Enhancing Climate Resilience of Water Sources in Bhutan

Bhutan | Food and Agriculture Organization of the United Nations (FAO)

22 June 2018

Please submit the completed form to sap@gcfund.org, using the following name convention in the subject line and file name: “CN-[Accredited Entity or Country]-YYYYMMDD”

Project/Program Title: Enhancing Climate Resilience of Water Sources in Bhutan

Country(ies): BHUTAN

National Designated Authority(ies) (NDA):

Gross National Happiness Commission, Royal Government of Bhutan

Executing Entities:

Accredited Entity(ies) (AE):

National Environment Commission (NEC) in partnership with Ministry of Agriculture and Forests (MoAF), National Centre for Hydrology & Meteorology (NCHM), Ministry of Health, Ministry of Works and Human Settlement (MoWHS), and Local Government.

FAO

Date of first submission/ version number: [2018-06-22] [V.1]

Date of current submission/ version number [2018-06-22] [V.1]

Simplified Approval Process CONCEPT NOTE Template V.1 GREEN CLIMATE FUND | PAGE 1 OF 4

A. Project / Programme Information (max. 1 page) A.1. Project or programme ☒ Project

☐ Programme A.2. Public or private sector

☒ Public sector ☐ Private sector

A.3. Indicate the result areas for the project/programme

Mitigation: Reduced emissions from:

☐ Energy access and power generation

☐ Low emission transport

☐ Buildings, cities and industries and appliances

☐ Forestry and land use Adaptation: Increased resilience of:

☒ Most vulnerable people and communities

☒ Health and well-being, and food and water security

☒ Infrastructure and built environment

☒ Ecosystem and ecosystem services

A.4. Estimated mitigation impact (tCO2eq over lifespan)

A.5. Estimated adaptation impact (number of direct beneficiaries and % of population)

5 of 20 Districts in Bhutan. Maximum of 25% of population < 175,000

A.6. Indicative total project cost (GCF + co-finance)

Amount: USD 19m

A.7. Indicative GCF funding requested (max 10M)

Amount: USD 10 million

A.8. Mark the type of financial instrument requested for the GCF funding

☒ Grant ☐ Loan ☐ Guarantee Other: specify___________________

A.9. Estimated duration of project/ programme:

a) disbursement period: 2018-2023 b) repayment period, if applicable: N/A

A.10. Estimated project/ Programme lifespan

10 years, if sinking fund approach adopted.

A.11. Is funding from the Project Preparation Facility needed?

Yes ☐ No ☒

A.12. Confirm overall ESS category is minimum to no risk1

☒ C or I-3

A.13. Provide rational for the ESS categorization (100 words)

The main focus of the project is the revival and protection of water sources under the impacts of climate change. Small scale infrastructure development is not expected to have negative consequences. There are three cases where there could be minor social or environmental impacts:

• Disputed ownership of sources (all water resources are vested in the State safeguard mechanisms which are included in the Water Act of Bhutan, 2011 and the Water Regulation of Bhutan, 2014): and

• Land access issues for small scale water supply infrastructure (normal negotiation procedures and alternatives apply as described in the Water Regulation of Bhutan, 2014).

A.14. Has the CN been shared with the NDA? Yes ☒ No ☐ A.15. Confidentiality2 ☐ Confidential

☒ Not confidential

A.16. Project/Programme rationale, objectives and approach of programme/project (max 100 words)

Brief summary of the problem statement and climate rationale, objective and selected implementation approach, including the executing entity(ies) and other implementing partners, including who will be implementing the measures to manage the environmental and social risks. Across the Himalaya, spring and other local water sources are drying up, seasonally or completely, often attributable to rising temperatures, reduced spring and winter precipitation and declining snow cover area. In Bhutan, further climate change will likely impact water availability to rural and urban communities, whose residences are typically high above the major rivers and streams. The project objectives are to:

1 Refer to the SAP ESS Guidelines 2 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18).

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• identify and assess declining spring-sheds, sources and catchments; • implement recharge measures to ensure climate-proofed water supply.

