
catchment management, which results in siltation of some water bodies, has been
highlighted as one of the factors contributing to irrigation failure.

A study was done on smallholder irrigation in Zimbabwe (1995), focusing on the Hama
Mavhaire Irrigation scheme in Chirumhanzu district, to share innovative experiences.
The study describes the scheme as an oasis of life and a hive of commercial activities.
The scheme proved to be both financial and economically viable, having farmers
averaging US$2,500 to US$2,700 gross margins per hectare per year (Chitsiko, 1995).
The scheme operations demonstrated a good integration of environmental and
conservation management aspects. Soils that were once exposed to erosion prior to the
establishment of the irrigation scheme were relieved of grazing pressure giving
vegetation a chance to recover. Additionally, the year-round crop production in the
scheme increased vegetation cover. Resultantly, water storage capacity in rivers and
tributary streams increased as sedimentation loads were significantly reduced.
Additionally, the pipe system used for irrigation proved to be environmentally friendly and
healthy with no run-off to cause water logging that can be a source of malaria and
bilhazia (Chitsiko, 1995).

2.7 Conclusion
The foregoing sections discussed the EIA and economic analysis framework, and
related studies. The literature accessed especially for Zimbabwe chronicled mostly the
socio-economic aspects of smallholder irrigation schemes in terms of agriculture,
financial and economic viability. The studies reviewed on EIA related to irrigation
schemes in Zimbabwe focused more on issues of employment, business opportunities,
increase in farmer incomes, rural infrastructure development and the enjoyment of
human dignity by farmers in producing their own food instead of depending on food aid.

32
However, none of the literature reviewed presented economic analysis of the
environmental impacts of the irrigation schemes. This study therefore attempts to do an
economic analysis of the environmental impacts of the Ruti irrigation scheme in Gutu
district in Zimbabwe.

33
 CHAPTER 3: METHODOLOGY AND PROCEDURES

3.0 Introduction
This chapter documents the design and methodology followed during the research
fieldwork. It discusses instruments that were used in the measurement of key variables
of the study and explains the sample design and techniques used in data collection. It
also describes the procedures used in capturing and editing data and the rationale
behind the selection of data analysis procedures employed. It concludes by giving a
discussion on the quality of data collected by highlighting shortcomings, limitations and
gaps in the data.

3.1 Selection of study area

The selection of the study area was mostly influenced by the fact that Oxfam GB has
been operating in Gutu district implementing livelihoods project for a period of about 8
years. The proposed irrigation project in the district is currently being funded by Oxfam
GB, which enabled the researcher (currently employed by Oxfam GB) to have easy
access in the area as well as information. Selection of the irrigation site was done in
conjunction with the local authorities and the local leadership. It was also influenced by
the fact that the proposed irrigation site is located around the Ruti Dam in Gutu district,
which forms the eastern boundary of Mazuru and Magombedze wards. Ruti dam is
about 65 kilometers east of Gutu Mpandawana Growth Point. Consideration was also
made in view of the proposal that the project will be implemented in three phases. The
first phase which has secured funding is aimed at developing 20 hectares, estimated to
benefit 80 farmer households. The proposed site for this initial phase lies in the Mazuru
ward. This study therefore focused more on the Mazuru ward which has approximately
277 households.

Selection of the study area was also influenced by the EIA study which was conducted in
the Mazuru ward focusing on the proposed site for the initial 20 hectares. The
assessment was conducted to ensure that the positive impacts of the proposed project
on the environment are enhanced, while the negative impacts are mitigated. This study
is therefore enhancing the EIA study, by conducting an economic analysis of the
proposed irrigation projects taking into consideration the environmental impacts and
mitigation measures identified.

34
3.2 Methods Employed in Data Collection
Focus group discussions were organized in four villages out of six in the study area. An
effort was made to have at least 10 participants taking part in each of the focus group
discussions. The objective of these focus group discussions was to collect in-depth
qualitative information about the irrigation scheme with regards to the community’s
expectations, planned activities, contributions towards setting up the scheme, as well as
perceptions on environmental management. A checklist with key questions was drawn
up to guide the discussions. Male and female participants were combined during the
discussions as the proposed irrigation scheme is expected to benefit both men and
women equally with no special bias to gender. Efforts were made to have both the youth
and adults to accommodate diversity in terms of views and perceptions.

A total of 43 community members participated in the four focus group discussions

conducted in the ward. Of these, 23 were male and 20 were female. This maybe due to
the fact that culturally the community expects men to be the decision makers. Therefore
more men will be encouraged to attend community meetings and discussions, which are
likely to influence change in the community. Three of the group discussion had 10
members each and only one had 13 members. Their ages varied from 18 to late 60s,
with the majority in their early to mid-40s.

Various interviews were conducted with key informants from the Environmental
Management Authority, Ruti Irrigation Committee Members, Irrigation Department, Food
and Agriculture Organization, local chief and village head, ward councilor, AGRITEX,
Oxfam GB Programme Manager, Zimbabwe National Water Authority (ZINWA), and
Rural Electrification Agency (REA). Information collected through key informant
interviews was broadly centered on:
- The temporal or spatial boundaries of the irrigation project;
- The social dimensions in relation to the irrigation project;
- The economic factors relating to the irrigation project;
- The possible adverse and beneficial environmental impacts that may influence
the design of irrigation project; and
- The environmental safeguards and mitigation measures in view of the predictions
of environmental impacts of the irrigation project.

35
A total of 13 key informants were interviewed over a period of 5 days. Information
obtained was both qualitative and quantitative in nature. The roles and responsibilities of
interviewed key informants are as follows:
• Oxfam GB: Financing the implementation of the irrigation project. It is responsible
for coordination of activities during the irrigation scheme establishment. It is also
responsible for building capacity of the targeted community, through community
mobilization, organization and awareness raising on gender, HIV/AIDS and policy
issues related to natural resource and environmental management.
• Ruti Irrigation Project Committee (RIPC) is responsible for the direct management
of the irrigation scheme set up and implementation on behalf of the community,
which includes mobilizing community members to provide labour and local available
resources during construction. The committee represents the community members in
stakeholder meetings and decision-making.
• The Irrigation Services Department is responsible for topographical surveys,
design of the irrigation scheme and hiring out heavy machinery (graders, front
loaders and dousers) at subsidized rates. The department will be responsible for
providing irrigation management and training in relation to equipment utilization and
maintenance.
• Zimbabwe National Water Authority is responsible for technical design of water
movement from the dam to overnight storage systems and pipelines to the field. It
also provides trainings on community based water management and maintenance.
The department currently issues and manages water rights permits and receipts
water users’ fee.
• District Development Authority is responsible for providing expertise for
construction of access roads, surveying of boreholes and fencing of the irrigation
fields. The department will facilitate trainings on water point and fence maintenance.
• District Administrator and Local government are responsible for land
administration and related policy implementation. They are responsible for gazetting
the proposed area from being a communal area to an irrigation scheme area. This
implies enforcement and administering of by-laws related to land designated for
irrigation purposes.
• Local leadership (traditional chief, councilor and village heads) is responsible
for mobilizing community members, providing basic information on the community

36
 such as social, cultural and traditional values. They also participate in decision
making as they represent the views and interests of the community from a political,
social and cultural points of view.
• Agricultural Training and Extension Services are responsible for agronomic
issues and agriculture conservation practices. They provide agriculture information
and extension services to the community and shall be giving similar support to the
targeted farmers in the project.
• Ministry of Health and Child Welfare is responsible for implementation of health
programmes with special focus on sanitation, HIV/AIDS, malaria control and
bilharzias in relation to the irrigation project.
• Zimbabwe Electricity and Supply Authority is responsible for providing electricity
connections and maintenance of the electrical systems.
• Environmental Management Agency is responsible for environmental
management, which includes overseeing the conduction of the EIA, monitoring and
evaluation of the environmental mitigation measures proposed by the EIA study.

3.3 Methods Used In Data Analysis

Information collected through focus group discussions was largely qualitative and thus
deductive reasoning was used to analyze the data, given that the research questions
were both exploratory and interpretive. Data analysis was guided by use of the constant
comparative method where emerging themes were categorized and reevaluated.
Comparison of new data sets with old data sets on related or similar themes to check for
variations was conducted to generate appropriate discussion sections. Throughout the
process, analyzed information was reexamined and interpreted in view of the research
questions established earlier. An in-depth description and interpretation of findings is
presented in words and narratives.

Quantitative data was compiled through document review and key informant interviews.
This was information on gross margin budgets, crop production trends and the proposed
irrigation project budget. The data was analyzed using Microsoft Excel, a simple
statistical aid to construct graphs and pie charts.

Economic analysis of environmental impacts was done by initially identifying the spatial
and conceptual boundaries of the proposed project site. This was achieved through

37
consultations with the lead consultant who undertook the EIA exercise for the proposed
irrigation project. Through the EIA study, as well as literature review on climate change
impacts and coping strategies, the environmental impacts of the irrigation project were
identified. The identified environmental impacts were quantified where possible and
organized according to importance in relation to the irrigation project. This was a
mammoth task in study as it required a good basis for deciding which environmental
impacts to include and how to quantify and monetarise the same. In determining the
significance of the relationship of identified impacts to the irrigation project, the
environmental impacts were screened using the steps illustrated on the diagramme
below.

Screening Steps Actions

Screen 1: Is the
impact internal or
mitigated? Yes

Drop impact from quantitative assessment, but

No list in screening summary table. Document why
the impact is deleted from quantitative
assessment.
Screen 2: Is the
impact relatively Yes
small?

No
Describe impact qualitatively and quantify to the
Yes extent feasible. Document reasons why impact
cannot be quantified or monetized?
Screen 3: Is the impact
too uncertain or
sensitive for objective
assessment?
No

Proceed with quantitative impact assessment

No and solution.
Yes

Screen 4: Can quantitative

assessment be completed?

Figure 2: The Impact Screening Process

Source: Asian Development Bank, 1996

38
Following the quantification of impacts, economic valuation techniques were selected
based on the nature of the identified environmental impacts. In reference to the valuation
flowchart presented below, adopted from Dixon et al (1994), the quantified
environmental impacts were presented in monetary values using the appropriate
valuation techniques. As illustrated on the flowchart below, the environmental impacts
were divided into 3 categories. The first two categories are those that cause measurable
changes in the production of a specific good or service, and thereby affect: 1) human
welfare, and 2) human health. The third category comprise of impacts that cause
changes in the quality of the environment. However, in reference to the screening of
impacts done using the process illustrated earlier, the impacts affecting human welfare
and health were quantifiable, while the impacts on changes in environmental quality
were qualified.

