FOR OFFICIAL USE ONLY Report No: PADHI01056 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF EUR 757.1 MILLION (US$819 MILLION EQUIVALENT) TO THE REPUBLIC OF TÜRKİYE FOR A TÜRKİYE SECOND IRRIGATION MODERNIZATION AND WATER EFFICIENCY PROJECT (P506997) MAY 8, 2025 Water Europe and Central Asia This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2025) Currency Unit = EUR EUR 0.92 = US$1 US$ 1.08 = EUR 1 FISCAL YEAR January 1 - December 31 Regional Vice President: Antonella Bassani Regional Director: Sameh Naguib Wahba Tadros Division Director: J. Humberto Lopez Practice Manager: Winston Yu Task Team Leader(s): Ahmed Shawky Mohamed Abdelghany, Nooshafarin Tayebi ABBREVIATIONS AND ACRONYMS AF Additional Financing AI Artificial Intelligence AIP Annual Investment Plan AM Accountability Mechanism AMS Accounting Management System BETF Bank-Executed Trust Fund CAPEX Capital Expenditure CCDR Country Climate and Development Report CDS Credit Default Swap CPF Country Partnership Framework CRI Corporate Results Indicator DG Director General DI Department of Irrigation DIGITAL Digital Europe Programme DSI State Hydraulic Works (Devlet Su İşleri) DUC Dam Undergoing Construction DTO Digital Transformation Office (Dijital Dönüşüm Ofisi) E&S Environment and Social EIRR Economic Internal Rate of Return ESCP Environmental and Social Commitment Plan ESF Environmental and Social Framework ESMF Environmental and Social Management Framework ESMS Environmental and Social Management System EU European Union EX-ACT Ex-Ante Carbon Balance Tool FAO Food and Agriculture Organization of the United Nations FIDIC International Federation of Consulting Engineers FM Financial Management GDP Gross Domestic Product GEF Global Environment Facility GHG Greenhouse Gas GM Grievance Mechanism GRS Grievance Redress Service HEIS Hands-on Expanded Implementation Support I&D Irrigation and Drainage I-ESMS Institutional Environmental and Social Management System ICB International Competitive Bidding ICT Information and Communication Technology IFR Interim Financial Report IRI Intermediate Results Indicator ISF Irrigation Service Fees LA Loan Agreement LMP Labor Management Procedure M&E Monitoring and Evaluation MFD Maximizing Finance for Development MoAF Ministry of Agriculture and Forestry MEYTAP Spatial Investment Monitoring Program (Mekânsal Yatırım Takip Sistemi) MoTF Ministry of Treasury and Finance NDC Nationally Determined Contribution NDP National Development Plan NPV Net Present Value OHS Occupational Health and Safety O&M Operation & Maintenance OPEX Operating Expenses PCE Private Capital Enabling PDO Project Development Objective PIM Participatory Irrigation Management PMT Project Management Team POM Project Operations Manual PPSD Project Procurement Strategy for Development RF Resettlement Framework RoT Republic of Türkiye SBO Strategy and Budget Office SEP Stakeholder Engagement Plan SOE Statement of Expenditures STEP Systematic Tracking of Exchanges in Procurement SUTEM Irrigation Facilities Spatial Information System (Sulama Tesisleri Mekânsal Bilgi Sistemi) TIMP Türkiye Irrigation Modernization Project TIMP2 Türkiye Second Irrigation Modernization and Water Efficiency Project WBG World Bank Group WESAP Water Efficiency Strategy Document and Action Plan WUA Water User Association The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) TABLE OF CONTENTS DATASHEET ........................................................................................................................... i I. STRATEGIC CONTEXT ..................................................................................................... 1 A. Project Strategic Context .................................................................................................................1 B. Sectoral and Institutional Context ...................................................................................................2 II. PROJECT DESCRIPTION .................................................................................................. 4 A. Project Development Objective .......................................................................................................4 B. Theory of Change and PDO Indicators .............................................................................................4 C. Project Beneficiaries ........................................................................................................................7 D. Project Components ........................................................................................................................8 E. Role of Partners ..............................................................................................................................11 F. Lessons Learned and Reflected in the Project Design....................................................................12 III. PROJECT IMPLEMENTATION ........................................................................................ 13 A. Institutional and Implementation Arrangements ..........................................................................13 B. Results Monitoring, Evaluation, and Verification Arrangements ..................................................14 C. Disbursement Arrangements .........................................................................................................14 IV. PROJECT APPRAISAL SUMMARY .................................................................................. 14 A. Technical, Economic, and Financial Analysis .................................................................................14 B. Fiduciary .........................................................................................................................................18 C. Environmental, Social and Legal Operational Policies ...................................................................19 V. KEY RISKS .................................................................................................................... 21 ANNEX 1. RESULTS FRAMEWORK ........................................................................................ 23 ANNEX 2. IMPLEMENTATION ARRANGEMENTS ................................................................... 28 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) @#&OPS~Doctype~OPS^dynamics@padbasicinformation#doctemplate DATASHEET BASIC INFORMATION Project Operation Name Beneficiary(ies) Turkiye Türkiye Second Irrigation Modernization and Water Efficiency Project Environmental and Social Risk Operation ID Financing Instrument Classification Investment Project P506997 Substantial Financing (IPF) @#&OPS~Doctype~OPS^dynamics@padprocessing#doctemplate Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternative Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) Expected Approval Date Expected Closing Date 02-Jun-2025 31-Dec-2031 Bank/IFC Collaboration No Proposed Development Objective(s) The Project Development Objective (PDO) is to improve irrigation service delivery and water efficiency for strengthening climate resilience of selected irrigation schemes. Components Component Name Cost (US$) i The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Irrigation System Rehabilitation and Modernization 806,000,000.00 Institutional Support, Digital Irrigation and Smart Water Accounting 8,600,000.00 Project Management 4,400,000.00 @#&OPS~Doctype~OPS^dynamics@padborrower#doctemplate Organizations Borrower: The Republic of Türkiye Contact Title Telephone No. Email Implementing Agency: General Directorate of State Hydraulic Works, Ministry of Agriculture and Forestry Contact Title Telephone No. Email Senem Yıldırım Section Director of Foreign +90312454 5365 senemyildirim@dsi.gov.tr Financed Projects Özlem İritaş Head of Foreign Relations +90(312)454 5085 ozlemiritas@dsi.gov.tr Department @#&OPS~Doctype~OPS^dynamics@padfinancingsummary#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Yes Is this project Private Capital Enabling (PCE)? Yes SUMMARY Total Operation Cost 821.00 Total Financing 821.00 of which IBRD/IDA 819.00 Financing Gap 0.00 DETAILS World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 819.00 Non-World Bank Group Financing ii The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Commercial Financing 2.00 Unguaranteed Commercial Financing 2.00 @#&OPS~Doctype~OPS^dynamics@paddisbursementprojection#doctemplate Expected Disbursements (US$, Millions) WB Fiscal Year 2025 2026 2027 2028 2029 2030 2031 2032 Annual 0.00 10.00 100.00 200.00 200.00 200.00 100.00 9.00 Cumulativ e 0.00 10.00 110.00 310.00 510.00 710.00 810.00 819.00 @#&OPS~Doctype~OPS^dynamics@padclimatechange#doctemplate PRACTICE AREA(S) Practice Area (Lead) Contributing Practice Areas Water CLIMATE Climate Change and Disaster Screening Yes, it has been screened and the results are discussed in the Operation Document @#&OPS~Doctype~OPS^dynamics@padrisk#doctemplate SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  Moderate 2. Macroeconomic  Substantial 3. Sector Strategies and Policies  Moderate 4. Technical Design of Project or Program  Moderate 5. Institutional Capacity for Implementation and Sustainability  Substantial 6. Fiduciary  Substantial 7. Environment and Social  Substantial iii The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) 8. Stakeholders  Moderate 9. Overall  Substantial @#&OPS~Doctype~OPS^dynamics@padcompliance#doctemplate POLICY COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No ENVIRONMENTAL AND SOCIAL Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance ESS 1: Assessment and Management of Environmental and Social Risks and Relevant Impacts ESS 10: Stakeholder Engagement and Information Disclosure Relevant ESS 2: Labor and Working Conditions Relevant ESS 3: Resource Efficiency and Pollution Prevention and Management Relevant ESS 4: Community Health and Safety Relevant ESS 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources ESS 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Not Currently Relevant Traditional Local Communities ESS 8: Cultural Heritage Relevant ESS 9: Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). @#&OPS~Doctype~OPS^dynamics@padlegalcovenants#doctemplate iv The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) LEGAL Legal Covenants Sections and Description Loan Agreement, Schedule 2, Section I.A.2. The Borrower, through DSI, shall establish and maintain, throughout Project implementation, a Project Management Team (“PMT”) with staffing, budgetary resources, and authority necessary and appropriate for satisfactory Project implementation, all of which shall be acceptable to the Bank, including a financial management specialist, a procurement specialist, two environmental specialists, two social specialists, an occupational health and safety specialist, a dam safety specialist, a contract management specialist and a monitoring and evaluation specialist with terms of reference and qualifications further described in the Project Operations Manual ("POM"). Loan Agreement, Schedule 2, Section I.A.3. No later than six (6) months after the Effective Date, the Borrower, through DSI, shall assign or hire one environmental specialist, two land acquisition experts and one occupational health and safety specialist, all with the terms of reference and qualifications acceptable to the Bank, to be assigned to each of the regional directorate teams overseeing the implementation of activities under Part 1 of the Project, for each Selected Irrigation Scheme. Loan Agreement, Schedule 2, Section I.F.1.(a). The Borrower, through DSI, shall prepare and furnish to the Bank not later than thirty (30) days after the Effective Date in the first year of implementation, and thereafter, November 30 of each year during the implementation of the Project, a proposed Annual Work Plan and Budget containing: (i) all activities to be carried out under the Project during the following year; (ii) a proposed financing plan for expenditures required for such activities, setting forth the proposed amounts and sources of financing; (iii) any training activities that may be required under the Project including (A) the type of training, (B) the purpose of the training, and (C) the cost of the training; and an Annual Procurement Plan setting out the packaging, estimated cost, applicable procurement method and market approach, Bank’s review requirements, and timeline for each procurement package expected to be launched the following year. Loan Agreement, Schedule 2, Section II. The Borrower, through DSI, shall furnish to the Bank each Project Report not later than thirty (30) days after the end of each calendar semester, covering the calendar semester. Loan Agreement, Section I.E.1. of Schedule 2. The Borrower, through DSI, shall have DSI experts acceptable to the Bank, carry out a safety inspection of each of the above-mentioned dams at intervals at least once every year, during the implementation of the Project; the first of said safety inspections shall be carried out not later than September 30, 2025; and Section I.E.2. of Schedule 2. The Borrower, through DSI, not later than March 31, 2027, in accordance with terms of reference satisfactory to the Bank, and all to the satisfaction of the Bank, shall (i) prepare updated operation and maintenance plans and emergency preparedness plans for the above-mentioned dams, (ii) furnish said plans to the Bank for its review, and (iii) adopt and implement said plans, which shall take into account the views of the Bank. Loan Agreement, Section I.D of Schedule 2. The Borrower, through DSI, shall ensure that the Project is carried out in accordance with the ESCP. @#&OPS~Doctype~OPS^dynamics@padconditions#doctemplate Conditions Type Citation Description Financing Source The Project Operations Loan Agreement, Article IV, Manual referred to in Effectiveness IBRD/IDA Section 4.01.(a) Section I.B. of Schedule 2 to the Loan Agreement, has v The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) been prepared and adopted in a manner acceptable to the Bank. The Project Management Team (“PMT”) referred to in Section I.A.2. of Schedule Loan Agreement, Article IV, Effectiveness 2 to this Agreement, has IBRD/IDA Section 4.01.(b) been established in a manner acceptable to the Bank. The grievance redress mechanism referred to in Section I.D.5. of Schedule 2 to this Agreement, has Loan Agreement, Article IV, Effectiveness been established in a IBRD/IDA Section 4.01.(c) manner acceptable to the Bank, and is also fully operational acceptable to the Bank. vi The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) I. STRATEGIC CONTEXT A. Project Strategic Context 1. Türkiye has embarked on an ambitious water efficiency program focused on modernizing and rehabilitating irrigation schemes to strengthen resilience to increasing droughts, floods, and extreme heat risks, and to enhance water efficiency. Türkiye is highly vulnerable to the impacts of natural disasters, highlighting the urgent need for investments in resilience and adaptation. In addition to the high exposure to earthquakes (Türkiye has suffered 39 earthquakes of magnitude 5 and above since 1990 causing approximately 20,000 fatalities and over US$43 billion in damages), the country is facing increasing frequency and magnitude of weather-related hazards. Türkiye has high vulnerability on 9 out of 10 climate vulnerability dimensions, compared with a median of 2 out of 10 in other Organization of Economic Co-operation and Development (OECD) countries. The increasing occurrence of severe droughts and water scarcity show wide ranging impacts on agricultural production and water intensive sectors (agriculture is Türkiye’s largest water user, the sector may also directly contribute to the country’s overall water stress). 