Nepal: Mainstreaming Climate Change Risk Management in Development

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1 Technical Assistance Report Project Number: Capacity Development Technical Assistance (CDTA) November 2011 Nepal: Mainstreaming Climate Change Risk Management in Development (Financed by the Strategic Climate Fund) The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

2 CURRENCY EQUIVALENTS (as of 1 September 2011) Currency Unit Nepalese rupee/s (NRe/NRs) NRe1.00 = $ $1.00 = NRs72.86 ABBREVIATIONS ADB Asian Development Bank CCPRF climate change program results framework MOE Ministry of Environment PPCR Pilot Program for Climate Resilience SPCR Strategic Program for Climate Resilience TA technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Type Capacity development technical assistance (CDTA) Targeting classification General intervention Sector (subsectors) Multisector (irrigation, drainage, and flood protection; decentralization; transport management and policies; urban sector development) Themes (subthemes) Environmental sustainability (environmental policy and legislation, urban environmental improvement); social development (disaster risk management); capacity development (organizational development; client relations, network, and partnership development) Climate change Climate change adaptation Location (impact) Rural (low), urban (low), national (high) Partnership Strategic Climate Fund NOTE In this report, "$" refers to US dollars. Vice-President X. Zhao, Operations 1 Director General S. H. Rahman, South Asia Department (SARD) Director T. Matsuo, Environment, Natural Resources and Agriculture Division, SARD Team leader Team members Technical expert C. Malvicini, Senior Water Resources Specialist, SARD M. Amerasinghe, Environment Specialist, SARD N. Carandang, Young Professional, SARD S. Shrestha, Senior Public Management Specialist, RSDD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 I. INTRODUCTION 1. Strategy 2020 calls for the Asian Development Bank (ADB) to support member countries in adapting to climate change. 1 ADB s Nepal country partnership strategy, includes climate change adaptation and environmental sustainability as one of four strategic pillars. 2 It cites the Strategic Program for Climate Resilience (SPCR), 3 which is included in the country operations business plan, The SPCR comprises five components: (i) building climate-resilient watersheds in mountainous ecoregions (administered by ADB), (ii) building resilience to climaterelated hazards (administered by the World Bank), (iii) implementing the proposed technical assistance (TA), (iv) building climate-resilient communities (through private sector participation administered by the International Finance Corporation), and (v) enhancing climate resilience of endangered species (administered by the World Bank). 2. The TA will build on the work of the ongoing TA, Strengthening Capacity for Managing Climate Change and the Environment (to be completed by January 2012). 4 The proposed TA builds upon and enhances ADB s and the government s ongoing climate change program in Nepal, which focuses on institutional strengthening and capacity building, improved information about the impact of climate change on Nepal, and tools for adaptation planning. The design and monitoring framework is in Appendix 1. 5 II. ISSUES 3. As part of the SPCR planning and preparation process, the capacity of stakeholders to adapt to climate change was assessed. 6 Capacity gaps and needs were identified within vulnerable communities and households, vulnerable sectors (e.g., water, forestry, health, agriculture), and key agencies and organizations (public, local government and municipalities, and civil society). The assessment used four climate change risk management indicators: (i) knowledge; (ii) mechanisms; (iii) access to resources and ability to deploy such resources; and (iv) impediments to assess national, district, and community adaptive capacity. 4. Two sector, district, and community issues were identified. The first relates to inadequate knowledge of potential climate change impacts on infrastructure and social systems, and of strategic and systemic mitigation and adaptation measures to address these. As a result, development projects cannot be planned with new and necessary considerations for design features and materials to respond to climate change scenarios. Senior officials in some ministries and departments have moderate knowledge of climate change risk, but very little knowledge exists at junior levels in key government district and local agencies. Most public officials are unfamiliar with tools, such as climate proofing, and screening. Technical training for local government officials, particularly in the districts, and financial resources to implement climate change risk management measures are needed. 5. The second issue relates to overlapping mandates of district agencies, inadequate coordination, meager fund flows, and weak resource allocation mechanisms, which are major 1 ADB Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, Manila. 2 ADB Country Partnership Strategy: Nepal, Manila. 3 Nepal was chosen as one of nine countries to participate in the Pilot Program for Climate Resilience (PPCR) under the Strategic Climate Fund of the Climate Investment Funds. The objective of the PPCR is to pilot and demonstrate ways to integrate climate risk and resilience into developing countries core development planning. SPCR is a governmentled program describing the TA and investment program using PPCR resources. 4 ADB Technical Assistance to Nepal for Strengthening Capacity for Managing Climate Change and the Environment. Manila. 5 The TA first appeared in the business opportunities section of ADB s website on 9 August The methodology and analysis for the adaptive capacity assessment is available at

