Project Documentd2ouvy59p0dg6k.cloudfront.net/downloads/project...The overall development objective of the project is “By 2020, water and related resources of Koshi basin are best

Project Document Integrated River Basin Management at Koshi River – Safeguarding the lives of millions”, Phase II, 2013-2015

Applicant: WWF Finland

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Table of Contents

SUMMARY OF THE PROJECT DOCUMENT .......................................................................................................................................... 1

BACKGROUND AND NEED ................................................................................................................................................................. 2

BACKGROUND AND PRESENT SITUATION .......................................................................................................................................................... 2 ANALYSIS OF THE OPERATING ENVIRONMENT ................................................................................................................................................... 3 SECTOR-SPECIFIC POLICY GUIDELINES ............................................................................................................................................................. 9 A DESCRIPTION OF DEVELOPMENT NEEDS ...................................................................................................................................................... 10 CONNECTION TO OTHER POSSIBLE PROJECTS OR DEVELOPMENT PROGRAMS .......................................................................................................... 10 COMPATIBILITY WITH THE RECIPIENT COUNTRY’S POVERTY REDUCTION PROGRAM ................................................................................................. 11 ANY OTHER POTENTIAL ACTORS IN THE TARGET AREA, COMMON APPROACHES ...................................................................................................... 11

BENEFICIARIES ................................................................................................................................................................................. 12

OBJECTIVES AND MONITORING ....................................................................................................................................................... 13

IMPLEMENTATION .......................................................................................................................................................................... 15

PROJECT IMPLEMENTATION PLAN AND ROLE OF PARTNERS ................................................................................................................................ 15 PARTNERS AND THEIR RESPONSIBILITIES, STEERING GROUP ................................................................................................................................ 18 PROJECT TIMETABLE .................................................................................................................................................................................. 19 MID-TERM AND FINAL EVALUATIONS ............................................................................................................................................................ 19 PROJECT SUSTAINABILITY AND CROSS-CUTTING ISSUES ...................................................................................................................................... 19

Financial sustainability .................................................................................................................................................................... 19 Institutional capacity ....................................................................................................................................................................... 20 Socio-cultural considerations .......................................................................................................................................................... 20 Environmental sustainability ........................................................................................................................................................... 20 Participation and Ownership ........................................................................................................................................................... 20 Cross-cutting themes ....................................................................................................................................................................... 21

RISK ANALYSIS AND RISK MANAGEMENT PLAN ............................................................................................................................... 22

BUDGET CALCULATED ON THE BASIS OR REQUIRED MEANS ........................................................................................................... 24

REPORTING PLAN ............................................................................................................................................................................ 25

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Summary of the project document

The proposed project is the continuation of MFA funded project in the Indrawati Sub-basin of the Koshi river basin, called “Integrated River Basin Management at Koshi River – Safeguarding the lives of millions” (Jan 2010-Dec 2012). This project is based on the outcomes, needs and recommendations of the first phase and has involved extensive stakeholder consultation in the process of design and planning.

The overall development objective of the project is “By 2020, water and related resources of Koshi basin are best managed (in the face of climate change and development scenario) to promote socioeconomic development for the benefit of all the local people, especially the poorest and marginalized while maintaining the ecological balance”. The immediate objectives include:

1) By 2016, institutional structures are functional having broad-based partner support to implement democratic IWRM approach, which empowers local communities and marginalised groups to participate in decision-making, planning and implementation

2) By 2016, local communities in target areas are empowered and capacitated to manage natural resources sustainably and to reduce their vulnerability against the impact of climate change through rights-based approach, complemented by optimised economic benefits from water and other natural resources

As in the first phase, the project will still be built on the same approach that uses three E-pillars as the foundations:

1) Social Equity 2) Economic Efficiency 3) Environmental Sustainability

Figure 1. Basic approach. At the catchment level, the project will be implemented through the 9 Integrated Resource Management Committees (IRMCs), the legally registered institutions that were established and institutionalized during the first phase. The IRMCs are responsible for planning and implementation of the IWRM activities at catchment levels with the technical and financial support from project office. The project will strengthen them further to

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enhance their capability to function as independent institutions in the longer run. In addition, the project will play an instrumental role of coordinating with the concerned and relevant agencies and organizations for the IRMCs to enable them to raise funds for sustainable functioning. The proposed project will directly benefit at least 4,000 households and 20,000 individuals across the project intervention areas in Indrawati. Indigenous people (IPs), Marginalized Janajatis and disadvantaged groups, primarily women will be project's prime focus. IRMCs, Eco-clubs, water smart communities, Buffer zone user committees are the direct beneficiaries. The indirect beneficiaries are primarily the stakeholders indirectly associated with IRMCs and different user groups (water,irrigation, farmers, forest, agriculture).

Background and need This section describes the relevant background related to project context including political, social, environmental, economic, legal and technical aspect. Section also outlines how this proposed project is aligned with country priorities and how it responds to the development needs at different levels, with an emphasis on a bottom-up focus.

Background and present situation The Three Year Plan Approach Paper (2010-2013) of the Government of Nepal recognizes the importance of adopting Integrated Water Resource Management to fulfill the requirements of hydropower, irrigation, drinking water, water transport and water based tourism through the multidisciplinary use of water resources of Nepal. The plan emphasizes integrated river basin management (IRBM) practices to ensure the sustainable use of water resources and to maximize benefits for local communities. Nepal’s National Water Plan of 2005 also strongly stressed the need for IRBM in order to decrease the amount of inter-sectoral, inter-regional and riparian conflicts related to river systems in Nepal. Water resource scarcity is a reality for many poor communities in Nepal, exacerbated by growing pressures from an increasing population, as well as agricultural and industrial needs. The ability of local communities to cope with this growing scarcity has been further compromised by the increased frequency of extreme climatic events likely related to global climate change. The IRBM framework provides valuable tools that encompass management, wise use and development of water and associated natural resources within the river basin. The proposed project adopts the overall objective of the South Asia Water Initiative (SAWI) to promote the goals of poverty reduction, economic growth, mitigation and adaptation to climate change, and water security through significant and measurable improvements in water resources management and development. In addition, it aligns with Nepal’s Strategic Program for Climate Resilience (SPCR) in building long-term climate resilience of watersheds in Nepal through an integrated water resource and ecosystem-based approach focusing on community-based management. The proposed project is the second phase of support requested from the Ministry for Foreign Affairs of Finland. In the long-term, this project is a continuation of WWF’s efforts in showcasing and demonstrating the IRBM approach in the Koshi River Basin, and would help replicate successes in other parts of the country. However, the water systems the basin contributes to are trans-boundary, so the longer term objective is to develop a regional multi-country basin initiative. This approach has been used in other parts of the world to address the issues and challenges related to water resource management, especially as it pertains to climate change adaptation, and are the only way to implement the approach at the appropriate scale required by freshwater systems. While this project will focus on one of the major tributaries of the Koshi Basin, the Indrawati sub-basin, the long term plan is to upscale this IRBM project to a cross-border, basin wide initiative. The strategy is focused on a stepwise approach and demonstration, which are the main characteristics of this project. The governments of India, Nepal, Bhutan and Bangladesh came together in November 2011 to agree on a declaration and a framework of cooperation to address issues related to water, food and energy security, and

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biodiversity conservation in the context of climate change adaptation at the regional scale. This framework provides a major opportunity to initiate a serious dialogue concerning water resource management issues at the regional scale, and the process has been strongly supported by WWF since its inception. The proposed project addresses the three principal components of IWRM: environmental sustainability, social equity and economic efficiency. The project addresses interventions to maintain ecological integrity while working to protect the rights and resources of local communities and indigenous people, and takes the appropriate measures to safeguard economic investments. Environmental Sustainability One of the key components of the project is to protect environment and natural resources to maintain the ecological balance in the Indrawati basin. It is focused on effective management of water and related resources in a sustainable manner, and includes actions such as water source protection, sustainable management of freshwater ecosystems, adoption of environmental friendly measures in infrastructure development projects, and promotion of traditional water management practices. Social Equity Central to social equity is ensuring equity in allocation of water resources and services across different economic and social groups to reduce conflict and promote sustainable development. It is focused on enhanced access to and decision making regarding water and related resources among poor, marginalized, and disadvantaged groups, including indigenous people and women. This involves meaningful participation of all relevant stakeholders in the planning and management of projects from the grassroots up to the central level. Economic Efficiency The economic efficiency pillar aims to promote economic growth through wise use and development of water and related resources of the basin in a manner that significantly alleviates poverty and improves quality of life. It is focused on optimization of economic gains from the water resources through diversification of water uses for multiple purposes, and increasing the efficiency of water uses with the least damage to the natural environment.