1 Türkiye is projected to face water scarcity within the next six years as natural resources continue to be depleted. Over 75 percent of the country’s lakes have experienced significant declines in water levels, with the remaining ones increasingly threatened by drought and pollution. 2 Türkiye’s agricultural sector must enhance its resilience to drought by improving its capacity to anticipate, withstand, and recover from its impacts. This includes adopting and transforming practices to respond effectively to drought events while ensuring that these measures do not intensify existing or future water stress. 3 The projected impacts call for urgent adaptation action and the government has already stepped up to mitigate climate vulnerabilities and strengthen adaptation. 2. Türkiye’s agriculture is heavily dependent on irrigation, which triples productivity compared with rain-fed agriculture and is essential to ensure steady agricultural production and food security in the face of increasing drought risks. To sustain agricultural productivity and promote efficient water management, the proposed Project “Türkiye Second Irrigation Modernization and Water Efficiency Project (TIMP2-P506997)”, supports the modernization of irrigation infrastructure by improving the design and operation of irrigation systems to reduce water losses in the conveyance system and optimize water utilization. The Project addresses both sudden climate shocks and long-term water scarcity by driving institutional advancements. Another component of the Project is strengthening the capacity of Water User Associations (WUAs) to enable effective and sustainable water management. It also integrates improved social and environmental management practices to ensure responsible implementation and inclusive outcomes. Collectively, these efforts aim to build a more resilient irrigation sector capable of adapting to the change in climate, while simultaneously enhancing energy and water use efficiency and reducing greenhouse gas (GHG) emissions. The Project will help advance the country’s goal of ensuring long-term water security and resilience against escalating climate risks. 3. The Project will contribute to the achievement of the goals of Türkiye’s National Development Plan (NDP) for 2024–2028 as well as the Water Efficiency Strategy Document and Action Plan (WESAP) (2023–2033). The NDP prioritizes rehabilitation and modernization of existing irrigation systems to preserve water in terms of quality and quantity to ensure its efficient use. The NDP aims to increase the cumulative gross rehabilitated irrigation area from 66,000 ha in 2023 to 303,000 ha in 2028; this Project will contribute 72,000 ha towards that goal. In addition, as a core adaptation measure aligned with the Government’s WESAP, the Project will enhance irrigation efficiency and reduce water loss. The project is 1 For example, the drought in 2007-2008 affected more than 400,000 farmers, and resulted in a drop in crop production of 9 percent and losses of TRY1.8 billion, with yield losses particularly pronounced in the Southern Anatolia region. OECD, 2021. Building Agricultural Resilience to Natural Hazard-Induced Disasters: Türkiye Case Study. 2 Lakes and Wetlands Action Plan 2017-2023, (2017). Republic of Türkiye Ministry of Forestry and Water Affairs. 3 OECD, 2021. Building the resilience of Türkiye’s agriculture sector to droughts. Page 1 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) also aligned with the country’s Resilient and Net Zero Pathway. 4 Among the six climate-specific priorities described in the pathway, the Project will contribute to Priority 5: Make growth more resilient and sustainable. B. Sectoral and Institutional Context 4. With more than 7 million ha of irrigated land, a highly advanced State Hydraulic Works (Devlet Su Isleri, DSI) under the Ministry of Agriculture and Forestry (MoAF), and a long-standing focus on expanding service delivery, Türkiye ranks among the world’s leading countries in irrigation and drainage (I&D). A large portion of Türkiye’s agricultural productivity depends on irrigation, particularly in the arid and semi-arid regions of the country. Irrigation supports the cultivation of high-value crops like fruits, vegetables, cotton, and cereals, which are vital for both domestic consumption and export. According to FAO’s Global Information System on Water and Agriculture, AQUASTAT, 5 the water productivity of irrigated agriculture in Türkiye was around US$0.2 per cubic meter in 2021, which can be 100 percent higher than a few middle eastern countries but 100 percent lower than a few EU countries. Current trends show an increase in the frequency and severity of droughts, resulting in high water stress and consequently reducing agricultural yield, threatening food security, and undermining rural livelihoods. Modernizing irrigation systems and reducing water losses are urgent measures to sustain agricultural production and ensure adequate water management amid the rising frequency and severity of droughts. Moreover, advanced irrigation systems minimize evaporation and seepage, protect the soil and crops (from waterlogging and salinization, among others), and enhance yields while reducing energy use and pumping costs.6 Improved drainage helps reduce crop losses by increasing their resilience to extreme rainfall and waterlogging, thus contributing to adaptation to floods and extreme precipitation. The Bank is currently supporting Türkiye in modernizing irrigation through multiple operations. Its comparative advantage lies in convening scalable global knowledge on modernization and reuse, with the aim of crowding in additional funding for a long-term engagement and climate adaptation. 5. The increasing frequency and severity of extreme weather events, such as droughts and heatwaves have further depleted groundwater and heightened irrigation water demand in Türkiye. Average temperatures in Türkiye are projected to rise by 1.5°C to 2.5°C by mid-century, with summer months potentially experiencing rises close to 4°C, resulting in more frequent and severe heatwaves. These impacts are already evident, as rising temperatures and more prolonged dry spells have drastically increased irrigation demand. From 1990 to 2019, the share of water used for irrigation rose from 72.0 to 76.7 percent of total water consumption. Over two-thirds of Türkiye’s river basins, including those supplying major cities like Istanbul and Ankara, are now experiencing severe water scarcity. This has led to significant drops in river basin water levels and occasionally contributing to the formation of sinkholes7. By 2050, agricultural droughts are projected to increase by 37 percent, and heatwaves could last 42 percent longer, posing a severe threat to Türkiye’s agricultural economy, with potential GDP losses of 2.26 percent 8. The droughts of 2020 and 2021, which reduced reservoir levels around major cities to their lowest levels in 15 years, highlight the urgent need to adapt to these risks to sustain economic growth. 4 Türkiye, Country Climate and Development Report (2022). 5 Food and Agriculture Organization of the United Nations (FAO). AQUASTAT. 6 While pressurized systems tend to have higher energy requirements for pumping for water conveyance than open channel systems, they reduce water losses and can deliver water more efficiently (that is, directly to the plant roots), thus reducing overall water consumption and energy costs in the long run. 7 Türkiye, Country Climate and Development Report (2022). 8 G20 Climate Risk Atlas. Impacts, policy and economics in the G20, Türkiye (2021). Page 2 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) 6. Irrigation accounts for almost 77 percent of total water use, but nearly half (48 percent) of the irrigation water is lost before reaching crops. To address Türkiye’s water challenges, it is crucial to modernize irrigation systems and reduce water losses as urgent adaptation measures to sustain agricultural productivity. This Project is specifically designed as a climate adaptation intervention, aiming to strengthen resilience against increasing water scarcity and variability by rehabilitating and modernizing irrigation infrastructure to ensure efficient water use at both upstream and downstream levels. In the irrigation schemes selected for rehabilitation under the Project, downstream farmers currently do not receive sufficient water when needed. To address this, Devlet Su İşleri (DSI) supplements water supplies with groundwater in some schemes, contributing to groundwater depletion, higher energy consumption, and increased emissions. Considering these challenges, measures such as completing land consolidation and investing in modernizing I&D systems, including high-efficiency drip systems, the use of remote sensing data, and automation, along with water-saving agricultural practices and policies are recommended. A 10 percent reduction in water availability, could cost Türkiye 6 percent of its GDP, or around US$50 billion annually7, underscoring the urgency of modernizing irrigation networks as a key strategy for water security and economic stability. The Government’s WESAP (2023–2033) in the Framework of Adaptation to the Changing Climate has set targets for irrigation efficiency and water loss reduction, aiming to increase irrigation efficiency from 50 percent in 2023 to 60 percent by 2030. 7. The WESAP outlines ambitious targets across four pillars of water efficiency: urban, agricultural, industrial, and cross-cutting areas, with a strong focus on irrigation modernization. The plan aims to modernize 1.3 million ha of irrigation schemes by 2050, at an estimated cost of US$6.5 billion, 9 to optimize water use, enhance resilience to droughts, and to increase crop yields through improved irrigation and precision agriculture. These efforts build on previous investments and will establish a foundation for long-term water security strategies in response to increasing drought and water scarcity. According to the WESAP, the modernization of irrigation systems will involve wider adoption of pressurized irrigation techniques and diversification of agricultural water supply through the reuse of treated urban wastewater, rainwater harvesting, and storage systems. The Republic of Türkiye (RoT) has implemented measures to enhance the efficiency of transmission and distribution lines, rehabilitate irrigation areas, and conducted research and development on land consolidation, water-conscious irrigation, and drainage water management. Efforts to improve the water system management include the implementation of Supervisory Control and Data Acquisition (SCADA) systems and capacity- building programs for farmers. Additionally, a comprehensive strategy, including policy reforms such as water pricing, strengthening of WUAs, and implementing of smart metering, will be crucial for reducing water losses, promoting farmers’ uptake of new technologies, and ensuring sustainable water management. These investments are essential measures that will enhance Türkiye’s water security, economic stability, providing a sustainable path forward to address future water and agricultural challenges from the changing climate. Accordingly, the Project directly contributes to WESAP’s targets through innovative, data-driven solutions for better water management. 8. The proposed Project is aligned with the Bank’s Country Partnership Framework for Türkiye for FY24-FY28 (Report No. CPF0000004, discussed and endorsed by the Board of Directors on April 9, 2024). It is also consistent with Türkiye’s 2024–2030 Climate Change Mitigation Strategy and Action Plan (CCMSAP), and 2024–2030 Climate Change Adaptation Strategy and Action Plan (CCASAP),10 as well as its 2053 Long-Term Climate Strategy, 11 and aligned with the adaptation and mitigation goals of the Paris Agreement.4 The Project directly advances Türkiye’s adaptation efforts by enhancing water efficiency and reducing water shortage resulting from increased drought frequency, extreme heat, and shifts in rainfall. This will be achieved through investing in irrigation infrastructure, including improving water pumping systems with efficiency metrics, converting open channels to pressurized systems, transitioning from pumping-based to gravity-fed systems, thus significantly reducing water losses and bridging the gap between water demand and supply. 9 Estimate provided by DSI. 10 Climate change adaptation strategy and action plan (2024-2030). 11 The 2053 net-zero target and Türkiye’s long-term climate change strategy. Page 3 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) These measures will increase both water and energy use efficiency while ensuring long-term agricultural sustainability in the face of escalating climate risks. Thus, the Project will help farmers adapt to an anticipated worsening in the availability of water, equipping them with more reliable irrigation solutions. 9. The Project’s activities and objectives are aligned with Türkiye’s updated first Nationally Determined Contribution (NDC), Long-Term Climate Strategy, and other related national policies and strategies. The Project’s focus on modernizing irrigation systems, enhancing digital tools for water management, and strengthening institutional capacity directly supports Türkiye’s climate goals. By improving irrigation efficiency and resilience to climate impacts, the Project aligns with adaptation priorities outlined in the NDC and National Water Plan while contributing to mitigation targets through efficient resource use. The integration of digital solutions , including the Irrigation Facilities Spatial Information System (SUTEM) and artificial intelligence (AI)-based enhancements, align with Türkiye’s National AI Strategy and the Green Deal Action Plan, which emphasize digital transformation and sustainability. Additionally, capacity-building efforts for WUAs promote sustainable agricultural practices, thereby reinforcing local adaptation measures, and fostering efficient resource management. The Project’s scope is fully aligned with Türkiye’s goal of reaching net-zero emissions by 2053. Furthermore, this Project contributes and provides support to the government's long-term strategy for improving water efficiency and sustainable resource management. Given that irrigation accounts for a significant share of Türkiye’s water consumption, irrigation modernization is a key priority in water policies. As such, this Project supports the government in the medium and long-term water efficiency objectives. These efforts align with Türkiye’s broader objectives to address water scarcity, increase agricultural productivity, and build climate resilience in the sector. 