4 2 impediments to effective climate-change risk management. Existing policies and legal frameworks need to be strengthened to address climate change risks. Government, nongovernment, and community-based organizations lack adequate training and financial resources to implement climate change risk management and disaster risk reduction measures. 6. National issues include (i) almost complete absence of climate change risk management personnel in key organizations and institutions; (ii) climate change risk management is not institutionalized in government, academia, civil society, vulnerable sectors, municipalities, districts, or communities; (iii) no training, database, information, or guidance exists for planning or constructing climate-resilient development; (iv) financial resources to effectively integrate climate change risk management into development planning are inadequate; and (v) development planning in key sectors (water, agriculture, physical planning) does not consider the risks associated with climate change and no modalities are in place to facilitate such transformational change in development planning. 7. With recent support from the United Nations, bilateral agencies, and ADB (footnote 4), Nepal has completed or has ongoing activities in (i) sensitizing and building national and local awareness of climate change impacts and risks and within vulnerable sectors and population groups; (ii) building climate monitoring and analytical capacity, including climate modeling and climate data and records; (iii) building national and local adaptation planning capacity and within vulnerable sectors and vulnerable population groups; (iv) developing vulnerability and adaptation assessment and planning tools; and (v) preparing and implementing the Climate Change Policy (2011) and National Adaptation Programme of Action (2010). The Ministry of Environment (MOE) is developing projects to implement the most urgent and immediate adaptation actions in climatevulnerable districts. As a part of institutional strengthening, MOE has started preliminary works for establishing a climate change center and fund. In addition, MOE is preparing a climate change strategy to operationalize the Climate Change Policy, which focuses on climate adaptation and resilience 7. III. THE PROPOSED TECHNICAL ASSISTANCE A. Impact and Outcome 8. The expected impact is that Nepal has increased resilience to climate variability and climate change. The expected outcome is that the government s infrastructure development programs, policies, and projects incorporate safeguards to address the effects of climate change. By TA end, it is expected that (i) risk screening tools and methods are applied for projects in irrigation, flood protection, roads, water supply and sanitation, and urban development; (ii) 50% of approved projects are assessed for climate change risk; and (iii) a trained focal point is in charge of climate change risk management in government infrastructure agencies. B. Methodology and Key Activities 9. Output 1: Climate change risks are integrated into Nepal s development planning and implementation of development projects. The National Adaptation Programme of Action and Climate Change Policy highlight the need to develop targeted tools to incorporate climate change risk management throughout development planning and implementation. Line ministries increasingly understand that changes in climate patterns are impacting their sectors, but have little knowledge on how to address these concretely. The TA will focus on infrastructure irrigation, 7 See Synergies with Other Related Programs (Supplementary Appendix D) for a summary of current capacity-building initiatives in climate change adaptation and climate change risk management (available upon request).

5 flood protection, roads, water supply and sanitation, and urban development. Tools will be developed based on an iterative learning process, and reflect experiences and realities. This will ensure that institutional capacity is developed as part of the process of tool development, and that the tools are implementable in the context in which they are regularly applied. At the end of the activities, MOE will facilitate the incorporation of lessons and knowledge into an overall risk management system. Climate proofing will take place by (i) integrating climate change risk management into technical guidelines, (ii) developing an overarching risk management system, (iii) applying risk identification screening to development projects, and (iv) making recommendations for sector policy revisions, as appropriate. 10. The planned activities 8 will (i) support implementation of the Climate Change Policy with emphasis on policy initiatives that explicitly benefit women, marginalized, and other vulnerable groups; (ii) develop and document sector-specific knowledge and case analysis; (iii) incorporate climate change risk management into sector guidelines, manuals, and standards; (iv) train and share knowledge on climate change risk management; (v) review sector policies; (vi) develop data support infrastructure for implementing climate change risk management; (vii) prepare detailed concept notes for climate change-related projects, with emphasis on projects that directly improve the climate resilience of women, children, and marginalized groups in rural and urban areas; and (viii) establish an overall climate change risk management system. TA performance will be measured by whether development projects approved by the participating infrastructure agencies apply the revised guidelines. 11. Output 2: Knowledge management tools for climate change are developed and applied. The development of knowledge systems for climate change and environmental management was envisaged under the National Adaptation Programme of Action, but implementation is in its early stages and requires capacity building. Knowledge sharing is improving with new government online portals dedicated to climate change news, but fundamental systems of creating new knowledge and supplemental systems for sharing new and existing knowledge would significantly strengthen the country s knowledge base. By the end of the TA, key knowledge partners should have a deeper knowledge of climate change, adaptation, and resilience in Nepal; be able to store and retrieve the information that such knowledge is based on; and communicate this knowledge more regularly and clearly. Specifically, MOE should be regularly and clearly communicating the newly acquired knowledge, key results, and lessons identified during TA implementation. 12. The knowledge system will use a holistic cycle of creating, storing, and sharing knowledge. The activities, 9 organized according to these categories, will (i) implement a district climate change training program, including community-based vulnerability assessment, risk assessment, and adaptation planning, with specific measures to assure an adequate proportion of female participants and representatives of marginalized communities in the training; (ii) update educational curriculum on climate science and resilience; (iii) provide a small research grant fund for Nepal researchers; 10 (iv) document traditional or indigenous adaptation practices in Nepal, including those of women and disadvantaged groups; (v) establish and manage a knowledge management system on climate change; (vi) prepare and implement a communication strategy for Nepal s climate change program, including capacity building of MOE s communication officers; and (vii) produce knowledge products and provide knowledge support. TA performance The views expressed herein are those of the consultant and do not necessarily represent those of ADB s 8 members, More details Board are of in Climate Directors, Change Management, Risk Management or staff, (Output and may 1) be Implementation preliminary in Note nature. (Supplementary Appendix A) (available upon request). 9 More details are in Knowledge Management and Communications (Output 2) Implementation Note (Supplementary Appendix B) (available upon request). 10 Proposals focusing on subject matter relevant to women and marginalized groups will be prioritized. 3

