Articles in Finance and Development generally deal with the world’s economic problems as they appear to the generals in the operations rooms, or to senior officers in the field. In this series of articles an attempt is made to give some glimpses of development as it affects the lives of the private soldiers of development.
LIKE FINGERS of an enormous hand, parallel mountain ridges reach from the north toward the sedimentary plains that fill the Gulf of Siam. In the valleys between these northern’ ridges, four torrential rivers rise: the Ping in the west, the Wang in the center, and from the east the Yom and the Nan. Falling south toward the plains, the mountain rivers broaden and wind toward each other, finally merging in the Chao Phya, a great brown and braided stream that traverses the rich lowlands of Thailand, entering the sea below Bangkok.
The Chao Phya has been, and is still, the life stream of the Thai people. From the ancient city of Ayudhaya in the river’s central valley, the Thai nation consolidated, developed its civilization, flowered, and spread. And the annual flood and ebb of the river across its flanking plains, crisscrossed by the dikes and canals of an elementary irrigation system, allowed the growth of one of the great rice bowls of Asia, traditionally providing a surplus for export. For generations, too, the river and its tributaries, and their flanking and interconnecting canals, have formed the country’s main routes for commerce—a flourishing central trading highway linking the province with the town, and the town with other trading nations far abroad.
For all their bounty, however, the Chao Phya and its principal tributaries are, in their natural state, capricious rivers. The rice-dominated agriculture of the inner central plain has over the centuries depended crucially on the seasonal rains and the gentle flooding of the river’s channels. But in their untamed state these streams can switch in a trice from sustainers of man to destroyers of life and property. A tropical storm on the teak and rattan covered ridges of the Ping can send that river roaring from its deep-cleft mountain course to swamp the slow and gently graded channels of the plains. Such floods usually have wrought no more damage than a depleted crop. But at times the damage has been ruinous. And occasionally—perhaps once or twice in a generation—the flooded streams have swept the plains for mile upon mile with something like a tidal wave, carrying homes, bridges, cattle, and people with it. On average, some 240,000 acres of riceland have been damaged each year by floods on the Chao Phya.
Nor is flooding the only kind of treachery. Traditionally, each year in May or June, farmers of the flanking plains start their rice in its seedbeds and rely then on the river’s rise and flow to water the paddy fields. But often—in about one year out of every three in fact—the pattern of the monsoon fails: in its untamed state, the river drops drastically and fails to reach paddy fields within its medial range. The seed plantings are lost, and losses due to these sudden, drought-induced drops in the river in the growing season actually have been greater, if less spectacular, than those caused by the floods. Records show an annual average of 350,000 acres of riceland damaged by these droughts.
Controlling the River
In the early 1950’s, the World Bank began assisting the Thai Government in a series of projects designed to break this ancient tyranny of the river’s capricious changes. The object is not only to tame it and increase its reliability for agriculture and navigation but also, in the process, to harness its greater northern tributaries and convert their force to a new capacity for electric power. First, the Chao Phya itself was checked at Chainat, about 40 miles downstream from the meeting place of its tributaries. By 1957, a barrage at Chainat was softening the brunt of floods and allowing a wider diversion of its waters into old and new canals on the central plain. In addition, a beginning was made toward removal of the check to navigation which came each year when monsoons ceased in November, and the long, dry months to May gradually reduced the river and its tributaries, in parts to a shallow trickle.
After Chainat, the next step was to control the torrential Ping, the Chao Phya’s westernmost tributary. By 1964, the biggest storage dam in Southeast Asia had harnessed the Ping at Yanhee, in the foothills of the ranges upstream from the town of Tak. And with the Yanhee project came not only substantial new water control, new storage against drought, improved navigation, and new hydroelectric capacity but also—for Thailand—a new style of operating organization charged with tying together, in one workmanlike operation, the business of generating, transmitting, and selling the greater part of the electric power of modern Thailand.