10. The proposed Project builds on and replicates the ongoing irrigation modernization Project (TIMP - P158418), TIMP Additional Financing (AF), and the Türkiye Water Circularity and Efficiency Improvement Project - P174915). The proposed Project will provide around US$819 million in financing to the RoT, building on the existing projects but in other irrigation schemes distributed over the country. II. PROJECT DESCRIPTION A. Project Development Objective 11. The Project Development Objective is to improve irrigation service delivery and water efficiency for strengthening climate resilience of selected irrigation schemes. B. Theory of Change and PDO Indicators 12. The Theory of Change is presented in Figure 1. A major challenge the Project seeks to overcome is significant off-farm water losses. When large amounts of water are irrecoverably lost from the water cycle (through open-channel evaporation, seepage, and runoff to sinks), crop yields decline. This water loss subsequently places immense pressure on groundwater supplies along canal tail reaches that lack surface water. The economy also suffers from the loss of water that could be better allocated to higher value uses. These challenges are further exacerbated by climate change, as rising temperatures increase water demand, and shifting rainfall patterns reduce water availability at the source. An overarching goal that encompasses both improved irrigation service for farmers and water savings, is optimizing “water productivity” 12. Component 1 focuses on improving surface-water irrigation service delivery, while Component 2 amplifies the farm level impact of Component 1 and monitors on-farm water usage to ensure that increased production does not result in higher water consumption. Crop production is expected to more than double, envisaged to improve 12 Water efficiency typically focuses on reducing water losses and maximizing the water used for crops. Water productivity refers to agricultural output produced per unit of water used. Irrigation modernization projects, aim to increase water productivity and improve water efficiency. Page 4 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) farm-to-market nutrition for approximately 550,000 people. The capacity building strategy under Component 2 is supported by Information and Communication Technology (ICT), delivering real-time water availability data to farmers to support adaptive irrigation practices, while also empowering women by enhancing their roles in decision-making. Figure 1. Theory of Change Critical assumptions that underpin the Theory of Change: • Off-farm water losses far exceed farm-level water losses (as many farms already improved their on-farm irrigation system), thus investments are focused on modernizing the off-farm system while monitoring the water usage within the on-farm system. • Water User Associations (WUAs) continue to be functioning at the off-farm/on-farm interface, in charge of collecting Irrigation Service Fees. Women roles in WUAs have a good potential to improve, if they obtain training & information services. Page 5 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) • After modernization, cropping pattern will shift to around 75 percent high-calory staples and 25 percent high- value vegetables (which is common with modernized schemes), with increased yields on both, particularly at canal tail reaches. 13. The PDO comprises two interdependent goals: • Improve reliability, flexibility, and equality of irrigation service. Pressurizing the off-farm irrigation delivery system and digitally monitoring this delivery will improve the service reliability and flexibility, ensuring climate-resilient water access (smaller flows with higher on-demand frequency) and helping farmers adapt to increasing drought risks while transitioning to high-value, climate-resilient agriculture. Additionally, increased water variability disproportionately affects tail-end farmers. By reducing off-farm water losses, the Project will enhance service equality among upstream and downstream farmers, ensuring equitable and climate-resilient water distribution. • Increase water efficiency. Modernizing the off-farm system is a critical adaptation measure that will minimize the off-farm seepage water losses in the irrigation conveyance and distribution system ensuring efficient water use in a climate-stressed environment. This will not only increase the water available for irrigation in the face of growing water scarcity but also reduce energy requirements for pumping (and its associated tCO2e emissions). Role of Participatory Irrigation Management, End-User Tariffs, Jevons Paradox, and Water Accounting 14. In Türkiye, end-user irrigation water tariffs or Irrigation Service Fees (ISF) serve two purposes: (i) recovering service costs and (ii) incentivizing water conservation. However, global irrigation practices suggest that irrigation water savings are to be attained through coupling the modernization technologies with ‘rationing’ the water quota with the support of WUAs, following the ‘Participatory Irrigation Management’ (PIM) concept. 13 In this approach, ISF are primarily used to attain scheme-level financial autonomy in operating expenses (OPEX). 14 Linking Component 2 with Component 1, the Project will deepen its impact by consulting supported WUAs on the modernization approach under Component 1, in alignment with the PIM concept. This effort, reinforced through a scheme-level water accounting 15 exercise, is essential to ensure rationing of on-farm water use, particularly in view of the ‘Jevons Paradox’ (where efficiency improvements can lead to intensification of the resource, which may increase water-resource consumption). Despite the potential ‘unintended consequences’ of modernization in some countries, combining off-farm infrastructure investments under TIMP2 with on-farm water rationing practices and smart water accounting will lead to net water savings and increased water productivity. Although TIMP2 does not directly finance activities at the farm level, the Project will leverage off-farm investments and collaborate with WUAs under DSI. This collaboration will facilitate 13 The World Bank’s ‘Sourcebook for Investment in Agriculture Water Management’ (2005) concluded that, “A key challenge is to include incentives that ensure WUA compliance with government regulations, service agreement between WUAs and service providers, and WUA’s own rules. PIM may involve increase in investment by water users, which is often offset eventually by the increased productivity due to improved I&D systems, innovative cropping, marketing, and agribusiness.” In China Hai Basin, through PIM, WUAs helped the Government implement scheme-level water quotas to curb irrigation water overuse and groundwater mining. 14 In water-resource economics, both ISF and water-demand rationing require volumetric monitoring (metering), but pricing and rationing serve different purposes. Price instruments are sought when policy makers worry about (recouping) steep marginal costs of developing water supplies; whereas rationing (quotas) is sought as a demand-management tool when policy makers worry more about the socioeconomic damage from water scarcity. Irrigators’ water demand is considered inelastic to pricing due to farmers’ lack of informed choice. Thus, a reduction in irrigation demand requires a large price increase, resulting in large income losses to farmers. Thereby, an ad hoc application of high ISF (where quotas through WUAs and high-tech investment solutions would suffice) could unnecessarily impoverish farmers, bringing up equity concerns (Source: Water Pricing for Irrigation: From Theory to Practice. World Bank Policy Research Working Paper No 7571, Scheierling and Treguer 2016). 15 Water accounting is a structured approach to quantifying and reporting the inflows, outflows, and storage of water resources within a defined hydrological system. Page 6 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) improvements on-farm such as irrigation scheduling, volumetric metering, soil-water management, and government- to-farmer rebates for water-saving practices. 15. The key results indicators are the following, of which two are WBG scorecard indicators: • PDO indicator 1 (WBG scorecard): People benefitting from climate resilient planning, preparation, surveillance, and/ or response (gender and youth disaggregated); target: 200,000 people. 16 • PDO indicator 2 (WBG scorecard): People fed as a result of increased agricultural/food production (gender and youth disaggregated); target: 550,000 people. • PDO indicator 3: Increase in Water Productivity 17: 20% compared to the baseline. • PDO indicator 4: Increase in irrigation conveyance efficiency 18; target 20%. • Component 1 intermediate results indicator (IRI): Area equipped with improved irrigation service (ha). The target is 72,000 ha. This represents serviced areas; however, farmers may expand the irrigated area further, within DSI’s framework, WUA rules and water-rationing practices. • Component 1 IRI: Increase in crop production over the project-financed schemes; target: 75%. • Component 2 IRI: Number of beneficiaries in WUAs 19 accessing and trained in the use of SUTEM; target: 1,000. • Component 2 IRI: Number of women in active roles in WUAs; baseline 15; target 23. • Component 2 IRI: Increase in revenues from Irrigation Service Fees (ISF) that are mobilized to finance the system’s operation and maintenance (O&M) and improve its financial sustainability; target 20% - to be adjusted during implementation. • Component 3 IRI: Grievances addressed by DSI in accordance with stipulated service standards; target: 90%. C. Project Beneficiaries 16. The Project will improve irrigation service and water efficiency for approximately 72,000 ha, serving around 50,000 households (farms), or approximately 200,000 beneficiaries, as well as around 550,000 farm-to-market beneficiaries from improved nutrition. Beneficiaries also include staff from DSI’s regional offices and staff from WUAs 16 The target of 200,000 people is calculated based on an estimated 50,000 water-user landlords, each representing an average household size of four individuals. 17 Water productivity tracks the increase in water productivity and efficiency at a scheme-wide level, as measured through a scheme-level water accounting effort expressed in tons of output per cubic meter of water used. Alternatively, it is often expressed in monetary $US value added per cubic meter of water. It is used as a PDO indicator as it captures both the improved service that leads to increasing production as well as the magnitude of water savings over the scheme level. 18 Component 1 invests in modernizing the off-farm system, besides procuring on-farm hydrants and smart meters. The irrigation efficiency here is realized by the reduction in water conveyance and seepage losses. It is commonly measured through input/output volumetric measurements. The term ‘conveyance’ is added to distinguish the improved off-farm efficiency attributed to Component 1 from the farm-level water application/use efficiency within the WUA command and below the farm intakes (for which modernized farm-level irrigation systems are not financed by Component 1 but are trackable by Component 2 through the Water Accounting activities). 19 TIMP has supported DSI in rolling out SUTEM across 181 WUAs nationwide. In contrast, TIMP2 focuses on fewer WUAs, but with a deeper engagement, emphasizing capacity building in participatory management, digital irrigation through SUTEM and other ICT tools, and gender inclusion. Additional WUAs will be targeted in future projects. Page 7 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) through capacity building on managing water resources, adopting climate-smart practices, and sustainable irrigation management. D. Project Components Component 1: Irrigation System Rehabilitation and Modernization (US$806 million) 17. This component will finance rehabilitation and modernization of DSI’s 20 irrigation infrastructure, entailing climate adaptation investments to convert open-channel systems to pressurized systems in selected irrigation schemes, building on successful activities from the ongoing TIMP and TIMP AF. Besides investing in modernization of the off-farm canals it also includes installing relevant equipment such as on-farm modern hydrants and smart meters. 21 By investing in the reduction of water losses (evaporation and seepage) in the irrigation conveyance system and improving water utilization, this component will enhance the irrigation subsector’s resilience to intensifying water shortages, droughts, and extreme weather events. Additionally, this component will enable responsive water management through smart water metering, ensuring efficient and adaptive water allocation in response to increasing climate variability. Results show that the Project, in addition to its primary adaptation benefits, will achieve a net carbon sink of -766,610 tCO2e emission over 25 years, which averages to approximately 41 percent emissions reduction per year relative to the baseline. Selected irrigation schemes or ‘subprojects’ are selected based on criteria such as readiness, technical and economic efficacy (for example, recoverable water losses, benefit-cost ratio), minimized environmental and social (E&S) risks and other criteria in accordance with World Bank policy as outlined in Section IV A. Additionally, priority is given to schemes that enhance livelihoods, strengthen food security, support the local economy, and promote efficient water management. A priority list of eligible subprojects fulfilling these criteria is provided in Table 1—approved by the Strategy and Budget Office (SBO) in the Annual Investment Plan (AIP2025). Table 1. List of Priority Subprojects that Fulfilled the Eligibility Criteria Irrigation Scheme Gross Irrigation Irrigation Water Loss Area (ha) Efficiency in Ratio (%) 2023 (%) Antalya Manavgat Right and Left Bank 6,813 52 46 Tokat Kazova Right and Left Bank 21,021 43 20 Aksaray Uluırmak (Mamasın) Dam Irrigation 16,508 75 15 Karaman Ayrancı Dam Irrigation 9,336 26 15 Amasya Suluova Right and Left Bank 15,304 62 15 Kahramankazan Akıncı 3,796 33 50 18. Figure 2 and Figure 3 show a typical pre-project off-farm irrigation conveyance and distribution system. A pre- project off-farm system is typically a network of open channels from which WUAs/farmers pump water along several points of the canal or intake water by gravity into lower-level on-farm canals. Subprojects under Component 1 are mainly designed to transform the off-farm classical irrigation network (open channels and flumes) into a pressurized piped network under gravity pressure. Newly installed piped network lines are generally designed to fit into existing open channels; thus, when modernization is completed, existing open channels will be filled up with pipelines and required dredging (cut and fill) is minimal. Subprojects have a relatively high capital expenditure (CAPEX), as high as US$11,000 per ha but leading to high-value agriculture, which justifies the cost (as reflected by the Economic Analyses provided below). The hydro-module is typically approximately 2 liters per second per ha for a non-modernized scheme, which 20 General Directorate of State Hydraulic Works - the state agency responsible for water resources planning, development, and management, including most of the irrigation schemes in the country. 