6 4 will be measured through the application of the district training program, incorporation of revised curriculum into course materials, and publication and dissemination of research articles. 13. MOE will ensure that the human resources (government counterpart staff, consultants, and service providers) and the design and implementation of all output 2 activities (training, research, knowledge production and products, and communications) are gender and socially inclusive (for disadvantaged and marginalized groups). 14. Output 3: Outputs and lessons from the SPCR and other adaptation programs are managed for results and incorporated into Nepal s climate change programming. MOE will establish a results management function for its climate change adaptation program. It will guide the preparation and refinement of a climate change program results framework including monitoring targets and indicators (and associated baselines) that will enable MOE to measure the extent that people in Nepal are able to adapt to climate change and the extent to which government development programs, policies, and projects incorporate climate change impacts. Each agency involved in leading or implementing SPCR components and other adaptation programs and the respective development partners will actively participate in preparing the climate change program results framework (CCPRF). Framework preparation will be guided by the results framework of the Pilot Program for Climate Resilience (PPCR) and Nepal s experience in managing for development results (coordinated by the National Planning Commission). A management information system will be established to implement the monitoring and coordination of all progress indicators in line with the CCPRF. 15. MOE s Climate Change Management Division will set up quarterly meetings with each project director to discuss key issues affecting progress and share implementation experience and feedback related to meeting specific project targets and expected outputs. Data for specific indicators will be collected and reported annually along with any baseline data surveys needed during detailed project design or at the beginning of project implementation. Any deviation from targets and achieved results will be dealt with in a timely manner to allow for corrective actions at the early stages of implementation. Evaluation activities such as field visits, and review and analysis of progress reports will collect data to assess project progress. 16. MOE will lead annual program reviews based on the CCPRF, supported by the TA. Each project director and responsible development partner will participate in the program review. At each review, the CCPRF will be assessed and amended as necessary. MOE will produce and make public a program evaluation following each review. 11 C. Cost and Financing 17. The total cost of the TA is $7.163 million equivalent. The TA will be financed on a grant basis by the Strategic Climate Fund, and administered by ADB. 12 The government will contribute in-kind by covering the participation of government personnel in TA activities, and office space (with electricity, internet, and telephone) for the consultants. The cost estimates and financing plan are in Appendix More detailed procedures for this output are in Results Management and Climate Change Adaptation Program Coordination (Output 3) Implementation Note (Supplementary Appendix C) (available upon request.) 12 Under the Pilot Program for Climate Resilience.

7 5 D. Implementation Arrangements 18. Expected TA implementation milestones are (i) effectiveness, February 2012, (ii) consultant mobilization, June 2012, (iii) completion of TA activities, January 2017, and (iv) TA financial closure, July MOE will be the executing agency. The MOE secretary will chair a TA steering committee comprising senior representatives of the Department of Water Supply and Sewerage, the Department of Roads, the Department of Urban Development and Building Construction, the Department of Irrigation, the Department of Water-Induced Disaster Prevention, the Department of Hydrology and Meteorology, the Ministry of Local Development, the Department of Local Infrastructure Development and Agricultural Roads, and the Ministry of Education they are all directly involved in TA implementation. The Nepal Climate Change Knowledge Management Centre under the Nepal Academy of Science and Technology will implement some knowledge management activities. MOE will establish advisory boards to guide the development of a small grant research fund and upgrading of educational curricula. Nongovernment and community-based organizations will be involved in TA implementation as service providers for knowledge management, documentation of best practices, communication, and training. 19. A fiduciary risk assessment, conducted in August 2011 as part of ADB s due diligence, evaluated MOE practices in implementing the Strengthening Capacity for Managing Climate Change and the Environment TA (footnote 4) and recommended ways to build MOE capacity in procurement and financial management. The risk assessment and risk management plan is in Appendix MOE s Climate Change Management Division will be primarily responsible for TA implementation. MOE will designate the national project director (joint-secretary) and two national project managers (undersecretaries). MOE will depute an accountant to serve as the full-time TA accountant. Disbursement under the TA will be done in accordance with ADB s Technical Assistance Disbursement Handbook (2010, as amended from time to time). 21. A firm (or consortium of firms) specializing in climate risk management will provide the main consulting services (85 person-months of international and 252 person-months of national consultants over 5 years). The outline terms of reference for consultants are in Appendix 4. ADB will engage the main consultants using the quality- and cost-based selection method (with 80:20 quality-cost weighting). Various service providers will be needed to help MOE manage such activities as the district training program, research, curriculum development, and web portal management. ADB will engage all consultants and service providers in accordance with ADB s Guidelines on the Use of Consultants (2010, as amended from time to time). 22. ADB will finance equipment for the TA activities in accordance with ADB s Procurement Guidelines (2010, as amended from time to time). The equipment will become the property of the government upon TA completion. MOE will procure the equipment. ADB will recruit (under the main consulting firm package) a national procurement specialist to assist MOE in selecting and contracting service providers, and procuring goods. IV. THE PRESIDENT'S RECOMMENDATION 23. The President recommends that the Board approve ADB administering technical assistance not The exceeding views expressed the equivalent herein are of those $7,163,000 of the consultant to the Government and do not necessarily of Nepal represent to be financed those of on ADB s a grant basis members, by Board the Strategic of Directors, Climate Management, Fund for staff, Mainstreaming and may be Climate preliminary Change in nature. Risk Management in Development.