New phases, new aspects, and offshoots of this program continue to emerge: on the central plain, irrigation and construction engineers push ahead with an expanded network of dikes, canals, lateral channels, feeder roads, and drains to milk the dry-season farming potential provided by the storage of the monsoon floods in the Yanhee dam. In Bangkok, the Yanhee Electricity Authority pushes ahead with construction of large-scale thermal generating units to blend with the hydro power of the dam. In the Royal Irrigation Department, plans proceed for a sister dam to the Yanhee—a similar hydro power and water storage reservoir, this time across the Nan on the eastern flank of the Chao Phya’s northern tributary system.
The great river control system is still under construction. But today, some 17 years after decisions were first taken on a World Bank contribution, events have matured sufficiently to provide the seeker with something of a tableau of modern economic development. Here is an illustration of what can—and what cannot—be done by dams and channels alone; of the importance of follow-through organization and of coordinated decision-making capacity in the development process; and of the connection between the growth of wealth from the fields and the pace and vigor of the towns. To make a division within the complex interconnection of impacts flowing from such a development program is arbitrary. But in aid of brief illustration, such as is intended here, it is useful to draw a line between the countryside and its people on the one hand, and on the other, the towns and their new, voracious appetite for electric power.
The River and the Plain
The farming people of Thailand live in close communion with their gods. From antiquity, whenever the monsoon failed and the river dwindled and the ground dried in the growing season, the thing to do has been to gather in the villages and perform the dance of the rain’s beginning, for Pra Piroon, god of the rain. For this, a female cat must be selected and encased in a long, cylindrical, wickerwork fish trap. A procession must form: at its head the Klong Yao, or band of drummers; next, hoisted shoulder high on a pole, the cat in the fish trap, and beside the cat a villager carrying an urn of precious household water. Behind, the women of village and farm form in line and the dance begins to wind its way across the fields. The drums beat, the cat jiggles in the fish trap as the carrier of the urn sprinkles it with water, and the dancers chant an invocation for the rain.
At such a time, one burning July morning in a year of drought soon after the first barrage was finished at Chainat, Mr. Suwat Keowpuang Sek, engineer of the Royal Irrigation Department, came upon this ceremony outside a village not far from Bangkok. The drums beat, the cat squalled, and the dancers wound over riceland cracked dry by a withering sun. For more than a month the rains had failed to come.
To Mr. Suwat, as an engineer, the situation held dramatic interest: a few miles behind him men from his department were working on a lateral channel to bring the first benefits of new water storage capacity to this area; before him, the villagers made petition to Pra Piroon for water for their fields.
Mr. Suwat is a modest man and does not fancy himself as any personal agent of the gods, although the driver’s door of his black sedan does in fact carry a replica of the rain god with Phya Nak, the great snake through which water is delivered to the earth, stretched beneath the god. These, appropriately, are the insignia of his Department. So it was fitting that Mr. Suwat should drive with urgency from the ritual of the dance to his Departmental headquarters in Bangkok, there to make a brief plea to his superiors. And fitting, too, that he should return soon after with an array of pipes and pumping equipment, capable of lifting the new water supply from its channels to the villagers’ fields in time to avoid a serious loss of crop.
In this vignette one gets close to the core of an impact spread in recent years across the rice plains flanking the Chao Phya. Through rationalization of the water supply for traditional cropping patterns, as distinct from departures into new and more intensive cropping patterns, a substantial change has occurred in the production capacity of the rice bowl of Thailand. In wide areas of traditional cropping, the excess flooding has been cut dramatically; and with the regulation of the water’s rise, higher-yielding seed varieties may now be used. Conversely, the removal of the ancient threat of sudden drought at transplanting time by now has extended well beyond the village in Thonburi Province where Mr. Suwat saw the rain ritual.
Rice has long been the basic staple export of Thailand. Even today, when the economy is diversifying rapidly and substantial new sources of export income are found in the cropping of maize, kenaf, cassava, and other crops in the uplands, rice still accounts for one third of the value of this rapidly expanding export trade. Had it not been for the dams at Chainat and Yanhee, however, and the new network of canals and channels, ditches, and dikes that they have made feasible across the central plain, the traditional export staple—the steady, reliable, substantial surplus of rice—would have disappeared completely by the mid-1970’s. For in the second half of the 1950’s the trends appearing in rice exports were broadly these: Thai population was rising at an annual average rate of about 3 per cent and rice consumption at a rate only slightly lower. Rice production, on the other hand, rose at an average rate of only 1.5 per cent a year. It was alarmingly clear that the end of the export surplus was drawing close.