39
 Environmental Impact

Measurable change in No Change in

production environmental quality

Yes Health
Air and Effects
Habitat Recreation water quality

Nondistorted market
prices available? Opportunity Cost
cost approach effectiveness of Sickness Death
prevention
Trave
Replacement l Cost Preventive Loss of CEA
Yes
cost expenditures earning of
No
approach s preve
ntion
Contingent
Use change evaluation Replacement/
in Land value relocation costs Medic
Use surrogate market approach al costs
productivity Human
approach. approaches, apply
shadow prices to Capital
change in production
Contingent
valuation

Figure 3: A Simple Valuation Flowchart

Source: Asian Development Bank 1996. Adopted from Dixon et al 1994.

40
Following the economic valuation of environmental impacts, a period of a month was set
to collect relevant data for the extended benefit cost analysis. The process entailed
collection of gross margin budgets for the proposed irrigation scheme’s cropping
calendar and for the current rain-fed crops grown in the study area. In partnership with
the farmers in the proposed site and key stakeholders involved in the setting up of the
irrigation scheme, Oxfam GB consolidated a bill of quantities for the scheme on behalf of
the farmers. The consolidated bill of quantities was incorporated in this study as the
capital investment of the irrigation project. Cash flows for both the ‘with’ project and
‘without’ project scenarios were calculated from the collected financial information.

The computed financial cash flows were the starting point for economic analysis. The
prices were then adjusted to reflect the economic value to Zimbabwean society for the
two scenarios. The economic values of both inputs and outputs differ from financial
values because of market distortions created either by the government or by the private
sector. The main causes of distortion in the Zimbabwean economy are tariffs and export
taxes. This has resulted in distortions of prices for traded items, non-traded items and
wage rates. The distortions on market prices were corrected using a conversion factor
obtained from the Planning Commission of Zimbabwe to arrive at shadow prices. The
following relationship, which exists between financial prices and shadow prices, was
used;

Shadow Price = (Financial Price) X (Conversion Factor)

In March 2009 the Zimbabwe dollar was abandoned and the government announced the
undertaking of total economic reform liberalizing most sectors of the economy through
the Short Term Economic Recovery Programme (STERP). However, since the
government of Zimbabwe adopted the new policy in March 2009 of using stable foreign
currencies, a pay-as-you-go budget and the cessation of quasi-fiscal activities, this has
resolved the problem of inflation. Measures implemented to guarantee profitability and
viability of farming centre around deregulation of the marketing and pricing of
commodities and allowing farmers to sell freely their commodities in the open market
and market determined prices. Against this background, the following assumptions were
made underlying the economic analysis of this study:

41
 - The macro-economic context in the country is expected to be stable with less or
no distortions in marketing systems.
- Policies that promote local production and protect producers especially farmers
will be implemented.
- Both farmers and consumers will have access to market information for decision-
making.
- The local based institutions will have capacity to effectively play their role and
support the irrigation project as expected.
- There is no uncertainty about either the costs or returns of the project.
- The proposed irrigation scheme has a 30-year life span.
- There will be no civil unrest in the planned 2013 presidential elections, which can
result in relocation of farmer households.

Examining the difference between the availability of inputs and outputs for the ‘with’ and
‘without’ project situations, was used as the basic method of identifying project costs and
benefits. This method measures the incremental benefits arising from the project over
time. Measures of change in costs and benefits over time were compared by expressing
the corrected market prices in present values or as an annualized figure. This involves
use of social discount rate, which is similar to the rate of interest, but which reflects
society’s time preference for the consumption of goods and services, or the productivity
of capital. The time horizon of the analysis was set at 25 years, informed by the
expected life-span of the irrigation infrastructure before major improvements are
required.

The technique for economic evaluation used in this study is the net present value (NPV)
also known as the net present worth. The NPV determines the present value of net
benefits by discounting the streams of benefits and costs back to the beginning of the
base year. In view of economic analysis of environmental impacts, the present value of
the net benefits can be expressed as presented in the formula below:

NVP = (Bd – Cd ) – Cp + (Be – Ce ) + (Bo – Co)

Where NPV is the net present value of the development alternative,

42
 – Bd and Cd are the present values of direct benefits and costs of outputs and
resources used in the proposal
– Cp is the present value of environmental protection costs, which are an additional
cost item incurred within the proposed activity
– Be is the value of the environmental benefits, which are external to the proposal
– Ce is the present value of remaining environmental damage, which are external
to the proposal.
– Bo and Co are the present values of other indirect or secondary benefits and
costs.
For Bd, Cd and Cp, financial values are a starting point for estimation of economic
values. Adjustments of the financial values were considered given the distortions on
prices in Zimbabwe as explained earlier. For Be and Ce, the idea was to consider using
market-based techniques first, surrogate market methods next and contingent valuation
last. The general rule is to maximize and have the NPV positive and it is calculated by
means of a formula;
n
NPV = ∑ (Bt – Ct)
t=1 (I + r)t

Where Bt are economic benefits at time t, Ct are economic costs at time t, r is the social
discount rate and n is the number of years or project life span.

3.4 Limitations
Due to the political and economic instability experienced in the last decade, the country
has continued to suffer from brain drain. This affected effective and timely collection of
information for this study. During key informant interviews, information was provided as
estimates as opposed to actual due to institutional memory loss. Some of the
respondents interviewed were new in their positions due to high staff turn over especially
in local based institutions. Therefore more time was required to follow up with
respondents to get information. Also, the adoption of foreign currency in March 2009
coupled with reduced activities in communal irrigation scheme presented challenges in
getting gross margin budgets for communal irrigation crops. Given that 2009/10
agricultural season is the first under the use of foreign currency, producer prices for
some crops were not readily available as these are determined at the end of the
production period. This was noted especially with prices for wheat and maize. This delay

43
was also due to the government’s delay to remove price controls and GMB as the sole
buyer of maize and wheat.

3.5 Conclusion
Research indicates that conducting an economic analysis of a development project can
be done more effectively in environments with low socio-economic and political
distortions. This study was conducted in a context characterized by uncertainty in terms
of political and economic stability. The context was best described as a transiting context
from socio-economic and political instability to a seemingly stable context. However,
given that a lot of work towards achieving stability has to be done, this study faced
challenges in getting updated figures such as the current discount rate. To overcome the
challenges, assumptions were made under which the proposed project would be
successful.

The question on whether the agricultural sector and macro preconditions are satisfactory
for the project could not be answered during the course of this research study. This was
due to the uncertainty of economic stability as the government faced challenges in
operating as Government of National Unity. There are however hopes pinned on the
government to implement favourable policies and strategies in view of creating a stable
environment. During the course of the study the agriculture sector was faced with 4
critical issues which needed to be addressed, for all farmers to realize meaningful
benefits from farming. These areas were Market intermediation and evolving market
support systems; financing mechanisms; agriculture related policy formulation and
implementation; and land tenure and administration for different farmer groups.

44
 CHAPTER 4: FINDINGS AND RESULTS

4.0 Introduction
This section presents the findings and results of the information collected for an
economic analysis of an irrigation project in the context of EIA framework. The results
are presented in 3 major sections of the EIA findings; analysis of the environmental
impacts; and the economic analysis of the proposed irrigation project.

4.1 The EIA Of The Proposed Ruti Irrigation Scheme

This section presents findings from the focus group discussions and key informant
interviews. It also presents an analysis of findings obtained from the EIA study, which
provided the basis for the economic analysis. The EIA findings were categorized into 2
broad sections of socio-economic and biophysical aspects. The socio-economic aspects
focus on the social and economic issues, while the bio-physical aspects look at the
ecological and physical dimensions of the study area.

4.1.1 The Socio-Economic Aspects

The proposed irrigation scheme would make use of the dam and weirs constructed
previously. The physical boundary of the proposed irrigation scheme covers an area of
at least 20 hectares. The proposed site would attract communities from the 2 adjacent
wards (ward 13 and 14), with the majority coming from ward 13 where the scheme will
be. Consultations with local authorities and extension officers revealed that the current
20 hectares proposal if well managed, would provide sufficient food to feed the 2 wards
through-out the year, and be able to produce surplus for selling. Therefore part of the
boundary for the proposed irrigation scheme was established to be the 2 wards.

In terms of social dimensions, the community surrounding the proposed irrigation site
was fully aware of possible development of the site into an irrigation project. As a result,
the site had no cultural or heritage sites. Previous occupants of the proposed sites had
been relocated long back and fully compensated. However, given that the area has been
lying fallow for more than a decade before funding could be secured for further
development, surrounding communities have encroached back into the site. The area
was being utilized for mainly dry-land farming. The major crops grown were maize,
sorghum, rapoko and groundnuts. Other crops such as pumpkins, watermelons, round

45
nuts, sweet potatoes sugar beans, cowpeas and sweet reeds are also grown in the area
though at a very low quantities. These crops are popularly referred to as ‘women’s crops’
given that they are grown on field portions allocated to women for household
consumption. Gardening, hunting and gathering of wild fruits and fishing is also done but
on a very small scale compared to farming.

Due to economic instability, the majority of youth in the area had migrated to urban areas
and neighbouring countries in search of “greener pastures”. Thus the current community
set up is characterized by dependant people above the ages of 40 and school going
children. Irrigation development in the area is expected to reunite the families, as the
youth will be attracted back to the community to earn a living from the scheme. The
irrigation would result in continuous cropping, 3 seasons instead of 1, thus eliminating
droughts and increasing food security. According to the District Administrator, the
incomes from the scheme is currently projected to triple the current salaries (US$90) of
those who are working in urban areas as general hands. Employment creation is also
expected for skilled people such as builders during construction as well as general
hands during land clearing and supply of locally available raw materials during
construction. The infrastructure development is projected to require at least 150 locals
during the peak period of construction.

The major source of livelihood is agriculture, which is dry-land farming though the effects
of climate change coupled with the current unfavorable market systems were making this
venture not viable. The current marketing policy of Grain Marketing Board (GMB)
controlling maize and wheat producer prices makes producers fail to realize value for
their produce. GMB has no resources to pay market prices, further influencing alternative
buyers who then offer less money to producers who are desperate to sell their produce.
However, opportunity exists for farmers to form strong unions or associations to
influence policy formulation and market systems. This has been witnessed in the
soyabean production sector in Zimbabwe where the farmers formed an association,
influenced by government in policy issues relating to marketing of soyabeans, and are
enjoying favorable marketing terms.

Fishing is also another livelihoods venture for the community. However, the absence of
electricity in the area leaves fisher-men with one option of selling dried fish only. Also,
most of the community members do not possess fishing licenses making the venture

46
illegal. Additionally, the presence of hippopotamus in the dam imposes risk on fishing
and threatens crop production in the absence of fencing and other security measures.