The project will be implemented by the NEC in partnership with the GNHC, MoAF (Watershed Management Division), MoH, MoWHS, NCHM and local governments. Oversight and risk management will be undertaken by the NEC. --------- GNHC: Gross National Happiness Commission NEC: National Environment Commission MoAF: Ministry of Agriculture and Forests MoH: Ministry of Health MoWHS: Ministry of Works and Human Settlement

B. Project / Programme details (max. 3 pages) B.1. Context and Baseline (max. 1 page) Describe as relevant the climate vulnerabilities and impacts, GHG emissions profile, and mitigation and adaptation needs that the prospective intervention is envisaged to address. Bhutan is a net carbon sink with a sequestration of 6.3 million tons of per year, thanks to extensive forest cover (~60% of land area), most of which falls under a network of protected areas, covering around 51% of the country. A recently successful GCF awardee “Bhutan for Life” targets the sequestration of an additional 35.1 million tons of CO2 equivalent over its 14-year life. • Regional GCM and RCM modelling indicate a rise in mean temperatures of between <1C (RCP4.5) and 3.4C (RCP

8.5) by 2050 and are consistent with observed trends. Minimum winter temperature is rising and predicted to increase by more than 2C by 2050 and 3.5-4C by 2100. This is critical for the extent of snow cover (lean season recharge and baseflow) and glacier melt.

• Regional GCM modelling predicts increasing rainfalls, particularly in the monsoon period. RCM modelling predicts both increasing and decreasing rainfall, depending on the model and the scenario. This contradiction is compounded by the scarcity of high resolution climate data for effective calibration and bias correction and by the complexity of microclimate in the rugged, steep and varying altitudes and aspects of terrain in Bhutan.

• Observed rainfalls exhibit gently declining trends; observed runoffs in the north-south flowing major rivers, and spot flow time series in E-W tributaries, also exhibit declining trends (with low correlation coefficients in most cases). There are stronger correlations for some E-W tributaries in the project area, but times series are short, to a maximum of 20 years.

• Climate vulnerability surveys conducted by UNDP in 2014-2016 reported that ~45% of respondents observed declining availability of water for both domestic and irrigation use in three districts in central Bhutan.

Please indicate how the project fits in with the country’s national priorities, action plans and programs and its full ownership of the concept. • The project addresses one of eight major priority objectives specified for Bhutan’s 12th five-year plan, in the form of

the Water Flagship, which is focusing on the provision of climate resilient water and sanitation infrastructure to rural and urban populations. The highest priority is accorded to eight districts where climate change vulnerability is greatest: Chhukha; Dagana; Wangdiphodrang; Trongsa; Trashigang; Pemagatshel; Samtse; and Samdrup Jongkhar. The project will focus on 5 of these 8 districts (excluding Samtse, Trongsa and Samdrup Jongkhar), located predominantly in the south and east of the country where reductions in streamflow and runoff are expected to be greatest.

• Project experience will be relevant to the whole country and will need to be extended to the remaining 15 districts in the future. The experience gained by the project is expected to include:

o improved, climate-change-adjusted water resource planning for rural and urban communities; o cost-effective delivery of climate-proof drinking water supply and sanitation; and o effective climate adaptation and climate proofing of local water sources (predominantly springs, lakes and

upland tributaries) Describe the main root causes and barriers (social, gender, fiscal, regulatory, technological, financial, ecological, institutional, etc.) that need to be addressed. Where relevant, please describe the key characteristics and dynamics of the sector or market. There are a number of operational risks, which the project proposal has aimed to address in its activity structure: • Regulatory provisions for water management are strong on paper (National Water Act and Regulations, emerging

River Basin Management) but greater resources and skill are required for implementation of climate resilient water interventions. There has been solid devolution to district and sub-district level, where staff numbers, resources and professional capacity need support and improvement.

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• Climate change assessment in Bhutan is challenging, due to the small size, dissected and extreme topography, and limited spatial and temporal coverage of climatic and hydrological data (1992 to date). Although NCHM has strong capabilities in flood warning, forecasting and weather forecasting, it needs strengthening in climate modelling, scenario analysis and all aspects of catchment hydrology.