8 6 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Performance Targets and Indicators with Baselines Data Sources and Reporting Mechanisms Assumptions and Risks Impact Nepal has increased resilience to climate variability and climate change By 2021: Number of households affected by floods and landslides reduced (2010 baseline: 14,226) Livestock losses from floods and landslides reduced (2010 baseline: 747) Statistics and reports of the Disaster Management Section of Ministry of Home Affairs Statistics and reports of the Disaster Management Section of Ministry of Home Affairs Assumption The government remains committed to mainstreaming climate change risk management into national development planning. Outcome The government s infrastructure development programs and policies incorporate safeguards to address the effects of climate change By 2016: Risk screening tools and methods are applied for projects in irrigation, flood protection, roads, water supply and sanitation, and urban development (baseline: 0). 50% of approved projects are assessed for climate change risk by 2016 (baseline: 0). Nepal development plan Design documents of infrastructure projects approved by DWIDP, DWSS, DOI, DUDBC, DOR, DOLIDAR, MOLD Assumption Climate change risk management tools and measures are supported by national and local government offices and user communities. Risk Insufficient budget allocation for climate change development programs, policies, and projects Trained focal point in charge of climate change risk management in DWIDP, DWSS, DOI, DUDBC, DOR, DOLIDAR, MOLD (baseline: 0) Human resource records of DWIDP, DWSS, DOI, DUDBC, DOR, DOLIDAR, MOLD Outputs 1. Climate change risks are integrated into Nepal s development planning and implementation of development projects. DWIDP, DWSS, DOI, DUDBC, DOR, DOLIDAR, and MOLD guidelines, manuals, and standards include climate change risk management by the end of year 5 (baseline: 0). 50% of projects approved from agencies identified apply revised guidelines by end of year 5. (baseline: 0) Results management specialist s assessment report (end of years 3 and 5) Results management specialist s assessment report (end of years 3, 4, and 5) Assumptions Strong cooperation and coordination between relevant government agencies and MOE Risk High turnover of trained government staff Risk management system established in MOE and used by at least 4 of 7 agencies by end of year 5 Climate change program results management framework produced by MOE, infrastructure

9 Appendix 1 7 Design Summary Performance Targets and Indicators with Baselines Data Sources and Reporting Mechanisms Assumptions and Risks project design reports Local adaptation practices are used by 5 of 7 agencies in CCRM training by end of year 4 (baseline: 0) Development communications specialists review (by Q1 year 5) 2. Knowledge management tools for climate change are developed and applied. Trained district development committees develop adaptation plans for 100 communities by year 4 (baseline: 0) Results management specialist s assessment (by midyear 5) New academic curriculum for climate change science and adaptation incorporated in the syllabi of 2 of 4 universities by year 4 (baseline: 1) Development communications specialists review (by 2nd half of year 4) New academic curriculum for climate change science and adaptation developed and revised for secondary and higher secondary education by year 4 (baseline: 0) Development communications specialists review (by year 4) 25 new research articles published and posted in Nepali and global web portals by year 5 (baseline: 0). NCCKMC and MOE reports 3. Outputs and lessons from the SPCR and other adaptation programs are managed for results and incorporated into Nepal s climate change programming. MOE conducts two media briefings annually on results of the climate change program. Results of climate change programs in Nepal are tracked through wellestablished management information system by midyear 2. MOE communications focal point records Minutes of MCCICC and Climate Change Program Coordination Committee meetings Assumption Strong cooperation and coordination between relevant government agencies and MOE Risk Poor attendance during results management meetings Activities with Milestones Inputs 1. Climate change risks are integrated into Nepal s development ADB administered SCF, planning and implementation of development projects. PPCR: $7.163 million 1.1 The views Support expressed the implementation herein are of those Nepal s of the Climate consultant Change and Policy do not (by necessarily year 2) represent those of ADB s 1.2 members, Develop Board and of document Directors, sector-specific Management, knowledge or staff, and and may case be analysis preliminary (years in nature. 337 person-months of 2 3) consultant inputs

10 8 Appendix 1 Design Summary Performance Targets and Indicators with Baselines Data Sources and Reporting Mechanisms Activities with Milestones 1.3 Incorporate climate change risk management into sector guidelines, manuals, and standards (by years 3 4) 1.4 Train and share knowledge on climate change risk management (years 2 4) 1.5 Review sector policies (years 3 5) 1.6 Develop data support infrastructure for the implementation of climate change risk management (years 2 4) 1.7 Prepare detailed concept notes for climate change-related projects (by year 5) 1.8 Establish an overall climate change risk management system (by year 5) Assumptions and Risks Government: counterpart staffing, offices for consultants 2. Knowledge management tools for climate change are developed and applied. 2.1 Implement the district climate change training program (years 2 4) 2.2 Update educational curriculum on climate science and resilience (by year 4) 2.3 Provide a small grant fund for climate change research (by year 3) 2.4 Document traditional and indigenous adaptation (years 2 4) 2.5 Develop a knowledge management information system for gathering, storing, and producing knowledge products on climate change (by year 1) 2.6 Develop and implement communication strategies for the Nepal climate change program (years 2 5) 2.7 Provide knowledge and communication services to the government (years 2 5) 3. Outputs and lessons from the SPCR and other adaptation programs are managed for results and incorporated into Nepal s climate change programming. 3.1 Engage consultants for all TA outputs (by year 1) 3.2 Develop an implementation and coordination mechanism for all TA activities (by year 1) 3.3 Develop a climate change program results framework (by year 1) 3.4 Develop a reporting and monitoring format and schedule for the SPCR component and other climate adaptation programs progress monitoring (by year 1) 3.5 Establish a management information system for monitoring outputs from the SPCR and other adaptation programs (by year 1) 3.6 Identify lessons for Nepal climate change programming (years 2 5) ADB = Asian Development Bank, DOI = Department of Irrigation, DOLIDAR = Department of Local Infrastructure Development and Agricultural Roads, DOR = Department of Roads, DUDBC = Department of Urban Development and Building Construction, DWIDP = Department of Water-Induced Disaster Prevention, DWSS = Department of Water Supply and Sewerage, MCCICC = Multi-Stakeholder Climate Change Initiatives Coordination Committee, MOE = Ministry of Environment, MOLD = Ministry of Local Development, NCCKMC = Nepal Climate Change Knowledge Management Centre, PPCR = Pilot Program for Climate Resilience, SCF = Strategic Climate Fund, SPCR = Strategic Program for Climate Resilience, TA = technical assistance. Source: Asian Development Bank.

