The Future of Water in
Agriculture in the Balkans:
 The Irrigation & Drainage
    (Eco)system Approach
   REPORT BRIEF AND CONSULTATION DOCUMENT


           Ranu Sinha, Regassa Namara,
                   Pieter Waalewijn, and
                        Svetlana Valieva
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The Future of Water in
Agriculture in the Balkans
The Irrigation and Drainage
(Eco)system Approach
REPORT BRIEF AND CONSULTATION DOCUMENT




Ranu Sinha, Regassa Namara,
Pieter Waalewijn, and Svetlana Valieva
              1
vuk8691 / iStock
The dam on the river Rjecina,
                                                             INTRODUCTION
Rijeka, Croatia.
                                      Why is there a rethinking needed for
                                   the irrigation and drainage sector in the
               THIS                                       Western Balkans?
               BRIEF
            HIGHLIGHTS:
                                Most of the countries of the Western Balkans1 require major reforms
                                to the overall institutional, policy, regulatory, and financial aspects of
                                 their water and agriculture sectors, which are at varying stages of
                                  development. In addition, to mitigate and adapt to growing climate
         the status of the         risks and transform these sectors, they need to: (i) understand
                                    the diversity of farm types, irrigation water sources, and climatic
           irrigation and
                                     conditions in the Western Balkans, and how they influence I&D
          drainage (I&D)
                                      outcomes; and (ii) based on that understanding, rethink the
            sector in the
                                      investment approach to the irrigation, drainage, and agriculture
         Western Balkans;
                                       sectors in order to achieve greener, more sustainable, climate-
                                        resilient, and more inclusive rural development.


                                              The Western Balkans are among the best-
            introduces a                      endowed regions of Europe in terms of
          new investment                      land, soil, water, ample labor resources, and
             framework                        proximity to European Union (EU) markets.
           for the sector,
           with concrete                    This region has significant potential for improving its
          steps for how to                  agricultural production and productivity. The Western
          operationalize it;                 Balkan countries-- Albania, Bosnia and Herzegovina,
                                              Croatia, Kosovo, Montenegro, North Macedonia,
                                              and Serbia--are endowed with relatively abundant
                                               water resources. However, these resources are
                                                highly seasonal and spatially diverse, making I&D
           and highlights                       indispensable for productive and sustainable
         the outcomes and                        regional agricultural development. These countries
          benefits that can
                                                 1.	 The Western Balkan countries include Albania, Bosnia and Herzegovina,
            be expected.                             Croatia, Kosovo, Montenegro, North Macedonia, and Serbia

    2
 are characterized by economies in transition and rapidly changing demographics along with
increasing urbanization. With the poor economic competitiveness of the sector, and falling
incomes, agriculture tends to become an economic activity of last resort for many farmers,
providing critical income only to those without other job opportunities.


  Modern I&D services are a critical element for managing the risks
  associated with climate change, and for helping to increase crop
  productivity and diversification, to enable the Balkan countries to compete
  in European agricultural markets, thereby improving farming livelihoods.

Yet I&D sector development is at its historic low in terms of total area irrigated, and has declined
from previous levels in several of the Balkan countries. Drainage and flood protection play an
equally important role in extending the cropping area and the cropping season, but this also
remains underdeveloped or poorly maintained in many places.


  Since the early 1990s, the World Bank has been supporting I&D
  development in the Western Balkans. Public I&D systems are in varying
  states of dilapidation, rehabilitation, and modernization.

The Bank has played a major role in channelling investments to upgrade these systems, along
with other sources of finance, including the European Union (EU) (in Croatia), the Abu Dhabi
Fund (in Serbia) and European Bank of Reconstruction and Development (EBRD). However,
underfunding in the I&D sector is a major problem due to a combination of low tariffs and limited
cost recovery.

