PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: PIDC206 Public Disclosure Copy Project Name Zambia Strengthening Climate Resilience (PPCR Phase II) (P127254) Region AFRICA Country Zambia Sector(s) General agriculture, fishing and forestry sector (20%), General transportation sector (20%), General information and communications sector (20%), General public administration sector (20%), Flood protection (20%) Lending Instrument Specific Investment Loan Project ID P127254 Borrower(s) Government of Republic of Zambia Implementing Agency Ministry Of Finance and National Planning Environmental Category B-Partial Assessment Date PID Prepared 05-Mar-2012 Estimated Date of Appraisal Completion 10-Dec-2012 Estimated Date of Board Approval 29-Mar-2013 Concept Review Decision Track II - The review did authorize the preparation to continue I. Introduction and Context Country Context Zambia is a vast landlocked country of 752,600 km2 located on southern sub-Saharan Africa. The current population of 13 million is predominantly rural (61%) and expected to double by 2030. Zambia’s economic is heavily dependent on natural resources, particularly mining and increasingly forestry. Copper and cobalt account for 80% of the exports. With favourable copper prices and robust macro-economic conditions, Zambia grew at an average of 6.4% per year during 2006-2010, attaining a GDP per capita of US$1,253 and a GNI per capita of US$1,070 in 2010. Despite this rapid growth, overall poverty remains high (59%), particularly amongst small-scale farmers (77%). By contrast, poverty in urban areas has declined to 27%, further broadening urban-rural inequities. Agriculture employs 65% of the population, but Public Disclosure Copy remains largely rainfed and under-developed. Given its economic reliance on a narrow resource base, Zambia is particularly vulnerable to external shocks. Sectoral and Institutional Context Sub-Saharan Africa is expected to be significantly affected by climate change. Already, average temperatures have increased by 0.50 C on average and extreme weather events (such as floods and droughts) have become more frequent. These changes are expected to intensify in the future, leading to reduced crop yields, increased cost of infrastructure maintenance, water shortages, and potential social strife. Zambia’s climate is highly variable, with frequent droughts, seasonal and flash floods, extreme temperatures and dry spells . The frequency of floods and droughts has increased over the past three decades, costing the nation an estimated 0.4% of annual economic growth. These trends are expected to intensify in the future: projected temperatures are expected to increase by 3-5o C by 2100, with average precipitation declining during the early rainy season (October to December) and intensifying thereafter. In the absence of adaptation, rainfall variability alone could keep an additional 300,000 people below the poverty line over the next decade, and affect annual GDP growth by 0.9%. Due to their reliance on agriculture, natural resources and food-for-works, the poor are particularly vulnerable to climate change impacts. Zambia includes two major river catchments, the Zambezi and the Congo. The rural population along the Zambezi basin (particularly along the southern and western zones), is amongst the most vulnerable in Zambia, due to recurrent floods and droughts and socio-economic isolation (the prevalence of absolute poverty in the Western Province was 78% in 1998). Amongst the poorest are the elderly, female-headed households and single or divorced male-headed households. Their food and income sources are heavily reliant on rainfed crops, sales of livestock and natural resources, and casual labor (mostly paid for in food). This makes them particularly vulnerable to climate-induced crop failure, both during droughts, as well as floods, when erratic and excessive rainfall leads to water logging. As climate patterns change, water and energy resources, infrastructure and housing, and animal and human health are also becoming increasingly vulnerable. To address these challenges, a panel of national experts under the Ministry of Finance and National Planning (MoFNP) helped the Government mainstream climate change into Zambia’s Sixth National Development Plan (2001-2005). Zambia also developed a National Climate Change Response Strategy, built upon the 2007 National Adaptation Programme of Acton (NAPA), which provides the institutional basis for its national climate change program. The number of partners involved in climate change activities is steadily growing. The Ministry of Finance and National Planning, Local Government, Housing, Early Education and Environmental Protection (MLGHECEP), and the Disaster Management and Mitigation Unit (DMMU) under the Office of the Vice President currently lead climate change activities in Zambia. Over the past two Public Disclosure Copy