Analysis of the operating environment Geographic and Environmental Nepal is globally recognized for its unique blend of biodiversity, culture and tradition in the Eastern Himalayas. The Eastern Himalayas is a mosaic of diverse landscapes and includes biodiversity hotspots home to endangered and endemic species. The region has the largest concentration of glaciers outside the polar regions, with nearly 33,000 km2 of glacier coverage. The Himalayas are known as the Water Towers of Asia, with research showing that Nepal has over 3,200 glaciers that cover over 5,300 km2, with an estimated ice reserve of 481 km3 that supports the life of millions. Nepal is largely an agrarian economy and therefore highly sensitive to changes in climate. Nepal has been ranked as the fourth most climate vulnerable country in the world due to its extraordinary geography (climbing from just 60 m to over 8,800 m above sea level); a largely poor and resource dependent population; and weak institutional capacity to manage the range of climate challenges it will face. Analysis of climate change vulnerability suggests that more than 1.9 million people are highly climate vulnerable and 10 million people are increasingly at risk (NAPA 2010).This number is likely to increase significantly in the future if the international community fails to reduce greenhouse gas emissions in line with science-based recommendations. Available studies suggest that temperatures are increasing in Nepal at a higher rate than the global average warming rates, and has been found to be more pronounced in the higher altitude regions, such as the middle mountains

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of the Himalayas. Unpredictable weather patterns, including warmer and drier winters, draughts, changes in monsoon rain patterns, and more intense precipitation events are resulting in deleterious effects in sensitive sectors such as agriculture, forestry, water and energy, health, infrastructure, tourism, industry and livelihoods. In mountain regions, the warmer, drier winters with limited snowfall and rain affect winter crops and contribute to food shortages. In the low-lying Terai, more intense flash floods and cold spells are destroying crops, and severe flooding has resulted in temporary displacement of people. The changes in temperature and rainfall are creating favorable environments for pests, diseases and invasive species to emerge, spread and encroach upon agricultural and forest lands, with adverse impacts for biodiversity. Water resources have been affected, with direct impacts on wetlands, availability and quality of fresh water, water recharge systems for irrigation and hydropower, as well as the risk of increased floods, droughts and landslides. Glacier retreat in the Himalayas has increased Nepal’s vulnerability to glacier lake outburst floods which can have devastating consequences for downstream communities, infrastructure and property. Climate change also impacts the vast rangeland ecosystem in the mountains by altering the rate of evaporation and run off, and changing vegetation composition and diversity, forage productivity, and decomposition rates, and increasing the risk of forest fires. With the growing magnitude of climate change impacts on the availability of natural resources, adaptation is a necessity. More than half the population of Nepal derives their livelihood from natural resources, and many live in vulnerable locations such as on land prone to landslides or flooding. People directly reliant on natural resources who are living in degraded landscapes are more vulnerable and exposed to climate impacts than those co-existing within healthy, well-functioning ecosystems, as indicated by environmental flows and connectivity of habitats. Therefore, tackling climate change must be pursued through integrated ecosystem and community based approaches, with locally feasible and technologically sound adaptation strategies and actions. Lessons learnt from the global experience, combined with traditional and local best practices, offer the best suited adaptation on the ground. Within the Eastern Himalayas, the Koshi River Basin is Nepal’s largest river system and is a trans-national river connecting China, Nepal and India. The Koshi River originates in the Tibetan Plateau in China, runs through the Himalayan Mountains in Nepal, and into the alluvial plains of India where it converges with the Ganges River. The basin includes 90% of the Sacred Himalayan Landscape, a priority conservation landscape of the Government of Nepal for conservation of Eastern Himalayan biodiversity. It also includes two global ecoregions, namely the Eastern Himalayan Alpine Shrub and Meadows and Eastern Himalayan Temperate Broadleaf and Conifer Forests.

Map 1. Koshi basin and main sub-basins. The basin drains into a total area of approximately 60,400 sq. km, of which 46 percent (27,863 sq km) lies in Nepal. About 10 percent of the total catchment is covered with ice and snow. The segment of the Koshi River Basin that lies in Nepal includes land areas formed by seven major tributaries, including: Sun Koshi, Tamakoshi, Dudh Koshi, Indrawati, Likhu River, Arun and Tamor. Koshi functions as one of the major life support systems for approximately 5.2 million people living along its basin in Nepal, covering 17 districts situated in all the five physio-graphic regions (Mountain, Mid-Mountain, Hill, Chure and Terai) and supporting irrigation for about 215,000 ha of crop land. The basin has a network of protected areas (PAs) and corresponding buffer zone areas covering more than 25 % of the total Koshi Basin’s land area. The network of

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PAs includes Langtang National Park, Makalu Barun National Park, Sagarmatha National Park, Kangchenjunga Conservation Area, and Koshi Tappu Wildlife Reserve (KTWR). The Koshi River is one of the biggest tributaries of the Ganga, India’s largest river system. The section of the Koshi River in Nepal contributes over 45% of the total flow of the Ganga River, with almost 70% during the dry season and over 87% in the three critical non-monsoon months between March and May (Source: KRBM Strategic Plan 2011). The hydropower potential of the Koshi River system is immense, with an estimated potential of 22000 MW, and the current total hydropower being generated is less than 75MW. However, ambitious plans to develop a large portion of the river with hydropower projects is currently under negotiation, and work has already begun. This massive project includes the construction of the world’s second highest dam, as well as a series of cascading dams that will have significant environmental, socio-cultural, political, and economic implications at the local, national, and regional levels. Social and Political Nepal is composed of more than 100 ethnic groups that totals a population of nearly 30 million people. The progress report of the UN Millenium Development Goals estimates Nepal’s poverty rate to be 25.4%, with approximately 85% of Nepalese living in rural areas and directly dependent on natural resources for their subsistence (MDG Progress Report, UNDP 2010). Although the Human Development report indicates the rise of Nepal’s Human Development Index (HDI) by 2.4% annually from 0.210 to 0.428 between 1980 and 2010, it ranks 157 out of 187 countries and is still below the South Asian regional average of 0.548 (UNDP International Human Development Indicators). Nepal’s economic growth continues to be adversely affected by political uncertainty. The country is still under a prolonged political transition, following a decade of insurgency. In the past five years, the Nepalese people have witnessed the signing of a peace accord between the former Maoist rebels and the state, a new interim constitution, the election of a Constituent Assembly (CA), the abolition of the monarchy and declaration of a federal republic, five governments, and the rise of strong ethnic identity movements. However, a new constitution has yet to be promulgated. A new constitution to inspire power devolution, social and political inclusion, democratic elections and political accountability has come to a sudden halt, and Nepal’s federal restructuring has once again entered into an intense national debate and discussion. Although the government has already announced fresh CA elections in November of 2012, there are many ongoing efforts to bring political consensus and maintain peace and stability in the country. The socio-political transformations in Nepal are an important driving force in the country, and are vital to conservation and people’s livelihoods. However, addressing the implications of climate change is one of the biggest challenges, particularly for the vulnerable and marginalized who experience the greatest impacts and are in the greatest need of adaptation strategies in the face of shifts in weather patterns and resulting environmental phenomena. Poor and rural populations will be most vulnerable to climate risks. The poor are already dependent upon subsistence agriculture for their livelihoods, and climate change poses an additional risk to these livelihoods. Floods, droughts, and degraded ecosystem health directly affect their livelihoods. More than any other group, they are not able to manage these changes. Within this group, women are likely to be affected the most. They typically have disproportionate access to resources and opportunities, with less pay for the same work as men, less access to schools, less access to health services, and less social and political status than men1. Women’s daily activities, particularly in rural areas, largely relate to natural resources. Changes in precipitation and temperature patterns affect the availability of fuel wood, fodder, grasses and drinking water. Women typically collect these resources for their homes and family, and will likely face longer distances to collect these supplies as they are likely to become scarce. These factors add to the daily challenges that women face, and physical and emotional health is also affected. This scenario is very real and present in high and mid-mountain regions. Climate induced disasters in the vulnerable areas will force more and more people, mostly male, to relocate or move from the community to augment their lost livelihoods with income from cities and other countries, leaving women with additional burdens to manage their