Saving the Rice Export
The dams and the canals have changed all that, at least for the time. Population continues to rise by more than 3 per cent a year and rice consumption at the slightly lower rate of 2.5 per cent a year. But from a 1.5 per cent rate of increase in the latter 1950’s, the rate of increase in rice production has doubled to reach 3 per cent in the last five years. The trend in the export surplus and its value has turned, quite markedly, from down to up. And the change, of course, has been important to the Thai economy. Without it, new car traffic along the avenues of Bangkok would be less conspicuous. Television aerials would have sprouted much less rapidly from the wooden homes beside the river, and the new industries appearing around Bangkok would have grown less rapidly.
Thailand has renovated and expanded the productive capacity of traditional cropping patterns on her central plain. But there are limits to the gains to be drawn out of renovation of traditional capacity, great though these are proving to be. There are distinct limits, too, to scope for expansion into the uplands to grow new export crops, such as maize, for which the dynamic Japanese economy is proving an eager market. If agriculture is to continue as a strong contributor to Thailand’s long-term growth prospects (it accounts for some 77 per cent of export income and 30-35 per cent of the value of Thailand’s gross national product), then existing cropland within the central plain’s irrigation area must be used for production in the future much more intensively than in the past. Land that, for centuries, has followed the cycle of the wet and the dry—planting in May or June, harvesting in November, December, or January, then lying fallow until the cycle begins again—must be used for double cropping in the dry season. A second crop of rice (new seed varieties offer a shorter growing period), perhaps in combination with one or two of the new export crops—maize, peanuts, soybeans, mung beans, sesame, sorghum, and others—could follow the initial rice.
This need for a new pattern of intensive second cropping brings in what amounts to a second dimension in the program for the harnessing of the rivers. The benefits of this second dimension still lie largely in the realm of potentialities, but the potentialities are huge and almost immediate: the storage of the monsoon rainfall in the existing Yanhee dam alone will permit second cropping of rice and other crops over some 500,000 acres. However, unlike the benefits stemming from the impact of water control upon existing patterns, a full reaping of benefits from this second dimension will require social change. The venerable and sensible custom of withdrawing from fields in the stifling heat from February to May, of turning then instead to the cockfights, the fishing, and the temple fairs—all this must be changed in the service of the gods of progress and of economic growth.
But if the Thai farmer is going to give up the idylls of the traditional fallow months, it must be for something of substantial counter-appeal—capacity to buy a motorcycle, a transistor radio, a television set and rural electrification to power it.
Ten Year Water Utilization Development Program
Thai agricultural and irrigation authorities have launched a detailed “Ten Year Water Utilization Development Program,” under which the dry season agriculture potential of the water stored at Yanhee is planned to be taken up, year by year, in a gradually escalating program, so that by 1975 intensified cropping by farmers in the Chao Phya irrigation area will have efficiently exhausted the dry-season watering capacity of Yanhee storage. Not surprisingly, a comparison between target figures and actual results shows the program, in its first two years, running behind schedule in most of its sectors.
A great deal more than target setting is involved in achieving the virtual revolution which must be wrought from above in the working and living patterns of a relatively well-satisfied farming community. Public resources must be mobilized for the task on a substantial scale. Detailed soil surveys and seed research programs must be pursued, and a small army of extension officers must be found to carry the results and their implications into the countryside. And if this work of the extension officer is not to be wasted, supplies of fertilizer, improved seed, pesticides, credit, and mechanized farming equipment must be organized nationally at a cost sufficiently low to allow the farmer an attractive profit from their use. Marketing channels must be delineated and market outlets promoted; price stabilization schemes must be considered. Institutions like the Farmers’ Groups of Taiwan and the Cooperative Societies of Japan, capable of providing a continuous link between the farmer and public policy, must be nurtured and expanded.