years, however, a growing number of Government Ministries, donors, non-governmental organizations (NGOs) and private sector organizations have been supporting Zambia in building a climate resilient economy. Altogether, there are currently some 25 partners directly involved in climate change-related activities in Zambia . Accepting the need for effective program coordination, Zambian stakeholders have in principle agreed to establish an autonomous National Climate Change and Development Council, under a Committee of Permanent Secretaries and Committee of Ministers chaired by the MoFNP. In the interim period, MoFNP is establishing a multi-sectoral Secretariat to help coordinate the climate change program. Several technical coordination platforms have also been created on, respectively, Climate Resilient Agriculture, Climate Information, Climate Resilient Infrastructure, Mitigation and Low Carbon Development and Finance and Resource Mobilization. The Pilot Program for Climate Resilience (PPCR) is an integral part of this effort. Phase 1 of the PPCR (2010-2013) is already supporting the establishment of the national Secretariat, planned to become operational by March 2012, with key staff expected to be supported directly by their Ministries. However, the institutional set-up remains complex and will need external support over the long-term. The PPCR has been designed to be both strategic and transformational. First, it supports the backbone of Zambia’s National Climate Change Program, thus leveraging a much larger financing and outreach. Secondly, it adopts a participatory, learning-by- doing adaptation approach in Zambia’s most vulnerable area (the Zambezi River Basin), promoting replication and scaling up. Third, it aims to catalyze behavioural change, through better climate information and policies. And finally, it recognizes that promoting better livelihoods amongst the most vulnerable gives them the best option to adapt. The PPCR was prepared through an extensive participatory process, and was presented by the Zambian delegation at the PPCR Sub-Committee meeting in Cape Town, on June 2011. Within the Zambezi Basin, PPCR Phase II will focus on the most vulnerable sub-basins: Barotse and Kafue. The PPCR therefore includes three complementary projects: the proposed project, administered through IBRD (US$33 million), focusing on national program support and the Barotse sub-basin; a complementary project administered through the African Development Bank (US$36 million) focusing on the Kafue sub-basin; and a US$15 million IFC support, focusing on private sector support to climate resilience. The activities are also closely linked with those of other donor programs, in particular the German Cooperation, who will be upgrading the hydro-meteorological network, and the Nordic Development Fund, which is expected to help Zambia develop strengthened infrastructure climate resilient standards. Public Disclosure Copy The Barotse sub-basin is home to 1.1 million people and one of the most vulnerable areas in Zambia. A designated Ramsar site and Zambia’s second largest wetland, it is currently proposed as a World Heritage Site. This vast flood plain is critical for livelihoods and culture of the Lozi people, who developed intricate systems of traditional resource management under their King (Litunga) and the Barotse Royal Establishment (BRE). Having learned to live with floods for centuries, the Lozi rely on a complex system of traditional earth lined canals for transport, drainage, irrigation, fisheries, and cultural ceremonies. In recent times, livelihoods have been increasingly disrupted by unpredictable floods and periods of drought and intense rainfall, as well as changing socio-economic patterns. Parts of the traditional canals built in the late 1880s have become silted, affecting agriculture and fisheries production. Addressing these challenges effectively is the focus of the proposed project. Project preparation has been endorsed by BRE and the authorities of Western Province, and has involved close partnerships with local experts, including Red Cross Zambia, the National Heritage Conservation Commission, the Zambia Civil Society Network, and youth champions. Relationship to CAS The proposed project is consistent with the 2008-2011 CAS in its support for infrastructure and institutional capacity enhancement and (to a lesser extent) social sector development. It also supports climate resilient activities which are relevant to major ongoing and planned operations such as the Irrigation Development Support Programme, the upcoming Livestock Development Project, and the future potential Zambezi-wide regional management program. IDA’s agriculture program has piloted performance-based contracts on rural roads which will be of relevance to the proposed project. In promoting closer institutional links between climate change adaptation and disaster risk management, the