11 Appendix 2 9 Items COST ESTIMATES AND FINANCING PLAN ($ 000) Total Cost Strategic Climate Fund a 1. Consultants a. Remuneration and per diem i. International consultants 1, ii. National consultants b. International and local travel Service Providers Workshops, training, and seminars 1, Research grant fund b Equipment and furniture c Vehicle rental Reports and publications Miscellaneous administration and support costs Representative for contract negotiations Contingencies 1, Total 7, Note: The government will contribute in-kind by covering the participation of government personnel in technical assistance activities, and office space (with electricity, internet, and telephone) for the consultants. a Under the Pilot Program for Climate Resilience, and administered by the Asian Development Bank. b These will be small grants to Nepali researchers after proposals are approved. Implementation arrangements will be determined during implementation of the technical assistance. c Includes videoconference facility, photocopier, computer, printer, digital camera, and scanners. The equipment will be handed over to the government at technical assistance completion. Source: Asian Development Bank estimates. The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

12 Risks A. Accounting arrangements: 1. The use of clerical (manual) accounting arrangements is inappropriate for a project of the scale proposed. The following risks in respect of transparency and accountability are highlighted: (i) Only six categories of expenditure classification are identified, essentially on a functional a basis. (ii) Very limited information on economic b classification or administrative c responsibility is explicitly identified. (iii) Budgetary control information to determine availability of resources is not readily available. (iv) Regularization of accounting timetables for month-end and year-end will be required in a larger project. B. Financial management 1. The authorization of cash and check advances and e cash payments dilutes the effectiveness of delegated transaction authorization. 2. Specific cash-handling risks include (i) expenditure transactions not independently substantiated or verified, (ii) loss of transparency and audit RISK ASSESSMENT AND RISK MANAGEMENT PLAN Assessment without Mitigation High High Management Plan or Measures Implement project accounting software (including budget module) to enable improved classification and reporting of project expenditure. Provide capacity-building and support for financial accounting, financial planning, and financial reporting for project management personnel and accounting personnel. Extend the project chart of accounts d to enable coding of project expenditures by economic, functional, and administrative classification. Map project expenditures to follow donor and government requirements if direct compatibility is not immediately achievable. Project management will produce and review expenditure reports on a regular (at least monthly) basis. Conduct a financial risk management workshop Develop a financial management and accounting capacitybuilding plan Reduce the volume of cash check payments and cash handing in general to ensure that delegated authority operates as intended. Extend authorization power to a range of named joint secretaries and undersecretaries. Establish hierarchical authorization limits for project Assessment with Mitigation Medium progressing to low Medium progressing to low 10 Appendix 3

13 Risks trail meaning that the ultimate payee may not be readily identifiable where cash checks are used, (iii) personal security hazards where large sums are involved, (iv) tax evasion where incorporated businesses are paid in cash, and (v) uncrossed checks represent a higher risk of theft and forgery. 3. Adequate bank balances must be on hand to enable project activities to take place Assessment without Mitigation Management Plan or Measures transactions and expenditure. Independent transaction authorization pretransaction where possible, but posttransaction where pre-authorization has not been possible. Account payee checks must be used for full payment, without exception, for all transactions with incorporated businesses. Use more detailed and accurate events planning to identify specific expenses, which can be paid by crossed check. Request crossed checkbooks from Nepal Rastra Bank. Ensure strict control of outstanding advances and timely liquidation within timescales set by specific rules. Annual audit of expenditure, classification, and financial control will provide both assurance and constructive commentary on the financial management of the project. Assessment with Mitigation C. Internal control 1. Significant change introduces different and unfamiliar risks to the internal control regime in place in an organization. The implementation of accounting software will be a significant change that will affect project management and project accounting personnel. The following risk is also highlighted: loss of institutional knowledge due to transfers and promotions. D. Procurement 1. As with financial management and accounting, the scale of the High High Separate annual risk management workshops will focus on internal control and continuous improvement for procurement and financial management. Recognize that internal control is the responsibility of all project personnel and not only accounting staff. Implement a regime of accounting and control spot checks throughout the life of the project. Conduct capacity-building for internal control for all project personnel. Design and adher to a high standard of separation of duties for financial management. Initial and ongoing technical accounting and information technology support should be made available for an appropriate period as part of the implementation strategy. The number of personnel deployed in the procurement process within the ministry should be increased and Medium progressing to low High progressing to Medium Appendix 3 11

