POVERTY ALLEVIATION FUND (PAF) / THE WORLD BANK

E865

ENVIRONMENTAL ASSESSMENTFOR

POVERTY ALLEVIATION FUND ACTIVITIES

FINAL REPORT

Nawa Raj Khatiwada, Dr. Eng.

(Principal Investigator)

122 Janakalyan Galli

Koteshwor, Kathmandu

FEBRUARY 2004

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ACKNOWLEDGEMENT

The Principal Investigator and his study team would like to express their gratitude to thePoverty Alleviation Fund and the World Bank for providing an opportunity to carry outEnvironment Assessment of 'Poverty Alleviation Fund (PAF) Activities'.

The co-operation and support extended by Dr. Mohan Man Sainju, Vice Chairman, PAF; MrShankar Raj Joshi, Executive Director, PAF; Mr. Rabi Sainju, the Executive Officer of PAFand all other staff of PAF Office are highly appreciated and thanks are due to all of them.

Similarly, gratitude is also due to Ms. Geeta Sethi, Task Leader, PAF/The World Bank, Ms.Naima Hasci, Senior Social Scientist, The World Bank, Mr. Luis, The World Bank and Mr.Kiran Gautam, The World Bank who kindly provided a major support and help inconceptualization of the study, preparation and finalization of the study.

The Principal Investigator and his team would also like to highly appreciate the commentsand valuable suggestions provided by all other stakeholders during consultation meetings andpersonal communication.

Finally, the co-operation, active participation and valuable suggestions rendered to this studyby other consultants also working for PAF activities are highly appreciated andacknowledged.

February 29, 2004 Nawa Raj Khatiwada, Dr. Eng.Koteshowr, Kathmandu (Principal Investigator)

TABLE OF CONTENTS

Chapter Title PagesTitle Page iAcknowledgement iiTable of Contents iiiList of Tables viList of Figures viiList of Abbreviations viiiExecutive Summary ix

I INTRODUCTION1.1 General 11.2 Justification of the Study 21.3 Objective and Scope of the Environmental Assessment 21.4 Methodology and Activities 31.5 Organization of the Study Team 31.6 Reporting 3

II PROJECT DESCRIPTION2.1 Introduction 42.2 Project Development Objective 42.3 Types of Sub-project 52.4 Category of the Project 62.5 Location and Size of the Project 72.6 Description of the Project Components 7

III BASELINE ENVIRONMENTAL STATUS3.1 General Information 103.2 Physical Information 10

3.2.1 Topography 103.2.2 Soil and Geology 113.2.3 Mining and Extraction 123.2.4 Land Use 123.2.5 Climate and Meteorology 143.2.6 Water Pollution Issues 15

3.3 Biological Environment 163.3.1 Inventory of Floral Species 163.3.2 Inventory of Faunal Species 173.3.3 Protected Areas 18

3.4 Forest Resources of Nepal 223.5 Socio-economic Condition 243.6 Tradition and Culture 26

3.6.1 Ethnic Groups, Languages and Religion 263.6.2 Festivals 273.6.3 Marriage and Family 27

3.7 General Information of Selected Districts 27

IV POLICY, LEGISLATION AND REGULATION4.1 World's Bank EA Requirements 31

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4.2 National Guideline Related to Environment 334.3 Decentralization Policy and Environment 344.4 National Policies and Planning Practices 364.5 Institutional Involvement at Local Level 384.6 International Obligations 40

V POTENTIAL ENVIRONMENTAL IMPACTS5.1 Introduction 415.2 Environmental and Social Impact Associated with the Income 42

Generating Activities5.2.1 Impact Associated Planning and Location 435.2.2 Impact Associated with Implementation, Operation and 43

Maintenance Phase5.3 Environmental and Social Impact Associated with Infrastructure 43

Project5.3.1 Impact Related to Project Planning and Location 455.3.2 Impact Associated with Construction and Implementation 46

Phase5.3.3 Impact during Operation and Maintenance Phase 46

5.4 Environmental and Social Impact Associated with Capacity 46Building5.4.1 Impact due to Planning and Implementation 475.4.2 Impact due to Operation and Management 47

5.5 Cumulative Environmental Impact 48

VI ALTERNATIVE ANALYSIS6.1 Introduction 496.2 Without Project Scenario 496.3 Comparison of Alternative 496.4 Alternatives for Project Components 50

VII ENVIRONMENTAL MANAGEMENT FRAMEWORK7.1 Mitigation Measures 547.2 Environmental Management Plan 547.3 Enviromnental Management Action Plan 617.4 Institutional Strengthening and Training 627.5 Monitoring and Evaluation 637.6 Independent Monitoring Agency 647.7 Capacity Building Program 64

VIII INDIGENOUS PEOPLES DEVELOPMENT PLAN8.1 Introduction 668.2 Legal Framework 678.3 Baseline Data 678.4 Land Acquisition and Resettlement 708.5 Strategy for Local Participation 718.6 Technical Identification of Development or Mitigation Activities 718.7 Institutional Capacity 728.8 Implementation Schedule 738.9 Monitoring and Evaluation 738.10 Cost Estimates and Financial Plan 73

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References 74

Annex I: Checklist of the Environmental Sensitive Areas in a District 76Annex II: Feed Back Slip for Technical Session 77Annex III: Proposals Requiring Initial Environmental Examination 78Annex IV: Summary of the Response to the Feedback Provided on the 83

Draft ReportAnnex V: Development Activities in Selected Six Districts 85Annex VI: Human Development Index 87Annex VII: Summary of Discussions with Different Stakeholders 88

LIST OF TABLES

Table Title Page

1.1 Details of the Study Team 33.1 Soil type and Geology of the Geographic Region 123.2 Boulder, Gravel and Sand Reserve in Siraha and Kapilbastu 123.3 Land use Pattern of Nepal 143.4 Nepal's Share in Global Plant Species 163.5 Inventory of Faunal Species 173.6 Number of Species Included in CITES and IUCN list 173.7 List of National Parks in Nepal 193.8 List of Wildlife Reserve in Nepal 213.9 Hunting Reserve in Nepal 223.10 Conservation Areas of Nepal 223.11 Area, Population and Number of Districts by Geographic Region 253.12 The Demographic Feature of Selected Six Districts 293.13 The Land Use Pattern of Selected Six Districts 294.1 Major Socio-economic Goals 374.2 Environmental Related Provisions in Some Contemporary Acts 384.3 Laws and Relevant Regulation for Maintaining Sound Enviromnent 395.1 Summary of Environmental and Social Impacts of PAF Activities 445.2 Sub-project Classification 456.1 Institutions Involved in the Development of Rural Areas 506.2 Comparative Analysis of Alternatives 517.1 Matrix of Environmental Impacts and Mitigation Measures 557.2 Summary of Activities Included in EMP 618.1 Percentage of Population Distribution 688.2 Percentage of Population Distribution by Mother Tongue 688.3 Population Distribution by Religion of Six Selected Districts 698.4 Distribution of Ethnic Groups in Selected Six Districts 698.5 Traditional Skills Inherited by Dalit Women in Terai Region 72

IV.A Summary of the Response to the Feedback Provided on the Draft 83Report

V.A Present Level of Irrigation Development, 1997 85V.B Drinking Water Project, 1999/2000 85V.C Number of Industries Registered and Skilled Trainees in Selected 85

Districts (1999/2000)V.D Total Number of Schools, Students and Teachers, 2000 86V.E Health Services in the Districts (1999/2000) 86VI.A Human Development Index 87

LIST OF FIGURES

Figure Title Page

2.1 Organizational Structure of the PAF 53.1 Land Use of Nepal 133.2 Protected Areas of Nepal 233.3 Map of Selected Six Districts 304.1 Environmental Assessment Process in Nepal 35

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LIST OF ABBREVIATIONS

BOD Biological Oxygen DemandCBS Central Bureau of StatisticsCITES Convention on Intemational Tread in Endangered speciesCO Community OrganizationDDC District Development CommitteeDFO District Forest OfficerDFRS Department of Forest Research and SurveyDNPWC Department of National Park and Wildlife ConservationDWSS Department of Water Supply and SewerageEA Environment AssessmentEIA Environmental Impact AssessmentEMAP Environmental Management Action PlanEMP Environmental Management PlanEPA Environment Protection ActEPR Environment Protection RulesFD Forest DepartmentFMIS Farmers Managed Irrigation SystemGDP Gross Domestic ProductHDI Human Development IndexHMG His Majesty's GovemmentIDA Intemational Development AssociationIEE Initial Environmental ExaminationIPDP Indigenous People's Development PlanIUCN The World Conservation UnionLSGA Local self Governance ActMFSC Ministry of Forest and Soil ConservationMOPE Ministry of Population and EnvironmentNARC Nepal Agricultural Research CouncilNDI National Development InstituteNHRC National Health Research CenterNPC National Planning CommissionNWSC Nepal Water Supply CorporationOG Operational GuidelinePAF Poverty Alleviation FundPD Plan DepartmentPI Principle InvestigatorPO Partner OrganizationRWSSFDB Rural Water Supply Sanitation Fund Development BoardRWSSP Rural Water Supply and Sanitation ProjectSA Service AgencySO Social OrganizationUNDP United Nation Development ProgramUNEP United Nation Environment ProgramVDC Village Development CommitteeWHO World Health OrganizationWHS World Heritage SitesWUC Water User CommitteeWUG Water User Group

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EXECUTIVE SUMMARY

The concept of the Poverty Alleviation (PAF) Project is based on the principles thatappropriate income generation activities, small-scale infrastructure development andcapacity building programs improve the livelihoods of the nrral poor and sociallyexcluded groups in rural community of Nepal. The project is based on the integratedapproach in which emphasis is given on both hardware comnponents and software aspects.This study has identified a few environmental issues related to income generation,infrastructure development and capacity building components under PAF projectactivities. The mitigation measures addressing these issues need to be incorporated in thelife cycle of the sub-projects in order to attain the environmentally sound and sustainabledelivery of the services.

Introduction

The objective of the Poverty Alleviation Fund (PAF) project is to improve the livelihoods ofthe rural poor and socially excluded groups by implementing the income generation activities,small-scale infrastructure development programs and sustaining these programs in ruralcommunity of Nepal through capacity building and training. The project will receive financialassistance from World Bank. PAF plans to implement the rural development activities in onehand, while on the other hand, it intends to empower the rural poor communities for theenhancement of socio-economy. The project aims at socio-economic development of deprivedrural communities through the development of skill and establishment of basic infrastructures.Social mobilization and organization of the communities is defined as the starting point in theproject. Community participation at project planning, implementation and operation has beenidentified as the pre-requisite for the development of the schemes under PAF. Targeting thepoor, deprive groups and ensuring the equity and gender balance would be the basic principlesof this project.

The proposed project is within the framework of the national development policy in Nepal.The proponent of the project, Community Organisation (COs), and Partner Organizations(POs) have been identified as major stakeholders of the project. The tenth national plan(2002-2007) of Nepal has a target of improving the socio-economic indicators significantly byproviding employment opportunity through development programs in Nepal. The proposedproject of PAF is expected to have a significant contribution to achieve this goal. This study'Environment Assessment of PAF' is aimed at recommending measures for enhancing andsustaining the positive environmental benefits of the project by identifying the external andintemal, direct and indirect, and immediate and long-term impacts and by formulating themitigation measures and a plan to incorporate the measures in the life cycle of the projectcomponents.

The Proposed Project

The PAF Board was created by His Majesty's Govemment of Nepal in 2004. PovertyAlleviation Fund ordinance 2004, provides authority to plan, implement and monitor theactivities under the umbrella of PAF. His Majesty's Government has adopted andpromulgated the Poverty Alleviation Fund Rules 2060 under the section 31 of the ordinance.PAF Project is planned to promote the development process by developing some physical

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infrastructures and providing funds for employment and income generation in one hand, whileon the other hand to empower the rural communities essential for the enhancement of socio-economy. The proposed project is within the framework of the national policy on povertyalleviation and sustainable development in Nepal. The project has a goal to improve socio-economic condition of deprived rural communities and beneficial to at least 80 percentpopulation of the project areas.

The working principles of the PAF include: a demand lead or responsive participatoryapproach, ensuring the sustainability of the project components by increasing the communitycapacity, considering marginalized and socially excluded groups as primary actors of processand enhancing their role in the project and decision making through active participation. ThePAF Board signs MOUs with POs for mobilizing COs. COs with the assistance from POsdevelop sub-project proposals and submit to PAF Board for approval. Such approved sub-projects get a funding support through PAF. POs are VDCs, DDCs, local NGOs or privatesector agencies. The community with a support from PAF manages the planning,implementation and operation of the project components focusing particularly on communityawareness, planning and training aspects. The concept and approach of PAF is expected to besound and yield successful results on the ground with indications of strong communityownership and commitment, which will pave a way for scheme sustainability.

PAF activities are anticipated to be implemented in two phases. Phase I, also termed as PilotPhase, will be spanned for a maximum duration of 3-4 years. However, the successfulimplementation and results may shorten the span of phase I. Depending upon the outcomesand lesson learned, phase II will be initiated. The results of phase I decide the launching timefor phase II. The pilot PAF will be implemented in six districts namely: Ramechhap, Siraha,Kapilbastu, Pyuthan, Mugu and Darchula that have been seriously under-served. The selectedPOs in these districts will mobilize the COs, and PAF Board will screen the sub-projectssubmitted by COs. Siraha has been chosen from Eastern Development Region and lies on theTerai belt. Ramechhap was selected from Mid Development Region and lies on the Mid hills.Kapilbastu lies in the Western Development Region and is located in the Terai area. Muguand Pyuthan have been selected representing Mid Western Development Region. Mugurepresents the district located in Mountains region whereas Pyuthan is located in the Churiarange. Finally, Darchula belongs to the Far Western Development Region and is located in themid hills. This modality has been termned as first window of the pilot phase. This modalitywill be expanded to the rest of the districts during PAF phase II. A slightly different modalityhas been decided for the second window. Any social or other organization can propose aproject, probably innovative and typical, located in any of the seventy-five districts. The laterwindow might include poverty alleviation programs to disadvantaged communities/groupssuch as the Kamaia in the Westem region or conflict victims in the country etc. The selectionis directly based on the eligibility of their sub-project proposals from anywhere in Nepal.

Baseline Environmental Status

The baseline data on the physical, biological, socio-economic, tradition and culture and otherrelevant environmental characteristics of the project area are briefly described below.

Physical Environment: The topography of Nepal is comprised of Terai, Hills and Mountains.The Terai region constitutes the most productive agricultural region of the country. Thealtitude of Terai ranges from 60 m to 300 m. The Churia range constitutes the southem Hillregion of Nepal with an altitude upto 2,000 m. The altitude of the Mahabharat and the Mid-Hills range from 600 to 3,000 m. The inner Himalayan Valleys situated at an elevation of

about 4,000 m is home to highland dwellers. The percentage distribution of coverage and thepopulation for mountains, hills and the Terai is 35.2, 41.7 and 23.1 and 7.29, 44.28 and 48.43,respectively. Because of this topographical variation, the country exhibits the diversity notonly in the natural resources and climatic conditions but also the settlement pattern, socio-economy, tradition and culture. The type of the soil differs according to the geographicregion. The soil in Terai and Churia region consists mainly of alluvial deposits derived fromthe erosion of sediments from the Himalaya. This region is highly fertile and intenselycultivated. The Churia region comprises of north dipping sedimentary rocks of tertiary agecharacterized by low elevation strike ridges. The Mid-Hills consist mainly of low-grademetamorphic and meta-sedimentary rocks such as phyllite, quartzite, limestone and dolomite.

The land is distributed as: cultivated land 20%, non-cultivated land 7 %, grass land 12%,forest land 29%, shrub/degraded land 11% and others 22 %. The 2001 Census data indicatedthat 84% of the total households are located in rural settings. Thus it is very clear thatmajority of the population to be covered under PAF will be farmers located throughout the 75districts of Nepal.

Biological Environment: Nepal is immensely rich in biological diversity as it lies in betweentwo big geographical regions. In spite of being small in size which constitutes only about 0.03percent of the world total landmass, it provides a favorable habitat for the luxurious growth ofdifferent biological species. The country has about 54% of the surface area under some sort ofvegetation cover. A total of 118 ecosystems have been identified in different physiographiczones in Nepal. In addition, 75 vegetation types and 35 forest types are identified in thecountry, which is biologically divided into ten zones.

Nepal shares a less than three percent on non-flowering species and slightly over two percenton flowering plant species in comparison to the whole world. About 60 non-endemic and 47endemic plant species are documented as threatened species in the recent state of environmentreport of Nepal. Among the 60 non-endemic plants, 22 are rare, 12 are endangered, and 11species are vulnerable. With regard to endemic plants, 8 are extinct, I is endangered, 7 arevulnerable, and the remaining 31 species are documented as rare species.

Nepal is equally rich in faunal diversity. Various types of ecosystems provide habitat tovarious wild species. At present, in situ conservation of wild species are ensured in 9 nationalparks, 3 wild life reserves, I hunting reserves and 3 conservation areas. Nepal shares 4.27 and8.57 percentage of the total world's mammals and birds respectively.

Parks, reserves and conservation areas are distributed in different ecological belt as well as indevelopment regions. Covering area of these parks and reserves change from time to time dueto extension programs. In recent years, the successful outcomes of the community forestryprograms in Nepal have contributed not only in conservation and enhancement of biodiversitybut also in meeting the demands of forest products.

Socio-economic Environment: The population of Nepal increased from 18.5 million in 1991to 23.2 million in 2001. Average population density of Nepal is 157 persons per sq. kilometerand it is estimated that the PAF project will cover total households of about 4 million. It isalso anticipated that the population of the country will be doubled by 2031. Principalindicators of the socio-economy in 2001 included: life expectancy at birth-59.7 years, literacyrate 53.74 %, per capita GDP- Rs. 17,712 and per capita GNP Rs. 18,451.

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The Nepal Human Development Report 2001 estimated the Human Development Index(HDI) for Nepal to be 0.466. The indices for Mountain, Hill and Terai were estimated as0.378, 0.510 and 0.474, respectively. On the regional basis, the mid-western (0.402) and far-western (0.385) had lower values than of national average showing the concentration of lessproductive economic activities there. Nearly four-fifths of the total population depends uponagriculture as its primary source of earning. Nearly four-fifths of all workers are also self-employed, almost all in the agricultural sector. Sixty-nine percent of the agricultural holdings,however, are less than one hectare in size. The agricultural GDP grew annually by only 2.3percent during the last two decades.

Nepal is heading for the economic development with liberalization policy and hasimplemented various programs for eliminating the poverty and achieve rapid growth rate.Private sector has been encouraged and efforts are underway to generate more employment.Although, Nepal lacks modem development infrastructure and the income level of majority ofthe population is fairly low, the mountainous landscape has also offered diverse potentials foreconomic development. The major potential areas include: hydropower and tourism.

Tradition and Culture: Nepal's population consists of two major groups: the Indo-Nepaleseand the Tibeto-Nepalese. These groups are further represented by various ethnic communitieshaving diverse culture, traditions and languages. The Nepalese society has a tradition ofmaintaining the harmony and peace among various ethnic communities. The family andkinship networks providing the individuals with wide ranging personnel relations as well associal security in difficult times. People continue diverse ritual and religious practices, whichgive meaning to their life resulting in to stability in the society. Crisis management is a veryregular activity of the majority of the households.

Policy, Legislation and Regulation

The objective of carrying out EA of projects proposed for World Bank's financing is to helpensure that they are environmentally sound and sustainable and thus to improve decisionmaking.

As per the Bank's policy and requirement, EA is initiated as early as possible in projectprocessing and is integrated closely with the economic, financial, institutional, social andtechnical analysis of a proposed project. The borrower is responsible for carrying out the EA.The Bank reviews the findings and recommendation of the EA to determine whether theyprovide and adequate basis for processing the project for Bank financing.

The proposed project of PAF is expected to have a net positive impact on human populationand the environment. In fact and in a broad sense, the objective of PAF is to enhance theenvironmental quality and quality of life by reducing the traditional environmental risks andpoverty. In case of any adverse impact on enviromnentally important areas such as wetlands,forests, grasslands and other natural habitats, the mitigation measures can be designed andincorporate easily so as to improve the environmental performance. Thus as per the WordBank's criteria, PAF project has been classified as Category B. The projects falling under thiscategory require a limited environmental review to determine potential negative impacts,identify the appropriate mitigation measures and recognize the identification of opportunitiesfor environmental assessment.

His Majesty's Government of Nepal (HMG/N) has enacted the Environmenit Protection Act,2053 (1997) (EPA) and the Environnent Protection Rules, 2053 (1997) (EPR). The EPA

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requires that an EA either in the form of an Initial Environmental Assessment (IEE) or anEnvironmental Impact Assessment (EIA) shall be carried out for all proposed projects, whichmeet the criteria listed in Schedules 1 and 2 in the EPR. While EIA has been described as adetailed study or evaluation of the adverse environmental impacts, IEE has been mentioned asa report on analytical study or evaluation. The EPA clearly outlines the concerned agency orthe Ministry approval of the proposal as a prerequisite for the implementation of a project.The provisions are made such that a proponent must submit a project proposal accompaniedby either IEE or EIA studies for the approval.

Local Self-Govemance Act, 2055 (1999) (LSGA) aims at having institutional development oflocal bodies capable of bearing responsibility. By providing such responsibility and power atthe local level, the local bodies are able to make decisions on the matters affecting the day today needs and lives of the people. LSGA has specific provisions in relation to theinfrastructure development and environment projects.

Other legislation related to environment in general include: Forest Act (1992), Pesticide Act,(1991), Solid Waste Act (1986), Soil and Water Conservation Act (1982), King MahendraTrust for Nature Conservation Act (1982), Tourism Act (1978), and National Parks andWildlife Conservation Act (1973). Article 7 of Environment Protection Act 2053 (1997) hasmade the clear provisions regarding the Environmental Standards.

The environmental policies and strategies in the Tenth Five-Year Plan are:

* Conservation of natural resources, biodiversity and cultural heritage* Strengthening the capacities of local bodies on local natural resource management* Mainstreaming and promoting environmental conservation in socio-economic

development activities* Setting up and implementation of environmental standards- air, water, noise and soil

pollution and adopt polluter pays principles* Formulation of regulatory frameworks for environmental health programs* Encouragement to scientists, technicians and researchers to develop new technologies

and measures* Making the government and private sector investment environment-friendly* Introduction of pollution prevention fee and other fees to increase funds in

environment conservation fund and* Give special focus on voluntary compliance

The Tenth Plan also commits to carry out environmental monitoring. This indicated thecommitment of the national plan in addressing the environmental issues. For infrastructures,the key features of Tenth Plan are listed below:

* Appropriate methodology should be sought for resource mobilization, allocation andutilization to achieve sustainable economic growth

* Generate employment opportunity through development programs* Development of strategic road network (accesses to district head quarter and regional

balance) and area with significant socio-economic importance e.g. hydropower,tourism etc.

* Encourage private sector participation in the development of infrastructure activities* Promotion of decentralized management system to sustain the development

infrastnmctures activities

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* Provide basic water supply services to 85 percent of rural and 95 percent of urbanpopulation.

* Prepare physical development plans for small towns and market centers ensure betterprovision of infrastructure

Nepal government has established number of districts level offices, which directly orindirectly involve for maintaining environmentally sound and sustainable delivery of servicesat local level. These offices are responsible to implement rules and regulations and have rightto monitor other existing non-government offices and private sectors.

Potential Environmental and Social Impacts

Because of the proposed country wide coverage of PAF, the distinct topographical andclimatological variations and the demand responsive nature of the schemes, the environmentalimpacts identified and listed in this study are not specific but of general in nature. Most of thesub-projects to be financed under the village and community infrastructure component areexpected to be small and community-driven. Their possible negative environmental impact,on terrestrial (land, forest, protected sites etc.) and aquatic (water sources, water flows,wetlands, etc.) ecosystems are likely to be insignificant and mostly reversible. As per theWorld Banks consideration most of the sub-project's features lie in the Category B and C.Therefore, no major environmental impacts to the surroundings are expected due to thisproject primarily due to small-scale intervention. The income generation, small-scaleinfrastructure development and capacity building programs are expected to reduce the povertyand maintain sound environmental condition in the rural community.

The income generation activity is of small scale. The examples of these activities includeanimal husbandry such as cattle raising, enhancing the land productivity for example throughcash crops such as tea, cardamom, and vegetables. Micro enterprises will also include watermill, ceramic industry, garments or hand loom, tannery etc. Proposed individual interventionsare so small that in most cases the target would be normally of few households or individualhouseholds in specific case. Looking at the size of the project components, the coverage ofaffected area due to their establishment or operation would be of small scale and isolated.Therefore, only minor environmental impacts are expected due to this project activityprimarily. As such, no issue of human settlement is anticipated in the project area. Because ofthese facts, the project is not expected to generate any adverse environmental or socialimpacts in the community. Thus, there could be minor environmental and social impactsrelated to the income generation activities such as: solid waste generation, water pollution,deforestation and impairment on the traditional employment.

Physical infrastructure projects would contribute the community in accessing the market andcity area, providing health and educational benefits and creating awareness through promptcommunication and access. The examples of these activities include water supply andsanitation schemes, small scale irrigation, engineering trail, bridges, school building, healthpost/clinic facilities and development of trade center or market. Although the project sizeseems to be big in terms of coverage, the individual physical infrastructures proposed underPAF are of small scale. Proposed individual interventions are targeted to cover only a fewhundred households. The project component will disturb only a small portion of land. This isalso spatially distributed in a distance of few kilometers. Therefore, no major environmentalimpacts are expected due to this project primarily due to small-scale intervention. Nosignificant human resettlement or property damage is expected. Nonetheless, there will be

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minor and easily mitigable impacts associated with the physical infrastructures. Soil erosion,land use change, water quality impairment, wastewater disposal are some examples.

Community training program is one of the activities, which would develop local skilledmen/women to manage and sustain the development activities in the community. Theseprograms will enable them to select and plan their activities in certain areas withenviromnental consideration. There are no major environmental and social impacts expecteddue to this project activity in the community. But it is generally difficult to select specifictraining activities targeted to selected beneficiaries. This is because of the potential conflictswhich may arise between social organization vis-a-vis local people. Some social abuse mightappear in community due to social mobilization, training and capacity building program.Migration may be another impact, which lead to the flow of manpower to the urban area. Inorder to minimize the impacts on tradition and culture and retain the traditional concepts,mitigation measures have been suggested. A table of matrix of the impacts and the activitieswas developed and included.

Alternative Analysis

An attempt was made to systematically compare the alternatives which have beenimplemented on a similar module.

The socio-economic indicator such as infant mortality rate, life expecting rate, and access tohealth and education indicate that more and concrete interventions are essential to improve thequality of life of rural and marginalized community. The indicators reflect a relatively worsesituation of health and sanitation and socio-economic condition in rural area. Among differentregions remote rural areas in mid-western and far-western region form the bottom levelfacilities and services. If the activities proposed under PAF will not be implemented and thesub-projects will not be under taken, the prevailing environmental and socio-economicconditions will be continued till, any other agencies will address the issues and make similarinterventions. As outlined above, the conflict situation may add the negative externalityworsening the status quo.

There are a number of institutions working in the rural areas in the field of infrastructure andcommunity development. The projects undertaken with the help of various agencies followdifferent modalities. The level of community participation and sense of ownership also varysignificantly. The past experience indicated that the projects implemented under centralagency model poorly addressed the issues of community participation and sustainability ofdelivered services. In contrast, the project based on community approaches were marked bymuch lower cost and high level of participations and sustainable delivery of services. Often,careless planning and rapid engineering works result not only the damage of physicalenvironment but also the negative perception of development projects among thebeneficiaries.

Therefore, a comparative analysis was made on selected projects undertaken by differentagencies, which follow similar principles of PAF. On the water supply and sanitation sectorthe model of Ruiral Water Supply and Sanitation Fund Development Board (RWSSFDB) wasselected and on irrigation site the model of Kalleritar Irrigation Project (KIP) underDepartment of Irrigation (DOI) was selected. For engineering trails and bridges a model offollowed by DFID supported Ruiral Access Program (RAP) was selected.

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The proposed project, PAF is a demand-driven and integrated one addressing theenvironmental issues as well. The positive benefits are fully ensured by taking care of theenvironmental impacts. Strong participation from the community and the partnerorganizations during project planning and implementation will create the ownership andresponsibility of operation and maintenance of the schemes. A brief introduction to thealternatives of the various project components is also included.

Environmental Management Framework

Environmental Management Framework (EMF) outlined in this chapter focuses on threegeneric areas: mitigation measures, institutional strengthening and training, and monitoringand evaluation. The framework defines the means for incorporating the mitigation measuresin the project cycle and monitoring of the environmental performance.

An EMF consists of the set of mitigation, monitoring and institutional measures to be takenduring implementation and operation to eliminate adverse environmental and social impactsand reduce them to acceptable level. The framework also includes the actions needed toimplement these measures. The EMF identifies feasible and cost effective measures that mayreduce potentially significant environmental impacts.

As PAF activities are not only concentrated in a single field and the coverage of the sub-projects is the 75 districts of Nepal, it is better to have a plan both at project level and sub-project level which will address the environmental issues. Normally EnvironmentalManagement Plan (EMP) should include the activities to be undertaken during planning,construction and operational phases.

The major responsibility for implementing the policy related activities fall under thejurisdiction of the PAF Board. Where as the POs and SOs have to play a major role inimplementing the project component activities. They need to take the leading role for thetraining and capacity building. A typical scheme under consideration may not have all theimpacts identified. Therefore, it will be essential to sort out from the list, the specific activitiesto be carried in a particular scheme under PAF activities. It is recommended to develop a sub-project specific Environmental Management Action Plan (EMAP) for category I sub-projects.

Income generating activities such as cattle raising and paper making may trigger loss of forestresources, solid waste generation and water pollution problems if carried out in a large scalein a community or a group of communities in a district. Attention should be paid to ensurethe fodder or grass while planning such activities. Similarly, composting could be planned tominimize the solid wastes problems and water sources should be protected to minimize thepollution problems.

Maintaining proper drainage facility, wastewater reuse, bioengineering measures and trainingand capacity building activities could minimize the impacts related to water supply andsanitation schemes.

Soil erosion, water logging, land acquisition, conflict situation on water use are some of theimpacts associated with small scale irrigation sub-projects. Soil erosion could be avoided orminimized by proper site selection or using bio-engineering measures. Similarly, waterlogging could be controlled by incorporating drainage facilities. Land acquisition problemsand conflicts could be solved by building consensus based on existing rules and regulations.

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Engineered trails and bridges will have impacts on forest resources, land use pattern andsocial aspects also. Therefore, special considerations are essential in selecting the alignmentfor trail. Awareness and training activities are recommended for the social problems.

In Nepal, the traditional concepts in using the natural resources are interlinked with manyfestivals, rituals and group activities. They consider the infrastructures or part of them as holyplaces, which are protected, trees are planted and people have ethical, moral and spiritualobligations to not damage the resources. Thus the new projects should provides a recognitionand respect to the old practices, encouraging the users to continue such rituals and festivals innew projects locations also.

The local authorities have to play effective role particularly during operation and maintenanceof the sub-projects. VDC, DDC and other line agencies working on the district need a strongsupport in case when there might be abrupt disturbances to the services delivered by the sub-projects. The apex body of PAF is recommended to hire an enviromnental expert and ananthropologist to look after the relevant issues.

Monitoring and evaluation of sub-project gives existing trend of environmental conditionprevailing in the area and proximity and performance of the anticipated services. For this, it isnecessary to consider the three types of monitoring indicators in the sub-project area i.e. baseline monitoring, impact monitoring and compliance monitoring. An independent professionalstaff or an agency should monitor the contractors activity on site, activity of the beneficiariesand quality and quantity of delivered services. This practice ensures that the proposedmitigation measures are effectively followed during the constructional and operational phase.

Capacity building program on EA is essential for the local beneficiaries during theimplementation and operation phase of the sub-projects. This training programs are not onlyenhance the capacity of local communities to achieve the goal of PAF but also helps to makethem enable to mitigate the negative impact on surrounding environments, society andculture.

Indigenous Peoples Development Plan

Indigenous People Development Plan (IPDP) identifies the issues associated with indigenouspeoples and suggests a plan including various aspects. Legal provisions on IPs are in place inNepal. The statistical figures on castes or ethnic groups and on spoken languages are given.Land acquisitions must be discouraged and donations should be made voluntary.Representative organization of IPs or individuals must be included in decision making.Technical identification should include indigenous knowledge related to practices and skills.A list of the institutions working on the IP issues is given. PAF should prioritize monitoringand evaluation of the delivered services in areas where indigenous peoples are located. Anyactivities addressing IP issues must be incorporated in the sub-project documents.