This rich history of engagement has enabled the World Bank to learn some key lessons: one
of them is that to break the rehabilitate-dilapidate-rehabilitate cycle, ensure optimal use of
the I&D potentials created, and respond to economic, environmental, and social inclusion
goals, there is a need to complement infrastructure investments with farmer (farming
system)-centered investments known as the Irrigation and Drainage (Eco)system approach.
This approach customizes I&D investment solutions to the prevailing and projected biophysical
context of the Western Balkans--including climate change, crop choices, and agricultural
markets--and seeks to reduce environmental damage and ensure the sustainability of both water
resources and I&D service delivery. However, it does not propose a wholesale alternative to an
infrastructure-based investment strategy; instead, it builds on it and strives to put the sector on
a more sustainable, resilient, greener, and more inclusive development path. Economic analyses
show that new public irrigation systems, whether open or pressurized, will only be profitable with
a high level of uptake and a substantial share of users opting to grow high-value crops; and our
experience in the region shows that often these conditions are not met in practice.


                                                                                                       3
    The Irrigation and Drainage (Eco)system approach aligns with the World Bank’s
    Green Resilient Inclusive Development (GRID) approach.2 The GRID framework, which aims
    for zero pollution and the creation of a toxic-free environment, as well as inclusive and
    resilient development, is highly relevant for rethinking the I&D sector. These goals require
    comprehensive and multipronged policy and investment responses, and enhanced pollution
    monitoring, prevention, and remediation in order to simultaneously address water and food
    security objectives while also heeding the growing calls for sustainability and “building back
    green” as a prominent economic recovery model. However, few countries in the Balkan region
    have an integrated strategy for how I&D investments can drive sustainable, resilient, inclusive,
    and greener agricultural growth.




    2        What are the factors driving transition & transformation
             of the I&D sector in the Western Balkan countries?
    CLIMATE CHANGE
    Arable agriculture in the Western Balkans is practiced in four distinctive agroclimatic zones:

                 ZONE 1                                   ZONE 2                           ZONE 3                   ZONE 4
       The Pannonian Plain,                   The Adriatic Coast, in the                The hills,               The isolated
      which is in the northern                 southwestern part of the                which cover                 plains of
       and northeastern parts                region, includes significant             Central Serbia               Kosovo
      of the Balkans, covering                areas of agricultural land               and parts of               and North
       large areas of Croatia,                  in Albania, Croatia, and               Bosnia and                Macedonia.
      Serbia, and the northern                   some areas of Bosnia                 Herzegovina;
         parts of Bosnia and                     and Herzegovina, and                      and
            Herzegovina.                              Montenegro.


    The region is generally well endowed with water resources, though with shortages at specific
    times and in specific places. The impact of climate change is expected to be modest in the short
    term but to accelerate markedly from the mid-century on, making the entire region hotter, the
    north wetter, and the south drier. By 2050, the following changes are expected:

                      Average temperatures will rise by 0.5-1.5˚C, slightly less in the north and more
                      in the south. Maximum temperatures will also rise, and there will be fewer cold
                      days. With a predicted temperate continental climate, this may lead to increasing
                      snowmelt, resulting in the potential for floods. This will also lead to higher

    2.	 The World Bank Group’s corporate Climate Change Action Plan strategy for 2021-25 presents a paradigm shift of the World Bank
        toward a Green Inclusive Resilient Development (GRID) approach, which is responding to the triple crises of poverty, climate
        change, and inequality.


4
                           consumptive requirements of crops and more erratic water availability in the
                           summer, particularly in the Southern Balkans.

                           Precipitation will increase in the north and decrease in the south, with higher levels
                           of precipitation in early spring and late autumn, and lower levels in summer. There
                           will also be more drought days (see Figure 2.1).

                           Inflows from the Danube, Sava, Tisa, and Drava rivers will be determined by
                           climate changes further north in Europe; average flow is not expected to decrease
                           significantly over this period, but the risk of flooding may increase. Flows for the
                           other rivers will be influenced by precipitation changes within the region, including
                           increased seasonality and variability.