14 Risks proposed TA is an issue. The following risks are highlighted: (i) greater frequency of procurement, (ii) environmental factors, (iii) the absence of professionally qualified procurement, and (iv) the experience of diverse methods of selection is limited. Assessment without Mitigation Management Plan or Measures consideration should be given to establishing a project procurement function. Specialist procurement skills should be developed for a number of appropriate senior ministry personnel. Additional trained and experienced personnel are needed. Skills and knowledge in the application of procurement methods will be required. Procurement planning skills will be required. Engage with the Public Procurement Monitoring Office. Additional trained personnel will be required. Increase knowledge of and compliance with laws and regulations including the Public Procurement Act and Public Procurement Regulations. Develop and apply procurement risk analysis skills. Assessment with Mitigation 12 Appendix 3 a Functional classification provides information on the purpose for which an expense was incurred (Government Finance Statistics Manual [2001], page 62) b Economic classification identifies the types of expense incurred for project activity. c Administrative responsibility identifies the officer or cost center authorizing expenditure. d The Government of Nepal has adopted a chart of accounts, which complies with the Government Finance Statistics Manual (2001) from July The manual is the recognized international standard for the classification of government expenditure. e An advance may be defined as payment by the entity before receipt of goods or services. In effect, funds leave the bank account of the project in advance of delivery of goods or services. Typically this practice facilitates payments in cash to suppliers. Source: Asian Development Bank.

15 Appendix 4 13 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1. The technical assistance (TA) requires a consulting team (85 international person-months and 252 national person-months) to work on the three TA outputs. 1 A. Output 1: Climate Change Risks are Integrated Into Nepal s Development Planning and Implementation of Development Projects 1. Engineering Specialists and Researchers: Irrigation (6 person-months international, 12 person-months national) Water Supply and Sanitation (5 person-months international, 20 person-months national [one person for urban and one for rural]) Roads and Bridge Design Infrastructure (6 person-months international, 6 personmonths national) Water Resources Engineering Specialist (3 person-months international, 12 person-months national) 2. The experts will assist in reviewing and recommending revisions of existing planning and design tools. They will support departments in undertaking case analysis, technology transfer, sector vulnerability analysis, guideline revisions, policy recommendations, and training (both formal and onthe-job). Two national experts with water and sanitation engineering backgrounds will be needed. Extensive exercises are to be carried out to facilitate participatory training and modification of guidelines. 3. The international experts should have experience in developing engineering guidelines and a background in developing solutions in the context of climate change and other environmental pressures. Some exposure to climate change risk management is needed. The experts will be responsible, together with the agency senior engineers appointed to the project, for reviewing and identifying information needs for the revisions of current guidelines and standards. The experts should draw from existing international experience to highlight best practices. They will help with the case analysis, identification of technologies for respective sectors, and identification of data needs. They will also lead, together with contributions from all other experts, in training, including on-the-job training. The national experts should have extensive experience in the Nepalese engineering and environmental context as well as the application of its respective guidelines. They will assist the agency and work with the international experts to collect data and information, identify needs, conduct training, and revise guidelines. The national experts will support the development of the risk screening tool, the case analysis, and the overall risk management framework. They will bring in local knowledge of end-users preferences for technologies and adaptations. 2. Urban Planning and Water Resources Specialist (6 person-months international intermittent, 6 person-months national intermittent) 4. The experts will provide guidance on best practices in reducing vulnerability of urban centers to climate change risks, drawing from international experience in other cities with similar geography. The international expert will work closely with the department of urban planning to develop core conceptual and scientific tools and techniques for integrating climate change risk management into urban planning and related codes, drainage, building codes, and flood-plain zoning. The national expert will liaise with the ministry staff, conduct training, provide local knowledge and context, and 1 The following additional national consultants needed to support TA administration are not included in this appendix: (i) financial management specialist (4 person-months), (ii) procurement management specialist (6 person-months), (iii) internal auditor (3 person-months), and (iv) assistant accountant (30 person-months). Separate contracts will also be made with four service providers. See supplementary appendixes for more details (available upon request).

16 14 Appendix 4 identify key vulnerabilities and hot spots. They will also bring in local knowledge of end-userspreferences for technologies and adaptations. 3. Risk Management Expert (6 person-months international intermittent, two national at 6 person-months each, intermittent) 5. Some of the techniques involved in developing adaptation strategies are often limited by the availability of data and the nature and purpose of climate change projections. Risk management approaches are complementary to quantitative techniques. The international expert should have a sound theoretical knowledge of risk assessment and management techniques, including from private sector models. The expert should have extensive experience in applying these tools in support of decision-making, particularly in the context of infrastructure investments and decision making. Some knowledge of climate change risk management is also needed. The expert will be responsible for developing and testing the framework procedure and methodology identified in para. 10 of the main text, in close collaboration with sector focal points and with the executing agency. The national experts should have economic and risk management backgrounds. They should have the ability to work with multiple stakeholders and have good consultation skills. They will contribute to formal and on-the-job training in the use of the developed framework. They will roll out the use of risk management models and propose how they can be used to amend decision-making. 4. Hydrology Modeler and Impacts Assessment Modeler (12 person-months international, 12 person-months national) 6. Additional support will be needed for developing detailed impact models based on specific sector requirements as well as assistance in establishing the structures for storing such information and providing it under a service model to various users. The international expert will be responsible for undertaking detailed impact modeling based on climate change projections, and work with a national expert who will assist in confirming the assessments. They will provide guidance and assistance on institutional arrangements for establishing data service provision for key agencies. They will work with all agencies to identify agency data requirements. The probabilities, assumptions, and limitations will be clearly identified. The expert will provide training to the national institute, which will be the custodian for such data service provision. The experts should work closely with the Department of Hydrology and Meteorology, the Department of Water-Induced Disaster Prevention, and the Water and Energy Commission Secretariat, and be responsible to detailing out and finding agreement on the most appropriate data repository to service the needs of agencies in applying revised guidelines. The consultant will be crucial in contributing to the revision of guidelines to ensure that they are realistic in that the data is available to undertake any analysis required by revised guidelines. 5. Climate Change Vulnerability, Impacts, and Adaptation Specialist (6 personmonths international) 7. The need for regular training will be met partially through knowledge transfer from international experience and from high-level scientific sources. Dedicated efforts are needed to develop targeted training opportunities and materials. The expert should have sound knowledge of several approaches to managing climate change risks, with a particular emphasis on good international practice in addressing infrastructure risks. The expert will provide technical support to all of the other consultants and will oversee the development of training materials, especially bringing in international cases and good practice. The expert will oversee the implementation of the training and knowledge-sharing activities under output 1 by ensuring good quality control. The consultant will also assist the Ministry of Local Development to revise its local infrastructure environment policy and guidelines, and support the project development expert by providing advice on international standards in preparing project concept notes and proposals.