• There are on-going challenges in coordinating the efforts and impacts of the different agencies responsible for water related services in Bhutan. The Water Resources Coordination Unit (NEC) is seriously understaffed (6 people) and the establishment of a larger, coordinating body (a National Water Authority) is under consideration.

• Target per capita water consumption is relatively high with 45 litres/day in rural areas (urban – no data), but actual availability is lower as most rivers are in valley bottoms and settlements are located on hill tops and slopes. Thus, rural communities are dependent on small, localised and vulnerable sources and access to water is a major constraint.

• Water is important for the country as it generates one-quarter of the government revenue from sale of electricity; it aligns with its green economy policy. However, the government is yet to build the necessities for water management in terms of reliable data generation and sharing, HR and institution capacity, coordination mechanism among stakeholders, need to look at water management from source to users and the conveyance in-between.

• In some parts of Bhutan, it is expected that there is a lack of community awareness about some or all of the following: climate change, drying springs, restorative measures and the corollary value of demand management.

B.2. Project / Programme description (max. 1 page) Describe the expected set of components and activities to address the above barriers identified that will lead to the expected outcomes. Activity 1 Assessment, revival and climate proofing of small and medium water sources for water supply and sanitation 1. Identifying remediable sources: inevitably investigation is required since hydrogeology and climate are the key factors

governing the recharge of spring and other small sources (lakes, ponds and streams). Investigation of spring sources is not a preparatory activity, or water supply business as usual, but an essential action that is needed to allow proven technologies to be upscaled effectively. This is because a springshed is defined by hydrogeology and may encompass two or more river/stream catchments. The location of effective recharge areas and spring lines depends on the connectivity, and dip and strike of geological layers. • Survey, inventory and mapping (nationwide preferable); • Establishment of simple baseline flow monitoring at representative sources; • Characterisation and prioritisation of sources for treatment (within Flagship priority districts); and • Hydrogeological investigation to determine recharge catchment (which is not the same as surface hydrology

catchments and cannot be done directly from GIS) is a critical step in being able to implement a successful remediation.

2. Implementation of effective and established rainwater harvesting technologies to improve recharge – mostly recharge pits, contour bunds, and other rainwater harvesting techniques. • Possible inclusion of PES approaches that have been successfully trialled at 3 locations in Bhutan (Monggar,

Paro and Phuentsoling): Monggar has been running for nearly 10 years and is thought to be strong because it has a compact set of stakeholders and jurisdiction. PES is considered here an established practice with track record in Bhutan that can be scaled up through a GCF project; and

• Slightly different scale of work (and PES arrangements) will be required if rural towns are included in the district priorities.

• Currently it is thought that the rural road network both interferes with catchment recharge and generates erosive runoff that is the cause of many landslides. The project should take a good look at how to enhance recharge from road alignments and minimise landslide risk at the same time.

3. Monitoring: rainfall, discharges, trends, perceptions and realities of user’s water sufficiency; effectiveness of PES arrangements; and financial flows.

Activity 2 Improving institutional coordination for water and land management for the WASH sector • Practical cooperation and coordination between MoH, MoAF and MoWHS across a current jurisdictional divide –

climate-resilient resource management at the source and resource use below it; • Create awareness among not only end-users but also policy makers so there is some consistency in the

programs, otherwise water is seen through the lens of users only; • Leading to improvements in policy, planning and implementation of 24/7 DWSS and WASH in general.

Activity 3 Building capacity to: model climate change scenarios in a complex environment; better understand local water sources and their behaviour under climate change; and to provide detailed policy support for actions that adapt to changes in water availability in Bhutan.