FIGURE 2.1 Projected Change in Annual Precipitation in the Balkans 2071-2100
Compared to 1971-2000

              AUSTRIA
                                                               HUNGARY
                     SLOVENIA
                                                                                                               ROMANIA




                                      CROATIA
                                                   BOSNIA                          SERBIA
                                                     AND
                                                 HERZEGOVINA


                                                                MONTENEGRO
                                                                                   KOSOVO                                         BULGARIA
    ITALY
                                                                                               NORTH
                                                                                             MACEDONIA
 PROJECTED CHANGE IN ANNUAL PRECIPITATION                                ALBANIA
 2071 - 2100
          GREATER THAN 10%
          5.01 - 10%
          -4.99 - 5%
          -9.99 - 5%                                                                                                  IBRD 45905 | APRIL 2021

          LESS THAN -10%
                                                                                            GREECE   This map was produced by the Cartography Unit of the World Bank
                                                                                                     Group. The boundaries, colors, denominations and any other
                                                                                                     information shown on this map do not imply, on the part of the
                                                                                                     World Bank Group, any judgment on the legal status of any
        INTERNATIONAL BOUNDARIES                                                                     territory, or any endorsement or acceptance of such boundaries.




There is large spatial and temporal variation within these countries and, in addition to the
type and scheduling of crops, the need for irrigation will depend on the current and expected
changes in climate and rainfall patterns across the region. This underscores the importance of
having adequate I&D throughout the region to enable crop intensification and the production of
higher-value crops. Although I&D services are needed in all the Balkan countries, the northern


                                                                                                                                                                       5
    parts of the region will require I&D more as insurance, and to extend the season in the wet
    months. In the southern regions I&D will be needed to allow cropping in the hot and dry months,
    and to provide insurance in the spring.


    ACCESSION TO THE EUROPEAN UNION, THE GREEN AGENDA, AND
    STRUCTURAL TRANSFORMATION OF THE AGRICULTURAL SECTOR

    Some of the Balkan countries are undergoing the process of accession to the EU and aligning
    with the Green Agenda; and the agricultural sector in the region is in the process of structural
    transformation. All of these are contributing factors that underscore the need to rethink
    investment approaches in the I&D sector. These factors, and the transition requirements and
    enablers for these processes are detailed in Figure 2.2.


    FIGURE 2.2 Summary of the Major Drivers of Transition in the Western Balkans

    DRIVERS OF TRANSITION IN THE WESTERN BALKANS
    The Western Balkan countries are in a process of transition driven by the accession to the EU,
    the Green Agenda and climate change.

     Transition Drivers         Transition Requirements                           Transition Enablers

                                                                                   Rethink regulatory, institutional,
      European              Harmonization and negotiation of 35 separate           and infrastructure investment
        Union               “chapters” of the Acquis Communautaire                 approaches in water, food,
      Accession                                                                    energy sectors.


                        Policy and grant alignment with Green Agenda themes:

                        Shift to        Establish criteria       Enhance           Active national harmonization
        The             integrated      for environmental        resilience        to Water Framework Directive,
       Green            water           protection and the       through           and related EU green
      Agenda            manage-         management of            adaptive water    directives.
                        ment on a       water quantity and       and crop
                        basin-scale.    quality.                 practices

                                                                                   An (eco)system approach is
                          Shift to integrated water management on a basin          needed that recognizes the
      Climate             scale and establish criteria for environmental           different dimensions of the
      Change              protection and the management of water quantity          farming systems in the region,
                          and quality.                                             the agro-climatic and structural
                                                                                   elements.

                           Agriculture across the Balkans is undergoing a
      Farm-scale           process of structural transformation. Irrigation can    Better match needed between
                           play a critical role in supporting this process and     diverse farm system needs with
       Structural                                                                  appropriate irrigation options.
                           improve production efficiencies on the farm and
    Transformation         beyond.