Slowly, but with certainty, organization is firming and policy action moving forward in each of these fields. Public revenue raised from a long-standing export levy on rice is being diverted increasingly to expansion of infrastructure and extension services for the farmer. Revenue is moving, as well, to support the stabilization of domestic rice prices at levels, if not exactly bounteous, at least more attractive than those ruling in recent years. Thai Government purchases of fertilizer are being organized for the farmer’s use on a pay-as-you-grow basis, with payment in paddy acceptable if he does not have the ready cash. Substantial new local fertilizer capacity is in sight.
With some diffusion of effort—but in line with the realities of the Thai political mechanism—self-help farmers’ groups and cooperatives are being organized and strengthened locally: the Ministry of Agriculture has its Farmers’ Group movement; the Ministry of the Interior its People’s Irrigation Association, and the Ministry of National Development its Cooperative Societies. At the top, these bodies are coordinated at Cabinet level through a recently instituted Farmers’ Aid Committee, with the Prime Minister as chairman.
And beyond the committee work, what of the farmer?
The typical farmer in transition is a four-year veteran of his local Farmers’ Group or Cooperative, who used chemical fertilizer on his regular rice crop three years ago and was astonished at the result. Two years ago, perhaps, he used the new irrigation water in the “dry” to put in a patch of mung beans which he found he could sell readily to merchants down river interested in exports to Japan. This year he will put in more mung beans and perhaps next year a first, experimental, dry-season crop of rice.
Consider, for example, Lae Boonpeng, 48, farmer of Chainat province, husband of Kloy, 41, and father of Pol, Porn, Sakorn, Puang, Ton, Tui, Tim, Turn, and Tarn. Turn and Tarn are 5 and 3 respectively, Pol and Porn 23 and 20. The others range between those ages—all told, three boys and six girls. Lae Boonpeng has farmed the 16 acres left to him by his mother since he was old enough to work. He was born where he lives today in a village compound of platform homes three meters off the ground, fenced around by bamboo stakes and set among the lush green and yellow shades of copiously growing banana trees, mango, coconut, and papaya on the high bank of the Noy, a side stream of the Chao Phya, now used as an irrigation artery.
Lae Boonpeng has memories of years when flood waters lapped the floorboards of his elevated home, sweeping away crop, topsoil, and stock. He has memories of other years when the monsoons failed and the ground baked hard and barren in the growing season. It was such a year of drought, he recalls, when the Royal Irrigation Department was finishing the Chainat barrage, about 30 miles from his home. That year, before the first dam was ready, no crop at all had grown for him; he and his brothers were lucky enough to get work laboring on construction of the dam.
Four years ago a young man called upon Lae Boonpeng, introduced himself as an officer of the Chainat Province Land Cooperative Society, and invited the farmer to a meeting which, he said, would explain vast changes and new possibilities opened up by a second, substantially bigger dam further north.
Mr. Boonpeng joined his local Cooperative soon after this meeting. Since then, cautiously but cheerfully, he has allowed himself to be caught up in the new materialism. He has met the cost of small water gates to regulate the flow of water from the Irrigation Department’s ditches onto his farm land. His membership dues to the Land Cooperative entitle him to a share in a tractor. Two years ago, for the first time, he used his irrigation water in the “dry” to plant land—which in the “wet” had grown his rice—with patches of eggplant, chilies, and maize. Last year, at the urging of his counsellors in the Cooperative, he planted his usual 16-acre rice crop in combination with the recommended quantities of ammonium sulphate.
At this point in the telling of his tale his hands will flash upward and his eyes light: the results, he says, were almost a doubling of the crop. Then his hands drop. He casts an admonishing glance at a “man from the Department” sitting cross-legged and shoeless, as is customary for a visitor. This year, Mr. Boonpeng goes on, he would have tried a little second cropping rice, but at the crucial time the water in the canal was not sufficient. Sufficient for vegetables and maize, yes; but for rice, no. For rice you must have more…. “Probably it was maintenance work in progress,” explains the visiting engineer.