• National Centre for Hydrology and Meteorology

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• MoAF/MoH/DGM/MoWHS – hydro-geological investigation for water management in sloping terrain. Activity 4 Climate resilient rural water supply infrastructure implemented, communities trained, user committees established and monitored (RGoB co-financing) Construction of RWSS and selected urbans in 5 districts end to end (cofinancing issue on whether it needs to be additively climate resilient). Although MoH does not specify climate resilient WSS technologies and practice, it could involve climate proofing pipes, alignments, daily storage, household storage, interseasonal storage, and alternative (lift pumping) sources where existing sources will not sustain or have already failed. Please explain why this project or programme is ready for scaling up and having the potential for transformation. Has it been piloted in the country or region? Are the proposed interventions well documented for their costs and benefits? Individual project appraisal is recognised as being more important than the interventions (catchment-based recharge of monsoon rainfall), which are well established, simple and shown to be effective in Sikkim, India and Nepal, in similarly mountainous conditions where spring, lake and small tributary sources are documented as drying (ICIMOD, 2015). ACWADAM (www.awcadam.org) has pioneered community based hydrogeological mapping and assessment and has conducted multiple trainings for the assessment and remediation of drying sources in Sikkim, Nepal and India. Trainees from Bhutan include staff from Ministry of Health (2013) and from the Watershed Management Division (WMD) of MoAF (2017), leading to 3 pilot projects established by MoH and a more recent effort involved WMD and ICIMOD in Paro, Bhutan. Following training in Sikkim in 2013, MoH (Bhutan) established three pilot sites for spring revival, with early indications of successful improvement. In preparation for the flagship, MoH has also been undertaking survey of the extent of drying springs in selected districts. The results of both exercises are due shortly. In parallel, the Watershed Management Division of MoAF has been undertaking a nation-wide survey of drying springs, wetlands and other sources at risk – which includes GPS location and a questionnaire on source condition, trends and other key data. This will likely be available at the end of July 2018.

Recharge work in Sikkim in 2010 showed an approximate doubling of lean season discharges within one year (2011) at four sites, despite a lower winter rainfall than in the previous year (Mountain Research and Development, 32(1):62-72). Further data from these sites has not been published. There is also three years of monitoring data showing improvements from Nepal and various Himalayan locations in India, which is documented in a number of studies under review and will ultimately be available through a “Spring Portal” on the ICIMOD website (http://www.icimod.org/spip). One case study at Dailekh, in Nepal, showed a doubling of minimum flows in 2017, following recharge activities in the Springshed in previous year (draft Poster “Implementing the Spring Revival Protocol: a case from Dailekh, Nepal, ICIMOD, 2018). The project has identified 106 springs, serving a population of 5,213. It has monitored 21 of them, and hydrogeologically mapped 9, with 5 selected for revival.

Describe in what way the Accredited Entity(ies) is well placed to undertake the planned activities and what will be the implementation arrangements with the executing entity(ies) and implementing partners. FAO has strong track record in catchment management, water resources management for NRM, water assessment, participatory management and in the development of climate smart solutions to NRM including water conservation and forest management. FAO has the internal resources to provide technical back-stopping in all these areas, and has practical partnerships with other international organisations, such as ICIMOD, who have recent practical experience in investigating and restoring springs in the Himalaya and can provide appropriate training. GNHC will lead in the development of CN and full proposal. The implementation of the project will be coordinated and led at the national level by NEC. Thus, NEC will be the EE. Planning and implementing field activities, will be executed through the sectors and agencies concerned. FAO as AE will coordinate and link with and among different government agencies at different levels. FAO will also provide technical support within its mandates. FAO in consultation with EE will prepare and share template for preparing Annual Work Plan and Budget for the project; AE and EE will prepare a timeframe for planning, implementing and reporting on the progress; and share a reporting format and timeline for reports. The project steering committee (PSC) will be the apex body for approving annual work plan and budget, and for advice and guidance of the project management. The PSC will have members from all implementing partners, GNHC, Finance, AE and EE, and Project Director from PMU. EE will chair PSC and it will meet once a year, and based on need, the Chairperson may call for PSC Meeting at other times. The PMU will lead and coordinate project management and implementation. The PMU will make sure the works are according to project document and they contribute to project results. The AE, in consultation with PMU, will make joint monitoring visits to project sites. The PMU will report at project