6
       DIVERSITY OF AGROCLIMATIC ZONES,
       AND TYPOLOGY OF FARMS IN THE BALKANS

       The Balkans are characterized by three distinct typologies of farms, dominated by the small
       family farm. The three types are:

          Small household                        Mixed-income                       Full-time
              farms:                           commercial farms                  commercial farms




       Small farms producing             Medium-sized farms (typically    Large farms producing almost
       largely for consumption           1-5 ha), producing crops         entirely for commercial sale, and
       by the household and              partly or mainly for sale,       often providing the majority of
       the extended family               but gaining most of the          farm household income. (There
       (typically < 1 hectares           household income from non-       are now 6-30+ hectare farms in
       (ha); covering mostly             agricultural jobs or pensions    all regions, usually accounting
       Albania, Kosovo, and              (Albania, Kosovo, North          for 20-40 percent of the land, for
       North Macedonia);                 Macedonia); sometimes            example in Adriatic Croatia, where
                                         spread over two or even          more than 65 percent of the land
                                         three adjacent farm plots (for   lies on holdings of more than 100
                                         example, Adriatic Croatia);      hectares; as well as in Montenegro
                                                                          and Vojvodina, where nearly 40
                                                                          percent of the land lies in holdings
                                                                          of more than 100 hectares).




Jana_Janina / iStock
The agricultural fields of southern Croatia.
                                                                                                                 7
         PRIVATE IRRIGATION, AND THE ROLE OF MUNICIPALITIES
         IN IRRIGATION SERVICE DELIVERY

            Across the Balkans, more than 60 percent of irrigating farmers use
            groundwater, and almost 40 percent use surface water. One conclusion
            that emerges from this data is that multiuser irrigation systems, an area of
            investment upon which governments and donors tend to focus, represent
            only around a third of the irrigated farms in these countries.

         Private irrigation, where just one farm is responsible for irrigating their farm plot, from
         abstraction through to application, is the dominant system in the region. The data for four
         countries (Croatia, Kosovo, Montenegro, and Serbia) indicate that more than 150,000 farms use
         this approach, and the total for the region may exceed a quarter of a million farms, the large
         majority operating without any formal permit. Individual irrigation tends to be institutionally simple
         and economically profitable and is widely used to produce high-value crops that can easily cover
         the costs of irrigation. However, in some places unlicensed groundwater withdrawals are creating
         a risk of overexploitation of scarce water sources.

         Municipalities and their I&D units are active in many countries of the Western Balkans.
         Municipalities act as the central point for identifying needs, as well as for promoting and financing
         preparatory studies, supervising and financing the construction of infrastructure, and managing
         irrigation facilities. Sometimes the management is undertaken directly by the municipalities’
         Irrigation & Drainage Units (IDUs), as is the case in Albania; in other cases, this is handled by
         water utility companies (WUCs). The role of these institutions as service providers
         needs to be strengthened and incentivized to be able to
         improve overall I&D services across
         the region.




studiodr / iStock
Greenhouses plantations in Albania.


8
3         Enabling Green, Climate-Resilient, Sustainable, and
          Inclusive Agricultural Transformation in the Western
          Balkans: The Irrigation & Drainage (Eco)system
          Approach.

DEFINING THE APPROACH
Irrigation and drainage are inherently part of a complex socio-technical-ecological system that is
influenced and affected by climatic, agroecological, socioeconomic, technological, governance
and policy, as well as behavioral factors. These factors are referred to as the (eco)system3 of the
I&D sectors. They play a powerful role in influencing the outcomes from investments in irrigation,
drainage, and agriculture; therefore, they need to be considered when designing and prioritizing
interventions. This approach has redefined the investment framework for identifying, designing,
prioritizing, sequencing, implementing, and monitoring I&D sector interventions in a holistic and
targeted manner in order to address agricultural water management constraints for a variety of farm
types and contexts. It is oriented toward supporting governments in meeting the triple objectives of
green, inclusive, and climate-resilient irrigation and agricultural growth.


WHAT ARE THE KEY CHARACTERISTICS THAT DISTINGUISH
THE IRRIGATION & DRAINAGE (ECO)SYSTEM APPROACH FROM
“BUSINESS AS USUAL”?
The irrigation & drainage (eco)system approach is an integrated “farm-centric” investment
strategy that targets specific I&D infrastructure and non-infrastructure solutions to address
the constraints and needs of various farming systems. As Figure 3.1 shows, the (eco)system
approach focuses on targeting I&D solutions by:

                    (i) making a deliberate effort to ensure that optimal use of the improved or new
                    I&D potential that is created by investments in I&D matches the way various farm
                    systems actually use irrigation water;

                    (ii) providing all farming systems, from small- scale to commercial producers, with
                    tailored approaches to food production;

                    (iii) linking climate risk management to other forms of risk management (insurance,
                    trade, phytosanitary, and agro-environmental measures, and other market-based
                    mechanisms);
3.	 The term “(eco)system” is not limited to the natural ecosystem of living and nonliving organisms, but instead is a broader term to
   describe the socioecological systems that comprise irrigation. That is, it is a combination of the hydrological, environmental, social,
   economic, governance, and human systems that interact upon and influence I&D outcomes.


                                                                                                                                             9
                                               (iv) instituting policy reform of delivery mechanisms, for example creating better
                                               coordination mechanisms between different tiers of government, as well as
                                               between sectors; and between government and the private sector; and

                                               (v) integration from the farm to the basin scale, with an emphasis on water
                                               security and climate resilience (see Figure 3.1).



     FIGURE 3.1 The Irrigation & Drainage (Eco)system Approach Theory of Change

     PUTTING THE I&D ECO(SYSTEM) APPROACH INTO ACTION


                                                                    Dominant irrigation
                                                        Agro-      and drainage scenario
                                                                                            Implementation
                                                       climatic
                                                                     • Flood                     Areas
                                                        Zones
                                                                       protection
                                                                     • Drainage            • I&D infrastructure
                                                        Zone 1:                              options
                                           Farm        Pannonian     • Large-scale
                                         Typology        plains        irrigation          • Strengthening
                                                                     • Groundwater/          I&D governance
                                          Full-time                    private               structures,
                                         commercial                    irrigation            irrigation service
                                           farms                                             delivery &
                                                                                             management
                                                                     • Summer                                                          Long
                                                                                             with
                                                                       irrigation                                                      Term
                                                                                             multi-agency
                                                        Zone 2:      • Storage                                     Outcomes            Goals
                                                                                             coordination
      The (eco)system Theory of Change




                                                        Adriatic
                                                                     • Hydropower
                                                         coast                             • Incentivize          • Reduced         • Enhanced
                                                                       nexus
                                                                                             farmer-                environmental     water and
                                                                     • Commercial            led irrigation         footprint of      food security
                                            Mixed                      greenhouses           development            agriculture     • Reduced rural
                                           income
                                                                                           • Green &              • Resilient         poverty
                                         commercial                  • Multi-user
                                                                                             decarbonize            Covid-19        • Green
                                            farms                      irrigation            irrigated              recovery          Inclusive
                                                                     • Small-scale           agriculture          • Increased         Resilient
                                                        Zone 3:
                                                                       private                                      Income            Development
                                                         Hills                             • Activate &
                                                                       irrigation
                                                                     • Groundwater/          strengthen
                                                                                             agriculture
                                                                       springs
                                                                                             knowledge
                                                                                             services and
                                                                     • Large-scale           access to
                                         Household                     irrigation            markets and
                                           farms                     • Sprinkler/drip        value chains for
                                                        Zone 4:        irrigation for        irrigated
                                                        Isolated       high value            agriculture
                                                         plains        crops
                                                                                           • Basin to farm
                                                                     • Groundwater/          smart irrigation &
                                                                       private               climate services
                                                                       irrigation




10
                                                                                                 utamaria / iStock
                                                             Mountain landscape in North Albania with river Koman.