1 Case Study: Gender and Climate Change in the Hindu Kush Himalayas of Nepal, ICIMOD Unpublished report

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households, the elderly, the sick, and the young while continuing the farming operations needed to sustain the family. Project Context Through decades of natural resources management and biodiversity conservation in Nepal, WWF has established best practices to make conservation projects and programs more accountable and results-based. It has made a paradigm shift from its absolute focus on species conservation and habitat management to a more integrated landscape level approach where people are both beneficiaries and stewards of biodiversity conservation. WWF Nepal has been one of the key partners of the Government of Nepal (GoN) in the prioritization of two important conservation landscapes in Nepal: the Terai Arc Landscape (TAL) and the Sacred Himalayan Landscape (SHL). Both these landscapes have been endorsed by the GoN through extensive consultative processes involving all the landscape level key players and a thorough root-cause analysis with an identification of priority thematic areas for implementation. WWF Nepal initiated the IRBM approach, as stipulated by Nepal’s National Water Plan 2005, in the Koshi River Basin with the management of water and related resources. The implementation of this approach by WWF is the first project of its kind in Nepal. The proposed project aims to address equitable water utilization and service delivery, optimize development and management of water resources, and protect sensitive ecological systems. As the project objectives and activities are three-fold, covering economic, social and environmental aspects, successful project outcomes will be capable of reducing people’s vulnerability to unsustainable development and climate change risks through enhanced water, food and energy security. The first phase of MFA Funding for the project “Integrated River Basin Management at Koshi River- Safeguarding the Lives of Millions” started in January 2010 and will end in December 2012. This support has been crucial in creating local institutions, including nine Integrated Resource Management Committees (IRMCs), which through WWF’s support have taken forward catchment level IWRM initiatives in the Indrawati sub-basin of the Koshi River Basin. During the phase I of implementation, WWF has demonstrated good practices in IWRM and has achieved the following:

• KRBM Strategic Plan prepared and endorsed by the Government of Nepal • Sub-basin management plan of Indrawati sub-basin prepared • Government Position Paper on Water Resources published • Water smart communities established and promoted in Indrawati sub-basin • Ecosystem based and water focused Vulnerability Assessment conducted in Indrawati sub-basin • 9 IRMCs established of which 8 are functional • Partnerships with other departments to foster field implementation

Phase II of the proposal has been designed and developed following the progress of Phase I, and on the basis of numerous field visits and a series of stakeholder consultations at the local level. The process has also involved meetings with government district line agencies and partners concerning collaboration on issues of common interest. The lessons learnt during Phase I has formed the basis for the activities to be implemented during the proposed project. Project Area: Indrawati Sub-Basin Located in central Nepal and part of the larger Koshi Basin, the Indrawati River originates in the high Nepali Himalayas, eventually joining the Sun Koshi River that flows into the Koshi that then connects with the Ganges River in northern India. With a total length of approximately 59 km and a catchment area of 124,000 hectares, the Indrawati Basin has seven major tributaries that contribute to its flows: the Larke Khola, Yangri Khola, Melamchi Khola, Jhyangri Khola, Chaa Khola, Handi Khola and Mahadev Khola (Bhattarai et al. 2002). The Indrawati Basin is predominantly an agriculture-based system. Its upper basin supplies water to more than 120 Farmer Managed Irrigation Schemes (FMIS), comprising about 2,100 hectares of agricultural land. Recently,

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the basin was selected for more complex and varied water uses, including hydropower plants and the Melamchi inter-basin water transfer scheme to provide water to Kathmandu. Climate in the basin is primarily governed by the interaction of the South Asian monsoon system and the Himalayas. Heavy rainfall, higher temperatures and humidity characterize the summer months from roughly mid May to mid October, with nearly half of the total annual rainfall occurring in the months of July and August. The rest of the year is considerably dryer, with roughly 7% of the annual total rainfall occurring from November to April. Average annual rainfall has a wide range of 1,100 to 3,800 mm, with the highest totals reported at the higher altitude measuring stations. Temperatures range from 5° to 32.5°C (Bhattarai et al. 2002; Sharma 2002). There is also high spatial variability across many microclimates within the basin that have distinct differences in weather and temperature patterns. There is notable biodiversity in the Indrawati, conserved in part by Langtang National Park, which cuts across the entire higher altitude alpine region of the basin. Established in 1976, the 1710 km2 park contains more than 1,000 species of vascular plants, 45 mammals, 30 fish, and 345 bird species, including the snow leopard, red panda, musk deer,

Map 2. Indrawati sub- basin. Tibetan wolf, blue sheep, clouded leopard, and several globally threatened bird species (Bhuju et al. 2007). Langtang is also home to the Panch Pokhari (meaning “five lakes”) wetlands, a significant water source for the Indrawati that is particularly vulnerable to a number of development pressures stemming from overgrazing and deforestation to water pollution. The wetlands provide a number of valuable ecosystem services to the basin, including groundwater recharge, flood control, sediment trapping, and water for wildlife and livestock in the catchment. Water Resources

Water in the Indrawati is currently used for irrigation, drinking water, livestock, hydropower, water mills, and natural ecosystems, with agriculture as the main consumptive use. With nearly 90% of total average annual inflows in the basin discharging from the basin, the Indrawati can be considered a surplus basin, meaning the available water exceeds current consumptive demand. However, demand has also increased significantly in recent decades, which has resulted in more frequent incidences of localized scarcity, especially in the dry season, indicating that this 90% (based on a water accounting done based on data from 1970 – 1990) is actually much lower today with higher consumptive use in the basin (Bhattarai et al. 2002; Shrestha 2004). Furthermore, such general statistics belie basin hydrology that results in frequent occurrences of localized scarcity regardless of total surpluses or deficits. Natural water supplies in the Indrawati, as is the case throughout the mountainous regions of Nepal, are often far removed from demand even though it is extremely expensive and energy intensive to transport water over long distances through complex geography with piped systems. There are also huge seasonal fluctuations in water availability in the basin, with flows dominated by snow and glacial melt in the dry season until mid-May when the summer South Asian monsoon system becomes dominant (Shrestha 2004). Due to the lack of functional and sufficient storage infrastructure, these interannual fluctuations often have direct ramifications for downstream populations and basin food security.