21 Readings of the smart meters procured under Component 1 will inform the water accounting activities under Component 2. Page 8 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) would decrease to approximately 1.5 liter per second per ha after modernization; thus, the pumped discharge will decrease, leading to lower OPEX and lower carbon emissions. Figure 2. Pre-Project Off-Farm Irrigation Conveyance and Distribution System (source: DSI documents) Figure 3. Aksaray Uluırmak Irrigation Layout Plan 8000 ha 8508 ha 3180 ha Component 2: Institutional Support, Digital Irrigation and Smart Water Accounting (US$8.6 million) 19. Enhancing farmers’ capacity to use information and communication technology will significantly strengthen their ability to adapt to climate change impacts. This component will leverage the Irrigation Facilities Spatial Information System (SUTEM) - an innovative digital service developed by DSI under the ongoing World Bank-financed TIMP (P158418) - which has been successfully implemented across 3 million ha. SUTEM provides real-time data on water availability, irrigation schedules, and efficient water use practices, equipping farmers with essential tools for adaptive irrigation. Under this component, SUTEM will be further enhanced for an ‘Integrated Water Budget Study’ and ‘Water Accounting’ which will form the basis for Crop Production Planning and Water Security Studies. Further development will include – but will not be limited to - additional modules 22 tailored to improve irrigation efficiency, enhance data accuracy, stream data from on-farm water meters, and integrate localized climate and soil moisture data for the selected subprojects. The system will also incorporate user-friendly features for better decision-making, and facilitate automated alerts for optimized water use. The component will support the updating of SUTEM to be compatible with current 22The Water Global Practice of the World Bank is interested in testing Smart Water Accounting and AI features in SUTEM through BETF resources. The aim is to enable the World Bank team to do its “due diligence” on water accounting, while also transferring the latest global knowledge to DSI’s operators of SUTEM, enabling DSI to scale up SUTEM in the future. Ideally, ICT in drought/irrigation management involves top-down activities (Remote Sensing, Open Source, AI) complemented with bottom-up activities (calibration, ground truthing/downscaling, weather stations, and Internet of Things). Over the last few years, the revolution in AI and Remote Sensing technology has reduced the need to invest in costly bottom- up ground-truthing and in-situ sensors. Page 9 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) technologies and the procurement of IT equipment. Additionally, this component will conduct needs/gap assessment, and training for WUAs : (a) to improve technical and financial management, (b) for the assessment and provision of targeted training to women to increase the number of women with active roles in irrigation management, (c) support the development of the ‘National Program for WUA Capacity Building’. This program aims to strengthen WUAs’ capacity to manage water resources efficiently, adopt climate-smart agricultural practices, and ensure sustainable irrigation management at the local level.23 Together, the initiatives under this component are designed to empower farmers and WUAs with the knowledge and tools necessary to enhance water-use efficiency and adapt to deteriorating environmental conditions, particularly the increasing risk of water shortages and extreme weather events. The farmers’ estimated contribution of approximately US$2.0 million in ISF payments will support the irrigation system’s O&M costs and is considered as a source of unguaranteed commercial financing 24. 20. The geographic information system-enabled management information system, SUTEM (Figure 4), is designed to enhance data-driven decision-making and improve the operational efficiency of the WUAs by centralizing key data across multiple dimensions. This includes physical data on irrigation network condition, type of water source and availability of water sources, socioeconomic data covering the total number of water users/farmers, crop types and cropping patterns, and managerial data such as assessment and collection of service charges, and identification of investment needs within irrigation schemes. Additionally, Component 2 will support the incorporation of additional functions for producing ‘Integrated Water Budget Studies’ and ‘Water Accounting’, which serve as the foundation for Crop Production Planning Studies, enabling more sustainable and efficient water and agricultural management. By consolidating these comprehensive data sets, SUTEM aims to support sustainable agricultural land management through more efficient water use, optimized crop management, and coordinated multi-stakeholder planning and investment. Through these efforts, WUAs will be better equipped to manage resources effectively, promote climate resilience among farmers, and contribute to sustainable agriculture. 21. In addition to SUTEM, this component will support the development of MEYTAP (Spatial Investment Monitoring Program) software with additional modules for the Project, construction works, and to provide monthly progress reports. The additional modules will provide detailed visualization of the planning and project stages of construction works on land topography using geographic information systems. They will ensure that projects align with general technical specification criteria and allow building components to be produced as live data. The software will enable DSI’s relevant units to electronically review, track, and work within an approval/rejection workflow structure. It will also automatically generate a site list of the building components in the Project, determine construction methods and conditions, and generate approximate project estimates. The component will finance the acquisition of hardware for MEYTAP 25. This hardware provides online access to system and supplies data from site to system. Furthermore, this component will also support training and capacity-building activities to ensure effective implementation and long-term utilization of the software by relevant DSI personnel. 23 In future investments on irrigation modernization, an on-farm component can be sought to work directly with farmers on crop-water productivity and agriculture value chain. The pertinent fiduciary unit is the DG for Agricultural Reform under the MoAF, mandated to interact directly with individual farmers. In TIMP2, DSI will collaborate with the DG for Agricultural Reform for the implementation of Component 2. DSI is mandated to work off-farm and to work with WUAs who represent farmers. This WUA level is a proper interface linking the off-farm and on-farm levels. 24 The global experience shows that ISF can be increased toward the end of irrigation modernization investments, after farmers income increase. Typically, part of the ISF is allocated to O&M services and part is retained to build-up a contingency fund for future system replacement etc. ISF is being collected by WUAs. Toward the end of TIMP2, the ISF to be collected and mobilized for O&M purposes within WUAs command area has been estimated at around US$2.00 million. 25 Spatial Investment Monitoring Program or “MEYTAP” refers to DSI’s software designed to monitor and track spatial investment projects related to water infrastructure, irrigation, and hydraulic engineering. The software provides a structured framework for managing project progress, budgeting, and strategic planning, to ensure efficient oversight of DSI's large-scale water projects. Page 10 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) 22. In addition to the Government’s strong commitment to digitalize the water sector, the World Bank may mobilize Bank-Executed Trust Fund (BETF) resources to explore how AI could benefit SUTEM. 26 The Digital Transformation Office (Dijital Dönüşüm Ofisi, DTO) of the Presidency of Republic of Türkiye has created a strong foundation for transitioning from e-government to digital government. Türkiye has a National AI Strategy that was published by the DTO in 2021, with goals for 2025, which prioritizes capacity building, development of data governance and management systems, and research and entrepreneurship, among other things. The European Union (EU) Commission signed an association agreement for the Digital Europe Programme (DIGITAL) with Türkiye in September 2023, bringing in funding for deployment of digital technologies such as AI and advanced digital skills. They will also be able to set up Digital Innovation Hubs. DIGITAL complements funding available through other EU programs, such as Horizon Europe (for research and innovation) and the Connecting Europe Facility (for digital infrastructure), the Recovery and Resilience Facility, and the Structural funds. Figure 4. SUTEM Interface Source: DSI Component 3: Project Management (US$4.4 million) 23. This component includes E&S management, fiduciary management, technical management, and DSI’s activities linked to management, supervision and coordination of the Project. Eligible expenditure will include consulting services and non-consulting services, goods, training, and incremental operating costs required by DSI to implement the Project according to World Bank policies and guidelines. E. Role of Partners 26 Under Türkiye’s irrigation modernization program, farmers receive water on demand, with flexibility on irrigation duration, discharge, and frequency. SUTEM, enhanced with AI capabilities, could predict water demands based on crop types and rotations, and provide advice to farmers on when and how much to irrigate. SUTEM uses AI on the demand side of water while a proposed groundwater management dashboard can feed into SUTEM, providing supply-side information. Page 11 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Table 2. Role of Partners Name of Partner Nature of Involvement/Description Food and Agriculture FAO, in partnership with GEF, implemented the Central Asian Countries Initiative for Organization (FAO) and Land Management II (CACILM-2) project, focusing on integrated natural resource Global Environment management in drought-prone and salinity-affected agricultural areas in Türkiye and Facility (GEF). Central Asia. The project introduced sustainable land management practices, advanced irrigation techniques, and risk mitigation strategies to combat desertification and land degradation. FAO is also supporting irrigation sector reform in Türkiye by promoting Irrigation Management Transfer (IMT), aiming to enhance sustainability and efficiency through technical and institutional improvements. FAO and Türkiye collaborate on food security and sustainable natural resource management, including water governance and irrigation efficiency. GEF grant of US$2 million was mobilized under TIMP to finance SUTEM software, WUA training and solar pumping demonstration. Bilateral donors such as Providing support to other water management initiatives. the EU, JICA (Japan), and KfW (Germany). F. Lessons Learned and Reflected in the Project Design 24. The Project design draws on global lessons from past and ongoing World Bank/international financial institution-supported irrigation modernization projects, in terms of Participatory Irrigation Management (PIM), Water Accounting, and full conversion of open channels to pressurized systems. These include projects in Australia, Egypt, India, Mexico, Pakistan, the United States, and Viet Nam. 25. More efficient water management by improving the performance of existing irrigation systems often has a higher return on investment than infrastructure expansion. While Türkiye still has ambitious targets for expanding the area under irrigation, there is a growing realization that improving the performance of existing systems has higher returns on investment and therefore should receive priority. Thus, the World Bank’s engagement in irrigation and the design of this specific Project, focus on the modernization of existing irrigation schemes. 26. The introduction of efficient irrigation systems on total water use does not always lead to water usage savings without implementing adequate control measures. In the absence of regulated water allocation, farmers often increase overall water consumption by expanding land under irrigation in response to more productive technology. To prevent this unintended consequence, the irrigation schemes financed under the Project have been included in the respective basin management plans. These plans limit the amount of water that can be used for irrigation while safeguarding the allocations for drinking water, environment, and other needs. To further promote water efficiency, the Project will support several key initiatives: • Water accounting. Implementing comprehensive water accounting practices will provide accurate tracking and transparent reporting of water usage across irrigation schemes. This ensures that water resources are managed sustainably, and allocations are effectively maintained. • PIM of WUAs. Strengthening WUAs will enable farmers to take an active role in managing and conserving water resources. This participatory approach encourages responsible water use and collective decision- making, enhancing the overall effectiveness of irrigation management. Page 12 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) • Smart volumetric water metering. Deploying advanced metering technologies will allow for precise measurement and monitoring of water consumption. Smart meters provide real-time data, facilitating better management of water resources and enabling timely interventions to address inefficiencies. 27. The implementation of TIMP offers important lessons on occupational health and safety (OHS) incidents and contract management which are embedded in TIMP2. (i) The World Bank team worked with DSI on a Corrective Action Plan to ensure due diligence on OHS for all Bank-financed DSI projects, including for TIMP and TIMP2; and (ii) TIMP implementation experience revealed the need to act quickly on resolving any emerging contract management issues, that could otherwise cause major implementation delays. Diligent contract management (a caliber that is different from procurement) entails that DSI would deploy staff/consultants versed in contract management, particularly as TIMP2 will introduce International Competitive Bidding (ICB) for works for the first time in Bank-financed water operations implemented by DSI. III. PROJECT IMPLEMENTATION A. Institutional and Implementation Arrangements 28. The Project will have a Loan Agreement (LA) with the Borrower and be implemented by DSI under the MoAF. DSI will assign a Project Management Team (PMT), using its existing institutional capacity, technical expertise, and experience in ensuring E&S compliance established under the ongoing TIMP, Türkiye Water Circularity and Efficiency Improvement Project (P174915), and Türkiye Resilient Landscape Integration Project (TULIP) (P172562) which also includes irrigation investments. A LA for the Project will be signed between the World Bank and the RoT represented by the Ministry of Treasury and Finance (MoTF). The Law on Public Finance and Debt Management No. 4749 (the Debt Law) describes the procedures for international borrowing in the RoT. The Debt Law classifies the international borrowing under three categories: allocation, on-lending, and guarantee. The debt law authorizes the MoTF to allocate foreign-financed loans to DSI (which is a special budget institution). 