Improved road networks is expected as the District Development Fund (DDF) has
already drawn a plan to further develop the main road which passes near the scheme
with a web of access roads sprouting from it. There are numerous business centers
close and linking to the proposed irrigation site. This makes marketing and information
sharing relatively easy for irrigation operations. Boarding schools and hospitals in the
district also provide a potential market once the irrigation project is established and
running. These market opportunities will ensure that farmers are not restricted to limited
marketing options thereby maximizing their returns.

Electricity installation as part of the irrigation scheme infrastructure development would

enable nearby shopping centres and homesteads to access electricity at a lower cost as
the community will not be installing on their own. The expected development in the area
due to electrification include improvement in provision of services such as grinding mills,
use of computers in schools and use of fridges in both households and shopping centers
especially in relation to freezing fish for commercial purposes.

4.1.2 The Bio-Physical Aspects

The adverse and beneficial environmental impacts that may influence the design of the
irrigation project were identified through the EIA conducted by a team of specialists. The
EIA study reported that in terms of water quality, the chemical component analysis of
dam water (96mg/l), downstream water (168mg/l) and underground water (498mg/l)
indicted that the total dissolved solids results fall within the acceptable irrigation water
limits. The general salinity levels for irrigation are 435mg/l, while salt tolerant crops can
withstand up to 3485mg/l. Soil salinity from irrigation can occur over time wherever
irrigation occurs; since almost all water contains dissolved salts due to the leaching of
bases. The proposed project area was found to have relatively low salt concentrations of
less than 390mg/l. Greater part of the area has levels below 15, there is however a
saltpan near the riverbed, which requires constant monitoring, given that the water table
in this area is high, making the soils more susceptible to salt accumulation. The area is
however very small and can be managed with minimum costs and good cropping

47
practices. Maize, wheat, sugar beans, groundnuts and vegetables can be grown on this
site provided the salinity levels are kept in check.

In terms of soil quality, soils from the proposed site have been reported to have a pH
level ranging between 5.44 and 8.53 (UZ, 2009). The middle section of the site has
acidic to neutral soils, while the north-east and south-east sections have neutral to
alkaline soils. This has a bearing on the crops to be grown. Acid soils negatively impact
on the production of food crops such as maize, wheat and sorghum. The pH levels for
dam water, downstream water and underground water are 7.64, 8.12 and 7.49
respectively; making the water neutral to slightly alkaline in general. These conditions
make the water suitable for irrigation.

66 tree species were identified in the proposed project area despite that greater portion
of the area has been cleared of vegetation for cultivation and during the construction of
the dam in 1976. The tree species are along the contours, while most grass species
were observed in the cultivated fields. Cultivated fields occupy a greater portion of the
area. The proposed project will disturb few trees as much clearance has already been
done for dry land cropping currently underway.

Some few portions of the proposed site have deep gullies, which are evidence of
vulnerability of certain areas to erosion. Generally the proposed site for irrigation has
relatively low erosive hazard although it has some very steep areas that are susceptible
to erosion. These are areas close to the river and around kopjes, and would require
conservation measures to be implemented to avoid land degradation.

The Ruti dam capacity during serious droughts, which occur once or twice a decade, is
reported to be around or below 0.48 mega-litres. However during normal periods the
dam can have as much as 154,227 mega-litres. The dam yield is 77.7x106m3, while the
average irrigation requirements are 15,000m3/ ha/year. According to ZINWA, the
irrigation community members need to apply for abstraction of water from ZINWA given
that approximately 2,878,400m3 of water is reported to be uncommitted and can be used
for the development of the proposed irrigation scheme. An excess of 2,578,400m3 of
water is expected to remain uncommitted after part of the dam water is committed to
irrigating the proposed 20 hectares.

48
4.2 Analysis of the Environmental Impact Identified
The EIA study identified both negative and positive environmental impacts of the
proposed irrigation project. The table below presents a summary of the negative
environmental impacts and mitigation measures identified;

Table 2: Identified Negative Environmental Impact Identified And Mitigation Measures

Environmental impact Mitigation Measure
A. SOCIO-ECONOMIC ENVIRONMENT

Disputes on who should be prioritised for the Community engagement in irrigation

scheme, i.e the previous occupants who were project design, implementation,
moved and compensated; the current monitoring and management.
‘temporary’ users of the proposed site;
outstanding farmers; poor household farmers;
or youth who do not own land.

Disputes on water access, management and Introduce water and power pricing that
water rights issues among up-stream and better represent the market value of
down-stream communities and individuals with water. Introduce transferable water
water permits. entitlements.

Increase in water borne diseases such as Health education and hygiene

malaria and bilharzia as people get more promotion would be vital to address
exposed to water when the irrigation scheme these challenges.
is operational.

Increase in Sexual Transmitted Infections and HIV/AIDS awareness, prevention and

HIV & AIDS during the construction phase, as mitigation measures.
campsite for constructors will be set up.
B. BIOPHYSICAL ENVIRONMENT

49
Environmental impact Mitigation Measure

Increased slope instability due to leveling and Provide incentives for land reclamation.
cliff creation that occurs during construction. This includes reinforcing boundary
slopes with artificial cliff stabilization
and channeling water away from
unstable areas.

Changed tree density on the sites that are Provide incentives for monitoring and
used for the irrigation scheme reduction of the tree species on the site.
Community should be encouraged to
leave some wild fruit species during
land clearing to minimize loss of tree
species.

Soil erosion may increase in relatively steep Enhance farmers’ involvement in

areas due to land clearing during construction management and maintenance of
irrigation and drainage facilities.

Potential contamination of groundwater due to Manage fertilizer programs so as to

use of chemical fertilizers and pesticides in minimize nutrients available for
areas that have shallow water tables. detachment and transport.

Soil salinity that may arise from irrigating the Apply soil amendments and reclamation
land practices.
Source: Environmental Impact Assessment, University of Zimbabwe 2009

Apart from these negative impacts, the following positive impacts were also noted:
- Increased crop production on the site due to water availability under the irrigation
scheme, facilitating all year round crop production. The increase is in quantity
and varieties;

50
 - Infrastructure development, especially road and electricity, improving
communication network and technology advancement opportunities from
electricity;
- Increase in employment opportunities during construction of the irrigation
infrastructure and related supporting infrastructure; and
- Increase in food diversity and income generated from the irrigation scheme
proceeds.

The identified positive impacts are based on the assumptions that the Zimbabwean
economy will continue on the path to recovery and attain stability. This will ensure that
there is effective information sharing on market issues. Also policies promoting an
enabling environment for these positive aspects to occur are assumed.

The identified negative and positive environmental impacts were screened in reference
to the Impact Screening Process illustrated in chapter 3. This was done to determine the
significance of the relationship of identified impact to the proposed irrigation project. The
results below present a summary of the screening process to identify the significant
impacts which could be quantified for further analysis.

51
Table 3: Impact Screening Process Results
Environmental Impact Significance Of The Impact Quantification Or Qualification Of The
Impact
A. BIOPHYSICAL ENVIRONMENT
Increased slope instability due The general rugged terrain of the proposed site for A topographic survey conducted as part of
to leveling and cliff creation irrigation makes the impact significant and the need to the irrigation establishment determined the
that occurs during be mitigated as part of the construction and correctional factors of slope instability,
construction. operational costs. which were factored into the irrigation
structure as part of the capital
requirements. Periodic surveys (once
every 5 years) have to be undertaken
during operational stage to check evidence
of slope failure so as to mitigate it.
Changed tree density on the Reduction of tree density during land clearing to open The impact of change in tree density was
sites that are used for the space for irrigation will be mitigated by farming of therefore not assessed further for
irrigation scheme various crop all year round to ensure vegetation cover. quantifying given that it can be mitigated
Leaving specific tree species will ensure limited loss of internally.
indigenous trees. The impact is therefore internal and
mitigated in the process.
Soil erosion may increase in Topographic surveys established that the area has The impact was dropped as insignificant
relatively steep areas due to relatively low erosive hazard, except a few steep areas given that the steep areas vulnerable to
land clearing during noted. erosion were less than a 10th of the
construction proposed site for irrigation. Additionally,

52
Environmental Impact Significance Of The Impact Quantification Or Qualification Of The
Impact
increasing vegetation cover during crop
production as well as leaving some trees to
enhance soil stability can internally
mitigate the impact.
Soil salinity that may arise The EIA established that the area has relatively low The costs for soil salinity tests done once
from irrigating the land salt concentrations and overall, the soils can be every 5 years were estimated and factored
classified as non-saline. There is potential for salt in as part of the environmental
accumulation, which can occur from irrigation over management costs. The costs for
time, and this can be checked and corrected correcting possible soil salinity could
periodically. The checks can be done once every 5 however not be established as this stage.
years.
Potential contamination of The impact is too uncertain for objective assessment The estimated area of contamination was
groundwater due to use of and the impact was dropped as significant. very small given that there are few
artificial fertilizers and sections where the water table is close to
pesticides in areas that have the surface. Therefore the impact could not
shallow water tables. be quantified further.
Increase in crop production The proposed irrigation will allow for all-year Under irrigation, expected crop type and
production under the 20-hectares. This significantly average yield (tonnes) per hectare are
contributes to increase in food production and type of maize (4.8), wheat (3), sugar beans (1.6),
crops produced, compared to rain-fed agriculture. carrots (20), Onions (24), tomatoes (25),
green maize (8) and potatoes (18),

53
Environmental Impact Significance Of The Impact Quantification Or Qualification Of The
Impact
compared to current average crop yield per
hectare of rain-fed crops maize (0.1),
sorghum (0.3), groundnuts (0.2) and
rapoko (0.15).
B. SOCIO-ECONOMIC ENVIRONMENT
Disputes with regard to Community disputes with regards to selection of The impact of community disputes will be
operating in the scheme. participants to operate in the irrigation scheme can evident in irrigation scheme management
have significant repercussions if not well managed. as well as community support or
Indications of such disputes have been noted during engagement.
various engagements with the community.
Disputes on water access, Water rights are significant in implementing irrigation Water disputes are social in nature,
management and water rights schemes. By-laws regarding transferable water therefore difficult to quantify.
issues. entitlements and market value water charges needs to
be enforced for effective management of related
disputes.
Increase in water borne Generally the area is less prone to malaria and The impact was not considered for
diseases such as malaria and bilharzias. Establishment of an irrigation scheme will quantitative analysis. However, community
bilharzia increase exposure of community to these water related awareness and periodic assessment of the
diseases. However, these impacts were not regarded impact is vital.
as significant considering experience from related
communities in the district with irrigation facilities.