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Water Quality The most prominent water quality problem in the Indrawati is worsening siltation due to a number of factors in the higher altitude regions of the Middle and High Mountains. These factors include deforestation and degradation that leads to loss of recharge capacity; landslides caused by un-planned road construction; poor soil management techniques associated with slash and burn farming techniques, where monoculture rotations leave hillsides lacking vegetation for months at a time; and poor terrace construction that can lead to continual loss of topsoil. Gravel and sand mining along riverbeds at the lower altitudes of the Middle Mountains also contributes to erosion problems, especially during high flow periods of the monsoon, when instead of filtering down into groundwater aquifers, waters will cascade downstream, unabsorbed by the flattened and hardened riverbanks due to the mining process (Sayami 2007). Himalayan rivers are known for having high silt content, but these anthropogenic activities in the basin are contributing to the problem (Karkee 2004). In terms of industrial sources, the Indrawati is relatively unpolluted due to minimal industrial activity in the basin; however, increased use of fertilizer and pesticides on agricultural lands in recent years has begun to significantly impact water quality downstream at the lower reaches of the Middle Mountains. Eutrophication and algal blooms were evident in these lower altitude commercial agriculture regions of the basin during a pre-workshop site visit. Water Poverty Water Poverty Mapping in the Indrawati sub-basin conducted by the project has shown the Water Poverty Index (WPI) of the Indrawati sub-basin to be 52.5. The highest WPI is 62.5 in Ichhok VDC and the lowest is 40.5 in Nawalpur VDC. A lower WPI indicates that the area is water poor and should enhance the water management systems. The VDC wise water poverty results have been very important for the project planning and intervention. Bird Diversity Study on Bird diversity in Indrawati sub-basin recorded 219 bird species of 44 families, of which 41 water and 140 forest dependent species. Socio-Economic Status of the Sub-Basin The population projection for 2011 indicates that the total population of the sub-basin is 2,99,860 distributed over 47,341 households with an average household size of 6.3. In terms of land use, agricultural land covers nearly 40 percent of the land followed by forests covering 22.3 percent of the land. This is followed by bush area and barren land. Based on the socio-economic baseline survey conducted by the project, the Indrawati sub basin comprises major ethnicities such as Brahmin/Chhetri/Thakuri/Sanyasi (BCTS); Janajati and Dalit. 43.2 percent of the households are considered very poor, 17.2 percent are poor, and the remaining 40 percent of the households in the sub-basin are non-poor. 53.8 percent belonged to age group between 25-49 years while 87.2 percent of the households were headed by male. In terms of land holding, 97.3 percent of the households have their own land which is highest among BCTS followed by Janajati and dalit with average land holding size of 0.68 ha, 0.62 ha and 0.34 ha respectively. Overall average land holding size of the sub-basin is 0.6 ha. About one fourth of the households have food sufficiency beyond 12 months, while about 8 percent have food sufficiency for less than three months. Households with less than three months of food sufficiency are the highest among Dalit (32.1 percent) followed by Janajati and BCTS. In order to cope food shortages, the majority (59.2 percent) of the households were involved in wage labor followed by occupational work (12.6 percent). About one sixth of the population derive income from temporary sources whereas about 46 percent depend upon sales of livestock as a source of income whereas about 19 percent depend upon sales of animal products such as milk, egg, curd, and ghee. Per capita income in the sub-basin is found to be NRs. 14996.00

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($208) with major contribution (35.8 percent) from temporary sources of income followed by 45.7 percent from permanent sources. Agriculture is the mainstay of livelihoods in the sub-basin and 90.6 percent have been cultivating maize followed by 71.8 percent who have been cultivating paddy. Similarly, 54.8 percent have been cultivating millet and another 50.5 percent have been cultivating wheat. In terms of irrigation, only about 60 percent of the households have access to irrigation facilities with majority still depend upon traditional types. Average size of land area with irrigation is 0.25 ha for Khet while 0.07 ha for bari land. Majority (86.7 percent) source their water from nearby river for irrigation. Slightly more than 2 percent of the households have been practicing water conservation technology such as mulching, sprinkler and drip irrigation which is highest among BCTS and non-poor. About 4.3 percent of the households have been using alternative technology for irrigation such as plastic pond, rainwater harvesting jar etc. About 60 percent of the households reported water shortage for irrigation purpose and in order to cope with this problems 55.6 percent said they waited for rain while 30 percent reported that they keep their land fallow indicating very traditional type of agriculture practice in the sub-basin. Climatic hazards are very frequent in the sub-basin mainly those related to landslides and floods.

Sector-Specific Policy Guidelines As a river basin that stretches across multiple development districts (regional government boundaries), there are a number of different institutions – formal and informal, national, regional and local – that govern natural resources in the Indrawati, including organizations and written legal frameworks. These include various national government bodies and ministries, regional and local government in the form of District Development Committees (DDCs) and Village Development Committees (VDCs), water, forestry and other user groups, and more informal cultural customs and norms such as those that dictate water allocation agreements. Legal Framework Nationally, the Water Resources Act of 1992 and 1993 is the only governing legislation specific to water at the national level. Its main purpose was to give ownership of the country’s water resources to the government and require a license for any major development (Bhattarai 2002). The 2005 National Water Plan (NWP) advocates a number of institutional reforms in water resource management, including decentralization to local institutions via River Basin Organizations (RBOs) that would act as WECS subunits at the local level, theoretically making allocation decisions and centralizing information and data (HMG 2005). For various reasons, including political instability associated with the 10 year conflict and insufficient capacity, these have yet to be formally created. The Forestry act of 1993 and Forest Regulation of 1995 are critical to the management of the country’s forests, creating the legal basis for community forestry management. The Forestry act of 1993 recognized forestry user groups as legal entities and created 5 categories of national forest, based on its primary usage or management goals; i.e. religious, government managed, or protected (Dahal 2008). Also of note is the Forest Sector Policy of 2000, which required community forestry user groups (CFUGs) to give 40% of their timber sales to the national government. The National Agricultural Policy 2004 envisions an improvement in the standard of living through a sustainable agriculture development to be achieved by transforming the current subsistence oriented farming system into a commercial and competitive faming system. The Hydropower development policy 2001 recognizes the immense contribution of hydropower development in the national economy and emphasizes the efforts on integrated water resources development based on bilateral and regional cooperation with prime considerations to the national interests of Nepal.

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Development and Resource Management Plans With the expiry of the last development plan (2006/07-2009/10), a three year approach document was prepared to formulate a new plan. The approach paper was formulated on the basis of the long-term vision of transforming the country from least developed country to a developing country with a focus on building economic strength through creating employment for the Nepali people along with developing infrastructure needed for modern development. It has also envisioned reducing poverty in a sustained way, and to raising the living standards of the common people. The country’s three year plan stresses the implementation of the Integrated River Basin Management approach for conservation and management of watersheds in Nepal through increased community ownership in the face of climate change.

A description of development needs The existing water allocations across the sectors are mostly governed by customary water law, based on the informal traditions and needs-based allocations. The local customary law provides priority to irrigation needs, because of the agricultural- based livelihoods of the communities. This is acceptable as long as the basin remains open with a low level of water use. However, as the development of other water uses increase, the demand for alternative water institutions and allocation practices would also increase. Minority water users, such as ghatta (traditional watermill), water mills, and micro-hydro owners, are already pressing for change in the existing informal arrangement. They want water allocations made more transparent and formal, which would protect their water rights during the water-scarce periods. The growing competition among various local users, and the need for bulk water transfer out of the basin, may provide enough incentives to all local stakeholders in the community, for institutionalization of appropriate and formal water-allocation mechanisms, for effective management of water resources in the project area and broader basin. There is a lack of coordination among various local institutional stakeholders to manage and plan the use of water resources in the basin in a democratic, transparent and inclusive manner. This also includes the project areas. Some of the local-level formal stakeholders are the District Water Resources Committee (DWRC), the District Development Committee (DDC),the Village Development Committee (VDC), Non-Governmental Organizations (NGOs), and other water user groups, and the Farmer Managed Irrigation Systems (FMIS). The statutory roles and functions of these local stakeholders on the allocation of water resources are not clearly defined in the National Water Resources Act (1993), resulting in conflicts among stakeholder groups, which also impacts social cohesion more generally. The National Water Resources Act (1993) has given the DWRC greater authority on decision making on water allocations. However, it is a virtually nonfunctional agency. Currently the DWRC is restructured with more representation from local water users and the DDC. Therefore, it could potentially also function as a coordination mechanism for inter-sectoral and inter-district water allocation. It could also evolve as a rudimentary form of river basin (or sub-basin) planning initiative in Nepal, without major changes in other administration and political institutions in the country.