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level, collating reports received from implementing partners, and submit to FAO/AE which will submit reports to GCF as per the agreed format and frequency. Please provide a brief overview of the key financial and operational risks and any mitigation measures identified. The financial risk in the provision of improved WSS services is low due to their prioritisation and inclusion in the 12th Five-year plan and being the focus of the Water Flagship. Operational risks are described above in the section on operational barriers and are intended to be addressed as part and parcel of this project. Oversight and management of the source investigation and revival works will be managed as described in the previous paragraph. It is proposed to use a similar sinking fund approach to financing the one that has been pioneered in the “Bhutan for Life” project supported by WWF. This aims at ensuring good performance through staged payment, based on results, and a gradual shift from grant financing to national financing through the project and after it has formally ended. FAO would, as the AE, have oversight of the reporting, monitoring and evaluation tasks and of the disbursements through the sinking fund. B.3. Expected project results aligned with the GCF investment criteria (max. 1 page)

Please describe and provide an estimate of the expected impacts aligned with the GCF investment criteria: paradigm shift, sustainable development, needs of recipients, country ownership, and efficiency and effectiveness. The paradigm shift embedded in this project lies in the policy importance of planning and executing robust improvements to rural and urban water supply and sanitation in the face of climate change impacts on water availability, to achieve source reliability and sustainability; and to introduce routine resource assessment in the WASH sector, which has historically had little concern with it nor with the rights and uses of other water users. It includes 4 simple notions: • Don’t invest in source protection and climate proofing when not needed if sources are sufficiently large, continuous

and robust in the face of climate change and rising community demands; • Don’t invest where sources are too small to be sustainable. In this case seek alternative sources and solutions – such

as interseasonal storage, lift pumping from sources with larger flows and development of multiple sources, including groundwater where sustainable;

• Do invest in revival and improvement to water delivery infrastructure where sources can be revived and communities’ resilience to climate change can be strengthened;

• Do enhance national capacities to fill significant data gaps, improve data analysis and forecasting techniques and provide early warning and disaster risk reduction services needed for resilience in a changing climate.

The proposed project arises from a request from the NDA to support the Water Flagship and its priority to climate proof water supply and sanitation in the rural and urban areas of Bhutan. Whilst the country has a strong record in the provision of water services to both rural and urban dwellers, it is both highly vulnerable to climate change and poorly equipped to analyse trends, impacts and take adaptive action to maintain those services in the future. Bhutan has both strong planning and a decentralised government apparatus but needs continuing assistance to implement climate resilience strategy on the ground. Although Bhutan has a small population (700,000), and good coverage of water supply, sanitation and electricity across the nation, it lacks cash resources to ensure their sustained benefits under the impacts of climate change. Its national debt (mostly to India) is greater than GNP. The country’s major export is electricity, from hydropower plants financed by India and run to export power there, whilst simultaneously satisfying domestic demand. Agriculture, which is 17% of GNP is not competitive with imported staples and products from India, and consequently food self-sufficiency sits at around 55% of demand. Although costs to produce in the steep and rugged terrain are high, vegetables, fruits and traditional medicines are exported to India, Bangladesh and Myanmar. The country has a policy to achieve 100% organic production status and focus marketing on higher value organic produce. An equally high priority target is to achieve food self-sufficiency but doing so for staples, such as rice, maize and wheat is unlikely due to a number of pressures: significant downward trends in the area cropped with staples (2006-2015: -25% for rice, -25% for maize and -75% for wheat); migration of young males to cities to seek work, resulting in a shortage of heavy farm labour and a significantly increased burden on women remaining in rural areas; and production costs that are higher than sale prices of imported Indian basic goods. Communities and their activities are changing in Bhutan, but significant numbers of vulnerable people remain in rural areas, and others become newly vulnerable in fast growing towns that will be further pressured by the impacts of climate change on water supplies. Climate-proofed water supply and sanitation allows both rural and urban communities to spend more time on productive activities that sustain livelihoods and contribute to growing welfare. Effectively climate-proofed rural water supplies will have a disproportionate benefit to females and should be targeted to further reduce their work load.

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C. Indicative financing / Cost information (max. 2 pages) C.1. Financing by components (max ½ page) Please provide an estimate of the total cost per component and disaggregate by source of financing.

Component Indicative cost (USD)

GCF financing Co-financing Amount (USD)

Financial Instrument

Amount (USD)

Financial Instrument

Name of Institutions

Source identification, characterization and geohydrological investigation.