29. DSI will be responsible for implementing all components of this Project in coordination with relevant stakeholders. MoTF will allocate the loan proceeds to DSI to implement activities as described. DSI has a long collaboration history with the World Bank and is familiar with Bank’s systems and procedures. In addition, DSI was also involved in previous World Bank-financed lending operations completed in the 1990s. 30. TIMP, the oldest of the Bank-financed water projects in Türkiye, covers 50,764 ha, representing 6 percent of the Government’s 1.3 million ha target, and its implementation progress is rated ‘Moderately Satisfactory’ with commitments and disbursements at around 95 percent and 50 percent, respectively. Both TIMP and TIMP2 operate at the headquarters and Regional Directorate levels. The participation of other stakeholders for implementation of TIMP2 has been specifically discussed between DSI, SBO, and the World Bank and is summarized in the Stakeholder Engagement Plan (SEP). The DSI is establishing an Environmental and Social Management System (ESMS) with the World Bank’s support under the ongoing Türkiye Flood and Drought Management Project (P179313). 31. DSI has an independent legal status, with clear roles and responsibilities. Through implementation of these projects as well as its own projects, DSI has developed strong E&S management capacity. The Environmental and Social Commitment Plan (ESCP) developed for TIMP2 has included a provision for adequate E&S specialists to work on E&S risk management of the Project until the ESMS is fully functional. While most of the PMT will be located at the DSI Headquarters in Ankara, it will include regional staff located in each of the DSI Regional Directorates corresponding to the Project-financed schemes. Each relevant DSI Regional Directorate will have a Coordinator and an E&S Focal Point who are members of the PMT. The procurement for all Project-financed schemes will be conducted from the DSI headquarters, but the PMT staff from Regional Directorates will be responsible for regular supervision of construction, Page 13 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) O&M, and management of the E&S aspects of the activities. The operational modalities are described in the Project Operations Manual (POM). 32. Türkiye has a reasonable track record with O&M of dams. Basic dam safety management practice, including surveillance, monitoring, inspection, and emergency preparedness, is satisfactory, and the RoT welcomes capacity- building programs. B. Results Monitoring, Evaluation, and Verification Arrangements 33. DSI’s PMT will be responsible for project monitoring, evaluating, and reporting performance for all Components, working in close collaboration with other relevant stakeholders. The PDO level and intermediate results indicators, including annual targets, are presented in Section II. The PMT will provide relevant data for each component required to track the PDO level and intermediate results indicators. The PMT will be required to submit biannual progress reports to the Bank for review. In addition to professional staff from relevant DSI departments and regional offices, the PMT will include a full-time monitoring and evaluation (M&E) officer. 34. A mid-term review of the Project will be carried out jointly by the Borrower/implementing agency and the Bank around three years after effectiveness of the Project to assess overall implementation progress and identify and resolve any key issues affecting implementation and make any necessary adjustments to the Project’s design or implementation schedule. An evaluation will also be carried out at the end of the Project to provide input to the Implementation Completion and Results Report (ICR) which evaluates the Project’s outcomes and overall performance, and captures key lessons from the Project’s implementation. C. Disbursement Arrangements 35. The loan proceeds will be disbursed by the World Bank in line with the World Bank Disbursement Guidelines for Investment Project Financing. There will be one Designated Account for the Project. All payments to contractors, suppliers, and consultants will be made directly from the Loan Account or from the Designated Account with the authorization of the responsible personnel. The minimum application size for payments directly from the Loan Account, for issuance of special commitments and for reimbursements, as well as the Designated Accounts’ ceilings, will be provided in the Disbursement and Financial Information Letter (DFIL). Eligible expenditures paid from the Designated Account will be documented to the World Bank through Statements of Expenditures (SOEs). Full documentation in support of SOEs should be retained by DSI for at least seven years after the World Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made. This information will be made available for review during supervision by World Bank staff and for annual audits. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic, and Financial Analysis 36. Subprojects’ eligibility is assessed by their impact and readiness. The Project is expected to enhance efficiency of irrigation services through modernization of existing irrigation schemes benefitting around 200,000 people. The subprojects create substantial opportunities to enhance cost-effectiveness and sustainability through the adoption of innovative technologies and practices. The long list of potential subprojects considered by DSI and the SBO were screened as part of Project appraisal against the following ex ante eligibility criteria, to derive a shorter priority list as outlined in Table 3. Thereby, the proposed framework Project consists of six potential subprojects covering approximately 72,000 ha which have undergone the World Bank’s ex-ante eligibility criteria screening. However, this list of subprojects may be Page 14 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) revised and updated by DSI during project implementation with a prior-written agreement with the World Bank, provided they comply with the ex-ante eligibility criteria, which are in accordance with the World Bank’s policy (Table 3). Table 3. Description of Subproject Selection Criteria Criteria Description Simplicity Minimized E&S risks such as minimum need for land acquisition, size of the dams (no new large dams or hazardous dams), rehabilitation and modernization of existing schemes, and ease of implementation arrangements. Subprojects will be screened against their geographic location and water source for irrigation in accordance with World Bank policies. Readiness for Inclusion in the AIP, availability of planning/feasibility reports and preliminary engineering designs. implementation Economics Feasibility of replacing each investment subproject whose cost-benefit ratio does not meet the requirement (the paragraphs below describe the Project-wide economic analyses, and a sample subproject analyses). Priority is given to schemes that enhance livelihoods, strengthen food security and support the local economy and promote efficient water management. 37. Economic analysis. Despite the significant CAPEX per ha, the economic benefits far outweigh the costs after adding up the water productivity gains and climate adaptation and mitigation benefits. The economic analysis performed included results of carbon sequestration and reduction in GHG emissions due to energy efficient irrigation systems calculated with the Ex-Ante Carbon Balance Tool (EX-ACT) and valued at a shadow price of carbon per World Bank guidance note (2017) updated for FY2025. Emission reductions have been calculated for three selected subprojects. These values were then applied on a pro rata basis to the entire Project, proportionate to the capital expenditure of each subproject relative to the total project capital expenditure, using a framework approach. 38. In addition to the financial analysis for sample irrigation schemes selected based on their proposed high water efficiency improvement (high water loss under the without project scenario) and CAPEX amounts, an economic analysis (Table 4) for the entire Project was performed under a framework approach, which considers environmental benefits and total project cost without contingencies and taxes. The resulting economic net present value (NPV) of incremental net benefits is US$262.7 million and the economic internal rate of return (EIRR) is 9.25 percent. When the Project’s net carbon balance valued at low and high shadow price of carbon is considered, an NPV of US$1.423 billion and EIRR of 14.32 percent or US$1.531 billion and 14.76 percent, respectively, can be achieved. Sensitivity analysis demonstrates that the Project is moderately robust to changes in investment cost and benefits, showing variations in EIRR between 6.0 percent (10 percent reduction in project benefits) and 6.7 percent (30 percent increase investment cost). The modernization investments are high cost but deliver significant long-term benefits. TIMP2 incorporates a high level of modernization, including the full conversion of off-farm open channels to pressurized glass reinforced plastic pipes. This approach overcomes the limitations of lower-cost alternatives such as automation in open channels. Overall, the Project investment is considered profitable. Table 4. Economic Analysis for the Project Project Performance Indicators Without Shadow Price With Low Shadow Price With High Shadow Price of of Carbon of Carbon Carbon Economic NPV (US$, millions) 262.7 1,423 1,531 EIRR (%) 9.25 14.32 14.76 39. Climate change. The Project directly addresses the worsening impacts of climate change, including increasing drought frequency and intensity, by strengthening the resilience of the irrigation sector to withstand extreme heat, floods, and prolonged dry periods. These adaptation measures will play a critical role in achieving Türkiye’s broader water security Page 15 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) and climate resilience goals by addressing the most pressing challenge - water stress and scarcity - in the most vulnerable sector, agriculture. According to the latest 2053 Long Term Climate Strategy 27, Türkiye puts a high emphasis on promoting the efficient use of water resources in agriculture and increase irrigation efficiency. While the primary focus is climate adaptation, the Project will also generate mitigation co-benefits by reducing energy demand for pumping (because of decreased water losses, increased water use efficiency, and the switch from open channels to pressurized systems). It will also reduce tCO2e emissions through improved management of irrigated annual crops, the adoption of climate-smart irrigation techniques, and lower methane emissions from waterlogged soils due to enhanced drainage. The partnership of the Government of Türkiye and the World Bank will enhance farmers’ capacity to implement climate-adaptive irrigation practices using IT and digital tools, ensuring they respond effectively to climate variability, as underpinned by initiatives such as SUTEM and Capacity Building for WUAs under TIMP2. 40. Climate Co-benefits. Modernizing irrigation is a core adaptation strategy that advances climate change adaptation through multiple pathways: (i) shift in cropping patterns and increased crop diversification due to improved climate- resilient water availability, enabling high-value crop production even under changing climate conditions, and (ii) reducing waterlogging and land degradation through better drainage and eliminating over-irrigation, thereby enhancing long-term agricultural resilience. Comparative studies from TIMP, Water Circularity, similar projects in Türkiye and other regions indicate that these changes can lead to reclamation of degraded lands, greater agricultural productivity, and more sustainable land management practices. The key climate adaptation benefit of Components 1 and 2 is the significant improvement in irrigation reliability for farmers, protecting them from increasing climate variability, including uncertain rainfall and unpredictable pre-project irrigation schedules. These improvements will enable at least two crop harvests per year, increased production, and diversification into high-value crops—strengthening farmers’ resilience against climate change-driven water scarcity. While adaptation is the primary focus, the Project will also deliver mitigation co-benefits, as shown in the EX-ACT analysis: (i) Climate-smart agriculture practices—on-demand irrigation delivery enabled by Component 1, monitored through Component 2 (smart water accounting), will enhance soil carbon sequestration and optimize fertilizer use, reducing overall GHG emissions, and (ii) Energy efficiency— Türkiye’s irrigation sector faces severe inefficiencies due to aging infrastructure, with 48 percent of irrigation water lost before reaching crops through seepage, evaporation, and outdated open-channel systems, leading to increased reliance on groundwater pumping, higher energy consumption, and worsening climate-induced water scarcity. Without intervention, these inefficiencies—combined with rising drought frequency and over-extraction of water from already stressed river basins—will reduce agricultural productivity, increase energy costs, and amplify vulnerabilities to extreme climate events— Component 1 will reduce the need for pumped flows per season, with monitoring and control through smart water meters (Component 2), leading to an estimated 30 percent 28 energy savings per annum. 41. Paris Alignment. The operation is aligned with the goals of the Paris Agreement on both mitigation and adaptation. The Project’s activities, including irrigation modernization, digital water management, and capacity building for WUAs, fall under the universally aligned list as they promote sustainable resource use and climate resilience without engaging in emissions-intensive practices. By improving irrigation efficiency and promoting climate-smart agricultural practices, the Project supports Türkiye’s low-carbon transition goals while avoiding activities that would go against any national climate objectives. On mitigation, the operation has a low risk of hindering Türkiye’s transition to a low-carbon economy. Modernization of irrigation systems will decrease energy consumption by minimizing water losses during extraction and distribution and reduce GHG emissions. The use of digital solutions, such as SUTEM, supports data-driven water budgeting and crop planning, optimizing resource use and potentially reducing indirect emissions from inefficient 27 Türkiye 2053 Long Term Climate Strategy. chrome extension://efaidnbmnnnibpcajpcglclefindmkaj/https://unfccc.int/sites/default/files/resource/Turkiye_Long_Term_Climate_Strategy.pdf This is an estimate based on indicative water and carbon accounting, as the water discharge (volume per unit of time) in the off-farm and on-farm 28 modernized systems is significantly reduced for the same biomass produced. Page 16 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) agricultural practices. By enhancing water-use efficiency and integrating sustainable agricultural practices, the Project indirectly contributes to Türkiye’s mitigation efforts while ensuring compatibility with its net-zero emissions target for 2053. On adaptation, the operation directly addresses Türkiye’s climate vulnerabilities, particularly water scarcity and variability. The development of a National Program for WUA Capacity Building strengthens the ability of local communities to sustainably manage water resources, adopt climate-resilient agricultural practices, and adapt to evolving climate change induced challenges. Together, these measures enhance Türkiye’s adaptive capacity and align with its adaptation goals to build resilience across the agriculture and water sectors. 