Connection to other possible projects or development programs The proposed project will continue to work in coordination and collaboration with relevant ministries, departments and district line agencies primarily in forestry, soil conservation and watershed management, agriculture and livestock, irrigation, energy, drinking water supply and sanitation and local development. This project is closely linked with the following programs, and WWF will contribute to these larger government led development initiatives:

• Community forestry • Watershed management, protected area management, agriculture and livestock development

program/cooperatives • Hydropower development

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• Irrigation, drinking water supply and sanitation • Local Development Water Induced Disaster Prevention • Pilot Programme for Climate Resilience (PPCR), which is part of the Strategic Programme for Climate

Resilience (SPCR)

Compatibility with the recipient country’s poverty reduction program The priority goal of the Government of Nepal is to reduce poverty. The government is pursuing this goal through a strategy of economic development, good governance, and an inclusive development process. A series of National Five-Year Plans and Three-Year Interim Plans provide a policy framework that encourages investments in those sectors that form the backbone of rural development and poverty reduction. In recent years, government initiatives to support policy formation and implementation have increasingly emphasized environmental issues, and now climate resilience as well. The government’s recent Three Year Plan (TYP) Approach Paper (2010/11-2012/13) and the three year plan ((2010/11-2012/13) has broad objectives of promoting green development, making development activities climate-friendly, mitigating the adverse impacts of climate change, and promoting adaptation. The plan emphasizes the need to adopt the principle of IWRM to fulfill the requirements of hydropower, irrigation, drinking water, water transportation and recreation and implement integrated river basin management approach for conservation and sustainable development of water resources in Nepal. This project will contribute to following development priorities set out by the Government of Nepal:

• Poverty reduction and pro-poor development • Sustainable economic growth • Sustainable management of natural resources • Equity and social justice

Any other potential actors in the target area, common approaches Some of the important government stakeholders, whose mandates, roles and responsibilities directly contribute towards achieving the vision and goal of KRBM strategy are the Ministry of Energy (MoE), Ministry of Environment, Science and Technology (MoEST), Ministry of Irrigation (MoIR), Ministry of Forests and Soil Conservation (MOFSC), Ministry of Local Development (MoLD), Ministry of Tourism and Civil Aviation (MoTCA) and the Ministry of Agriculture and Cooperatives (MoAC) and their respective departments. Nonetheless, other sectoral ministries can also act as partners during strategy implementation. Likewise, different INGOs , NGOs and federations currently investing in the region have responsibilities in KRBM. These include WWF, ICIMOD, IUCN, NTNC, TMI, ANSAB, Eco-Himal and CARE. Federations such as Nepal Hydropower Association (NHA), Federation of Water and Sanitation User Nepal (FEDWASUN), National Federation of Irrigation Water Users Association Nepal (NFIWUAN), Water and Energy User Federation Nepal, Federation of Energy Producers Nepal and Federation of Community Forest User Groups Nepal (FECOFUN) have roles and responsibilities, In addition, donors like UNDP, DFID, SDC, JICA, ADB, World Bank, SNV, GTZ, NORAD, USAID, DANIDA, FINIDA, can contribute substantially to implement the strategy. Likewise, at the basin level, two types of government agencies – namely local bodies (DDC) and district line agencies – are the important stakeholders for the implementation of the strategy. In addition, the strategy envisions the establishment of river basin offices at sub-basins. Besides, district based NGOs actively working on water and related issues are important stakeholders for implementing the programs and projects in the key catchments, basin and sub-basins. District Water Users Association (DWUA), District Community Ground Water User Association, District Federation of Irrigation Water Users’ Association, District Chapter of FECOFUN also have important roles in the implementation of IRBM Koshi and its sub-basins.

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At a local level, there is an extensive network of different target beneficiaries by sectors such as water users associations for drinking water, irrigation, hydro-power; community forest users groups (CFUGs), agriculture groups, etc, which are the ultimate beneficiaries of the strategy implementation. IWRM is closely linked to watershed management and integrated land use planning, which are also implemented in Nepal, and could be common approaches relevant to this project. Many government and non-government agencies are working in the Indrawati sub-basin in areas of rural development, natural resource management, water resources development, environmental management, social equity, and governance. During this project design, there has been an extensive consultation with the district line agencies to complement the existing interventions in Indrawati. Ecosystem based adaptation, or adaptation in general, is identified as another common element.

Beneficiaries According to estimations, the bulk of over 60% inhabitants of Indrawati river basin below the poverty line are indigenous mountain people. Women are generally impoverished as they have less access to resources than men, less influence over decision making, but have to carry out the bulk of daily work. All these factors reinforce a poverty structure where social and economic differences are enhanced and resource use remains unsustainable. The Human Poverty Index is approximately 40% in this sub-basin. (Source: Sacred Himalaya Landscape strategic document, 2006-2011). Based on the Nepal United Nation’s Development Programme (UNDP) Human Development Report (2004), Sindhupalchok district falls within the bottom third using the Human Development Index, while this project will focus on the more marginalised groups within the district, which emphasis the fact that this is a pro-poor initiative, especially targeting the poor and marginal resource users who are generally excluded from receiving the development-project benefits. This includes tribal hill communities, traditional fishing communities, women and indigenous communities etc. The direct beneficiaries of the project include the following:

• Integrated Resource Management Committees (IRMCs) are the locally registered institutions at the catchment level and are represented by different user groups from that particular catchment. On the basis of the size of the catchment, the number of members usually varies from about 10-25, who are democratically elected within the local communities. The Koshi Phase II project will continue its work with the 9 IRMCs in the 9 catchments of Indrawati namely Cha Khola, DhandKhola, Sahare-Baghmara and Mahadev-Tipeni, JargeKhola, SindhuKhola, MusureKhola, HandiKhola and GhatteKhola catchments. At present, there are altogether 152 executive members in these IRMC, which has 76% male and 24% female representation. Out of the total number, 46% members are from the Janajatis and 5% represent Disadvantaged Group (DAG).

• At least 35 eco-clubs constituting approximately 8,000 members, will directly benefit through project's conservation education and awareness activities.

• At least 100 water smart communities will directly benefit through efficient water management. • 10 Buffer Zone User Committees (350 HHs) will benefit through their active participation in the park

management interventions The proposed project will directly benefit at least 4,000 households and 20,000 individuals across the project intervention areas in Indrawati. Indigenous people, marginalized Janajatis and disadvantaged groups, primarily women, will be the project's principal focus. The indirect beneficiaries will be the 300,000 people residing within the Indrawati sub-basin who will one way or the other benefit through the project activities. The indirect beneficiaries are primarily the stakeholders indirectly associated with IRMCs, WUAs, FMIS, CFUGs and Buffer Zone User Committees (BZUCs). These indirect beneficiaries will benefit due to improved environmental conditions and better arrangements for benefit sharing mechanisms devised and owned by community groups themselves. In addition, such groups will

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benefit due to improved organizational capacity of the communities and their empowerment to better address their common problem through unity and advocacy. The major indirect beneficiary group of this project will be the local Non-Government Organizations (NGOs) and Community Based Organizations (CBOs), which are directly working in development and conservation related issues in the Indrawati sub basin. The project will basically mobilize local NGOs and CBOs to implement livelihood activities and management of natural resources. Also, the project will undertake advocacy and communication activities through local NGOs and CBOs collaboration, which will help in attaining project’s goal, as well as increase their working capacity with communities. The project activities will be sub-granted to IRMCs and other NGOs and CBOs wherever applicable and feasible, in order to strengthen the capacity of local civil society. From collaboration and partnerships mechanisms, indirect benefits will be accrued by Local Governments, District Water Resource Committee, Sub basin management committee, Integrated Resource Management Committee, District Administrative Office, District Soil Conservation office, District Forest Coordination Committees, District Forest Office, District Agriculture Development Office, District Irrigation Office, National Park, WECS, Ministry of Environment, Science and Technology (MOEST), Ministry of Forests and Soil Conservation, Departments of Forests and National Parks and Wildlife Conservation, District level Government line agencies including Veterinary Office. Working through media, both at local and national level, will be the strategy of this project to reach to a wider audience to benefit from the project interventions – mostly through awareness raising for themselves and general public. The researchers and students working on IRBM issues will also benefit indirectly.