$1m $1m Grant - - RGOB

Remediation of spring, lake and stream resources

$8.15m $5.5m Grant $2.65 Staff RGOB

Capacity Building for National Centre for Hydromet Services

$1m $1m Grant 0 -

Improved intersectoral coordination

$400,000 $200,000 Grant $200,000 12 FYP Budget RGOB

Climate proof community water supply and sanitation infrastructure

$17.2 $1m - $16.2 m 12 FYP Budget RGOB

Project Services Cost $1.3 m $1.3 Grant 0 -

Indicative total cost (USD) $29.05m $10m $19.05

For private sector proposal, provide an overview (diagram) of the proposed financing structure.

C.2. Justification of GCF involvement (max 1/2 page) Explain why the Project/ Programme requires GCF funding, i.e. explaining why this is not financed by the public and/ or private sector(s) of the country. Bhutan has a small and emerging private sector which is concentrated on tourism, retail and small industries including mining. The state is responsible for water management and is the owner of all waters in the country. Bhutan has adopted a green development philosophy, including goals to maintain its carbon sink (carbon neutral) status and developed 100% organic agriculture. Thanks to its large areas of forest, the country is a net sink for carbon (about 6.3m tonnes of CO2 equivalent per year). The majority of forests are protected and managed by public agencies in partnership with local communities. Although hydropower is the largest individual contributor to GDP, Bhutan has considerable loans to service for the investment made (largely by India) in HEP development. Current policy is to minimise public sector borrowing, and in fact to not take loans from international agencies. Public sector budgets will be stretched in attempting to provide climate resilient water supplies to rural and urban settlements under the Water Flagship programme. Additional funds that help assess and, where feasible, revive or sustain small scale local water sources in response to climate change pressures, are at best very limited, as indicated by the very limited scale of investigation and remediation undertaken to date. C.3. Sustainability and replicability of the project (exit strategy) (max. 1/2 page) Please explain how the project/programme sustainability will be ensured in the long run and how this will be monitored, after the project/programme is implemented with support from the GCF and other sources. Sustainability of the project will be incorporated through the establishment of a sinking fund at the start of the project, which will see a gradual increase in national funding for the expansion of project activities. • The project will initiate a rolling plan to extend source protection to other districts in order of priority, starting in the 4th

year, with concurrent shifting to full RGoB funding for this activity. o A sinking fund will be established for minimum of 10 years, with transition from project financing (over 5

years) to full RGoB financing.

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o Tranches of disbursement each year will be contingent on progress, disbursement of funds and reporting in the previous year. Reporting commitments will extend for the 5-year period after completion of the main project period.

o It would be useful to consider some form of investment strategy attached to the sinking fund, that generates interest from unused capital that can be used to fund activities after the end of the formal project period. This approach has been successfully applied by the Bhutan Trust Fund for Environmental Conservation (BTFEC) which was established with an endowment of US$20m in 1992.

• The development of specialist capacity in inventory, assessment (particularly in hydro-geology) and understanding of successful implementation practice and techniques for spring and source revival will speed application elsewhere in the nation and provide the foundation for a high level of success at minimum cost. One key driver will be in the savings made through prioritising investment in water supply and sanitation that will be sustainable and therefore not waste funds on projects that are either unnecessary or infeasible. Although the costs of alternatives in these cases will be more expensive, there should be less waste and a more efficient and effective use of public funds resulting in a broader and better public good.

• The capacity building component in climate modelling, scenario assessment and associated hydrological / hydrogeological monitoring and investigation will provide an increasingly focused and refined capacity to ensure sustainable water supplies and to monitor and further adapt to climate change as it happens in Bhutan. The associated data collection, archival and analysis will in itself be part of the monitoring process, that emphasises the use of data for evaluation and improvement of project delivery – during and after the formal project period.

For non-grant instruments, explain how the capital invested will be repaid and over what duration of time.

C.4 Stakeholders engagement in the project or programme (max ½ page) Please describe how engagement among the NDA, AE, EE and/or other relevant stakeholders in the country has taken place so far and what further engagement will be undertaken as the concept is developed into a funding proposal. This proposal stems directly from a request by the NDA to support the Water Flagship, which will be a centrepiece of 12th Five Year Plan.