54
Environmental Impact Significance Of The Impact Quantification Or Qualification Of The
Impact
Increase in Sexual Previous trends of construction projects have revealed The impact could not be quantified due to
Transmitted Infections and that there are high incidents of sexual affairs its sensitivity nature for objective
HIV & AIDS established between the constructors and surrounding assessment.
community. Given the high prevalence of HIV (13,7%)
in the country, there are high chances of infections.
Infrastructure development An improved road network for effective linkages and The impact could not be quantified due to
access to markets will support the irrigation scheme. the subjective nature of the development. It
Installation of electricity for pumping implies that depends on the willingness and ability of
surrounding community will have access to connection the community to make use of the
points for electrifying the community. opportunity presented by the irrigation
scheme facilities.
Increase in employment Construction phase of the irrigation infrastructure The estimated cost of construction will be
opportunities presents opportunities for employment for skilled and factored in as part of capital costs required
casual labour. During operation of the irrigation to set up the irrigation infrastructure.
scheme, security labour as well as maintenance and Maintenance and repair costs were
repair of equipment presents employment estimated from related operations and
opportunities to the community. factored in as part of operational costs
incurred during implementation.
Increased food diversity and Food diversity contributes to quality health, through Both consumed produce and income
income improved nutritional status. Income can be generated generated from operations in the irrigation
through selling of surplus produce. This will scheme is valued considering the gross

55
Environmental Impact Significance Of The Impact Quantification Or Qualification Of The
Impact
significantly improve the welfare of the participating margin budgets for communal irrigation
farmers. schemes. However, improved quality of
health is an intangible benefit, which could
not be quantified in this study.
Source: Research Study Data Analysis, 2009

56
4.3 Economic Analysis Of the Proposed Irrigation Project
The framework for economic evaluation of the proposed irrigation project is an
environmental benefit-cost analysis. The approach incorporates the findings from the
EIA and includes the economic valuations of the relevant effects. For a proper benefit-
cost analysis, the study takes into account both the location of goods and services and
their valuation. It incorporates the identified changes in productivity caused by
environmental impact both on-site and off-site. In this study, changes on-site are the
outputs such as increased crop production, for which the proposed irrigation project is
designed to achieve. Changes off-site include all the environmental or economic
externalities, which are included in this analysis to give a true picture of the project
impact. In order to conduct the economic analysis for the proposed irrigation project, the
quantified environmental impacts were valued and incorporated in a benefit-cost
analysis. In determining whether the proposed irrigation project would use the available
resources efficiently from a community standpoint, analysis of the ‘with’ project and
‘without’ project was made. The focus was on the net changes that are predicted to
occur, that is, the differences between the without-project and with-project situations.

4.3.1 The ‘Without’ Project Situation

The baseline conditions of the current crop production patterns of the community were
established, noting the crop yield and production levels. For the ‘without’ project
situation, the average production levels have been deteriorating over the years mostly
due to the changing climate resulting in recurrent droughts. This has been further
compounded by the unavailability of inputs, poor soil fertility and unfavourable policies
for agricultural production. Maize has been affected the most as the producers of green
maize are currently operating at a loss due to increased costs of production compared to
the set producer prices. Consultations with the community for the targeted irrigation site
revealed that maize yield levels under rain-fed range between one and half to two 50kgs
bags per hectare. However, production of small grains such as sorghum and rapoko was
reported to be constant and in some instances increasing. This was mainly because the
grown small grains are drought tolerant and require fewer inputs. Therefore current yield
levels per hectare of sorghum were presented as ranging from 4 to 8 50kgs bags,
rapoko at 2 to 3 50kgs bags and ground nuts ranging from 2 to 6 50kgs bags. The table
below shows the average annual cropping pattern in the study area.

57
Table 4: Current Annual Cropping Pattern In The Study Area
Crop % Estimated Area planted Average Yield 2008/09
of Area (ha) per Hectare Production
Planted (t/ha) levels (t)
Maize 70 14 0.1 1.4
Groundnuts 10 2 0.2 0.4
Rapoko 10 2 0.15 0.3
Sorghum 10 2 0.3 0.6
Total 100 20
Source: Gutu AGRITEX Ward 13 and 14 crop production records 2008/09

The area planted was calculated assuming that the proposed site of 20 hectares was being
fully utilized under rain-fed farming. The communities and the extension workers provided
the percentage estimates of area allocated to various crops under rain-fed farming. Given
that season 2008/09 was a better season compared to previous seasons, this study has
assumed 2009 to be the base year for evaluation. Realistically, this situation would change
over time, even without implementation of the proposed project. Generally, the change would
be due to economic, social, climatic and institutional forces, which can alter the life-style and
land-use practices of the community. Indications from consultations with various key
informants were that the current crop yield levels can increase if factors of availability and
accessibility to inputs are addressed which affected production in the community during the
season. However, the recurrent droughts and deterioration of soil quality and fertility, were
highlighted as key threats to achieving maximum crop yield levels in the study area. As a
result, the maximum yield levels in tones per hectare (t/ha) expected for the dry land crops in
the study area are maize 1t/ha, groundnuts 2t/ha, rapoko 3t/ha and sorghum 3t/ha.

4.3.2 The ‘With’ Project Situation

For the ‘with project’ situation, analysis was made on the type of crops, which could be
planted, expected yield levels and production area. The community indicated maize,
wheat, sugar beans, potatoes, tomatoes, cabbage, rape, onions, covo, spinach, carrots
and butternuts, as the crops preferred under irrigation. Consultation with local based
agronomist and agriculture economists revealed the recommended crops as maize,
wheat, sugar beans, carrots, onions, cabbages, tomatoes and potatoes. These crops

58
were recommended in view of the soil type, recurrent droughts resulting in food
insecurity and current economic challenges associated with pricing and marketing crop
produce in Zimbabwe. Given the unfavourable marketing terms and policies prevailing in
the country, farmers are better off producing non-perishable crops, which can be stored
for future use.

Also, the changing climate implies that communities have to find measures of ensuring
food security, such as production of staple cereal crops and small grains, which are
drought tolerant. The expected crop production pattern was to begin by planting maize
and sugar beans during summer period, October to January. This is to be followed by
sugar beans and potatoes planted from late January to April. This will be followed by
wheat from May to August, while carrots, cabbages, tomatoes, green maize and onions
will be produced from August to October. Traditionally the targeted community has not
been producing potatoes, wheat and carrots. This study therefore assumes that yield
levels for these new crops would generally be low in the first 2 years and start to pick up
from the third year onwards and reach the maximum expected yield levels by year 5,
ceteris paribus. The table below provides the summary of expected crop production
trend under irrigation.

Table 5: Expected Crop Production Pattern ‘With’ Irrigation

Crop Cropping % Area Area Expected Average Yield per hectare
Type Period To Be To Be (t/ha)
Planted Planted Year Year Year Year Year
1 2 3 4 5
(ha)
Maize Oct - Jan 90 18 4.2 4.8 5.4 6 6
Sugar Oct - Jan 10 2 1.4 1.6 1.8 2 2
beans Jan - April 50 10
Potatoes Jan - April 50 10 16 18 20 22 23
Wheat May - Aug 100 20 2.5 3 3.5 4.5 4.5
Carrots Aug - Oct 30 6 18 20 23 25 25
1
Cabbages Aug - Oct 30 6 28000 32000 36000 40000 40000
Onions Aug - Oct 15 3 21 24 27 30 30

1
The yield per hectare for cabbages is expressed in terms of heads per hectare

59
Tomatoes Aug - Oct 15 3 20 25 30 35 35
2
Green Aug - Oct 10 2 31500 36000 40500 45000 45000
Maize
Source: AGRITEX Estimates, 2009

The crop production estimates were given on assumptions that inputs will be readily
available, accessible and there will be a favourable macro and sectoral policy
environment to enable increasing agricultural production. However, to achieve maximum
production levels reflected in year 5, the study assumes that good agronomic and
environmental management practices will be employed by the farmers targeted to
participate in the irrigation scheme.

4.3.3 Valuation Of the On-Site Effects

The on-site effects of the project are measured as the increase in the net value of
production for the farmers targeted to participate in the irrigation scheme. In order to
place monetary values to the environmental impact of change in crop production, this
study used the changes in productivity technique. This technique allows for the
assessment of effects on productivity for the ‘with’ and ‘without’ project situations. Gross
margin budgets for crop production under irrigation and rain-fed agriculture were used to
determine the financial situation for the ‘with’ and ‘without’ project situations. 2009 was
considered as the base year for this analysis. The financial situation given the current
prices in Zimbabwe is presented in the gross margin budgets attached in the annex. The
table below provides a summary of the cash flow situations.

Table 6: Financial Gross Margins For Rain-Fed And Irrigated Crops

Crop Type Yield Selling Gross Total Gross
Levels Price Income Variable Margin
(t/ha) (US$/t) ($/ha) Costs ($/ha)
($/ha)
Without Irrigation
Maize 0.1 265 26.5 467 - 440
Sorghum 0.2 400 80 239 - 159
Rapoko 0.15 400 60 239 - 179
Groundnuts 0.3 1000 300 489 - 189

2
The yield per hectare for green maize is expressed in terms of cobs and not tonnes

60
Total 466.5 1434 - 967
With Irrigation
Maize 4.2 265 1113 1715 - 602
Sugar beans 1.4 1200 1680 2005 - 325
Potatoes 16 1000 7875 3641 4234
Wheat 2.5 650 1625 1359 266
Carrots 18 500 8750 1044.9 7705.1
3
Cabbages 28000 0.33 9240 1739 7501
Onions 21 500 10500 1856 8644
Tomatoes 20 1000 10,000 7802 2198
4
Green Maize 31500 0.08 2615 1509 1106
Total 53398 22670.9 30727.1
Source: AGRITEX gross margin budgets for communal dry land and irrigation, October
2009

The financial analysis indicates that dry-land farming is currently generating negative
profit for the communal farmers given the yield levels, which are way below normal.
Sugar beans and grain maize under irrigation is also generating negative gross margin.
This is largely due to price distortions in the country as imported inputs such as fertilizer
and chemicals are more expensive compared to importing crop produce from
neighboring countries like South Africa. This is partly because production of crops in
other countries is subsidized, while in Zimbabwe the government is not providing any
subsidies. Also, the current policies of charging duty on inputs imported and no duty
charges on crop produce and processed commodities in Zimbabwe, has resulted in high
production costs compared to purchasing of finished products. For grain produce such
as maize, government prostates like the Grain Marketing Board determine the floor price
at the beginning of the selling season. This further distorts the market forces as the set
price for the season is fixed and does not respond to market forces.

In order to perform an economic analysis, shadow prices, which reflect the real value of
the produce, were used. The shadow prices were calculated using conversion factors to
adjust the financial prices. The conversion factors used are 0.78 for fertilizers, 0.9 for
irrigation, 0.76 for chemicals, 0.4 for labour and 0.78 for energy. The conversion factors

3
The unit for the selling price for cabbages is given as dollars per head
4
The unit for the selling price for green maize is given as dollars per cob

61
were derived from Planning Commission of Zimbabwe. The calculation of shadows
prices was done and not presented in this document but the results of the computation
were used in the economic analysis.