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EXECUTIVE SUMMARY

The concept of the Poverty Alleviation (PAF) Project is based on the principles thatappropriate inconme generation activities, small-scale infrastructure development andcapacity building programs improve the livelihoods of the rural poor and sociallye-xcluded groups in nrral community of Nepal. The project is based on the integratedapproach in which emphasis is given on both hardware components and software aspects.This study has identified a few environmental issues related to income generation,infrastructure development and capacity building components under PAF projectactivities. The mitigation measures addressing these issues need to be incorporated in thelife cycle of the sub-projects in order to attain the environmentally sound and sustainabledelivery of the services.

Introduction

The objective of the Poverty Alleviation Fund (PAF) project is to improve the livelihoods ofthe rural poor and socially excluded groups by implementing the income generation activities,small-scale infrastructure development programs and sustaining these programs in ruralcommunity of Nepal through capacity building and training. The project will receive financialassistance from World Bank. PAF plans to implement the rural development activities in onehand, while on the other hand, it intends to empower the rural poor communities for theenhancement of socio-economy. The project aims at socio-economic development of deprivedrural communities through the development of skill and establishment of basic infrastructures.Social mobilization and organization of the communities is defined as the starting point in theproject. Community participation at project planning, implementation and operation has beenidentified as the pre-requisite for the development of the schemes under PAF. Targeting thepoor, deprive groups and ensuring the equity and gender balance would be the basic principlesof this project.

The proposed project is within the framework of the national development policy in Nepal.The proponent of the project, Community Organisation (COs), and Partner Organizations(POs) have been identified as major stakeholders of the project. The tenth national plan(2002-2007) of Nepal has a target of improving the socio-economic indicators significantly byproviding employment opportunity through development programs in Nepal. The proposedproject of PAF is expected to have a significant contribution to achieve this goal. This study'Environment Assessment of PAF' is aimed at recommending measures for enhancing andsustaining the positive environmental benefits of the project by identifying the external andinternal, direct and indirect, and immediate and long-term impacts and by formulating themitigation measures and a plan to incorporate the measures in the life cycle of the projectcomponents.

The Proposed Project

The PAF Board was created by His Majesty's Government of Nepal in 2004. PovertyAlleviation Fund ordinance 2004, provides authority to plan, implement and monitor theactivities under the umbrella of PAM. His Majesty's Government has adopted andpromulgated the Poverty Alleviation Fund Rules 2060 under the section 31 of the ordinance.PAF Project is planned to promote the development process by developing some physical

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infrastructures and providing funds for employment and income generation in one hand, whileon the other hand to empower the rural communities essential for the enhancement of socio-economy. The proposed project is within the framework of the national policy on povertyalleviation and sustainable development in Nepal. The project has a goal to improve socio-economic condition of deprived rural communities and beneficial to at least 80 percentpopulation of the project areas.

The working principles of the PAF include: a demand lead or responsive participatoryapproach, ensuring the sustainability of the project components by increasing the communitycapacity, considering marginalized and socially excluded groups as primary actors of processand enhancing their role in the project and decision making through active participation. ThePAF Board signs MOUs with POs for mobilizing COs. COs with the assistance from POsdevelop sub-project proposals and submit to PAF Board for approval. Such approved sub-projects get a funding support through PAF. POs are VDCs, DDCs, local NGOs or privatesector agencies. The community with a support from PAF manages the planning,implementation and operation of the project components focusing particularly on communityawareness, planning and training aspects. The concept and approach of PAF is expected to besound and yield successful results on the ground with indications of strong communityownership and commitment, which will pave a way for scheme sustainability.

PAF activities are anticipated to be implemented in two phases. Phase I, also termed as PilotPhase, will be spanned for a maximum duration of 3-4 years. However, the successfulimplementation and results may shorten the span of phase I. Depending upon the outcomesand lesson leamed, phase II will be initiated. The results of phase I decide the launching timefor phase II. The pilot PAF will be implemented in six districts namely: Ramechhap, Siraha,Kapilbastu, Pyuthan, Mugu and Darchula that have been seriously under-served. The selectedPOs in these districts will mobilize the COs, and PAF Board will screen the sub-projectssubmitted by COs. Siraha has been chosen from Eastern Development Region and lies on theTerai belt. Ramechhap was selected from Mid Development Region and lies on the Mid hills.Kapilbastu lies in the Western Development Region and is located in the Terai area. Muguand Pyuthan have been selected representing Mid Westem Development Region. Mugurepresents the district located in Mountains region whereas Pyuthan is located in the Churiarange. Finally, Darchula belongs to the Far Western Development Region and is located in themid hills. This modality has been termed as first window of the pilot phase. This modalitywill be expanded to the rest of the districts during PAF phase II. A slightly different modalityhas been decided for the second window. Any social or other organization can propose aproject, probably innovative and typical, located in any of the seventy-five districts. The laterwindow might include poverty alleviation programs to disadvantaged communities/groupssuch as the Kamaia in the Western region or conflict victims in the country etc. The selectionis directly based on the eligibility of their sub-project proposals from anywhere in Nepal.

Baseline Environmental Status

The baseline data on the physical, biological, socio-economic, tradition and culture and otherrelevant environmental characteristics of the project area are briefly described below.

Physical Environment: The topography of Nepal is comprised of Terai, Hills and Mountains.The Terai region constitutes the most productive agricultural region of the country. Thealtitude of Terai ranges from 60 m to 300 m. The Churia range constitutes the southern Hillregion of Nepal with an altitude upto 2,000 m. The altitude of the Mahabharat and the Mid-Hills range from 600 to 3,000 m. The inner Himalayan Valleys situated at an elevation of

about 4,000 m is home to highland dwellers. The percentage distribution of coverage and thepopulation for mountains, hills and the Terai is 35.2, 41.7 and 23.1 and 7.29, 44.28 and 48.43,respectively. Because of this topographical variation, the country exhibits the diversity notonly in the natural resources and climatic conditions but also the settlement pattem, socio-economy, tradition and culture. The type of the soil differs according to the geographicregion. The soil in Terai and Churia region consists mainly of alluvial deposits derived fromthe erosion of sediments from the Himalaya. This region is highly fertile and intenselycultivated. The Churia region comprises of north dipping sedimentary rocks of tertiary agecharacterized by low elevation strike ridges. The Mid-Hills consist mainly of low-grademetamorphic and meta-sedimentary rocks such as phyllite, quartzite, limestone and dolomite.

The land is distributed as: cultivated land 20%, non-cultivated land 7 %, grass land 12%,forest land 29%, shrub/degraded land 11% and others 22 %. The 2001 Census data indicatedthat 84% of the total households are located in rural settings. Thus it is very clear thatmajority of the population to be covered under PAF will be farmners located throughout the 75districts of Nepal.

Biological Environment: Nepal is immensely rich in biological diversity as it lies in betweentwo big geographical regions. In spite of being small in size which constitutes only about 0.03percent of the world total landmass, it provides a favorable habitat for the luxurious growth ofdifferent biological species. The country has about 54% of the surface area under some sort ofvegetation cover. A total of 118 ecosystems have been identified in different physiographiczones in Nepal. In addition, 75 vegetation types and 35 forest types are identified in thecountry, which is biologically divided into ten zones.

Nepal shares a less than three percent on non-flowering species and slightly over two percenton flowering plant species in comparison to the whole world. About 60 non-endemic and 47endemic plant species are documented as threatened species in the recent state of environment

,report of Nepal. Among the 60 non-endemic plants, 22 are rare, 12 are endangered, and 11.species are vulnerable. With regard to endemic plants, 8 are extinct, 1 is endangered, 7 arevulnerable, and the remaining 31 species are documented as rare species.

Nepal is equally rich in faunal diversity. Various types of ecosystems provide habitat tovarious wild species. At present, in situ conservation of wild species are ensured in 9 nationalparks, 3 wild life reserves, 1 hunting reserves and 3 conservation areas. Nepal shares 4.27 and8.57 percentage of the total world's mammals and birds respectively.

Parks, reserves and conservation areas are distributed in different ecological belt as well as indevelopment regions. Covering area of these parks and reserves change from time to time dueto extension programs. In recent years, the successful outcomes of the community forestryprograms in Nepal have contributed not only in conservation and enhancement of biodiversitybut also in meeting the demands of forest products.

Socio-economic Environment: The population of Nepal increased from 18.5 million in 1991to 23.2 million in 2001. Average population density of Nepal is 157 persons per sq. kilometerand it is estimated that the PAF project will cover total households of about 4 million. It isalso anticipated that the population of the country will be doubled by 2031. Principalindicators of the socio-economy in 2001 included: life expectancy at birth-59.7 years, literacyrate 53.74 %, per capita GDP- Rs. 17,712 and per capita GNP Rs. 18,451.

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The Nepal Human Development Report 2001 estimated the Human Development Index(HDI) for Nepal to be 0.466. The indices for Mountain, Hill and Terai were estimated as0.378, 0.510 and 0.474, respectively. On the regional basis, the mid-western (0.402) and far-western (0.385) had lower values than of national average showing the concentration of lessproductive economic activities there. Nearly four-fifths of the total population depends uponagriculture as its primary source of earning. Nearly four-fifths of all workers are also self-employed, almost all in the agricultural sector. Sixty-nine percent of the agricultural holdings,however, are less than one hectare in size. The agricultural GDP grew annually by only 2.3percent during the last two decades.

Nepal is heading for the economic development with liberalization policy and hasimplemented various programs for eliminating the poverty and achieve rapid growth rate.Private sector has been encouraged and efforts are underway to generate more employment.Although, Nepal lacks modem development infrastructure and the income level of majority ofthe population is fairly low, the mountainous landscape has also offered diverse potentials foreconomic development. The major potential areas include: hydropower and tourism.

Tradition and Culture: Nepal's population consists of two major groups: the Indo-Nepaleseand the Tibeto-Nepalese. These groups are further represented by various ethnic communitieshaving diverse culture, traditions and languages. The Nepalese society has a tradition ofmaintaining the harmony and peace among various ethnic communities. The family andkinship networks providing the individuals with wide ranging personnel relations as well associal security in difficult times. People continue diverse ritual and religious practices, whichgive meaning to their life resulting in to stability in the society. Crisis management is a veryregular activity of the majority of the households.

Policy, Legislation and Regulation

The objective of carrying out EA of projects proposed for World Bank's financing is to helpensure that they are environmentally sound and sustainable and thus to improve decisionmaking.

As per the Bank's policy and requirement, EA is initiated as early as possible in projectprocessing and is integrated closely with the economic, financial, institutional, social andtechnical analysis of a proposed project. The borrower is responsible for carrying out the EA.The Bank reviews the findings and recommendation of the EA to determine whether theyprovide and adequate basis for processing the project for Bank financing.

The proposed project of PAF is expected to have a net positive impact on human populationand the environment. In fact and in a broad sense, the objective of PAF is to enhance theenvironmental quality and quality of life by reducing the traditional environmental risks andpoverty. In case of any adverse impact on environmentally important areas such as wetlands,forests, grasslands and other natural habitats, the mitigation measures can be designed andincorporate easily so as to improve the environmental performance. Thus as per the WordBank's criteria, PAF project has been classified as Category B. The projects falling under thiscategory require a limited environmental review to determine potential negative impacts,identify the appropriate mitigation measures and recognize the identification of opportunitiesfor environmental assessment.

His Majesty's Govermment of Nepal (HMG/N) has enacted the Environinent Protection Act,2053 (1997) (EPA) and the Environ,ment Protection Rules, 2053 (1997) (EPR). The EPA

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requires that an EA either in the form of an Initial Environmental Assessment (IEE) or anEnvironmental Impact Assessment (EIA) shall be carried out for all proposed projects, whichmeet the criteria listed in Schedules 1 and 2 in the EPR. While EIA has been described as adetailed study or evaluation of the adverse environmental impacts, IEE has been mentioned asa report on analytical study or evaluation. The EPA clearly outlines the concemed agency orthe Ministry approval of the proposal as a prerequisite for the implementation of a project.The provisions are made such that a proponent must submit a project proposal accompaniedby either IEE or EIA studies for the approval.

Local Self-Govemance Act, 2055 (1999) (LSGA) aims at having institutional development oflocal bodies capable of bearing responsibility. By providing such responsibility and power atthe local level, the local bodies are able to make decisions on the matters affecting the day today needs and lives of the people. LSGA has specific provisions in relation to theinfrastructure development and enviromnent projects.

Other legislation related to environment in general include: Forest Act (1992), Pesticide Act,(1991), Solid Waste Act (1986), Soil and Water Conservation Act (1982), King MahendraTrust for Nature Conservation Act (1982), Tourism Act (1978), and National Parks andWildlife Conservation Act (1973). Article 7 of Environment Protection Act 2053 (1997) hasmade the clear provisions regarding the Environmental Standards.

The environmental policies and strategies in the Tenth Five-Year Plan are:

* Conservation of natural resources, biodiversity and cultural heritage* Strengthening the capacities of local bodies on local natural resource management* Mainstreaming and promoting environmental conservation in socio-economic

development activities* Setting up and implementation of environmental standards- air, water, noise and soil

pollution and adopt polluter pays principles* Formulation of regulatory frameworks for environmental health programs* Encouragement to scientists, technicians and researchers to develop new technologies

and measures* Making the government and private sector investment environment-friendly* Introduction of pollution prevention fee and other fees to increase funds in

environment conservation fund and* Give special focus on voluntary compliance

The Tenth Plan also commits to carry out environmental monitoring. This indicated thecommitment of the national plan in addressing the environmental issues. For infrastructures,the key features of Tenth Plan are listed below:

* Appropriate methodology should be sought for resource mobilization, allocation andutilization to achieve sustainable economic growth

* Generate employment opportunity through development programs* Development of strategic road network (accesses to district head quarter and regional

balance) and area with significant socio-economic importance e.g. hydropower,tourism etc.

* Encourage private sector participation in the development of infrastructure activities* Promotion of decentralized management system to sustain the development

infrastructures activities

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* Provide basic water supply services to 85 percent of rural and 95 percent of urbanpopulation.

* Prepare physical development plans for small towns and market centers ensure betterprovision of infrastructure

Nepal government has established number of districts level offices, which directly orindirectly involve for maintaining environmentally sound and sustainable delivery of servicesat local level. These offices are responsible to implement rules and regulations and have rightto monitor other existing non-government offices and private sectors.

Potential Environmental and Social Impacts

Because of the proposed country wide coverage of PAF, the distinct topographical andclimatological variations and the demand responsive nature of the schemes, the environmentalimpacts identified and listed in this study are not specific but of general in nature. Most of thesub-projects to be financed under the village and community infrastructure component areexpected to be small and community-driven. Their possible negative environmental impact,on terrestrial (land, forest, protected sites etc.) and aquatic (water sources, water flows,wetlands, etc.) ecosystems are likely to be insignificant and mostly reversible. As per theWorld Banks consideration most of the sub-project's features lie in the Category B and C.Therefore, no major environmental impacts to the surroundings are expected due to thisproject primarily due to small-scale intervention. The income generation, small-scaleinfrastructure development and capacity building programs are expected to reduce the povertyand maintain sound environmental condition in the rural community.

The income generation activity is of small scale. The examples of these activities includeanimal husbandry such as cattle raising, enhancing the land productivity for example throughcash crops such as tea, cardamom, and vegetables. Micro enterprises will also include watermill, ceramic industry, garments or hand loom, tannery etc. Proposed individual interventionsare so small that in most cases the target would be normally of few households or individualhouseholds in specific case. Looking at the size of the project components, the coverage ofaffected area due to their establishment or operation would be of small scale and isolated.Therefore, only minor environmental impacts are expected due to this project activityprimarily. As such, no issue of human settlement is anticipated in the project area. Because ofthese facts, the project is not expected to generate any adverse environmental or socialimpacts in the community. Thus, there could be minor environmental and social impactsrelated to the income generation activities such as: solid waste generation, water pollution,deforestation and impairment on the traditional employment.

Physical infrastructure projects would contribute the community in accessing the market andcity area, providing health and educational benefits and creating awareness through promptcommunication and access. The examples of these activities include water supply andsanitation schemes, small scale irrigation, engineering trail, bridges, school building, healthpost/clinic facilities and development of trade center or market. Although the project sizeseems to be big in terms of coverage, the individual physical infrastructures proposed underPAF are of small scale. Proposed individual interventions are targeted to cover only a fewhundred households. The project component will disturb only a small portion of land. This isalso spatially distributed in a distance of few kilometers. Therefore, no major environmentalimpacts are expected due to this project primarily due to small-scale intervention. Nosignificant human resettlement or property damage is expected. Nonetheless, there will be

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minor and easily mitigable impacts associated with the physical infrastructures. Soil erosion,land use change, water quality impairment, wastewater disposal are some examples.

Community training program is one of the activities, which would develop local skilledmen/women to manage and sustain the development activities in the community. Theseprograms will enable them to select and plan their activities in certain areas withenvironmental consideration. There are no major environmental and social impacts expecteddue to this project activity in the community. But it is generally difficult to select specifictraining activities targeted to selected beneficiaries. This is because of the potential conflictswhich may arise between social organization vis-a-vis local people. Some social abuse mightappear in community due to social mobilization, training and capacity building program.Migration may be another impact, which lead to the flow of manpower to the urban area. Inorder to minimize the impacts on tradition and culture and retain the traditional concepts,mitigation measures have been suggested. A table of matrix of the impacts and the activitieswas developed and included.

Alternative Analysis

An attempt was made to systematically compare the alternatives which have beenimplemented on a similar module.

The socio-economic indicator such as infant mortality rate, life expecting rate, and access tohealth and education indicate that more and concrete interventions are essential to improve thequality of life of rural and marginalized community. The indicators reflect a relatively worsesituation of health and sanitation and socio-economic condition in rural area. Among differentregions remote rural areas in mid-westem and far-western region forn the bottom levelfacilities and services. If the activities proposed under PAF will not be implemented and thesub-projects will not be under taken, the prevailing environmental and socio-economicconditions will be continued till, any other agencies will address the issues and make similarinterventions. As outlined above, the conflict situation may add the negative externalityworsening the status quo.

There are a number of institutions working in the rural areas in the field of infrastructure andcommunity development. The projects undertaken with the help of various agencies followdifferent modalities. The level of community participation and sense of ownership also varysignificantly. The past experience indicated that the projects implemented under centralagency model poorly addressed the issues of community participation and sustainability ofdelivered services. In contrast, the project based on community approaches were marked bymuch lower cost and high level of participations and sustainable delivery of services. Often,careless planning and rapid engineering works result not only the damage of physicalenvironment but also the negative perception of development projects among thebeneficiaries.

Therefore, a comparative analysis was made on selected projects undertaken by differentagencies, which follow similar principles of PAF. On the water supply and sanitation sectorthe model of Rural Water Supply and Sanitation Fund Development Board (RWSSFDB) wasselected and on irrigation site the model of Kalleritar Irrigation Project (KIP) underDepartment of Irrigation (DOI) was selected. For engineering trails and bridges a model offollowed by DFID supported Rural Access Program (RAP) was selected.

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The proposed project, PAF is a demand-driven and integrated one addressing theenvironmental issues as well. The positive benefits are fully ensured by taking care of theenvironmental impacts. Strong participation from the community and the partnerorganizations during project planning and implementation will create the ownership andresponsibility of operation and maintenance of the schemes. A brief introduction to thealternatives of the various project components is also included.

Environmental Management Framework

Environmental Management Framework (EMF) outlined in this chapter focuses on threegeneric areas: mitigation measures, institutional strengthening and training, and monitoringand evaluation. The framework defines the means for incorporating the mitigation measuresin the project cycle and monitoring of the environmental performance.

An EMF consists of the set of mitigation, monitoring and institutional measures to be takenduring implementation and operation to eliminate adverse environmental and social impactsand reduce them to acceptable level. The framework also includes the actions needed toimplement these measures. The EMF identifies feasible and cost effective measures that mayreduce potentially significant environmental impacts.

As PAF activities are not only concentrated in a single field and the coverage of the sub-projects is the 75 districts of Nepal, it is better to have a plan both at project level and sub-project level which will address the environmental issues. Normally EnvironmentalManagement Plan (EMP) should include the activities to be undertaken during planning,construction and operational phases.

The major responsibility for implementing the policy related activities fall under thejurisdiction of the PAF Board. Where as the POs and SOs have to play a major role inimplementing the project component activities. They need to take the leading role for thetraining and capacity building. A typical scheme under consideration may not have all theimpacts identified. Therefore, it will be essential to sort out from the list, the specific activitiesto be carried in a particular scheme under PAF activities. It is recommended to develop a sub-project specific Environmental Management Action Plan (EMAP) for category I sub-projects.

Income generating activities such as cattle raising and paper making may trigger loss of forestresources, solid waste generation and water pollution problems if carried out in a large scalein a community or a group of communities in a district. Attention should be paid to ensurethe fodder or grass while planning such activities. Similarly, composting could be planned tominimize the solid wastes problems and water sources should be protected to minimize thepollution problems.

Maintaining proper drainage facility, wastewater reuse, bioengineering measures and trainingand capacity building activities could minimize the impacts related to water supply andsanitation schemes.

Soil erosion, water logging, land acquisition, conflict situation on water use are some of theimpacts associated with small scale irrigation sub-projects. Soil erosion could be avoided orminimized by proper site selection or using bio-engineering measures. Similarly, waterlogging could be controlled by incorporating drainage facilities. Land acquisition problemsand conflicts could be solved by building consensus based on existing rules and regulations.

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Engineered trails and bridges will have impacts on forest resources, land use pattern andsocial aspects also. Therefore, special considerations are essential in selecting the alignmentfor trail. Awareness and training activities are recommended for the social problems.

In Nepal, the traditional concepts in using the natural resources are interlinked with manyfestivals, rituals and group activities. They consider the infrastructures or part of them as holyplaces, which are protected, trees are planted and people have ethical, moral and spiritualobligations to not damage the resources. Thus the new projects should provides a recognitionand respect to the old practices, encouraging the users to continue such rituals and festivals innew projects locations also.

The local authorities have to play effective role particularly during operation and maintenanceof the sub-projects. VDC, DDC and other line agencies working on the district need a strongsupport in case when there might be abrupt disturbances to the services delivered by the sub-projects. The apex body of PAF is recommended to hire an environmental expert and ananthropologist to look after the relevant issues.

Monitoring and evaluation of sub-project gives existing trend of environmental conditionprevailing in the area and proximity and performance of the anticipated services. For this, it isnecessary to consider the three types of monitoring indicators in the sub-project area i.e. baseline monitoring, impact monitoring and compliance monitoring. An independent professionalstaff or an agency should monitor the contractors activity on site, activity of the beneficiariesand quality and quantity of delivered services. This practice ensures that the proposedmitigation measures are effectively followed during the constructional and operational phase.

Capacity building program on EA is essential for the local beneficiaries during theimplementation and operation phase of the sub-projects. This training programs are not onlyenhance the capacity of local communities to achieve the goal of PAF but also helps to makethem enable to mitigate the negative impact on surrounding environments, society andculture.

Indigenous Peoples Development Plan

Indigenous People Development Plan (IPDP) identifies the issues associated with indigenouspeoples and suggests a plan including various aspects. Legal provisions on IPs are in place inNepal. The statistical figures on castes or ethnic groups and on spoken languages are given.Land acquisitions must be discouraged and donations should be made voluntary.Representative organization of IPs or individuals must be included in decision making.Technical identification should include indigenous knowledge related to practices and skills.A list of the institutions working on the IP issues is given. PAF should prioritize monitoringand evaluation of the delivered services in areas where indigenous peoples are located. Anyactivities addressing IP issues must be incorporated in the sub-project documents.

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CHAPTER I

INTRODUCTION

1.1 General

With the objectives of empowering the marginalized group of people and facilitating thepoverty alleviation process, a project named Poverty Alleviation Fund (PAF) has beenproposed in the Kingdom of Nepal. Poverty Alleviation Fund ordinance 2060 B.S. providesauthority to plan, implement and monitor the activities under the umbrella of PAF. HisMajesty's Government has adopted and promulgated the Poverty Alleviation Fund Rules 2060under the section 31 of the ordinance. The project will receive financial assistance from theWorld Bank. PAF Project is planned to promote the development process by developing somephysical infrastructures and providing funds for employment and income generation in onehand, while on the other hand to empower the rural communities essential for theenhancement of socio-economy. The project aims at socio-economic development of deprivedrural communities through the development of basic infrastructures and capacity building.Social mobilization and organization of the communities is defined as the starting point in theproject. Community participation at all levels of project planning, implementation andoperation has been identified as the pre-requisite for the development. Targeting the poor,indigenous and others marginalized groups and ensuring the equity and gender balance wouldbe the underlying principles of this project.

The proposed project is within the framework of the national policy on poverty alleviation andsustainable development in Nepal. The proponent of the project, PAF Board is expected to bea major stakeholder in the development sector in Nepal. The tenth national plan (2002-2007)of Nepal has a target of improving the socio-economic indicators significantly. The proposedproject activities under PAF are expected to have a significant contribution to achieve thegoals set by tenth national plan.

The PAF Board provides assistance to the rural communities socially mobilized by PartnerOrganizations (POs). POs are VDCs, DDCs, Local NGOs or private sector agencies. Thecommunities are expected to manage the planning, implementation and operation of theprojects focusing particularly on community awareness, planning and training aspects of theprojects.

The objectives of the Board activities are to:

- establish infrastructures and create employment and income generating opportunities inthe most depressed villages and habitations;

- Enhance the capacity of local govemment, particularly VDCs to provide and sustainservices for poor and socially excluded groups; and

- Create an instrument where donors can come together in a coordinated manner andsupport govemment programs targeted on the rural poor.

The working principles of the Board include: demand lead or responsive participatoryapproach, ensuring the sustainability of the project components by increasing the communitycapacity, considering marginalized and socially excluded groups as primary actors of processand enhancing their role in the project and decision making through active participation.

1.2 Justification of the Study

The prime objective of the activities under PAF model is to make an intervention to theunderlying situation of poverty, unemployment and conflict and empower the sociallyexcluded group of people. The main benefits of these services lie in the improvement of thesocio-economic indicators. As the socio-economic indicators are still in a poor stage in Nepal,such interventions are expected to play a crucial role. It is a well understood fact that thehardware by itself is not enough and, therefore, softwares, which include creating awareness,capacity building and manpower trainings are also equally important.

Sustainable community projects have many direct and indirect socio-economic benefits. Ruralpeople will have better access to the services and facilities. For example, a water supplyproject saves their time of collecting the water, which they can use in a productive way inother activities. While developing such projects, a demand driven participatory approach hasbeen practiced in Nepal in recent years. This community based approach has helped inempowering the rural communities which has been proved successful in community watersupply and sanitation projects, community forestry and micro-financing projects. Theseparticipatory projects and activities have significantly contributed in raising the per capitaincome and the quality of life of the rural people.

On this background and following the results obtained by other similar projects, theanticipated outputs of PAF project components are the positive socio-economic andenvironment benefits. However, a number of significant negative impacts could occur, if theproject components are not properly planned, located, designed, constructed, operated andmaintained. Potential negative impacts, both individual or cumulative, include:

- physical impacts such as soil erosion, water pollution, downstream effects etc;- biological impacts such as loss of biodiversity, deforestation etc;- socio-economic impacts such as health effects; and- impacts on tradition and culture such as loss of traditional employment, culture and

customs associated with the intrinsic features of the communities.

There are a number of environmental issues to be taken which do not feature prominently atpolicy or implementation level. This is because of the fact that some of the issues are veryspecific and not noticeable at the time of planning or implementation but crop-up later. Theenvironmental risks associated could be avoided or minimized with careful planning anddesign.

Thus in order to ensure the environmental sustainability of the project components, it isessential to address these issues and identify potential mitigating measures. EnvironmentAssessment Study and consequent preparation of Environmental Management Framework(EMF) meet these goals.

1.3 Objectives and Scope of the Environmental Assessment

The key objective of the Envirorment Assessment (EA) Study is to recommend measures forenhancing and sustaining the positive environmental benefits of the project activities.Appropriate measures to mitigate any identified adverse environmental impacts will beintegrated as part of the overall project design.

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Specific objectives of the EA are:

1. describe environmental condition and issues related to PAF activities;2. identify environmental impacts related to PAF activities; and3. recommend environmental management framework, to be developed and implemented

issue to sustain the project activities of PAF.

1.4 Methodology and Activities

The employed methodology and the activities carried out for the study were as follows:

* Review of relevant project documents* Review of relevant policy documents (World Bank's policy, Environmental Act and

Regulations, Local Self Governance Act etc.)* Discussion and meetings with the Board Staff, World Bank Officials (Refer Annex

VIW)* Consultation with consultants working for PAF preparing operational guidelines,

financial modalities and legal framework* Consultation with resource persons from other organizations having experiences on

similar areas (Refer Annex II for sample feedback slip and Annex VII for summary ofminutes and meeting outputs)

1.5 Organisation of the Study Team

With an aim of contributing to the environmental sustainability of the activities under theumbrella of PAF, the Board and the World Bank designed an 'Environment Assessment'study. A team comprised of the members listed in Table 1.1 is carrying out the study. A.contract for the study was signed on December 26, 2003.

Table 1.1: Details of the Study Team

Name Position

Dr. Nawa Raj Khatiwada Principal Investigator (PI)

Mr. Pravakar Pradhan Environmental and Socio-economic Expert

Mr. Santosh Nepal Environmental and Socio-economic Expert

1.6 Reporting

A draft report of comprising the preliminary findings was submitted during 5th week of thestarting of the assigmnent. Comments and feedback (refer Annex IV for the details) on thedraft report were received. Additions and appropriate modifications were made on the finalreport. The final report of the study was submitted during 8th week of the starting of theassignment.

CHAPTER II

PROJECT DESCRIPTION

2.1 Introduction

Small community-based projects featuring high levels of local participation have beensuccessful in Nepal in recent years. Such project having participatory investment approach oncommunity organizations and local government institutions performed better than traditionalmodel of public investment and service delivery. In particular, modalities of investment andservice provision which incorporate social mobilization, usually by NGOs, with the inclusionof community organizations, Village Development Committees (VDCs) and DistrictDevelopment Committees (DDCs) throughout the project cycle results in lower unit costs,better quality of infrastructure, higher transparency in the use of funds, and greater long termsustainability. When there is greater local ownership of project outputs, then there will begreater transparency, and the projects also become more realistic in terms of size and scope.Each of these characteristics of the project's activities indicates that the community basedapproach is more appropriate to alleviate the poverty in the context of Nepal.

In general, social funds face a constant tension between reaching the poorest of the poor andfinancing projects in communities where the best conditions for project success exit indeveloping countries. But decentralization and the spread of the institutions of localgovernance throughout a country will tend to reduce the tension between efficiency andpoverty-targeting by redressing the organizational disadvantage of poorer communities andgiving them voice and political power. Decentralization thus marks a two-fold stimulus topro-poor institutions: the first directly through local government, which is responsive to itsconstituency, the majority of which in developing countries will likely be poor; and thesecond indirectly by providing an incentive for the poor to organize themselves to take betteradvantage of local government's resources (demand effect). However, Nepal is still far fromachieving such a decentralized institutional framework. Local governments in Nepal are new-bom, and there is still a long way to go on administrative and fiscal decentralization, oncapacity building and on empowering constituents.

In order to address these challenges specially in reducing the poverty through short-termn butefficient interactions efforts are to be made. Initiatives related to PAF have been envisionedon this line. In order to ensure the smooth functioning, the administrative structure of PAF isorganized as shown in Fig. 2.1.

2.2 Project Development Objective

The general objective of the PAF is to improve the livelihoods of the rural poor, women anddisadvantaged group by providing access to resources for their productive self-employment,and to encourage them to undertake activities of income generation for poverty alleviation. Tothis end the objective of the PAF are to (Shrestha, 2004):

1. Improve the income of the poor;2. Empower the poor especially women and disadvantaged;3. Increase the access of poor communities to infrastructure for improving their

livelihood;4. Strengthen institutional capacities of the PAF, its Partner Organizations (PO) and

Community Organization (CO) to undertake and sustain poverty alleviation efforts;

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5. Mobilize and coordinate internal and extemal resources to finance povertyalleviation programs;

6. Develop a system of poverty monitoring and evaluation; and7. Suggest the government on effective policy/program for poverty alleviation.

Development of infrastructure and creation of the employment and income generatingopportunities in the village will assist to uplift the economic condition of most deprived andpoor people in the community. Capacity building of local government will play vital role tosustain the services for poor and socially excluded groups that will also assist to achievedesire goal of PAF. Donors have to come together in close coordination with governmentprograms to support the rural poor that give effective positive result to strengthen the livingstandard of the community.

[Management Board

Vice Chairman

Executive Director

Administration/Finance Program Monitoring/Evaluation ProcurementUnit Unit Unit Unit

Fig. 2.1: Organizational Structure of the PAF (Further details are not shown) (PAF3 , 2004)

2.3 Types of the Sub-project

There are two types of sub-project: i) activities which lead to income generation; and ii)village infrastructures, During the execution and operation of the project components, it isexpected that PAF can support the NGOs, VDCs, community organizations, and DDC toimprove the quality and access to services for the poorest people in villages of Nepal. Further,it is also anticipated that the project gives an opportunity to uplift the economic condition ofthe most socially excluded rural people (specifically women, occupational castes and tribalpeoples). The process of participation of local communities and government continuouslythroughout project leads to the development of responsibility and ownership towards theproject, which sustains the poverty reduction process in Nepal.

PAF will co-ordinate with selected POs like VDCs, DDCs, local NGOs and private sector tomobilize community organisation. Community organisation with the assistance from POsdevelops a sub-project proposal and submits it to PAF Board. After approval from PAFBoard, the sub-project gets funding.

The income generation sub-project includes animal husbandry, land productivity, micro-enterprises, micro-irrigation and other works which can improve economic condition of the

poor, whereas village infrastructure sub-project includes engineering trails, foot bridge,schools, clinics and other public infrastructure of small scale that can be managed by localcommunity groups or VDCs.

The project would not finance sub-projects falling in the following negative list:

o Individual projects;o Consumption activities;o Religious buildings;o Resettlement or construction on private lands unless there is a consensus among all;o Land acquisition;o Sub-projects not screened for environmental impacts;o Activities likely to cause damage to wildlife, or likely to cause damage to a sanctuary

by setting fire, injuring wildlife, or involves indiscriminate felling of trees or involvesindiscriminate removal of plant, animal, mineral produce from a sanctuary;

o Activities located within a national park;o Construction /rehabilitation of a dam (old or new) of ten meters or more height;o Activity that could damage cultural property;

2.4 Category of the Project

PAF activities are expected to be implemented in two phases. Phase I includes six districtsfrom different development regions and also geographical division; Mountain, Hill and Terai,and termed as pilot phase. These districts are: Siraha, Ramechhap, Kapilbastu, Pyuthan,Mugu, and Darchula. The estimated time of phase I is about 3-4 years. This will provideopportunity for learning experience based on regional, ecological as well as socio-economic

-diversities. The PAF will also take into account security situation as well as the accessibility-of districts in the initial years. This modality of the pilot phase is named as window I.

A slightly different modality has been decided for the second window. Social and otherorganization from 75 districts can apply innovative and typical proposals to the PAF Boardfor possible funding. The modality of this window might include poverty alleviation programsto disadvantaged and marginalized community such as Kamaia in the Western Region,conflicts victims etc. directly based on the sub-project from anywhere in Nepal. This approachis expected to establish credibility to PAF's demand based approach to poverty alleviation.

Based on the district level indicators of Nepal (2003), PAF followed these indicators to divideentire seventy-five districts in three classes A, B and C. While A and C represent good andbad situation of the districts, respectively, whereas B comprises the districts that fall under themedium category. Each of the class contains twenty-five districts under its head. Kathmanduhas been ranked as top district scoring one point while Mugu stood last securing no points. Asthe PAF gains experience and the community capacity is enhanced, it will expand itsoperation in other districts subsequently. The programs of phase I implemented in six districtswill be extended to 75 districts in phase II.

With a reference to Public Works Directives (PWD) of His Majesty's Government of Nepal,the proposed project components under the jurisdiction of PAF can be classified as LocalBody Projects (HMG, 2002). In general the physical infrastructure projects executed in thekingdom of Nepal have been classified by PWD in three categories: Central level, districtlevel and local level projects. Projects included in the Integrated District Development Planmay be implemented either as a district level project by the sectoral agency or as a local bodyproject by the DDC or VDC. This PWD categorization puts PAF activities straight away in

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local level projects in which the major stake of project planning, implementation andoperation lies with the local communities.

The World Bank's "Environmental Assessment" policy was established in 1991. It indicatesthe three kinds of projects, where Category "A" projects need full environmental assessment(EA). These projects include most of those having large population displacement impacts.Category B projects do not require a full EA but do require some environmental analysis.Category C projects do not require environmental analysis. Whereas PAF sub-projects areexpected to fall under Category B and C because PAF sub-project's activities cover onlylimited area in the communities and have minor negative environmental impact as shown inTable 5.1. The policy aspects of the project as per the Bank's regulations are mentioned inChapter IV.

2.5 Location and Size of the Project

PAF activities will be implemented in two phases. Phase I will cover selected six districtsunder the major project activity. Depending upon the outcomes and lesson learned, phase IIwill be initiated. The results of phase I decide the launching time for phase II. The projectimplementing districts in the first phase are the representative of different geographical andadministrative zone, areas that have been seriously under the category of poverty alleviationin different context and areas with different levels of conflicts. These districts are: Siraha,Kapilbastu, Mugu, Pyuthan, Ramechhap and Darchula. Siraha and Kapilbastu lie in the Terairegion and represents Eastern and Western Development region respectively. Mugu andPyuthan are selected representing Mid Western Development region located in Mountainousand Churia range respectively. Ramechhap and Darchula lie in the Mid Hills and belongs tothe Mid and Far Western Development region respectively. This modality will be expanded tothe rest of the districts during PAF phase II. A slightly different modality has been decided forthe second window. Any social or other organization can propose a project, probablyinnovative and typical, located in any of the seventy five districts. The later window mightinclude poverty alleviation programs to disadvantaged communities/groups such as theKamaia in the Western region or conflict victims in the country etc. directly based on theeligibility of their sub-project proposals from anywhere in Nepal.

PAF is planning to use different mechanisms (e.g., NGOs, VDCs, community organizations)to implement the sub-projects. The proposed sub-projects will have the following fourcomponents: a) administration; b) income generation project targeted to the poorest andexcluded groups; c) small scale village and community infrastructure; and d) capacitybuilding. It is described in the project document that the PAF will provide US $ (in million)0.50, 3, 10, and 1.50 for the sub-projects respectively.

2.6 Description of the Project Components

The project will be successful when there is proper selection and identification of sub-projectsfor the selected communities. It should be necessary to carry out planning exercises in closeconsultation with local community and stakeholders during the preliminary stages of the sub-project preparation. These consultations must also address the project's environmental impacton project-affected groups and take their views, and those of local nongovernmentalorganizations (NGOs), into account. So, it will be easy to maintain the environmentalcondition and sustainable development in the area when we maintain the practice ofconsultation with local community and stakeholders throughout project implementation

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phase. However, the PAF sub-projects will have the following four components to meet theproject goals.

Activities Which Lead to Income Generation

Beneficiary eligibility will be determined at the village level by the villagers themselves basedon objective criteria including ethnicity, gender, accessibility to services and indicators ofpoverty such as level of assets and income. This sub-project includes micro-irrigation, micro-enterprises, land productivity, animal husbandry, and others. Social organizations will berecruited to work with the community groups to help them develop sub-project proposals.

Physical Infrastructures

Infrastructure sub-projects eligibility will be determined based on number of jobs generatedrelative to size of sub-project and number of jobs for the disadvantaged groups. This sub-project include engineered trails, footbridges, schools, clinics and other public infrastructureof small scale that can be managed by community groups or VDCs. Preference will be givento infrastructure in VDC development plans where they exist and where the VDC is willing tocontribute a share from its own resources. More specifically the criteria include (PAF3, 2004):

b. The infrastructure projects should be in compliance with Nepali law relating tohealth, safety and environment

c. The cost of scheme should not exceed NRs. 1500-3000 per capita.d. The proposed scheme should be:

- beneficial to at least 80 percent population of the project area;- sustainable in terms of community capacity to implement and maintain;- technically viable;- environmentally sound;- free from disputes within and from other communities;- not take more than two years to complete- labor intensive and use of local material; and- income and employment generating and productivity enhancing

e. The schemes must have been selected through participation of all beneficiariesincluding women and disadvantaged.

f. Preference will be given to rehabilitation, extension or modernization / upgrading ofschemes rather than building new ones.

g. Partner Organization will do survey and cost estimates in consultation with thecommunity.

h. The beneficiary community will contribute labor, local material, cash towardsscheme cost and its operation and maintenance. The minimum contribution will be15 percent of scheme cost.

i. The community and the Partner Organization will jointly agree on disbursementsbased on implementation plan. Responsibilities of the community and PartnerOrganization will be clearly defined.

Social Mobilization

POs will be selected to work in selected areas to mobilize the community groups and to workwith them in order to develop proposals for funding. Where local governments arefunctioning, VDCs will be trained to provide assistance to community groups in accessingPAF. The POs would always liaise with VDCs to ensure that the proposed infrastructureprojects fit into the VDC's plan and priorities. POs selected for this work will undergo

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orientation and training programs to enable their capacity to operate in conflictive and dividedsituations. A Capacity Building Organization for POs will be recruited by PAF for thispurpose. This organization will also monitor the work of POs and provide capacity buildingassistance where necessary.

Capacity Building

Capacity building of the local bodies of the community would be the basic requirement inplanning, design, implementation and management of the sub-projects with environmentalconsideration. This will also assist to sustain the sub-project in the community as theirrequired. The components of capacity building for PAF sub-projects are discussed below(PAF', 2004).

Capacity Building for Local Governments: It will focus mostly on capacity building to helpVDCs perform their core functions and will include financial management, accounting,participatory budgeting, procurement and conducting of meeting. In addition, for those VDCsthat attain basic capacity building will also be provided on specific thematic areas, including;existing government programs, gender issues, health issues, education, nutrition, PAFprocedures, and others as may be necessary. A specialized agency will be recruited to developa capacity building plan for VDCs and manage the program. In addition each VDC associatedwith the target villages will be eligible for a $ 1000 grant to procure technical assistance inareas not covered by the capacity building program. The PAF will assist VDCs in identifyingTA service providers. Grant will be approved by the PAF Board.

Support to Micro-Finance Intermediaries: While PAF will not finance micro-lending, it willfinance capacity building for micro-finance intermediaries on a demand basis. A micro-finance Capacity Building Agency will be contracted by PAF to provide support services tomicro-finance intermediaries. The first task of this agency will be to identify capacity buildingneeds and demand for capacity building.

Monitoring and Evaluation System: Monitoring and Evaluation will do monitoring forsupervision, and monitoring for impact. Monitoring for supervision will focus on processes;how many groups are being formed, which sub-projects are being financed, what is the timelag between group formation and sub-project formation, etc. Monitoring for evaluation will bebased on a base-line study, a MTR study and final study tracking the evolution of the projectimpact indicators over time and geographically and comparing them with control villageoutside the project. Specifically the Monitoring and Evaluation system will include thefollowing modules; a) a standard MIS; b) structured field visits to assess impact; c) measureimpact against benchmarks established from Nepali and global experience; d) beneficiaryassessments; and e) impact assessment surveys starting with a baseline during the early phase.

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CHAPTER III

BASELINE ENVIRONMENTAL STATUS

3.1 General Information

Nepal is a landlocked country in South Asia, located between latitudes 26 022 'N and 30 0 27'N and longitudes 800 4' E to 880 12' E, and bordered by China in the north and India in thesouth, east and west directions. With a total area of 147,181 kn 2, the country is characterizedby diverse topography, geology and climate, as well as patterns of land use. It is roughlyrectangular in shape with 885 km east west average length and about 193 km non-uniforrnnorth south width. Nepal is predominantly covered by mountain, with elevation ranging from64 m above sea level at Kachlakalan in the Eastern Terai district of Jhapa to 8,848 m at thepeak of the world's highest mountain, Mt. Everest (Sagarmatha), within a span of 200 km.

3.2 Physical Information

Nepal has been divided into 5 development regions, 14 zones and 75 districts. Districts arefurther divided into smaller units, called Village Development Committee (VDC) andMunicipality. Currently, there are 3,914 VDCs and 58 municipalities in the country. EachVDC is composed of 9 wards and municipality ward ranges from 9 to 35. The detailinformation on physical features such as topography, soil and geology and land use is givenbelow.

3.2.1 Topography

Nepal is divided into five physiographic regions. They are Terai, Siwaliks, Middle Mountain,High Mountain and High Himal. The feature of these regions is quite different according tothe geography and climate and thereby differentiation occurs in land utilization dependingupon altitude, climate, topography, people and the settlement patterns.

Terai Region: The flat plain area of the country stretching from east to west is known as theTerai region. This lower belt of the country is highly fertile and is intensively cultivated. Thealtitude of this region lies between 66 m to 300 m. The area of this region covers 14.4% of thetotal land area of the country.

Siwalik Region: Covering an area of 12.7% of the country, this region lies at an altitude of 300m to 1800 m. Several inner valleys in this region are densely populated and are potentiallygood for agriculture due to the alluvial soil deposits by the rivers. However, this region is veryrugged and unstable and is regularly affected by soil erosion due to floods and landslides.

Middle Mountaini Region: As the country is mountainous, this region represents the overallcountry. Covering a wide range of physiographic area, this region occupies 29.5% of the totalland area of the country ranging from 200 m to 2000 m. As this region is highly cultivated andthe proportion of people living in this region is also higher, agricultural product is alwaysinadequate to maintain the living standard of the people living in this region. This could bedue to the varied and rugged soil condition of this region.

High Mountain Region: This region lies below the snow line with an elevation ranging from2000 to 2500 m. About 19% of the total area of the country lies in this region. Compare to theinhabiting population, the agricultural production in this region is insufficient. Most part of

10

this region is covered with thick grasses and is good for mountainous animal grazing duringthe summer time.

High Himalayani Region: Stretched over highest peaks and mountains this region is alwayscovered with snow and occupies 23.7% of the total land area. The altitude of this regionranges from 3000 m to 8848 m and human settlement is thinly distributed.

3.2.2 Soil and Geology

The type of the soil differs with the geographic region. The Terai and Churia region consist ofsoil derived from the erosion of sediments from Hills and Mountain regions. The region ishighly fertile and intensively cultivated. The main soil of Terai is Loam i.e. sand and claymixed with a yellowish brown color. Every year new deposits of eroded soil are laid down onriverbeds. In this way, the Terai consists of tracts with new alluvium and areas of olderdeposits. The Terai area is gradually under the pressure of population concentration becauseof inter and intra migration process due to its high fertility.

The Churia ranges are composed of sand, conglomerate, quartzite, sandstone and partly richin mica and calcareous clay. The soil cover of Churia is coarse and porous and thereby drycondition prevails almost all the year round except in rainy season. Development works,particularly, the construction of mountain roads without adequate conservation measures,have also contributed to landslides and soil erosion. Studies have shown that 60-80% of thetotal annual soil loss from cultivated terraces occurs during the pre monsoon season. Thedeclining soil fertility has resulted difficulties in the production of major food crops.

The mid hill region at present is under the serious attack of environmental problems due to themismanagement of environmental attributes. The soil erosion has been non-stop phenomenonaggravated by floods and landslides. This region mainly consists of low-grade phyllite,quartzite, limestone and dolomite.

The main Himalayas indicate outstanding geographic divisions with most prominent peaksseparated by very deep gorges. Many prominent peaks including Mt. Everest, are located inthis region. This region is environmentally fragile due to high steep topography. Table 3.1provides a brief summary of the soil type and geology of the geographic region.

PAF related project components may come across the following land use types: forest andshrub area, crop land (Khet and Bari), barren land (Pakho Jamin) and settlement area. Forestand shrub land are generally shallow and well-drained soils occurring mostly on moderatelysteep to very steep terrain. The land, which is used for crops like paddy, Khet has relativelylow permeability as of high value of clay or loam in the soil. Bari and Pakho Jamin haverelatively high permeability values as of high content of boulder and gravel beds.

While implementing in mid hills and mountainous region, the most prominent problems suchas soil erosion and landslide may occur, however, the same problem may not occur frequentlydue to its plain nature with loam soil type. Proper environmental management plan should bedeveloped to mitigate these impacts.

Table 3.1: Soil Type and Geology of the Geographic Region. (KESL, 1986)

Region Elevation (m) Geology Soil TypeTerai and Inner 60 - 300 Quatemary Ustochrepts, Haplustolls,Terai alluvium Haplaquepts, Haplustalfs,

Ustifluvents and UstorthentsChuria range 200 - 1500 Tertiary sandstone, Ustochrepts, Haplustolls,

siltstone, shale and Rhodustalfs, Ustorthents,conglomerates Dystrochrepts, Haplaquepts,

UstifluventsMahabharat 800 - 3000 Phyllite, quartzite Ustochrepts, Haplustolls,and mid-hills limestone and Rhodustalfs, Haplumbrepts,

slands of granite Ustorthents, Ustifluvents

High mountain 2200 - 4000 Gneiss, quartzite Eutrochrepts, Dystrochrepts,and mica sheets Haplumbrepts, Cryumbrepts,

Cryorthoents and UstorthentsHimalaya. > 4000 m Gneiss, schist, Cryumbrepts, Cryorthents

limestone and and RockTethys sediments

3.2.3 Mining and Extraction

Mineral deposits can be divided into metallic minerals and nonmetallic minerals. Terai areahas a good potential for gravel, sand, aggregate, groundwater, oil and gas. Middle Hills showthe potentiality of nonmetallic deposits like cement grade limestone, magnesite, dolomite etc.'Middle Hills also show the occurrence of iron, base metal and talc. High Mountain areas havenot yet been fully explored for mineral potentiality.

From the PAF project point of view, construction materials such as bricks, stone, aggregatesand sand are important. Bricks are manufactured from the clays in the valleys and plain areas.In Kathmandu and Dang valleys, and various places in Terai regions, abundant quantity ofclay deposits is available for brick production. Stones used either for stone masonry in makingstructures or for paving purpose are available in the Hilly areas. Boulder gravel and sand areavailable in the rivers of Nepal. The situation of boulder and gravel in two selected Teraidistricts Siraha and Kapilbastu is given in Table 3.2. Similarly, stone and sand quarries arelocated in bedrocks in various parts of the country.

Table 3.2: Boulder, Gravel and Sand Reserve in Siraha and Kapilbastu (in 1 ,000m3)

District Boulder and Gravel Sand

Siraha 121 98

Kapilbastu 2338 1180

3.2.4 Land Use

Land is the principal resources of the country and constitutes about 97% of its total area.There is a great variation in land resources and land use pattern across different regions ofNepal (Fig. 3. 1). The distribution of land according to land-use type is shown in Table 3.3.

12

. ,........ ........_ .. ... tt ,, .. __.. .........,, ,, ,_ ,,9 , ,,....... _. . k. 2

ou -r A 12D8

mv N ' X i ;a -O _a) r9

C T

o 0X/r ZseS;r-* vf Z e o ;>

-2

10~ ~~

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°.O ---- --- -- - - ------ w....zesX

'I~~~~~~~~~~~~~~~~~~~~2 ---------

,wzz--............................

.'.........

Table 3.3: Land Use Pattern in Nepal (UNEP, 2001)

Land Use Type Land %(hectare)

Cultivated land 2,968 20Non-cultivated land 998 7Grass land 1,745 12Forest land 4,269 29Shrub land/degraded forest 1,559 11Other land use 3,179 22Total 14,718 100

Agriculture land posses the second largest with 20% in terms of land use category in Nepalwhereas the forestland covers 29% of the total land. The agriculture land has increased from2,376 thousands hectors in 1980 to 2,968 thousands hectors in 1985. The agricultural land hasremained constant during 1985 to 1999. Similarly, the per capita agricultural land hasdeclined from 0.16 ha in 1980 to 0.13 ha in 1999. In other words, the person land ratio(cultivated land) increased considerably from 4.7 in 1971 to 7.5 persons/ha in 1999. Similarly,in the Terai, the person-land ratio has increased from 3.1 in 1971 to 8 persons/ha in 1999while during the same year there were 6.5 and 11 persons/ha in the hills, respectively (UTNEP,2001). The findings of the national Population Census 2001 showed that the percentages ofno. of households having agriculture land, and livestock and birds has remained to be 75.6and 71.5, respectively (CBS, 2002).

3.2.5 Climate and Meteorology

Nepal lies within the subtropical monsoon climatic division and the climate of the country iscategorized into five major climatological zones based upon the altitudinal variation. They

' are: Subtropical, Warm Temperate, Cool Temperate, Alpine and Artic. Subtropical climate isfound in Terai, Inner Terai and Churia. Similarly, the climate of the hilly area is warmtemperate. However, even within a cross section of a mid hill area, lower river valleys aresubtropical and high ridges are cool temperate. In the higher mountain region, Alpine climateis common with low temperature in summer and extremely frosty condition in the winter.

Nepal has two rainy seasons; one during the summer from mid June to mid October, when thesouthwest monsoon brings about more than 80% of its total annual rainfall, and the other inwinter, accounting for the rest. There is an increasing trend in rainfall from Terai to Siwalikregion. The monsoon in general starts through eastern Nepal on around 10 th June and extendall over the country with in a week. In Kathmandu, the normal onset date is 12t June.

The annual mean precipitation of the country is around 1,500 mm. The highest mean rainfallwas 5,202 mm, recorded at Lumle in Kaski district where as minimum was observed to be174 mm at Mustang in the northern side of the Central Himalayan Range (CBS, 1998).Temperature remains lowest during winter and highest in the pre monsoon period. In the Terai(Subtropical), temperature can go up to 44°c in the summer and fall to 5°c in the winter.Similarly, the corresponding temperatures for the hill and mountain areas in the summer are41°c and 30°c respectively, and 3°c and far below 0°c in winter, respectively. The highesttemperature generally occurs in May and early parts of June and minimum occurs in themonth of June. The capital of the country, Kathmandu, has a pleasant equable climate withaverage summer and winter temperature of 19 - 27°c and 2-12°c respectively.

14

Because of the ample supply of moisture due to the south-easterly monsoon, the relativehumidity reaches more than 80% during monsoon, however, in dry season, it decreases lessthan 50%. Annual pan evaporation rates of 1,400 mm to 1900 mm are usual. Ramechhap,Manang and Mustang are the places where typical high wind speeds of more than 30 M/s, areencountered. Average sunshine hours are varied between 4 - 8 hours per day (CBS, 1998). Ingeneral, marked local climatic variation occurs due to high and steep topography and diversitywith terrain, location and seasonal characteristics.

The selected districts under PAF Phase I are different in climatic nature according togeographical distribution. Siraha has tropical and sub-tropical climate, whereas Kapilbastuhas only tropical climate. Similarly, Ramechhap lies in the cool-temperate and alpine zoneand Pyuthan is in sub-tropical and mild temperate zone. Mugu is situated in temperate, cool-temperate and alpine climatic zone. At last Darchula represents mix climatic zone.

3.2.6 Water Pollution Issues

Water pollution is the result of various natural and anthropogenic activities, which affect thenatural attributes of water. As, the water is directly concerned to human health, thedegradation of which adversely affect on human health. Similarly, 80% of the total diseasesare attributed to water related.

The anthropogenic activities are found to have the vital role to degrade the existing watercondition in Nepal. The activity of disposing all sorts of domestic waste into the river is themajor threats to Nepali river hitherto, especially in Kathmandu Valley. Similarly, thechemical wastes discharged from industries and the disposal of solid wastes in nearby openplaces, surface drains, yard and on the bank of river are the accelerating activities towardswater pollution. Bhaktapur city has sewerage facilities and a wastewater treatment system.Similarly, in Kathmandu, an oxidation ditch named Guheswori waste treatment plant hasrecently been constructed and operated. Five constructive wetlands have been developed fortreating domestic wastes across the nation.

The existing domestic sewers also discharge directly into the rivers without any treatment.Many people defecate on open ground, often along the banks of ponds, rivers and streams. Inthe cities of Kathmandu, the capital of nation, only 15% of the houses have access to asewerage facility (WHO and NHRC 2002).

On an average, 20,846 kg of BOD per day is available at the outlet of the Bagmati River,constituting 42 percent of the total BOD load produced by the Valley's people. The totalindustrial wastewater discharge of 8.557 million cubic meter contains 5.7 thousands tonsBOD and 9.6 thousands tons of total suspended solids. Industries causing water pollutionconstituted 40 percent of the total 4,271 industrial establishments in the country in 1991/92. In1991, IUCN identified 125 industrial plants throughout the country as polluting 'Hot Spots'.Of them, sixty highly polluting hot spots included industries like; Brewery and distillery,cement, cigarette, tobacco, soap, chemical solvent etc (WHO and NHRC 2002).

More than 72 percent of the country's water polluting industries are located in KathmanduValley. The effluents from many industries are directly discharged into the local riverswithout treatments and spoiling the quality of river water.

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3.3 Biological Environment

Nepal is immensely rich in biological diversity as it lies in between two big geographicalregions, paleotropical and paleoarctic region. In spite of being small in size, which constitutesonly about 0.03 percent of the world total landmass, it provides a favorable habitat for theluxurious growth of different biological species. The colntry has about 54% of the surfacearea under some sort of vegetation cover. A total of 118 ecosystems have been identified indifferent physiographic zones in Nepal. In addition, 75 vegetation types and 35 forest typesare identified in the country, which is biologically divided into ten zones.

3.3.1 Inventory of Floral Species

Nepal shares a less than three percent on non-flowering species and slightly over two percenton flowering plant species in comparison to the whole world. Table 3.4 below shows the plantdiversity in the country in comparison with the global species diversity.

Table 3.4: Nepal's Share in Global Plant Species (UNEP, 2001)

Nepal World Nepal's

Groups Species Endemic sps. Species Share %

Non-flowering SpeciesAlgae 687 13 40,000 1.72Fungi 1,822 150 70,000 2.38Lichen 471 48 17,000 2.77Bryophytes 853 37 14,000 6.09Pteridophytes 383 . - 12,000 3.19

Non-flowering Plant Total 4216 248 153,000 2.76

Flowering plants 5,833 246 250,000 2.33

60 non-endemic and 47 endemic plant species are documented as threatened species in therecent State of The Environment Report Nepal. Among the 60 non-endemic plants, 22 arerare, 12 are endangered, and 11 species are vulnerable. With regard to endemic plants, 8 areextinct, 1 is endangered, 7 are vulnerable, and the remaining 31 species are documented asrare species (UNEP, 2001).

Similarly, nine species are included in appendix II and five are in appendix III of CITES(Convention on International Trade in Endangered Species of wild fauna and flora) (IUCN,2002). About 571 species of medicinal plants are listed in two volumes of the MedicinalPlants on Nepal. Out of the total no. these species, it is roughly estimated that 30 percent aretree, 25 percent are shrub and 32 percent are herb and 10 percent climbers and 3 percentothers (CBS, 1998).

Nepal has a wide variety of domesticated plants and animals. Over 400 species of agro-horticultural crops and about 200 species of vegetables have been reported of which around50 species have been utilised for commercial and household consumption. Fifteen fruits ofmore than 100 varieties, 50 vegetables with 200 varieties, and 10 varieties of potatoes arecultivated commercially. Some wild genotypes have also been identified and utilised by localpeople because of their economic value. The Nepal Agricultural Research Council (NARC)has stored the germplasm of various crops-cereals, grains, legumes, oilseeds, vegetables, and

16

spice species, which total about 8,400 accessions. There about 680 accessions for rice and 713for finger millet (UNEP, 2001).

3.3.2 Inventory of Faunal Species

Nepal is equally rich in faunal diversity. Various types of ecosystems provide habitat to ampleof wild species. At present, in situ conservation of wild species are ensured in 9 nationalparks, 3 wildlife reserves, 1 hunting reserves and 3 conservation areas. Nepal shares 4.27 and8.57 percentage of the total world's mammals and birds respectively. Table 3.5 provides theinformation regarding the faunal species in comparison with global faunal diversity.

* Out of 645 butterfly species, 29 are endemic, 142 are threatened, and 12 areendangered species.

* Out of 185 fishes, 8 are endemic, 9 vulnerable, and 24 are rare.

Table 3.5: Inventory of Faunal Species (UNEP, 2001)

Groups Nepal World Nepal'sSpecies Endemic sps. Species Share

ArthropodsInsects 5052 4 1,000,000 0.44Butterflies 645 29 - -Moths 6000 - -

Spiders 144 108 -

Freshwater fishes 185 8 85,000 0.21

HerpetofaunaAmphibians 43 9 4,000 1.07Reptiles 100 2 6,5000 1.53

Birds 847 2 9,881 8.57Mammals 185 1 4,327 4.27

Some of the protected species mentioned in CITES and IUCN lists are listed in Table 3.6

Table 3.6: Number of Species Included in the CITES and IUCN lists(FD et. al. 2003 and IUCN, 2002)

Protected list Mammals Birds Reptiles and ButterfliesAmphibiansCITES 55 111 19 3

Appendix I 28 16 9Appendix II 16 94 10 3Appendix III 3 1

IUCN 44 19 3 1EN 9 2CR 1 2 1VU 15 7 1LR/nt 7 8 1 1LR/Ic 8 -

DD 4 -

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EN- Endangered, CR- Critically Endangered, VU- Vulnerable, LR/nt- Low risk/nearthreatened, LR/lc- Lower risk/least concern, DD- Data deficient

3.3.3 Protected Areas

Protected area is defined as a geographically defined area, which is designated and managedto achieve specific conservation objectives. In the context of Nepal, the protected areas arecreated for the preservation of historic, scenic, cultural and wildlife values of the territory.The basic aim of creation and management of protected areas is to improve, maintain andpreserve the environment in and around such areas by involving conservation of forest landareas, water, soil and cultural and ecological heritages. The management of national parks andwildlife reserves has attained special significance from the point of view of ecotourism. Notonly that the wild animals can be observed in their natural habitats by visitors in nationalparks and wild life reserves but also help in educating people about animals and plants andtheir importance and provide opportunity for evolution.

In order to conserve the biological resources and maintain a notable natural heritage of Nepal,institutional efforts are underway. In 1972, the office for the national parks and wildlifeconservation was set up and the same was upgraded to a departmental status in 1979.Conservation of biological species to protect them in a sustainable manner was realized lately.Parks, reserves and conservation areas are distributed in different ecological belt as well as indevelopment regions. Covering area of these parks and reserves change from time to time dueto extension programs.

At present, there are nine national parks, three wildlife reserves, three conservation areas andone hunting reserves (Fig. 3.2) (CBS, 2003).

National Parks: It is a vast protected area and planned land set aside for its features ofpredominantly, unspoiled natural landscape, flora, fauna permanently dedicated for publicenjoyment, protection from all interferences so that natural attributes are preserved. Theseareas contain both rare and representative flora and fauna of different places of theHimalayans and the south-east terrain of Asia. In addition, these areas are also managed forecosystem conservation and recreation. It is a natural area, not materially altered by humanactivity.

Similarly, the primary objectives of the Department of National Parks and WildlifeConservation (DNPWC) are to conserve the country's major representative ecosystems,unique natural and cultural heritage, and give protection to the valuable and endangeredspecies. The DNPWC's present priority stresses a conciliatory approach with participatorymanagement of biodiversity. Table 3.7 gives the overall scenario of national parks of Nepal.

World Heritage Sites (WHS): Protected areas are managed to protect the natural features forwhich the area is considered to be of outstanding universal significance. A world heritagenature site may exemplify process, or be representative of biological evolution, or contain thenatural habitats endangered animals. It is a place of natural habitats of endangered animalsand of exceptional scenic beauty, a spectacular view and a reserve for a large number of wildanimals. Royal Chitawan National Parks and Sagarmatha National Park have been listed inthe World Heritage Sites.

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Table 3.7: List of National Parks in Nepal (DNPWC, 2003)

GeoNational Physio- Area Gazetted

Parks Graphic (sq. km.) Years Vegetation Wild AnimalsZone

Royal Terai and 932 1973 Sal (Shorea Robusta), One-HomedChitwan Siwalik Chirpine, Khair, Rhinoceros, Gaur,

Sissoo, Simal, Grass Royal Bengal Tiger,(Sacccharum & Wild Elephant,Inperata) Fourhorned

Antelope, Pangolin,Golden MotorLizard, Python,Bengal Florican,Lesser Florican,Gaint Hombill,Black Stork, WhiteStork, GangeticDolphin

Sagarmatha High 1148 1976 Pine, Hemlock, Fir, Himalayan Tahr,Himal Juniper, Birch, Ghoral, Serrow,

Rhododendron Musk Deer,Himalayan BlackDeer, Weasel,Marten, HimalayanMouse Hare, Jackal,Langur, Birds (Atleast 118 species)

Langtang High 1710 1976 Sal, Chirpine, Red Panda,Himal & Rhododendron, Himalayan, BlackHigh Nepalese Alder, Oak, Bear, SnowMountain Silver Fir, Hemlock, Leopard, Wild Dog,

Nepalese Larch, Ghoral, Serow,Birch, Birds

Rara High 106 1976. Blue pine, Musk deer,Mountain Rhododendron, fir, Himalayan Tahr,

oak, birch, Yellow throatedmarshlands, tussock marten, Otter, Wildgrassland, Dog, Common

Langur, RhesusMacaque and RedPanda

Shey- High 3555 1984 Rhododendron, Snow Leopard,Phoksundo Himal caragana Shrubs, Musk Deer, Blue

Salix, Juniper, White Sheep, Grey Wolf,Himalayan Birch, Gorak, GreatSilver Fir, Blue pine Tibetan Sheep,Spruce, Hemlock, Himalayan Tahr,Cedar, Poplar, Leopard, Jackal andBamboo. Himalayan Black

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GeoNational Physio- Area Gazetted

Parks Graphic (sq. km.) Years Vegetation Wild AnimalsZone

BeerKhaptad High 225 1984 Oak, Spruce, Fir, Barking Deer, Wild

Mountain Hemlock, Oak, Boar, Goral,Maple, Birch, Himalayan BlackRhododendron, Bear, YellowGrassland Flowers Throated Marten,like Primulas, Rhesus and LangurButtercups, Wild Monkey, Leopards,Berries and varieties Wild Dogs, Jackalof medicinal herbs Musk Deer, Birds(224 species). (226 species)

including hnpeyanpheasant (Dhanphe)Nepal's nationalbird, many types ofPartridges,Flycatchers,Bulbuls, Cuckoos,Eagles

Royal Terai and 968 1976 & Sal (Shorea Robusta) Rhinoceros, Tiger,Bardiya Siwalik 1988 and Grassland Gharial Crocodile,

Gaur, WildElephant, GourHomed Antelope,Striped Hyena,Pangolin, GangeticDolphin, MonitorLizard, PythanSambar, Chital, HogDeer, Barking Deer,Sloth Beer, PalmCivet, Wild Dog,Langur, RherusMonkeys, CommonLeopard, Ratel

Makalu High 1500+830 1991 Rhododendron, Snow Leopard, RedBarun Himal and orchid (47 types), Panda, Musk Deer,

Mountain Wild BoarShivapuri Mid 104 2002 Pine, Oak, Chestnut, Himalayan Black

mountain Rhododendron Beer, Leopard,Leopard, JungleCat, RhesusMonkey

Wildlife Reserves: Wildlife reserves are the places where most of wild flora and fauna areembraced within a boundary of reserves. Sometimes it is also called as habitat/speciesmanagement areas. Wildlife Reserves are managed for the protection of characteristics

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wildlife, especially migrated bird communities and of threatened animal or plant species. Forexample, Koshi Tappu Wildlife reserve is habitat for the only remaining population of wildbuffalos, which is difficult to get in other parts of the country. Table 3.8 gives the descriptionof wildlife reserves in Nepal.

Table 3.8: List of Wildlife Reserves in Nepal (DNPWC, 2003)

GeoWildife Physio- Area GazettedWildlife Physio (sq. Gaze.Vegetation Wild Animals

Reserves Graphic ks.) Years WZone

Royal Terai 305 1976 Sal, Asna Wild Elephant, Royal BengalSuklaphanta (Terminalia Tiger, Spotted Deer, Blue

Alta), Simal, Bull, Barking Deer, HogKarma, Khair, Deer, Wild Boar, Leopard,Sissoo, Jackals, Langur, RhesusImperata Monkey, 350 species ofCylindrica, birds, including Sarus Crane,Saccharun Swapm Francolin, Grass owl,Heteropogon Warblers, Flycatcher, Bengal

Florican, Marsh MuggerCrocodile, Cobra, Python

Koshi Terai 175 1976 Tall Kharpater Wild buffalo, Hog Deer,Tappu grasslands, Wild Boar, Spotted Deer,

Thatch grass, Blue Bull, Rock Python andKhair-Sissoo 441 species of BirdsScrub Forest including Wild Tailedand Deciduous Stonechat, Striated MarshMixed Riverine Warbler, Shore Birds, WaterForest, Birds, Swamp Partridge and

Bengal Florican, GharialCrocodile, Gangetic Dolphin

Parsa Terai 499 1984 Sal forest, Pine Wild Asian Elephant, Royaland forest, Khair, Bengal Tiger, Sloth Bear,Siwalik Silk Cotton Leopard, Blue Bull, Samber,

Tree, Sabai Chital, Hog Deer, BarkingGrass, Deer, Langur, Rhesus

Macaques, Striped Hyena,Jungle Cat, Palm Civet,Giant Hornhill, CommonCobra, Banded Krait,Phython, King Cobra and500 species of Birdsincluding White BreastedKingfisher, ParadiseFlycatcher, Large Racquet-Tailed Drongo, GoldenBacked Woodpecker

Koshi Tappu Wildlife Reserves: The reserve is a habitat for a variety of wildlife. The lastsurviving population of wild buffalo is found here. The estimated population of around 150

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individual is dwindling. They are distinguished from domestic buffalo by their much biggerhoms. Around 441 species of birds-many seen nonwhere else in Nepal (14 endemic species)have been recorded. In 1987, Koshi Tappu was declared a Ramsar site, a wetland ofinternational significance.

Royal Suklaphanta Wildlife Reserve: The reserve is established to protect Nepal's lastremaining herd of Swamp Deer (Cervus duvaucelli). The herd currently stands at about 2000individuals. The reserve provides habitat for 350 species of birds, 21 species of fish and otherendangered species.

Parsa Wildlife Reserve: It was established as wildlife reserves to preserve the habitat for WildAsian elephant. The reserve is also the habitat of 500 bird species and many other endangeredspecies.

Dhorpatan Hunting Reserve: This reserve provides.the needs of Nepalese and foreign huntersof Blue Sheep and other animals and preserves a representative high altitude ecosystem ofNepal (Table 3.9).

Table 3.9: Hunting Reserve in Nepal (DNPWC, 2003)

Hunting Geo Physio- Area Gazetted Vegetation Wild AnimalsReserve Graphic Zone (sq. km.) Years

Dhorpatan High Mountain 1325 1987 Fir, Pine, Birch, Blue Sheep, Leopard,Hunting Rhododendron, Goral, Serow,reserves Hemlock, Oak, Himalayan Tahr,

Juniper, Spruce Himalayan Black Bear,Barking Deer, WildBar, Rhesus Macaque,Langur, Mouse

Conservation Area: An example of conservation area is given in Table 3.10.

Table 3.10: Conservation Area of Nepal (CBS, 1998)

Conservation Geo Physio- Area GazettedArea Graphic (sq km.) Years Vegetation Wild Animals

ZoneAnnapurna High 7629 1992 226 species of 101 species of

mountain plants, 38 species mammals, 478 speciesof orchids, 9 of Birds, 39 speciesspecies of Reptiles and 22 speciesRhododendrons of Amphibians.

3.4 Forest Resources of Nepal

Forest is the most important natural resources of Nepal and covers an area of 42,682 sq. km,which is 29% of the total land area. The shrub area covers 15,601 sq. km or 10.6% of the totalarea. Forest depletion is one of the major environmental issues in the country. The forestsdecreased in both area coverage and density over previous decades. Landslides, soil erosion,floods, encroachment of forests by cultivated land and people for settlement, among others,have been responsible for this. The rapid population growth, at an annual rate of 2.37 percentper annum, is considered to be the most important factor for diminishing forest area. Moreover, fuelwood is the main source of energy for cooking and heating purposes. Forests remainthe single most important source for fiuelwood, particularly for rural people. Forests accountfor 78 percent of energy consumption.

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Protected Areas of NepalN Legends:

Annapurna National Park and Conservation AreaW } t-E K Koshi Tappu Wild Life Reserve

Langtang National Park. Makalu Barun National Park and Conservation Area

f] Parsa Wild Ufe Reserve,_ Rara National Park,, Royal Bardiya Wild Ufe Reserve

Royal Chitawan National Park]_ Royal Dhorpatan Hunting Reserve

Royal Khaptad National ParkRoyal Shukia Phant Wild Life ReserveSagarmatha National Park

e v + v . , _ She-Phoksundo National ParkM.Shivapuri Water Shed

100 0 100 200 Miles

Fig 3.2: Protected Areas of Nepal

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Out of the total land area in the country, the forest area, according to the Land ResourcesMapping Project (LRMP) accounted for 38% in 1978/79; in 1994 the area had declined to29%. The shrub area increased during the same period from 4.7 to 10.6%. This has beenmainly due to uncontrolled cutting of trees for fuelwood and forest clearance for agriculturalland. Between 1978/79 and 1994, the estimated rate of annual deforestation in the Hills was2.3% compared to 1.3% in the Terai, while for the country as a whole was 1.7%. During thesame period, the annual decrease in forest and shrub together was 0.5%. In terms of area, theforests of the country decreased by 24%.

The agricultural area increased from 235,900 ha in 1980 to 2,968,000 ha in 1985 and thenremained constant up to 1999. This increment was mainly due to the encroachment on forestareas. The forest was also encroached by development works and human settlements.

There has been a decrease in the growing stock rate of the trees. In 1985, the growing stockwas 522 million cubic meters of bark up to 10 cm top diameter, and this dwindled down to387.5 million cubic meters in 1999. The growing stock for Sal (Shorea robusta) in the Teraiforests declined from 101 m 3/ha to 72 m 3/ha and for other hardwood forests the decline wasfrom 76 m3/ha to 58 m3/ha. Fuelwood consists 78% of the total fuel consumption and its useis one of the main causes of forest depletion. This is basically due to the lack of alternativefuel to wood. As a result, distances from the villages to the forests have increased. The foresthas also been under great pressure from the ever-increasing demand of the livestockpopulation for grazing and fodder. Species of flora and fauna have also declined (MOPE,2001).

Currently the emerging issues in Nepal's forestry sector are in community and leaseholdforestry. Community forests are the part of national forest handed over to users groups toconserve, manage and utilize for the basic needs of the community. Community forestry inthe hills, in most cases, is functioning well and communities are deriving various benefits. Atotal of 15 percent of the forest area has already been converted to community forestry. Aslightly old data (December 11, 2001) indicated that 10,969 community groups are managing847,282 ha of community forest benefiting 1,196,199 households in total (MFSC, 2003).

Normally, a forest user group prepares an operational forest management plan and submits itfor approval. The concerned District Forest Officer (DFO) is required to approve theoperational forest management plan before handing over the forest to the Community ForestUser Group. As of 2001, 939,195 hectares of forest have been handed over to communitiesthroughout the country. In the initial phase of the 9 th five-year plan, there were only 5,316community forests and the number has been increased to about 12,000 by the end of the planyear (NPC, 2003).

3.5 Socio-economic Condition

Nepal had a population of 18.491 million in 1991 (CBS, 2003). The average populationdensity at that time was 125 persons per sq. km, although nearly half the people wereconcentrated in the narrow Terai region. However, the 2001 population is 23.15 million andpopulation growth rate is 2.24%. The population density is 157.2 per sq. km. It is estimatedthat the population of the country will be doubled by 2031. Although the government hassponsored family planning since the 1950s, these programs have been slow to affect Nepal'spopulation growth. The distribution of population in three geographic regions is shown inTable 3.11.

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Table 3.11: Area, Population and Number of Districts by Geographic Region (UNEP, 2001)

Estimated Pop.Physiographic Area Number of in 1999

Region Districts (million)km 2 % Size %

Mountains 51,817 35.2 16 1.7 7.8

Hills 61,345 41.7 39 10.2 45.5

Terai 34,019 23.1 20 10.5 46.7

Total 147,181 100 75 22.4 100

Nepalese economy is principally based on agricultural production. The agricultural sectorcontributes over 40% to the National Gross Domestic Products (GDP). The principalindicators of the socio-economy in 2001 included: life expectancy at birth- 59.7 years, literacyrate-53.74%, per capita GDP- Rs 17,712 and per capita GNP- Rs. 18,451.

The Nepal Human Development Report 2001 estimated the Human Development Index(HDI) for Nepal to be 0.46 based on Life Expectancy at birth of 59.5 years and GDP percapita of Rs. 1,237 (UINDP, 2002). The HDI for urban areas (0.60) far outstripped that forrural areas (0.46), where more than 80% of the population lives, because of far better accessto services, resources and opportunities. The indices for Mountain, Hill and Terai wereestimated as 0.38, 0.51 and 0.47, respectively. The broad scattering of communities in themountains sharply limits access to services and information and severely disadvantagedpeople who live there. On the regional basis, the Mid-western (0.40) and Far-western (0.38)had lower values than of national average showing the concentration of less productiveeconomic activities there.

Nearly four-fifths of the total population depends upon agriculture as its primary source ofearning. Nearly four-fifths of all workers are also self-employed, almost all in the agriculturalsector. Sixty-nine percent of the agricultural holdings, however, are less than one hectare insize. The agricultural GDP grew annually by only 2.3 percent during the last two decades.

One of the economic and social developments of Nepal with the most potential is tourism.Nepal has been a destination for tourist for centuries because of its unique cultural, social andnatural resources. Since, the opening of the kingdom to foreigners in 1956, tourist visits to thecountry have increased tremendously. In 1999, there were almost 500,000 tourist arrivals,almost five times that of 110,000 in 1980 (UNEP, 2001-). The country possesses strongtourism viability as of many natural, archeological and religious attractions. However, inrecent days, the tourist attraction is being decreased due to insurgency problems.

Nepal's energy consumption consists of three categories: traditional biomass, conventionalcommercial and alternative renewable energy resources. The trend of energy consumptiondepicts positive growth with increase in commercial and renewable resources at annual rate of15.5% and 21%, respectively, and the traditional source at 2% over the last decade. Thoughthe growth rate indicates increase in use of commercial and renewable energy by 2001/02, thetraditional biomass still shares a mammoth share of 86% of the total energy consumptionwhile that of commercial and renewable are 13.7 and 0.4% respectively. On fuel usages, thetraditional fuel wood has the largest contribution of 76% (MoPE, 2003). The lack ofalternatives to fuiel wood has resulted in constant forest encroachment leading to myriad of

25

environmental disorders such as landslides, lowering of water table and desertification in therural area.Population explosion, deteriorating environmental conditions and constraints of resources hasaffected human health and health of the ecosystem. Environmental pollution adversely affectshealth of the people and the ecosystem. Air pollution causes respiratory problems like asthmaand bronchitis. Some studies have shown certain co-relation between the pollution level anddiseases like acute respiratory infections, lung cancer, cardiovascular disease, cataracts andtuberculosis. Similarly, 80% of the total diseases are attributed to water related. Pollutedwater causes typhoid, Japanese Encephalitis (JE), meningitis, visceral leishmaniasis (kala-azar), viral hepatitis, malaria and parasitic infection are also the results of environmentalpollution. Because of the above problems, the mortality rate from diarrhea was 12 per 100,000population and morbidity 612 per 100,000 population (WHO and NHRC, 2002).

Nepal is heading for the economic development with liberalization policy and hasimplemented various programs for eliminating the poverty and achieve rapid growth rate.Private sector has been encouraged and efforts are underway to generate more employment.Although, Nepal lacks modem development infrastructure and the income level of majority isfairly low, the mountainous landscape has also offered diverse potentials for economicdevelopment. The steep topographical features and high run-off are the main factors offeringa hydroelectricity potential of 45,000 MW installed capacity although the theoreticalhydropower potential of Nepal's rivers, based on an average flow, has been advocated at83,000 MW which is one of the largest potential in the world.

On the other hand the Nepalese society has a tradition of maintaining the harmony and peaceamong various ethnic communities. The family kinship networks provide the individuals withranging personnel relations as well as social security in difficult times. People continuediverse ritual and religious practices, which give meaning to their life resulting stability in thesociety. Crisis management is a very regular activity of the majority of the households.

3.6 Tradition and Culture

3.6.1 Ethnic Groups, Languages and Religion

Nepal's indigenous population consists of two major groups, the Indo-Nepalese, whoseancestors migrated into the country from the south and the Tibeto-Nepalese, whose ancestorsentered into Nepal from the north. Although intermingling between the two groups hasoccurred, cultural, linguistic religious differences exist both between and within the twogroups.

The indo Nepalese group comprises people who speak Sanskrit, the derived languages and arestrict adherents to Hinduism. Nepali, the official language, is derived from Sanskrit.Difference within the Indo-Nepalese group are marked more by caste (a system of socialhierarchy) than by ethnicity. The Tibeto-Nepalese group comprises several different ethnicgroups including Newar, Bhutia, Sherpa, Gurung, Magar, Tamang, Rai and Limbu people.Although most of the Tibeto-Nepalese speak Nepali, each ethnic group has its own language.While the majority of Nepali people practice Hinduism, the official religion, a strongshamanist element remains in the religious practices of many official religious practices ofmany Tibeto-Nepalese ethnic groups. Buddhism is also important within the country. Buddha,the founder of Buddhism was born in Lumbini, Kapilbastu district of Nepal. There is also asmall Muslim population mainly located in the Terai.

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3.6.2 Festivals

Nepal has its own solar calendar called Bikram Sambat, with the new-year occurring in mid-April. Dates for religious holidays and festivals, however, are based on the phases of themoon. Dashain is the greatest festivals of Nepali. Dashain takes place during two weeks inSeptember or October and celebrates the inevitable victory of virtue over the forces of evil; itis a time of gift giving, family gatherings, feasts, and rituals performed for the Goddess ofVictory. During Tihar, three days in October or November, rows of lights are displayed onevery building in worship of the Goddess of Wealth. In this festival, sister worships herbrothers and wishes for his long life. Teej, a greatest festival of women, is observed in Augustor September and is a time for married women to go home to their parents, receive specialtreatment, ritually purify themselves, and pray for sons. Holi is a lively social event inFebruary or March during which people dance in the streets and throw colorful powders oneach other.

3.6.3 Marriage and Family

Marriage customs vary among the different castes. Traditional marriages are arranged byparents, although sometimes with the consent of the marriage partners. Marriage is sacred,divine, and considered to ensure well being beyond death. Sherpas might live together beforegetting married. Weddings are times of great celebration and feasting.

In Nepal the interests of the family take precedence over those of the individual. The elderlyare respected and cared for by their families. Traditional households are large and include theextended family. In many homes, aunts, uncles, and other relatives live together with theirrespective families and share the same kitchen. Among the educated, it is increasinglycommon for some sons to set up separate households after marriage rather than live with theextended family.

Land is inherited and divided equally between the sons of a family. Inheritance laws havebeen reformed, and women are gaining some property rights. They are responsible for thehousehold and farming except for plowing and do not socialize in public as much as men.Many women have started to work outside the home, it is more common in urban areas thanin rural areas. Women in rural areas often marry before they are 18 years old. They join theirhusband's extended family at that time and are expected to contribute in husband's householdworks.

General Information of Selected Districts

The general information of the six selected districts for pilot phase of PAF programs aredescribed below. Similarly, the demographic features and land use pattern of these districtsare shown in Tables in 3.12 and 3.13, respectively. The development activities and HumanDevelopment Index are mentioned in Annex V and VI respectively. The selected six districtsof pilot phase are shown in Fig. 3.3.

Siraha District: Siraha district is located in Sagarmatha zone in Eastern Development Region.It covers 1,188 sq. km of land. It is surrounded by four districts namely Saptari in the East,Udayapur and Sinduli in the North, Dhanusa in the West. It boarders with Bihar State of Indiain the South. It consists of 109 VDCs with population of 569,880. Population 10 years of ageand over by economically active and inactive are 223,644 and 184,339, respectively. Literacypercent of 6 year and above is 38.

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Ramechhap District: Ramechhap district is located in Janakpur Zone in Central DevelopmentRegion of Nepal. It covers 1,546 sq. km. of land. It is surrounded by five districts namelyOkhaldhunga and Solukhumbu in the East, Kavrepalanchok and Dolakha in the West,Dolakha in the North and Sindhuli in the South. It consists of 55 VDCs with population of212,408. Population 10 years of age and over by economically active and inactive are 116,268and 37,670 respectively. Literacy percent of 6 year and above is 41.

Kapilbastu District: Kapilbastu district is located in Lumbini Zone in Western DevelopmentRegion of Nepal. It covers 1,738 sq. km. of land. It is surrounded by three districts and onestate of India, namely Rupandehi in the East, Dang and Uttar Pradesh State of India in theWest, Arghakhanchi and Dang in the North and Uttar Pradesh State of India in the South. Itconsists of 79 VDCs and Municipalities with population 481,976. Population 10 years of ageand over by economically active and inactive are 221,673 and 123,293 respectively. Literacypercent of 6 year and above is 39.

Pyuthan District: Pyuthan district is located in Rapti Zone in Mid-Western DevelopmentRegion of Nepal. It covers 1,309 sq. km. of land. It is surrounded by six districts, namelyArghakhanchi, Gulmi and Baglung in the East, Rolpa in the West, Rukum and Baglung in theNorth and Dang in the South. It consists of 49 VDCs with population 212,484. Population 10years of age and over by economically active and inactive are 102,116 and 45,101respectively. Literacy percent of 6 year and above is 43.

Muigu District: Mugu district is located in Kamali Zone in Mid-Western Development Regionof Nepal. It covers 3,535 sq. km. of land. It is surrounded by five districts and Tibet of China,where Dolpa and Jumla in the East, Humla and Bajura in the West, Humla and Tibet of Chinain the North and Humla and Kalikot in the South. It consists of 24 VDCs with population31,465. Population 10 years of age and over by economically active and inactive are 20,403and 1,403 respectively. Literacy percent of 6 year and above is 25. Shey-Phoksundo, a biggestnational park of Nepal also lies in this district. Some parts of the national park lie in theeastern part of the district. Similarly, Rara National Park is also located in the southern part ofthe district. Rara Lake (Mahendra Tal), situated at an elevation of 2990 m. is the main featureof this district. It is Nepal's biggest lake (10.8 sq. km) with a depth of 167 m. The briefdescription of National Parks and endangered species lived in these Parks are mentionedSection 3.3.3.

Darchula District: Darchula district is located in Mahakali Zone in Far-western DevelopmentRegion of Nepal. It covers 2,322 sq. km. of land. It is surrounded by two districts and onestate of India and China respectively, namely Bajhang in the East, Uttar Pradesh State of Indiain the West, Tibet of China in the North and Baitadi and Bajhang in the South. It consists of41 VDCs with population 121,996. Population 10 years of age and over by economicallyactive and inactive are 63,634 and 24,305 respectively. Literacy percent of 6 year and aboveis 45.

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Table 3.12: The Demographic Feature of Selected Six Districts (CBS, 2003 and NDI, 2002)

Population Household Avg. Pop. DensityDistrict Population Household VDCs Municity (/sq.km)

2001 2006* 2001 size 2001 2006*Siraha 569,880 651,521 102,551 5.56 109 0 479.70 548.42Ramechhap 212,408 256,472 40,467 5.25 55 0 137.39 165.89Kapilbastu 481,976 558,645 83,513 5.77 78 1 277.32 321.43Pyuthan 212,484 234,077 57,065 3.72 49 0 162.33 178.82Mugu 43,937 46,490 . 7,612 5.77 24 0 12.43 13.15Darchula 121,996 186,053 19,849 6.15 41 0 52.54 80.13

Note: * Projection for 2006

Table 3.13: The Land Use Pattern of Selected Six Districts (CBS, 2003 and NDI, 2002)

District Area Agriculture (ha) Grazing Forest(km2) Cultivated Non-cultivated (ha) (ha)

Siraha 1,188 80,766 7,589 1,314 28,155Ramechhap 1,546 40,050 19,130 11,,429 66,152Kapilbastu 1,738 87,709 6,146 933 77,838Pyuthan 1,309 28,171 14,870 2,899 72,694Mugu 3,535 11,972 7,121 91,927 111,099Darchula 2,322 16,053 8,911 61,215 79,538

29

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Cen ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tC>C100 0 100 200 tilometers X ¢ R X ng 8

300000 400000 500000 600030 700000 800000 900000 1000000

Fig. 3.3: Map of Selected D)istricts

30

CHAPTER IV

POLICY, LEGISLATION AND REGULATION

This chapter describes the pertinent policies, laws and regulations governing environmentalquality, health and safety, protection of sensitive areas, protection of endangered species, landuse control, etc. in line with the World Bank's safeguard polices and the constitution and lawsof Nepal.

4.1 World Bank's EA Requirements

World Bank Operational Manual (OP 4.01, January 1999) describes the Bank's operationalpolicies for Environment Assessment (EA) of proposed projects. EA is a one of the 10environmental and social Safeguard Policies of the World Bank that is used in the Bank toexamine the potential environmental risks and benefits associated with Bank lendingoperations. The Bank's environmental assessment policy and procedures are described inOP/BP (Operational Policy/Bank Procedures). The objective of carrying out EA of projectsproposed for Bank's financing is to help ensure that they are environmentally sound andsustainable and thus to improve decision making. This study aims at focusing on EA of theproject including Indigenous Peoples Development Plan (IPDP).

As per the Bank's policy and requirement, EA is initiated as early as possible in projectprocessing and is closely integrated with the economic, financial, institutional, social andtechnical analysis that (a) environmental considerations are given adequate weight in projectselection, sitting, and design decisions; and (b) EA does not delay project processing.However, the borrower ensures that when individuals or entities are engaged to carry out EAactivities, any conflict of interest is avoided for the proposed project. The borrower isresponsible for carrying out the EA. The Bank reviews the findings and recommendation ofthe EA to determine whether they provide and adequate basis for processing the project forBank financing.

The Bank classifies the proposed project into four categories, depending on the type, location,sensitivity, scale of the project and the nature and magnitude of its potential environmentalimpacts. Category "A" projects require a full EA. These projects include most of those havinglarge population displacement impacts. Category "B" projects do not require a full EA but dorequire some environmental analysis. Category "C" projects do not require environrmentalanalysis. Category "FI" projects do also require some environmental analysis.

Category A projects are likely to have significant adverse environmental impacts that aresensitive, diverse, or unprecedented. These impacts may affect an area broader than the sitedor facilities subject to physical works. The following list is illustrative of Category A projects:

* Dams and reservoirs;* Forestry production projects;* Industrial plants (large-scale) and industrial estates;* Irrigation, drainage, and flood control (large-scale);* Land clearance and leveling;* Mineral development (including oil and gas);* Port and harbor development;* Reclamation and new land development;* Resettlement and all projects with potentially major impacts on people;.

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* River basin development;* Thermal and hydropower development; and* Manufacture, transportation, and use of pesticides or other hazardous and/or toxic

materials.

A project is classified in Category B if its potential adverse environmental impacts on humanpopulations or environmentally sensitive areas that including wetlands, forests, grasslands andother natural habitats, which are less adverse than those of Category A projects. The impactsassociated with B type projects may be site specific, few if any of them are irreversible and inmost cases mitigation measures can be designed more readily than for Category A projects.The scope of EA for a Category B project may vary from project to project, but it is narrowerthan EA of Category A. Examples of Category B projects are:

* Agro-industries (small-scale);* Electrical transmission;* Aquaculture and mariculture;* Irrigation and drainage (small-scale);* Renewable energy;* Rural electrification;. Tourism;* Rural water supply and sanitation;* Watershed projects (management or rehabilitation); and* Rehabilitation, maintenance, and upgrading projects (small-scale).

A proposed project is classified as Category C if it is likely to have minimal or no adverseenvironmental impacts. Beyond screening, no further EA action is required for a Category Cproject. Category C projects might be:

• Education,* Family planning,. Health,. Nutrition,* Institutional development,* Technical assistance, and* Most human resource projects.

Category Fl project involves investment of Bank funds through a financial intermediary, insubprojects that may result in adverse environmental impacts. For a FI operation, the Bankrequires that each FT screen proposed subprojects and ensure that sub-borrowers carry outappropriate EA for each subproject. Before approving a subproject, the concemed agencyverifies (through its own staff, outside experts, or existing environmental institutions) that thesubproject meets the environmental requirements of appropriate national and local authoritiesand is consistent with this OP and other applicable environmental policies of the Bank.

For all Category A and B projects proposed for International Donor Agency (IDA) financingduring EA process, the borrower consults project-affected groups and NGOs aboutenvironmental aspects of the projects and takes their views into account.

For meaningful consultation between the borrower and project-affected groups and localNGOs on all Category A and B projects proposed for IDA financing, the borrower providesrelevant material in a timely manner prior to consultation and in a form and language that areunderstandable and accessible to the groups being consulted. Public availability in borrowingcountry and official receipt by the Bank of the EA report are prerequisites to Banks appraisalof these projects.

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During the project implementation, the borrower reports on; a) compliance with measuresagreed with the Bank on the basis of the findings and results of EA, including implementationof any environmental management plan (EMP), as set out in the project documents; b) thestatus of mitigatory measures and c) the findings of monitoring programs. The Bank basessupervision of the project's environmental aspects on the findings and recommendations ofthe EA, including measures set out in the legal agreements, any EMP, and other projectdocuments.

A project's EMP consists of the set of mitigation, monitoring, and institutional measures to betaken during implementation and operation to eliminate adverse environmental and socialimpacts, offset them, or reduce them to acceptable levels. The plan also includes the actionsneeded to implement these measures. Management plans are essential as element of EAreports for Category A projects; for many Category B projects, the EA may result in amanagement plan only. To prepare a management plan, the borrower and its EA design team;(a) identify the set of responses to potentially adverse impacts; (b) determine requirements forensuring that those responses are made effectively and in a timely manner; and (c) describethe means for meeting those requirements.

The proposed projects of PAF and its sub-project components are expected to have netpositive impacts on human population and the environment. In fact and in a broad sense, theobjective of sub-projects are to enhance the socio-economic status of the community and theenvironmental quality of the community and the surroundings by reducing the level ofpoverty and the traditional environmental risks. In case of any adverse impact onenvironmentally important areas such as wetlands, forests, grasslands and other naturalhabitats, the mitigation measures can be designed and incorporate easily so as to improve theenvironmental performance. Thus as per these characteristics, PAF in general and specificallythe sub-projects have been classified in Category B. The projects falling under this categoryrequire a limited environmental review to determine potential negative impacts, identify theappropriate mitigation measures and recognize the identification of opportunities forenvironmental assessment.

4.2 National Guideline Related to Environment

The Constitution of the Kingdom of Nepal (1990) mentions environmental protection underthe directive principles and policies of the State. Paragraph 4 of Article 26 of the Constitutionstates "The State shall give priority to the protection of the environment of the country andalso prevent damage due to physical developmental activities by making the people consciousof the environmental cleanliness, and also make special arrangements for the protection ofrare animal species, the forests and the vegetation of the country".

In 1997, an Environment Protection Act (EPA) was enacted to internalize environmentalassessment system. Whereas, it is expedient to make legal provisions in order to maintainclean and healthy environment by minimizing, as far as possible, adverse impacts likely to becaused from environmental degradation on human beings, wildlife, plants, nature and physicalobjects; and to protect environment with proper use and management of natural resources,taking into consideration that sustainable development could be achieved from the inseparableinter-relationship between the economic development and environment protection. Section 3of the Act obliges the proponent to carry out IEE or EIA of the prescribed proposals while itsSection 4 calls upon the proponent not to implement any proposals, which requires such anassessment. Section 5 of the Act provides provisions to submit IEE report for approval and its

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Section 6 contains procedures for approval process. If any person or organization hasimplemented proposal without approval of IEE or EIA, the prescribed authority is empoweredto close down such project, and to punish with a fine up to one hundred thousand rupeesaccording to Section 18. In addition to the concessions and facilities to encourage anyindustry, enterprise, technology or process which causes positive impacts on environmentprotection (Section 15). Furthermore, the Act provides provisions for compensation for thevictims of environmental pollution (Section 17). These provisions are support to enhance theenvironmental condition in Nepal.Under the provision of the Environment Protection Act 1997, article 24, His Majesty'sGovernment of Nepal (HMG/N) has enacted the Enviromnent Protection Rules 1997 (EPA).The EPA requires an EA either in the form of an Initial Environmental Examination (IEE) oran Environmental Impact Assessment (EIA) to carry out all proposed projects, which meet thecriteria listed in Schedules I and 2 in the EPR. While EIA has been described as a detailedstudy or evaluation of the adverse environmental impacts, TEE has been mentioned as a reporton analytical study or evaluation. The EPR clearly outlines in Rule 3, 5, 7 and 11, IEE or EIAreport approval process. The provisions are made such that a proponent must submit a projectproposal accompanied by either IEE or EIA studies for the approval depending in the natureof investment in the project. However, the concerned body should issue the Terms ofReference (TOR) in the format as prescribed in Schedule 3 of the Rules. Furthermore, theproponent should prepare and submit the IEE or EIA report in the format mentioned inSchedule 5 or 6 of the Rules respectively. The detail selection criteria for IEE is mentioned inAnnex ITT.

The EA process as described in the EPA and EPR in Nepal is illustrated in Fig 4. 1, the EAprocess should be an integral part of the project cycle. The EA should be carried out in closecoordination with the feasibility study, the social assessment, the engineering design work andconstruction activities. The EA will assist in determining the scope of the project, mitigationmeasures and implementation arrangements, which should be incorporated into the projectdesign and implementation plan.

The Ministry of Population and Environment has made necessary arrangement to open theEIA report for the general public to render opinions and suggestions. The EPR, 1997(amendment 1999) further elaborates the public consultation process in order to ensure theparticipation of different stakeholders right from the scooping to the approval process. TheEPR, 1997 obliges the proponent to issue public notice on the contents prior to the preparationof a scoping report. Once the draft EIA report is prepared, based on the approved Terms ofReference (TOR), the proponent should conduct a Public Hearing at the project site.Following submission of the EIA report to the Ministry of Population and Environment(MOPE), it should be made public. The MOPE has to legally approve the EIA report within60 days upon receipt. These legal provisions are meant to enhance the participation ofdifferent stakeholders right from the project inception to the implementation of the proposal.

4.3 Decentralization Policy and Environment

The Local Self-governance Act, 1999 (LSGA) gives authority to make provisions toparticipation of the grass root people in the process of governance by way of decentralization.It gives space to Institutionalize the process of development by enhancing the participation ofall the people including the ethnic communities, indigenous people and down-trodden as wellas socially and economically backward groups in bringing out social equality in mobilizingand allocating means for the development of their own region and in the balanced and equaldistribution of the fruits of development. They have institutional development of local bodies

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EPR= EnvironmentalEnvironmental screening to designate project Protection Rules

type (EPR Schedules I and 2) 2054 amended 2055

No Further EA Project requires IEE Project requires EIArequired (Schedule 1) (Schedule 2)

Prepare TOR Prepare scope and TOR Public In.ut(Schedule 3) (Rule 5) of EIA

+ (Schedule 4) (Rule 4) l v l

Public Input Carry out IEE v Committee

MOPE approvesscope and TOR

Prepare IEE Report (Rule 5)(Schedule 5) (Rule 7) 4

' [ pCarry out EIA 4 Public Input

Submit to concerned lagency for approval

(Rule 10) Prepare EIA Report

Approved Not Approved (Schedule 6) (Rule 7)

Approved by Decision that EIA Concerned agency reviewsconceme agenc isneeand reports and submits toconcerned agency is needed

(Rule 11) (Rule 6) MOPE for approval(Rule II)v

MOPE makes EIA report Public Inputavailable for public

review (Rule 11)I Review

Committee

MOPE reviews andapproves EIA reports

(Rule I 1)

Approved | Not Approved

Implement project in PoetRdsgp comnpliance with IEE/ElA Project Redesign

report (Rule 12) l

Concerned agency Resubmitmonitors and evaluate

implementation (Rule 13)

MOPE carries outenvironmental audit after

2 years (Rule 14)

Fig. 4.1 Environmental Assessment Process in Nepal

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capable of bearing responsibility, by providing such responsibility and power at the local levelas is necessary to formulate and carry out plans. Constituting local bodies for the developmentof the local self-governance system in a manner that they are able to make decisions on thematters affecting the day-to-day needs and lives of the people, by developing local leadership.

The Village Development Committee (VDC) and District Development Committee (DDC)are liable to formulate and implement the programmers related to the protection of theenviromnent and biodiversity consideration, and to give adequate priority for the protection ofthe environment during the formulation and implementation of the local level plans. Inrelation to the infrastructure development and environment projects, LSGA has the followingelements.

* To build community buildings, rest houses and public toilets* To construct, maintain and repair wells, water ponds, taps etc. within the village

development area* To prepare criteria for houses, buildings, roads and other physical infrastructures etc.

to be constructed within the village development area, and to grant approval asprescribed for the construction of them

* To formulate, implement, operate and maintain and repair programs on irrigation,ditch, embankment and small ditch providing facility to more than one villagedevelopment area in the district

* To make arrangements for necessary sewerage and drainage in settlement areas* To prepare programs in respect of forests, vegetation, biological diversity and soil

conservation and to carry out the related activities* To make various programs on environment protection and to carry out the related

activities* To make proper coordination with NGOs and INGOs to execute the development

activities in the community

4.4 National Policies and Planning Practices

The need for environment-friendly policies was realized in the mid 1970s and the need forenvironmental assessment study was included in the Sixth Plan (1980-85) in the planninghistory of Nepal. This commitment was re-enforced in the Seventh Plan (1985-90) with theNational Conservation Strategy, 1987, and the Master Plan for Forestry Sector. The EighthPlan (1992-97) elaborated the need for institutionalizing EIA system to attain to goals ofsustainable development by integrating environmental aspects into development activities.The Nepal Environmental Policy and Action Plan (NEPAP) also recognized EIA as anessential planning and management tool to internalize environmental management system inthe development projects. The Ninth Plan (1997-2002) emphasizes participatory EIA and theTenth Plan (2002-2007) emphasizes to make the EIA process effective in the developmentprojects.

Ninth plan (1997-2002) had a target of lowering the percentage of people living below thepoverty line from 42% to 32%. However, by the end of three fiscal years this figure has beenestimated as 37 % only. The tenth plan (2002-2007) has a target to lowering the povertyfigure to 30% (NPC, 2002). In order to achieve this goal, the targets for the various socio-economic indicators have been set as shown in Table 4.1.

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Table 4.1: Major Socio-economic Goals (NPC, 2002)

Indicators Ninth plan Tenth planIndicators (2001-2002) (2002-2007)

Infant mortality (per 1,000) 64 45Maternal mortality (per 100,000) 439 300Life expectancy (year) 57.6 62Literacy rate (above 15 years), % 52.7 70Water supply coverage 69 86.6Sanitation coverage 25 50Population growth 2.27 2.1Population living below poverty line 38 30Human development index (HDI) 0.466 0.517Human poverty index (HPI) 39.2 34.0

The environmental policies and strategies in the Tenth five year plan are:

* Conservation of natural resources, biodiversity and cultural heritage,* Strengthening the capacities of local bodies on local natural resource management* Mainstreaming and promoting environmental conservation in socio-economic

development activities.* Setting up and implementation of environmental standards- air, water, noise and soil

pollution and adopt polluter pays principles,* Formulation of regulatory frameworks for environmental health programs,* Encouragement to scientists, technicians and researchers to develop new technologies

and measures,* Making the government and private sector investment environment-friendly* Introduction of pollution prevention fee and other fees to increase funds in

environment conservation fund and* Give special focus on voluntary compliance.

Tenth five-year plan commits to carry out environmental monitoring. This indicated thecommitment of the National Plan in addressing the environmental issues.

For infrastructures, the key features of Tenth Plan are listed below:

* Appropriate methodology should be sought for resource mobilization, allocation andutilization to achieve sustainable economic growth.

* To generate employment opportunity through development programs.* Development of strategic road network (accesses to district head quarter and regional

balance) and area with significant socio-economic importance e.g. hydropower,tourism etc.

* Encourage private sector participation in the development of infrastructure activities.* Promotion of decentralized management system to sustain the development

infrastructures activities.* Provide basic water supply services to 85 percent of nmral and 95 percent of urban

population.* Prepare physical development plans for small towns and marker centers ensure better

provision of infrastructure.

In addition to the foregoing acts and regulations, some contemporary acts in Table 4.2 andrelevant laws and environment related regulations are shown in Table 4.3.

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4.5 Institutional Involvement at Local Level

Nepal govemment has established district level offices, which directly or indirectly involve tomaintain environmentally sound and sustainable delivery of services at local level. Theseoffices are responsible to implement National rules and regulations at local level, and haveright to monitor other existing non-govemment offices and private sectors i.e. to knowwhether they are following National rules or not for local benefits. These institutions areresponsible for providing technical support to the communities during operational phase.

Major district offices are listed below:

District Forest Office, District Irrigation Office, Water Supply and Sanitation Division OfficeDistrict Agriculture Service Center, District Police Station, District Development Committee,Village Development Committee, District Soil and Watershed Conservation, DistrictEducation Office, District Road Department, District Electricity Corporation, DistrictGovernment Hospital, Agricultural Development Bank, Rural Development Bank etc.

The PAF activities are mainly focused on agriculture, small scale factories, irrigation, watersupply and sanitation, engineered trail and capacity building. The organizations listed abovewill certainly have both direct and indirect linkages to PAF activities implemented at the grassroot level.

Table 4.2: Enviromnent Related Provision in Some Contemporary ActsActs Relevant Provisions

Acts Relevant Provisions Local Self- Specific environmental scope of work for DDC, VDC andGovernance Act, 1998 TDC comprising local level environmental planning; forest

and biodiversity conservation, land-use management,pollution control, public sanitation, etc.

Environment Protection Act, 1996 Maintain clean and healthy environment and contribute tosustainable development

Forest Act, 1992 Conserve and manage forest and biodiversityWater Resources Act, 1992 Promote environment assessment, water quality standard,

and avoid significant impacts on local environment in thecourse of water use

Electricity Act, 1992 Avoid environmental effects during electricity generationand transmission

Vehicle and Transport Management Regulate vehicular exhaust emission according to theAct, 1992 standardIndustrial Enterprises Act, 1992 Promote the adoption of industrial pollution control

measures, including incentive and disincentive provisionsPesticide Act, 1991 Regulate the use, production and distribution of pesticideLabour Act, 1991 Adopt preventative and curative measures for occupational

health and safetySolid Waste (Management and Ensure solid waste management through the collection,Resource Mobilisation) Act, 1986 transportation, recycling, disposal, and the classification of

hazardous wastesSoil and Water Conservation Act, Ensure soil conservation through land use regulation1982King Mahendra Trust for Nature Generate fund and manage the nature with people'sConservation Act, 1982 participationTourism Act, 1978 Minimize environmental pollution during mountaineering

activitiesNational Parks and Wildlife Declare and manage national parks, wildlife reserves andConservation Act, 1973 conservation areas

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Table 4.3: Laws and Relevant Regulation for Maintain the Sound Environment

S. No Laws and Relevant Regulation Description1. Animal Slaughter House and Meat Inspection Act, 2055 (1998) Hygiene2. Consumer Protection Act, 2054 (1997) Food safety3. Environment Protection Act, 2053 (1996) Environmental manage't4. Environmental Planning Guidelines, 2055 (1998) Environmental manage't5. Explosives Act, (1961) Environmental manage't6. Financial Act, 2049 (1993) Environmental manage't7. Food Act, (1966) Food safety8. Foreign Investment & Technology Transfer Act, 2049 (1993) and First Environmental

Amendment 2052 (1996) management9. Local Self Governance Act, 2055 (1998) and Rules, 2056 (2000) Environmental manage't10. National Environmental Impact Assessment Guidelines, 2050 Environmental manage't11. New Civil Code of Nepal, (1962) Environmental manage't12. The Conservation Act, (1972) Environmental manage't13. Nepal Drinking Water Corporation Act, (1988) Water supply14. Nepal Health Services Act 2053 (1996) and First Amendment 2055 Water supply

(1998)15. Water Resources Act, 2049 (1992) Water resource16. Solid Waste Management and Resource Mobilization Act, (1986) Solid waste management17. Ancient Monuments Protection Act, 2013 (1956) and Latest Urban environment

Amendments 205218. Apartment Ownership Act, 2054 Urban environment19. Civil Aviations Act, 2016 (1958) Urban environment20. Environmental Impact Assessment Guideline for Industry Sector, Industry

205221. Factory and Factory Workers Act, (1958) Industry22. Industrial Enterprises Act, 2049 (1992) and First Amendment 2054 Industry23. Kathmandu Valley Development Authority Act, 2045 (1988) (Not Industry

Enforced)24. Mines and Minerals Act, 2042 (1985) Industry25. Mines and Minerals Regulations 2056 (1999) Industry26. Nepal Petroleum Act, (1983) Industry27. Nepal Petroleum Products Act, 2040 (1983) Industry28. Buildings Act, 2055 Infrastructure29. Public Roads Act, (1974) Infrastructure30. Public Roads improvement Cess Fund Act, 2052 Infrastructure31. Tourism Act, (1978) Urban environment32. Town Development Act, 2045 (1988) and Third Amendment Act . Urban environment33. Town Development Committee Act, (1963) Urban environment34. Town Development Fund Act, 2053 Urban environment35. Town Development Fund Regulation, 2054 Urban environment36. Town Planning Projects Implementation Act, (1973) Urban environment37. Vehicle and Transport Management Act, 2049 (1992) and Rules, 2054 Urban environment38. Aquatic Animals Protection Act, 2017 (1961) and First Amendment Forest and biodiversity

205539. Buffer Zone Management Regulations, 2052 (1996) Forest and biodiversity40. Buffer Zone Regulations, (1996) Forest and biodiversity41. Conservation Area Management Regulations, 2053 (1996) Forest and biodiversity42. Conservation Area Regulations, Forest and biodiversity43. Environmental Impact Assessments of Forestry Sector Guidelines, Forest and biodiversity

(1994)44. Forest Act, 2049 and First Amendment Act, 2055 (1998) Forest and biodiversity45. Forest Protection (Special Arrangements) Act, (1967) Forest and biodiversity46. Forest Regulations, (1994) Forest and biodiversity47. Himalayan National Parks Regulations, (1979) Forest and biodiversity48. Khaptad National Park Regulations, (1985) Forest and biodiversity49. King Mahendra Trust for Nature Conservation Act, (1982) Forest and biodiversity

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Table 4.3, ContinuousS. No Laws and Relevant Regulation Description50. National Parks and Wildlife Conservation Act, (1973) Forest and biodiversity51. National Parks and Wildlife Conservation Regulations, (1974) Forest and biodiversity52. Plant Protection Act, (1972) Forest and biodiversity53. Royal Bardia National Park Regulations, Forest and biodiversity54, Royal Chitwan National Park Regulation, (1974) Forest and biodiversity55. The Wildlife Conservation Act, (1958) Forest and biodiversity56. Wildlife Reserves Regulations, (1977) Forest and biodiversity57. Soil and Watershed Conservation Act, (1982) Soil and watershed58. Electricity Act, 2049 (1992) Energy59. Electricity Regulations, 2050 (1993) Energy60. Hora Area (Newly Cultivated Land) Land Act, (1971) Land management61. Land (Survey and Measurement) Act, (1961) Land management62. Land Acquisition Act, 2034 (1977) Land management63. Land Administration Act, (1971) Land management64. Land Reforms Act, (1964) Land management65. Land Related Act, 2021 and Fourth Amendment Act, 2053 Land management66. Land Revenue Act, 2034 (1977) Land management67. Pasture Land Nationalization Act, (1974) Land management68. Pesticides Act, 2048 (1991) Land management69. Rapti Doon Development Area Land (Sale and Distribution) Act, Land management

(1967)70. Natural Calamities (Relief) Act (1982) & Amendment (1989) Natural disaster71. Guthi Corporatin Act (1964) NGO

4.6 International Obligations

The following is a list of the multilateral agreements related to the water and environment ofwhich Nepal is a signatory (MOPE, 2002)

* United Nations Convention to Combat Desertification Experiencing Serious Drought and /or Desertification Particularly in Africa. (CCD): 13 January 1997

* United Nations Framework Convention on Climate Change (UNFCCC): 31 July 1994

* United Nations Convention on Bio-diversity: 21 February 1994

* Basel Convention on the Control of Trans-boundary Movement of Hazardous Wastes andtheir Disposal: 13 January 1997

* Vienna Convention for the Protection of the Ozone Layer: 4 October 1994

* Convention on Intemational Trade in Endangered Species of Wild Fauna and Flora(CITES): 16 September 1975

* Convention on Wetlands on International importance especially as Waterfowl Habitat(Ramsar): 17 April 1988

* Convention for the Protection of the World Cultural and Natural Heritage: 20 September1978

* Agreement on the Network of Aquaculture Centers in Asia and the Pacific: 4 Jan1990

* Plant Protection Agreement for the South East Asia and Pacific Region: 12 Augl965

* International Tropical Timber Agreement: 3 July 1990

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CHAPTER V

POTENTIAL ENVIRONMENTAL AND SOCIAL IMPACTS

5.1 Introduction

The proposed project and its components will be implemented on the two basic principles: i)demand responsive approach, and ii) community mobilization and participation. As per thepolicy and implementation, the first phase of PAF will focus on six selected districts. Thesub-projects to be implemented in these districts will be designed at later stage as the projectproceeds. Therefore the actual locations of the proposed interventions are not identified atthis stage since a process planning approach will be used during the implementation. Thephase II of the PAF project is expected to cover all 75 districts of Nepal. As described inchapter III, the environmental condition and the socio-economic status are different for thecommunities located in these areas. The geographical diversity and settlement pattems andpriorities of the communities dictate the type, size and benefits of the particular sub-projectcomponents. These facts clearly indicate that the emerging environmental issues will not be ofsame nature even for similar sub-projects in different areas. For example, an irrigation projectmay use a snow fed stream in the mountain and ground water in the Terai area.

Therefore, description of the project interventions and the environmental assessment providedin this section are not site specific. General characteristics of the project area are used forenvironmental assessment. The project would initially focus on six districts that have beenseriously under-served. Selected POs will mobilize the beneficiaries in these districts and thebeneficiaries community will submit the sub-project proposals to the PAF Board. Asdescribed above, the environmental and socio-economic issues of the regions within theproject area are drastically different from each other. Each activity may yield varying impactsand may require different mitigation inputs across the regions depending on location.

Following the World Bank (1994) definition of the environment as "the natural and socialconditions surrounding all mankind including the future generation", it is essential toencompass all of these aspects. In addition to this, the tradition and culture particularlyassociated with the indigenous and marginalized groups of people in rural areas is of greatconcern.

The environment and poverty are linked in two ways; firstly, poverty alleviation measuresshould not damage the environment of the poor, as this should only substitute gains in onedimension and secondly, improvements in environmental conditions can help to reducepoverty. Most of the sub-projects to be financed under the village and communityinfrastructure component are expected to be small and community-driven. Their possiblenegative environmental impacts, on terrestrial (land, forest, protected sites etc.) and aquatic(water sources, water flows, wetlands, etc.) ecosystems are likely to be insignificant andmostly reversible. According to World Bank EA Guideline (Refer Chapter IV), most of thesub-project's features lie in the Category B and C. Normally, Category C projects do not needEA because the projects are unlikely to have adverse impacts and have negligible,insignificant, or minimal environmental impacts only. But some small scale village andcommunity infrastructures projects lie in Category B, which have minor adverseenvironmental impact in the community and need partial EA.

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The specific details of the proposed sub-projects are not known at this stage. Thus theenvironmental impacts identified and listed on this chapter are not specific but of general innature.

Based on the general characteristics of the area and nature of the activities under PAF, a briefassessment of the environmental and social impacts is summarized in Table 5.1. This table isa matrix comprising of sub-project components in the columns and environmental and socialimpacts in the rows. The sub-project components are classified into four groups namely;income generating project, community infrastructure project, social mobilization and capacitybuilding. The income generating group is further classified into agriculture related and microenterprises. The sub-projects listed under these categories are only indicative of the typicalexamples to be covered under the scope of PAF. For other sub-projects not listed in Table 5.1,similar conclusions could be drawn during the screening and design period. Theenvironmental impacts shown in Table 5.1 include physical, biological, socio-economic andrelated to traditional and culture. The shaded solid square in Table 5.1 indicates locationspecific significant negative impact, which has a very small magnitude. Unshaded squarerepresents minor negative impact and unshaded circle represent a positive impact.

Further, in order to provide the information in an easily understandable manner, Table 5.2 wasdeveloped, which indicates level zero and level one sub-project. The screening of zero leveland first level was done based on the type of impact indicated in Table 5.1.

Generic guidelines and mitigation measures are also discussed in detail in Chapter 7.

5.2 Environmental and Social Impacts Associated with the Income GeneratingActivities

Income generating activities are targeted to the poorest and excluded groups, which will leadto the capacity building and generation of funds. The examples of these activities includeanimal husbandry such as cattle raising, enhancing the land productivity for example throughcash crops such as tea, cardamom, and vegetables. Micro enterprises will also include watermill, ceramic industry, garments or hand loom, tannery etc. These activities are expected to belocated mainly in the rural and peri-urban areas.

The project components proposed under this activity are of small scale. Proposed individualinterventions are so small that in most cases, the target would be normally of few householdsor individual households in specific case. Looking at the size of the project components, thecoverage of affected area due to their establishment or operation would be of small scale andisolated.

Therefore, there could be some minor environmental impacts generated due to these projectactivities. As such, no issue of human settlement is anticipated in the project area. Because ofthese facts, the project is not expected to generate any major adverse environmental and socialimpacts in the community. However, looking at the specific project sub-components, theremight be some major or minor negative impacts, which are listed in Table 5.1. A briefdiscussion of these impacts according to different phases of the project establishment andoperation is given below.

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5.2.1 Impacts Associated Planning and Location

There could be some minor environmental impacts due to the project location. It has to giveproper attention in selection of site for the project to minimize the conflict situation in thecommunity. The selected site should cover-up majority of socially excluded and deprivedpeople. Traditionally, in the process of site selection, the influencing individuals or localleaders take the major stake, this situation might effect the achievement of the desired goals ofthe PAF activities. Thus, efforts should be made to minimize such influences.

5.2.2 Impacts Associated with Implementation, Operation and Maintenance Phase

There could be some minor environmental impacts occurring during the planning andimplementation phase of the project. Income generating activities like cattle raising/ animalhusbandry might accelerate the problem of soil erosion due to over exploitation of grazingland and forest products. For example, if goat raising scheme is entrusted to individuals withno lands, the scheme would be totally dependent on the grass and fodder from thesurroundings. Besides this, improperly managed animal husbandry may lead to thedeterioration of water and air quality and solid waste problems. In the contrary, the promotionof bio-gas not only helps to improve the indoor air quality but also helps to decrease thepressure on forest recourses. Bee keeping may lead to the impact on aesthetics creatingdisturbances to the passerby. Improperly maintained parts or the hardwares, for example, theaccessories of a mill used to process the grain may lead to the pollution problems.

5.3 Environmental and Social Impact Associated with Infrastructure Project

Infrastructure project are targeted to the communities with marginalized group of people suchas poorest and socially excluded. Physical infrastructure projects would contribute thecommunity in accessing the market and city area, providing health and educational benefits

-and creating awareness through prompt communication and access. The examples of theseactivities include water supply and sanitation schemes, small scale irrigation, engineeringtrail, bridges, school building, health post/clinic facilities and development of trade center ormarket.

Although the project size seems to be big in terms of coverage, the individual physicalinfrastructures proposed under PAF are of small scale. Proposed individual interventions aretargeted to cover only a few hundred households. The project component will disturb only asmall portion of land (about a hector in total per project such as engineered trail, small scaleirrigation canal or community water supply project). This is also spatially distributed in adistance of few kilometers. Therefore, no major environmental impacts are expected due tothis project primarily due to small-scale intervention. No significant human resettlement orproperty damage is expected. It will not be essential to relocate the infrastructure in place(such as roads, electricity line or public buildings). There won't be any adverse impact to theforest, wetlands, grassland, and other natural habitats. However, there might be some minorimpacts to the surrounding, for example, construction disturbances, erosion and landslides,ponding of water and water pollution. These impacts are briefly listed in Table 5.1. A briefdiscussion of these impacts according to different phases of the project establishment andoperation is given below.

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Table 5. 1: Summary of Environmental and Social Impacts of PAF ActivitiesProject PiIP 3 P 5 P P s 8 2 B A S S 3 S s S 7 S 91SD SlT 2 T

Income Generation Project

a. Agriculture Base

I.Cattle Raising 0 0 0 a

2. Beekeeping oa

3. Bio-gas 0 0 U 0 0 0 0

4. Vegetable 0Farming

b. Micro-enterprisesI. Community

Saving 0 0Schemes

2.Ganment/tailoring0

3. Tannery U

4.1-Hand Loom U 0

S. Mill/Water 0 0EMill

6. Paper Making 3 0o

7. Pottery00

Community Infrastructure Project

Water Supply E 3 0 00 ( and Sanitation

Small Scale * 0 0 irrigation

Engineered Trails m 0 a 0 0 a a 0 a o o o n o . o3

Trail Bridges o 0 o

School Building

Health Post/Clinic

Sheds for Cattle

Market m0 1DevelopmentSocialMobilization

Capacity Building Project

Training I I II I III I I I I II I 1 *lI o

Legend:Physical Biological Socio-economic Tradition/Culture

PI. Soil Erosion BI. Vegetation and Crop SI. Health Condition and TI. Changes in TraditionalP1. Soil Erosion ~~~Field Sanitation Culture/Practices

P2. Landslide B2. Forest and Habitat S2. Land Use ~T2. Traditional Ways of ProtectingP2. Landslide B2. Forest and Habitat S2. Land Use Resources

P3. Water Quality B3. Biodiversity S3. Social Abuse T3. Loss of Traditional EmploymentP4. Water Logging B4. Pesticides S4. Economic Condition

P5. Down Stream Water Quality S5. Access to city/marketP6. Air Quality S6. Resettlement/RehabilitationP7. Noise S7. Migration

P8. Solid Waste 58. Property Values

S9. Conflict SituationSIb. Gender IssuesSIl1. Aesthetics

U Significant Negative Impact 0 Minor Negative Impact 0) Positive Impact

*Significant NegativelImpact implies location specific effects of very small-scale magnitude whose coverage islimited to sub-project area only.

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Table 5.2: Sub-project Classification

Level-O Projects Level-I Projects

Beekeeping Cattle rearingCommunity saving schemes Bio-gasVegetable farming TanneryGarment/ tailoring Paper makingHandloom Small Irrigation canal

-Mill/water mill Engineering trailsPottery Market developmentTrail bridge School buildingWater supply and sanitation Health post/clinicSheds for animalsSocial mobilizationSkill development on tailoringCapacity building for micro-financing

Note: O-Project has no significant negative enviromnental impact but I-Project had some significantnegative enviromnental impact (Refer Table 5.1)

5.3.1 Impacts Related to Project Planning and Location

Because of the location of the projects, there might be circumstances, which lead to theconflicts situation, for example:

o In selecting the location of public tap stand post and the coverage of projects suchas service area delineation of water supply project. This could be due to scatteredhouseholds in the community and technical difficulties.

o In deciding the alignment of engineered trails or footbridges as of the rise in landvalue and provision of compensation.

o Biasness in site selection for school building, health post, trade center, etc.

The community infrastructure projects are small in size, even though, land acquisition couldbe another issue during the site selection for the project. It may also be necessary to protectprime agriculture land. The changes of prime agriculture land may affect social, economic andecological conditions. The lack of planned land-use system affects the land productivity andcreates environmental problems. This is due to the fact that agricultural land is normallydefined as a physical entity which includes soil, water and associated plants and animals thatare continuously inter-acting under influence of climate and people's activities.

Another concern is related to the selection of technology. There might be situations, whichlead to technological lock-in making the system redundant and non-resilient. This will notallow the system to cater the emerging issues, which crop-up during the operational phase ofthe project. Priority should be given to modify the traditional technology and make it moreefficient which also leads to preserve the traditional practices at the same time meet theproject goals.

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5.3.2 Impacts Associated with Construction and Implementation Phase

This project could cause some significant environmental and social impact during theconstruction and implementation phase in the community. There could be damage tovegetation and crops. Construction wastes also come out after completion of project and maycreate pollution in surrounding environment. Sometime, it will also induce landslides anderosion in mountain and hilly areas due to the improper disposal of rocks and waste duringconstruction phase. So, the concerned parties have to take care to minimize the risk duringconstruction phase that also aid to reduce health hazard to the workers as well as the localcommunity and protect the natural water resources as well (eg. well, river, spring, water pondetc.).

There is more possibility of influence by the exogenous factors in the community during theconstruction and implementation phase (eg. engineering trail, bridge etc.). There could bedisturbances to the indigenous tradition and culture. The new project might change thevillager's way of thinking toward their traditional ritual values and beliefs.

5.3.3 Impacts during Operation and Maintenance Phase

There could be minor environmental and social impacts during the operation and maintenancephase. Water logging may be the major issues in the irrigation project. It may cause soilerosion and disturb the downstream water quality. Sometime, villagers use more pesticides ofsame brand as required for the agricultural use that slowly decrease the productivity of thesoil. It will also contaminate the water resource in the community. As shown in Table 5.1, thewater supply and sanitation scheme may lead to health hazard and sanitation problems if thereis no proper management system. This is due to the wastewater generated at the platform oftap stand posts. Similarly, personal hygiene and containers used for water transport areimportant from the sanitation point of view. This clearly indicates that although the focus ofwater supply project is to improve the health and sanitation situation but the impropermanagement may undermine its goals.

If there is no proper management practice during the operation and maintenance phase ofinfrastructure project there will be probability of conflict situation among the localcommunity people for the rights of utilization of infrastructure facilities.

People can visit various city areas frequently because of road access in the community, whichinfluence on their livelihood. There might be possibility of discontinuation of traditionalrituals, festivals and conservation practices due to the exposure.

5.4 Environmental and Social Impact Associated with Capacity Building

Capacity building activities are targeted to the poorest and excluded groups in the selectedcommunity. Community training program is one of the activities, which can develop locallyskilled man power to manage and sustain the development activities. Beside this, there arenon-formal education and skill development programs under capacity building activities.These programs will enable them to select and plan their activities in certain areas withenvironmental consideration. They will also be trained to carry out compliance monitoring forenvironmental parameters and carry out mitigation measures to maintain the soundenvironmental condition in the community.

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There are no major environmental and social impacts expected due to this project activity inthe community. However, looking at the specific project sub-components, there might besome major or minor negative impacts, which are listed in Table 5.1. A brief discussion ofthese impacts according to different phases of the project planning and implementation andoperation and management are given below.

5.4.1 Impact due to Planning and Implementation

There are no significant environmental impacts during planning and implementation phase.But it is generally difficult to select specific training activities targeted to selectedbeneficiaries. This is because of the potential conflicts which may arise between socialorganization vis-a-vis local people. Providing training programs to community groups mightaffect on local traditional employment like tailor, mill/water mill operators, etc. In theprocess of training program people have to visit number of city areas and meet differentpeople that may change their traditional way of thinking.

5.4.2 Impact due to Operation and Management

The major social and cultural impacts during the operation and implementation phase ofcapacity building activities could be summarized as shown below.

* Social abuse* Migration* Changes in traditional culture and customs* Discontinuation of traditional rituals and festivals* Discontinuation of old values and believes

There may not be any physical enviromnental impact during operation and management of-capacity building component. However, some social and cultural impacts might occur duringoperation phase. As shown in Table 5.1, some social abuse could appear in community due tosocial mobilization, training and capacity building program. Migration is another impact,which leads to the flow of manpower to the urban area.

Similarly, changes might occur in the traditional way of adopting culture and customs due tothe exposure. The traditional concepts for using natural resources are interlinked with manyfestivals, rituals and group activities. In case of water resources, people carry out theseactivities because they consider water to be valuable resources, without it life existence wouldbe impossible. Similarly, in many Farmers Managed Irrigation Systems (FMISs) in Nepal,farmer construct temple near the canal side and worship it to protect their system from naturalcalamities beyond their capacity and people also worship Bar and Pipal trees, often located ontrail side, which protect greenery in the community. The belief behind such activities is toensure the sustainability of the system and protect the forest resources. Furthermore, thenegative impacts on culture and tradition if proper awareness and training are not giveninclude:

* The possibility of discontinuation of traditional rituals and festivals such as Nag Ptia,Devi Ptzja, Bali Ptyja and Sansari Mai Puja in water outlets.

* Possibility of discontinuation of the old values and beliefs of considering the watersources or Chauitari at the trailside as places of spiritual importance.

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* Possibility of discontinuation of old believes that 'no one should damage or destroythe resources around the holy places'

Nevertheless, proper attention should be given to mitigate these impacts. The old system(spout, temple, Chautari, stone tap etc.) should be protected. Continuation of such rituals andfestivals which develop intimacy towards the project in long run and manage surroundingenvironment should be made.

5.5 Cumulative Environmental Impact

Forgoing discussion and results indicated that the PAF sub-projects do not create locationspecific significant environmental impacts. If similar sub-projects are launched in a district orin a region there could be significant impact in cumulative basis. For example, drawing waterfrom a basin either for irrigation or water supply purpose may have significant downstreameffect, cattle raising or poultry may have significant solid waste management problems.

While an environmental impact produced by a single activity may not be significant, a seriesof impacts created by more than one sub-project, or by the combined effects of severalimpacts from the similar sub-project, may be significant. Consequently, an ecosystem may bedramatically affected through cumulative impacts. It is necessary to consider the cumulativeimpact of all projects that share mutual resources or affect the same area (HMG and IUCN,1998). Canter (1996) described that the cumulative impacts result from the incrementalimpact of the action when added to other past, present, and reasonably foreseeable futureactions regardless of what agency or person undertake such other actions. Cumulative impactscan result from individually minor, but collectively significant actions taking place over aperiod of time.

Thus, the system may come under situations when or where small perturbation cause largeimpacts as of complex situation or 'butterfly effects'. It is not straightforward to measure suchimpacts in case of PAF sub-projects, which are isolated and have minute impacts to theenvironment. Impacts such as loss of vegetation or disposal of excavated materials may nothave the cumulative effects because of small scale intervention and easily manageablesituations. As the sub-project schemes under PAF are located in rural areas where amplenatural environment is available, small perturbations of pollution are easily nullified by thenatural assimilation processes. However, there are activities, which may have cumulativeimpacts: inter-basin water transfer and groundwater extraction. If there are many schemesdiverting the water from a single catchment or many wells extracting water from thegroundwater sources or activities generating significant amount of solid wastes creatingobservable pollution, it may be essential to evaluate the cumulative impacts. Since, as of thesmall scale of PAF schemes, such situations may also arise if they are accompanied by largerprojects either spatially or temporally. In such a context, in depth research studies are to berecommended for the identification of impact and estimating the mitigation measures:

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CHAPTER VI

ALTERNATIVE ANALYSIS

6.1 Introduction

In this chapter an attempt is made to systematically compare the alternatives, which havesimilar objectives and being implemented in the kingdom of Nepal. The major focus of theanalysis is to learn from these alternatives and incorporate the attributes, which will help thePAF project to be sustainable and meet the goals.

A criteria comprising the following elements was used for alternative analysis.

a. Sustainability of delivered servicesb. Environmental impacts and mitigation measuresc. Operating costd. Suitability under local conditione. Capacity building and institutional requirement

For the purpose of comparison "without project" scenario has also been considered.

6.2 Without Project Scenario

If there will be no improvement in the existing supply of services in the rural areas, many ofthem may continue to be at conflict situation. It will be difficult to maintain the status quo. Inabsence of the projects, efforts will not be made to sustain the positive enviromnentalbenefits. This will lead to miss the opportunity of improving the socio-economic andenvironmental condition of particular community in comparison with nearby areas.

As shown in Table 4.1, the socio-economic indicator such as infant mortality rate, lifeexpecting rate, and access to health and education indicate that more and concreteinterventions are essential to improve the quality of life of rural and marginalizedcommunities. The indicators reflect a relatively worse situation of health and sanitation andsocio-economic condition in rural areas. Among different regions remote rural areas in mid-westem and far-western region form the bottom level facilities and services. If the activitiesproposed under PAF will not be implemented and the sub-projects will not be under taken, theprevailing environmental and socio-economic conditions will be continued till, any otheragencies will address the issues and make similar interventions. As outlined above, theconflict situation will add the negative externality worsening the status quo.

6.3 Comparison of Alternatives

There are a number of institutions working in the rural areas in the field of infrastructure andcommunity development. Table 6.1 provides a picture of various agencies involved in suchactivities. The projects undertaken with the help of various agencies normally follow differentmodalities. The level of community participation and sense of ownership also variedsignificantly. The past experience indicated that the projects implemented under centralagency model poorly addressed the issues of community participation and sustainability ofdelivered services. In contrast, the projects based on community approaches were marked bymuch lower cost and high level of participation and sustainable delivery of services. Often,careless planning and rapid engineering works result not only the damage of physicalenvironment but also the negative perception of development projects among thebeneficiaries.

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Table 6.1: Institutions Involved in the Development of Rural Areas

S. No. Sector Agencies1. Water Supply and Sanitation DWSS, RWSSFDB, UNICEF, FINIDA,

HELVETAS, Red Cross, Army WelfareAgencies, NEWA

2. Road, Engineering Trail, DOR, Swiss Technical Corporation, RAP,Bridge DOLIDAR, CARE Nepal, PLAN International

3. Irrigation/ River training DOI, DOFSC4. Micro-enterprises GTZ, ADB/N5. Community Mobilization ACAP, UMN6. Capacity Building/ Training ACAP, UMN

Note: ACAP (Annapurna Conservation Area Project)ADB/N (Agriculture Development Bank, Nepal)DOFSC (Department of Forest and Soil Conservation)DOI (Department of Irrigation)DOLIDAR (Department of Local Infrastructure Developmeht and Agricultural RoadsDOR (Department of Road)DWSS (Department of Water Supply and Sanitation)NEWA (Nepal Water for Health)RAP (Rural Access Program)RWSSFDB (Rural Water Supply and Sanitation Fund Development Board)UMN (United Mission to Nepal)

It would be impractical to incorporate and explain the modalities followed by variousagencies as shown in Table 6.1. Therefore, a comparative analysis was made on selectedprojects undertaken by agencies, which follow similar principles of PAF. On the water supplyand sanitation sector, the model of Rural Water Supply and Sanitation Fund DevelopmentBoard (RWSSFDB) was selected and on irrigation site the model of Kalleritar IrrigationProject (KIP) under Department of Irrigation (DOI) was selected. For engineering trails andbridges, a model of followed by DFID supported Rural Access Program (RAP) was selected.A comparative analysis based on criteria shown in section 6.1 was made and summarized inTable 6.2.

6.4 Alternatives for Project Components

PAF has three types of sub-projects to be implemented in the villages of Nepal. These sub-projects will have number of project components that could use number of locally availableresources. The engineering components in the infrastructure development include buildingconstruction, road construction, bridge construction etc. These may. include variation in thetechnology (example: stone masonary, ferrocement or reinforced concrete or locally availablemethods), size and feature of the structure (example: numbers of small size reservoirs vs. abig size, earthen canal vs. masonary canal), design type (example: wooden ceiling vs.RBC/RCC ceiling), raw materials (sand, gravel and cement type, wooden bridge vs. metalbridge), location of the structures (near village vs. in the forest), time schedule (constructionphase during rainy season vs. winter season). The criteria for the selection of best alternativefrom these choices depend mainly on the local situation and suitability. However, therequirement from the environmental sustainability perspective is to ensure that theenvironmental impacts and technological lock-in effects are minimized.

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Table 6.2: Comparative Analysis of Alternatives

Criteria PAF RAP RWSSFDB KIPScope of Project * Income generating * Improve physical access * Construction of water * Community

activities * Enhancing and protecting supply projects mobilization

* Infrastructure projects interventions * Non-formal education * Improve physical

* Capacity building and * Piloting of accessibility * Health, hygiene and accesstraining planning sanitation education * Uplift the economic

* Capacity building of condition withSOs and communities providing petty-

* Construction of family contract to localand institutional peoplelatrines * Construction of

* Women's participation Irrigation Canaland capacity building

Objective of the Project . Improve the livelihoods of * Promote more secure and * Improve the * Reduce the poverty

the rural poor and socially sustainable rural capabilities of the with increasingexcluded in Nepal livelihoods for poor and sector Institutions agricultural

disadvantaged people in * Deliver sustainable productivity in thehill areas. health and hygiene community.

* To improve poor people's servicesaccess to the goods,markets and services.

Mechanisms to Ensure * Involvement of * Survey to identify the * Involvement of CO, * Involvement of

Sustainability of community organization poorest people SOs and SAs during community member inDelivered Services (CO) of the poor with * Use community based planning and training program

facilitation from partner labors implementation phase facilitated byorganization (PO) * Pro-people planning * Lack of proper HMG/Nepal

* Empowering the * Empowerment of social monitoring andindividuals in the capital evaluation duringcommunities covered * Acknowledge the existing operation andunder the project knowledge maintenance

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Criteria PAF RAP RWSSFDB KIP* Dynamic and flexibility* Partnership for ownership

Environmental Impacts * The environmental * Standard procedures are * IEE and EIA are not * EA, IEE and EIA wereand Mitigation Measures screening process must be used for enviromnental applicable not applied

adopted for each sub- appraisal which includes; * EA was carried out for * Environmentalproject proposal. District environment brief, entire project mitigation measures

* People should not be IEE, EIA, environmental * Environmental were not incorporatedinvoluntarily displaced management plan and mitigation measuresand settled no land can be environment monitoring are employedpurchased without theconsent of its owner;

* Sub-project should notaffect environmentadversely, and if so,project must indicate itsappropriate remedy

* The impact evaluationreport will focus oneffectiveness of theproject interventions inimproving the livingconditions of the poor.

Operating Cost Probably through the Make provision for funding Through community Through a fund (irrigationcommunity saving practice the continuation of a district saving practice saving account)(to be included in OM) transport infrastructure

maintenance system. A roadmaintenance fund will beestablished between the DDCincluding a cost sharingsystem with the VDCs that areinfluenced by the roads beingconstructed.

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Criteria PAF RAP RWSSFDB KIPSuitability Under Local Although the project will Initially the project has been The first phase of the Three VDCs in DhadingCondition cover all 75 districts of launched in selected six project covered mainly the District

Nepal, but initially six pilot districts four development region,districts will be selected however, phase II will

cover all five regionsCapacity Building and * Building capacity of the * Maintenance management * Water user group * Water user associationInstitutional beneficiaries offices * Water user * Drinking waterRequiTement * Building of capacity of * Building capacity of the communities committee

POs and COs beneficiaries * SAs, and SOs * Forest community* An environmental expert * Community saving groups

should be involved (to be and credit groupsincluded in OM)

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CHAPTER VII

ENVIRONMENTAL MANAGEMENT FRAMEWORK

7.1 Mitigation Measures

The Environmental Management Framework (EMF) is expected to not only reduce thenegative environmental impacts due to project implementation but also help to enhance theenvironmental benefits that could be accrued from the project. EMF outlined in this chapterfocuses on three generic areas: mitigation measures, institutional strengthening and training,and monitoring and evaluation. The framework defines the means for incorporating themitigation measures in the project cycle and monitoring of the environmental performance.

An EMF consists of the set of mitigation, monitoring and institutional measures to be takenduring implementation and operation to eliminate adverse environmental and social impactsand reduce them to acceptable level. The framework also includes the actions needed toimplement these measures. The EMF identifies feasible and cost effective measures that mayreduce potentially significant adverse environmental impacts to acceptable levels.

In the light of the proposed project intervention, the identified environmental issues and thepotential adverse impacts during the different states of project implementation along with themitigation measures are presented in Table 7.1.

7.2 Environmental Management Plan (EMP)

As PAF activities are not only concentrated in a single field and the coverage of the sub-projects is the 75 districts of Nepal, it is better to have a plan both at project level and sub-project level which will address the enviromnental issues. Normally EnvironmentalManagement Plan (EMP) should be based on the following considerations:

o What mitigation measures should be employed?O When should the mitigation measures be applied?O Which actor is responsible for the specific mitigation measure?

Therefore the EMP should include the activities to be undertaken during planning,construction and operational phases.

Based on the identified impacts as shown in Table 5.1 and the mitigation measures suggestedon Table 7.1, the review of similar projects and the responsibility of the stakeholders, majoractivities to be considered under an EMP and their nature were identified. A summary of suchactivities is given on Table 7.2.

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Table 7.1: Matrix of Environmental Impacts and Mitigation Measures

Proposed Potential Impact Mitigation Measures Time frame ResponsibilityProject

Income Soil erosion due to over o Promote community forestry program Planning and COs, Communitygenerating exploitation of grazing o Do not exceed the carrying capacity of operational stageactivities land and over grazing land and search for other

utilization of forest alternatives for fodderproduct o Ensure the fodder & grass for cattle

o Don't keep a large number of cattlebeyond capacity

Water pollution due to o Composting and use as manure Operational stage COs, Communitycattle's wasteDeterioration of o Control the grazing practice on the Operational stage COs, Communitydownstream water periphery of water resourcesqualityAdverse impact on air o Regularly clean up the cattle shed Operational stage Communityquality due to cattle's o Use cattle and biogas waste foractivity and waste of agriculture by developing compostingbiogas plant systemSolid waste generation o Encourage the composting system using Operational stage COs, Community

solid wastes

Loss of forest resources o Promote community forestry program Operational stage COs, Communityand habitat due to with participation of women membersexcess use by cattle o Consider carrying capacity of the fodder

and grass areas while planningo Protect forest premises with fencing and

don't allow the direct cattle grazinginside the forest boundary

55

Proposed Potential Impact Mitigation Measures Time frame ResponsibilityProject

Probability of spreading o Manage the cattle's wastes for Operational stage COs, Community

disease if the cattle compostingwaste is improperly o Conduct awareness programs on healthmanaged and sanitationEnhancement in o Ensure the market Operational stage PAS, POs, VDC,economic condition due DDC, COs

to cattle raisingNegative impacts on o If possible, keep the bees away from the Operational COs, Communityaesthetic due to bees community phaseWater pollution due to o Develop wastewater management Operational COs, Ownertannery waste and hand system phaseLoomSolid waste due to o Develop waste management system Operational COs, Ownerpaper making o Encourage composting of solid waste phase

Water Soil erosion and o Use of appropriate bioengineering Construction & PAS, COs,Supply and landslide measures operational stage CommunitySanitation o Proper management of excavated soil

during pipeline constructionContamination of water o Training and capacity building on proper Operational COs, Communityduring use water handling ways using the local and phase

traditional resourceso Conduct training program and awareness

campaign on water borne diseasesBiological water o Monitoring the conditions of project Operational and COs, communitypollution component premises and buffer zones, maintenance

periodic cleaning of the screen

56

Proposed Potential Impact Mitigation Measures Time frame ResponsibilityProject

Problems due to o Re-using the wastewater in kitchen Operational Community, COs,generation and disposal garden, paddy fields, end disposal in stages VDC, DDCof platform drained soak pits, constructed wetlands, roadwastewater side drain and natural coursesUnsanitary condition o Develop a plan to construct latrines, Planning and PAF, COs, VDC,due to waste disposal develop a waste disposal system operational stage DDCand improper use oflatrine facility in publicplacesPossibility of o Developing a plan to encourage the users Planning phase PAF, COs,discontinuation of to continue rituals and festivals either at Communitypractices of conserving the protected old sources or at thethe source and appropriate locations of the new sub-catchment area by projectsplantation etcDisturbances on o Avoid the pipeline alignment Planning and PAF, Community,vegetation and crops construction from vegetation area, if construction COs, VDC, DDCduring the construction possible stageof pipeline aligmnent o Arrange compensation

Land acquisition o Compensation Planning phase COs, VDC, DDC,o Develop a consensus Community

Changes in Traditional o Creating awareness on the importance of Operation and COs, Communitypractices and ways of traditional norms and values maintenancesprotecting resources stages

57

Proposed Potential Impact Mitigation Measures Time frame ResponsibilityProjectSmall Scale Soil erosion and o Avoid the unstable land area during the Construction and PAF, COs,Irrigation landslide during the fonnation of canal operational stage Community

construction of canal o Encourage the use of bioengineeringtechniques along the canal side

Impact on vegetation o Avoid the canal construction from the Construction PAF, COs, VDC,and cropland area vegetation area stage Communityduring the construction o Recover the vegetation area in nearbyof canal places if the impact is not avoidableImpacts on forest, wild o Relocate the canal alignment to Implementation PAF, COs, VDC,habitat and biodiversity minimize the impact on biodiversity and and Construction Community

wild habitat stageWater logging o Provide proper drainage facility Implementation COs, VDC,

& operation Communityphase

Improper use of o Launch an awareness and capacity Operational stage COs, VDC, DDCPesticides building program on pesticides useLand acquisition o Exchange the land with land on suitable Planning phase PAF, COs, VDC,Resettlement places in consensus with community DDC, CommunityConflict on water o Proper distribution by using indigenous Operation and COs, VDC,distribution and traditional method of water maintenance Community

distributiono Make the distribution system transparent

to all the water usersProblems of mosquito o Avoid the formation of water pool Operational stage COs, communityand flies around the community

o Conduct awareness program on healthand sanitation to community and schoolchildren

58

Proposed Potential Impact Mitigation Measures Time frame Responsibility

ProjectEnhancement on local o Assure the market to sell the agricultural Operational stage PAF, COs, DDC,

economy products VDC, Community

o Encourage farmers for producing cash

crop and green vegetables

Engineering Acceleration of soil o Locate the road alignment to avoid Construction and PAF, COs,

Trail erosion and landslide major unstable sites wherein possible development Community

o Minimum excavation by attempting to stage

balance cut and fill and by the extensiveuse of retaining walls

o Construction of a stable road formation

o Location of cross-road drains at natural

drainage sites

Loss of agricultural o Locate the alignment on lowest value Development and PAF, COs, VDC,

land, forest resources land planning stages DDC, Community

along the ROW o Compensate for the loss of crop

Loss of forest, habitat o Plantation on nearby area Planning and PAF, COs

and biodiversity o Relocate the road alignment if adversely operational stage Community

affect on biodiversity

Adverse impact on o Proper disposal of excavated soil during Construction COs, Community

downstream water the construction phase stage

quality o Develop a appropriate drainage system

Dispersion of dust o Regular spraying of water on dusty area Construction COs, Community

around the construction stage

areaSocial abuse o Conduct awareness programs Construction and COs, VDC, DDC

operational stage

Impacts on cultural o Support programs, training and Construction and PAF, COs, VDC,

traditions counseling operational stage DDC

59

Proposed Potential Impact Mitigation Measures Time frame ResponsibilityProject

Access to market/city o Ensure the market for agricultural Planning and PAF, COs, DDC,product operational stage VDC, Community

o Encourage community to produce cashcrops and green vegetables

o Provide agricultural based trainingConflict among the o Use participatory and transparency Planning and PAF, COs, DDC,community during the approach while selecting the road development VDCalignment of road alignment with the consultation with stage

local communityTrail Enhancement in social o Conduct social awareness campaign to Planning and PAF, COs,Bridges and economic status community regarding the benefit of trail operational stage

bridges

60

Table 7.2: Summary of Activities Included in EMP

Activity ImplementingAgency

Policy Related PAF Board,* Design of appropriate training packages Donor Agency* Ensure the market for agricultural products* Rehabilitation of old infrastructures* Construction of infrastructure which will

compliment the major activities, examplelatrine, Chautari on the trail site

* Engineering design of components essentialfor environmental management, example soakpits, bioengineering measures, etc.

* Selection of TechnologySub-project Related COs, and* Conflict resolution community* Disposal of construction related wastes* Provide proper drainage facility* Encourage the community forestry program* Spraying water on dust* Selection of sites for different structures* Implementation of bio-engineering measuresTraining and Capacity Building Related PAF, and COs* Capacity building programs on skill

development activities* Disseminating the information of appropriate

sanitary practices to users and school children* Using the toilets, keeping good sanitary

conditions in the kitchen and house premises* Encouraging the users to continue traditional

rituals and festivals* Encourage villagers to produce cash crops to

harness the market opportunity provided byroad access and irrigation system

* Training programs for proper handling ofpesticides

* Awareness campaign to community regardingthe benefits physical infrastructures

7.3 Environmental Management Action Plan

As the specific sub-project under consideration may not have all the impacts listed in Table5.1, therefore, it will be essential to sort out from the list, the specific activities to be carried ina specific sub-project. A primary screening is recommended which can be based on Table 5.2.For level one projects it is recommended to develop a scheme specific EnvironmentalManagement Action Plan (EMAP) during the planning. For level zero projects a preliminaryassessment could be made in the proposal. The EMAP should be developed primarily with thepurpose of:

61

1. Identification of environmental conditions and issues related to particular sub-project(Refer Tables 5.1,5.2 and Annex I for checklist of sensitive areas)

The expected environmental problems should be properly identified during thesubmission of sub-project proposals. It should be prepared by the comrnunity andshould clearly mention the mitigation measures needed to be applied forenvironmental safe guard.

2. Altemative analysis and identification of the mitigation measures (Refer Table 7.1)

An important altemative criteria that needs to be applied is hazard/risk assessment. Itis extremely necessary to conduct a proper hazard/risk assessment beforeimplementing the project. For example, infrastructures like trails, irrigationinfrastructure, school buildings, health posts, cowsheds should be built on safe areasby ensuring proper site selection, so that there would be no risk of washing away assoon as the major rainfall occurs (Refer Chapter VI, Section 6.4). Once the altemativeis selected, associated environmental impacts and mitigation measures should beidentified.

3. Estimation of the tentative cost of the mitigation measures

The estimated cost for mitigation measures will be different for different geographicregion like Terai, Hill and Mountain. For example, during the construction ofengineering trail, the estimated cost for mitigation measures like management ofexcavated soil, regular spraying on dust, construction of drainage facility and latrines,plantation, construction of Chautari should clearly be included in sub-projectproposal.

4. Incorporation of the estimated cost in the engineering estimate of the sub project

The engineering estimated cost of the sub-project should be shown to the PAF Boardafter the approval of proposal. For this, the concerned government officer (eg.Department of Irrigation, Drinking water supply, DDC) would help the localcommunities for the preparation of engineering estimate.

5. Development of monitoring and evaluation schedule

After implementation of sub-project, monitoring to evaluate the performance ofmitigation measures to maintain the environmentally sound and sustainable delivery ofthe sub-project services is to be carried out. The monitoring indicators and evaluationscheme should be developed as discussed in section 7.5.

The EMAP should provide guidelines to the construction and operation activities. The costoutlined in EMAP should be included in the Engineering Cost Estimate document.

7.4 Institutional Strengthening and Training

In order to identify the environmental impacts associated with the particular projects or sub-project activity and implement the mitigation measures, there is a specific role of institutionsranging from the apex body the administration unit of the PAF to the grass root stakeholders.As outlined in Tables 7.1 and 7.2, the role of each stakeholder relevant to each mitigation

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measures is defined. The experiences on similar other projects suggest that there is aneffective role to be played by the local authorities such as DDC and VDC particularly duringoperation and maintenance of the sub-projects. The community organizations need a strongsupport in cases when there might be abrupt disturbances to the services delivered through thesub-projects.

Considering the administration of the apex PAF body it is recommended that a mechanismhas to be developed in order to address the environmental and social issues. At this stage, it iscustomary to recommend that the apex body should utilize the following expertise for thispurpose.

1. Environmental Expert2. Anthropologist

Particularly, the role of anthropologist will be in identifying the issues related to the traditionand culture and indigenous people ( Refer Chapter VIII). As indicated in Tables 5.1 and 7.1,there is a positive role to be played in relation to the issues associated with the developmentactivities, and the tradition and culture and indigenous features.

7.5 Monitoring and Evaluation

This study defines some indicators, which will be used to monitor the environmentalperformance in PAF related activities. These indicators will show the trend of environmentalcondition prevailing in the sub-project area and the proximity. Three types of indicators aredescribed below.

Baseline Monitoring: This includes the parameters, which indicate the changes in basicenvironmental parameters during the project construction or after the completion andoperation. The significant indicators of this category in water supply and sanitation includewater quantity related parameters such as discharge of the source and per capita wateravailability and physical and biological parameters at the points of major construction. Thetotal water discharge available at the upstream site of an irrigation intake could serve anexample of baseline indicator. Similarly, Land use patterns on the proximity of an engineeredtrail or bridge could be used to know the baseline status.

Impact Monitoring: The biophysical and socio-economic (including public health) parameterswithin the project area should be measured during the project construction and operationalphases in order to detect environmental changes, which may have occurred as a result ofproject implementation. This category of the performance indicators includes the parametersrelated to health and sanitation, socio-economic, and tradition and culture.

Compliance Monitoring: This form of monitoring employs periodic sampling or continuousrecording of specific environmental quality indicators or pollution levels to ensure projectcompliance with recommended environmental protection standards. Monitoring should beregular and performed over a long period. Interruptions in monitoring may result ingenerating insufficient data to draw accurate conclusions concerning project impact. Forexample, the water quality of a water supply system or and irrigation canal against thestandard should be measured to know the compliance. Similarly, the performance of bio-engineering measures in trails and roads could be used as a compliance indicator.

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7.6 Independent Monitoring Agency

The objective of monitoring plan is to ensure that the proposed mitigation measures areproperly followed and whether they are effectively working or not. Also the purpose is toidentify unforeseen negative impacts during and after the project implementation.

During monitoring attention should be paid on the contractor's activities on site, activities ofthe beneficiaries and quality and quantity of delivered services. This is to ensure that theproposed mitigation measures are effectively followed during the construction and operationalphase. An independent professional staff working under PAF (Refer Operational Manual) oran independent agency contracted for the purpose will monitor these activities. However, thiswill be done in close consultation with community and community organizations.

7.7 Capacity Building Program

Environmental Assessment training plan of PAF activities need different types of training atdistrict and village level. It is essential for the local people during the implementation andoperation phase of the project.

The contents of the training course should focus on the needs of the local communitiesbecause they are the direct beneficiaries and implementer of the PAF project. The trainingprograms, for example, should include awareness campaign, health and sanitary relatedtraining, training related to benefit of income generating activities, proper utilization ofexisting available natural resource etc. In this case, training program should also focus on therelationship between different components. of PAF sub-project activities with the central focuson sustainable development priority. Similarly, to ensure successful implementation ofenvironmental mitigation plan, the target groups should be exposed to existing policies,legislations, bylaws and act related to enviromnent, income generating activities,infrastructure development etc. Other important aspects of the training program shouldinclude financial and managerial administrative skills, especially to enhance the capacity oflocal government, particularly VDCs, DDCs, to provide sustain services for poor and sociallyexcluded groups.

It is also anticipated that the training programs not only enhance the capacity of localcommunities to achieve the goal of PAF sub-projects but also help to make them enable tomitigate the negative impacts on surrounding environments, society and culture.

In this regard, the program should ensure the awareness training and public education that isprovided to cover all stakeholders, users group at community level and rural community ingeneral which includes following components;

Program Implementing and Target Group: At the village level target groups should includeselected representative from community organizations like Water Users Groups, Forest UsersGroups, Irrigation Users groups, Local NGOs, Ama Samuha, Health workers, school children,Agriculture officers (JTA), Individuals (women and men) from community

Contents of the Trainings: Specifically the contents of the training program course shouldinclude the following.

o Sanitary survey techniqueso Existing laws, policies, regulations, bylaws pertaining to environment

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o Workers safety and healtho Construction of latrines, disposal of waste waters, use of pesticides, sanitary and

health related training, disposal/composting of solid waste, drainage constructionmethods by using local available resource etc.

o Other relevant environmental mitigation measures.

Training Methods and Materials: The methodology should involve case studies, site visitsand general awareness campaigns. The training materials at community level shall includeposters, pamphlets, theater, audio and video shows, street drama, speech and quiz contest atschool levels.

Dissemination of awareness through school children to communities might be one of the bestand reliable methods. The awareness campaign, health and hygiene activities showed to theschool children are ultimately approached to their community.

Time Frame: The training programs are expected to be launched during projectimplementation and become a continuous process at operational phase at different timedepending upon the situation. The awareness and health related trainings would be conductedduring implementation phase to mobilize the rural people in incorporating environmentalsanitation and hygiene issues in their daily life. Similarly, the construction training activities,for example, construction of latrine and disposable site of solid waste etc., should be carriedout at operational phase.

Finally, the qualified local consultant selected by PAF shall evaluate the effectiveness of thetraining programs periodically. The consultant is expected to provide a feedback to theresponsible authorities at community, district, and national level to maintain the effectivenessof the program.

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CHAPTER VIII

INDIGENOUS PEOPLES DEVELOPMENT PLAN

8.1 Introduction

The terminologies "Indigenous People," "indigenous ethnic minorities," "tribal groups," and"scheduled tribes" carry similar meanings and describe social groups with a social andcultural identity distinct from the dominant society that makes them vulnerable to beingdisadvantaged in the development process. Because of the varied and changing contexts inwhich Indigenous Peoples are found, no single definition can capture their diversity.Indigenous People are commonly among the poorest segments of a population. In manycontexts, they engage in economic activities that range from shifting agriculture in or nearforests to wage labor or even small-scale market-oriented activities. Indigenous Peoples canbe identified in particular geographical areas in Nepal. Although it is rather difficult todistinguish Indigenous People in Nepal based on the definitions given above, this document isaimed at addressing the issues related to Indigenous People, which need to be addressed byPAF project.

The central goal for this IPDP is to identify the issues and suggest a plan inclusive of legalframework, baseline data, land acquisition and resettlement, strategy for local participation,technical identification of development activities, institutional capacity, implementationschedule and monitoring and evaluation. This is in line with the Operational Directive of theWorld Bank Operation Manual (OD4.20).

As mentioned earlier, it would be a daunting task to disaggregate the indigenous group in atarget area of the PAF because of heterogeneous nature of Nepalese society based on castes,cultures, tradition and employment. Therefore the approach taken by the project in addressingthe marginalized groups including ethnic minorities, women and dalits located particularly inremote rural areas seem to be appropriate. In addition, a basis can also be made on minoritycaste, religion, language and the culture. Thus, Indigenous People meant in this documentinclude ethnic minorities, disadvantaged women and dalits with a typical caste, religion,language and culture different from the mainstream group of people in the target area.Examples are Praja Jati in Dhading district, Raute and Badi Jati in Mid Westem Hills andDhimal and Jhangar Jati in Eastern Terai.

The development plan indicates that high priority should be given to involve IndigenousPeople (IP) individual and or their organization right from the planning stage of developmentactivities in both service receiving and responsibility bearing. PAF project duringimplementation may encounter with many indigenous communities. Therefore, they should beinvolved in project to ensure that they benefit from the development project, and to mitigatepotentially adverse effects on IP caused by PAF activities.

The development plan is being prepared in tandem with the preparation of the maininvestment. In many cases, proper protection of the rights of Indigenous People can only beensured with the implementation of special project components that may lie outside theprimary project's objectives. These components can include activities related to health andnutrition, productive infrastructure, linguistic and cultural preservation, entitlement to naturalresources, and education. In such situation, PAF needs to be reinforced with other projectssuch as conducted by HMG or any other donor agencies. The elements of IPDP are discussedin detail in the following sections.

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8.2 Legal Framework

Although kingdom of Nepal remained and recognized as a Hindu Kingdom for centuries, the1990 constitution has recognized and acknowledged the diversity in culture races languageand religion. The constitution has committed to the protection, preservation and promotion oflanguage, religion and culture, affirmative action for IPs and vulnerable groups. Article 4 ofpart 1 of the Constitution states that Nepal is a 'multi-ethnic, multi-lingual' kingdom. Article6 of the same section, relating to the 'Language of the Nation', warrants citing infull onaccount of its importance to Indigenous Peoples and the activists who represent them on thenational stage in Nepal:

1) The Nepal language in the devanagari script is the language of the nation. The Nepalilanguage shall be the official language.

2) All the languages spoken as the mother language in the various parts of Nepal are thenational languages of Nepal.

It also makes the provision of education in mother tongues up to grade five. Despite ofvarious other problems and challenges including the instability in the governance, the electedgovernments paid significant attention to the priorities and concerns of IPs in their policies,plan and programs.

The government set up the National Committee for Development Nationalities in 1996. Thecommittee recognized the existence of 61 Indigenous Nationalities in Nepal. Consequently,the Ninth Plan (1997-2002) explicitly made policies and programs targeting IPs. TheParliament has passed a bill forming a Foundation for Development of IndigenousNationalities, which has recognized 59 IPs in Nepal. In 1999, the Local Self-Governance Actwas amended, giving more power and authority to local govermment bodies such as DistrictDevelopment Committees (DDCs), Municipalities and Village Development Committees(VDCs) - including the authority to protect, preserve and promote IPs' language, religion andculture. The National Planning Commission (NPC) has also included programs and strategiesfor IPs in the Tenth Plan/PRSP (2003-2008).

8.3 Baseline Data

CBS (2003) has listed 71 castes/ethnic groups in the recent statistical publication. The first tengroups are shown in Table 8.1.

Rest of the caste/ethnic groups are less than 2.4% which include: Gurung, Damai/Dholi,Limbu, Thakuri, Sarki, Teli, Chamar, Harijan, Ram, Koiri, Kurmi, Samyasi, Dhanuk,Musahar, Dusadh/Paswan/Pasi, Sherpa, Sonar, Kewat, Brahman-Terai, Baniya, Gharti/Bhujel,Mallah, Kalwar, Kumal, Hajm/Thakur, Kanu, Rajbansi, Sunuwar, Sudhi, Lohar, Tatma,Khatwe, Dhobi, Majhi, Nuniya, Kumhar, Danuwar, Chepang (Praja), Haluwai, Rajput,Kayastha, Badhae, Marwadi, Santhal/Satar, Dhagar/Jhagar, Bantar, Barbae, Kahar, Gangai,Lodha, Rajbhar, Thami, Dhimal, Bhote, Bing/Binda, Bhediyar/Gaderi, Nurang, Yakkha,Darai, Tajpuriya, Thakali, Chidimar, Pahari, Mali, Bangali, Chantel, Dom, Kamar, Bote,Brahmu/Baramu, Gaine, Jirel, Adibasi/Janajati, Dura, Churaute, Badi, Meche, Lepcha,Halkhor, Punjabi, Sikh, Kisan, Raji, Byangsi, Hayu, Koche, Dhunia, Walung, Jaine, Munda,Raute, Yehlmo, Patharkata/Kuswadiya, Kusunda, Dalit/Unidentified dalit, Unidentifiedcast/ethnic group. Similarly, the distributions of ethnic groups in selected six districts aregiven in Table 8.4.

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Table 8.1: Percentage of Population Distribution by Caste/Ethnic Groups

S.N. Caste/Ethnic PercentageGroup

1. Chhetri 15.802. Brahman-hill 12.743. Magar 7.144. Tharu 6.755. Tamang 5.646. Newar 5.487. Muslim 4.278. Kami 3.949. Yadav 3.9410. Rai 2.79

CBS (2003) has also listed 92 languages spoken in the kingdom of Nepal in the recentstatistical publication. The first ten groups are shown in Table 8.2. The publication showedthat 0.74 % of the population belongs to a group of people whose language was still unknown.

Table 8.2: Percentage of Population Distribution by Mother Tongue

S.N. Mother Tongue Percentage1. Nepali 48.612. Maithili 12.303. Bhojpuri 7.534. Tharu (Dagaura/rana) 5.865. Tamang 5.196. Newar 3.637. Magar 3.398. Awadhi 2.479. Bantanwa 1.6310. Gurung 1.49

Rest are less than 1.47% which include: Limbu, Bajjika, Urdu, Rajbansi, Sherpa, Hindi,Chamling, Santhali, Chepang, Danuwar, Jhangar/Dhangar, Sunuwar, Bangla,Marwari(Rajasthani), Manjhi, Thami, Kulung, Dhimal. Angika, Yakkha, Thulung, Sangpang,BhujeVKhawas, Darai, Khaling, Kumal, Thakali, Chantyal/Chhantel, Neplai sign Language,Tibbetan, Dumi, Jirel, Wanmbule/Umbule,Puma, Yholmo, Nachhiring, Dura, Meche, Pahari,Lepcha/Lapche, Bote, Bahing, Koi/Koyu, Raji, Hayu, Byangshi, Yamphu/Yamphe, Ghale,Khariya, Chhiling, Logorung, Punjabi, Chinese, English, Newahang, Sanskrit, Kaike, Raute,Kisan, Churauti, Baram/Maramu, Tilung, Jero/Jerung. Dungmali, Oriya, Linghim, Kusunda,Sindhi, Koche, Hariyanwi, Magahi, Sam, Kurmali, Kagate, Dzonkha, Kuki, Chhintang, Mizo,Nagamese, Lhomi, Assamise, Sadhani, and other unknown languages. The information onpopulation distribution of six districts by religions is given in Table 8.3.

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Table 8.3: Population Distribution by Religion of Six Selected Districts

Districts Total Hindu Bouddha Islam Kirat Jain Christian Sikh Bahai OthersSiraha 569,880 517,911 9,890 40,926 791 29 69 21 17 226Ramechhap 212,408 144,561 60,069 44 4,147 4 913 14 2 2624Kapilbastu 481,976 390,698 3,285 87,573 6 15 120 175 12 92Pyuthan 212,484 205,489 6,296 645 2 1 26 - 3 22Mugu 31,465 27,198 4,258 2 - 1 3 - - 3Darchula 121,996 121,807 126 12 - 11 4 7 19 10

From the point of view of PAF activities, there should be provision of including baseline dataon the sub-project documents. Baseline data should include population, location, culture andbelief, language, linguistic context, education, relationship of Indigenous Peoples to otherlocal and national groups, natural resources management practices, accurate up-to-date mapsof project influence. Besides this analysis of the social structure and income sources of theindigenous population, inventories of the resources that Indigenous People use and technicaldata on their production systems should incorporate in baseline infonnation. The sub-projectproposal should include this information as far as applicable.

It is particularly important that baseline studies should capture the full range of productionand marketing activities in which Indigenous People are engaged. Site visits by qualifiedsocial and technical experts should verify and update secondary sources.

Table 8.4: Distribution of Ethnic Groups in Selected Six Districts

S.N. Ethnic Group ~~~~~DistrictSiraha Ramechhap Kapilbastu Pyuthan Mugu Darchula

1 Nepali 29,692 128,519 103,582 188,200 35,947 110,3252 Maithali 483,432 201 396 65 57 413 Bhojpuri 500 62 448 21 10 304 Newari 632 16,088 1,573 1,646 13 105 Gurung 134 58 166 927 4 -

6 Tamange 5,397 43,498 303 196 6 177 Abadhi 11 5 341,000 6 18 Tharu 141,161 13 51,481 44 1 859 Magar 4,615 10,220 1,455 2,001 1 6210 Lumbu 110 5 110 7 2 1711 Hindi 4,828 20 3,075 9 22012 Rai/Kirati 524 944 2,109 1,819 4,363 16713 Bhote/Sherpa 316 4,737 27 6 10 6314 Thakali 21 21 53 1 8 315 Rajbanshi 17 2 38 8 1 116 Satar 5 7 - 317 Sunuwar 7 2 1 -

18 Danuwar 606 2 239 -

19 Sinthal 720 LocalLanguage 741 8,687 1,091 39 - 2,83421 others 18,728 5,758 2,151 75 - 68422 English 55 15 14 9 - 3

Total 691,532 218,855 509,325 195,081 40,424 114,566

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8.4 Land Acquisition and Resettlement

Traditionally some of the indigenous castes of the community for example, Damai, Kanmi,Sarki are engaged in specialized profession other than farming and agriculture. This leads tothe fact that these groups have relatively less land holdings compared to the mainstreamcastes which have been engaged in farming activities. Additionally a few marginalizedcommunity such as Kamaiyas relied on working for the elite group of community. Similarly,migration of people for example from the hilly areas to the low land areas and valleys lead tohold the land which is originally belong to the low land people often indigenous group such asTharu, Dhimal and Chaudhari. The migrated people often belong to the elite group withaccess to good education and property and this sometimes lead to the situation that IndigenousPeople loose the ownership of land they belong to. Thus the indigenous groups of peoplenormally possess less land per capita compare to the elite group of community. Therefore,from the land acquisition and resettlement point of view, the indigenous groups are morevulnerable as of their less access to the land.

In order to ensure that poor IPs and other vulnerable groups participate more actively in thecourse of development, it is recommended that an approach (discussed below) based on thesuccessful experienced of a similar projects be incorporated into the official regulations andprocedures.

If possible, the PAF activities will not promote land acquisition and resettlement. If itbecomes mandatory to acquire some land proper compensatory measure will be employed. Ingeneral, any sub-project requiring land for the sub-project components will look for voluntarycontribution or donation. However, land donations will be made fully voluntary, but also thatsuch donations do not involve physical displacement or any significant adverse impacts uponincomes of the donor household.

All voluntary land transactions are expected to meet the following criteria:

i) The land in question will be free of squatters, encroachers or other claims of anyliabilities;

ii) Land will be chosen by the community after ensuring that the sub-project will alsobenefit the land under consideration;

iii) Verification of the voluntary nature of land donations in each case;iv) Land transfers will be completed through registration, with the ownership being

transferred to the COs;v) Provision will be made in PAF Board procedures for any future grievances related to

the land acquisition.

Lands will not be accepted from such landowners whose holding will be less than theminimum economical viable stipulated size particularly in case of indigenous group. This sizeof land might vary from one locality to another. In this case, an agreement of minimumstipulation size will be determined by the POs and COs in the local context.

Land to be used may also not be registered with government (Ailani) and the possibility thatsuch land may have been occupied by landless (Suikinzbasi) is high. Normally, Ailani landshould not be used in the sub-project as for such land there might be a registration problem.All land transactions will be subject to registration (as per market transactions) under theownership of community organization. If any such land is mandatory then the local authoritiessuch as VDC or DDC should be consulted and ownership be granted to the COs.

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Essentially, provision should be made for field verification of all cases of land purchases insuch a way as to ensure that land has not been taken under any psychological, social, andeconomic domination and that the above obligations and criteria have been fulfilled. Wheresuch land donation involves an IP household, the POs and COs may wish to seek assistancefrom local authorities for field verification.

8.5 Strategy for Local Participation

Mechanism should be developed for the participation of Indigenous People in decisionmaking and through out the project planning and implementation and evaluation. Because ofthe poverty, illiteracy, and awareness, many communities in Nepalese society still suffer fromthe benefits of modem development and follow the traditional practices and beliefs. Thereforesome degree of social exclusion based on caste and ethnicity is still prevailed in Nepalesesociety. As indicated above, the indigenous groups of people do not get opportunities inparticipating in the development activities and getting the benefits. Hence, serious attentionshould be given to the poor Indigenous Peoples, dalits, as well as women, to ensure theireffective participation in PAF activities. Many of the larger groups of Indigenous People havetheir own representative organizations that provide effective channels for communicatinglocal preferences. Traditional leaders of those communities occupy key positions formobilizing people and should be brought into the planning process, with due concern forensuring genuine representation of the indigenous population.

8.6 Technical Identification of Development or Mitigation Activities

The proposed project might have negative impacts on surrounding environments and orlivelihoods of Indigenous communities. Sub-project appraisal team should meet with numberof IP groups and focus groups of IP project beneficiaries at selected sites to document anynegative impacts experienced during the implementation of PAF project and further consultwith these groups to mitigate these impacts in their own practices. Focus group discussionsand interviews should be carried out to gather the information.

Technical proposals should proceed from on-site research by qualified professionals. Detailedengineering designs are essential in case of projects with complex structures.

Indigenous knowledge is often more successful than those introducing entirely new principlesand institutions. For example, the potential contribution of traditional blacksmith, tailor,tanner, and goldsmith should be considered in planning income generating or skillenhancement activities. An example of the traditional skills inherited by dalit women in Terairegion of Nepal is shown in Table 8.5

Similarly, during the implementation of PAF related project, to ensure the local participationof Indigenous People, it is better to include the Indigenous Peoples in users committee so thatthey feel more responsibility in sub-project.

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Table 8.5: Traditional Skills Inherited by Dalit Women in Terai Region (Jha, 2003)

Items Type ItemsPaper and Bamboo, Jute o Basket, Bag, hand made fan,products o Snacks packaging items

o Toys, Tray, mato Bamboo Products

Agriculture based o Poultry, Goat raising, pig raising,Buffalo raising

o Dairyo Vegetable farming

Small scale enterprises o Handkerchiefo Bread, Chocolateo Flour and spiceso Candleo Bidio Chalko Cotton thread itemso Soap and sampoo

Others o Mithila Arto Beauty parloro Hair cuttingo Metal productso Wooden garments

8.7 Institutional Capacity

The following institutions are responsible for Indigenous People's Development at the statelevel.

o Ministry of Local Developmento Department of Local Infrastructure Developmento Ministry of Education and Sporto Ministry of Social Welfareo Thematic Group on Indigenous Peoples and Linguistic Minorities

Similarly the following non-governmental institutions are also working on the sector.

o National Foundation for the Development of Indigenous Nationalities (NFDIN)o Nepal Federation of Nationalities (NEFEN)o Linguistic Society of Nepal (LSN)o National Indigenous Women's Federation (NWIF)o Lawyers Association for Human Rights of Nepalese Indigenous Peoples

(LAHURNIP)

One of the tasks of a successful Indigenous Peoples Plan is to identify the institution orinstitutions that should and can take responsibility for implementing the suggestions. Hence,proper institutional arrangements should be made to tackle the issues and concerns ofIndigenous Peoples. For this, PAF project should hire a legal expert and an anthropologist inorder to address the Indigenous People's rights and issues. Documentation should be availablealso in local language by hiring bilingual experts. Similarly, it is recommended that where

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qualified local IP organizations and individual expertise exist, they should be involved to theextent possible during the project implementation. Involvement of such organization wouldhelp to generate demand, identify needs and problems, create effective participation andcooperation from IPs, as well as to generate a sense of ownership of PAF project.

8.8 Implementation Schedule

An Indigenous Peoples Plan should include an implementation schedule by which progresscan be measured at appropriate intervals. Pilot programs may be needed to provide planninginformation, for phasing the project component for Indigenous Peoples with the maininvestment. The aim must be the long-term sustainability of project activities subsequent. tocompletion of disbursement.

8.9 Monitoring and Evaluation

Strong monitoring and evaluation is imperative for the PAF board to assess how well itsprogram is going, to learn lessons from the past, and to improve the project performances.The monitoring and evaluation should be carried out at different phases. Independentmonitoring capacities may be needed since the institutions responsible for indigenouscommunities have weak management histories. Monitoring by representative of IndigenousPeoples' own organization may be an efficient way for the project management to absorb theperspective of indigenous beneficiaries. Three types of monitoring indicators namely Baselinemonitoring, Impact monitoring and Compliance monitoring, as outlined in the PAFOperational Guideline and EMF (Refer Chapter VII) should be used. Monitoring unit shouldbe staffed by experienced social science professionals, and reporting formats and schedulesappropriate to the project's needs should be established. Monitoring and evaluation reportshould be reviewed jointly by the PAF Board. The evaluation report should be made availableto the public.

8.10 Cost Estimates and Financial Plan

Indigenous People Plan should include detailed cost estimates for planned activities andinvestment. The estimates should be broken down into unit costs by project year and linked toa financing plan. Such programs as revolving credit funds that provide indigenous people withinvestment pools should indicate their accounting procedures and mechanisms for financialtransfer and replenishment.

Although the cost of the sub-project under PAF is included in the proposal submitted to PAFBoard, it is recommended that additional costs, if any, essential to address IP should also beincluded in the cost estimates.

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References:

Canter, L. W. (1996), Environmental Impact Assessment, McGraw-Hill, Inc. New York

CBS (1998), A Compendium on Environment Statistics 1998 Nepal, HMG national Planningcommission Secretariat central bureau of statistics, Kathmandu Nepal.

CBS (2003), District Level Indicators of Nepal for Monitoring Overall Development (Basedon Selected Socio-economic Indicators), HMG, National Planning CommissionSecretariat, Central Bureau of Statistics, Kathmandu, Nepal.

CBS (2002), National Population Census 2001: Summary Sheet, Central Bureau of Statistics,National Planning Commission Secretariat, HMG of Nepal, Kathmandu

CBS (2003), Statistical Year Book of Nepal 2003, Kathmandu, Nepal

DFRS (1999), Forest resources of Nepal 1978-1998, Department of Forest Research andSurvey (DFRS), Ministry of Forests and Soil Conservation, HMG Nepal, publication74

DNPWC (2002 and 2003), Leaflets on National Parks, Department of National Parks andWildlife conservation, Kathmandu Nepal

Forest Department (FD), Plant Department(PD), Department of National Parks and Wildlifeconservation, Natural Science Museum (2003), a leaflet on Convention onInternational Trade in Endangered Species of Wild Fauna and Flora-CITES,Kathmandu Nepal

Gurung, Y. B. (2004), Indigenous People's Plan for Rural water supply and Sanitation(RWSS II), RWSSFDB and The World Bank

HMG (2002), Public Works Directives, His Majesty's Government of Nepal January 2002

HMG and IUCN (1998), EIA Guidelines for Industry Sector 1995, His Majesty's Govermnentand The World Conservation Union, Nepal.

IUCN and NSM/TU Nepal (2002), Nepal's Protected Flora and Fauna, an IntroductionRelevant to the CITES, Kathmandu, Nepal

Jha, H. B (2003), Dalit and dalit women of Terai, (In Nepali), Central for Economic andTechnical Studies and Fredaric Ewart Stiptong, Lalitpur, Nepal

KESL (1986), Land System and Geology reports, Land Resourced Mapping Project (LRMP),Kenting Earth Sciences Limited/HMG Nepal / Government of Canada

MFSC (2003), Hamro Ban, Ministry of Forest and Soil Conservation, Forest Department,Babarnahal, Kathmandu, Nepal

MOPE (2001), State of the Environment Nepal (Agriculture and Forests) His Majesty ofGovernment, Ministry of Population and Environment, Kathmandu, Nepal

MOPE (2002), Status of Environmental Convention Ministry of population and EnvironmentKathmandu, http//www.mope.gov.np/frame.php3

NDI (2002), Nepal District Profile 2002, National Development Institute, Kathmandu, Nepal

NPC (2003), His Majesty of Government, National Planning Commission 2003, 10t1h FiveYear Plan, Kathmandu, Nepal

PAF' (2004), Project Concept Paper: Detailed Project Description, Annex 2 PovertyAlleviation Fund/The World Bank

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ANNEX I

CHECKLIST OF THE ENVIRONMENTALLY SENSITIVE AREAS IN A DISTRICT

Protected Areas: National Parks, Wildlife Reserves, Hunting Reserves, Conservation Areas,and other areas declared by HMGN as protected.

Forest Areas Renowned in District: State forest, Religious forests and Community foreststhat are significant in the district because it is virgin or it is an important habitat of rare andendangered fauna and flora, or it has high bio-diversity, or it is large, or it contains importantmedicinal plants and other non-timber products, and so on.

Wetlands: Wetlands listed in the national inventories, high altitude lakes including glaciallakes, Pokharis usually known as religious sites in district and other important wetlands indistrict.

Natural Hazard and Risky Areas: Zones of Main Boundary Thrust (MBT) Fault, MainCentral Thrust (MCT) Fault, known regional and local faults, highly unstable areas (highrelief-more than 35 degree slope and weak geology), other areas in district generally knownfor landslides and erosion, and areas known for very frequent flood damage.

Unique Areas: Areas in the district considered as distinct and important because ofgeographical, geological, scientific, aesthetic reasons and human-interest viz.: beautiful andrare landscape, view points, caves, etc.

Other Important Areas in District: Areas known for natural resources (deposits ofconstruction materials and minerals, major drinking water resources), Areas inhabited byspecial ethnic groups, Common property areas (common grazing lands), district and highlyfertile lands and the like.

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References:

Canter, L. W. (1996), Environmental Impact Assessment, McGraw-Hill, Inc. New York

CBS (1998), A Compendium on Environment Statistics 1998 Nepal, HMG national Planningcommission Secretariat central bureau of statistics, Kathmandu Nepal.

CBS (2003), District Level Indicators of Nepal for Monitoring Overall Development (Basedon Selected Socio-economic Indicators), HMG, National Planning CommissionSecretariat, Central Bureau of Statistics, Kathmandu, Nepal.

CBS (2002), National Population Census 2001: Summary Sheet, Central Bureau of Statistics,National Planning Commission Secretariat, HMG of Nepal, Kathmandu

CBS (2003), Statistical Year Book of Nepal 2003, Kathmandu, Nepal

DFRS (1999), Forest resources of Nepal 1978-1998, Department of Forest Research andSurvey (DFRS), Ministry of Forests and Soil Conservation, HMG Nepal, publication74

DNPWC (2002 and 2003), Leaflets on National Parks, Department of National Parks andWildlife conservation, Kathmandu Nepal

Forest Department (FD), Plant Department(PD), Department of National Parks and Wildlifeconservation, Natural Science Museum (2003), a leaflet on Convention onInternational Trade in Endangered Species of Wild Fauna and Flora-CITES,Kathmandu Nepal

Gurung, Y. B. (2004), Indigenous People's Plan for Rural water supply and Sanitation(RWSS II), RWSSFDB and The World Bank

HMG (2002), Public Works Directives, His Majesty's Government of Nepal January 2002

HMG and IUCN (1998), EIA Guidelines for Industry Sector 1995, His Majesty's Governmentand The World Conservation Union, Nepal.

IUCN and NSM/TU Nepal (2002), Nepal's Protected Flora and Fauna, an IntroductionRelevant to the CITES, Kathmandu, Nepal

Jha, H. B (2003), Dalit and dalit women of Terai, (In Nepali), Central for Economic andTechnical Studies and Fredaric Ewart Stiptong, Lalitpur, Nepal

KESL (1986), Land System and Geology reports, Land Resourced Mapping Project (LRMP),Kenting Earth Sciences Limited/HMG Nepal / Government of Canada

MFSC (2003), Hamro Ban, Ministry of Forest and Soil Conservation, Forest Department,Babarmahal, Kathmandu, Nepal

MOPE (2001), State of the Environment Nepal (Agriculture and Forests) His Majesty ofGovernment, Ministry of Population and Environment, Kathmandu, Nepal

MOPE (2002), Status of Environmental Convention Ministry of population and EnvironmentKathmandu, http//www.mope.gov.np/frame.php3

NDI (2002), Nepal District Profile 2002, National Development Institute, Kathmandu, Nepal

NPC (2003), His Majesty of Government, National Planning Commission 2003, 10* FiveYear Plan, Kathmandu, Nepal

PAF1 (2004), Project Concept Paper: Detailed Project Description, Annex 2 PovertyAlleviation Fund/The World Bank

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2PAF , (2004), Project Appraisal Document, Poverty Alleviation Fund/The World Bank,

Kathmandu, Nepal

PAF3 (2004), Poverty Alleviation Fund Sub-Rules 2060 B. S., Poverty Alleviation Fund,Kathmandu, Nepal

Shrestha, R. B. (2004), Poverty Alleviation Fund: Operational Guidelines (First Draft), PAF/The World Bank, Kathmandu, Nepal

UNDP (2002), Nepal Human Development Report 2001: Poverty Reduction and Governance,United Nation Development programs, Kathmandu, Nepal

UJNEP (2001), State of Environment 2001, United Nation Environment Program incollaboration with MoPE/HMG, SACEP, ICIMOD, NORAD

WHO and NHRC (2002), Situation Analysis Environment Health in Nepal, Center forEconomic and Technical Studies and Creative Consultants, Kathmandu, Nepal

World Bank (2004), Indigenous People, Operational Directive (OD 4.20), The World BankQperational Manual

http://www. gisdaynepal.com.np/Maps/MapCatalog/NepalMaps/Physiography/PhysioTitle.htm (23-02-2004)

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ANNEX II

FEEDBACK SLIP

(Environment Assessment of PAF Activities)

EA study is aimed at identifying major environmental issues associated with PAF activitiesand recommending a management framework. This feedback slip is designed to getinformation based on your experience. You are kindly requested to fill the slip and return itto Dr. Nawa Raj Khatiwada.

Name of Respondent: Organization:

Current or past involvement of your organisation (Pls. tick '-' and write as appropriate):O Income Generation (eg. Bee keeping, micro-enterprises) such as ..............O Infrastructure (eg. School bldg., trails, water supply) such as ..........................O Capacity Building (eg. community training) such as ...................................O Others.................................................................................

Please tick 'V' and or write environmental impacts relevant to the activities under yourexperiences and indicate appropriate mitigation measures (eg. Compensation, plantation,awareness).

Impact Environmental Impacts Generation Infrastructure Building Mitigation MeasuresType Mitigation Measures

Soil Erosion

0e Water pollution

Down Stream Impacts

DeforestationBiodiversity lost

C

Land acquisition0 Health problems

a Lost of rituals and customs

.° = Lost of tradition ways of-s U protection resourcesHci

Other Impacts, if any...........................................Other mitigation measures, if any......................................

Major policy legislation relevant to your work

O World Bank Policy on Environmental AssessmentO National EIA Guidelines, 1993Ol Environmental Protection Act 2053 and Rules 2054O Local Self Governance Act 1999 and Regulation, 1999O Others........................................................

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ANNEX III

Proposals Requiring Initial Environmental Examination

a. Forest Sector

1. Plantation of indigenous plants of a single species on a single block of 50 to 100hectares in the Terai and 25 to 50 hectares in the hills.

2. Plantation of such imported species of plants as are deemed suitable for that purposefollowing their test in the concerned place, on a single block of 10 to 50 hectares inthe Terai and 5 to 25 hectares in the hills.

3. Handover of forests with an area ranging between 25 to 100 hectares in the Terai and5 to 25 hectares in the hills as leasehold forests.

4. Clear felling or rehabilitation of national forests with an area of not more than 5hectares.

5. Establishment of saw-mills processing 5,000 to 50,000 cubic feet of timber per year.6. Collection of 5 to 50 tons of forest products other than timber per year.7. Establishment or expansion of national parks, wildlife sanctuaries and conservation

areas, or environmental conservation zones.8. Extraction of the roots of trees which have been felled, removal of leaves (in such a

manner as to turn trees into stumps), extraction of seeds of lichens or orchids fromtrees, and collection of Sal (Shorea robusta) seeds.

9. Formulation of watershed management plans.10. Construction of new botanical gardens or zoos outside forest areas in the public or

private sector.11. Resettlement of imported wild animals of different species.12. Preparation of management plans of national parks, wild life sanctuaries,

conservation areas, and their buffer zones, or launching of development andconstruction activities specified in such plans.

13. Establishment of medicinal herbs centers for the commercial production of medicinalherbs and aromatic plants in public scrublands.

14. Commercial collection or industrial processing of non-polluting medicinal herbs andaromatic plants.

15. Construction of forest paths up to 5 kilometer long, and of fire protection lines up to1O kilometer long.

16. Collection of boulders, gravel and sand and extraction of coal and other mineralsfrom forest areas.

b. Industrial Sector

1. Production of alcohol by the process of blending and establishment of distilleriesequipped with boiling and fermentation facilities, with a production capacity of5,00,000/- liters per day.

2. Establishment of breweries and wineries equipped with fermentation facilities with aproduction capacity of 500,000/- liters per day.

3. Establishment of acid, alkali, and primary chemical industries with a productioncapacity of 1 00 metric ton per day.

4. Processing of hides not more than 5000 sq. ft. per day.5. Establishment of Electroplating and Galvanizing industries.6. Establishment of cooking, natural gas refilling, filling, production and distribution

industries.

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7. Establishment of boulder crushing industries.8. Establishment of paints industries.9. Establishment of dairy processing industries.10. Establishment of industries producing lubricant by the process of blending

reprocessing or reclamation.11. Establishment of industries manufacturing foam.12. Establishment of industries manufacturing dry or wet cell (battery).13. Establishment of crude sugar or sugar industries with a production capacity of 3000

metric tons per day.14. Establishment of thread and cloths dyeing, printing and laundry industries (including

carpets) except traditional cottage industries.15. Establishment of pulp and paper industries, except traditional cottage industries, with

a production capacity of 100 metric tons per day.16. Establishment of bricks and tiles industries with a production capacity of 10 million

units per year.17. Establishment of cement industries with a production capacity of 30 metric tons per

hour based on lime-stone and with a production capacity of 50 metric tons per hourbased on clinker.

18. Establishment of quick/ slaked lime industry producing 50 metric tons per day.19. Establishment of pharmaceutical industries.20. Establishment of industries manufacturing chemical fertilizers (blending) and

pesticides (blending).21. Establishment of plastic industries (bases on waste plastic as raw materials).22. Establishment of matches industries.23. Establishment of industries relating to auto workshop (except 2 wheelers).24. Establishment of industries producing and processing coke and briquette from coal."

c. Establishment of the following industries having investment of total fixed capitalexceeding Rs. 1 million.

1. Plastic processing (except processing waste materials).2. Processing and production of tyres, tubes and rubber.3. Soap (including detergents and clearing shampoos).4. Photo processing.5. Foundry.6. Production of cigarettes, bidi (tobacco rolled in leaf) tobacco, betel rults.7. Slaughter house.8. Glass (plane glass)9. Food processing.10. Relating to metal (including remelting, rerolling, and fabrication).11. Bitumen and bitumen emulsion.12. Cold storage.13. Threading.14. Vegetable ghee, oil.15. Herbal processing.16. Production of different items from bone, horm and foot root17. Rosin turpentine, veneer and catechu.18. Fish and meat processing.19. Production of packaging materials20. Poultry feeds.21. Machine shop

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d. Mining Sector

1. Excavation of mines through relocation and resettlement of permanent residence ofnot more than 100 people.

2. Relating to Open Mine and Under Ground Mine:a. Excavation of metallic minerals in small scale.b. Excavation of the other industrial minerals in small scale except precious stones

semiprecious stones and abrasive minerals from among the classified industrialminerals for the industrial purpose.

c. Excavation of non-metallic minerals in small scale.d. Excavation of industrial precious and semiprecious stones and abrasive minerals

with a production capacity of 50 to 100 grams per day.e. Establishment of coal mines in small scale.f. Excavation of construction oriented minerals materials in small scale.g. Excavation of highly precious, precious, valuable stone and semi-valuable stone

minerals with a production capacity of 50 to 100 grams per day.h. Production of natural gases in very small and small scale.

3. Relating to other Minesa. Extraction of 10 to 50 cubic meters of sand, gravel and soil from river beds per

day.b. Extraction of 50 to 100 grams of precious, valuable and semi-valuable stone

minerals per day through placer or dredging techniques.

e. Road Sector

1. Construction of the following roads:a) District roadsb) Urban roadsc) Rural roadsd) Small feeder roads

2. Construction of I to 5 kilometers long ropeways.3. Construction of 1 to 5 kilometers long cable car routes.4. Construction of major bridges.5. Construction of tunnels.6. Improvement of the standard, rehabilitation and reconstruction of national highways

and feeder roads.

f. Water Resources and Energy Sector:

a. Supply of electricity through the installation of transmission lines of not more thanfrom 33 kv to 66 kv capacity.

b. Operation of rural electrification projects of 1 to 6 mva.c. Operation of electricity generation projects of 1 to 5 mw capacity.d. Under the new systems of irrigation:

i. Those irrigating 25 to 2000 hectares in the Terai,ii. Those irrigating 15 to 500 hectares in the hill valleys,

iii. Those irrigating 10 to 200 hectares in the hill and mountain areas with a steepgradient.

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e. Under the rehabilitated systems of irrigation:

i. Those irrigating more than 500 hectares in the Terai.ii. Those irrigating more than 200 hectares in the hill valleys.

iii. Those irrigating more than 100 hectares in the hill and mountain areas with asteep gradient.

iv. Any water resources development activity, which displaces not more than from25 persons to 100 persons with permanent residence.

f. Control of floods through dams in the Terai.g. Control of rivers over an area of more than one kilometer.

Note: Any rehabilitation project, which includes additional irrigated areas, new sourcesof water, watershed management or changed channel lines shall be considered tobe a new system.

g. Tourism Sector:

a. Establishment and operation of hotels with 50 to 100 beds.b. Extension of the areas of the existing airports.c. Opening of new areas for the promotion of tourism.d. Operation of rafting activities on any river having fish or other aquatic life.e. Operation of new golf courses and organized water sports.f. Promotion of tourism in a number exceeding 10,000 per year at an altitude above

5000 meters.g. Disposal and management of waste emitted from trekking points.

h. Drinking Water:

a. Collection of rain-water in an area of not more than 200 hectares, and use of watersources (springs and wet-lands) located within the same area.

b. Surface water sources with not more than 1 cubic ft. safe yield, and supply of notmore than 50 percent of the water during the dry season.

c. Processing of water at the rate of 10 to 25 liters per second.d. Recharging up to 50 percent of the total aquifer for the development of underground

water sources.e. Construction of not more than one kilometer long tunnels for carrying water.f. Displacement of not more than 100 persons for operating a water supply scheme.g. Settlement of not more than 500 persons on the upper reaches of water sources.h. Supply of drinking water to a population ranging between 2,000 and 20,000.i. Supply of drinking water to a population ranging between 10,000 and 100,000, and

connection of new sources.j. Installation of more than 20 kilometers long electricity transmission lines for

pumping or processing water, and consumption of more than one mw of electricity.k. River training and diversion activities over an area of more than one kilometer.

i. Waste Management:

a. Waste management activities to be undertaken with the objective of providingservices to a population ranging between 2,000 and 10,000.

b. Following activities relating to waste emitted from houses and residential areas:

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i. Filling of land with 100 to 1000 tons of waste a year.ii. Activities relating to transfer stations and resource recovery areas spread

over not more than 3 hectares.iii. Selecting, picking, disposing, and recycling waste through chemical,

mechanical or biological techniques in an area of not more than 2 hectares.iv. Activities relating to compost plants in an area ranging between I and 5

hectares.v. Operation of sewerage schemes.

j. Agricultural Sector:

a. Clearing of national forests covering not more than I hectare in the hills and 5hectares in the Terai, and using them for agricultural purposes.

b. Following activities relating to construction:i. Construction of 1 to 5 kilometers long agricultural roads.

ii. Construction activities for farming 2000 to 5000 domestic fowls.iii. Construction activities for farming big cattle numbering between 100 and

500.iv. Construction activities for farming small cattle (sheep and goats) numbering

between 1000 and 5000.v. Establishment of agricultural wholesale markets in urban areas.

c. Following activities relating to toxic substances (only those which are listed):i. Import of I to 10 tons of toxic substances.

ii. Sale, supply, storage and disposal of 100 kg. to 1 ton of toxic substances.iii. Use of 100 kg. to 1 ton of toxic substances in a single area.

d. Establishment of the following agro-based industries which do not dispose ofpolluted substances mixed with dangerous toxins:

i. Milk-processing industries with a capacity of not more than 26,000 liters aday.

ii. Such agro-based industries as those producing jam, jelly, squash and juice.iii. Cheese industries.iv. Baby food industries.

e. Commercial fish-farming in an area of more than I hectare.

i. Operation of any planning, project or program of any development work,physical activities or change in land use except the proposals mentioned inClause (A) to Clause (I) and those below the standards of such proposals aswell as the proposals below the standards of those mentioned in Schedule-2with a cost of Rs. 10 millions to hundred millions.

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I

ANNEX IV

Table IV. A: Summary of the Response to the Feedback Provided on the Draft Report

Location of Revision /Addition inComment Response the TextDelete the paragraphs 2,3 & 4 of section 2. 1, pp. 4 (meetingwith World Bank mission and PAF officials)Revise the Project development objective according to the Included Chapter II, Section 2.2, pp 4new version of Operational Manual of PAF, Section 2.2, pp 6Rewrite the paragraph 2 of section 2.3 and include the Included Chapter II, Section 2.3, pp 6negative list of sub-project in paragraph 3, pp. 7Rewrite the project modality in Section 2.4, pp 7 and delete Project modality included and deleted Chapter II, Section 2.4, pp 6the paragraph 3, 4, 5 & 6 paragraphs

Physical description, land use pattern,Include the special section of six districts (This comment was demographic features are included Chapter II, Section 2.5, pp 7also mentioned by. Paul Jonathan Martin) under the heading of 'General Chapter III, Section 3.7, pp 27informnation of selected districts' and ChpeII,Scin37pp2

map is includedRemove the heading 'Administration' of Section 2.6, pp. 9 Included

Include a brief information of mining and extraction Included Chapter III, Section, 3.2.3, pp. 12

General climatic feature of six districts Included Chapter III, Section 3.2.5, pp 14

Include the present scenario of forest resources in Nepal Included Chapter III, Section 3.4, pp. 22IPDP has been included in chapter

Chapter IV only considered the EA policy of World Bank VIII and negative list of sub-projects Chapter VIII, pp 66(Paul Jonathan Martin) including aspects other than EA has Chapter II, Section 2.3, pp 6

been givenAdd existing institution at local level (Yuka Makino) Included Chapter IV, Section 4.5, pp 38

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Table IV.A: Continued

Location of Revision /Addition inComment Response the Text

Significant negative impact should be clarified properly Clarified that impacts are locationspecific and very small-scale in Chapter V, Table 5.1, pp 44magnitude and limited to sub-projectarea only.To better reflect sub-project

Sub-project classification (Paul Jonathan Martin) classification, a table of Chapter V, Table 5.2, pp 45classification is given

There should be some environmental impact afterimplementation of the project, it should be mentioned Included Chapter V, Section 5.2, pp 42systematically and give its mitigation measuresScreening criteria for sub-project and consider hazard and Included Chapter VII, Section 7.3, pp. 62risk assessment (Yuka Makino)

Include independent monitoring agencies Included Chapter VII, Section 7.6, pp 64

Include capacity building programs Included Chapter VII, Section 7.7, pp 64

Include the chapter of indigenous people development plan Included Chapter VIII, pp 66

Table IV. B: Addition Made on Draft Report

World Heritage Site Added Chapter III, Section 3.3.3, pp 18

Map of selected six district Added Chapter III, Fig 3.3, pp 30

Alternative project component Added Chapter VI, Section 6.4, pp 50

Cumulative Environmental Impact Added Chapter V, Section 5.5, pp 48

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ANNEX V

Development Activities in Selected Six Districts

Table V.A: Present Level of Irrigation Development, 1997 (NDI, 2002)

S.N. District Total Total Irrigable Total IrrigatedLand Land Land

1 Siraha 77726 77726 338622 Ramechhap 32276 4248 51583 Kapilbastu 84785 84453 309034 Pyuthan 23197 7037 40935 Mugu 9616 2030 9726 Darchula 13201 4239 2230

Table V. B: Drinking Water Project, 1999/2000 (NDI, 2002)

Percentage of BenefitedS.N. District Population

Rural Urban Total1 Siraha 50.1 86.94 53.432 Ramechhap 55.39 -- 55.393 Kapilbastu 85.53 49.39 82.514 Pyuthan 62.03 -- 62.03

5 Mugu 85.25 -- 85.256 Darchula 95.2 -- 95.2

Table V.C: Number of Industries Registered and Skill Trainees in Selected Districts(1999/2000) (NDI, 2002)

S.N. District No. of No. of Skill*.N. District Industries trainees

1 Siraha 181 3832 Ramechhap 84 1433 Kapilbastu 178 5574 Pyuthan 62 1465 Mugu 15 766 Darchula 7 96

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Table V. D: Total Number of Schools, Students and Teachers (2000) (NDI, 2002)

Number of SchoolsS.N. District Lower Students Teachers

Primary secondary Secondary

1 Siraha 364 84 49 86073 1814

2 Ramechhap 401 18 41 55235 1355

3 Kapilbastu 260 66 33 66050 1550

4 Pyuthan 311 62 30 49700 1329

5 Mugu 119 22 11 6597 454

6 Darchula 279 66 28 33527 1139

Table V.E: Health Services in the Districts (1999/2000) (NDI, 2002)

S.N. District Hospitals PHC Health Posts Posts

I Siraha 2 3 12 972 Ramechhap 1 1 12 413 Kapilbastu 2 2 7 674 Pyuthan 1 2 11 355 Mugu 0 1 9 166 Darchula 1 1 11 29

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ANNEX VI

Table VI. A: Human Development Index (NDI, 2002)

Mean Per Gender HumanSN Dist s Life Adult Years of Capita Sensitive Development

Expectancy Literacy oof Income Development IndexSchooling NRs. Index

1. Siraha 62.5 24.42 1.89 9257 0.31 0.352. Ramechhap 61 24.81 1.50 6421 0.21 0.323. Kapilbastu 53.5 28.84 1.77 6541 0.24 0.294. Pyuthan 56 32.96 1.85 8141 0.24 0.325. Mugu 36 18.96 0.81 5065 0.09 0.156. Darchula 52 38.41 2.03 4876 0.21 0.29

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I

ANNEX VII

SUMMARY OF DISCUSSIONS WITH DIFFERENT STAKEHOLDERS

Poverty Alleviation FundStakeholder Consultation Workshop

12 December 2003

The December World Bank Mission participated in a one day workshop organized by thePAF Board on December 12th, 2003, to discuss the role of key stakeholders, particularlyvulnerable communities and their role, PAF's operational rules and implementation. Thesession was attended by some Government Representatives, vulnerable and indigenouscommunities NGOs, all PAF board members and relevant Bank staff.

The following Government and Civil Society representative attended the workshop: Dr.Bimal Koirala (Chief Secretary), Mr. Krishna Prasad Sapkota (President ADDCN), Dr. ArjunKarki (President, NGO Federation), General Mr. Rukmagat Katuwal (Coordinator NationalSecurity Council Secretariat), Dr. Madhav Ghimire (Joint Secretary Ministry of Finance), Mr.Mohan Man Sainju (Executive Vice Chair, PAF Board), Dr. Durga Pokharel (NationalWomen's Commission, Member PAF Board), Mr. Srikrishna Upadhya (SAPROS, memberPAF Board), Mr. Bojraj Ghimire (Member NPC, member PAF board), Dr. Om Gurung(Nepal Adibasi Janajati Mahasangh, member PAF board), Mr. Shankar R. Joshi (ExecutiveDirector, PAF board), Dr. Rita Thapa (member PAF board), Mr. Padam Singh Biswakarma(National Dalit Organization, Member PAF board) and Rabi Sanju (PAF board). The missionalso met with Donors to solicit information on their experience working with vulnerablegroups an in a conflict situation: Mr. Stephen Sharples, Governance Advisor (DFID), Mr.Mark Segal, Advisor (DFID), Mr. Donald Clark (Director, USAID), and Mr. Mathew Kahane(Resident Representative, UNDP).

The following paragraphs summarizes the discussions held during the meetings andworkshop:

1. Project Objectives. HMGN views the Poverty Alleviation Fund as an alternativeinstrument of service delivery for the poor, intended to signal a departure frompast practices and help establish government credibility in poverty alleviation. Assuch PAF needs to look different from other government programs. Hence itsgovernance structure is based on an autonomous Board with wide representation,transparent procedures, and the targeting of resources to well defined,marginalized groups. PAF would start small to test its new approach and theproposed project would therefore be a pilot where learning and trying out differentmodels is a priority. It would initially target only a small number of districts. OncePAF establishes its reputation it could be rolled out to cover the entire country.Focusing on a small number of districts would also allow PAF to demonstrate acritical impact.

2. Poverty targeting in PAF. There needs to be an objective and transparentcriterion for targeting to prevent political and interest group interference. Targetingwould take place at two levels: geographic targeting (district and villages), andhousehold targeting.

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* District targeting. For the choice of districts, the Human Development Indexcould be one of the criteria. Another complementary criteria would be tospread pilot districts across regions and conflict and non-conflict areas tomaximize learning effect and test approaches under a variety of situations.

* Village targeting. Targeting at the village level would be based on the povertyranking of the VDCs which the Government is in the process of developing.

* Beneficiary targeting. For income generating sub-projects, beneficiaryeligibility would be determined at the village level by the villagers themselvesbased on objective criterion including ethnicity, gender, accessibility toservices and indicators of poverty such as level of assets and income. Thetarget population would include all the indigenous groups, dalits, and womenheaded households. For village infrastructure sub-projects, eligibility would bedetermined based on number of jobs generated relative to size of sub-projectsand number of jobs for the targeted beneficiaries. The beneficiary targetingwithin each village maybe done through a PRA/Wealth Ranking exercise.

3. Eligible Activities. Activities would be demand driven without pre-definedexpenditure categories. Communities would choose from an 'open-menu' with alimited negative list1. The eligible activities would fall under two broad categories:(i) income generating activities, to be implemented by groups of poor people; and(ii) infrastructure related sub-projects. The 'rules of the game' for accessing thefunds for either of the categories would be the same. Funds would be transferred tothe eligible groups as grants.

4. Budget Constraints and Community Contributions. Two types of budgetceilings would be needed: one for small income generating subprojects undertakenby groups of poor people; another one for infrastructure subprojects benefiting theentire village. Experience from other countries with an identical level of povertysuggests a rule of thumb of $15 per capita (this means about $100 per familyduring the duration of the project) for a visible improvement in livelihoods. 30%of the village entitlement calculated in this manner could be used for villageinfrastructure. Community contributions would be essential for creating a sense ofownership, ensuring that prioritization takes place, and create a basis forsustainability of activities. Contributions could be cash or labor and amount toabout 10% of the cost of the subproject.

5. Social Mobilization and Sub-project Cycle. Social mobilization is key for theformation of groups, dissemination of PAF rules of the game, and development ofbeneficiary capabilities. However social mobilization must not be viewed as anend in itself, but rather as a way to improve the voice of poor people. For incomegenerating projects, especially for excluded groups, social mobilization wouldprobably need to be done by NGOs or CBOs. In the case of communityinfrastructure projects, some level of technical support and facilitation would needto be provided by the DDC. Income generating projects could be approved at thevillage level by open community meetings held 3-4 times a year, thus ensuringtransparency and community validation of consistency with agreed self-targeting.

Items on the negative list would include those that the World Bank cannot finance such as activities related toalcohol, tobacco, or religious institutions.

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For Community Infrastructure projects there would be a case to require approval atthe DDC level due to: larger amounts involved, technical aspects and need toensure some linkage with the DDC development plans and other governmentalprograms (e.g suspension bridges, community water, school mapping etc.). Someof the risks to consider are:

* NGOs and CBOs push their pet projects;* It may take time for NGOs and CBOs to gain the trust of the communities and

organize them to prepare projects, especially excluded groups;* Requiring DDC approval for infrastructure projects may add a bureaucratic

hurdle and thus generate risk of delays, political/elite capture and corruption;and

* Open village meetings to self target and approve income generation projectsmay attract the attention of the insurgents with uncertain effects.

6. Institutional Arrangements

* The PAF Board's Role would be to approve strategy, programs and operationalpolicies of the PAF, mobilize resources, approve annual budget and staffing ofPAF secretariat, and support the monitoring/impact system and review results.The PAF Board must act and be seen to act in an independent and autonomousway for two reasons: (i) to ensure that funds are not captured or manipulatedpolitically; and (ii) to ensure that there is no corruption in use of funds. If theseproblems crop up, the Board must (and be seen to) deal forcefully andindependently with the problem. Failure to do so would be an indication that itis not or cannot function as an autonomous entity.

* The Secretariat's Role would be to implement the Project in line with thestrategies, policies and priorities set by the Board; design and implementcapacity building (including for its own staff); design targeting mechanismsand define the roles and responsibilities of DDCs and VDCs under PAF;prepare periodic progress reports, PAF Annual Report and Annual Auditreport; design and implement monitoring and evaluation systems, includingbaseline; and design and implement communications and disseminationcampaign. The Secretariat must be a lean and agile agency, staffed bymotivated and professional individuals. It must have a strong sense of purposeand demonstrate a "new way of doing business" in terms of reaching poor andexcluded groups. The Secretariat should be asked to prepare a budget andstaffing plan, including the secretariat's organizational structure, that takes intoaccount the principles of a lean and agile agency, its roles and responsibilities,appropriate salary levels to recruit professional and motivated staff, and theneed, justification and staffing of Regional offices. To the extent possible (andat least initially) clustering Districts so that each Regional office would servemore than one District should be considered. The management overhead wouldbe discussed and agreed on following a review of the Secretariat's proposedbudget, staffing and organization structure.

* The Village Development Committees (VDC) would play three critical roles:(i) explain and seek agreement with the community on the way PAF willoperate at the village level-the "rules of the game". The rules must be seen astransparent, agreed to, understood and validated by the communities that PAF

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seeks to benefit (including the requirement of 10% contributions); (ii) seekcommunity agreement on who are the most disadvantaged and excludedgroups, and thus ensure agreement that a share of the funds will be targeted onthese groups, ie community self targeting; and (iii) agree on village prioritiesfor infrastructure projects that benefit the community as a whole, and wherenecessary, when agreements have to be sought with neighboring villages andVDCs (e.g. road projects). Local NGOs and Social Mobilizers would ensurethat vulnerable communities are educated about the project benefits, so thatthey may given the appropriate training to identify and access resources for theeffective preparation and implementation of their their sub-project. PAF willcompliment the existing local decentralized structures to avoid created parallelinstitutions.

* The District Development Committee (DDC) is where there is the greatestrisk, in terms of bureaucratic delays, political capture and manipulation, andlack of transparency (i.e corruption), yet DDCs must have a clearly definedrole in the process. A positive approach could entail the following rules: (i)funds flow from PAF to DDCs in the three select districts; (ii) DDCs approveprojects and set up Bank accounts for the beneficiary groups with approvedprojects (process of approval would be different by type of projects); (iii) forincome-generating projects, indication from VDC that project was approved inopen community meeting would suffice, if necessary the community approvalprocess having been witnessed by DDC representative (or delegated to NGO orCBO); (iv) for infrastructure projects, approval by DDC would be required;this would also facilitate technical support (e.g. by DDC engineer or districtplanning officer) during project preparation and design; (v) responsibility fordistrict baseline and monitoring evaluation system; (vi) responsibility fordistrict communication and dissemination campaign; (vii) responsibility forcoordination and liaison with PAF secretariat and its regional office.Possibilities to be considered would be a performance fee (or other types ofincentives) for DDC in order to encourage efficient resource transfers andapproval processes as well as technical support. Another design option toconsider is to not distinguish by type of project in terms of DDC approval, butinstead require DDC approval above a pre-defined project cost. This wouldresult in an implicit self selection of projects since most income generationprojects are likely to be smaller and this would fall below the DDC approvalceiling;

7. Fiduciary Arrangements. These include the Environmental Framework,procurement rules and the financial management system. The EnvironmentalFramework must be simple and play three primary roles: (i) enable screeningprocess by which activities that may pose environmental risks receive morescrutiny for approval; (ii) help improve community activities where warranted(e.g. quality of a drinking water supply system); and (iii) offer capacity buildingactivities on environmental related issues. Procurement rules would be based oncommunity procurement for subprojects and normal procurement procedures forother activities. There is wide relevant experience in Nepal, for example in theDrinking Water Supply Project. A financial management system would need to bedesigned and here again the system in the Drinking Water Supply Project could beadapted.

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8. Communications. Communications are critical to create demand frombeneficiaries, ensure transparency and foster learning across stakeholders.Appropriate strategy and tools would need to be developed to clearly present theproject to the target population and make the rules of the game clear to everybodyso that accountability to beneficiaries could take place.

9. Monitoring and Evaluation. In addition to the more traditional projectmonitoring systems mechanisms for community self monitoring, monitoringbetween stakeholders (e.g. beneficiaries over VDCs, DDCs over NGOs, etc.)needs to be thought through and experimented during the pilot phase of PAF.

10. Field Visits and PAF Stakeholder Consultations. Once the Pilot Districts havebeen identified and as part the planned concurrent District Social and InstitutionalAssessments, systematic consultations will continue to be undertaken in line withPAF's demand driven and participatory approach. This consultative process wouldensure that PAF's main beneficiaries, the vulnerable and indigenous communitiesare not only consulted in a reiterative way but are genuinely participated andbenefiting from the program in a sustainable manner.

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Summary Discussion of the PAF Brain Storming Session12 December 2003

All day session was participated in by PAF Staff, Board Members, representatives ofGovernment Agencies, NGOs, Private sector, Donors including the World Bank and theConsultants. The brainstorming session was organized to discuss and feed backoperational procedure, organization, financial procedure and environmental guidelinesrequired for PAF operations.

1. The discussions centered around PAF Organization and management and issuesrelating to poverty targeting, social mobilization, eligibility criteria for partners,sub-project activities, monitoring and evaluation, communications, fund flow,decentralized and participatory planning process etc.

2. PAF Board needs to be transparent, effective and autonomous was emphasized.3. PA!F efforts need to focus on marginalized and disadvantaged groups through

income activities.4. Poor should be treated as part of the solution not the problem.5. PAF board should not be politicized and be represented by lobby groups.6. Poor need to be organized through facilitation of catalysts, social mobilizer from

the local areas.7. Agency managed delivery systems are not effective while partnership with local

NGOs and CBOs are more effective.8. Experience of RWSS and other community based demand driven models are

proving successful. PAF can learn lessons from this and improve upon.9. Experience in Andhara Pradesh, Rajasthan, Madhya Pradesh, Brazil and Nepal

were shared and factors contributing to their success and failures were discussed.10. Proper targeting, effective communication, simple implementation procedures,

transparency and effective monitoring were highlighted as some of the keyfactors for success. Likewise transparent and properly identified criteria for sub-projects and partner organization and broad based participation of all thecommunity groups including women, vulnerable and socially excluded groupsare important.

11. Community capacity to organize, procure the services and monitor throughcommunity auditing are important aspects.

12. Local governance agencies like VDC/DDC should be strengthened and be part ofthe process. Mechanisms must be built to involve local government.

13. Nepal has enough experience of its own successful program and lessons learntfrom them need to be identified and incorporated in the PAF process.

14. PA activities must be holistic, not just focus on income. Targeting should takeinto account gender, ethnicity and regional and ecological diversities.

15. As a pilot testing six districts representing regional, ecological and socio-economic diversities and based on indicators of poverty and human developmentindicators will be selected by PAF in initial years of learning.

16. Project cycle must not be long and approach must be flexible to accommodatelocal situations.

17. Per capita cost and community contribution were discussed to ensure betterparticipation and ensure community sense of ownership.

18. PAF to adopt two approaches to target the poor, one based on targeting thepoorest district and then community within it, and the second approach to address

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the vulnerable and socially excluded community/groups based on sub-projectproposals directly from anywhere in Nepal.

19. Need to avoid duplication of efforts, coordinate with other similar programs andbuilt on what already exist in the community.

20. Holistic approach to social mobilization and building the local communityorganizations with support from local NGOs, VDC? DDC and private sectororganizations as important process.

21. PAF secretariat will be developed as lean effective structure and it is to procurethe services of specialized services for communications, skill and capacitydevelopment and monitoring of projects.

22. VDC/DDC can assist in communicating PAF rules to the community, involve inidentifying poor and vulnerable communities and monitoring communityparticipation in sub-project.

23. Fund flow, contracting arrangements should be simple and based on milestonesachieved. All the fund for the sub-projects should be directly to community.

24. Community should be able to procure the services from agencies of their choiceas long as it meets the criteria.

25. Monitoring the performance, process and impact as well as targeting is crucial forPAF success. They should be complete and yet simple. Monitoring shouldencompass different levels including the community, PO and PAF.

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POVERTY ALLEVIATION FUND

Stakeholder Consultations and Meetings during Project PreparationJanuary and February 2004

Stakeholder consultation is a continuous process and one, which PAF is engaged in asystematic and reiterative way focusing on vulnerable communities, their needs and how thePAF operations would ensure their genuine participation with transparency andaccountability. In this context, during the PAF preparation various stakeholder consultationsand meetings are being held to inform the design of the project and solicit the views of partnerorganization, village and district representative, vulnerable communities and donors. Thefollowing is a summary of the consultations held during the months of January and February.These meetings have been facilitated by the PAF Board and its technical

At various meetings the following Social, Environmental and Institutional issues werediscussed with regard to PAF Activities:

Field Visit and Meetings with DDCc, VDCs and COs in 2 villages (one heterogeneous -mixof ethnic groups and castes including Dalits and one homogenous-only Dalits) in KavreDistrict

* Definition of poor based on criteria of food sufficiency and requirement in terms ofnumber of months. Classification of poor in terms of three categories: Ultrapoor, Pooran Medium

* Communities felt comfortable with the community-based demand driven approach andhad expenrence in implementing their own projects with technical support, facilitationfrom CSOs, NGOs and other partner organization.

* Proposals should address the communities' priorities as be determined by the wholecommunity, paying attention to the neediest and community public goods.

* Community investment funds provided from the LDF and own savings. Communityestablished 3 types of funds: Dairy, Livestock Insurance and Local DevelopmentFund.

* Following the establishment of community funds there has been a decrease ofindividual dependence on traditional lenders, an increase in livestock investment,including purchase of livestock insurance

* As a result of the combined pool of community resources, local development funds,legislators fund community has benefited from the development of infrastructure(trails, tracks, schools, temples) as well as social and human development programs(social mobilization training capacity building in accounts, child/baby growthmonitoring, alphabetization and numeracy as well as agriculture) have increased.

* As a result of these community-based programs there has also been a decrease in"social evils"-alcohol, gambling, smoking.

* Additional outcomes of the community programs are:o Increase in women's voice and empowermento Higher level of community cohesiono Lower household and intra-household conflict and violenceo Increased use of health serviceso Increased number of cement toilet and pit latrineso Higher level of awareness in health and sanitationo Increased education enrollment resulting inl 00% children school enrollmento Increased awareness and education about family planning.

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There are still many challenges to overcome:* Food security and plan to develop further livestock as most families do not have food

sufficiency throughout the year* Lack of electricity* Lack of adequate water supply, managed drinking water and plan to harvest rain water* Build cement toilet for everyone in the community* Gain access to permanent assets.* Alternative fuel and cash to buy fodder for animals to avoid women's daily burden of

collecting wood and fodder.

Environmental and Social Safeguards* The project is categorized as Category B and has undertaken an EA and an indigenous

Peoples Framework.* There may not be any adverse impact as a result of small scale infrastructure

development* The project does not envisage involuntary land acquisition* Mitigation plan for resettlement should be developed in case of resettlement resulting

from project activities* Some income generating schemes might have minor impacts.* A checklist must be prepared for environmental screening.* The list of activities, which do not need an EA must be provided.* The followings should be considered for activities such as seed production: fertilizer

use, organic farming, use of compost, disease pest, integrated pest management* A clear demarcation regarding the size of the project beyond which environmental

concern is serious must be indicated.* The activities such as goat raising (particularly if funds for such activities are given to

landless) might have significant impact on regeneration of trees.* Negative list of sub-projects should be provided.* Mitigation plan for resettlement should be indicated.* No major environmental impacts are expected, there could be minor impacts which

could be mitigated easily.* Mechanisms to overcome bureaucratic hurdles must be identified.* Indicators for example calorie intake may not be appropriate.* Community contribution should be different in remote and less remote areas.* Forestry related activities should be better highlighted.* Activities such as Women Technical Support Service and Saving and Credit Group

(Fund Board experience) might be good examples.* A proper system of communication should be built-up.* Environmental issues are also important from population growth point of view, we

may include the measures to control the population* Community Forestry (User Forestry) is important from the water source improvement

point of view* Hybrid approach (Irrigation, Vegetable farming, use of plastic tanks for water storage)

could be employed for environmental enhancement* Capacity building for environmental sustainability is very important* Mitigation measures should be included during the project proposal phase* Some of the aspects such as management of wastewater should already be included in

the design

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* There should be a mechanism to ensure that the impacts and the mitigation measuresmatch each other

* A checklist of impact and mitigation measures should be provided* Proponent should verify the beneficiary, ex. a tannery project must include a Sharki

who is already there on the profession.* The check-list should be disaggregated as far as possible.* A thorough discussion on the draft report was made and comments and improvement

areas were suggested.

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Summary of Discussion held with WB Mission, PAF, PAF Consultants,Donors and NGOs5-8 February 2004

The WB Mission, PAF and the Consultants held a thorough discussion on draft operationalmanual and suggested the following:

1. Need to include vulnerable groups clearly defined as target group.2. The approach how 6 districts are selected as pilot district by PAF.3. Outline the process of targeting poor communities in the VDCs and beyond based on

district level poverty information and stakeholder consultation.4. Need to include innovative and special program approach to reach the vulnerable

groups such as victims of conflict.5. Outline the process of social mobilization, capacity building by POs.6. Differentiated approach 5%, 10% and 15% of cost in community contribution for

subproject based on Mountain, Hill and Terai districts in consideration of cost andequity issues.

7. Provisions of 10% cash upfront for community group income/employment activitieswith discretionary provision by PAF.

8. Capacity building including community skill training, process/performancemonitoring, baseline and impact evaluations, communication support to be undertakenby specialized agencies (SA).

9. Clearly defined contractual agreements between PAF and PO for social mobilizationand capacity building activities, and PAF and CO for subprojects.

10. Monitoring indicators should include indicators for service standards, performance ofPOs and COs.

11. Two approaches to PAF operations, one through PAF regional or district office towork with the COs and other through POs working with COs involving communityfacilitators representing women, dalit, and indigenous groups were discussed.However, lack of district level structure of PAF, the later approach working throughPOs was adopted for now.

12. It was emphasized not to undermine the role of VDC/DDC. However to treatVDC/DDC as potential partner for the project

13. It was suggested that before launching the project, initial consultation (through rapidappraisal process) to understand the districts in terms of ethnic/caste groups, likelyavailability of POs, resources, etc would be useful.

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1. Venue: World Bank Seminar Hall, Yak and Yeti Complex DateJanuary 20, 2004Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF BoardDr. Rita Thapa, Member, PAF BoardMr. Shankar Raj Joshi, Executive Director, PAFMr. Roshan Bajracharya, The World BankMr. Tashi Tsiring, The World BankMs. Naima Hasci, Senor Social Scientist, The World BankMs. Lynn Benette, The World BankMr. Puma Man Shakya, ConsultantDr. Rajendra Shrestha, ConsultantDr. Nawa Raj Khatiwada, ConsultantMr. Chandra Nemkul, ConsultantMr. Raj Babu Shrestha, Executive Director, Water Supply and Sanitation Fund BoardMr. Shailendra Thakali, DFIDMr. Naresh Chapagai, Local Development Officer, DDC KavreDr. T. N. Shrestha, Program Co-ordinator, CEAPREDMs. Shrijana Rana, SNV NepalMr. Durgesh Pradhan, Consultant

2. Venue: PAF Building, Chakupat, LalitpurDate: February 05, 2004Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF BoardMr. Shree Krishna Upadhaya, President, SAPROSSMr. Krishna P. Sapkota, President, DDC OrganisationMr. Pitambar Acharya, ED, DIPROSSMr. Dol Nath Neupane, ED, Samagra Bikash KendraMr. Shankar Raj Joshi, Executive Director, PAFDr. Nawa Raj Khatiwada, ConsultantMr. Chandra Nemkul, ConsultantMr. Dilip Raj Joshi, ConsultantMr. Durgesh Pradhan, ConsultantDr. Rajendra Shrestha, ConsultantMr. Raj Babu Shrestha, Executive Director, Rural Water Supply and Sanitation Fund

Development Board

3. Venue: PAF Building, Chakupat, LalitpurDate: February 05, 2004Second SessionParticipants:

Dr. Mohan Man Sainju, Vice Chairman, PAF BoardMr. Narendra K.C., Director, SAPROSSMr. Kailash Rijal, Small scale loan expert, DIPROSSMr. Amar Adhikari, Field Co-ordinator, Samagra Bikash KendraMr. Pooma Lal Shrestha, Program Co-ordinator, SIPREDMr. Gokul Pyakurel, Deputy Director

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Mr. Kiran Kumar Shrestha, Head, Evaluation and Monitoring Department, The RuralWater Supply and Sanitation Fund Board

Mr. Shankar Raj Joshi, Executive Director, PAFDr. Nawa Raj Khatiwada, ConsultantMr. Chandra Nemkul, ConsultantMr. Dilip Raj Joshi, ConsultantMr. Durgesh Pradhan, ConsultantDr. Rajendra Shrestha, ConsultantMr. Raj Babu Shrestha, Executive Director, Rural Water Supply and Sanitation Fund

Development Board

4. Venue: PAF Building, Chakupat, LalitpurDate: February 11, 2004Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF BoardMs. Geeta Sethi, Task Leader, PAF, The World BankMr. Luis, The World BankMr. Shankar Raj Joshi, Executive Director, PAFDr. Nawa Raj Khatiwada, ConsultantMr. Pravakar Pradha, ConsultantMr. Santosh Nepal, Consultant

5. Venue: Kavre District, DDC, VDC and COsDate: February 10, 2004

Present: DDC, VDC members as well as 27 members of one CO and 33 members inanother. Among them:

Maniju Mijar, ManagerBimala Maijar, ChairpersonMangal Bahadur Mijar, ChairpersonKur Bahadur Mijur, ManagerRam Lama, Social Mobilizer of Metherkot UDCKrishna Prasad, ADDCN ChairmanMaryan Prasad, Program Officer, DDCRajan Bhurar, Social Mobilizer of Khanalthok, UDC

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POVERTY ALLEVIATION FUND

Technical Consultative Session on Rules and Regulation, Operational, Financial andEnvironmental Manual

Tuesday, January 20, 2004

World Bank Conference HallProgram

10:00 AM Registration

10:30 AM Welcome and Highlight the Objectives of Meeting: Mr. S. R. Joshi, ExecutiveDirector, PAF

10:30 AM Introductions

10:45 AM Presentation by Consultants:Rules and Regulation: Mr. Puma Man ShakyaOperational Rules: Dr. Rajendra ShresthaFinancial Manuals: Mr. Chandra NemkulEnvironmental Framework: Dr. Nava Raj Khatiwada.

11:30 AM Sharing of Experience of different projects by participants

12:30 PM Floor Discussion

1:30 PM Hi-Tea

2:15 PM Floor Discussion Continue

3:00 PM Summary of Discussions by Consultants

Rules and Regulation: Mr. Puma Man ShakyaOperational Rules: Dr. Rajendra ShresthaFinancial Manuals: Mr. Chandra NemkulEnvironmental Framework: Dr. Nava Raj Khatiwada.

3.30 PM Conclusions and Next Steps: Mr. S. R. Joshi, Executive Director, PAF

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PAF Stakeholder ConsultationsSummary of Discussion held with NGO Heads and Head of Operations: PAF on

4 February 2004

The morning meeting with the heads of NGOs including SAPPROS, CEPRED,, DEPROS,IIDS, DDC, RWSSP and the PAF team by the consultants at PAF office discussed at lengthon the first draft of the Operational Manual for PAF. The discussions focused on thefollowing issues:

1. The focus of discussion was on criteria for selection of partner organization,community organizations, community contribution and participation, organizationPAF secretariat and staff.

2. The draft was considered to be well written encompassing most of the issuesimportant for PAF operation.

3. Although the proposed criteria for community contribution was appropriate, specialprovisions for remote communities and differentiated rates of contribution forMountain, Hill and Terai communities were suggested. This will also justify in termsof equity considerations since hard core poor tend to live in remote places.

4. Likewise the per capita cost of sub-project support is reasonable but should take intoconsideration, high cost of transportation and labor in light of the remotecommunities and PAF should maintain some discretion in this.

5. Targeting the poor communities in the district is very important and practices basedon wealth ranking by the community with participation of all including the womenand vulnerable proposed in the manual is appropriate. However effort should bemade to benefit all.

6. Victims of conflict (by either side), social discrimination and conflict affected areasshould be given priority and effective provisions to reach them by PAF.

7. Role of partner organization and community organizations need to be very clearlydefined.

8. PAF secretariat should have provision of micro-enterprise specialist.9. Support to income/employment activities for community groups was good. However

most felt such can be utilized from the community group savings and the supportshould target hard core poor and vulnerable as far as possible. Ensure mechanism torevolve such fund.

10. Need to link up PAF activities with similar activities undertaken by other agenciesby building on what already exist in a holistic framework.

11. Adequate communication and information dissemination about PAF rules andeffective social mobilization by POs is important.

12. PAF should emphasize on R&D to promote pro-poor policies, institutional reformsand effective service delivery.

13. Developing a service center concept at the VDC level will enhance service deliveryand reduce unnecessary govemment interference.

14. Transparency in the process such as public audit and empowerment of communitybased on best practices need to be ensured.

15. Standardized formats for monitoring implementation, processes and partnershipbetween PAF and PO and PAF and CO is required.

16. Implementation procedure should not be lengthy and disbursements of fund shouldnot be too many causing delays.

17. PAF should revise the manuals periodically based on learning from the field.18. Forming community groups under the provision of cooperative act will facilitate

assessing services from government agencies.

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