17 Appendix Water Resources Experts: River Hydraulics, Fluvial Geomorphology, Sediment Transport (3 person-months international, two national experts at 3 person-months each) 8. The rampant mining of riverbeds has exacerbated flood impacts in numerous communities and increased the vulnerability of roads, bridges, irrigation structures, and agricultural land. The consultant will support the revision and strengthening of guidelines, based on climate change science, for riverbed sand mining. They will provide overall support, particularly in districts, for enforcement and sound decision-making based on basinwide considerations to the impacts of sand mining. The experts should have an advanced degree related to river processes and flood management hazard identification and management. Knowledge of the Nepalese environment and glacial lake outburst flood risks is essential. 7. Project Development Expert (6 person-months national) 9. The preparation of project concepts for financing is often specific to the particular funding source. Assistance to develop these proposals quickly and facilitate their application to particular funding sources should be accelerated through dedicated time commitment by an expert. The expert should have extensive experience in adaptation project development for major development partners, including multilateral and bilateral; stakeholder consultations; results-based monitoring frameworks; identification of institutional arrangements; and budgeting. The expert will collect project submissions and recommend priorities based on an agreed set of criteria. The expert will work directly with the Ministry of Environment, which will be guided by the Climate Change Program Coordination Committee, to undertake this activity. Then, the consultant will organize, with ministry support, a stakeholder workshop to develop the project proposals for submission. B. Output 2: Knowledge Management Tools for Climate Change are Developed and Applied. 1. Development Communications, Capacity-Building, and Participation Specialist (20 person-months international, intermittent) 10. The specialist should have extensive knowledge and experience in training and capacity building, knowledge management and development, and implementation of communication strategies. The expert should be able to facilitate a participatory communication process in designing and implementing project activities, and promote knowledge sharing. The expert should have an understanding of sociological and behavioural factors underlying communicative processes and awareness of cultural factors affecting communication to be able to ensure that knowledge from the TA will be effectively transferred in Nepal. The expert will (i) ensure the quality of outputs of service providers for training, research, and curriculum development; (ii) lead the national consultant in documenting local knowledge and best practice to address climate change impacts and ensure highly participative communication process in documenting local knowledge; (iii) support the government and researchers in disseminating findings and conceptualizing follow-up activities that support the use of research findings for behaviour or policy change communications; and (iv) support the government in developing and implementing a communications protocol and strategy for the entire SPCR program (components 1 5) and results management for these components and other climate change adaptation programs.

18 16 Appendix 4 2. Development Communications and Participation Specialist (20 person-months national, intermittent) 11. The specialist should have extensive experience in managing and implementing communication activities, and providing liaison support to clients. The specialist will (i) work with the international consultant in adapting international good practices in implementing communication strategies related to climate change; (ii) support the government in liaising with national stakeholders and coordinating training activities under the TA; (iii) ensure the quality of outputs of service providers for training by closely monitoring training activities and recommend corrective actions as needed; (iv) assist in supporting the government in developing a communication protocol and strategy for Nepal s climate change adaptation program; (v) assist the climate change vulnerability, impacts, and adaptation specialist in reviewing training materials on climate change risk management produced and implemented in various agencies under the TA; and (vi) help with procurement and other coordination activities under the TA. 3. Public Relations and Knowledge Management Specialist (24 person-months national, intermittent) 12. The specialist should have experience in public relations preferably with the government and be knowledgeable of environmental and climate change issues. The expert will (i) support the government in implementing communication strategies and help with other communication needs such as liaising with other national and local agencies, international development agencies, and other stakeholders; (ii) ensure the quality of outputs of service providers for research and curriculum revision by closely monitoring research activities and curriculum revision, and advise on corrective actions as needed; (iii) assist in monitoring the management information system for results management and providing updates to lead agencies as required; and (iv) evaluate research and other knowledge products produced including documentation of local adaptation under the TA. 4. Gender Expert (6 person-months national, intermittent) 13. The expert should have significant experience in implementing gender and social programs and be knowledgeable of climate change impacts on women. The expert should be able to relate with women and assist in facilitating participative communication processes involving them under the TA. The expert will (i) review the design and implementation of all training and knowledge-sharing activities in the light of gender needs and benefits, and provide guidance on its revision as needed; (ii) encourage women s participation in a small grant fund for climate change research; (iii) review plans and outputs for documenting traditional and indigenous adaptation practices, and ensure specific arrangements are built-in for women s participation; (iv) assist in implementing training and knowledge-sharing activities, and ensure women s broad participation though gender-sensitive actual training setup and arrangements; (v) conduct a midterm and final impact evaluation on the impacts of gender activities under the TA; and (vi) coordinate with other consultants in identifying areas where gender and social inclusive provisions can be strengthened under the TA. C. Output 3: Outputs and Lessons from the SPCR and Other Adaptation Programs are Managed for Results and Incorporated into Nepal s Climate Change Programming 1. Project Management Specialist and Team Leader (55 person-months national, full-time) 14. The specialist will manage the entire TA consulting team and provide guidance in the effective implementation and coordination of all TA and climate change adaptation program activities. The specialist will have extensive knowledge and experience on natural resource management, adaptation to climate change, monitoring and evaluation, and assessment of climate risk and