Objectives and Monitoring The overall development objective of the Koshi Phase II project is: “By 2020, water and related resources of the Koshi Basin are sustainably managed to promote socio-economic development for the benefit of the local people, particularly the poor and marginalized, while maintaining the ecological balance in the face of climate change and development pressures” The immediate objectives of the programme include: 1. By 2016, institutional structures are functional having broad-based partner support to implement

democratic IWRM approach, which empowers local communities and marginalised groups to participate in decision-making, planning and implementation

2. By 2016, local communities in target areas are empowered and capacitated to manage natural resources sustainably and to reduce their vulnerability against the impact of climate change through rights-based approach, complemented by optimised economic benefits from water and other natural resources

The immediate objectives are supported by the results listed below,

A) By 2015, IRBM Institutions (WECS/RBO, sub-basin level and IRMCs) are in place and functional, and are strengthened

B) By 2015, marginalized communities (primarily PVSE, IPs, women) are empowered through increased participation in planning, decision making and implementation of IWRM approach

C) By 2015, income level of targeted communities increased through the optimum use of water and other

related natural resources

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D) By 2015, at least two critical watersheds are safeguarded and ecosystem services are maintained

E) By 2015, capacity to cope with and adapt to the risk and stresses due to climate change of the target

communities enhanced (water, food and energy security) The immediate objectives provide the basis for sustainable management of water and related resources in the basin on the backdrop of climate change and development priorities. The objectives aim to achieve the functional institutional structures with concerted effort of all partners and the meaningful participation of targeted communities (especially PVSE groups) in all levels of project. It is supported by the focus on empowering communities by employing the right-based approach among others and the increased economic benefits.

The immediate objectives are supported by the underlying results. The first two results aim to put the institutional structure in place and to empower the marginalized groups. Similarly, the other two results focus on the increasing economic level of the targeted communities and the safeguarding the two critical watersheds. The final result stresses on the building resilience of targeted communities against the impacts of climate change.

Each result area subsumes a number of outputs. The outputs are the direct products and services of the input and the ensuing process. These are measured annually.

The qualitative and quantitative definitions, as well as indicators, are illustrated more in details in the logical framework (ANNEX).

Project Monitoring Plan matrix (ANNEX) is structured to monitor the progress/performance of the activities at each level against time. The impacts are supported by the results/outcomes in institutional building and sustainable natural resource management. The information is provided based on each indicator. The results are based on the intermediate outcomes/outputs, which are measured and mapped annually. They are gauged against the baselines. The matrix clearly depicts data source, methods and frequency of data collection. Assumptions are placed in the column and are important for project success. But, they would be revisited regularly while planning annually.

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The project broadly follows the WWF’s Program and Project Management standards (www.panda.org/standards) as shown in Figure below.

Figure 2. WWF’s Conservation Project/Program Cycle

The project will adopt a three-tiered monitoring system – participatory monitoring by the project beneficiaries at community level; monitoring of progress, effectiveness and results by Indrawati Sub Basin Project office (field office); and output and outcome level monitoring by country office. We consider participatory M&E to be part of good governance, a feedback mechanism integrated at all levels of decision making. Participatory monitoring will be conducted at the community level, with regular monitoring by community members with support from project staff. This is mostly related to input process and output monitoring. The second level of monitoring at the program site level will be done by field office. Extension and technical staff will be responsible for collecting information from community. Collected data will be regularly updated in the existing database system, which is built in MS Excel. Additionally, the field offices data formats will be revised based on the activities of the intermediate results (IRs) and the project performance monitoring plan (PMP). Program level monitoring will include periodic progress reporting and review and reflection (biannual and annual performance reviews), joint monitoring with partner agencies and field visits. Central program monitoring and technical staff will maintain records, and collect, collate and analyze, report information from the field offices against project performance monitoring plan (PMP). This will include output, outcome and impact level monitoring.

Implementation This section describes more in detail the operational aspects of the project related to how the different components and activities will be delivered, including roles and responsibilities of relevant stakeholders.

Project implementation plan and role of partners WWF Nepal, according to GoN, is considered as an international non-governmental organization (INGO). It operates in Nepal according to the covenants of a General Agreement with the Social Welfare Council (SWC), the statutory and nodal agency authorised by the Government of Nepal to facilitate the work of INGOs. This

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General Agreement governs WWF Nepal’s overall operations in Nepal and facilitates the running of its projects and programmes through local partners, including non-governmental organizations (NGOs), community based organizations (CBOs) and government agencies. The proposed project is the request for continuation of the MFA Finland supported in implementing IRBM in the Indrawati Sub-basin. The project will be implemented by WWF Nepal in partnership with WECS and MOFSC.WWF Nepal will have the main management, implementation and coordination role whereas the IRBM implementation model will provide the mechanism for delivery, depending on activities. For specific competencies requiring components, like action research and market linkages, implementation will be carried out by partner organisations/ consulting experts whohave specific skills and comparative advantage to do them.

Figure 3. Basic Implementation Model for IRBM in Koshi

As shown in the figure above, the IRMCs will implement the project activities at the catchment level through WWF’s technical and financial support. The project will strengthen the River Basin Office (RBO)- Koshi and the sub basin management committee of Indrawati Sub-basin during the implementation period of phase II funding. As the country is still under the federal restructuring process and it is not yet certain about how the political boundaries would be decided by the forthcoming constitution, the district water resources committees will remain as a loose network. As such, all these institution will basically play a coordinating role to successfully demonstrate IRBM approach at different levels that will foster smooth implementation.

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Figure 4. Simplified model of implementation and fund flows. WWF will work in partnership and collaboration with the following for the project implementation:

• GoN/Water and Energy Commission Secretariat (WECS) – government lead and policy support • Ministry of Forest and Soil Conservation – policy support • Department of National Park and Wildlife Conservation - National park and buffer zone management • Department of Forest - Forest management • Department of Hydrology and Metrology – Hydro and meteorological studies, climate change impacts • Department of Soil and Watershed Conservation – watershed management • Relevant line ministries and government agencies, Buffer Zone Management Committees (BZMCs),

Community Forest Coordination Committees (CFCCs), User Groups (water, forest, agriculture etc), Relevant NGOs and CBOs- – local level implementation

Figure 5. Project implementation model.

MFA Finland

Indrawati sub-basin project

WWF Finland WWF Nepal Implementing partners WECS/MoFSC/line depts.

Grant Agreement

IRMC as implementers on the ground at the catchment level

$ $

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For the use of financial resources, WWF Nepal will prepare specific agreements with the concerned IRMCs. The partnering IRMC will be responsible to conduct annual financial audit by a certified accountant and also undertake regular auditing in public of its operation and activities. They will be liable to give quarterly project progress reports to WWF Nepal and WWF Nepal will give adequate support to them for planning and implementing project activities. The following diagram depicts the implementation of the agreement with CBOs/ NGOs:

WWF Nepal

SWC CBOs/NGOs

Repo

rts

Lega

l Man

date

/ M

onito

rs

Implem

ents / Reports

Funds Complem

entary Activities /

Builds CapacityProject / Grant Agreement

with Communities

Figure 6. WWF Nepal’s relationship with CSOs.