project is also fully consistent with the Africa Region’s Strategy “Making Development Climate Resilient�. Its support for mainstreaming, scaled-up financing, and institutional and capacity strengthening follow closely the key pillars of the regional strategy. II. Proposed Development Objective(s) Proposed Development Objective(s) The development objective of the project is to strengthen the institutional framework for climate resilience in Zambia and improve the adaptive capacity of vulnerable rural communities in the Barotse sub-basin. Considering Zambia’s long-term institutional strengthening needs, the project would be implemented over a six year period, from 2013 to 2019, with subsequent programmatic phases expected. The estimated costs would be US$33 million (including US$28 million in grant, and US$5 million in credit) from the Pilot Programme for Climate Resilience Trust Fund. This is expected to leverage an estimated US$105 million in parallel financing. A Project Preparation Grant (PPG) of US$1 million is being processed. Key Results Public Disclosure Copy The proposed key result indicators are as follows: PDO LEVEL INDICATORS 1. Increased proportion of national budget allocation to climate resilient programs (a) Allocations to climate resilient programmes increased by 25% in real terms for vulnerable sectors by end-of-project (agriculture, environment and natural resources, energy and water, infrastructure, health and disaster management), from 2007-2011 baseline (using existing climate change budget tracking tool) 2. Pilot activities assessed as likely to equip targeted communities to increase their resilience to climate risks (b) At least 70% of target communities in Barotse sub-basin met pre-agreed criteria for increased resilience capacity (based on composite score-card)* INTERMEDIARY INDICATORS: 1. Strengthened institutional framework for climate resilience: (a) National Climate Change and Development Council or equivalent, with active representation from key Government, civil society and private sector, established and fully operational, effectively managing Zambia’s Climate Change Program (b) Harmonized mechanisms to coordinate and manage climate change funds established (xx% growth in internal and external funds managed through Climate Change Programme) (c) Information crowdsourcing platform (for two way communication) established, covering 70% of the pilot districts, and supporting timely, user-friendly and accurate information 2. Participatory adaptation piloted effectively and benefiting the most vulnerable (a) At least 70 percent of the Integrated Development Plans in pilot districts have been mainstreamed with climate resilience Public Disclosure Copy considerations. (b) At least 50 percent of the climate resilient plans benefit socially vulnerable groups (women, elderly, incapacitated and youths). (c) Area under food crops affected by extreme events not exceeding xxx percent of official annual forecasts (based on previous exposure) 3. Improved utilization of traditional canals for climate resilience (Barotse) (a) Reduced annual public maintenance needs and number of years before periodic maintenance required * NOTE: This composite indicator will be agreed with the Government during preparation (based on standard definitions of adaptation co-benefits) and will be further specified in the PAD. III. Preliminary Description Concept Description The project would include three related components: Component 1: Strategic Program Support (estimated cost US$12 million grant). This component would be national in scope, and build upon the institutional strengthening started under PPCR Phase I. It would include the following sub-components: (a) Institutional Support to Zambia’s Climate Change Program (US$6 million grant), providing direct and flexible support to the Program, through (i) Management of External Resources and Climate Risk Financing, to improve the coordination and allocation of climate financing sources, and support the establishment of climate/disaster risk financing and transfer mechanisms; (ii) Capacity Building and Knowledge Sharing, funding training and mentorships for national climate change champions, fiduciary management, and exchange of lessons learned; (iii) Mainstreaming Climate Resilience into key policies, regulations, strategies and sectoral plans; and (iv) Incremental Operating Costs for the project as well as to the National Climate Change and Development Council and its Secretariat for a limited initial period. In particular, this sub-component would help Zambia optimize its climate change resources as it transitions to a Medium Income Country, and build its capacity to potentially access and manage global climate funds directly (e.g. the Green Climate Fund). (b) Strengthened Climate Information (US$6 million grant), providing more reliable and timely early warning and climate Public Disclosure