Following the calculations of the shadow prices, the value of incremental production was
calculated. In doing this, additional costs of capital, operations and maintenance and
environmental management for the ‘with’ irrigation project situation were included in the
analysis in addition to variable costs. The projected capital cost was calculated to be
US$300,656. The proposed irrigation method is surface irrigation using canals. The
capital cost therefore took into consideration an additional engineering intervention of
preventing canal seepage through lining. This will aid in reducing the effect of soil salinity
over time.

The operations and maintenance costs were estimated to be at least 10% of the capital
costs. The operational and maintenance costs will be incurred from year 6 onwards.
Identified environmental costs of conducting soil salinity tests and slope stability surveys
were estimated to be the same as the cost of initial topographic survey conducted prior
to the construction of the irrigation systems, which is US$5,300 every 5 years. This
translates to US$1,060 per year for environmental management costs, starting from year
5 onwards. All these costs would be included in the economic analysis. The period of
analysis was considered to be 30 years, which was derived from related benefit-cost
analysis parameters, used on irrigation projects in Zimbabwe. The graph below shows
how the value of incremental production (gross benefit) was derived for the ‘with’ and
‘without’ project situations.

62
 600000

500000

400000
Gross Income (US$)

Without Project Net Income

300000
With Project Net Income

200000

100000

0
1 2 3 4 5 6-30
Years

Figure 4: The Incremental Production of Irrigation Project

The graph was plotted on the assumption that under the ‘without’ project situation,
farmers would continue producing. The production levels will be expected to increase as
farmers adapt to the effects of climate change and inputs would be accessible and
available through various mechanisms such as distributions from Non-Governmental
Organizations, Government input supply scheme as well as other channels. For the
‘with’ project situation it has been assumed that farmers will be able to achieve maximum
yield levels by year 5 to allow them time to master production of crops that were not
traditionally grown in the area. The annual amount for years 6 through to 30 inclusive is
expected to be constant. To reach the total amount of the incremental net benefit, the
amount in year 6 was included 25 times. The calculated total gross income ‘without’

63
project is US$368,710 and the total gross income ‘with’ project is US$14,298,248.
Therefore the value of incremental production of the irrigation project is US$13,929,538.
As indicated on the figure above, the area between the ‘with’ and ‘without’ project is the
incremental production.

4.3.4 Valuation of Off-Site Effects

Besides the increased crop production as a result of the proposed irrigation scheme,
there are environmental management and conservation issues to be integrated. As
discussed earlier, the significant environmental management issues related to the
proposed irrigation project includes the issue of slope instability expected to occur during
construction and soil salinity. The mitigation measures will be partly incorporated in the
design of the irrigation system. As indicated earlier, soil salinity and slope stability
checks will be conducted after every 5 years, beginning from year 5. The costs will be
included as part of gross costs required for operating the irrigation project in view of
sustainable development.

Conservation measures identified as significant environmental impact is the change in

tree density and removal of up to 66 tree species during construction. Mitigation
measures to this impact include the need to purposively leave some fruit species during
land clearing to minimize loss of indigenous tree species in the area. Agronomic
practices, which enhance conservation measures, will be encouraged during farming in
the scheme. This includes the following measures as indicated by the irrigation and
agronomy specialists in the area;
• Minimizing water losses in the irrigation scheme distribution system;
• Improving irrigation systems performance to minimize deep percolation and
surface runoff;
• Irrigation watercourse improvement and precision land leveling;
• Implement more efficient irrigation methods to minimize evaporation and
sediment concentration in run-off water;
• Grow different crops or introduce different crop rotations ;
• Irrigating according to reliable crop water requirement estimates and leaching
requirement calculations;
• Managing fertilizer programs so as to minimize nutrients available for
detachment and transport; and

64
 • Applying soil amendments and reclamation practices.

Most of these mitigation measures were noted to be part of crop production measures,
which are internal and can be mitigated and included in production costs. In consultation
with local based agronomists, farmers participating in the irrigation scheme should be
able to adjust the fertilizer application rates as well as soil amendments and reclamation
measures according to the soil type and various crops to be grown. Farmers
participating in the irrigation project will be expected to regularly monitor soil quality to
minimize negative impacts on the environment due to irrigation operations. Resultantly,
no off-site effects were valued separately from the on-site effects in this study.

4.3.5 Measurement of Economic Viability of The Proposed Irrigation Project

Computation of economic benefits and costs will take into account the cash flow
discussed earlier under on-site and off-site valuations. A discount factor of 12% was
used to compute the net present value of the benefits of the proposed project. The
selected discount rate is recommended for agriculture related studies for most
developing countries. The discount factors were obtained from Compounding and
Discounting Table in Gittinger (1982, pp310). From economic analysis studies done by
FAO in Zimbabwe on irrigation projects, the discount rates were selected basing on the
social opportunity cost of capital and or the social rate of time preference ranges from
9% to 15%.

The net present value used in this study was computed by discounting the incremental
net benefit stream or incremental cash flow to obtain the present worth, which were then
summed up. The gross incremental cost in each year was subtracted from the value of
incremental production to obtain the incremental net benefit. The net present value was
obtained from summing the present worth of the incremental net benefit stream. Given
that the calculated incremental net benefit yields the same amount from year 6 onwards,
a decision was made to use discount factor up to year 9 and find the present worth of
this future income stream from year 10 through 30 inclusive. To find the present worth of
from year 1 to year 9, discounting tables were used adopted from Gittinger (1982
pp310). To find the present worth of future income stream of one currency unit a year, an
annuity factor was used. An annuity is an amount payable yearly or at other regular

65
intervals. Thus the present worth of an annuity factor for years 10 through 30 inclusive
was calculated using the formula below.

Present worth of an annuity factor for 30 years at 12%

Less Present worth of an annuity factor for 9 years at 12%
Equals Present worth of an annuity factor for 10th through 30th year at 12%.

66
Table 7: Computation of Net Present Value For The Irrigation Project (In Millions of US$)
Year Incremental Cost Value of Incremental Discount Present
Capital Operational Production Environmental Gross incremental net benefit factor 12% Worth 12%
costs and costs Management (Total) production
maintenance Costs (gross
cost benefit)
1 0.301 0 0 0 0.301 0 -0.301 0.893 -0.268
2 0 0 0.136 0 0.136 0.325 0.189 0.797 0.151
3 0 0 0.140 0 0.140 0.372 0.233 0.712 0.166
4 0 0 0.143 0 0.143 0.423 0.280 0.638 0.178
5 0 0 0.148 0.001 0.149 0.475 0.326 0.567 0.185
6 0 0.030 0.148 0.001 0.179 0.475 0.296 0.507 0.150
7 0 0.030 0.148 0.001 0.179 0.475 0.296 0.452 0.134
8 0 0.030 0.148 0.001 0.179 0.475 0.296 0.404 0.120
9 0 0.030 0.148 0.001 0.179 0.475 0.296 0.361 0.107
10-30 0 0.0305 0.1485 0.0015 0.1795 0.4755 0.2965 2.7276 0.807
Total 0.301 0.752 4.273 0.028 5.353 13.480 8.127 8.056 1.729
Source: Research Analysis of Ruti Irrigation Budget and AGRITEX Crop Gross Margin Budgets, 2009

5
Annual amount for years 10 through 30 inclusive. To reach column total, this amount was included 21 times.
6
Present worth of an annuity factor for years 10 through 30 inclusive. The calculations were done using tables showing Present worth of an annuity factor at
12%.

67
As shown on the table above, the present worth for the proposed irrigation project in
US$1.729 million. In this case the present worth refers to the net present value (NPV) of
the project. Therefore the NPV of the proposed irrigation project is US$1.729 million.

4.4 Conclusion
The EIA study provided the general information that was analyzed for the physical,
ecological, social and economic environment of the study area. This was complemented
by interviews with key informants to establish the physical and temporal boundaries. The
possible adverse and beneficial environment impacts, as well as mitigation measures
that may influence the design of the irrigation project were derived from the EIA study
report. The benefit-cost analysis was based on the assumptions noted during the
discussions with both communities and key informants. This analysis was largely
informed by on-site analysis of benefits and costs, given that off-site analysis of the
proposed irrigation project presented impacts that were mostly incorporated internally in
the project design.

68
 CHAPTER 5: CONCLUSION AND RECOMMENDATIONS

5.0 Introduction
This chapter discusses the main findings of the study and draws conclusion and
recommendations. The chapter discusses the findings in view of the specific research
questions as highlighted in chapter one. The conclusion drawn is based on the analysis
done in this study in pursuit of answering the broad research question also highlighted in
chapter one. Way forward following conduction of this study and areas of further
research are discussed in the recommendations section.

5.1 Discussion Of Findings And Results

This study was conducted to answer the specific questions on, what are the probable
environmental damages and benefits arising as a result of the proposed irrigation
project; what are the environmental protection measures to be considered in view of the
probable environmental damages; and what are the monetary implications of such costs
and benefits.

5.1.1 Discussion of Bio-physical and Socio-economic Findings

As illustrated in chapter 4, the probable environmental damage and benefits were drawn
mostly from the EIA study, which are in fulfillment of the Environmental Management
Act’s requirement for irrigation projects. Key issues highlighted in the findings were
centered on the bio-physical and socio-economic aspects. Generally the impact of the
proposed irrigation on the bio-physical is expected to be less compared to socio-
economic aspects. This is mainly because the physical and ecological aspects of the
study area were already under a transformation from the time the dam was constructed
in 1976 to the present land use of dry-land farming. Thus by the time the EIA was
conducted the proposed site had been cleared during dam construction and land
preparation for farming.

As already indicated in chapter 4, the identified negative bio-physical environmental

impacts can be mitigated internally in the design of the irrigation establishment. This is
because some of the aspects such as slope instability and removal of vegetation cover
and decrease in tree density are partly a result of work done during construction of
irrigation infrastructure. Adoption of conservation measure to avoid land degradation will

69
be encouraged. These can be effectively adopted if incentives are provided such as
promotion of field days to encourage cross learning and awarding best performers
amongst the farmers.

The tests and analysis done established that generally, the proposed irrigation site is
suitable for irrigation operations in terms of soil quality, water quality and quantities.
However, periodic monitoring of these aspects will enable prompt response to mitigate
any negative effects.

The general negative impacts expected in terms of social and economic aspects are
largely due to the economic instability experienced in the country over the past decade.
This has been further compounded by the global economic down-turn experienced in
2008 and 2009. This has left communities, especially rural communities more vulnerable
to shocks such as hazards due to climate change. For the community in the study area,
they have experienced food insecurity, loss of livelihood sources and a decrease in
household income due to recurrent droughts. This has exposed the poor vulnerable
community members to harmful livelihoods coping strategies like prostitution, stealing,
disposing productive assets as well as poaching and fishing in hippopotamus infested
river. As a result HIV/AIDS was noted as a possible negative impact, which has a long
term bearing on the community if not prevented and mitigated.

Water borne diseases such as malaria, agro-chemical poisoning and bilharzia were
noted as potential threats to health as a result of Ruti irrigation development. Even
thought the area is generally less prone to these diseases, health education will be
essential to equip communities with essential information to prevent and mitigate the
impacts of water borne diseases.

Disputes in terms of scheme participants and water rights issues are inevitable in a
community, which is desperate for sustainable livelihoods options. Community
engagement by local authorities will be vital in managing these potential disputes. This
will be complemented by community involvement as well as transparent and
accountable processes from project design, development and implementation.

70
Despite these negative impacts, the net effect of the proposed irrigation project on
human health and quality of life was noted to out-weigh the negative impacts. An
increase in crop production is expected in terms of crop varieties and yield levels under
irrigation as compared to dry-land farming. The increase in crop varieties has a positive
impact on the nutritional status of the people both on the scheme and in the surrounding
communities. Directly the scheme is expected to achieve food security and generate
income for participating farmer households. Indirectly this implies that participating
households will afford better health services and other household requirements. The
prospects of upgrading infrastructure in terms of roads and electricity also implies that
the targeted community will have effective access to other surrounding areas as well as
improved access to technology for further community development. This will generally
improve the livelihoods of the community. Capacity of the community will be increased to
meet its basic requirements and be prepared for any shocks or climatic hazards that are
likely to affect the community.

5.1.2 Discussion of Benefit-Cost Analysis Findings

The study identified the ‘with’ and ‘without’ project situations as well as the on-site and
off-site effects of the proposed irrigation project in order to undertake a benefit-cost
analysis. The ‘without’ project situation revealed that crop production under dry-land or
rain-fed conditions favours the production of small grains such as sorghum, rapoko and
groundnuts compared to maize which is the staple food grown. Trends analysis done by
the Ministry of Agriculture of production levels of these crops revealed that maize yield
levels are decreasing compared to small grains. This is partly due to the drought tolerant
nature of small grains compared to maize. Also, input availability and accessibility has
also contributed to decreased production of maize. In view of all these factors, the
‘without’ project situation was projected to have generally low yield levels of maize
compared to other small grains.

The ‘with’ project situation assumed all things constant in terms of input availability and
accessibility as well as adoption of good agronomy and conservation practices. This
enable progressive production to achieve maximum crop yield levels expected. The
selected crops to be produced under irrigation (green maize, grain maize, sugar beans,
wheat, potatoes, cabbages, carrots, onions and tomatoes) were selected based on the
need to ensure food security and produce crops that can be stored for later use.

71
Shadow prices were used in the analysis to obtain economic values using conversion
factors. This was done to correct the distortions currently prevailing in the Zimbabwe
economy. Analysis of the on-site effects in terms of increased crop production for the
‘with’ and ‘without’ situations revealed the value of the incremental production to be
US$13.930 million. This implies that producing crops under irrigation compared to dry-
land farming yields better positive gross benefits. Therefore the project is expected to
create more net benefits to the economy compared to the option of not having the
project. Further economic analysis using the net present value over a period of 30 years
revealed that the project yields a positive NPV, of US$1.729 million. This implies that the
project can be accepted for implementation on the basis that it is economically viable.

5.2 Conclusion
From the discussions highlighted above, the use of economic analysis in EIA aids in
assessing the proposed project more objectively. In this study, EIA is used as a planning
tool to manage the negative environmental impacts and promote positive environmental
effects. The result of integrating economic analysis in projects assessed using the EIA
provides a comprehensive decision making.

The economic analysis showed that the project is economically viable incorporating the
environmental protection measures identified. The findings demonstrate that with an
irrigation project, the community will be able to realize more benefits, and can be able to
achieve food security requirements. Despite the identified negative environmental
impacts of the irrigation proposal on people, the benefits out-weigh the negative impacts.
Additionally, the proposal presents prevention and mitigation measures of the possible
negative impacts, which can be adopted at the inception of the project.

The study was however limited in terms of the analysis around the nature and type of
irrigation systems that can be considered. Additionally, the EIA study did not consider a
particular irrigation method in its analysis presenting a challenge for applying economic
analysis. Limited time available to do this study further limited the analysis in terms of
gathering more data to quantify identified environmental impacts regardless of their
significance to the proposed project. This could have presented a more holistic picture in
terms of benefits and costs from a community welfare point of view.

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5.3 Recommendations
Implementing the proposed irrigation project implies savings from both government and
NGOs as efforts will be directed towards sustainable development. The project is a
viable disaster risk reduction measure as opposed to planning for food aid subsequent to
drought periods.

As highlighted earlier in terms of limitations, areas of further research can be pursued to

determine the economic analysis of various alternatives in terms of irrigation systems
which can range from surface irrigation, drip irrigation or over-head sprinklers. The
economic analysis if done considering the various impact of each system on the
environment, it will enable the establishment of the most beneficial alternative to the
community, from an environmental conservation perspective. This approach
incorporates environmental impact considerations in the design, construction, and
operation of new irrigation projects.

There is also need for the government to revise the policy in terms of charging water and
electricity in communal areas. During the study, it was not clear how the local institutions
responsible for water and electricity provision in rural areas were pricing these services.
As a result, AGRITEX could not effectively factor in these costs in the gross margin
budgets given that the policy on pricing these services in rural communities was still not
clear. Services were then assumed to be subsidized by the government. However, in
real terms communities indicated that these services were not ‘free’ as implied by
charges ranging from US$0.5 per farmer per year. Still the costs were difficult to factor in
the study effectively as these were not linked to any amount of power or water required
for the various operations.

73
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02062006-130808/unrestricted/00dissertation.pdf [Accessed 7 September 2009].
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Government Printer, Harare Zimbabwe

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ANNEXURE
A. Discussion Guide

This discussion guide complements the EIA study undertaken by an independent

consultant to enable economic analysis of the irrigation scheme in the context of
environmental protection measures.
Discussion Guide for Community Groups
Question Probes
What is the name of the proposed irrigation scheme?
What are the major livelihood activities on the site Identify the types and
proposed for irrigation development? number of households
involved?
What is the current annual cropping pattern and List crops produced
production? annually and average
production levels.
Who proposed the irrigation development in the Check for community
community? involvement in decision
making
What is the cost on the community of setting out the Consider direct, indirect
irrigation project? i.e. the contribution of the community to and secondary costs.
the establishment of the scheme.
What will be the benefits to the community of having the Consider direct, indirect
proposed irrigation project? and secondary costs.
What business opportunities are likely to be created by Check on the multiplier
the project? effect of the scheme
Who will be responsible for the maintenance of the Probe to check who will be
scheme? paying the costs associated
What is the preferred annual cropping pattern for the List the inputs associated
irrigation? with the production of the
named crops
Who will be responsible for financing the inputs
associated with the expected crop production?
Who will be responsible for managing the operations of Decision making on crops

80
Question Probes
the irrigation project? grown and marketing.
How is the community going to decide who will be farming Capture the targeting
in the scheme and how many households are expected to criteria and number of
operate the 20ha scheme? farmers expected.
Any relocation expected due to the proposed site? If yes
what are the associated benefits and costs associated.

Discussion Guide for Key Informants

Question Source
1. The temporal or spatial boundaries of the irrigation project
What is the life span of the irrigation scheme or time-frame - Land, Environment and
for the project before major changes are anticipated? Irrigation specialist
What is the spatial boundary of analysis, within which The Environmental
environmental effects may occur? Specialist in the EIA
team.
2.The social dimensions in relation to the irrigation project
What is the demographic and social capital of the - Gutu RDC, chief, village
proposed community? head,
What is the history of the proposed site in terms of social
dimensions considering cultural and heritage sites, as well
as community settlement and livelihoods operations?
Who are the current water users at the proposed site?
How will their operations be affected by setting up the
scheme?
3. The economic factors relating to the irrigation project
What infrastructure is in place to support the establishment - Oxfam GB Irrigation
of the irrigation project? scheme budget
What is the agri-business environment in terms of credit, - Irrigation Department
inputs and output markets? (irrigation plan)
What is the capital required to construct the irrigation - Gross margin budgets
scheme? from AGRITEX for

81
Of the 20ha how much land will be committed to crop summer maize,
production? groundnuts, beans and
How much land will be allocated to each farmer fro sorghum; and winter
cropping? green mealies, onions,
What is the most appropriate cropping pattern for the cabbage, tomatoes, rape
irrigation scheme? carrots, butternuts and
What is the expected area allocation for various crops? peas.
What is the average annual crop production in the area, - FAO documents for NPV
considering the major food crops such as maize, sorghum, and IRR calculations.
wheat and groundnuts? - Discount rate from
What are the expected production levels from the irrigation Agribank
scheme? - Inflation rate in
What are the inputs required? Zimbabwe on the US$

What is the frequency of implementing the environmental

mitigation measures and the associated costs?
From the technical side, what are the estimated
maintenance costs (of pumps)?
What can be the estimated life-span of the major
components of the irrigation pumps before major
replacements?
How much would the council charge as monthly rates from
the plot holders?
4. Possible adverse and beneficial environmental impacts that may influence the design
of the irrigation project
Is there a defined area for each environmental effect - EMA, Irrigation
identified? specialist, EIA specialist
What is the time horizon over which each identified
environmental impact may be taking place?

5. The environmental safeguards and mitigation measures in view of the predictions of

environmental impacts of the irrigation project
What is the time horizon over which each identified - EMA, Irrigation
environmental measure may need to be implemented? specialist, AGRITEX

82
 officer, community groups

B. Gross Margin Budget for Irrigated Crops

GROSS MARGIN BUDGET FOR IRRIGATED CABBAGE

Year 1 Year 2 Year 3 Year 4

Saleable Yield (heads/ha) 28000 32000 36000 40000
Price ($/head) $ 0 $ 0 $ 0 $ 0
GROSS INCOME $ 9,240 $ 10,560 $ 11,880 $ 13,200
TOTAL VARIABLE COSTS $ 1,739 $ 1,771 $ 1,803 $ 1,835
GROSS MARGIN $ 7,501 $ 8,789 $ 10,077 $ 11,365

VARIABLE COSTS $/ha $/ha $/ha

Land Preparation $ 35 $ 35 $ 35 $ 35
Seed 0.45kg $ 45 $ 45 $ 45 $ 45
Fertilizer:
Compound S 1000kg $ 600 $ 600 $ 600 $ 600
Ammonium Nitrate 400kg $ 240 $ 240 $ 240 $ 240
Transport to farm 1400kg $ 6 $ 6 $ 6 $ 6
Insecticide
Endosulfan 35MO 2kg $ 8 $ 8 $ 8 $ 8
Dichlorvos 1litre $ 7 $ 7 $ 7 $ 7
Dimethoate 0.75litres $ 5 $ 5 $ 5 $ 5
Seasonal loan interest $ 426 $ 426 $ 426 $ 426
Hired labour 90days $ 144 $ 144 $ 144 $ 144
Transport $ 224 $ 256 $ 288 $ 320

TOTAL VARIABLE COSTS $ 1,739 $ 1,771 $ 1,803 $ 1,835

GROSS MARGIN BUDGET FOR IRRIGATED CARROTS

Yield levels kg/ha 17500 20000 22500 25000

Selling price $/kg 0.5 0.5 0.5 0.5
Gross Income $/ha 8750 10000 11250 12500
Total Variable Costs $/ha 1044.9 1074.9 1104.9 1134.9
Gross Margin $/ha 7705.1 8925.1 10145.1 11365.1

VARIABLE COSTS ITEMS $/HA $/HA $/HA

a. Land preparation 35 35 35 35
b. Seed, 5 kg/ha 250 250 250 250
c. Fertilizer (ex-factory, Harare)
Compound D, 600 kg/ha 420 420 420 420
Transport to farm , 600 kg/ha 2.4 2.4 2.4 2.4
d. Insecticides
Dimethoate 1.5 litres 10.5 10.5 10.5 10.5

83
e. Fungicide
Copper oxychloride 9 kg 117 117 117 117
d. Transport to market 70 80 90 100
e. Packing 140 160 180 200

TOTAL VARIABLE COSTS 1045 1075 1105 1135

GROSS MARGIN BUDGET FOR IRRIGATED GREEN MAIZE

Yield (cobs/ha) 31500 36000 40500 45000

Price ($/cob) 0.08 0.08 0.08 0.08
GROSS INCOME $ 2,615 $ 2,988 $ 3,362 $ 3,735
TOTAL VARIABLE COSTS $ 1,509 $ 1,509 $ 1,509 $ 1,509
GROSS MARGIN $ 1,106 $ 1,479 $ 1,853 $ 2,226

VARIABLE COSTS $/ha $/ha $/ha $/ha

Land preparation $ 35 $ 35 $ 35 $ 35
Seed 25kg $ 2 $ 2 $ 2 $ 2
Fertilizer:
Compound D 350kg $ 245 $ 245 $ 245 $ 245
Ammonium Nitrate 350kg $ 315 $ 315 $ 315 $ 315
Transport to farm 700kg $ 3 $ 3 $ 3 $ 3
Insecticide
Dipterex 4kg $ 408 $ 408 $ 408 $ 408
Seasonal loan interest $ 453 $ 453 $ 453 $ 453
Hired labour 30days $ 48 $ 48 $ 48 $ 48

TOTAL VARIABLE COSTS $ 1,509 $ 1,509 $ 1,509 $ 1,509

GROSS MARGIN BUDGET FOR IRRIGATED GRAIN MAIZE

Yield (t/ha) 4.2 4.8 5.4 6

Price ($/t) $ 265 $ 265 $ 265 $ 265
GROSS INCOME $ 1,113 $ 1,272 $ 1,431 $ 1,590

VARIABLE COSTS $/ha $/ha $/ha $/ha

Land preparation $ 35 $ 35 $ 35 $ 35
Seed 25 kg/ha $ 40 $ 40 $ 2 $ 2
Fertilizer:
Compound D 350 kg/ha $ 245 $ 245 $ 245 $ 245
Ammonium Nitrate 250 kg/ha $ 225 $ 225 $ 225 $ 225
Transport to farm 600 kg $ 2 $ 2 $ 2 $ 2
Insecticide
Dipterex 4 kg/ha $ 408 $ 408 $ 408 $ 408

84
Seasonal Interest $ 430 $ 430 $ 413 $ 413
Hired labour 42 labour days $ 67 $ 67 $ 67 $ 67
Bags $ 168 $ 192 $ 216 $ 240
Twine $ 3 $ 3 $ 3 $ 4
Transport out $ 17 $ 19 $ 22 $ 24

TOTAL VARIABLE COSTS $ 1,640 $ 1,667 $ 1,638 $ 1,664

GROSS MARGIN -$ 527 -$ 395 -$ 207 -$ 74

GROSS MARGIN BUDGET FOR IRRIGATED ONION

Year 1 Year 2 Year 3 Year 4

Yield (t/ha) 21 24 27 30
Price($/t) 500 500 500 500
GROSS INCOME 10,500 12,000 13,500 15,000
TOTAL VARIABLE COSTS 1,856 1,892 1,928 1,964
GROSS MARGIN 8,644 10,108 11,572 13,036

VARIABLE COSTS $/ha $/ha $/ha

Land Preparation $ 35 $ 35 $ 35 $ 35
Seed 3kg $ 10 $ 10 $ 10 $ 10
Fertilizer:
Compound S 1200kg $ 720 $ 720 $ 720 $ 720
Ammonium Nitrate 200kg $ 120 $ 120 $ 120 $ 120
Tansport to farm 1400kg $ 6 $ 6 $ 6 $ 6
Insecticide
Carbaryl 2kg $ 8 $ 8 $ 8 $ 8
Dithane M45 6kg $ 42 $ 42 $ 42 $ 42
Seasonal loan $ 423 $ 423 $ 423 $ 423
Hired labour 150 $ 240 $ 240 $ 240 $ 240
Marketing Costs
Pockets $ 168 $ 192 $ 216 $ 240
Transport out $ 84 $ 96 $ 108 $ 120

TOTAL VARIABLE COSTS $ 1,856 $ 1,892 $ 1,928 $ 1,964

GROSS MARGIN BUDGET FOR IRRIGATED SUGAR BEAN

Yield (t/ha) 1.4 1.6 1.8 2

Price ($/t) $ 1,200 $ 1,200 $ 1,200 $ 1,200
GROSS INCOME $ 1,680 $ 1,920 $ 2,160 $ 2,400
TOTAL VARIABLE COSTS $ 2,005 $ 2,014 $ 2,023 $ 2,031
GROSS MARGIN -$ 325 -$ 94 $ 137 $ 369

85
VARIABLE COSTS $/ha $/ha $/ha $/ha

Land preparation $ 35 $ 35 $ 35 $ 35
Seed 90kg $ 270 $ 270 $ 270 $ 270
Fertilizer:
Compound D 500kg $ 350 $ 350 $ 350 $ 350
Ammonium Nitrate 100kg $ 60 $ 60 $ 60 $ 60
Tansport to farm 690kg $ 3 $ 3 $ 3 $ 3
Chemicals
Carbaryl 1kg $ 4 $ 4 $ 4 $ 4
Dicofol 1kg $ 564 $ 564 $ 564 $ 564
Copper Oxychloride 0.6kg $ 8 $ 8 $ 8 $ 8
Seasonal loan interest $ 582 $ 582 $ 582 $ 582
Hired labour (30% of total) 42labour days $ 67 $ 67 $ 67 $ 67
Bags $ 56 $ 64 $ 72 $ 80
Twine $ 0 $ 0 $ 0 $ 1
Transport out $ 6 $ 6 $ 7 $ 8

TOTAL VARIABLE COSTS $ 2,005 $ 2,014 $ 2,023 $ 2,031

GROSS MARGIN BUDGET FOR IRRIGATED TABLE TOMATOES

Yield (kg/ha) 20000 25000 30000 35000

Price ($/kg) $ 1 0.5 0.5 0.5
GROSS INCOME ($/ha) 10,000 12,500 15,000 17,500
VARIABLE COSTS 7,802 9,156 10,509 11,862
GROSS MARGIN 2,198 3,344 4,491 5,638

VARIABLE COSTS $/ha $/ha $/ha $/ha

Seed 0.25kg $ 6 $ 6 $ 6 $ 6
Land preparation $ 35 $ 35 $ 35 $ 35
Fertilizer:
Compound S 1500kg $ 1,350 $ 1,350 $ 1,350 $ 1,350
Ammonium Nitrate 200kg $ 120 $ 120 $ 120 $ 120
Transport to farm 1700kg $ 7 $ 7 $ 7 $ 7
Chemicals
Carbaryl 85WP 2.7kg $ 11 $ 11 $ 11 $ 11
Dithane M45 1kg $ 7 $ 7 $ 7 $ 7
Dimethoate 0.5litres $ 4 $ 4 $ 4 $ 4
Seasonal interest $ 690 $ 690 $ 690 $ 690
Hired labour (30%of total) 100days $ 160 $ 160 $ 160 $ 160
Marketing Costs
Packaging $ 5,333 $ 6,667 $ 8,000 $ 9,333
Transport out $ 80 $ 100 $ 120 $ 140

TOTAL VARIABLE COSTS $ 7,802 $ 9,156 $ 10,509 $ 11,862

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GROSS MARGIN BUDGET FOR COMMNUNAL IRRIGATED WHEAT 25-Nov-09

Target Yield (t/ha) 2.5 3 3.5 4.5

Selling price ($/t) $ 650 $ 650 $ 650 $ 650
GROSS INCOME $ 1,625 $ 1,950 $ 2,275 $ 2,925
TOTAL VARIABLE COSTS $ 1,359 $ 1,361 $ 1,403 $ 1,447
GROSS MARGIN $ 266 $ 589 $ 872 $ 1,478

Variable costs $/ha $/ha $/ha $/ha

Land preparation $ 35 $ 35 $ 35 $ 35

Seed, 120kg/ha $ 330 $ 330 $ 330 $ 330

Compound D 450kg/ha $ 315 $ 315 $ 315 $ 315

Ammonium Nitrate 300kg/ha $ 180 $ 180 $ 180 $ 180

Transport to farm 900kg $ 4 $ 4 $ 4 $ 4

Demeton-S-Methyl 0.4litres/ha $ 4 $ 4 $ 4 $ 4

Irrigation 6000cub m $ 60 $ 60 $ 60 $ 60

Labour 200days $ 320 $ 320 $ 320 $ 320

Bags $ 100 $ 100 $ 140 $ 180

Twine $ 1 $ 1 $ 1 $ 1

Transport off farm $ 10 $ 12 $ 14 $ 18

TOTAL VARIABLE COSTS $ 1,359 $ 1,361 $ 1,403 $ 1,447

C. Gross Margin Budgets for Dry-Land Crops

25-Nov-
A GROSS MARGIN BUDGET FOR GROUNDNUT PRODUCTION 09

YIELD LEVEL (UNSHELLED)(T/HA) 0.5 1 1.5 2

US$20/bucket
BLEND SELLING PRICE (UNSHELLED)($/T) $ 1,000 $ 1,000 $ 1,000 $ 1,000
GROSS INCOME($/HA) $ 500 $ 1,000 $ 1,500 $ 2,000
TOTAL VARIABLE COSTS ($/HA) $ 424 $ 506 $ 552 $ 635
GROSS MARGIN ($/HA) $ 76 $ 494 $ 948 $ 1,365
GROSS MARGIN ($/$100 VC) $ 18 $ 98 $ 171 $ 215
GROSS MARGIN PER LABOUR HOUR $ 0 $ 1 $ 2 $ 2
GROSS MARGIN PER LABOUR DAY (6hrs) $ 1 $ 6 $ 11 $ 14