Partners and their responsibilities, steering group WWF Nepal is the local co-operation partner leading this project. WWF Nepal has been working with the Government partner, Water and Energy Commission Secretariat (WECS) in this project. WWF Nepal provides grant support to WECS for the implementation of the project in the field. The project conducts Project Coordination Committee (PCC) meetings regularly to discuss the programmatic and administrative issues of the project to provide the strategic direction to the project. This PCC involves officials from WECS and WWF Nepal. WECS being a policy body, it provides overall policy direction to the project for the IWRM implementation in the field. WWF Nepal office in Kathmandu coordinates and provides technical guidance to the project office in Chautara, whereas the project office coordinates the field level activities in Indrawati sub-basin. WWF Nepal provides various technical support to the project, they are: GIS and mapping, livelihood, conservation education, development, planning and monitoring, communications and policy, and technical assistance in implementing climate change adaptation initiatives. WWF has a proven track record of sound and rigorous financial management and administration, which has been verified by external auditors year after year. This includes also MFA funded projects that WWF Nepal has been working with over a decade already. WWF Nepal maintains regular communication with the Donors, WWF Finland, network and partners. Preparation of annual work-plan and budget, half yearly and annual progress review and technical and financial reporting to the donors are the key responsibilities of WWF Nepal. The upper part of the Indrawati sub basin lies in Langtang National Park. Department of National Parks and Wildlife Conservation (DNPWC) with the grant support from WWF Nepal implements conservation activities in the protected areas of the Indrawati sub basin through Langtang National Park. Partnership with Department of Hydrology and Meteorology (DHM) and Department of Soil Conservation and Watershed Management

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(DSCWM) is on progress. DHM will support on hydrological and meteorological study activities whereas DSCWM will support watershed management and soil conservation activities of the project. Also the project works in close collaboration with district line agencies; District Soil Conservation Office (DSCO) for soil conservation and watershed management activities, District Forest Office (DFO) for forest conservation and management activities including NTFPs, District Agriculture Development Office (DADO) for agricultural activities, District Livestock Services Office (DLSO) on livestock intervention activities. At the local level, project works with Integrated Resource Management Committees (IRMCs) of the selected catchments. These are the key local partners, who plan and implement the IWRM activities at the catchment level with the technical and financial support of the project.

Project timetable

A 3-year project implementation timetable is presented as a separate ANNEX.

Mid-term and final evaluations External evaluators will carry out the mid-term and final evaluation of the program/project. An independent team will carry out the mid-term evaluation at the end of phase I (early 2013) and final evaluation at the end of phase II. The evaluation team comprises of the thematic leads (main and cross-cutting themes) and the finance expert. The evaluation categorically analyses the relevance/design, effectiveness, efficiency, impacts and sustainability of the program and its activities/strategies. The analysis in the mid-term evaluation highlights the strengths and challenges for the adaptive management of the program/project, whereas, the final evaluation highlights the impact and sustainability of the program among others. Similarly, WWF Nepal signed project agreement with Social Welfare Council (SWC) of GoN - http://www.swc.org.np/index.php. SWC is responsible for the promotion, facilitation, coordination, monitoring and evaluation of the activities of the NGOs in Nepal including WWF Nepal. So, SWC carries out monitoring and evaluation of the program in the landscapes including the Indrawati project. SWC has the mandated of conducting the monitoring, mid-term and final evaluation of projects in Nepal.

Project sustainability and cross-cutting issues This sub-section focuses on how the project envisages to ensure during its lifetime the long term positive impacts outlined e.g. in the overall objective for 2020. The main aspects include financial, institutional, socio-cultural and environmental sustainability. Some key issues that are cross-cutting to the project are also discussed in this chapter. Financial sustainability The proposed project will play an instrumental role in enhancing the capacity of IRMCs to coordinate with different agencies and implement the programs on water and natural resource management on their own in the longer term. This will in turn lead to accessing funds in local government institutions and donor organisations for similar kind of interventions in future. This is supported by the fact that the role of IRMCs is increasingly recognized by the government, partner organisations and the communities. The success of the IRBM approach will bring together the relevant agencies and their resources in implementing and upscaling the IWRM in an integrated and collaborative way.

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Institutional capacity The long term goal of the proposed project is to strengthen the institutions at the community, sub basin and river basin levels. At the community level, 9 Integrated Resource Management Committees (IRMCs) are supported in their process of institutionalization in the first phase of the project. These IRMCs have their constitution in place, endorsed by the District Administration Offices. It guides their structure and governance, and the functionality. The IRMCs are capacitated in implementing the approaches of good governance, and plan and implement the activities in the catchment level. The existing institutional capability is further enhanced by capacitating them on the aspects of good governance.

Socio-cultural considerations The need of IWRM is increasingly realized by all stakeholders from local to national level for the sustainable management of water and related resources. The equity principle is addressed through good governance and inclusion and is reflected in the constitution of IRMCs. The project recognizes the indigenous practices that have long been rooted into local livelihoods, culture, spirituality and social system and has them well-incorporated. The approaches of good governance, inclusion, benefit sharing in natural resource conservation have been ingrained into plan and practice.

Environmental sustainability The project supports restoration of degraded water resources and conservation of natural resources for maintaining ecological balance in the Indrawati sub-basin. the degraded areas through plantation. The environmental sustainability is ensured by wise use of the water and related resources (including the payment schemes), mass awareness and increased constituency in implementing the IWRM. A good environmental condition can absorb stresses and shocks including the climate impacts. The project is thus formulated in light of climate impacts. This will also be followed in the plans in future. Appropriate technologies are employed in tackling the disasters and will be scaled up in future.

Participation and Ownership Participation, partnership and ownership are among the fundamental priorities of this project. Given the interdisciplinary nature of IRBM approach, this project encompasses multiple stakeholders ranging from the central level agencies to the grass-root level beneficiaries during planning, designing, and implementation and monitoring. The work in Indrawati sub-basin is highly regarded by the district line agencies and the local communities who are very adept in realizing the advantages and essence of the project. In the stakeholder consultations for planning of phase II, it was realized that communities own the project and they understand the need to make it sustainable through increased ownership and coordination among themselves and governing line agencies. The district line agencies on the other hand have been very positive on the entire initiative and agree that the interventions need to go beyond the funded project life to bring real long-term impacts to communities and conservation.

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Cross-cutting themes Climate change affects poor people in particular, because of their weak adaptive capacities. Climate proofing therefore forms the basis for measures to improve projects in the face of climate change. The proposed project has inbuilt climate change in all stages of planning and design, so that the interventions listed do not merely suffice the needs for coping, but calls for enhanced adaptive capacity, where local communities are capacitated to understand the impacts in a longer run and be able to utilize their traditional know-how, supplemented by the concurrent scientific actions to cope with present day climate variability and extreme events, while contributing in a positive manner to sustainable economic development, sound environmental management, social progress, and wise resource use. IWRM refers to the coordinated development and management of water, land and related resources for optimizing economic and social welfare without compromising the sustainability of vital environmental systems. Optimizing development implies recognizing that women and men of all strata have different requirements and often unequal opportunities for domestic and productive uses of water and the use of catchment areas and that women, marginalised groups and the poor generally have fewer opportunities to engage in and benefit from development and management. Changing practices for greater equity is required through more effective mobilization of human resources and institutional capacities and resulting in more logical sharing of burdens, benefits and responsibilities between women and men. Mainstreaming gender implies that knowledge and skills are used in a more holistic and systematic manner so that gender equity practice becomes an integral dimension of this project throughout the community level process of IRBM. (Effective gender mainstreaming in water management for sustainable livelihoods: From guidelines to practice. August 2005) Standing on the 3E principle, considering environment, economy and equity, the project will demonstrate a model in IWRM that will have a possibility of replication to other river basins in Nepal and beyond. The equity aspects particularly enforce the rights based approach to water and other natural resources, using a holistic framework provided by the IRBM. Compared to a top-to-bottom model, this project has adopted a bottom up approach from the beginning where the right holders are on the driver’s seat. This will, and already has during first phase, show that from social equity perspective the claim holders are not merely seen as passive recipients, but actually the ones that will define how they want development to take place, so that it serves their needs best. Technology will play a significant role in water and climate monitoring, as well as improved livelihood technologies. The appropriate solutions are sought based on past experience in terms of what works best, particularly in the long run. Low-tech solutions with a possibility for local maintenance with limited labour, skill and tool requirements often work best over time, since a slightly lower output low-tech works better than non-functioning high-tech. This has been also proven by the track record of some previous initiatives implemented by others in the target areas and elsewhere in Nepal, and further confirmed during the first phase of this project. WWF has increasingly started to use local communities for active monitoring of different matters that include forest cover, water quality, weather etc. This will improve their own capacity and understanding of issues that have direct impacts on livelihoods and wellbeing. Therefore, for example the weather stations and other fixed monitoring equipment has to be robust and technologically advanced, yet something that will enable to local stakeholders to operate as well. Normally the approach is to select Local Resource Persons, train them and provide them technical backstopping over time and monitor how they perform, until they are able to operate independently.