42. The Project’s support to modernizing the irrigation system is classified as Maximizing Finance for Development- enabling (MFD-e) and will generate Private Capital Mobilization (PCM) through irrigation service fees (ISF). The investment in rehabilitating and modernizing DSI’s irrigation conveyance and distribution infrastructure under TIMP2 (Component 1) and the climate-smart digital technologies (Component 2) will improve irrigation usage such that farmers’ income is expected to increase, particularly downstream users. This may increase the farmers’ willingness to pay Irrigation Service Fees (ISF). Investment in public infrastructure to unlock downstream private solutions (via the ISF) under Components 1 and 2 is confirmed as MFD-e. The farmers’ contribution through ISF payments will enable the DSI/WUAs to attract the private sector for operating and maintaining the off-farm/on-farm irrigation system via performance-based contracts. The incremental ISF payments for approximately 72,000 ha was estimated to be US$2.00 million based on a sample irrigation scheme of 3,000 ha cultivating multiple crops. The US$2.00 million of incremental ISF payments is confirmed as PCM and has been added to the Project’s financing table as unguaranteed commercial financing. The Results Framework also captures the percentage increase in ISF. As the modernization of irrigation infrastructure expands under future projects, the Project would promote additional private sector involvement along with a simultaneous increase in ISF, bringing further opportunities for Private Capital Enabling (PCE) and PCM under subsequent phases. 43. Gender. A Social Impact and Gender Assessment conducted for TIMP found that women constituted between 7 to 18 percent of WUA members, and less than 2 percent of WUA councilors. Women are also under-represented in active roles that are paid and central to WUA operations, such as bookkeepers, treasurers, and office managers. Women's under- representation in WUAs, including active roles, is underpinned by social norms, in addition to their limited access to information and training opportunities. Further, irrigation decision-making is largely seen as a male-dominated area, and women are typically not engaged in irrigation-related tasks on farms, which often involve hard physical labor and night- time work 29. Women's active participation in irrigation management is associated with several benefits, including improved enforcement of rules, more effective fee collection, increased transparency, improved dispute management, and more efficient water use and conservation. 30 Women's participation in water resource and irrigation management also has gender benefits for the women involved, including improved economic and social empowerment. Evidence also suggests improved outcomes for women not directly involved through greater societal recognition of women's skills and knowledge and erosion of harmful gender stereotypes and norms. 31 The Project will therefore improve women's participation in irrigation management by establishing a target for women's employment in active roles within WUAs. WUAs will be incentivized to meet this target, i.e., through provision of technical assistance. Women holding active roles in WUAs will be provided technical and non-technical training (including in leadership skills, financial and/or office management, communication and negotiation), in addition to networking and mentorship support. Female-targeted training will be conducted across WUAs to focus on the benefits of efficient water use and the importance of women participation in the collective effort for successful irrigation management decisions. Regarding the benefits of women’s participation in irrigation management decisions and employment in WUAs, a workplace review of WUA will be conducted to identify impediments to women's employment and improvements to relevant human resources policies and working 29FAO, 2016. National Gender Profile of Agricultural and Rural Livelihoods. 30 World Bank 2024. Investing in women: A game-changer in climate-resilient irrigation. 31 Women for Water Partnership 2022. With Women Better Results in Water Management. Page 17 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) conditions will be proposed and introduced accordingly. The impact of these initiatives will be measured through the following indicator(s): Number of women holding active roles in WUAs (baseline: 15, target: 23). 44. To support DSI’s gender development agenda under the recently approved Türkiye Flood and Drought Management Project (P179313) and TIMP2, the World Bank team obtained internal funding to provide technical assistance supporting DSI in undertaking a Gender Development Plan. 45. Citizen engagement. DSI has a functional multilevel grievance redress mechanism and public consultation platforms that guide its project operational activities. During the land consolidation and construction phases, DSI adopted various participatory approaches, including public meetings with communities to discuss potential E&S and OHS risks and mitigation measures. Participants were given access to the prepared E&S instruments and provided with contact details for submitting feedback. DSI also engaged extensively with WUAs, including provisions in the SEP for training WUA officials by the DSI’s Social Specialist prior to project implementation. The land consolidation and expropriation activities are largely completed. The Grievance Mechanism (GM) procedures and platforms shall be employed throughout the Project, to enable stakeholders and citizens to communicate their concerns and receive timely responses, ensuring alignment with local needs and capacity. The respective outcome indicator in the project’s Results Framework is “Grievances addressed by DSI in accordance with the stipulated service standards, target of 90 percent”. B. Fiduciary (i) Financial Management (FM) 46. The residual FM risk of the Project is assessed as ‘Moderate’. The DSI Department of Irrigation (DI) is currently implementing the TIMP and has satisfactory FM arrangements in place. The TIMP2 scope is similar to TIMP’s and the same FM arrangements will be applicable. Overall FM arrangements related to staffing, budgeting, financial reporting, internal control and internal auditing, flow of funds, and audits are deemed adequate to provide reasonable assurance on the proper use of Project funds for achievement of the PDO. DSI’s internal control systems will be used for the Project. DI, with the support of the DSI Strategy Development Unit, will ensure that the annual investment budgets include allocations satisfactory for the timely implementation of the Project activities. There will be one Designated Account for the Project which will be at the Central Bank of Türkiye and the Project will use traditional disbursement methods, as listed in the DFIL. The PMT will maintain detailed accounts of the Project in foreign currency in the accounting software currently used for the TIMP. The accounting software will be customized to facilitate accounting for TIMP2 in addition to the TIMP and AF. DSI will prepare unaudited interim financial reports (IFRs) for the Project following the same format used for the TIMP. Annual Project financial statements will be audited by Treasury Controllers. 47. The main FM covenants for the Project are the following: (a) DSI will maintain an FM system acceptable to the World Bank. (b) DSI will prepare the quarterly unaudited IFRs for the Project and submit these to the World Bank no later than 45 days after the end of each period. (c) The Project’s financial statements will be audited by independent auditors acceptable to the World Bank with terms of reference acceptable to the World Bank. The annual audited financial statements of the Project will be submitted to the World Bank within six months of the end of the fiscal year. (ii) Procurement 48. All procurement under the Project shall be carried out in accordance with the ‘World Bank Procurement Regulations for IPF Borrowers’, dated September 2023, and the Procurement Plan approved by the Bank. The Bank’s standard country thresholds for Türkiye, as defined in the Project’s procurement plan, will apply to the procurement Page 18 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) methods and market approaches. The World Bank’s ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, (revised as of July 1, 2016) (‘Anti-Corruption Guidelines’) will also apply to the Project. 49. Almost all the procurement under the Project is expected to be civil works for modernization of various irrigation schemes, cumulatively amounting to about US$806 million and representing about 98 percent of the total Project amount. This will include at least four large works contracts cumulatively valued around US$707 million which will be procured through open competitive bidding international market approach using Rated Criteria, whereas remaining three smaller value packages may be procured through open bidding national market approach. At this time, no goods are envisaged to be procured under the Project but if the need arises in the future the applicable procurement methods and market approaches will be followed. Consulting services under the Project are expected to include hiring of consultant firms for Land Acquisition Plans (LAP) and Resettlement Action Plans (RAP), which will be procured through the Quality & Cost Based Selection method or the Consultants Qualification Selection method as applicable, and hiring of some individual consultants such as procurement consultants, which will mostly be selected through competitive procedures as the default. Further details of the procurement arrangements are provided in Annex 2. 50. The Procurement risks of the Project have been rated ‘Substantial’. While DSI has experience in carrying out procurement of Works through open bidding national market approach under TIMP, Türkiye Resilient Landscape Integration Project (TULIP -P172562), and the Türkiye Water Circularity and Efficiency Improvement Project (P174915), the main procurement risk is that this will be the first time under the Project TIMP2 that DSI will be carrying procurement of works through the Bank’s ICB procedures and using the Bank’s Standard Procurement Documents for Works with FIDIC (International Federation of Consulting Engineers)-based contract, for which DSI will need external support. Details on the Procurement risks and mitigation measures are provided in Annex 2. C. Environmental, Social and Legal Operational Policies @#&OPS~Doctype~OPS^dynamics@padlegalpolicy#doctemplate Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No 51. The overall E&S risk of the Project is rated ‘Substantial’. The Environmental risk is rated ‘Substantial’ and the Social risk is ‘Moderate’. The overall E&S impact will be positive with improved irrigation service delivery and water conveyance efficiency in selected irrigation schemes. The key environmental risks include routine construction-risks related to air/noise emissions, waste, wastewater, hazardous waste and soil management, including the removal and disposal of parts of any existing structures to be removed, OHS risks, traffic safety, structural safety of the irrigation structures, and habitat disturbance due to construction. Environmental risks also include dam safety aspects as well as a number of existing upstream dams that might be involved by providing water for irrigation systems and/or flood protection for the facilities to be financed under the Project. Key social risks cover (a) land and livelihoods caused by permanent and temporary land acquisition or easement restrictions, (b) impacts on informal users of land, (c) labor and working conditions risks, (d) community health and safety risks, (e) increased sexual exploitation abuse and sexual harassment, (f) impacts on cultural heritage, and (g) risks relating to inadequate stakeholder engagement and grievance management. However, the land acquisition will mainly include temporary or permanent easement of small amounts of Page 19 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) land (for irrigation pipelines and distribution points) and no physical and economic displacements are expected. These E&S risks and impacts are likely to be mostly temporary, predictable, and/or reversible. 52. Irrigation Modernization ‘Renewal Projects’ are designed to transform the existing classical system irrigation network (open canal and flume irrigation) into a pressurized pipe network. In this design, newly installed piped network lines are generally designed to fit into existing open channels and routes. After the Project is completed, the existing channels are removed. These designs do not usually include dredging of existing channels for the collection and removal of sand/dirt at the bottom of the canals. The existing irrigation canal schemes are a combination of earthed, lined, canalette, and piped systems. Five existing upstream dams might be involved to provide water for irrigation systems and/or flood protection for the facilities to be financed under the Project. The dams are with heights of 28–78 m from foundation. All are irrigation dams; two of them also serve for drinking water supply and one also serves for flood protection. They are surrouned by forested catchments and agricultural lands. Dam reservoirs are located at lower elevations compared to their surroundings. For this reason, water is collected from the ‘water collection land’ basins around the dam reservoir and reaches the dam reservoir. Failure of the existing dams could cause extensive damage to or failure of the irrigation systems and other project facilities and affect the project-affected downstream communities. To ensure the safety of existing relevant dams and/or dams undergoing construction, the Borrower through DSI will hire independent dam safety expert(s) at a time suitable for conducting dam safety assessment based on terms of reference acceptable to the Bank, to (a) inspect and evaluate the safety status of the existing dams, (b) review and evaluate the owners’ O&M procedures, and (c) provide a written report of findings and recommendations. A preliminary dam safety assessment has been completed as part of the project’s appraisal and has not revealed any major issue for immediate attention. During project implementation an Emergency Preparedness Plan and Dam Safety Assessment will be updated by an independent dam safety expert. The activities planned under Component 2 and Component 3 are relevant to systems and capacity establishment, which are soft components and do not pose any adverse E&S impacts. 