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No. of labour hours 455 498 541 584

VARIABLE COSTS $/ha $/ha $/ha $/ha

A. PRIOR TO HARVESTING

1. Seed, purchased 25 kg/ha $ 50 $ 50 $ 50 $ 50

homegrown 75 kg/ha $ 131 $ 131 $ 131 $ 131
2. Fertilizer (ex-factory)
a. Compound L $ 140 $ 211 $ 211 $ 246
b. Gypsum $ 70 $ 70 $ 105 $ 140
d. Transport $ 0 $ 0 $ 0 $ 0

3. Insecticide
Dimethoate 1 litres/ha $ 5 $ 5 $ 5 $ 5

4. Seed Treatment
a. Innoculant 2 units $ 8 $ 8 $ 8 $ 8
b. Thiram 80WP 0.1 kg/ha $ 0 $ 0 $ 0 $ 0

5. Miscellaneous, 2% $ 8 $ 10 $ 10 $ 12

SUBTOTAL $ 413 $ 485 $ 521 $ 592

B. HARVESTING & MARKETING

1. Packing materials
a. Bags $ 10 $ 20 $ 30 $ 40
b.Twine 0.2 kg/tonne $ 0 $ 1 $ 1 $ 1

2. Transport off farm $ 0 $ 0 $ 0 $ 0

3. Miscellaneous, 2% $ 0 $ 0 $ 1 $ 1

SUBTOTAL $ 11 $ 21 $ 32 $ 42

A GROSS MARGIN RESULT BUDGET FOR DRYLAND MAIZE, 25/11/2009

YIELD LEVEL (T/HA) 2 3 4 5

Gazzetted US$ 265 minimum parity price/tonne or US$ 6.20/bucket
BLEND SELLING PRICE ($/T) 265 265 265 265

GROSS INCOME($/HA) 530 795 1,060 1,325

TOTAL VARIABLE COSTS ($/HA) 408 516 617 780

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GROSS MARGIN ($/HA) 122 279 443 545

GROSS MARGIN ($/$100 VC) 30 54 72 70

GROSS MARGIN PER LABOUR HOUR 0 1 1 1
GROSS MARGIN PER LABOUR DAY (6hrs) 3 5 7 9
No of labour hours/ha 269 353 368 378

VARIABLE COSTS $/ha $/ha $/ha $/ha

A. PRIOR TO HARVESTING

1. Seed, 25 kg kg/ha 35 35 35 35
2. Land Prep 40 40 40 40
3. Fertilizer (ex-factory)
a. Maize fert (D) 90 120 150 210
b. Ammonium nitrate 31 62 94 156
d. Transport $6.30 $7.70 $9.10 $11.90

4. Insecticide
Dipterex 2.5% 4 kg kg/ha 21 21 21 21

5. Miscellaneous, 2% 4 6 7 9

SUBTOTAL 228 292 356 484

B. HARVESTING & MARKETING

1. Packing materials
a. Bags 40 60 80 100
b.Twine 0.09 kg/tonne kg/ton 1 1 1 1
Combine 80 80 80 80
2. Transport off farm 28.00 42.00 56.00 70.00

3. Miscellaneous, 2% 3 4 4 5

SUBTOTAL 152 186 221 256

Labour 29 38 39 40
TVC 408 516 617 780
TVC/tonne 204 172 154 156

A GROSS MARGIN BUDGET FOR RAPOKO PRODUCTION,

YIELD LEVEL (T/HA) t/ha 1 2 3

BLEND SELLING PRICE ($/T) $/t $ 400 $ 400 $ 400.00

GROSS INCOME($/HA) $/ha $ 400 $ 800 $ 1,200.00

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TOTAL VARIABLE COSTS ($/HA) $/ha $ 202 $ 122 $ 143.14
GROSS MARGIN ($/HA) $/ha $ 198 $ 678 $ 1,056.86
GROSS MARGIN ($/$100 VC) $/$100VC $ 98 $ 556 $ 738.34
GROSS MARGIN PER LABOUR HOUR $ 0 $ 1 $ 1.67
GROSS MARGIN PER LABOUR DAY (6hrs) $ 2 $ 6 $ 10.02
No. of hours/ha Hrs/ha $ 633 $ 633 633

VARIABLE COSTS $/ha $/ha $/ha

A. PRIOR TO HARVESTING

1. Seed, 15 kg/ha $ 11 $ 11 $ 11.25

2. Land preparation $ 40 $ 40 $ 40
3. Fertilizer (ex-factory)
a. Compound D $ 68 $ 0 $ 0
b. Amm Nitrate $ 31 $ 0 $ 0

c. Transport $ 0 $ 0 $ 0.06

4. Insecticide
Dimethoate 1 Lits/ha $ 5 $ 5 $ 5.32
Dipterex 4 kg/ha $ 21 $ 21 $ 21.28

5. Miscellaneous, 2% $ 4 $ 2 $ 1.56

SUBTOTAL $ 180 $ 80 $ 79.67

B. HARVESTING & MARKETING

1. Packing materials
a. Bag hire 20 per tonne $ 20 $ 40 $ 60.00
b.Twine 0.2 kg/tonne $ 1 $ 1 $ 1.80

2. Transport off farm $ 0 $ 0 $ 0.42

3. Miscellaneous, 2% $ 0 $ 1 $ 1.24

SUBTOTAL $ 21 $ 42 $ 63.46

TVC $ 202 $ 122 $ 143.14

Fertilizer and lime Table in kgs

Compound D $ 150 $ 200 250

Ammonium Nitrate $ 50 $ 100 150

Total $ 200 $ 300 400

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A GROSS MARGIN BUDGET FOR COMMUNAL WHITE SORGHUM
PRODUCTION,

YIELD LEVEL (T/HA) 1 2 3

BLEND SELLING PRICE $/tonne $ 450.00 $ 450.00 $ 450.00

GROSS INCOME $/ha $ 450.00 $ 900.00 $ 1,350.00
TOTAL VARIABLE COSTS $/ha $ 160.29 $ 236.35 $ 312.42
GROSS MARGIN $/ha $ 289.71 $ 663.65 $ 1,037.58
GROSS MARGIN $/$100VC $ 180.74 $ 280.78 $ 332.11

VARIABLE COSTS $/ha $/ha $/ha

A. PRIOR TO HARVESTING

1. Seed, 15 kg/ha $ 11.25 $ 11.25 $ 11.25

2. Fertilizer (ex-factory)
a. Compound D $ 67.86 $ 90.48 $ 113.10
b. Amm Nitrate $ 31.20 $ 62.40 $ 93.60
c. Lime 0 0 0
d. Transport $ 0.03 $ 0.04 $ 0.06

3. Insecticide
Dimethoate 0.9 lits/ha $ 4.79 $ 4.79 $ 4.79
Dipterex 4 kg/ha $ 21.28 $ 21.28 $ 21.28

4. Miscellaneous, 2% $ 2.73 $ 3.80 $ 4.88

SUBTOTAL $ 139.13 $ 194.04 $ 248.96

B. HARVESTING & MARKETING

1. Packing materials
a. Bags $ 20.00 $ 40.00 $ 60.00
b.Twine 0.2 kg/tonne $ 0.60 $ 1.20 $ 1.80

2. Transport off farm $ 0.14 $ 0.28 $ 0.42

3. Miscellaneous, 2% $ 0.41 $ 0.83 $ 1.24

SUBTOTAL $ 21.15 $ 42.31 $ 63.46

TVC $ 160.29 $ 236.35 $ 312.42

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Fertilizer and lime Table in kgs

Compound D 150 200 250

Ammonium Nitrate 50 100 150

Total 200 300 400

D. Ruti Irrigation Scheme Project Budget

Oxfam GB compiled this budget in collaboration with Gutu communities and key
stakeholders supporting the establishment of the Ruti Irrigation Scheme. The budget is
presented in British pounds and an exchange rate of 1.6 was used to convert the pounds
to US dollars.

Ruti Irrigation Scheme Project Budget for 2009

Project Title: Smallholder Farmer Sustainable Livelihoods

ACTIVITIES (Provide detailed breakdown on detailed
sheet - formula means costs will automatically flow BUDGET
through using the ref number) Reference IN GBP
Land Survey study Constultancy fees 1.1 3,310
connection of electricity 1.2 10,000
Electric motor 3 phase 30hp 1.3 5,935
Star-delta starter 30hp, 3 phase 1.4 3450
Stock pump 50-250 1.6 5,500
F70 Coupling complete 1.7 2,110
Suction pipe works 1.8 1,860
Delivery pipe works 1.9 1,450
Check valve 1.10 1,490
Gate valve 6" C.I. 1.11 2,025
Pump House 1.12 2,500
Accessories @ 5% of total above 1.13 2,000
Land clearing - Grader hire 1.14 15,000
Canal construction and lining 1.15 9,490
Construction of pump house 1.16 150
Storage Tank - 50,000litres 1.17 12,000
Delivery line 150mm class 24 AC (80m) 1.18 18,500
Cement procurement - 135MT 2.1 21,600
Concerate stone procurement- 300M 2.2 9,000
Fencing Material procurement 2.3 15,000
(2x) well upgrading 2.4 1,000
(2x) Latrine construction 2.5 180
Irrigation Tools 2.6 6,000

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Purchase of inputs 2.7 10,000
Market Analysis 2.8 800
Truck hire 2.9 5,000
training in irrigation scheme management 3.10 200
Training in agronomy 3.2 200
Training in market linkage and business management skills 3.30 1,000
Training in SASE 3.4 400
Training in Gender based violence 3.5 400
Training in Post harvest technologies 3.6 200
Procurement of IEC materials 4.1 400
Holding exchange visits 4.2 1,000
Field day 4.3 500
Training in gender and HIV/AIDS awareness 4.4 750
Grant to partner (DDF & Irrigation Management Committee) 5.1 18,000
Direct Project Staff (Programme Coordinator, Project Officer
and Driver salaries for 11months) 5.2 30,800

Total 187,910

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