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Risk analysis and risk management plan Given the current political scenario and volatility that can potentially end up in any way possible, it is difficult to assess the potential outcomes of federal and constitutional process, and to come up with appropriate mitigation strategies related to the same. However, as during the years of insurgency, WWF Nepal was able to operate as a politically neutral organisation directly with the communities, delivering excellent results on the ground related to sustainable management of natural resources and conservation, e.g. in Terai Arc Landscape. 1. Political scenario is still bleak in Nepal four years after the historic political transformation. The deadline for constitution drafting was extended three times and the CA house was finally dissolved with the announcement of fresh election. The caretaker Prime Minister declared to hold the new election in November which has instigated a commotion on the political front and the political consensus is yet to be achieved. This will have implications on the project activities both internally and externally. Once the time for the fresh election is pinned down, it will definitely upset the planned activities of the project on the ground. Similarly, the new legislature and appointments can bring the changes in the ministry. WWF Nepal and the project will plan and implement activities according to the circumstance. The senior management team in WWF Nepal will devise new strategy to be implemented through the decision of PSC and PCC. 2. The country will undergo restructuring into federal states. The power will then be decentralized to the states including the rights over the water and related resources. The current institutional structure can also be amended. This in turn will demand a separate working modality with the federal state. The senior management team in WWF Nepal and the project will explore the best options for implementing the project in the changed context. 3. The country is marred with energy crisis and the power outage reaches up to 14 hours a day in the dry period. Government of Nepal declared energy crisis in 2011 and planned short-term, mid-term and long-term plans for hydropower development. Indrawati III is producing 7.5 MW currently, but more hydropower development plans could follow in the country. WWF Nepal has been engaging with key stakeholders in sustainable hydropower in Nepal. The development of hydropower is a likely scenario to meet most of the current and future energy needs, and this project also aims to bring the energy issue as part of the dialogue in the IRBM framework. 4. Lack of adequate policy on basin level planning; and absence of basin level institution are the two most potential risks. Lack of policy directives and institutional mechanisms to facilitate multi-sectoral coordination can also be a risk to implementation. Legal instruments of the government generally focus on sectoral coverage which restricts inter-sectoral planning and implementation. Besides, the capacity of the institutions to achieve multi-sectoral coordination could also emerge as a risk. Current institutions do not have adequate expertise and experience to adopt basin level planning and implementation. In view of this, the project will work towards strengthening the catchment level institutions as IRMCs and sub-basin committee while enhancing their role in building partnerships with district line agencies. 5. The sectoral rules and regulations on natural resources are at times contradictory, e.g. extraction of the sand and gravel from river bank/bed. This creates conflicting ownership of local government institutions and in turn the continuous depletion of natural resources. WWF Nepal undertakes the multi-stakeholder dialogue at the local level and central level to address the issue. 6. Some of the major social risks include a) limited access to information and resources among the people in the basin (b) existence of inequality and discriminations. Due to such differences, local elites are likely to capture benefits derived from the project implementation. To mitigate these risks, the project will have its own learning and sharing plan through which it will disseminate information to the public. The project will also, at all

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levels prioritize equal and meaningful participation, with special focus on women, poor, indigenous and disadvantaged communities that there are no discriminations.

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Budget calculated on the basis or required means

Budget Year 1 Year 2 Year 3 Total

Salaries and related costs of Finnish personnel 10 000 10 300 10 600 30 900 Travel and accommodation of Finnish personnel 3 000 3 000 3 000 9 000 Salaries and related costs of local personnel 70 325 75 951 82 027 228 302 Other personnel costs - - - Value of Finnish voluntary work - - - - Personnel costs, subtotal 83 325 89 251 95 627 268 202

2. Activity costs (e.g. training) (Appendix 2)Fees of hired experts 53 000 20 000 - 73 000 Other costs 240 000 340 000 161 500 741 500 Activity costs, subtotal 293 000 360 000 161 500 814 500

3. Materials, procurements and investments (Appendix 3)Procurement of materials and appliances 5 000 - - 5 000 Construction - - - - Other procurements 10 700 4 400 - 15 100 Value of donated goods - - - - Materials, procurements and investments, subtotal 15 700 4 400 - 20 100

Operation costs 31 650 33 233 34 894 99 777 Maintenance costs 2 700 2 835 2 977 8 512 Operation and maintenance, subtotal 34 350 36 068 37 871 108 288

5. Monitoring, evaluation and information (Appendix 5)Personnel costs and external services - - - - Travel and accommodation 12 700 7 200 12 700 32 600 Other costs 1 250 1 250 1 250 3 750 Information costs in Finland (max. 5 % of total project costs) 22 000 22 200 16 400 60 600 Monitoring, evaluation and information, subtotal 35 950 30 650 30 350 96 950

Total implementation costs 462 325 520 368 325 348 1 308 040

6. Administrative costs (Appendix 6)Salaries and related costs of administrative personnel 6 750 6 900 7 050 20 700 Office costs 7 920 8 096 8 272 24 288 Fund-raising costs (excluding information costs) 25 000 25 200 11 400 61 600 Statutory audit costs of the Finnish organisation 2 000 2 000 2 000 6 000 Value of Finnish voluntary work in administration - - - - Total administrative costs 41 670 42 196 28 722 112 588

Total project costs 503 994,71 562 564,18 354 069,61 1 420 628

Administrative costs as a % of total costs (max. 10%) 8,27 7,50 8,11 7,93

Financing plan Year Year Year Total

1. Self-financing (Appendix 7) Cash contributions 75 599 84 385 53 110 213 094 Voluntary work and material donations - - - - Total self-financing 75 599 84 385 53 110 213 094

Self-financing as a % of total project costs 15,00 % 15,00 % 15,00 % 0

2. Project support from the Ministry for Foreign Affairs 428 395 478 180 300 959 1 207 534 Earlier allocation of project support New/additional application -

Total financing 503 995 562 564 354 070 1 420 628

1. Personnel costs (Appendix 1)

4. Operation and maintenance (Appendix 4)

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Reporting plan WWF Nepal has reporting mechanism at different tiers. The project in the field submits the technical and financial progress report on 1st quarterly, half-yearly, 3rd quarterly and annual basis. It forms the basis for finalizing the report for the WWF network and WWF Finland. WWF Nepal submits the technical report to WWF Finland on half-yearly and annual basis on the given format. The half-yearly reporting falls in July whereas the annual reporting falls in January of the following year. Financial reporting to WWF Finland is done on quarterly basis.

The report highlights impacts and outcomes followed by descriptive outputs and progress. It entails the challenges, strategies and lessons learned for adaptive management and the success stories for wider communication.

Reporting is also carried out during regular meetings between WWF Nepal and WWF Finland. During WWF Finland monitoring visits to Nepal, also other partners report to stakeholders during meetings in Kathmandu and field. The outcomes of these missions are reported back to Ministry for Foreign Affairs of Finland in the form of mission reports.

More details about type and intervals of reporting can also be found from the logical framework and project monitoring plan (annexes).