• 1 May 2018. Initial request from NDA, who invited FAO to develop a project to support the Water Flagship. To get better sense of scope, gaps, etc. for developing CN, FAORAP fielded a two-member mission from 30 May to 15 June 2018 which was joined by a national consultant. The inputs from team were needed as the draft CN had to be submitted by 22 June to NDA.

• 4 June. Meeting between FAO scoping team, NEC, Flagship Coordinator and representatives of all water related agencies at GNHC.

• 5 June. Follow-up meeting with NDA in person. • During the two weeks in Bhutan, the FAO Mission met with other key stakeholders including Watershed

Management Division, WWF, Bhutan Trust Fund for Environmental Conservation, Tarayana Foundation, Ministry of Health, Ministry of Works and Human Settlements, National Centre for Hydrometeorology Services, World Bank, UNICEF, UNDP and SNV.

• 11-13 June. GNHC 3-day internal workshop on preparation of the Water Flagship. • 15 June. Wrap-up meeting with NDA, NEC Water Resources Coordinator and others on prior to end of scoping

mission – the NDA requested completion of Draft CN by 21 June for to meet submission deadline (22 June) and to provide a basis for discussion in Seoul 26-27 June when a Bhutanese team will visit GCF. The NDA has arranged an appointment with GCF Staff to seek more clarifications on SAP, its scope and process, Annex requirements, etc. In the meantime, the NDA requests FAO to update the CN as and when data on costs and source surveys becomes available.

o The NECs has been identified as the implementing partner for the proposed project. o There is a national steering committee and a focus group that work in the water flagship program.

The full proposal will be developed by a team that includes members of key agencies (WMD, MoH, NCHM, NEC, FAO Bhutan, FAO-RAP and local consultants, with direct reporting to the NDA). It will rely on local partner agencies to provide significant supporting data and analysis, and this process has already begun during the scoping visit.

C.5 Monitoring and Evaluation and reporting plans (max ¼ page) Please explain how the M&E will be conducted as part of the project or programme (routine and concurrent monitoring, interim and final evaluations, and annual reports) There is currently no baseline or well-established time series of flows from springs, lakes and streams that support local communities. By the July/August, there should be a national database of such sources and a qualitative indication of where they are failing, seasonally or entirely. If the CN moves to the preparation of a full proposal, it would be wise to establish routine (fortnightly) monitoring of flows at selected sites across the 5 districts – a small amount of money should

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be put aside to begin manual/community-based flow measurement using a simple “bucket and stop-watch” method with 5 replications per measuring event. This data will be collated by WMD and attached to its source database. If the project is funded, this approach to developing a baseline should be considerably expanded and should provide a meaningful reference at some locations by the time the project is completed. The expansion of the baseline should take in districts outside the priority locations where activities will be concentrated. This will provide a sound basis for continuation after project funding has ceased. Normal project activity monitoring will include: Technical monitoring: of spring inventory, assessment, categorisation, springshed/and watershed improvement activities and expenditures, and changes in dry season and annual source flows; training and capacity building activity and expenditure; audits of cross-sector coordination status; all aspects of financial management, flows and disbursement. An independent assessment of project effectiveness on the ground will be commissioned at the end of the 5-year period. D. Annexes ☐ ESS screening check list (Annex 1) ☒ Map indicating the location of the project/programme (as applicable): 2 maps Priority districts, river basins, catchments. ☐ Evaluation Report of previous project (as applicable)

Annex 1: Environmental and Social Screening Checklist Part A: Risk Factors The questions describe the “risk factors” of activities that would require additional assessments and information. Any “Yes” response to the questions will render the proposal not eligible for the Simplified Approval Process Pilot Scheme. Proposals with any of the risk factors may be considered under the regular project approvals process instead.

Exclusion criteria YES NO Will the activities involve associated facilities and require further due diligence of such associated facilities? ☐ ☒ Will the activities involve trans-boundary impacts including those that would require further due diligence and notification to downstream riparian states?