   This approach requires strong
   “environmental stewardship.” To align
   with the Water Framework Directive, EU Accession, and the
   Green Agenda policy priorities of the Balkans, all future I&D investments
   should be coupled with improved environmental standards and practices
   that meet the requirements of reduced water pollution and the negative
   environmental impacts of increased irrigation.

It offers a diversified irrigation service delivery model, which includes support to private
irrigation. In multiuser or public irrigation systems, a move toward on-demand irrigation
water services is encouraged in order to enable the flexibility, reliability, and adequacy of
irrigation water supply. This includes support to private irrigators who are making investments
and innovating to valorize the I&D infrastructure through the conjunctive use of surface
and groundwater resources. It also focuses on creating clear institutional responsibilities,
accountability, effectiveness, and regulations. (See Annex 1 for a brief overview of the types of
institutional and policy reforms that it will be necessary to make in the irrigation management
systems in the Western Balkan countries.)

It promotes new performance monitoring standards and metrics of success. Identification and
application of holistic performance indicators goes beyond narrow physical criteria to account
for the realities of the I&D (eco)system: this includes agricultural productivity, environmental
sustainability, climate resilience, flexibility, reliability and adequacy of the irrigation water supply,
and customer satisfaction, with a particular focus on gender inclusivity. This can set service
providers on a path toward providing reliable, safe, inclusive, transparent, and responsive
services that align well with the World Bank’s ongoing work of developing performance
assessment tools for the Irrigation Operator of the Future tool.



                                                                                                                     11
     It relies on the application of innovative financing models, including performance-oriented
     fiscal transfers to municipalities and results-based financing of individual projects or programs,
     and promotes partnerships at the local and national levels of administration to leverage financial
     resources, harmonize policies, coordinate investments, and ensure the principle of financial
     additionality.

     It offers flexibility in terms of timelines. Proposed interventions could be either short-term
     (setting the stage and preparing for longer-term investments) or long-term, spanning five or
     more years. To achieve better outcomes, the choice of interventions should be grounded in local
     realities for what farmers need to better manage their use of irrigation water; but the broader lens
     does not have to make interventions more complex. By understanding local complexities and
     leveraging opportunities, simple interventions can be crafted in such a way that they deliver high
     impact at low cost. (Box 5.1 describes such an approach being tested in Africa.4)



         BOX 3.1 On-Farm to Catchment Management in Ethiopia

         • The management
           of a catchment
           was successfully
           demonstrated in
           Northern Ethiopia,
           Tigray, illustrating how
           on-farm strategies are
           connected to broader
           catchment conditions.

         • A series of small dams
           (see photo), runoff-
           stopping structures,
           and reforestation were
           implemented following
           a rural diagnostic of water user economic, infrastructure, social, and environmental
           conditions.

         • As a result, flooding in the valley was reduced and the water storage in the catchment,
           especially in the valley floor, was improved.

         • This led to an extension of the growing time and enabled the production of alternative
           crops.


     4. W. Loiskandl and R. Nolz. “Requirements for Sustainable Irrigated Agriculture.” 2021. Agronomy Vol (11): 306.




12
4      Implementation Options for the Irrigation &
       Drainage (Eco)system Approach

           IMPLEMENTATION AREA 1: Strengthening I&D governance structures, improving
           irrigation service delivery and management with multiagency coordination.
This can be done by creating new opportunities to break silos across agricultural, water resources,
environmental, and related agencies; reform irrigation institutions; and enhance performance via
modernization and innovative measures for I&D service delivery. It is important to monitor the
performance of agencies against green, resilient, inclusive, and gender-sensitive services and
the of "degree of technological innovations applied", as well as by addressing the information
gaps inherent in irrigation scheme capacity, functionality, and sustainability. This in turn can better
support farmers as they transform their productive capacities. Next, it is vital to respond to the
diverse needs of different farming segments and water users by increasing accountability, creating
autonomy in the service delivery chain, and separating functions.


           IMPLEMENTATION AREA 2:
           Green and decarbonize irrigated agriculture.
Some of the region’s irrigation systems need repurposing to catalyze nature-based solutions,
power generation, pollution prevention, and circular economy approaches to the adoption of
wastewater reuse for irrigation. When investments are made to upgrade drainage systems, soil
health in irrigated agriculture can be improved. It is also important to encourage farm advisory
services to adopt new crop varieties that can adapt to climate stress; to target small producers
and female decisionmakers; and to increase investment in training farmers and ministries on
climate-resilient agricultural water management practices.


           IMPLEMENTATION AREA 3:
           Incentivize Farmer-Led Irrigation Development (FLID).
Since a large majority of farmers are “individual” irrigators, this is an opportunity for governments to
support their development, consolidation, and sustainability through regulations that allow for FLID,
which requires a different government support model than those in which farmers use irrigation
from public schemes (Izzi et al 2021). (See Annex 1 for specific steps on how to operationalize FLID
in appropriate farming systems and agroclimatic zones in the Western Balkans).


           IMPLEMENTATION AREA 4: Activate and strengthen agricultural knowledge
           services and inclusive access to markets and value chains for irrigated agriculture.
This can include interventions such as: (i) promoting partnerships with the private sector
(connecting farmers to off-takers); (ii) promoting and scaling existing opportunities for youth agro-


                                                                                                           13
     entrepreneurs; (iii) improving and enhancing marketing and agricultural input support to these
     farms, which increases their opportunities to market and sell their commodities; and (iv) training
     and coordinating farmers to organize around specific commodities in order to enable small
     household farms and medium mixed-income farms to transition from low-value subsistence to
     higher-value agriculture.


                IMPLEMENTATION AREA 5: Multipronged and customized infrastructure solutions
                for collective and bulk water supply schemes.
     These are to be selected, depending on the targeted farm type, to address core infrastructure
     and water access constraints: (i) modernization and improved management of poorly performing
     multiuser irrigation systems; (ii) rehabilitation, expansion, and decommissioning of dilapidated
     multiuser irrigation systems; (iii) rehabilitation of drainage systems; (iv) construction of new
     multiuser irrigation systems; (v) investments in storage, flood protection infrastructure, and river
     works to mitigate the impacts of climate change; and (vi) separate service delivery functions
     and business models for different types of infrastructure, outcomes, and timelines, which
     will determine the cost, time frame, technology choices, financing solutions (PPP or not), and
     integration with other infrastructure services.


                IMPLEMENTATION AREA 6:
                Invest in basin-to-farm “smart” irrigation and climate services.
     This entails modernizing how agencies observe, forecast, model, and disseminate real-
     time climate, water, land, and agronomic data such as precipitation, evapotranspiration (ET),
     temperature, wind pressure, humidity, soil, and river flow data services to help irrigation service
     providers design, plan, adapt, and modernize infrastructure, and efficiently allocate water to end
     users. It is also necessary to improve access to digital and mobile technologies to help farmers
     manage climate risks by direct citizen engagement in providing climate data services to end
     users.

     This approach, and its related areas of implementation, provide a platform for partners in the
     Western Balkans to dialogue about transformative investments in the I&D sector. Application
     of the I&D (eco)system approach offers governments a menu of investment options that
     are tailored to scale the potential of diverse farming systems to tackle
     climate risks and accelerate innovation in the I&D sectors
     for more green, inclusive, and resilient
     growth.




14
ANNEX 1: Institutional & Policy Actions Matrix for the I&D (Eco)system Approach

                            Dominant Irrigation          Suggested Irrigation Service        Suggested Irrigation Service
                            Management System            Delivery Reforms & Action(s)        Delivery Reforms & Action(s)
                                                         (common to all zones)               (specific to zone)

Dominant Farm Typology
by Zone
Zone 1: Pannonian Plains    Water utility companies      Water pricing policy for            FLID for private irrigators:
(full-time commercial       (majority are public, some   irrigation: Assess existing         Step 1: Conduct a beneficiary
farms with low-value        are private)                 tariff policies, or design a new    diagnostic to define FLID
crops; average 6-10 ha in                                tariff policy that aligns with      eligibility criteria for male/
Croatia/Vojvodina)                                       provisions of the European          female farmers (Actors: Donors
                                                         Commission Directives               & national/local agencies).
                                                         including cost recovery of          Step 2: Infrastructure
                                                         water services; adequate            assessment, prioritization
                                                         incentives for users to use         of private infrastructure
                                                         water efficiently; reduction in     development (Actors: Donors,
                                                         environmental degradation           public sector agencies,
                                                         using a “polluter pays principle”   farmers). Step 3: Assess
                                                         (for example, a two-part tariff     potential to scale – financial,
                                                         area + volumetric fee); (Actor:     technical capacity, types of
                                                         National regulatory authority or    crops grown, etc. for private
                                                         line ministry).                     irrigators (Actors: Donors
                                                         Environmental policies: To          and public agencies). Step
                                                         assess readiness to align           4: Create a multistakeholder
                                                         with various EU WFD, CAP,           alliance (Actors: public officials,
                                                         and related directives, the         financial institutions, irrigation
                                                         designated competent                equipment suppliers, value
                                                         authority to carry out analysis     chain actors, farmers). Step
                                                         of pressures on water bodies        5: Enable the flow of funds:
                                                         from I&D services; identify         examine different procurement
                                                         what might be blocking a good       options to help farmers to
                                                         status; and set mutually agreed     afford infrastructure/equipment
                                                         upon environmental criteria for     (Actors: govts, donors,
                                                         concerned irrigation providers.     equipment suppliers, value
                                                                                             chain actors, farmers).
                                                         Coordination capacities:
Zone 2: Adriatic Coast      Albania & Montenegro         Assess the capacity of              Legal: Prepare and adopt a
(Full-time commercial       Municipalities, through      multiple agencies and develop       WUO act if it is not yet available
farms (6-30+ ha); mixed-    I&D units, cooperatives,     strategies to establish common      (Actors: National governments)
income commercial farms     municipal multiutility       regulatory frameworks for
(1-5 ha)                    companies; Croatia           the use of European funds to
57% of high-value crops     Water utility companies;     fulfill pre-accession criteria in
in Adriatic Croatia,        BiH Municipalities, water    a coordinated manner across
Albania, some parts of      utility companies, WUAs,     multiple line agencies.
Montenegro & BiH)           cooperatives.
                                                         Regulatory instruments:
Zone 3: Hills (mixed-       Actors: Water utility        Develop policies that               FLID for private irrigators
income commercial farms     companies                    encourage cost reduction of         (Same steps as in Zone 1)
in Central Serbia & parts                                service provision by increasing
of BiH)                                                  the levels of operational,
                                                         conveyance, and energy
Zone 4: Isolated Plains     Kosovo Water utility         efficiency, based on proven         Legal: Prepare and adopt WUO
of Kosovo & North           companies; North             and solid technologies for          act if it is not yet available
Macedonia (Household        Macedonia WUAs, water        improved metering, regulation,      (Actor: National government)
plots (0-1 Ha); mixed-      utility companies, water     and control of flows and
                                                                                             FLID for private irrigators
income commercial farms     management enterprises       hydraulic heads.
                                                                                             (same steps as in Zone 1)
(3 ha)
                                                                                                                                   15
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