53. To mitigate these E&S risks, DSI has prepared a Stakeholder Engagement Plan (SEP), an Environmental and Social Management Framework (ESMF), a Labor Management Procedure (LMP), and a Resettlement Framework (RF). These documents outline how these E&S risks will be avoided, minimized, and mitigated. During the implementation phase, site-specific assessment and management plans will be prepared and implemented following the ESMF. A project- level grievance mechanism will be established and made functional before project effectiveness. Within the scope of the Project, DSI will establish a Project Management Team (PMT) consisting, among others, two qualified environmental specialist, two social specialist, and an OHS specialist, and a dam safety specialist to ensure effective E&S risk management in line with the national regulatory and ESF requirements throughout the lifetime of the Project as per the Project’s ESCP. All subprojects will be screened and required documentation for identification and management of E&S risks will be prepared for each of the eligible subprojects. 54. DSI has considerable experience in implementing World Bank-financed projects, with four active projects under implementation. More importantly, under the Türkiye Flood and Drought Management Project (P179313), DSI has started developing its own I-ESMS (institutional ESMS). The I-ESMS will establish a well-defined institutional setup with appropriate human resources, policies, and standard operating procedures to identify, assess, and manage E&S risks and impacts. Through the I-ESMS, DSI will institutionalize these processes, ensuring that all development projects are managed sustainably and responsibly, regardless of funding sources. Once this ESMS is functional, the E&S risk assessment and management of this Project will be further strengthened. 55. Grievance redress. Communities and individuals who believe that they are adversely affected by a project supported by the World Bank may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project- related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could Page 20 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s GRS, visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s AM, visit https://accountability.worldbank.org. V. KEY RISKS 56. The overall residual risk for this Project is rated as ‘Substantial’ due to the Substantial residual Macroeconomic, Institutional Capacity for Implementation and Sustainability, Fiduciary, Environment and Social risks. Risk Category Residual Risk Mitigation Macroeconomic Recent heightened volatility in To mitigate macroeconomic risks financial markets and increased stemming from financial market global economic uncertainties have volatility and global uncertainties, led to a depreciation of the lira, an the Bank will maintain close increase in the risk premia (as coordination with the Ministry of measured by CDS spreads), an Treasury and Finance to ensure upsurge in the cost of borrowing, alignment with macroeconomic and a decline in reserve buffers. stabilization efforts. Key Further market volatility and higher macroeconomic indicators— global uncertainties could exert including inflation, exchange rate additional pressures on the movements, interest rates, and exchange rate and inflation as well reserve levels—will be continuously as on domestic interest rates. While monitored to inform ongoing downside risks on energy prices are analysis and mitigation measures. helping external balances, risks on global growth could weigh on Türkiye’s growth outlook. Institutional Capacity for While project implementation will To address the anticipated Implementation and Sustainability build on the existing capacity at DSI implementation capacity under the ongoing World Bank constraints, DSI will engage at least financed operations, this Project will one individual senior procurement be the largest Bank-financed water consultant with international operation and DSI’s first experience experience in the procurement of with procuring civil works under ICB. large works following the Bank’s ICB procedure. In addition, the Bank will offer additional support in procurement and training in contract management. Fiduciary The residual FM risk is Moderate. The risk will be mitigated through The residual procurement risk is on-the-job training on FIDIC rated as Substantial mainly due to contract management. (Further DSI’s lack of experience in carrying details are provided in Annex 2.) Page 21 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) out procurement following the World Bank’s ICB procedures and using the Bank’s Standard Procurement Documents for Works with FIDIC-based contract, which will be applicable for about 85% of the procurement by value under the Project. Environment & Social The Environmental risk is The mitigation measures including Substantial and the Social risk is relevant dam safety measures, as set Moderate. Key environmental risks out in the World Bank-approved include air/noise emissions, waste ESMF, RF, LMP, and SEP, will be and soil management, OHS, traffic implemented by DSI and the safety, structural safety, and habitat contractors on the sites. Site-specific disturbance due to construction. impact assessments and Key social risks involve land management will be guided by the acquisition, impacts on informal ESMF, RF, LMP, and SEP. land users, labor conditions, community health and safety (especially safety of the existing dams), sexual exploitation and harassment, cultural heritage, and stakeholder engagement. Page 22 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) ANNEX 1. RESULTS FRAMEWORK @#&OPS~Doctype~OPS^dynamics@padannexresultframework#doctemplate PDO Indicators by PDO Outcomes Baseline Closing Period Improve irrigation service delivery and water efficiency for strengthening climate resilience in selected irrigation schemes People benefitting from climate resilient planning, preparation, surveillance, and/or response (Number of people) CRI May/2025 Dec/2031 0 200,000 People benefitting from climate resilient planning, preparation, surveillance, and/or response - Female (Number of people) CRI May/2025 Dec/2031 0 72,000 People benefitting from climate resilient planning, preparation, surveillance, and/or response - Youth (Number of people) CRI May/2025 Dec/2031 0 50,000 People fed as a result of increased agricultural/food production (Number of people) CRI May/2025 Dec/2031 0 550,000 People fed as a result of increased agricultural/food production - Female (Number of people) CRI May/2025 Dec/2031 0 220,000 People fed as a result of increased agricultural/food production - Youth (Number of people) CRI May/2025 Dec/2031 0 137,500 Increase in Water Productivity (Percentage) May/2025 Dec/2031 0 20 Increase in irrigation conveyance efficiency. Increase in irrigation conveyance efficiency (Percentage) May/2025 Dec/2031 0 20 Page 23 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Intermediate Indicators by Components Baseline Closing Period Irrigation System Rehabilitation and Modernization Area equipped with improved irrigation services. (Hectare(Ha)) May/2025 Dec/2031 0 72,000 Increase in crop production over the project-financed schemes (Percentage) May/2025 Dec/2031 0 75 Institutional Support, Digital Irrigation and Smart Water Accounting Number of women in active roles in WUAs (Number) May/2025 Dec/2031 15 23 Number of beneficiaries in Water User Associations (WUAs) accessing and trained in the use of Irrigation Facilities Spatial Information System (SUTEM) (Number of people) May/2025 Dec/2031 0 1,000 Increase in Revenue from Irrigation Service Fees that are mobilized to finance the system's O&M and improve its financial sustainability (Percentage) May/2025 Dec/2031 0 20 Project Management Grievances addressed by DSI in accordance with the stipulated service standards. (Percentage) May/2025 Dec/2031 0 90 Page 24 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Monitoring & Evaluation Plan: PDO Indicators by PDO Outcomes Improve irrigation service delivery and water efficiency for strengthening climate resilience of selected irrigation schemes People benefitting from climate resilient planning, preparation, surveillance, and/or response (Number of people) The indicator measures the number of people benefitting from enhanced climate resilience as a result of improved Description irrigation services. Frequency Biannually Data source Progress Report Methodology for Data Monitoring and Evaluation (M&E) Framework, through surveys combining desk-based work & field surveys. Collection Responsibility for Data DSI Collection People benefitting from climate resilient planning, preparation, surveillance, and/or response - Female (Number of people) The indicator measures the number of females benefitting from enhanced climate resilience as a result of improved Description irrigation services. Frequency Biannually Data source Progress Report Methodology for Data M&E Framework through surveys Collection Responsibility for Data DSI Collection People benefitting from climate resilient planning, preparation, surveillance, and/or response - Youth (Number of people) The indicator measures the number of youth benefitting from enhanced climate resilience as a result of improved Description irrigation services. Frequency Biannually Data source Progress Report Methodology for Data M&E Framework through surveys Collection Responsibility for Data DSI Collection Increase in Water Productivity (Percentage) This indicator tracks the increase in water productivity and efficiency at the scheme level, as measured through a Description scheme-level water accounting effort expressed in tons of output per cubic meter of water used. Frequency Biannually Data source Progress Report Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Responsibility for Data DSI Collection Increase in irrigation conveyance efficiency (Percentage) This refers to the increase in irrigation efficiency realized by the reduction of conveyance losses. It is commonly measured through volumetric input/output methods along the off-farm canals. Values and targets refer to efficiency increase, in absolute percentage points from baseline, averaged over project schemes. The term ‘conveyance’ is added to Description distinguish the improved off-farm irrigation conveyance efficiency (attributed to Component 1 investments) from the on- farm irrigation application efficiency within a WUA command (which is not receiving major project investments, while it will be monitored through Component 2). Frequency Biannually Data source Progress Report Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Page 25 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Responsibility for Data DSI Collection People fed as a result of increased agricultural/food production (Number of People) This indicator estimates the number of farm-to-market beneficiaries of improved nutrition, using a formula by FAO and the World Bank Irrigation Global Solutions Group (GSG), through projecting: (a) the weighted average of Kcal/gram for Description the after-project cropping pattern and (b) the projected incremental production. This indicator will be tracked during implementation by tracking the incremental production & the crop mix, then applying the aforementioned formula. Frequency Biannually Data source Progress Report Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Responsibility for Data DSI Collection People fed as a result of increased agricultural/food production - Female (Number of People) This indicator estimates the number of females beneficiaries with improved nutrition as a result of increased agricultural/ Description food production Frequency Biannually Data source Progress Report Methodology for Data Surveys Collection Responsibility for Data DSI Collection People fed as a result of increased agricultural/food production – Youth (Number of People) This indicator estimates the number of youth beneficiaries with improved nutrition as a result of increased agricultural/ Description food production. Frequency Biannually Data source Progress Report Methodology for Data Surveys Collection Responsibility for Data DSI Collection Monitoring & Evaluation Plan: Intermediate Results Indicators by Components Component 1. Irrigation System Rehabilitation and Modernization Area equipped with improved irrigation service (Hectare (ha)) This indicator measures the total area of land provided with I&D services under the project, including (a) the area Description provided with new I&D services and (b) the area provided with improved I&D services, expressed in hectare (ha). Frequency Biannually Data source Progress Report Methodology for Data M&E Framework through surveys Collection Responsibility for Data DSI Collection Increase in crop production over the project-financed schemes (Percentage) This refers to the positive impact of an irrigation modernization project on agricultural output. By upgrading irrigation Description infrastructure, improving water management, and optimizing resource distribution, the project enhances crop yields, ensuring more efficient water use, reducing waste, and increasing productivity across the supported farming areas. Frequency Biannually Data source Progress Report Page 26 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Responsibility for Data DSI Collection Component 2. Institutional Support, Digital Irrigation and Smart Water Accounting Number of beneficiaries in Water User Associations (WUAs) accessing and trained in the use of Irrigation Facilities Spatial Information System (SUTEM) (Number of people) This refers to the number of beneficiaries in WUAs that have received the equipment and training needed for using Description SUTEM Frequency Biannually Data source Progress Report Methodology for Data M&E Framework through social surveys under Component 2 Collection Responsibility for Data DSI Collection Number of women in active roles in WUAs (Number) Description This refers to the number of women who are hired or promoted in into a paid active role in WUAs Frequency Biannually Data source Project Progress Report Methodology for Data M&E Framework through social surveys under Component 2 Collection Responsibility for Data DSI Collection Increase in Revenue from Irrigation Service Fees that are mobilized to finance the system’s O&M and improve its financial sustainability (Percentage) This refers to the revenue from irrigation service fees, which can be utilized to finance costs associated with the O&M of Description irrigation systems. Frequency Biannually Data source Project Progress Report Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Responsibility for Data DSI Collection Component 3. Project Management Grievances addressed by DSI in accordance with the stipulated service standards (Percentage) This refers to the grievances addressed by DSI according to the Grievance Mechanism (GM) specified in their Stakeholder Description Engagement Plan (SEP). Frequency Biannually Data source Project Progress Report Methodology for Data Through surveys, combining desk-based/IT-aided work and field work by DSI’s staff & consultants. Collection Responsibility for Data DSI Collection Page 27 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) ANNEX 2. IMPLEMENTATION ARRANGEMENTS 1. DSI has a long-standing partnership with the World Bank and is well-versed in the Bank’s systems and procedures. It is currently the implementing agency for the ongoing Türkiye Irrigation Modernization Project (TIMP) (P158418), its additional financing, and the Türkiye Water Circularity and Efficiency Improvement Project (P174915) among other investment projects. However, strengthening DSI’s capacity for applying the World Bank’s Environmental and Social Framework (ESF) remains essential. 