☐ ☒

Will the activities adversely affect working conditions and health and safety of workers or potentially employ vulnerable categories of workers including women, child labour?

☐ ☒

Will the activities potentially generate hazardous waste and pollutants including pesticides and contaminate lands that would require further studies on management, minimization and control and compliance to the country and applicable international environmental quality standards?

☐ ☒

Will the activities involve the construction, maintenance, and rehabilitation of critical infrastructure (like dams, water impoundments, coastal and river bank infrastructure) that would require further technical assessment and safety studies?

☐ ☒

Will the proposed activities potentially involve resettlement and dispossession, land acquisition, and economic displacement of persons and communities?

☐ ☒

Will the activities be located in protected areas and areas of ecological significance including critical habitats, key biodiversity areas and internationally recognized conservation sites?

☐ ☒

Will the activities affect indigenous peoples that would require further due diligence, free, prior and informed consent (FPIC) and documentation of development plans?

☐ ☒

Will the activities be located in areas that are considered to have archaeological (prehistoric), paleontological, historical, cultural, ☐ ☒

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artistic, and religious values or contains features considered as critical cultural heritage?

Part B: Specific environmental and social risks and impacts Assessment and Management of Environmental and Social Risks and Impacts YES NO TBD

Has the AE provided the E&S risk category of the project in the concept note? ☒ ☐ ☐ Has the AE provided the rationale for the categorization of the project in the relevant sections of the concept note or funding proposal?

☒ ☐ ☐

Is there any additional requirement required by the country? ☐ ☒ ☐ Are the identification of risks and impacts based on recent or up-to-date information? ☒ ☐ ☐ Labour and Working Conditions YES NO TBD Will the proposed activities expected to have impacts on the working conditions, particularly the terms of employment, worker’s organization, non-discrimination, equal opportunity, child labour, and forced labour of direct, contracted and third-party workers?

☐ ☒ ☐

Will the proposed activities pose occupational health and safety risks to workers including supply chain workers?

☐ ☒ ☐

Resource Efficiency and Pollution Prevention YES NO TBD Will the activities expected to generate (1) emissions to air; (2) discharges to water; (3) activity-related greenhouse gas (GHG) emission; and (5) waste?

☐ ☒ ☐

Will the activities expected to utilize natural resources including water and energy? ☒ ☐ ☐ Will there be a need to develop detailed measures to reduce pollution and promote sustainable use of resources?

☐ ☒ ☐

Community Health, Safety, and Security YES NO TBD Will the activities potentially generate risks and impacts to the health and safety of the affected communities?

☐ ☒ ☐

Will there a need for an emergency preparedness and response plan that also outlines how the affected communities will be assisted in times of emergency?

☐ ☒ ☐

Will there be risks posed by the security arrangements and potential conflicts at the project site to the workers and affected community?

☐ ☒ ☐

Land Acquisition and Involuntary Resettlement YES NO TBD Will the activities likely involve voluntary transactions under willing buyer-willing-seller conditions and has these been properly communicated and consulted?

☐ ☒ ☐

Biodiversity Conservation and Sustainable Management of Living Natural Resources YES NO TBD

Will the activities likely introduce invasive alien species of flora and fauna affecting the biodiversity of the area? ☐ ☒ ☐ Will the activities have potential impacts on or dependent on ecosystem services including production of living natural resources?

☐ ☒ ☐

Indigenous Peoples YES NO TBD Will the activities likely to have indirect impacts on indigenous peoples? ☐ ☒ ☐

Simplified Approval Process CONCEPT NOTE Template V.1 GREEN CLIMATE FUND | PAGE 10 OF 4

Will continuing stakeholder engagement process and grievance redress mechanism be integrated into the management / implementation plans?

☒ ☐ ☐

Cultural Heritage YES NO TBD Will the activity allow continuous access to the cultural heritage sites and properties? ☐ ☒ ☐ Will there be a need to prepare a procedure in case of discovery of cultural heritage assets?

☐ ☒ ☐

Sign-off: Specify the name of the person responsible for the environmental and social screening and any other approvals as may be required in the accredited entity’s own management system.