Copy information to users. It would involve (i) A strengthened early warning system integrating indigenous and scientific knowledge, particularly through the application of crowdsourcing (e.g. FrontlineSMS) and rapid communication systems between line agencies and community mobilizers; (ii) Strengthen institutional and operational framework for data sharing, including agreement on Open Data platforms; and (iii) Applied Studies with direct relevance to climate resilience. Component 2: Participatory Adaptation (estimated costs US$10 million grant). This component would help strengthen the adaptive capacity of vulnerable rural communities in the Barotse sub-basin, through: (a) Support to Community-based Adaptation (estimated costs US$2 million grant), funding experienced facilitation NGOs, as well as the involvement of the technical coordinating platforms in reviewing and monitoring climate resilient plans (see para. 8). (b) Community-based Adaptation (estimated costs US$8 million grant), funding climate resilient Integrated Development Plans and Local Area Plans in the 8 districts of Barotse. The project would provide progressively higher funding to local community Area Development Committees and Districts that completed agreed benchmarks (e.g. mainstreaming of climate resilience into their plans; preparedness committees operational, etc.). Eligible adaptation activities would be demand-driven and multi-sectoral, depending on the pilot communities’ adaptation needs (see Zambia SPCR submission for the proposed eligible criteria). Funding would follow successful community-driven development procedures adapted from a past social fund, ZAMSIF. Component 3: Climate Resilient Infrastructure (estimated cost US$11 million, of which US$6 million in grant and US$5 million in credit) would support strengthened management and rehabilitation of traditional canals in the Barotse sub-basin, to optimize their use in climate resilience (particularly in the management of floods and droughts). These canals - earth-lined and of average width 1-5 m – are vital to the socio-economic fabric of the Lozi and thus of highest priority to traditional authorities. Since they involve multiple wards and districts, they require a more sectoral and technical approach from that adopted under Component 2. The component would include: (a) Strengthened Management of Traditional Canals (estimated cost US$2.5 million), providing the necessary policy, technical and institutional support to canal management, including: (i) piloting innovative ways to ensure sustainability – such as introduction of performance based contracts and dedicated operation and maintenance (O&M) funds to address the structural problems underlying weak canal maintenance; (ii) facilitating agreement between traditional water users; and (iii) better organization of communities in O&M. Public Disclosure Copy (b) Canal Rehabilitation (estimated cost US$8.5 million), including embankment stabilization (with earthworks and vegetative approaches), selected dredging, and erosion-control measures, with a view to restore the canals as much as possible to their traditional design, while optimizing their use in climate resilience. With the exception of specialized interventions (such as dredging), all works are expected to be community-based and benefit the poorest. The works design would be done in close collaboration with traditional and provincial authorities, the communities, and the National Heritage Conservation Commission, with a view of facilitating the proposed submission of Barotse as a World Heritage Site. It would be subject to a detailed technical assessment and social and environmental impact analysis prior to appraisal. The estimated costs will be refined and if necessary adjusted during preparation. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 ✖ Natural Habitats OP/BP 4.04 ✖ Forests OP/BP 4.36 ✖ Pest Management OP 4.09 ✖ Physical Cultural Resources OP/BP 4.11 ✖ Indigenous Peoples OP/BP 4.10 ✖ Involuntary Resettlement OP/BP 4.12 ✖ Safety of Dams OP/BP 4.37 ✖ Projects on International Waterways OP/BP 7.50 ✖ Projects in Disputed Areas OP/BP 7.60 ✖ V. Tentative financing Financing Source Amount Borrower 0.00 Strategic Climate Fund Credit 5.00 Public Disclosure Copy Strategic Climate Fund Grant 28.00 Total 33.00 VI. Contact point World Bank Contact: Sofia U. Bettencourt Title: Lead Operations Officer Tel: 5338+3218 / Email: sbettencourt@worldbank.org Borrower/Client/Recipient Name: Government of Republic of Zambia Contact: Mr David Kaluba Title: Principal Economist Tel: 260-979403037 Email: dckaluba@juno.com Implementing Agencies Name: Ministry Of Finance and National Planning Contact: Mr David Kaluba Title: Principal Economist Tel: 260-979403037 Email: dckaluba@juno.com VII. For more information contact: The InfoShop The World Bank Public Disclosure Copy 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop