Report No.: AB6895 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE (The report # is automatically generated by IDU and should not be changed) Project Name Community Climate Change Project Region South Asia Region Country Bangladesh Sector SASDI Lending Instrument Specific Investment Loan Project ID P125447 {If Add. Fin.} Parent Project ID {Same as in AUS} Borrower(s) People’s Republic of Bangladesh Implementing Agency Palli Karma Shahayak Foundation (PKSF) Environmental Screening { }A { X}B { }C { }FI Category Date PID Prepared December 13, 2011 Estimated Date of Appraisal February, 2012 Completion Estimated Date of Board August, 2012 Approval Decision Project authorized to proceed to negotiations upon agreement on any pending conditions and/or assessments. Other Decision {Optional} I. Country Context During FY01-09, Bangladesh’s GDP grew by an average 5.8% per annum and the growth has been fairly stable (Bangladesh Country Assistance Strategy 2011-2014). Yet, it remains a low- income country with 40% of its population living in poverty. With nearly 151 million inhabitants on a landmass of 147,570 km2, Bangladesh is the most densely populated climate-vulnerable country in the world. Two-thirds of the country’s land area is less than 5 meters above sea-level and is susceptible to river and rainwater flooding, particularly during the monsoon. Once every three to five years, these areas inundated by floods that cause substantial damage to infrastructure, housing, agriculture and livelihoods. Low-lying coastal areas are also at risk from tidal floods and severe cyclones. On average once every three years, a severe cyclone makes landfall on the Bangladesh coastline, creating storm surges that are sometimes in excess of 10 meters. Crops and livelihoods of the rural poor in the low-lying coastal areas are also devastated by saline water intrusion into aquifers and groundwater and through land submergence. In addition, seasonal droughts occasionally hit the northwestern region. II. Sectoral and Institutional Context The frequency and intensity of these extreme climatic events are expected to increase because of climate change, with devastating economic, social and ecological consequences. In a 2010 report by the World Bank it was predicted that climate change will decrease agricultural GDP by 3.1 % 1 each year. Around 80% of total losses fall directly on household consumption and therefore have severe household welfare implications. The southern coastal and northwestern regions are expected to experience the largest income decline. Other impacts of more frequent and intense climatic events include: (1) loss of key economic infrastructure and livelihood resources; (2) saline water intrusion into coastal aquifers and areas; and (3) loss of biodiversity. Bangladesh has put in place an extensive set of risk mitigation measures to enhance its preparedness for disasters. Households have also needed to adapt to reduce exposure to these risks and to maintain their livelihoods. While these measures have significantly reduced damages and losses from extreme events over time, especially in terms of deaths and injuries, additional measures are available and needed to further reduce the risks from existing climate related hazards. A number of these measures are already in place in Bangladesh, including both hard infrastructure as well as soft policy measures combined with communal practices. Hard infrastructure has included coastal embankments, foreshore afforestation, cyclone shelters, early warning systems; soft measures include changes in design of roads, migration of people from high risk coastal areas and changes in cropping patterns. These measures have made the country more resilient in facing the climate hazards and the number of fatalities and loss of income has reduced. The risks from climate variability and change are geographically concentrated in six specific regions of the country, which also have higher concentrations of the poor, i.e. subsistence farmers, the rural landless, fishing communities, and urban poor. The areas are largely defined by their physiology and ecology and have varying climate change risks: (1) the South, Southwest, Southeast coastal region is at risk from increasingly frequent and severe tropical cyclones, sea level rise causing drainage congestion and saline water intrusion in surface, ground water and soil; (2) Northwest Barind Tract is prone to drought; (3) Northeast haor or freshwater wetland area is impacted by either delayed rainfall or early floods and sedimentation from erosion of the surrounding hill areas; (4) Central char and floodplains are prone to flooding, flash floods and river bank erosion; (5) Hill Tracts are prone to landslides; and (6) the urban areas are impacted by drainage congestion. The Government of Bangladesh (GOB) recognizes that climate change is both an environmental and developmental issue and it has prepared a number of strategic documents to guide the country’s response to this issue. The National Adaptation Program of Action (NAPA) prepared in 2005 and updated by the Ministry of Environment and Forests (MOEF) in 2009 identified key climate change issues and recommended 45 specific regional adaptation strategies targeting the coastal region, including the islands, Northeast, Northwest, Central, Charland/floodplain, and Southwest regions. The 2009 Bangladesh Climate Change Strategy and Action Plan (BCCSAP) prepared by GOB also reinforces the country’s commitment to take all measures to protect people from the impacts of climate change and places adaptation as a priority. This strategy and action plan has the following six pillars: (1) address the impacts on food security, social protection and health; (2) strengthen further the country’s comprehensive disaster management capacity; (3) climate proofing existing infrastructure; (4) improve research and knowledge management to predict the likely scale and timing of climate change on different sectors; (5) incorporate mitigation and low carbon opportunities for future growth; and (6) focus on capacity building and institutional capacity. 2 To support the implementation of the BCCSAP, the GOB, in collaboration with development partners established a multi-donor trust fund entitled “Bangladesh Climate Change Resilience Fund (BCCRF)� in 2010 under MOEF’s purview to finance interventions to strengthen the country’s resilience to climate change. The United Kingdom, Sweden, European Union, Switzerland, and Denmark have contributed a total of US$125 million to the BCCRF to date. The BCCRF is being administered by the World Bank temporarily. The BCCRF is designed as a ‘one-stop’ mechanism for large-scale climate change financing in Bangladesh with two windows: an on-budget window for funding public sector projects and an off-budget window for funding projects to be implemented by Non-governmental organizations (NGOs). The objectives and guiding principles for the NGO window is outlined in the BCCRF implementation manual agreed upon by MOEF and the contributing donors. On May 19, 2011, the Governing Council of BCCRF designated Palli Karma-Sahayak Foundation (PKSF) as the implementing agency for the off-budget window of funding NGO sub-projects under the proposed Community Climate Change Project (CCCP). PKSF was established in 1990 as a not- for-profit organization by GOB, and has extensive community development experience and a nationwide network of partner organizations (POs) involved in poverty alleviation through sustainable employment generation for the poor. PKSF is a financial institution with experience in implementing projects supported by the World Bank, ADB, IFAD, DFID and other donors that target civil society and vulnerable groups. However, its focus has been mainly on micro- credit programs in metropolitan, urban and rural areas through predetermined Partner Organizations (PO). PKSF has 12 million clients throughout Bangladesh through their 200 POs with 6000 branches, and 8 million clients indirectly through their other networks. PKSF also has a technical assistance program that provides training in livestock and crop sector. PKSF has implemented two World Bank funded projects – “Second Poverty Alleviation and Employment Promotion Project� of US$105 million (1996) and Learning and Innovation Loan (LIL) for “Financial Services for the Poorest (FSP)� of US$5 million (2002-2004). It is currently supporting the implementation of the “Emergency 2007 Flood Restoration and Recovery Assistance Program� of US$15 million under the Social Investment Program Project (SIPP). III. Project Development Objectives The Development Objective of the project is to enhance the capacity of selected communities to increase their resilience to the impacts of climate change. This is expected to be achieved through the establishment of an effective grant financing mechanism within PKSF to channel funds to NGOs. IV. Project Description Component 1. Community Climate Change Fund (US$10.40 million) 1. This component would establish a US$10.40 million fund to finance community-based climate change adaptation projects implemented with the assistance of NGOs. The fund would be managed by PKSF through a separate Project Management Unit (PMU), to be set up and supported (including staffing, equipment, and operation costs) under Component 3. 3 2. PKSF will invite project proposals from NGOs to address climate change impacts in (a) salinity affected coastal areas; (b) flood affected char-lands and river basins; and (c) drought affected or rainfall-scarce areas. Each project proposal must be located within a vulnerable zone (a list of upazilas in these zones is provided in Annex 2), and must address at least one of the following six pillars of the BCCSAP: (a) improve food security, social protection and health; (b) improve disaster management capacity; (c) climate proof existing infrastructure; (d) improve research and knowledge management to predict the likely scale and timing of climate change in different sectors; (e) explore mitigation and low-carbon development opportunities; and (f) focus on capacity building and institutional strengthening. The sub- projects would range from US$20,000 to US$1 million, and all would be completed three months before the completion date of the CCCP. The proposals would also be reviewed for social and environmental safeguards, including gender and social inclusion, as per Bank policy. Component 2. Knowledge Management, Monitoring and Evaluation, and Capacity building (US$ 0.44 million) 3. Since community-based adaptation to climate change is an evolving field of practice, this component would promote the sharing of lessons on best practices among the participating NGOs, as well as in the wider NGO community and in regional and global forums. This component would also support a structured learning process of capturing lessons and incorporating best practices into the design and implementation of community-based interventions, including the preparation of a toolkit and guidelines, and visits to adaptation activities in different vulnerable zones. Technical assistance will be provided to develop options for institutionalizing lessons learned. 4. This component will also (a) build the capacity of NGOs to prepare eligible community- based climate change adaptation sub-project proposals; (b) operationalize an M&E system to ensure effective monitoring of project outcomes at the project and community levels; and to enable an independent third party monitoring and impact evaluation of financial system performance, and a comprehensive review and evaluation of outcomes at project completion; and (c) establish a grievance redress system to handle any issues raised by stakeholders about the implementation of the project or any sub-project. Component 3. Project Management (US$1.66 million) 5. This component would finance technical assistance to: (a) establish a PMU within PKSF to manage the Community Climate Change Project and monitor the implementation of sub- projects. It would also finance the operating costs of the Fund, including equipment, financial management, procurement, technical assistance, and administrative expenses; and (b) build the technical capacity of PKSF to appraise sub-project proposals submitted by NGOs; and to operationalize the procedures for Fund management outlined in the Operational Manual. V. Financing ($m.) Source: 4 Borrower/Recipient (PKSF) IBRD IDA Others: Bangladesh Climate Change Resilience Fund (BCCRF) 12.5 Total 12.5 VI. Implementation A. Institutional Arrangements 1. Project implementation will involve the following Government institutions:  Ministry of Environment and Forests (MOEF) will be the coordinating ministry on behalf of the Government;  Bangladesh Climate Change Resilience Fund (BCCRF) will provide the funds for this project as well as exercise some broad fiduciary controls through its Governing Council and Management Committee (further details in Annex 3);  PKSF will receive the funds from BCCRF and be responsible for overall implementation of the project. BCCRF 2. The Bangladesh Climate Change Resilience Fund (BCCRF) is a partnership among the Government of Bangladesh, the World Bank, and other development partners to address the impacts of climate change. Its objective is to support implementation of Bangladesh Climate Change Strategy and Action Plan (BCCSAP). The Government is leading the management and implementation of BCCRF. On behalf of the contributing development partners, and in consultation with the Government, the World Bank is ensuring that the Fund meets due diligence requirements in terms of financial management and implementation. Details of BCCRF’s governing structure and operations are in Annex 3. PKSF 3. PKSF was established in 1990 as an umbrella organization with the mandate for poverty alleviation through employment generation. PKSF disburses funds to microfinance institutions (MFIs) who are its Partner Organizations to implement programs designed for the poor of Bangladesh. In its first decade, PKSF focused on strengthening program implementation and institutional development of its Partner Organizations. In its second decade, PKSF shifted gears to accommodate the economic and social changes taking place in Bangladesh. As PKSF begins its third decade, it intends to address multi-dimensional aspects of development, including generating employment and providing comprehensive development support with programs such as health, education, and skill development. The proposed project represents this new direction. Project Management Unit in PKSF 5 4. PKSF will establish a PMU with suitable office facilities to manage the CCCP. A Project Coordinator (PC) will head the PMU and be in charge of overall implementation. He/she will directly report to a senior official of PKSF and be the first contact person at PKSF for the BCCRF Secretariat, the World Bank, and other development partners involved in the CCCP. The PC will report to the BCCRF through the designated senior PKSF official. 5. The PMU will engage several Program Officers (POs) to liaise with the implementing NGOs, known as project implementing partners (PIPs). The PIPs will receive sub-grants from the CCCP throughout the project implementation process. The PMU will engage minimum of 6 POs. The number of POs will depend on the number of PIPs and the number PIPs to be allocated to each PO will depend on the size, geographical location and nature of the projects. The POs will be the first contact points for the PIPs, and will report to the PC. Project Management Setup PKSF Governing Body BCCRF The World Bank MD/Sen official PKSF Technical Project Secretary Experts Coordinator support staff Senior Accounts Accounts & Admin/ Deputy M&E MIS PO s &Finance Officer Finance Officer PC/Procurement Specialist Specialist Project Implementing Partners (PIP) 6. The Program Officers will have backgrounds in climate change adaptation, environment, a community/social development, agriculture, water resources management, disaster management, knowledge management, and other relevant areas, and will ensure that environmental and social safeguard issues are properly addressed in all CCCP activities. In addition, an M&E officer in the central M&E unit of PKSF will provide technical guidance to POs on monitoring the sub-projects, and will report to both the head of M&E and the Project Coordinator in the PMU. A Senior Accounts and Finance Officer, and Administrative/Procurement and Logistics Officer dedicated to CCCP will work under the technical supervision of PKSF’s Finance, Accounts and Audit Section and under the administrative guidance of the PMU. 7. The PMU will also prepare a roster of technical reviewers and use their services as and when required to evaluate and appraise sub-project proposals. These technical experts will represent different thematic areas listed in the BCCSAP and different technical disciplines relevant to climate change adaptation (e.g., water, health, irrigation, agriculture, aquaculture, livestock, infrastructure, disaster management, gender, community development, ecosystem 6 management, organizational development, project management, financial management, coastal livelihoods, local governance and advocacy, etc.). Experts must have proven record of at least five years in the area of development and climate change and a relevant management/ academic/research background. 