19 Appendix 4 17 adaptive capacity. The tasks include (i) ensure proper maintenance of the management information system, provide information for the Ministry of Environment climate change web portals, and manage other information dissemination activities; (ii) assist the climate change results management expert in establishing the monitoring and evaluation systems for climate change programs including indicators and approaches for monitoring and evaluation; (iii) participate in review missions and studies to assess the performance of each climate change project; (iv) undertake separate in-depth monitoring and evaluation activities for the TA, including field visits, annual data collection for evaluating its performance based on identified indicators, review and analysis of progress reports, and internal program reviews and consolidation of findings in the management information system; (v) help develop evaluation guidelines and undertake component evaluations; and (vi) prepare monitoring and evaluation reports at the end of all review missions and other project documents as needed.. 2. Climate Change Results Management Expert (12 person-months international, intermittent) 15. The expert will have extensive knowledge and experience in managing results of large-scale climate change adaptation programs preferably in South Asia. The expert will (i) establish the results management framework based on Climate Investment Funds guidelines by facilitating and guiding meetings among lead agencies, (ii) develop reporting and monitoring format for TA implementation and for the results management of all climate change adaptation programs, (iii) develop evaluation guidelines and oversee monitoring of activities, (iv) undertake in-depth evaluation of the TA and consolidate findings in the overall results management framework and prepare progress reports and other project reports as needed, and (v) develop a minimum of five project documents ready for submission to selected donors or financiers. 3. Management Information System Specialist (national expert with lump sum, deliverable-based contract based on 12 person-months) 16. The specialist should have an advanced degree in information technology and knowledge management and extensive experience in the development and implementation of a management information system, database, and website. The expert should also have a strong sense of user interface and website usability for the intended users. The expert will develop and implement a frontend management information system and database to tie together activities under the TA into a computer-based information system to assist in its effective implementation and support the benefit and monitoring system for the TA activities and climate change programs including components under the SPCR program and other climate change projects.

20 A. Background NEP: Mainstreaming Climate Change Risk Management in Development Supplementary Appendix A CLIMATE CHANGE RISK MANAGEMENT (OUTPUT 1) IMPLEMENTATION NOTE 1. Nepal is a country that is highly vulnerable to climate change, and the Government has sought to strengthen its capacity to manage climate change risks, for example, through the development of its National Adaptation Programme of Action (NAPA) and Climate Change Policy. These exercises highlighted the need to develop targeted tools to incorporate climate change risk management throughout its development planning and implementation. Each of the line Ministries in Nepal has an increasing understanding that changes in climate patterns are impacting their sectors, but little is known on how to address these concretely. 2. Output 1 of the proposed TA is climate change risk management is integrated into Nepal s development planning and implementation of development projects. As the subject is quite broad, the TA places an emphasis on infrastructure sectors at the national level. Sectors which will be covered under this output include irrigation, flood protection, roads, water supply and sanitation, and urban development 1. The activities described below are based on consultations with respective ministries and departments on their needs and particular capacity constraints. Tools will be developed based on an iterative learning process and to reflect experiences and realities on the ground. This will ensure that institutional capacity is developed as part of the process of tool development, and that those tools are implementable in the context in which they are regularly applied. At the end of the activities, MOE will facilitate rolling up lessons learned and knowledge into an overall risk management system. Climate proofing will take place at four levels: by integrating climate change risk management into technical guidelines, by developing an overarching risk management system, by applying risk identification screening to development projects, and by making recommendations for sector policy revisions, as appropriate. 3. While the output has been tailored to respond to the needs of specific Government agencies, some cross cutting themes have emerged across sectors. These are: (i) the need for more comprehensive data and climate change projections as input into design processes, (ii) the preference for learning from doing, (iii) adjustments to guidelines which are based on experience, and (iv) trainings which are highly targeted, scientific as well as conceptual, at the national as well as district level. In addition, there is little experience in cross-sectoral, ecosystem wide or systems based planning and implementation, which is often needed to address climate change risks in a sustainable and cost effective way. Also, capacity for implementation of tools and new knowledge must exist at several levels of planning, from national to local. Project concept notes developed through this output should assist the Government in addressing some of these challenges and in applying and testing tools and knowledge developed through this TA. 1 Sand mining is also included. The hydropower sector is not included as it is is addressed through SPCR Component 4.

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