A second crop of rice has not yet been tried by Boonpeng. But from the expansion of the first, and from his dry-season vegetables and maize, his income has grown substantially. He has extended his home, bought a sewing machine, a transistor radio, and a drum for his son to play in the band at temple fairs. (Throughout the plains, the most arresting and tangible index of a rising rural prosperity is the great increase in temple building.) Mr. Boonpeng has decided now upon the purchase of an insecticide sprayer. He inquires about the progress of electrification: when it comes, he says, the first thing he wants is a television set.
The River and the Town
As well as being an irrigator, the Chao Phya is a trading river of significance. From Nakon Sawan to Bangkok the traffic is dominated by produce; more than anything else by the tug-towed trains of rice barges that move downstream and back in groups of 20 to 40 like great brown and gray caterpillars in slow procession upon the water. The procession now is constant from Nakon Sawan down. For more than half the distance, this constancy is a very recent phenomenon—another product of the regulation of monsoonal flows. Before Yanhee, the river above Bangkok was navigable in the dry season only as far as Angtong, about 80 miles upstream.
This annual stoppage of a great transport artery had been a serious constraint not only to the rice farms of the central and upper delta, whose only practicable outlet was the river, but also to the teakwood traders further north. To miss the last flood tides of the river could be damaging, even disastrous for some. For then the rice would lie deteriorating in storage on the farms, and the teakwood rafts would lie for months in the sands and shallows of the Ping. Even more than for the growers, however, for the men who work the river—the tugboat men, the barge men, the log runners—the impact of the change that has occurred has been great and many-sided.
Tongho Duangloy is a rice barge man—for 30 of his 37 years a worker of the boats that ply the Chao Phya from Nakon Sawan to Bangkok. Before the dam at Yanhee had begun holding back part of the monsoon flow for the dry season, Tongho Duangloy had established himself as the owner of a 60-ton boat. His custom then was to make the round journey from Nakon Sawan to Bangkok and back, maybe four or five times a year; by the time he negotiated sandbars and irregular flows, he did not have time for more. With the coming of a year-round regulated flow from Yanhee and with the river dredging work that has gone with it, demand, opportunity, and reward for Tongho’s services leapt forward. He has acquired a new barge, twice the size of the old 60-tonner. And with his accelerating income he has rapidly paid off its cost. His schedule has changed from some 4 or 5 round trips a year to some 14 or 15. Now he must all but live upon the water and take with him, as often as he can, his wife, Somnuk, and their four small children.
Much of what Tongho Duangloy sees from his rice barge today he has always seen. Certain things are ageless: the banks crowded with life and the fish leaping beneath the smoke of the cooking fires; the many-colored kites the children fly at evening, swooping and darting high above the lush green banks of coconut palm, mango, goya, cham cha, and madua; and every now and then the great bho tree beneath which Buddha rested and received enlightenment.
It is where Mr. Duangloy’s river winds among the towns that the changes have begun to ring. Streets recently shrouded and mysterious in the flicker of cooking fires have become, suddenly, a blaze of light. Television masts—in some cases looking more substantial than the dwellings from which they rise—sprout right and left like spinifex grass after rain in the desert. Out of doors, the hubbub of transistors quells the ancient sounds of the river. But nowhere along the river is this sudden uprising of electronics and light quite as marked as in Bangkok itself. Bangkok is a city of the plain, and from outside it now, on the river, against the humid evening sky, one picks up the glow of light; of neon that contracts, expands, blinks, and flickers across the city night in pop art patterns. To Tongho Duangloy it seems that the glow gets a little brighter each time he reaches the city.
The full flood of the change has come only recently, with a program that involves piping in the old, street-flanking canals and imposing on the new surface thus created modern, two-lane vehicle arteries. Narrow, two-lane roadways flanked by stagnant water have become, instead, spacious six-lane boulevards shaded by trees. And once the new roadways are in, up go the tall, crook-like stanchions closely set, as mountings for overhead fluorescent lights. The city is no longer Venetian; nor is it Tokyo neon. A happy combination of factors give it a new and unique quality of its own: the flatness of its setting upon the plain lends itself singularly well to a display of broad, floodlit boulevards, intersecting and reaching off into the distance as white ways of light.
Yanhee Electricity Authority
The dazzle of the new Bangkok is but one symptom of an upsurge of electrification, and the demand for electrification, now engulfing the young Yanhee Electricity Authority (YEA). The YEA began operating in 1961 as a result of earlier investigations and suggestions exchanged in the negotiation of an initial $66 million World Bank loan toward the construction of the Yanhee dam. It operates under the insignia of the god of the sun, Pra Atit. And its task involves the production, transmission, and sale to the distributors of electric power within an area extending from Chiengmai, high in the north, to both sides of the Gulf of Thailand in the south including, of course, Bangkok.
When the idea of a Yanhee Electricity Authority was conceived in 1957, the accepted view was that by the early or middle 1960’s the Authority would need to be meeting a normal growth in peak power demand of some 8-10 per cent a year in Bangkok and some 5-6 per cent in the provinces. As the new Yanhee hydro units—linked to Bangkok and the relevant provinces by a transmission network—came on stream in successive stages from 1963 onward, thermal and diesel capacity retained could be gradually diminished and reduced to stand-by equipment.
Events turned out rather differently. By the time YEA became an operating entity in 1961, there were indications that the longer-term trend in power demand might be higher than planners could have forseen in 1957. From that point on, these indications quickly became a burgeoning reality. Thailand’s boom in industry and tourism accelerated peak demand on the Yanhee system to a phenomenal growth rate of 29 per cent in 1965 and 30 per cent in 1966. And growth continues roughly along this trend.
The young Authority’s initial years thus have been a sustained and intense race to keep generating capacity ahead of this surging growth in demand. Almost as fast as funds and competent staff could be mobilized, YEA has pushed forward an investment program combining into the one transmission network new high-pressure thermal units around Bangkok and new hydro units at Yanhee, 280 miles away. Spurring it on has been the knowledge that a period of blackouts and power restrictions—resulting from a lag between growth of demand and the buildup of generating capacity in these years—could bring disaster to its long-term efficacy.
By now the YEA has passed the test of capability; it has met an extraordinary boom in demand for electric power, and it has met it without any significant break in the supply of power to its service area. This performance—plus the ability to combine substantial reinvestment of earnings with a significant gearing down of rate structure—has secured from Thailand’s rapidly expanding business and industrial community the kind of confidence that can amount to a special ingredient in an investment climate.
And from young Thai engineers and technicians graduating from the vocational schools, from Chulalongkorn University, and from graduate schools in Europe and America, it has secured a respect and pride in Thai achievement sufficient to allow it to build its professional and technological staff from an original 10 to approximately 400, in face of boom-time competition for skill. All of these 400 are Thais. Their average age is no more than 26. With international industrial investment blossoming in Thailand as never before, most of them could leave Yanhee and find substantially higher paid jobs elsewhere. So far, no more than one or two of them have done so. Within the many facets of this program of the rivers, the style of the YEA is as tangible an outcome of the investment as Mr. Duangloy’s new boat and Mr. Boonpeng’s burgeoning rice crop.
ECONOMIC DEVELOPMENT PROJECTS AND THEIR APPRAISAL
Cases and Principles from the Experience of the World Bank
by John A. King
Since it began operations in 1946, the World Bank has accumulated a vast store of experience in appraising the merits of different kinds of development projects in all parts of the world. This volume makes some of this experience of project evaluation available to all those interested in economic development. It is presented in the form of cases—seventeen dealing with electric power projects, nine with transportation projects, and four with industrial projects—in twenty-three different countries. The cases have been selected to illustrate the problems encountered in appraising projects in the developing countries, the techniques of analysis that have been used, and the changes which have been made since the Bank began its work. Project evaluation helps to ensure that a project will be technically viable, economically sound, and in keeping with a country’s over-all objectives. The Bank’s experiences will be helpful to those pursuing these objectives in the future.
John A. King, who was primarily responsible for preparing this volume for publication, is a policy officer in the Development Services Department of the World Bank.
Published for the International Bank for Reconstruction and Development.
The price is US$15.00. It is available from the publisher, The Johns Hopkins Press, Baltimore, Maryland, 21218, U.S.A.