2. For this Project, DSI has established a Project Management Team (PMT) that will be responsible for managing all aspects of project implementation. The PMT will manage inter alia finalization of designs, consultations, contracting, construction supervision, operations and maintenance, fiduciary management, citizen engagement, and social and environment framework compliance for the modernization of the irrigation schemes to be financed by this Project. The PMT will be headed by Deputy General Director of DSI, who will serve as Project Director/Coordinator. 3. The PMT will include professional staff from all the departments that are relevant to project implementation. The two main implementing departments are the Department of Irrigation (DI) and the Department of Operations and Maintenance. Other relevant departments include: (a) Department of Strategy Development; (b) Department of Land Consolidation and On-Farm Development Services; (c) Department of Real Estate and Expropriation; (d) Department of Dams and HPP’s; and (e) Department of Investigation, Planning and Allocation; and (f) Department of Support Services. 4. In addition to DSI’s professional staff, the PMT will include competitively recruited experts in the areas where DSI staff may not be able to designate sufficient staff. These areas include social and environmental aspects, financial management, procurement, citizen engagement, and M&E. The implementation of the Project will be aligned with the regular administration procedures of DSI. 5. At the field-level, the PMT, in coordination with the DSI Regional Directorates, will work closely with WUAs at all stages of implementation, to ensure that local knowledge enhances the final design, social acceptance, and economic potential of the modernization activities in the financed schemes. 6. Under Component 2, DSI’s Department of Operations and Maintenance will continue implementation of SUTEM system. This Department has previously developed the SUTEM under TIMP. The DSI Regional Directorates will be implementing the training of the WUAs under this component. In addition, DSI’s Department of Irrigation will develop MEYTAP and its additional modules. Fiduciary Arrangements Financial Management (FM) 7. Overall FM arrangements related to staffing, budgeting, financial reporting, internal control and internal auditing, flow of funds, and audits are deemed adequate to provide reasonable assurance on the proper use of Project funds for achievement of the PDO. DSI is a special budget institution subject to the Public Financial Management and Control Law No. 5018. The MoTF will assume the coordinating role for the World Bank loan and the World Bank will sign the LA with the MoTF. The MoTF will allocate the loan to DSI as per the Debt Law. 8. Implementing entity and staffing. DSI will establish a Project Management Team (PMT) in a manner acceptable to the Bank. This PMT may include existing staff from DSI’s pertinent departments, notably, the DSI’s well-functioning team under the DI. Other pertinent departments in DSI would include, but not be limited to, Irrigation, Operation and Maintenance, and International Relations (for coordination). The PMT’s responsibilities include FM, procurement, and M&E of the Project. The Project’s FM functions, including budgeting, payments, accounting, and reporting, are executed by the PMT. The two staff working on Project FM have satisfactory qualifications and experience, and they will also work Page 28 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) on the implementation of TIMP2. DSI and the World Bank will evaluate the need for additional FM staff during implementation depending on the workload. 9. Planning and budgeting. The investments that are proposed to be financed by the IBRD loan must be in the investment program of DSI. DSI will coordinate with the SBO to ensure allocation of sufficient budget to cover project expenditures over the life of the Project. The Project’s budget will be prepared by DSI and coordinated by the DI. Variances between actual and budgeted figures will be monitored on a regular basis and appropriately analyzed, and corrective actions will be taken. The PMT will prepare yearly financial plans and cash forecasts based on the Project’s budget, thus ensuring adequate liquidity management and withdrawal of funds. 10. Accounting system. The Project expenditures will be recorded in the Government’s financial reporting system in Turkish liras and in the Project’s accounting system in Euros. The accounts kept in the Government system are subject to the Public Financial Management and Control Law No. 5018. DSI’s accounting system, used for the TIMP, which will also be used for this Project. The software has adequate security levels, and the IFRs as well as the year-end financial reports will be automatically generated from the system. 11. Internal controls. The DI will be responsible for all stages of procurement. Construction supervision will be conducted by the regional offices, and they will also be responsible for approving the progress payments. Final approval of the invoices will be the responsibility of the DI. The department will process the invoices for payment and submit the payment orders to the DSI Accounting Office. The payment orders will be signed by the authorized personnel. The Accounting Office will execute basic controls on the payment order and will send it to the Central Bank for processing from the Designated Account. The accounting entry in the Government’s accounting system AMS (Accounting Management System) will be made by the DSI’ relevant departments based on the approved payment order. The accounting entries in the system that will be maintained by the PMT will be based on the payment confirmation of the Central Bank. DSI has a functioning Internal Audit Department and the project transactions will be considered under their regular systems audits. 12. Financial reporting and auditing. DSI will prepare unaudited IFRs for the Project following the same format used for the TIMP. The formats of the IFRs were agreed as part of Project negotiations. Project financial statements will be audited annually, and the report will be submitted to the World Bank before June 30 of the following year. The project financial statements will be audited by Treasury Controllers in accordance with International Standards on Auditing. The audited financial statements and audit reports will be publicly disclosed in a manner acceptable to the World Bank. The audit report for the project financial statements is due within six months after the end of each calendar year and at the closing of the Project. 13. Funds flow and disbursement arrangements. There will be one Designated Account for the Project. All payments to contractors, suppliers, and consultants will be made directly from the Loan Account or from the Designated Account with the authorization of the responsible personnel. 14. The loan proceeds will be disbursed by the World Bank in line with the World Bank Disbursement Guidelines for Investment Project Financing (dated February 2017), using traditional disbursement methods: advance, direct payment, reimbursement, and special commitment disbursement. The MoTF will open a Designated Account for DSI at the Central Bank of the Republic of Türkiye. Additional detailed procedures will be included in the Disbursement and Financial Information Letter. Full documentation in support of SoEs will be retained by the implementing agency for at least seven years after the World Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made. This information will be made available for review during supervision by World Bank staff and for annual audits. 15. FM supervision. During Project implementation, the World Bank will supervise the Project’s FM arrangements in DSI as follows: (a) during the World Bank’s supervision missions, FM and disbursement arrangements will be reviewed to Page 29 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) ensure compliance with the World Bank’s minimum requirements, and (b) the Project’s quarterly unaudited IFRs as well as the Project’s annual audited financial statements and auditor’s management letter will be reviewed. Procurement 16. The Project Procurement Strategy for Development (PPSD) and procurement plan have been prepared by DSI pursuant to paragraphs 4.1 and 4.2 of the Bank’s Procurement Regulations and were discussed and agreed between the World Bank and DSI. 17. It is envisaged that a total of seven procurement packages for irrigation modernization works, ranging between US$40 million and US$240 million per package, will be procured under the Project, of which at least four packages cumulatively amounting to about US$707 million will be procured through open bidding international market approach using Rated Criteria. 18. Past Procurement performance. During 2020–2021, under the Bank-financed TIMP (P158418), DSI successfully completed the procurement process and contract awards of all four irrigation modernization contracts. However, those contracts were procured through open bidding national market approach, the largest of them being less than half the value of the largest contract planned under TIMP2. Out of these four contracts, two were terminated due to the poor performance of the same contractor and later retendered and awarded/signed in 2024. 19. Procurement Capacity. DSI has extensive experience in carrying out procurement of works under the Government’s Procurement Regulations, as well as prior experience in following the Bank’s open bidding national market approach under the Bank’s Procurement Regulations. However, DSI lacks experience in applying the Bank’s procedures for open bidding international market approach and Standard Procurement Documents for Works with FIDIC-based contract, which will be the bulk of the procurement under the Project. In addition to assigning adequate number of additional in-house procurement staff, DSI will also require external support to be able to effectively manage the procurement under the Project, besides DSI’s other procurement demands. This will include hiring at least one individual senior procurement consultant with international experience in carrying out procurement of large works in accordance with the Bank’s ICB procedures, and at least one individual procurement consultant with experience in national competitive bidding procedures under the Bank’s Procurement Regulations. The Bank will also offer Hands-on-Expanded- Support (HEIS) if DSI requests it, and in addition provide procurement training to DSI procurement staff. 20. Risk and mitigation measures. The Project procurement risk is High and the residual procurement risk after implementation of the mitigation measures will be Substantial. The table below summarizes the main procurement risks and agreed mitigation actions. Page 30 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Table 2.1. Identified Risks and Agreed Action Plan Identified Risk Mitigation Measure Responsible Party Time Frame Action No. 1 Lack of DSI’s experience in - Hire at least one individual DSI At least three months procurement of large works senior procurement consultant before the planned date following the Bank’s with international experience for the invitation of bids international competitive in the procurement of large for the first ICB package. bidding procedures, including works following the Bank’s rated criteria, and using the international competitive World Bank Standard Procurement bidding procedures. Documents with FIDIC-based contracts. - The Bank will offer Hands-on- Expanded Implementation Support (HEIS), if DSI requests it. 2 Work overload of the existing - Assign an adequate number DSI Part of an Effectiveness procurement staff in PMT in of additional government Condition for the PMT managing the procurement of procurement staff in the PMT core staff. the proposed Project while to provide dedicated support concurrently managing the to the Project. procurement of two other ongoing projects. 3 Delay in initiating - Initiate during the project DSI Translations to be procurement due to DSI’s preparation phase the completed in advance so intention to issue the bidding translation of the bidding that the bidding documents, including documents into Turkish and documents are ready for technical design, submit for the Bank’s review issuance within 2 months specifications and drawings, in before project Effectiveness. of project Effectiveness. English and also translated version in Turkish for the - Include provision in the Works packages to be Turkish version of the bidding procured through documents that in case of international competitive discrepancy between the bidding procedures. Turkish and English versions, the English version shall prevail. - The FIDIC-based General Conditions of Contract, which is the Proprietary ownership of FIDIC, should be retained unchanged in English. Page 31 The World Bank Türkiye Second Irrigation Modernization and Water Efficiency Project (P506997) Identified Risk Mitigation Measure Responsible Party Time Frame Action No. 4 Insufficient participation of - Conduct early market DSI Before invitation of Bids. bidders in the larger value engagement with prospective procurement packages to be bidders in the local and procured through international markets before international competitive invitation for bids to obtain bidding due to inappropriate feedback on the proposed technical requirements, technical requirements, qualification and rate criteria. qualification and rated criteria in the bidding documents to promote maximum interest and competition. 5 Delay in start of the - Include in the Project’s annual DSI By November 30 of the procurement process due to procurement plan to be preceding year, and delayed or incomplete prepared and submitted to the subsequent progress preceding technical Bank, the timelines for updates by Mar 31, Jun preparation phase, including completion of the preceding 30, Sep 30, and Dec 31 of E&S assessments and plans. technical preparation each year. requirements, with quarterly progress reports. 6 Delay during the procurement - Annual contract DSI By November 30 of the process commitment/signing plans to preceding year, and be prepared and submitted to subsequent progress the Bank, with quarterly updates by Mar 31, Jun progress updates 30, Sep 30, and Dec 31 of each year. 7 Time extension of contracts Define realistic contract DSI During preparation of duration considering site bidding documents and conditions, scope and phases contract supervision. of the contract, strong project management and supervision. 8 Cost overruns of contracts Prepare designs and Bills of DSI During preparation of Quantities to reflect site bidding documents and conditions, scope and phases contract supervision. of the contract, realistic market survey during cost estimation, and effective supervision. 21. Procurement supervision. All procurement packages under the Project will be subject to the Bank’s prior review. The World Bank will also review and approve DSI’s annual procurement plans, activity procurement plans, and annual contract commitment plans. Procurement supervision will be provided mainly by the Procurement Team based in Ankara, with clearances for higher value contracts where required from the Bank’s Operational Procurement Review Committee (OPRC). 22. Operational costs will not be considered under World Bank procurement implementation. Page 32