8. For each sub-project proposal, the PC will designate an evaluation team led by one of the POs, and one or more of the technical reviewers, depending on the nature, scope and size of the proposal. The PO heading each team will be responsible for preparing the appraisal report and recommendations on behalf of the team. The proposals will be evaluated by sector and region to expedite the review process. B. The World Bank, PKSF Governing Body and the BCCRF Secretariat 9. The PKSF will keep the World Bank informed of all relevant matters and send the evaluations and recommendations for sub-projects to the World Bank to ensure their compliance with Bank fiduciary requirements. Once cleared by the World Bank, sub- projects will be submitted to the PKSF Governing Body for final approval. PKSF will also report to BCCRF Management Committee on the progress of CCCP on a semi-annual basis. C. Grant Awarding Procedures for the Community Climate Change Fund 10. Guiding Principles. CCCP will provide sub-grants to NGOs to implement sub-projects focused on community-based climate change adaptation activities. The guiding principle in the design of the grant award system is “simplicity with transparency,� so award decisions will be made in the shortest time possible, and activities will be carried out efficiently and meet all safeguard requirements without compromising the quality of outputs. 11. The selection of NGOs’ sub-projects and the award of sub-grants will be done in two phases: a Concept Review Phase (CRP), in which NGOs will establish their eligibility to receive sub-grants; and a Proposal Review Phase (PRP), in which sub-project proposals will be evaluated by a team of experts, using agreed-upon climate change-related criteria, after which sub-grants will be awarded. There will be one call for proposals at the project launch targeting the priority climate risk regions. Details of PKSF’s sub-grant funding mechanism are provided in Annex 3. 12. The aim of the Concept Review Phase is to determine whether the NGO has the institutional and financial capacity to proceed to the next phase of preparing a full sub-project proposal, based its legal registration and financial and institutional reports. The NGO must also have an established presence and ongoing activities in one of the target upazilas to ensure that the proposed sub-project builds on its experience in the area. The NGO will be required to submit a Concept Note with a brief description of the proposed sub-project, and demonstrate that the project qualifies as an “adaptation� project addressing at least one of the pillars of the BCCAP. The evaluation team will be composed of only evaluators who have no conflict of interest with the NGO being evaluated. There will be automatic disqualification of both evaluators and NGOs if there are conflicts of interest which are not declared. 7 13. The Proposal Review Phase applies only to sub-project proposals that have passed the Concept Review Phase. The proposals will be submitted in a prescribed format and evaluated by an Evaluation Team headed by a Program Officer, with input from technical experts as needed. There will be automatic disqualification of both evaluators and NGOs if there are conflicts of interest. D. Results Monitoring and Evaluation 14. The project will be monitored at three levels – (1) achievement of outcome of the project, (2) the performace of PKSF in the establishment and implementation of the sub-grant financing mechanism, and (3) the performance of NGOs in the implementation of the sub-grants. An annual Third Party outcome monitoring; and Mid-term and completion Impact evaluation will be conducted to determine the progress towards the achievement of the project development objectives. PKSF will be responsible for setting-up a functioning Project Management Unit (PMU), the sub-grant mechanism, and ensuring effective implementation of the fiduciary aspects throughout the project including environmental management, social assessment and management, financial management, and procurement management. A third party monitoring will be conducted as frequently as necessary, to assess the effectiveness of PKSF as the implementing agency and monitor the sub-projects implemented by NGOs for adressing the climate risk for each of the selected regions. 15. Each sub-project will be subject to monitoring both by the implementing NGO and by PKSF. However, the frequency and subject of monitoring will differ. A detailed M&E manual consistent with PKSF’s overall results-based monitoring system has been prepared and will guide the monitoring practices. 16. Monitoring under CCCP will have three functions. First, it will ensure that implementing NGOs deliver on agreed outputs, which will indicate that sub-grant resources are being used efficiently for the proposed activities. Second, monitoring will establish proper documentation of the implementation process and achievements at different levels (outputs, outcomes and impacts). Third, monitoring will help capture learning about climate change adaptation in different contexts, thereby add to the knowledge base for future actions. In short, the role of accountability is a significant monitoring issue at the level of outputs, whereas learning becomes a core issue at the level of outcomes and impacts. VII. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Involuntary Resettlement (OP/BP 4.12) X Indigenous Peoples (OP/BP 4.10) X Forests (OP/BP 4.36) X 8 Safety of Dams (OP/BP 4.37) X Projects in Disputed Areas (OP/BP 7.60)* X Projects on International Waterways (OP/BP 7.50) X VIII. Contact point at World Bank and Borrower World Bank Contact: Yuka Makino Title: Senior Natural Resources Management Specialist Tel: (880-2)8159001-28 Email: ymakino@worldbank.org Borrower/Client/Recipient Contact: Mr. Mesbah ul Alam Title: Secretary, Ministry of Environment and Forests, Government of Bangladesh Tel: (880)716-0481 Email: mozammel@moef.gov.bd Implementing Agencies Contact: Dr. Quazi Mesbahuddin Ahmed Title: Managing Director, Palli Karma-Sahayak Foundation (PKSF) Tel: (880-2) 9140246 Email: qmahmed_ged@yahoo.com IX. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas 9